[Federal Register Volume 62, Number 35 (Friday, February 21, 1997)]
[Notices]
[Pages 8069-8070]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-4235]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-38283; File No. SR-NSCC-96-19]
Self-Regulatory Organizations; National Securities Clearing
Corporation; Order Granting Approval of a Proposed Rule Change To
Discontinue the Operation of the Securities Clearing Group's Data Base
February 13, 1997.
On October 3, 1996, the National Securities Clearing Corporation
(``NSCC'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change (File No. SR-NSCC-96-19)
pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'').\1\ Notice of the proposal was published in the Federal
Register on November 6, 1996.\2\ No comment letters were received. For
the reasons discussed below, the Commission is granting approval of the
proposed rule change.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ Securities Exchange Act Release No. 37904 (October 31,
1996), 61 FR 57506.
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I. Description
The proposed rule change amends the Securities Clearing Group
Agreement of the Securities Clearing Group (``SCG'')\3\ to discontinue
the operation of the SCG data base. The SCG data base contains
information on common participants of the SCG members relating to
settlement payment obligations, clearing fund and margin requirements
and deposits, and other related information. The members of the SCG
created the SCG data base as a means to coordinate and share
information on common participants and increase cooperation among the
SCG members.
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\3\ The SCG was established in 1989 as a result of developments
surrounding the October market break and subsequent studies on the
causes of the market break. The stated purpose of the SCG is to
increase cooperation and coordination among securities clearing
entities and to facilitate the sharing of certain clearance and
settlement information regarding surveillance and member risk
monitoring. For a further description of the SCG, refer to
Securities Exchange Act Release No. 27044 (July 25, 1989), 54 FR
30963 [File Nos. SR-DTC-88-20, SR-MCC-88-10, SR-MSTC-88-07, SR-NSCC-
88-09, SR-OCC-89-02, SR-Philadep-89-01, and SR-SCCP-89-01] (order
approving the establishment of the SCG).
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Termination of the SCG data base is desirable for several reasons.
First, NSCC has established and agreed to make available to the SCG
members access to its Collateral Management Service (``CMS'').\4\ The
CMS will not only make available to the SCG members information similar
to that
[[Page 8070]]
contained in the SCG data base but will also provide members with
enhanced features and capabilities. For example, the SCG data base
contains aggregate information on clearing fund and margin deposits
including excess and deficit amounts whereas the CMS contains both
aggregate information on clearing fund and margin deposits including
excess and deficit amounts as well as detailed information on the
underlying collateral comprising clearing fund and margin deposits
(i.e., cash, securities, and letters of credit). The SCG members
recognize that termination of the SCG data base is desirable at this
point to avoid redundancies with the CMS.
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\4\ For a description of the Collateral Management Service,
refer to Securities Exchange Act Release No. 36091 (August 10,
1995), 60 FR 42931 [File No. SR-NSCC-95-06] (order approving a
proposed rule change establishing the CMS).
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Second, termination of the SCG data base will eliminate the
occurrence of a significant increase in costs that would be required to
maintain the SCG data base because the data base on which it is built
is no longer supported by the original vendor. As a result, SCG members
would be required to enter into a new and more costly contract with a
new vendor. Third, because the CMS contains more detailed information
and more features than the SCG data base, use of the CMS in place of
the SCG data base should enable the SCG members to better coordinate
and share information and to monitor clearing fund and margin deposits
with respect to common participants.
Accordingly, the SCG members have executed Amendment No. 6 to the
SCG Agreement.\5\ The Amendment: (i) authorizes the termination of the
SCG data base, (ii) authorizes NSCC to use all data information,
computer coding, and programs contained in the SCG data base in
establishing and maintaining the operation of CMS, and (iii) grants to
each SCG Member a nonexclusive and nontransferable license to use
NSCC's CMS.
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\5\ A copy of the Amendment is attached to NSCC's filing. A copy
of the filing is available for copying and inspection in the
Commission's Public Reference Room or through NSCC.
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II. Discussion
Section 17A(b)(3)(F) provides that the rules of a clearing agency
must be designed to assure the safeguarding of securities and funds in
the custody or control of the clearing agency or for which it is
responsible and to foster cooperation and coordination with persons
engaged in the clearance and settlement of securities transactions.\6\
The Commission believes that the proposed rule change is consistent
with the Act because the amendment to the SCG Agreement provides for
each SCG member to have access to the CMS, and the Commission believes
the CMS and the data contained in it should assist SCG members in
assuring the safeguarding of securities and funds in their custody or
control. The Commission also believes the termination of the SCG data
base in conjunction with NSCC's grant to each SCG member of a
nonexclusive and nontransferable license to use the CMS, should foster
cooperation and coordination with persons engaged in the clearance and
settlement of securities transactions.
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\6\ 15 U.S.C. 78q-1(b)(3)(F).
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III. Conclusion
On the basis of the foregoing, the Commission finds that the
proposed rule change is consistent with the requirements of the Act and
in particular Section 17A of the Act and the rules and regulations
thereunder.
It is therefore ordered, pursuant to Section 19(b)(2) of the Act,
that the proposed rule change (File No. SR-NSCC-96-19) be, and hereby
is, approved.
For the Commission by the Division of Market Regulation,
pursuant to delegated authority.\7\
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\7\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 97-4235 Filed 2-20-97; 8:45 am]
BILLING CODE 8010-01-M
