[Federal Register Volume 59, Number 145 (Friday, July 29, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-18472]


[[Page Unknown]]

[Federal Register: July 29, 1994]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-34427; File Nos. SR-MCC-94-07 and SR-MSTC-94-09]

 

Self-Regulatory Organization; Filing of Proposed Rule Change by 
Midwest Clearing Corporation and by Midwest Securities Trust Company 
Relating to Corporate Governance Issues

July 21, 1994.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on June 23, 1994, the Midwest 
Clearing Corporation (``MCC'') and the Midwest Securities Trust Company 
(``MSTC'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule changes as described in Items I, II, 
and III below, which Items have been prepared primarily by MCC and 
MSTC. The Commission is publishing this notice to solicit comments on 
the proposed rule changes from interested persons.
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    \1\15 U.S.C. 78s(b)(1) (1988).
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I. Self-Regulatory Organizations' Statement of the Terms of Substance 
of the Proposed Rule Changes

    MCC and MSTC propose to make changes to their By-Laws related to 
corporate governance issues.

II. Self-Regulatory Organizations' Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Changes

    In their filings with the Commission, MCC and MSTC included 
statements concerning the purpose of and basis for the proposed rule 
changes. The text of these statements may be examined at the places 
specified in Item IV below. MCC and MSTC 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 Changes

    The purpose of the proposed rule change are to make changes to 
MCC's and MSTC's By-Laws to correspond to changes that are being made 
simultaneously to the Constitution of the Chicago Stock Exchange, 
Incorporated (``CHX'').\2\ The changes are being made in order to 
achieve governance structures where CHX (the parent corporation of MCC 
and MSTC), MCC, and MSTC will be able to operate more as a single 
business. Once all the changes are approved and implemented, the board 
of directors of MSTC and MCC and the board of governors of the CHX will 
all consist of the same thirty-one individuals. This will be achieved 
by, among other things, changing MSTC's and MCC's nominating committees 
to be the same as the CHX's nominating committee. At the same time, in 
order to insure fair and meaningful representation of participants in 
the governance process of MSTC and MCC, the size of the board of 
governors will be increase by four slots to accommodate a new category 
of governor that will provide the board with more expertise on issues 
affecting MSTC and MCC.
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    \2\For a more detailed description of the proposed changes to 
the CHX's Constitution, see File No. SR-CHX-94-15.
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    Specifically, MSTC will amend Article II, Sections 1 and 2 which 
will provide for a flexible time for annual meeting, as opposed to the 
third Tuesday in May, and will add the chairman as one who will be able 
to call special meetings. MSTC will amend Article III. Sections 2 and 8 
which will change the number of directors from eighteen to thirty-one 
and will allow the nominating committee to select candidates with a 
view towards providing fair representation for the interests of CHX and 
of a cross section of the MSTC participants. Amendments to Article IV, 
Section 4 will provide that the nominating committee of MSTC will be 
composed of the same members of the CHX's nominating committee. 
Amendments to Article V, Sections 1, 2, 5, 6, and 7 empower the 
chairman, not the board of directors, to appoint and dismiss all 
officers and employees.
    MCC will amend Article 3, Sections 3.1, 3.2, and 3.3 which will 
change the number of directors and will permit the nominating committee 
to select candidates with a view towards providing fair representation 
for the interests of the CHX and of a cross section of MCC's 
participants. MCC will amend Article 4A, Section 4A.1 to allow the 
composition of MCC's nominating committee to be the same as CHX's 
nominating committee. Article 5, Sections 5.1, 5.3, 5.4, and 5.6 will 
be amended to empower the chairman, not the board of directors, to 
appoint all officers and agents.
    The CHX proposes to create a new category of governor, a 
participant governor. In order to be qualified to be a participant 
governor, a person must be a general partner or officer of a 
participant in MCC or MSTC and must securities clearance and settlement 
expertise, background, or responsibilities. The CHX proposed calls for 
the addition of four participant governors and also adds an additional 
nonmember governor slot. This will increase the size of the CHX board 
of governors to thirty-one from its present size of twenty-six.
    In addition to the proposed changes to MSTC's and MCC's boards of 
directors and nominating committees, the proposed changes will make the 
president and chief executive officer (``CEO'') of CHX the chairman ex-
officio of MSTC and MCC and an ex-officio member of their boards with 
the right to vote. Under the proposal, the presidents of MSTC and MCC 
also will be the CEOs of MSTC and MCC, respectively, but will not be 
board members ex-officio. The vice-chairmen of MCC and MCC will be ex-
officio members of the boards of MSTC and MCC, respectively, with the 
right to vote.
    The proposed rule changes are consistent with Section 17A of the 
Securities Exchange Act of 1934 in that they provide for the fair 
representation of participants in the selection of directors and in the 
administration of MSTC's and MCC's affairs.

B. Self-Regulatory Organizations' Statement on Burden on Competition

    MCC and MSTC perceive no impact on competition by reason of the 
proposed rule changes.

C. Self-Regulatory Organizations' Statement on Comments on the Proposed 
Rule Changes Received From Members, Participants, or Others

    Written comments from MCC or MSTC participants or others have not 
been solicited or received on the text of the proposed rule change.

III. Date of Effectiveness of the Proposed Rule Changes 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 organizations consent, 
the Commission will:
    (A) by order approve the proposed rule changes or
    (B) institute proceedings to determine whether the proposed rule 
changes 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 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. Sec. 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 the above-referenced 
self-regulatory organizations. All submissions should refer to File 
Nos. SR-MCC-94-07 and SR-MSTC-94-09 and should be submitted by August 
19, 1994.

    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 94-18472 Filed 7-28-94; 8:45 am]
BILLING CODE 8010-01-M