02-6264. Self-Regulatory Organizations; Emerging Markets Clearing Corporation; Notice of Filing and Order Granting Accelerated Approval of a Proposed Rule Change Relating to Conforming Rule Changes Resulting From the Integration With The Depository ...

March 8, 2002.

Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”),^[1] notice is hereby given that on February 1, 2002, the Emerging Markets Clearing Corporation (“EMCC”) filed with the Securities and Exchange Commission (“Commission”) the proposed rule change as described in Items I and II below, which Items have been prepared by EMCC. The Commission is publishing this notice and order to solicit comments on the proposed rule change from interested persons and to grant accelerated approval.

I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change

The proposed rule change will amend EMCC's rules to conform the rules to recent changes EMCC made to its by-laws.

II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change

In its filing with the Commission, EMCC included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. EMCC has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements.^[2]

A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change

On October 25, 2001, the Commission approved EMCC's integration with The Depository Trust and Clearing Corporation (“DTCC”) whereby EMCC became a subsidiary of DTCC (“Integration Filing”).^[3] As part of the integration, (i) EMCC's Class A shareholders were to be offered the right to exchange their EMCC shares for DTCC common shares, (ii) the EMCC shares held by EMCC's trade association shareholders were to be repurchased and cancelled, and (iii) EMCC's certificate of incorporation and by-laws were to be revised to provide for a corporate governance structure consistent with its integration into the DTCC organization. The integration, including the exchange offer, trade association share repurchases, and amendment of EMCC's governing documents, was completed as of January 1, 2002, and on that date EMCC became a subsidiary of DTCC.

When EMCC's by-laws were amended, the reference to “participant directors” was deleted because that term was no longer relevant in the new corporate governance structure. A conforming change should also have been made to EMCC's rules in the Integration Filing but was inadvertently omitted. Also, because EMCC users are now given the opportunity to buy shares of DTCC at periodic intervals under the new structure, the obligation to become an EMCC shareholder as part of an applicant's initial membership requirements should have been omitted from EMCC's by-laws.

Accordingly, Rule 1 (“Definitions”) and Rule 31 (“Hearing Procedures”) are being amended to delete the definitions of “participant director.” Rule 1 is also being amended to delete the definition of “ISMA,” which was a “participant director.” EMCC Rule 2 (“Members”) is being amended to delete the requirement that applicants for membership become EMCC shareholders.

EMCC believes that the proposed rule change is consistent with the requirements of the section 17A of the Act ^[4] and the rules and regulations thereunder because it permits EMCC's rules to be consistent with its current corporate governance structure.

B. Self-Regulatory Organization's Statement on Burden on Competition

EMCC does not believe that the proposed rule change will have an impact on or impose a burden on competition.

C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others

No written comments relating to the proposed rule change have been solicited or received. EMCC will notify the Commission of any written comments it receives.

III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action

The Commission finds that the proposed rule change is consistent with the requirements of the Act and the rules and regulations thereunder and particularly with the requirements of section 17A(b)(3)(C)^[5] of the Act, which requires that the rules of a clearing agency assure a fair representation of its shareholders and participants in the selection of its directors and administration of its affairs. In approving the Integration Filing, the Commission found that the proposed rule change was consistent with section 17A(b)(3)(C). Because this proposed rule change merely makes changes to EMCC's rules to conform them to the changes made in the Integration Filing, the Commission also finds this proposed rule change to be consistent with section 17A(b)(3)(C).

EMCC 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 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 such approval will allow EMCC to immediately conform its rule to its current corporate governance structure which should help to avoid confusion among participants.

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, U.S. Securities and Exchange Commission, 450 Fifth Street NW., Washington, DC 20549-6069. 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 Room in Washington, DC. Copies of such filing will also be available for inspection and copying at EMCC's principal office. All submissions should refer to File No. SR-EMCC-2002-02 and should be submitted by April 5, 2002.

It is therefore ordered, pursuant to section 19(b)(2) of the Act, that the proposed rule change (File No. SR-EMCC-2002-02) be, and hereby is, approved on an accelerated basis.

For the Commission by the Division of Market Regulation, pursuant to delegated authority.^[6]

Margaret H. McFarland,

Deputy Secretary.

Footnotes

1.  15 U.S.C. 78s(b)(1).

2.  The Commission has modified the text of the summaries prepared by EMCC.

3.  Securities Exchange Act Release No. 44987 (Oct. 25, 2001), 66 FR 55218 (Nov. 1, 2001).

4.  15 U.S.C. 78q-1.

5.  15 U.S.C. 78q-1(b)(3)(C).

6.  17 CFR 200.30-3(a)(12).