[Federal Register Volume 59, Number 31 (Tuesday, February 15, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-3477]


[[Page Unknown]]

[Federal Register: February 15, 1994]


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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-33595; File No. SR-MCC-94-1]

 

Self-Regulatory Organizations; Midwest Clearing Corporation; 
Notice of Filing of a Proposed Rule Change Relating to the Processing 
of Basket Trades

February 8, 1994.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on January 7, 1994, the 
Midwest Clearing Corporation (``MCC'') 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 MCC. The Commission is publishing this notice to solicit 
comments from interested persons.
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    \1\15 U.S.C. 78s(b)(1) (1988).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    Midwest Clearing Corporation (``MCC'') proposes to amend its rules 
relating to the processing of trades in the Chicago Basket (``CXM''). A 
detailed description of the CXM is contained in File No. SR-CHX-93-
18,\2\ and a detailed description of the current procedure for 
processing CXM trades is contained in File No. SR-MCC-93-3.\3\
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    \2\Securities Exchange Act Release No. 33053 (October 15, 1993), 
58 FR 54610.
    \3\Securities Exchange Act Release No. 33054 (October 15, 1993), 
58 FR 54620.
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II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, MCC included statements 
concerning the purpose of and statutory basis for the proposed rule 
change and discussed any comments it received on the proposal. The text 
of these statements may be examined at the places specified in Item IV 
below. MCC has prepared summaries, set forth in sections (A), (B), and 
(C) below, of the most significant aspects of such statements.

(A) Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    The purpose of the proposed rule change is to amend MCC's rules 
relating to the processing of trades in the CXM. The CXM is a basket of 
stocks that is comprised of the stocks included in the Chicago 
Mercantile Exchange's MMI stock index futures contract and is comprised 
of a fixed quantity of twenty-five shares of each of the stocks 
included in that futures contract.
    Basket trades are defined by MCC as trades in a group of securities 
that an exchange or market place Self-Regulatory Organization (``SRO'') 
has designated as eligible for execution in a single trade. MCC's 
current rules relating to basket trades permit MCC to accept from an 
exchange or market place SRO locked-in basket trade data. On T+1, MCC 
reports the locked-in basket trades to participants on a basket 
purchase and sales report. MCC separately combines, by participant, all 
basket buy transactions and all basket sell transactions. Aggregate buy 
side and aggregate sell side basket transactions are then ``burst'' 
into their component securities for clearance and settlement. The 
continuous net settlement (``CNS'') system nets all component 
securities. This results in an individual participant being either a 
net buyer or a net seller in each of a basket's component securities.
    The component securities are CNS eligible and are reflected on the 
appropriate CNS purchase and sales report. ``Burst'' basket trades are 
netted with all other transactions in the same component security 
having the same settlement.
    The proposed rule will provide an alternative clearing process for 
trades in the CXM. The alternative must be elected on an account-by-
account basis (as opposed to a trade-by-trade basis). Under this 
alternative, rather than aggregating all buy transactions and all sell 
transactions in one account prior to the separation of the CXM into its 
component stocks, MCC will separate each basket transaction, as 
executed, into its component securities, by lot, without the 
aggregation process. MCC will report this information to the electing 
participant instead of the participant's aggregate net buy and 
aggregate net sell basket information. This new alternative will make 
it easier for participants to allocate the correct number of shares to 
customers and will make it easier to identify trades for cancellation 
and correction.
    Because the proposed rule change will facilitate the prompt and 
accurate clearance and settlement of securities transactions, it is 
consistent with the requirements of Section 17A of the Act.

(B) Self-Regulatory Organization's Statement on Burden on Competition

    MCC believes that no burden will be placed on competition as a 
result of the proposed rule change.

(C) Self-Regulatory Organization's Statement on Comments on the 
Proposed Rule Change Received from Members, Participants, or Others

    No comments were received.

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. 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 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. 552, will be available for inspection and copying at the 
principal office of MCC. All submissions should refer to File No. SR-
MCC-94-1 and should be submitted by March 8, 1994.

    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority.\4\
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    \4\17 CFR 200.30-3(a)(12) (1993).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 94-3477 Filed 2-14-94; 8:45 am]
BILLING CODE 8010-01-M