[Federal Register Volume 64, Number 156 (Friday, August 13, 1999)]
[Notices]
[Pages 44252-44253]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-21044]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-41716; SR-NSCC-99-05]
Self-Regulatory Organizations; National Securities Clearing
Corporation; Notice of Filing of Proposed Rule Change Relating to the
Acceptance of Letters of Credit
August 6, 1999.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ notice is hereby given that on April 20, 1999, the
National Securities Clearing Corporation (``NSCC'') filed with the
Securities and Exchange Commission (``Commission'') the proposed rule
change as described in Items I, II, and III below, which items have
been prepared primarily by NSCC. The Commission is publishing this
notice to solicit comments from interested persons on the proposed rule
change.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of
Substance of the Proposed Rule Change
The purpose of the proposed rule change is to replace NSCC's
current letter of credit form with a letter of credit form developed by
the Uniform Clearing Group.\2\
---------------------------------------------------------------------------
\2\ NSCC attached a copy of the uniform letter of credit as
Exhibit A to the filing.
---------------------------------------------------------------------------
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, NSCC 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. NSCC has 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 text of the summaries
prepared by NSCC.
---------------------------------------------------------------------------
(A) Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
Rule 4, Section 1 of NSCC's Rules and Procedures permits NSCC to
accept letters of credit in addition to cash and government securities
as collateral for its clearing fund.\4\ The proposed rule change will
require that letters of credit delivered to NSCC on or after September
1, 1999, be in the form of the uniform letter of credit (``ULC'')
developed by the United Clearing Group (``UCG'').
---------------------------------------------------------------------------
\4\ See also Securities Exchange Act Release No. 18052 (August
21, 1981), 46 FR 43341.
---------------------------------------------------------------------------
The UCG is an organization comprised of all the major securities
and futures clearing corporations and depositories in the U.S.\5\ The
UCG developed the ULC to (i) foster uniformity among the various U.S.
securities and futures clearing organization with respect to the
acceptable terms of letters of credit that are deposited as margin and
(ii) reduce operational burdens for industry participants and their
letters of credit issuers. In developing the ULC, the UCG consulted
with several letter of credit issuing banks and the National Standby
Letter of Credit Committee of the International Financial Services
Association (formerly known as the U.S. Council on International
Banking).
---------------------------------------------------------------------------
\5\ The members of the UCG include the Boston Stock Exchange
Clearing Corporation, The Depository Trust Company, Government
Securities Clearing Corporation, NSCC, The Options Clearing
Corporation, MBS Clearing Corporation, Board of Trade Clearing
Corporation, Chicago Mercantile Exchange, Clearing Corporation of
New York, Kansas City Board of Trade, Minneapolis Grain Exchange,
New York Mercantile Exchange, Emerging Markets Clearing Corporation,
and Clearing Corporation for Options and Securities.
---------------------------------------------------------------------------
The ULC consists of a cover page plus the uniform terms. All
variable terms of the ULC, such as the name of the clearing member, the
beneficiary clearing corporation, the issuing bank, the amount of the
credit, and the
[[Page 44253]]
expiration date, are set forth on the cover page. To assist members in
completing the ULC, the UCG drafted general instructions. In addition,
NSCC has provided supplemental instructions relating specifically to
letters of credit furnished to NSCC.
NSCC expects that modifications may be made to the ULC in the
future. If and when that occurs, NSCC will require its members to use
the revised form.\6\
---------------------------------------------------------------------------
\6\ NSCC will file proposed rule changes with the Commission
prior to requiring members to comply with substantive changes made
to the ULC.
---------------------------------------------------------------------------
NSCC believes that the proposed rule change is consistent with the
requirements of Section 17A of the Act and the rules and regulations
thereunder because, among other things, it will promote the prompt and
accurate clearance and settlement of transactions in securities by
facilitating processing and will foster cooperation within the
financial community.
(B) Self-Regulatory Organization's Statement on Burden on Competition
NSCC does not believe that the proposed rule change will have an
impact on or impose any burden on competition.
(C) Self-Regulatory Organization's Statement on Comments on the
Proposed Rule Change Received From Members, Participants or Others
No comments on the proposed rule change were solicited or received.
NSCC will notify the Commission of any written comments it receives.
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 the self-regulatory organization consents,
the Commission will:
(a) by order approve the 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 file six copies thereof with the Secretary, Securities and
Exchange Commission, 450 Fifth Street, NW, Washington, DC 20549-0609.
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, DC 20549. Copies of such filing also will be available for
inspection and copying at the principal office of NSCC. All submissions
should refer to File No. SR-NSCC-99-05 and should be submitted by
September 3, 1999.
For the Commission by the Division of Market Regulation,
pursuant to delegated authority.\7\
---------------------------------------------------------------------------
\7\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 99-21044 Filed 8-12-99; 8:45 am]
BILLING CODE 8010-01-M
