[Federal Register Volume 60, Number 22 (Thursday, February 2, 1995)]
[Notices]
[Pages 6579-6580]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-2554]



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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-35285; File No. SR-GSCC-94-08]


Self-Regulatory Organizations; Government Securities Clearing 
Corporation; Notice of Filing of Proposed Rule Change Relating to 
Mandatory Participation in the Yield-to-Price Conversion Process

January 27, 1995.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on November 8, 1994, the 
Government Securities Clearing Corporation (``GSCC'') filed with the 
Securities and Exchange Commission (``Commission'') the proposed rule 
change described in Items I, II, and III below, which items have been 
prepared primarily by the self-regulatory organization. The Commission 
is publishing this notice to solicit comments on the proposed rule 
change from interested persons.

    \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 would modify GSCC rules to require 
participation by members of GSCC's netting system in GSCC's yield-to-
price conversion process.

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

    (a) The purpose of the proposed rule change is to make the 
participation by members of GSCC's netting system in GSCC's yield-to-
price conversion process mandatory. On October 16, 1992, GSCC 
implemented its yield-to-price conversion feature, which allows yield 
trades to be netted and novated on the night the trade is entered and 
eliminate the need for double submission of when-issued trades. At that 
time, in order to not impose undue operational or system burdens on 
certain firms, participation in the conversion process was not made 
mandatory.
    Participation in the yield-to-price conversion process is important 
for a netting member and for the settlement process in general because 
otherwise a netting member's when-issued trades do not have GSCC's 
guarantee of settlement until auction date. Because of this, since 
October 1992, GSCC has not admitted an entity into netting system 
membership unless the applicant has agreed to participate in the yield-
to-price process at the time of commencement of participation in the 
netting system. Currently, only one netting member still is not 
participating in the conversion process, and it is anticipated that it 
will commence participation in the yield-to-price process by the end of 
this year.
    In light of the importance for a netting member to participate in 
the yield-to-price conversion process and given the expectation that 
all current netting members will be participating in the near future, 
GSCC wishes to make participation in the yield-to-price conversion 
process by netting members mandatory. GSCC recognizes that there may be 
temporary situations, for example when an entity commences its 
participation in the netting system, in which there are operational or 
other considerations that render participation in the yield-to-price 
conversion process difficult for a member. In such circumstances, GSCC 
will retain the ability to temporarily exempt such member from the 
requirement to participate in the yield-to-price conversion process. 
For GSCC's protection, however, GSCC will calculate such member's 
clearing fund deposit and forward mark allocation payment obligations 
as if it were participating in the yield-to-price conversion process.
    (b) The proposed rule change will ensure that netting members' 
eligible trades are encompassed within GSCC's netting process and 
therefore that settlement is guaranteed at the earliest point in time 
possible. Thus, GSCC believes that the proposed rule change is 
consistent with the requirements of Section 17A of the Act and the 
rules and regulations thereunder.

B. Self-Regulatory Organization's Statement on Burden on Competition

    GSCC does not believe that the proposed rule will have an impact 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

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

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 reason for so 
finding or (ii) as to which the self-regulatory organization consents, 
the Commission will:
    (A) By order approve such 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, N.W., 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 

[[Page 6580]]
Section, 450 Fifth Street, N.W., Washington, D.C. 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 No. SR-
GSCC-94-08 and should be submitted by February 23, 1995.

    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 95-2554 Filed 2-1-95; 8:45 am]
BILLING CODE 8010-01-M