[Federal Register Volume 62, Number 95 (Friday, May 16, 1997)]
[Notices]
[Page 27091]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-12826]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-38595; File No. SR-MBSCC-96-08]
Self-Regulatory Organizations; MBS Clearing Corporation; Order
Approving a Proposed Rule Change Relating to Liens on Participants'
Property
May 9, 1997.
On November 20, 1996, MBS Clearing Corporation (``MBSCC'') filed
with the Securities and Exchange Commission (``Commission'') a proposed
rule change (File No. SR-MBSCC-96-08) pursuant to Section 19(b)(1) of
the Securities Exchange Act of 1934 (``Act'') \1\ to explicitly state
that MBSCC has a lien on all property placed in its possession by its
participants. On January 3, 1997, and on January 14, 1997, MBSCC filed
amendments to the proposed rule change. Notice of the proposal was
published in the Federal Register on February 26, 1997.\2\ On April 10,
1997, MBSCC again amended the proposed rule change.\3\ No comment
letters were received. For the reasons discussed below, the Commission
is approving the proposed rule change.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ Securities Exchange Act Release No. 38314 (February 19,
1997), 62 FR 8809.
\3\ The amendment was technical in nature and therefore did not
require republication of the notice.
---------------------------------------------------------------------------
I. Description
Unlike other clearing agencies, MBSCC's rules did not contain
specific language stating that MBSCC has a lien on all property placed
into its possession by its participants.\4\
---------------------------------------------------------------------------
\4\ For example, the rules of the National Securities Clearing
Corporation (``NSCC'') and the International Securities Clearing
Corporation (``ISCC'') provide NSCC and ISCC with liens on property
placed in their possession by their participants. The language
contained in the present proposed rule change is substantially
similar to the language contained in NSCC's and ISCC's respective
rules. NSCC Rule 18, Section 2(f) and ISCC Rule 18, Section 3.
---------------------------------------------------------------------------
However, MBSCC has stated that it always intended to have such a
lien. The proposed rule change modifies MBSCC's rules to explicitly
state that MBSCC has a lien on all property placed in its possession by
its participants.
The proposed rule change also revises MBSCC's rules to clarify that
any cash received with respect to deposits to MBSCC's participants fund
from and not yet distributed to a participant is available to MBSCC for
satisfaction of participant liabilities.
II. Discussion
Section 17A(b)(3)(F) \5\ of the Act requires that the rules of a
clearing agency be designed to promote the prompt and accurate
clearance and settlement of securities transactions. The Commission
believes that the proposed rule change is consistent with MBSCC's
obligations under the Act because the proposed rule change adds
language providing MBSCC with assurances that, in the event one of its
participants fails to discharge its liabilities, MBSCC will have a lien
on the participant's property in MBSCC's possession. Therefore, MBSCC
can utilize the participant's cash or securities subject to the lien to
cover the participant's unpaid obligations to MBSCC. As a result, MBSCC
is in a better position to protect itself and its participants from a
defaulting participant.
---------------------------------------------------------------------------
\5\ 15 U.S.C. 78q-1(b)(3)(F).
---------------------------------------------------------------------------
III. Conclusion
On the basis of the foregoing, the Commission finds that the
proposal is consistent with the requirements of the Act and in
particular with the requirements of 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-MBSCC-96-08) be, and hereby
is, approved.
For the Commission by the Division of Market Regulation,
pursuant to delegated authority.\6\
---------------------------------------------------------------------------
\6\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 97-12826 Filed 5-15-97; 8:45 am]
BILLING CODE 8010-01-M
