[Federal Register Volume 60, Number 131 (Monday, July 10, 1995)]
[Notices]
[Pages 35575-35576]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-16784]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-35916; File Nos. SR-NSCC-95-04; SR-MCC-95-02; SR-SCCP-
95-03]
Self-Regulatory Organizations; National Securities Clearing
Corporation; Midwest Clearing Corporation; 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 28, 1995.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ notice is hereby given that the 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 May 19, 1995,
May 26, 1995, and June 12, 1995, respectively, the proposed rule
changes as described in Items I and II below, which items have been
prepared primarily by the Clearing Corporations. The proposals seek
approval of rule changes relating to the guarantee of trades in the
Clearing Corporations' continuous net settlement systems. The
Commission is publishing this notice and order to solicit comments from
interested persons and to extend temporary approval of the proposed
rule changes on an accelerated basis through June 28, 1996.
\1\ 15 U.S.C. Sec. 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 approval of the Commission's temporary 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\
\2\ The Commission has approved these proposals on a temporary
basis on six 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); 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); and 33996 (June 27, 1994),
59 FR 33996 (approving File Nos. SR-NSCC-94-09, SR-MCC-94-06, and
SR-SCCP-94-02 through June 30, 1995).
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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.\3\
\3\ The Commission has modified the language in these sections.
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(A) Self-Regulatory Organizations' Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Changes
The proposed rule changes seek approval of the Clearing
Corporations' procedures whereby the settlement of all pending CNS
trades are guaranteed as of midnight (11:59 p.m. for MCC) on the day
after the trade date for locked-in or automatically compared trades and
as of midnight (11:59 p.m. for MCC) on the day trades are reported to
members as compared for all other trades. The proposed rule changes
also seek 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.\4\
\4\ For a more detailed discussion of the proposals, refer to
Securities Exchange Act Release Nos. 34261, 32547, 30879, 29388,
28728, and 27192 and the accompanying rule filings, supra note 3.
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The Clearing Corporations believe that the proposed rule changes
are consistent with the Act and particularly with Section 17A of the
Act because they 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.\5\
\5\ 15 U.S.C. Sec. 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 not impose a 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 using
revised formulas for calculating clearing fund contributions are
consistent with the Act and particularly with Section 17A of the
Act.\6\ Section 17A(b)(3)(F) of the Act \7\ 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.
\6\ 15 U.S.C. Sec. 78q-1 (1988).
\7\ 15 U.S.C. Sec. 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. The Commission finds good cause for so approving
because accelerated approval will permit the Clearing Corporations to
continue to provide their participants with earlier trade guarantees
and to
[[Page 35576]]
continue to base clearing fund assessments on the revised formulas
without any needless disruptions to their programs. 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.
The Clearing Corporations and the Commission will continue to
monitor the adequacy of the Clearing Corporation's procedures and
safeguards applicable to earlier guarantees of CNS trades and the
revised clearing fund formulas is necessary. Each Clearing Corporation
will 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.\8\
\8\ The Commission reserves the right to amend the data request
during the ensuing temporary approval period 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 submission
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. Sec. 552, will be available for inspection and copying in
the Commission's Public Reference Room, 450 Fifth Street, NW.,
Washington, DC 20549. Copies of such filings will also be available for
inspection and copying at the principal office of each Clearing
Corporation. All submissions should refer to the file numbers SR-NSCC-
95-04, SR-MCC-95-02, and SR-SCCP-95-03 and should be submitted by July
31, 1995.
It is therefore ordered, pursuant to Section 19(b)(2) of the Act,
that the proposed rule changes (File Nos. SR-NSCC-95-04, SR-MCC-95-02,
and SR-SCCP-95-03) be and hereby are approved on a temporary basis
through June 28, 1996.
For the Commission by the Division of Market Regulation,
pursuant to delegated authority.\9\
\9\ 17 CFR 200.30-3(a)(12) (1994).
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Jonathan G. Katz,
Secretary.
[FR Doc. 95-16784 Filed 7-7-95; 8:45 am]
BILLING CODE 8010-01-M
