[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