[Federal Register Volume 59, Number 126 (Friday, July 1, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-16043]
[[Page Unknown]]
[Federal Register: July 1, 1994]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-34261; File Nos. SR-NSCC-94-09, SR-MCC-94-06, and SR-
SCCP-94-02]
Self-Regulatory Organizations; National Securities Clearing
Corporation, Midwest Clearing Corporation, and Stock Clearing
Corporation of Philadelphia; Notice of Filing and Order Granting
Temporary Approval on an Accelerated Basis of Proposed Rule Changes
Relating to the Guarantee of Trades in Continuous Net Settlement
Systems
June 27, 1994.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ notice is hereby given that National Securities Clearing
Corporation (``NSCC''), Midwest Clearing Corporation (``MCC''), and
Stock Clearing Corporation of Philadelphia (``SCCP'') (collectively
referred to as ``Clearing Corporations'') filed with the Securities and
Exchange Commission (``Commission'') on June 15, 1994, June 12, 1994,
and June 24, 1994, respectively, the proposed rule changes as described
in Items I and II below. The Commission is publishing this notice and
order to solicit comments from interested persons and to grant
accelerated approval of the proposed rule changes.
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\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 proposals seek a one year extension, through June 30, 1995, of
the Commission's order that authorizes the Clearing Corporations: (1)
To guarantee at an earlier time the settlement of participant trades in
their Continuous Net Settlement (``CNS'') systems and (2) to use
revised clearing fund calculations to protect against any increased
risk caused by such earlier guarantees.\2\
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\2\The Commission has approved these proposals on a temporary
basis on five previous occasions in Securities Exchange Act Release
Nos. 27192 (August 29, 1989), 54 FR 37010 (approving File Nos. SR-
NSCC-87-04, SR-MCC-87-03, and SR-SCCP-87-03 until December 31,
1990); 28728 (December 31, 1990), 56 FR 717 (approving File Nos. SR-
NSCC-90-25, SR-MCC-90-08, and SR-SCCP-90-03 until June 30, 1991);
29388 (June 28, 1992), 56 FR 30951 (approving File Nos. SR-NSCC-91-
06, SR-MCC-91-03, and SR-SCCP-91-03 through June 30, 1992); 30879
(July 1, 1992), 57 FR 30279 (approving File Nos. SR-NSCC-92-04, SR-
MCC-92-07, and SR-SCCP-92-02 through June 30, 1993); and 32547 (June
29, 1993), 58 FR 36491 (approving File Nos. SR-NSCC-93-04, SR-MCC-
93-02, and SR-SCCP-93-02 through June 30, 1994).
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II. Self-Regulatory Organizations' Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Changes
In their filings with the Commission, the Clearing Corporations
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. The Clearing Corporations 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
The purpose of the proposed rule changes is to extend through June
30, 1995, the Commission's approval of NSCC's, MCC's, and SCCP's
procedures whereby the settlement of all pending CNS trades are
guaranteed as of midnight on the day after the trade date for locked-in
or automatically compared trades and as of midnight on the day trades
are reported to members as compared for all other trades. The proposed
rule changes also seek extension through June 30, 1995, of the
Commission's approval of the Clearing Corporations' revisions to the
CNS portions of their clearing fund formulas. These revisions are
designed to protect against increased risk associated with earlier
guarantees.\3\
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\3\For a more detailed discussion of the proposals, refer to
Securities Exchange Act Release Nos. 32547, 30379, 29388, 27828, and
27192 and the accompanying rule filings, supra note 2.
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The Clearing Corporations represent that the proposed rule changes
are consistent with the Act and particularly with Section 17A of the
Act because it will help the Clearing Corporations to assure the
safeguarding of securities and funds which are in their custody or
control or for which they are responsible.\4\
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\4\15 U.S.C. 78q-1 (1988).
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B. Self-Regulatory Organizations' Statement on Burden on Competition
The Clearing Corporations believe that the proposed rule changes
will impose no burden on competition.
C. Self-Regulatory Organizations' Statement on Comments on the Proposed
Rule Changes Received from Members, Participants or Others
The Clearing Corporations have neither solicited nor received any
comments.
III. Date of Effectiveness of the Proposed Rule Changes and Timing for
Commission Action
The Commission believes the Clearing Corporations' proposals to
continue providing earlier guarantees for CNS trades along with revised
formulas for calculating clearing fund contributions are consistent
with the Act and particularly with Section 17A of the Act.\5\ Section
17A(b)(3)(F) of the Act\6\ requires that the rules of clearing agencies
be designed to assure the safeguarding of securities and funds that are
in the custody or control of the clearing agencies or for which the
clearing agencies are responsible and be designed to remove impediments
to and perfect the national system for the clearance and settlement of
securities transactions.
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\5\15 U.S.C. 78q-1 (1988).
\6\15 U.S.C. 78q-1(b)(3)(F) (1988).
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The Commission believes that these proposals promote the perfection
of the national system by providing increased certainty as to
settlement of securities transactions by reducing the time that
clearing members are exposed to the risk of counterparty default. The
Commission further believes that these proposals achieve that goal
without compromising the safeguarding of securities and funds in the
Clearing Corporations' custody or control or for which they are
responsible.
The Clearing Corporations have requested that the Commission find
good cause for approving the proposed rule changes prior to the
thirtieth day after the date of publication of notice of the filings in
the Federal Register. Accelerated approval will permit NSCC, MCC, and
SCCP to continue to provide their participants with earlier trade
guarantees and to continue to base clearing fund assessments on the
revised formulas without any needless disruptions to the program.
During the proposals' temporary approval periods, the Commission and
the Clearing Corporations have continued to examine the Clearing
Corporations' procedures and safeguards applicable to earlier
guarantees of CNS trades and the revised formulas for calculating CNS
clearing fund contributions. To date, the earlier guarantee procedures
and revised clearing fund formulas have functioned adequately.
Therefore, the Commission believes there is good cause for approving
the proposed rule changes prior to the thirtieth day after the date of
publication of notice of the filing.
The Commission will continue to monitor the adequacy of NSCC's,
MCC's, and SCCP's procedures and safeguards applicable to earlier
guarantees of CNS trades and the revised clearing fund formulas. The
Clearing Corporations remain under a continuing obligation to provide
data to the Commission pertaining to earlier trade guarantees and the
ability of the revised CNS clearing formulas to guard against any
increased risks posed by earlier guarantees.\7\
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\7\The Commission reserves the right to amend the data request
during the ensuing temporary approval for any of the Clearing
Corporations in order to obtain the most useful and accurate
information available.
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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 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 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 at the
principal office of the Clearing Corporations. All submissions should
refer to File Nos. SR-NSCC-94-09, SR-MCC-94-06, and SR-SCCP-94-02 and
should be submitted by July 22, 1994.
It is therefore ordered, pursuant to Section 19(b)(2) of the Act\8\
that the above-mentioned proposed rule changes (File Nos. SR-NSCC-94-
09, SR-MCC-94-06, and SR-SCCP-94-02) be, and hereby are, approved
through June 30, 1995.
\8\15 U.S.C. 78s(b) (1988).
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For the Commission by the Division of Market Regulation,
pursuant to delegated authority.\9\
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\9\17 CFR 200.30-3(a)(12) (1993).
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Jonathan G. Katz,
Secretary.
[FR Doc. 94-16043 Filed 6-30-94; 8:45 am]
BILLING CODE 8010-01-M
