98-22479. Self-Regulatory Organizations; National Securities Clearing Corporation; Notice of Filing and Order Granting Accelerated Approval of a Proposed Rule Change Amending the Securities Clearing Group Agreement  

  • [Federal Register Volume 63, Number 162 (Friday, August 21, 1998)]
    [Notices]
    [Pages 44940-44941]
    From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
    [FR Doc No: 98-22479]
    
    
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    SECURITIES AND EXCHANGE COMMISSION
    
    [Release No. 34-40326; File No. SR-NSCC-98-08]
    
    
    Self-Regulatory Organizations; National Securities Clearing 
    Corporation; Notice of Filing and Order Granting Accelerated Approval 
    of a Proposed Rule Change Amending the Securities Clearing Group 
    Agreement
    
    August 14, 1998.
        Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
    (``Act''),\1\ notice is hereby given that on July 6, 1998, the National 
    Securities Clearing Corporation (``NSCC'') filed with the Securities 
    and Exchange Commission (``Commission'') the proposed rule change as 
    described in Items I and II below, which items have been prepared 
    primarily by NSCC. The Commission is publishing this notice and order 
    to solicit comments from interested persons and to grant accelerated 
    approval of the proposal.
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        \1\ 15 U.S.C. 78s(b)(1).
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    I. Self-Regulatory Organization's Statement of the Terms of 
    Substance of the Proposed Rule Change
    
        Under the proposed rule change, Emerging Markets Clearing 
    Corporation (``EMCC'') and Delta Clearing Corp. (``DCC'') will become 
    members of the Securities Clearing Group (``SGC'').
    
    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.\2\
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        \2\ The Commission has modified the text of the summaries 
    prepared by NSCC.
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    (A) Self-Regulatory Organization's Statement of the Purpose of, and 
    Statutory Basis for, the Proposed Rule Change
    
        NSCC filed the proposed rule change on behalf of the SCG. The SCG 
    was formed by seven registered clearing agencies under the terms of an 
    agreement dated October 19, 1988 (``Agreement'').\3\ On July 18, 1989, 
    the Commission approved the Agreement, which sets forth the purpose of 
    the SCG, the method of participation in the SCG, the legal 
    considerations relevant to the SCG's goals, and the formation of the 
    SCG.\4\
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        \3\ The original members of the SCG were: NSCC, The Depository 
    Trust Company, Midwest Clearing Corporation, Midwest Securities 
    Trust Company, The Options Clearing Corporation, Philadelphia 
    Depository Trust Company, and Stock Clearing Corporation of 
    Philadelphia.
        \4\ Securities Exchange Act Release No. 27044 (July 18, 1989) 58 
    FR 30963 (July 25, 1989) [File No. SR-NSCC-88-09].
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        The goal of the SCG is to promote coordinated action among its 
    members in identifying, addressing, and minimizing the risks and 
    problems common to more than one clearing agency. The SCG strives to 
    reduce risk posed by common participation by providing a framework in 
    which its members share appropriate financial, operational, and 
    clearing data of common participants.
    
    [[Page 44941]]
    
        The SCG believes that allowing EMCC and DCC to become SCG members 
    will further the goals of the SCG. Both EMCC and DCC are clearing 
    agencies and self-regulatory organizations as defined in sections 
    3(a)(23)(A) and 3(a)(26) of the Act.\5\ Both EMCC and DCC have 
    participants in common with other SCG members and therefore share 
    exposure to those common members. The SCG believes that allowing EMCC 
    and DCC to become SCG members will expand the SCG's sources for 
    information sharing and will enable the SCG to minimize risks to the 
    national system for the clearance and settlement of securities 
    transactions.
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        \5\ 15 U.S.C. 78c(a)(23)(A) and 78c(a)(26). EMCC was formed by 
    NSCC, the Emerging Markets Traders Association, and the 
    International Securities Market Association for the purpose of 
    facilitating the clearance and settlement of emerging market debt 
    instruments. DCC is a clearing corporation for the clearance and 
    settlement of repurchase agreements and over the counter options on 
    U.S. government securities.
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        In its order approving the formation of the SCG, the Commission 
    noted that a ``nexus'' exists among clearing agencies because of (1) 
    common participants, (2) interfaces through which clearing agencies 
    offer access to participants in other clearing agencies or access to 
    services offered by other clearing agencies; (3) shared operational and 
    financial exposure, and (4) common regulatory responsibilities.\6\ The 
    SCG believes that the same ``nexus'' of common interests exists between 
    the current SCG members and EMCC and DCC.
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        \6\ Securities Exchange Act Release No. 27044, supra note 4.
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        Pursuant to the terms of the Agreement, all of the current SCG 
    members voted on May 12, 1998 to allow EMCC and DCC to become members 
    of the SCG. Both EMCC and DCC have agreed to abide by the terms of the 
    Agreement.
        The SCG believes that allowing EMCC and DCC to become members of 
    the SCG is consistent with the requirements of the Act and the rules 
    and regulations thereunder because their inclusion should foster 
    cooperation and coordination with persons engaged in the clearance and 
    settlement of securities transactions.
    
    (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 a burden on competition.
    
    (C) Self-Regulatory Organization's Statement on Comments on the 
    Proposed Rule Change Received From Members, Participants or Others
    
        No written comments relating to the proposed rule change have been 
    solicited or received. The NSCC will notify the Commission of any 
    written comments received by NSCC.
    
    III. Date of Effectiveness of the Proposed Rule Change and Timing 
    for Commission Action
    
        Section 17A(b)(3)(F) of the Act \7\ requires that the rules of a 
    clearing agency be designed to foster cooperation and coordination with 
    persons engaged in the clearance and settlement of securities 
    transactions. The Commission believes that the proposed rule change is 
    consistent with this obligation because the SCG enables its members to 
    share appropriate financial, operational, and clearing data with 
    respect to common participants. Because among other things, EMCC and 
    DCC have common participants, the Commission believes that allowing 
    EMCC and DCC to become members of the SCG should enhance cooperation 
    and coordination among clearing agencies. Therefore, the Commission 
    believes that the proposed rule change is consistent with the Act.
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        \7\ 15 U.S.C. 78q-1(b)(3)(F).
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        The Commission finds good cause for approving the proposed rule 
    change prior to the thirtieth day after the publication of notice of 
    the filing. Approving prior to the thirtieth day after publication of 
    notice should allow the SCG members to begin exchanging information 
    about common participants in a more timely fashion. Consequently, SCG 
    members should be better equipped to assure the safeguarding of 
    securities and funds in their custody and control or for which they are 
    responsible and to minimize their financial risks.
    
    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. 
    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-98-08 and should be submitted by 
    September 11, 1998.
        It is therefore ordered, pursuant to Section 19(b)(2) of the 
    Act,\8\ that the proposed rule change (File No. SR-NSCC-98-08) be and 
    hereby is approved.
    
        \8\ 15 U.S.C. 78s(b)(2).
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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).
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    Margaret H. McFarland,
    Deputy Secretary.
    [FR Doc. 98-22479 Filed 8-20-98; 8:45 am]
    BILLING CODE 8010-01-M
    
    
    

Document Information

Published:
08/21/1998
Department:
Securities and Exchange Commission
Entry Type:
Notice
Document Number:
98-22479
Pages:
44940-44941 (2 pages)
Docket Numbers:
Release No. 34-40326, File No. SR-NSCC-98-08
PDF File:
98-22479.pdf