[Federal Register Volume 63, Number 141 (Thursday, July 23, 1998)]
[Notices]
[Page 39614]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-19571]
[[Page 39614]]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-40206; File Nos. SR-MCC-98-01 and SR-MSTC-98-01]
Self-Regulatory Organizations; The Midwest Clearing Corporation;
the Midwest Securities Trust Company; Order Approving Proposed Rule
Changes Relating to the Structure and Composition of the Board of
Directors
July 15, 1998.
On February 9, 1998, the Midwest Clearing Corporation (``MCC'') and
the Midwest Securities Trust Company (MSTC) filed proposed rule changes
with the Securities and Exchange Commission (``Commission'') pursuant
to Section 19(b)(1) of the Securities Exchange Act of 1934 (``Act'')
\1\ and on February 25, 1998, amended the proposed rule changes. Notice
of the proposals was published in the Federal Register on April 22,
1998.\2\ For the reasons discussed below, the Commission is approving
the proposed rule changes.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ Securities Exchange Act Release No. 39872 (April 14, 1998),
63 FR 19991 (File Nos. SR-MCC-98-01 and SR-MSTC-98-01).
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I. Description
The proposed rule changes amend MCC's and MSTC's by-laws in order
to reflect the cessation of their securities clearing and depository
services \3\ and to streamline the structure and composition of their
board of directors in order to remain consistent with the changes
recently made by the Chicago Stock Exchange, Incorporated (``CHX'').\4\
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\3\ Securities Exchange Act Release No. 36684 (January 5, 1995),
61 FR 1195 [File Nos. SR-MCC-95-04, SR-MSTC-95-10] (order approving
proposed rule changes relating to the withdrawal of the Chicago
Stock Exchange, Incorporated from the clearance and settlement and
securities depository businesses, conducted principally through its
subsidiaries, MCC and MSTC).
\4\ Securities Exchange Act Release No. 39759 (March 6, 1998),
63 FR 14153 (order approving a proposed rule change relating to the
structure and composition of CHX's board of governors).
Historically, the MCC's and MSTC's board of directors have been the
same as the CHX's board of governors. As a result of these changes,
half of MCC and MSTC's boards will be ``non-industry'' directors as
defined in CHX's constitution.
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The proposed rule changes reduce the number of directors from 27 to
24 and realign the classes for both MCC and MSTC. The directors are
still divided into three classes, but the size and composition will be
adjusted as follows. At the 1998 annual election, class I will be
reduced by two directors. At the 1999 annual election, class II will be
reduced by four directors. At the 2000 annual election, class III will
be reduced by one director, and class II will be increased by one
director. The board of directors will also be increased by three
additional ``non-industry'' directors by the 1999 annual election to
serve for staggered terms so as to balance the classes as determined by
the nominating committee.\5\
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\5\ Class I will consist of seven directors, class II will
consist of seven directors, and class III will consist of eight
directors.
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II. Discussion
Section 17A(b)(3)(F) \6\ of the Act requires that the rules of a
clearing agency be designed to protect investors and the public
interest. The Commission believes that the change in the composition of
MCC's and MSTC's board of directors should help MCC and MSTC to better
protect investors and the public interest. As a result of the
modifications to the boards, there will be fifty percent representation
of non-industry directors on MCC's and MSTC's board of directors. If
carefully selected, non-industry directors should bring diverse
experience to the boards and thus enable MCC and MSTC to better perform
their self-regulatory obligations.
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\6\ 15 U.S.C. 78q-1(b)(3)(F).
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III. Conclusion
On the basis of the foregoing, the Commission finds that the
proposals are 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 changes (File Nos. SR-MCC-98-01 and SR-MSTC-98-
01) be and hereby are approved.
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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Jonathan G. Katz,
Secretary.
[FR Doc. 98-19571 Filed 7-22-98; 8:45 am]
BILLING CODE 8010-01-M
