[Federal Register Volume 63, Number 25 (Friday, February 6, 1998)]
[Notices]
[Pages 6250-6251]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-3011]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-39609; File No. SR-SCCP-97-06]
Self-Regulatory Organizations; Stock Clearing Corporation of
Philadelphia; Notice of Filing and Order Granting Accelerated Approval
of a Proposed Rule Change Regarding Certain Corporate Governing Changes
February 2, 1998.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ notice is hereby given that on December 22, 1997, the
Stock Clearing Corporation of Philadelphia (``SCCP'') filed with the
Securities and Exchange Commission (``Commission'') the proposed rule
change as described in Items I and II below, which items have been
primarily prepared by SCCP. The Commission is publishing this notice
and order to solicit comments on the proposed rule change from
interested parties and to grant accelerated approval of the proposed
rule change.
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\1\ 15 U.S.C. 78s(b)(1).
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The proposed rule change involves amendments to SCCP's by-laws to
reflect its current restructured securities clearing business and to
streamline its board of directors and committee structures.\2\ More
specifically, the proposed rule change involves amendments to SCCP's
by-laws to require that nonparticipant directors compose at least fifty
percent of the director positions on the board of directors.\3\
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\2\ Securities Exchange Act Release No. 39444 (December 11,
1997), 62 FR 66703, (File Nos. SR-Philadep-97-04 and SR-SCCP-97-04)
(order approving a proposed rule change relating to a decision by
the Philadelphia Stock Exchange, Incorporated to withdraw from the
securities depository business and to restructure and limit its
clearance and settlement business).
\3\ Pursuant to the Commission's administrative proceedings
order entered against SCCP, SCCP is required to amend its by-laws to
require that nonparticipant directors fill fifty percent of SCCP's
board of directors. In the Matter of Stock Clearing Corporation of
Philadelphia and Philadelphia Depository Trust Company, Respondents,
Order Instituting Proceedings Pursuant to Sections 19(h) and 21C of
the Securities Exchange Act of 1934, Making Findings and Imposing
Remedial Sanctions, Administrative Proceeding File No. 3-9360,
Securities Exchange Act Release No. 38918 (August 11, 1997).
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[[Page 6251]]
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, SCCP included statements
concerning the purpose of and the basis for the proposed rule change
and discussed any comments that it received on the proposed rule
change. The text of these statements may be examined at the places
specified in Item IV below. SCCP has prepared summaries, as set forth
in sections (A), (B), and (C) below, of the most significant aspects of
such statements.\4\
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\4\ The Commission has modified the text of the summaries
prepared by SCCP.
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(A) Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
The proposed rule amends SCCP's by-laws in order to reflect its
restructured securities clearing business and to streamline its board
of directors and committee structures.\5\ In addition, the proposed
rule change amends Article IV of SCCP's by-laws to require that
nonparticipant directors compose at least fifty percent of the director
positions on the board of directors. The by-laws now define
nonparticipants as (a) Persons who are not officers, directors, or
employees of participants and persons who have not been employed in any
such capacity at any time within the prior three years and (b) persons
who (i) Do not have a consulting nor employment relationship with the
Philadelphia Stock Exchange, Incorporated (``PHLX''), SCCP, or
Philadelphia Depository Trust Company (``Philadep''), (ii) do not
provide professional services to PHLX, SCCP, or Philadep, and (iii)
have not had any such relationship nor have provided any such services
at any time within the prior three years. The proposed rule change also
reduces the number of directors that may serve at one time from not
less than fifteen or more than seventeen to not less than five or more
than nine.
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\5\ These changes: (a) require SCCP to call a special meeting of
shareholders if the by-laws regarding composition of the board are
to be amended, (b) limit the nominating committee to three persons
selected by the chairman of the board, (c) allow the chairman,
instead of the president, to call special meetings of shareholders
and of the board, and (d) reduce the number of board committees to
an audit committee, a finance committee, a nominating committee, and
an operations committee.
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SCCP believes the proposed rule change is consistent with Section
17A(b)(3)(F) \6\ of the Act because the amendments to its by-laws
reflect its restructured securities clearing business. In particular,
SCCP believes that the proposed governance changes, such as the change
in the composition of its board of directors, will help protect
investors and the public interest.
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\6\ 15 U.S.C. 78q-1(b)(3)(F).
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(B) Self-Regulatory Organization's Statement on Burden on Competition
SCCP believes that the proposed rule change will not impose a
burden on competition not contemplated under the Act.
(C) Self-Regulatory Organization's Statement on Comments on the
Proposed Rule Change Received From Members, Participants, or Others
Written comments were neither solicited nor received with respect
to the proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Section 17A(b)(3)(F) \7\ of the Act requires that the rules of a
clearing agency be designed to assure the safeguarding of securities
and funds which are in the custody or control of the clearing agency or
for which it is responsible and to protect investors and the public
interest. The Commission believes that the change in the composition of
SCCP's board of directors should help SCCP to better safeguard
securities and funds and to better protect investors and the public
interest. The requirement that nonparticipant directors compose at
least fifty percent of the director positions on the board of directors
will provide a more diverse governance structure for SCCP. If carefully
selected, nonparticipant directors should bring diverse experience to
the board and thus enable SCCP to better perform its self-regulatory
obligations. In addition, the Commission believes that the changes SCCP
is making in connection with its current restructured securities
clearing business are being made in a manner that is consistent with
SCCP's obligations under Section 17A of the Act.
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\7\ 15 U.S.C. 78q-1(b)(3)(F).
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SCCP has requested that the Commission find good cause for
approving the proposed rule change prior to the thirtieth day after the
date of publication of notice of the filing. The Commission finds good
cause for approving the proposed rule change prior to the thirtieth day
after the date of publication of notice of filing because accelerated
approval will allow SCCP to institute reforms called for in the
settlement of its administrative proceedings in an expedient fashion.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Persons making written submissions
should file six copies thereof with the Secretary, Securities and
Exchange Commission, 450 Fifth Street, N.W., Washington, D.C. 20549.
Copies of the submission, all subsequent amendments, all written
statements with respect to the proposed rule change that are filed with
the Commission, and all written communications relating to the proposed
rule change between the Commission and any person, other than those
that may be withheld from the public in accordance with the provisions
of 5 U.S.C. 552, will be available for inspection and copying in the
Commission's Public Reference Section, 450 Fifth Street, N.W.,
Washington, D.C. 20549. Copies of such filing will also be available
for inspection and copying at the principal office of SCCP. All
submissions should refer to the File No. SR-SCCP-97-06 and should be
submitted by February 27, 1998.
It is therefore ordered, pursuant to Section 19(b)(2) of the Act,
that the proposed rule change (File No. SR-SCCP-97-06) be and hereby is
approved on an accelerated basis.
For the Commission by the Division of Market Regulation,
pursuant to delegated authority.\8\
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\8\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 98-3011 Filed 2-5-98; 8:45 am]
BILLING CODE 8010-01-M
