[Federal Register Volume 59, Number 126 (Friday, July 1, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-16042]


[[Page Unknown]]

[Federal Register: July 1, 1994]


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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-34260; File No. SR-GSCC-94-5]

 

Self-Regulatory Organizations; Government Securities Clearing 
Corporation; Notice of Filing and Immediate Effectiveness of a Proposed 
Rule Change Relating to GSCC's Fee Structure

June 27, 1994.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on June 22, 1994, the 
Government Securities Clearing Corporation (``GSCC'') 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 by GSCC. The Commission is publishing this notice to 
solicit comments on the proposed rule change 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

    The proposed rule change modifies GSCC's fee schedule to establish 
fees for new services provided in connection with GSCC's auction 
takedown proposal and for certain services for which GSCC does not 
currently charge.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, GSCC 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. GSCC 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

    After a review of its fee structure, GSCC has determined that 
modifications are necessary and appropriate in order to establish fees 
for: (1) New services that will be provided in connection with GSCC's 
``auction takedown proposal'' and (2) certain current services for 
which GSCC does not currently charge. This rule filing provides for 
these fee structure modifications, which will become effective on 
August 1, 1994. A discussion of the new fees that are being established 
and the reasons for them follows:
1. New Fees in Connection With the Auction Takedown Proposal
    Earlier this year, GSCC received approval from the Commission of a 
proposed rule change (File No. SR-GSCC-94-1) that with regard to 
Treasury security purchases made at auction by members of GSCC's 
Netting System (``netting members'') authorizes GSCC to: (1) Accept and 
report data on such purchases through GSCC's Comparison System; (2) net 
the purchases with when-issued trades of such members in the same 
securities through the Netting System; and (3) assume responsibility 
for the delivery of the purchased securities.
    One aspect of this proposal (known as the ``auction takedown'' 
proposal) has GSCC provide a mechanism for ensuring timely delivery of 
needed auction purchases to a member that believes that by virtue of 
its secondary market trading it will have on issue date a net short or 
flat position or a long position that is smaller than the amount of 
auction purchases that it requires in a particular CUSIP. To accomplish 
this, each such member is able to request (a ``priority auction 
delivery request'') on a CUSIP-by-CUSIP basis that GSCC deliver to it 
needed auction purchases immediately after GSCC has received the 
securities from the Federal Reserve Banks on issue date.
    By this rule filing, GSCC establishes a fee of $1.00 for the making 
by a member of a priority auction delivery request. This fee is the 
same as GSCC's fee for the netting of one side of a trade.
    The rule filing authorizing GSCC to implement the auction takedown 
proposal also authorizes GSCC more generally to establish a mechanism 
for taking in data on members' activities in eligible securities from 
sources such as exchanges and other clearing corporations and to treat 
such data under its rules as compared trades to the same extent as if 
the data had been compared through the matching by GSCC of data 
submitted by two members.
    By this rule filing, GSCC establishes a member fee of $.50 for the 
processing and reporting of data on one side of a trade received from a 
locked-in trade source on a locked-in basis. This fee is the same as 
GSCC's lowest fee for the entry by a member of one side of a trade for 
comparison processing and reporting.
2. Fees for Current Services
    GSCC has determined that it is now appropriate that the costs 
incurred by GSCC in providing services that GSCC has provided to 
members to date without charge be covered by direct charges. Each of 
these services and charges is discussed below.
    a. Modifications and cancels. GSCC currently charges for the entry 
by a member of one side of a transaction in an eligible security for 
comparison processing and production of reports. In addition to the 
direct entry of trade data by a member, each member also has the 
ability to input to GSCC a modification and/or cancellation of 
previously-transmitted data. (Generally, a modification to or 
cancellation of trade data can be done unilaterally by a member only if 
the trade has not already been compared.)
    GSCC has not to date charged for such modifications and 
cancellations even though it incurs costs in processing and reporting 
those requests. The lowest charge to a member for the entry of trade 
data (i.e., trade data entry involving computer-to-computer input and 
output) is $.50 per side. While the costs of processing modifications 
and cancellation messages are roughly equivalent to those associated 
with the creation of a transaction, in order to encourage members to 
submit modifications and cancellations to existing trade data, GSCC is 
setting the fee for the modification to or cancellation of one side of 
a trade at $.25 per such modification or cancellation.
    b. Terminal access fee. GSCC currently provides without charge 
terminal access to its automated system to a growing number of its 
members. In order to offset the costs associated with the provision of 
terminal access, which include purchase and maintenance of hardware 
equipment and telephone lines, communication engineering support, and 
other charges imposed by the Securities Industry Association 
Corporation (``SIAC'') (GSCC's facilities manager), as well as the 
costs of training participants and of the monitoring of their terminal 
use, GSCC is imposing a charge for access to GSCC's system of $150 per 
month per terminal.
    c. Bulk data communication connection fee. GSCC also currently 
provides to members without charge bulk data communication access to 
its automated system. In order to offset the costs associated with the 
provision of such access, which are similar to but generally greater 
than those costs associated with the provision of terminal access, GSCC 
is imposing the following charges for differing types of bulk 
communication connections to its system: (i) The charge for a bulk 
communication connection via a shared hunt group is $150 per month; 
(ii) the charge for a bulk communication connection via a dedicated 
dial port or leased line is $450 per month per port or line; and (iii) 
the charge for a bulk communication connection to GSCC via a dedicated 
digital leased line is $600 per month per line.
    It should be noted that certain GSCC members already pay GSCC's 
affiliate, the National Securities Clearing Corporation, which also 
uses SIAC as its facilities manager, a bulk data communication 
connection fee. GSCC will not impose a duplicative fee on such members.
    (b) The proposed rule change will fairly reflect the costs incurred 
in GSCC in providing certain services to its members and, thus, is 
consistent with the requirements of Section 17A of the Act and the 
rules and regulations thereunder.\2\
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    \2\15 U.S.C. 78q-1 (1988).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    GSCC does not believe that the proposed rule change imposes any 
burden on competition not necessary or appropriate in furtherance of 
the purposes of the Act.

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

    Comments on the proposed rule change have not yet been solicited or 
received. Members will be notified of the rule change, and comments 
will be solicited by an Important Notice. GSCC will notify the 
Commission of any written comments received by GSCC.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    The foregoing rule change has become effective pursuant to Section 
19(b)(3)(A)(ii) of the Act and subparagraph (e)(2) of Securities 
Exchange Act Rule 19b-4 in that the proposed rule change establishes or 
changes a due, fee, or other charge imposed by GSCC. At any time within 
sixty days of the filing of such proposed rule change, the Commission 
may summarily abrogate such rule change if it appears to the Commission 
that such action is necessary or appropriate in the public interest, 
for the protection of investors, or otherwise in furtherance of the 
purposes of the Act.

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 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 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 will also be available for 
inspection and copying at the principal office of GSCC. All submissions 
should refer to file number SR-GSCC-94-5 and should be submitted by 
July 22, 1994.

    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority.
Jonathan G. Katz,
Secretary.
[FR Doc. 94-16042 Filed 6-30-94; 8:45 am]
BILLING CODE 8010-01-M