[Federal Register Volume 64, Number 101 (Wednesday, May 26, 1999)]
[Notices]
[Pages 28542-28543]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-13302]
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SECURITIES AND EXCHANGE COMMISSION
[Release 34-41427; File No. SR-MCC-99-01]
Self-Regulatory Organizations; Midwest Clearing Corporation;
Notice of Filing of a Proposed Rule Change Regarding Sponsored Account
Fund Contributions
May 19, 1999.
Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ notice is hereby given that on February 26, 1999, the
Midwest Clearing Corporation (``MCC'') filed with the Securities and
Exchange Commission (``Commission'') the proposed rule change (File No.
SR-MCC-99-01) as described in Items I, II, and III below, which items
have been prepared primarily by MCC. The Commission is publishing this
notice to solicit comments from interested persons on 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 will increase the minimum contribution
that sponsored participants are required to make to MCC's sponsored
account fund.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, MCC 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. MCC has prepared summaries, set forth in sections (A),
(B), and (C) below, of the most significant aspects of such
statements.\2\
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\2\ The Commission has modified the text of the summaries
prepared by MCC.
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(A) Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
MCC sponsors accounts (``sponsored accounts'') for certain eligible
Chicago Stock Exchange specialists, floor brokers, and market makers
(``sponsored participants'') to provide them with access to the
clearance, settlement, and depository services of a qualified clearing
agency.\3\ To cover any losses that MCC may incur from operating the
sponsored accounts, MCC requires sponsored participants to contribute
to a sponsored account fund. A sponsored participant's required
contribution to the sponsored account fund currently is the greater of
$15,000 (``minimum contribution'') or 110% of the amount calculated
pursuant to the formula of NSCC and DTC (``alternative contribution'')
\4\
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\3\ MCC uses the services of two qualified clearing agencies on
behalf of its sponsored participants: National Securities Clearing
Corporation (``NSCC'') and The Depository Trust Company (``DTC'').
\4\ The formula for the alternative contribution is based on the
participant's use of MCC's services or those of a qualified clearing
agency. The proposed rule change does not affect the alternative
contribution calculation.
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According to MCC, both NSCC and DTC require a minimum deposit of
$10,000.\5\ Therefore, the current minimum amount a sponsored
participant must contribute to the sponsored account fund is $22,000,
which is based on the alternative contribution formula.
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\5\ See Letter from Paul B. O'Kelly, Executive Vice President,
Market Regulation and Legal, Chicago Stock Exchange (March 19,
1999).
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Under the proposed rule change, the minimum contribution will
increase from $15,000 to $150,000. As a result, the new required
contribution will be $150,000, which will be based on the minimum
contribution amount. MCC believes the increase is necessary due to an
increased volume of transactions cleared through the sponsored accounts
and increased market volatility.
The increase will be phased-in over a twelve-month period. To
announce the actual phase-in dates, MCC will issue an administrative
bulletin no later than thirty days after the Commission's order
approving the proposal. The first phase-in date will be no more than 60
days from the date the bulletin is published and will increase the
minimum contribution to $50,000. The second and third phase-in dates
will be six months and twelve months from the initial phase-in date and
will increase the minimum contribution to $100,000 and $150,000,
respectively.
MCC believes the proposed rule change is consistent with Section
17A(b)(3)F) \6\ of the Act and the rules and regulations thereunder
because it will facilitate the prompt and accurate clearance and
settlement of securities transactions and because it will assure the
safeguarding of the securities and funds in MCC's custody or control or
for which MCC is responsible.
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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
MCC does not believe that the proposed rule change will impose any
burden on competition.
(C) Self-Regulatory Organization's Statement on Comments on the
Proposed Rule Change Received From Members, Participants or Others
MCC has neither solicited nor received written comments on the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change 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 MCC consents, the Commission will:
(A) By order approve such proposed rule change or
(B) Institute proceedings to determine whether the proposed rule
change should be disapproved.
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 fix six copies thereof with the Secretary, Securities and
Exchange Commission, 450 Fifth Street, NW, 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, NW,
Washington, D.C. 20549. Copies of such
[[Page 28543]]
filing also will be available for inspection and copying at the
principal office of MCC. All submissions should refer to File No. SR-
MCC-99-01 and should be submitted by June 16, 1999.
For the Commission by the Division of Market Regulation,
pursuant to delegated authority.\7\
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\7\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 99-13302 Filed 5-25-99; 8:45 am]
BILLING CODE 8010-01-M
