[Federal Register Volume 60, Number 71 (Thursday, April 13, 1995)]
[Notices]
[Pages 18864-18865]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-9079]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-35569; File Nos. SR-MCC-95-01 and SR-MSTC-95-04]
Self-Regulatory Organizations; Midwest Clearing Corporation and
Midwest Securities Trust Co.; Notice of Proposed Rule Changes Relating
to Indemnification of Committees
April 5, 1995.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ notice is hereby given that on February 8, 1995 and
January 14, 1995, respectively, the Midwest Clearing Corporation
(``MCC'') and the Midwest Securities Trust Co. (``MSTC'') filed with
the Securities and Exchange Commission (``Commission'') the proposed
rule changes as described in Items I, II, and III below, which items
have been prepared mainly by MCC and MSTC, self-regulatory
organizations (``SROs''). The Commission is publishing this notice to
solicit comments on the proposed rule changes from interested persons.
\1\15 U.S.C. 78s(b)(1) (1988).
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I. Self-Regulatory Organizations' Statement of the Terms of
Substance of the Proposed Rule Changes
The proposed rule changes will amend MCC's and MSTC's mandatory
indemnifications requirements, which are set forth in Article 6,
Section 1 of MCC's By-Laws and Article VI, Section 1 of MSTC's By-Laws
by requiring MCC and MSTC to indemnify members of their committees.
II. Self-Regulatory Organizations' Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Changes
In their filings with the Commission, MCC and MSTC included
statements concerning the purpose of and basis for the proposed rule
changes and discussed any comments they received on the proposed rule
changes. The text of these statements may be examined at the places
specified in Item IV below. MCC and MSTC have prepared summaries, set
forth in sections (A), (B), and (C) below, of the most significant
aspects of such statements.
(A) Self-Regulatory Organizations' Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Changes
MCC and MSTC currently have provision in their By-Laws (i.e.,
Article 6, Section 1 of the MCC's By-Laws and Article VI, Section 1 of
MSTC's By-Laws) that requires MCC and MSTC to indemnify, to the fullest
extent permitted by the General Corporation Law of Delaware, any person
who was or is threatened to be made a party to any threatened, pending,
or completed action, suit or proceeding, whether civil, criminal,
administrative, or investigative, by reason of the fact that he is or
was a director or officer of MCC or of MSTC or was or is serving at
MCC's or MSTC's request as a director or officer of another
corporation, partnership, joint venture, trust, or other committee. The
purpose of the proposed rule changes is to give members of MCC's and
MSTC's committees, including members of their Risk Assessment
Committees, the same indemnification protection that is currently given
to MCC's and MSTC's directors and officers.\2\
\2\Under MCC's and MSTC's rules, their Risk Assessment
Committees have substantial authority. This includes, among other
things, the authority to determine: (1) Whether a participant that
has failed to make timely payment to MCC should continue as a
participant, (2) whether a participant has been responsible for
fraudulent or dishonest conduct, and (3) whether a participant poses
a financial risk to MCC. See MCC Rules, Article VIII, Rule 2; MSTC
Rules, Article V, Rule 2.
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MCC and MSTC believe that the proposed rule changes are consistent
with Section 17A of the Act\3\ in that they will remove impediments
from MCC's and MSTC's efforts to attract competent persons to serve on
their committees, such as their Risk Assessment Committees. Thus, MCC
and MSTC believe that the proposed rule changes will help them in
providing fair procedure with respect to: (1) The disciplining of
participants, (2) the denial of participation to any person seeking
participation, and (3) the prohibition or limitation by MCC or MSTC of
any person with respect to access to services.
\3\15 U.S.C. 78q-1 (1988).
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(B) Self-Regulatory Organizations' Statement on Burden on Competition
MCC and MSTC believe that no burden will be placed on competition
as a result of the proposed rule changes.
(C) Self-Regulatory Organizations' Statement on Comments on the
Proposed Rule Changes Received From Members, Participants or Others
MCC and MSTC have neither solicited nor received any comments on
this rule proposal.
III. Date of Effectiveness of the Proposed Rule Changes and Timing
for Commission Action
Within thirty-five days of the date of publication of this notice
in the Federal Register or within such longer period (i) as the
Commission may designate up to ninety days of such date if it finds
such longer period to be appropriate and publishes its reasons for so
finding or (ii) as to which the self-regulatory organizations consent,
the Commission will:
(A) By order approve the proposed rule changes or
(B) Institute proceedings to determine whether the proposed rule
changes should be disapproved.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing. Persons making written submissions
should file six copies thereof with the
[[Page 18865]]
Secretary, Securities and Exchange Commission, 450 Fifth Street, NW.,
Washington, DC 20549. Copies of the submissions, all subsequent
amendments, all written statements with respect to the proposed rule
changes that are filed with the Commission, and all written
communications relating to the proposed rule changes 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 and at the principal offices of MCC and MSTC. All
submissions should refer to File Nos. SR-MCC-95-01 and SR-MSTC 95-04
and should be submitted by May 4, 1995.
For the Commission by the Division of Market Regulation,
pursuant to delegated authority.\4\
\4\17 CFR 200.30-3(a)(12) (1994).
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Jonathan G. Katz,
Secretary.
[FR Doc. 95-9079 Filed 4-12-95; 8:45 am]
BILLING CODE 8010-01-M
