[Federal Register Volume 62, Number 108 (Thursday, June 5, 1997)]
[Notices]
[Pages 30911-30912]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-14691]
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SECURITIES AND EXCHANGE COMMISSION
[Release 34-38698; File No. 600-23]
Self-Regulatory Organizations; Government Securities Clearing
Corporation; Notice of Filing and Order Approving a Request for
Extension of Temporary Registration as a Clearing Agency
May 30, 1997.
Notice is hereby given that on May 8, 1997, the Government
Securities Clearing Corporation (``GSCC'') filed with the Securities
Exchange Commission (``Commission'') an application pursuant to Section
19(a) of the Securities Exchange Act of 1934 (``Act'') \1\ requesting
that the Commission grant GSCC full registration as a clearing agency
or in the alternative extend GSCC's temporary registration as a
clearing agency until such time as the Commission is able to grant GSCC
permanent registration.\2\ The Commission is publishing this notice and
order to solicit comments form interested persons and to extend GSCC's
temporary registration as a clearing agency until February 28, 1998.
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\1\ 15 U.S.C. 78s(a).
\2\ Letter from Sal Ricca, President and Chief Operating
Officer, GSCC (April 11, 1997) (``Registration Letter'').
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On May 24, 1988, pursuant to Sections 17A(b) and 19(a) of the Act
\3\ and Rule 17Ab2-1 promulgated thereunder,\4\ the Commission granted
GSCC registration as a clearing agency on a temporary basis for a
period of three years.\5\ The Commission subsequently has extended
GSCC's registration through May 31, 1997.\6\
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\3\ 15 U.S.C. 78q-1(b) and 78s(a).
\4\ 17 CFR 240.17Ab2-1.
\5\ Securities Exchange Act Release No. 25740 (May 24, 1988), 53
FR 19639.
\6\ Securities Exchange Act Release Nos. 29067 (April 11, 1991),
56 FR 15652; 32385 (June 3, 1993), 58 FR 32405; 35787 (May 31,
1995), 60 FR 30324; 36508 (November 27, 1995), 60 FR 61719; and
37983 (November 25, 1996), 61 FR 64183.
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GSCC provides clearance and settlement services for its members'
transactions in government securities. GSCC offers its members services
for next-day settling trades, forward settling trades, auction takedown
activity, repurchase transactions, the multilateral netting of trades,
the novation of netted trades, and daily marking-to-the-market. In
connection with GSCC's clearance and settlement services, GSCC provides
a centralized loss allocation procedure and maintains margin to offset
netting and settlement risks.
At the time of GSCC's initial temporary registration, the
Commission granted GSCC an exemption from compliance with the fair
representation requirements in Section 17A(b)(3)(C) of the Act.\7\
GSCC's current selection process for its board of directors permits any
GSCC member to nominate candidates for election to the board and to
vote for candidates so nominated.
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\7\ 15 U.S.C. 78q-1(b)(3)(C). GSCC had also received a temporary
exemption from the membership requirements contained in Sections
17A(b)(3)(B) and 17A(b)(4)(B) (15 U.S.C. 78q-1(b)(3)(B) and 78q-
1(b)(4)(B)). Subsequently, the Commission determined that GSCC is in
compliance with such requirements. Securities Exchange Act Release
No. 36508 (November 27, 1995), 60 FR 61719.
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However, the shareholder agreement requires the six directors be
dealer participants, three directors be broker participants, and three
directors be clearing agent bank participants.\8\
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\8\ In its order granting GSCC its initial temporary approval,
the Commission stated that while the composition of GSCC's board of
directors reasonably reflected GSCC's anticipated initial
membership, the Commission believed that it would be appropriate to
defer to a later date its determination of whether GSCC's process
for selecting its board of directors assures participants fair
representation. This decision was based on the fact that GSCC
planned on expanding its services during the temporary registration
period and on the uncertainty with regards to GSCC's future
participant base.
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As part of GSCC's request for full clearing agency registration,
GSCC states that it is finalizing a number of changes to its
Shareholders Agreement and
[[Page 30912]]
Bylaws as a result of GSCC management's review of its nomination and
election process.\9\ GSCC states that these changes are designed to
make its nomination and election process more efficient and flexible
while enhancing the degree of fair representation provided. GSCC
anticipates distributing these changes to its shareholders for their
approval and making the requisite rule filings with the Commission
later this year. Therefore, the Commission will defer its decision on
whether GSCC meets the fair representation requirement of Section 17A
and should be granted permanent registration until GSCC submits its new
selection procedures and the Commission has had an opportunity to
evaluate them.
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\9\ Registration Letter, supra note 2.
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Interested persons are invited to submit written data, views, and
arguments concerning the foregoing application. Such written data,
views, and arguments will be considered by the Commission in granting
registration or instituting proceedings to determine whether
registration should be denied in accordance with section 19(a)(1) of
the Act.\10\ Persons making written submissions should file six copies
thereof with the Secretary, Securities and Exchange Commission, 450
Fifth Street, NW., Washington, DC 20549. Copies of the amended
application for registration and all written comments will be available
for inspection at the Commission's Public Reference Room, 450 Fifth
Street, NW., Washington, DC 20549. All submissions should refer to File
No. 600-23 and should be submitted by June 26, 1997.
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\10\ 15 U.S.C. 78s(a)(1).
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It is Therefore Ordered that GSCC's registration as a clearing
agency (File No. 600-23) be and hereby is temporarily approved through
February 28, 1998.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\11\
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\11\ 17 CFR 200.30-3(a)(16).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 97-14691 Filed 6-4-97; 8:45 am]
BILLING CODE 8010-01-M
