[Federal Register Volume 61, Number 45 (Wednesday, March 6, 1996)]
[Notices]
[Pages 8995-8996]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-5151]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-36902; International Series Release No. 940; File No.
SR-ISCC-95-06]
Self-Regulatory Organizations; International Securities Clearing
Corporation; Order Approving Proposed Rule Change Relating to Global
Clearance Network Service
February 28, 1996.
On December 2, 1995, the International Securities Clearing
Corporation (``ISCC'') filed a proposed rule change (File No. SR-ISCC-
95-06) with the Securities and Exchange Commission (``Commission'')
pursuant to Section 19(b) of the Securities Exchange Act of 1934
(``Act'').\1\ Notice of the proposal was published in the Federal
Register on January 5, 1996, to solicit comments from interested
persons.\2\ No comments were received. As discussed below, this order
approves the proposed rule change.
\1\ 15 U.S.C. Sec. 78S(B) (1988).
\2\ Securities Exchange Act Release No. 36656 (December 29,
1995), 61 FR 430.
---------------------------------------------------------------------------
I. Description
ISCC has established a foreign clearance, settlement, and custody
service known as a Global Clearance Network (``GCN'') in conjunction
with certain banks, trust companies, and other entities. Presently,
ISCC has established GCN relationships with Citibank, N.A.; Standard
Bank of South Africa; Westpac Custodian Nominees Limited of Australia;
Westpac Nominees-NZ-Limited; and S.D. INDEVAL, S.A. de C.V.\3\ The
proposed rule change accommodates Standard Chartered Bank (``SCB'') as
an additional GCN service provider.
\3\ Securities Exchange Act Release Nos. 29841 (October 18,
1991), 56 FR 55960; 35392 (February 16, 1995), 60 FR 10415; 36339
(October 5, 1995), 60 FR 53447; and 36791 (January 30, 1996) 61 FR
4508).
---------------------------------------------------------------------------
SCB has provided clearance, settlement, and custodial services in
the Asian-Pacific Region for over forty years and has had a banking
presence in this region for over one hundred and forty years. The value
of overall assets under SCB's administration is approximately US $55
billion. ISCC members will be offered clearance, settlement, and
custody services in the Philippines, South Korea, and Taiwan through a
division of SCB, Standard Chartered Equitor Group (``The Equitor
Group'').\4\
\4\ The Equitor Group is not a separate legal entity.
---------------------------------------------------------------------------
The Equitor Group provides clearance and custody services in
fifteen markets in the Asian-Pacific Region. The Equitor Group
established a branch office in the Philippines in 1872, which has
provided local custody services since 1935 and currently has US $1.12
billion in assets under custody. The Equitor Group established a branch
office in South Korea in 1984, which has provided local custody
services since 1991 and currently has US $1.47 billion in assets under
custody. SCB has represented that acting through its branches it meets
the requirements of Rule 17f-5 under the Investment Company Act of 1940
to be an eligible foreign custodian.\5\ The Equitor Group established a
branch office in Taiwan in 1985, which has provided local custody
services since 1992 and currently has U.S. $810 million in assets under
custody.
\5\ Letters from Julie Beyers, Associate Counsel, ISCC, to
Michele Bianco, Division of Market Regulation, Commission (December
12, 1995 and December 13, 1995).
---------------------------------------------------------------------------
In the future, ISCC may offer clearance, settlement, and custody
services through SCB in other countries such as Bangladesh, Hong Kong,
Indonesia, Japan, Malaysia, Pakistan, Shanghai, Shenzhen, Singapore,
Sri Lanka, and Thailand. In Malaysia, SCB operates through its wholly
owned subsidiary, Standard Chartered Bank Malaysia Berhad (``SCBM'').
SCB has received an exemptive order under Rule 17f-5 on behalf of
SCBM.\6\
\6\ Letter from Julie Beyers, Associate Counsel, ISCC, to
Michele Bianco, Division of Market Regulation, Commission (December
13, 1995). Investment Company Act of 1940 Release No. 20019,
International Series Release No. 628 (January 14, 1994).
---------------------------------------------------------------------------
SCB has entered into an agreement with ISCC pursuant to which SCB
has agreed to provide access to its clearance, settlement, and custody
services to GCN participants that qualify to be customers of SCB. ICB
has agreed to provide the services at reduced prices. ISCC will not
provide any volume guarantees to SCB. ISCC will collect fees from the
participants on behalf of SCB.\7\ The agreement will be terminable by
mutual agreement of the parties or on ninety days prior notice.
\7\ ISCC is not responsible for fees not rendered to SCB by
participants.
---------------------------------------------------------------------------
II. Discussion
The Commission believes the proposal is consistent with the
requirements of Section 17A of the Act, and therefore, is approving the
proposal.\8\ The Commission states in the initial order granting ISCC
temporary registration as a clearing agency that the development of
efficient and comparable automated national and international
clearance, settlement, and payment systems is one of the more important
international goals.\9\ The Commission noted that without established
international systems, broker-dealers and their institutional customers
often are forced to devote substantial resources to each task related
to trade settlement and must deliver securities by physical means. The
Commission also found that clearing linkages facilitate cross-border
settlements without compromising the essential soundness and integrity
of each national clearing and settlement system.
\8\ 15 U.S.C. 78q-1 (1988).
\9\ Securities Exchange Act Release No. 26812 (May 12, 1989), 54
FR 21691.
---------------------------------------------------------------------------
The GCN service offers participating ISCC members advantages in
securities processing including central access for processing trades,
standardized operating procedures, receipt of uniform reports on their
trades, and reduced costs. The addition of SCB as a GCN provider gives
ISCC participants access to settlement services in areas not currently
covered by the GCN service and thus increases the utility of the GCN
service. Therefore, the Commission believes the proposal is consistent
with Section 17A(b)(3)(F) of the Act in that it promotes the prompt and
accurate clearance and settlement of securities transactions.\10\
\10\ 15 U.S.C. 78q-1(b)(32)(F) (1988).
---------------------------------------------------------------------------
III. Conclusion
For the reasons stated above, the Commission finds that ISCC's
proposal is consistent with Section 17A of the Act.
It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\11\ that the
[[Page 8996]]
proposed rule change (File No. SR-ISCC-95-06) be and hereby is
approved.
\11\ 15 U.S.C. 78s(b)(2) (1988).
---------------------------------------------------------------------------
For the Commission by the Division of Market Regulation,
pursuant to delegated authority.\12\
\12\ 17 CFR 200.30-3(a)(12) (19950.
---------------------------------------------------------------------------
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 96-5151 Filed 3-5-96; 8:45 am]
BILLING CODE 8010-01-M
