[Federal Register Volume 60, Number 78 (Monday, April 24, 1995)]
[Notices]
[Pages 20131-20132]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-9986]



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SECURITIES AND EXCHANGE COMMISSION
[Release 34-35618; File No. 600-23]


Self-Regulatory Organizations; Government Securities Clearing 
Corporation; Notice of Filing of an Amended Application for Full 
Clearing Agency Registration and a Request for Extension of Temporary 
Registration as a Clearing Agency

April 17, 1995.
    Notice is hereby given that on February 3, 1995, the Government 
Securities Clearing Corporation (``GSCC'') filed with the Securities 
and Exchange Commission (``Commission'') an application, pursuant to 
Sections 17A and 19(a) of the Securities Exchange Act of 1934 
(``Act''),\1\ requesting that the Commission grant GSCC full 
registration as a clearing agency or, in the alternative, extend GSCC's 
temporary registration as a clearing agency until such time as the 
Commission is able to grant GSCC permanent registration.\2\ On March 
13, 1995, GSCC filed with the Commission an amended CA-1. The 
Commission is publishing this notice to solicit comments from 
interested persons on the request for extension of registration.

    \1\15 U.S.C. 78q-1, 78s(a) (1988).
    \2\Letter from Charles A. Moran, President, GSCC, to Brandon 
Becker, Director, Division of Market Regulation, Commission 
(February 3, 1995) (``Registration Letter'').
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    On May 24, 1988, the Commission approved, pursuant to Sections 17A 
and 19(a) of the Act and Rule 17Ab2-1(c) thereunder,\3\ the application 
of GSCC for registration as a clearing agency on a temporary basis for 
a period of three years.\4\ The Commission subsequently extended GSCC's 
registration until May 31, 1995.\5\

    \3\17 CFR 240.17Ab2-1 (1994).
    \4\Securities Exchange Act Release No. 25740 (May 24, 1988), 53 
FR 19639.
    \5\Securities Exchange Act Release Nos. 29067 (April 11, 1991), 
56 FR 15652 and 32385 (June 3, 1993), 58 FR 32405.
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    GSCC provides clearance and settlement services for its members' 
transactions in government securities. GSCC offers its members services 
for next-day settling trades, forward settling trades, auction takedown 
activity, the multilateral netting of trades, the novation of netted 
trades, and daily marking-to-the-market. In connection with GSCC's 
clearance and settlement services, GSCC provides a centralized loss 
allocation procedure and maintains margin to offset netting and 
settlement risks.
    At the time of GSCC's initial registration, the Commission granted 
GSCC exemptions from compliance with the participation standards in 
Sections 17A(b)(3)(B) and 17A(b)(4)(B) and the fair representation 
requirements in Section 17A(b)(3)(C) of the Act.\6\ GSCC has requested 
that the Commission remove GSCC's exemption from the participation 
standards in Section 17A(b)(3)(B) and 17A(b)(4)(B) of the Act.\7\ The 
Commission recently has approved two proposed rule changes that 
increase the categories of those eligible for membership in GSCC's 
netting system.\8\ In addition, GSCC has asserted that its current 
selection process for its board of directors, which permits any GSCC 
member to nominate candidates for election to the Board and to vote for 
candidates so nominated, assures fair representation.\9\ GSCC further 
states that it recognizes future membership growth may require GSCC to 
adjust the selection process to ensure fair member representation on 
the Board. The Commission is reviewing GSCC's request to remove the 
exemptions.

    \6\The Commission determined that GSCC's rules did not enumerate 
the statutory categories of membership as required by Section 
17A(b)(3)(B) and the financial standards for applicants and members 
as contemplated by Section 17A(b)(4)(B) of the Act. 15 U.S.C. 78q-
1(b)(3)(B), 78q-1(b)(4)(B) (1988). In addition, the Commission 
determined that while the composition of GSCC's Board of Directors 
reasonably reflected GSCC's anticipated initial membership, it would 
be appropriate to reevaluate whether GSCC's process for selecting 
its Board of Directors complied with the fair representation 
requirements in Section 17A(b)(3)(C) of the Act before granting full 
registration as a clearing agency. 15 U.S.C. 78q-1(b)(3)(C) (1988).
    \7\See Registration Letter, note 2 supra.
    \8\Securities Exchange Act Release Nos. 34935 (November 3, 
1994), 59 FR 56100 (order approving establishment of new categories 
of netting system membership for futures commission merchants) and 
32722 (August 5, 1993), 58 FR 42993 (order approving establishment 
of new categories of netting system membership for dealer and 
interdealer brokers, issuers of government securities, insurance 
companies, registered clearing agencies, and registered insurance 
companies).
    \9\See Registration Letter, note 2 supra.
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    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing application by May 15, 1995. Such 
written data, views, and arguments will be considered by the Commission 
in granting registration or instituting proceedings to determine 
whether registration should be denied in accordance with Section 
19(a)(1) of the Act.\10\ Persons making written submissions should file 
six copies thereof with the Secretary, Securities and Exchange 
Commission, 450 Fifth Street, NW., Washington, DC 20549. Reference 
should be made to File No. 600-23. Copies of the amended application 
for registration and all written comments will be available for 
inspection at the Commission's Public [[Page 20132]] Reference Room, 
450 Fifth Street, NW., Washington, DC 20549.

    \10\15 U.S.C. 78s(a)(1) (1988).
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    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\11\

    \11\17 CFR 200.30-3(a)(16)(1994).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 95-9986 Filed 4-21-95; 8:45 am]
BILLING CODE 8010-01-M