[Federal Register Volume 60, Number 157 (Tuesday, August 15, 1995)]
[Notices]
[Pages 42203-42204]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-20154]



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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-36066; File Nos. SR-MCC-94-01 and SR-MSTC-95-04]


Self-Regulatory Organizations; Midwest Clearing Corporation and 
Midwest Securities Trust Company; Order Approving Proposed Rule Changes 
Relating to Indemnification of Committee Members

August 7, 1995.
    On February 8, 1995, and on February 14, 1995, the Midwest Clearing 
Corporation (``MCC'') and the Midwest Securities Trust Company 
(``MSTC''), respectively, filed proposed rule changes (File Nos. SR-
MCC-95-01 and SR-MSTC-95-04) with the Securities and Exchange 
Commission (``Commission'') pursuant to Section 19(b)(1) of the 
Securities Exchange Act of 1934 (``Act'').\1\ Notice of the proposed 
rule changes appeared in the Federal Register on April 13, 1995.\2\ No 
comments on the proposals have been received by the Commission.

    \1\ 15 U.S.C. Sec. 78s(b)(1) (1988).
    \2\ Securities Exchange Act Release No. 35569 (April 5, 1995), 
60 FR 18864.
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I. Description of the Proposals

    The rule changes amended MCC's and MSTC's mandatory 
indemnifications requirements, which are forth in Article 6, Section 
6.1 of MCC's By-Laws and in Article VI, Section 1 of MSTC's By-Laws. 
Pursuant to the amendments, MCC and MSTC shall indemnify to the fullest 
extent permitted by the General Corporation Law of Delaware \3\ and the 
Business Corporation Act of the State of Illinois,\4\ respectfully, any 
person who was or who is threatened to be made a party to any 
threatened, pending, or completed action, suit, or proceeding, whether 
civil, criminal, administrative, or investigative by reason of the fact 
that the person is or was a member of a committee of MCC or MSTC or is 
or was serving at MCC's or MSTC's request as a member of a committee of 
another corporation, partnership, joint venture, trust, or other 
enterprise. The rule changes provide members of MCC's and MSTC's 
committees, including members of their Risk Assessment Committees,\5\ 
with the same indemnification that previously has been provided only to 
MCC's and MSTC's officers and directors.

    \3\ MCC is incorporated under the laws of the State of Delaware.
    \4\ MSTC is incorporated under the laws of the State of 
Illinois.
    \5\ Under MCC's and MSTC's rules, their Risk Assessment 
Committees have substantial authority. This includes, among other 
things, the authority to determine: (1) whether a participant that 
has failed to make timely payment to MCC or MSTC should continue as 
a participant, (2) whether a participant has been responsible for 
fraudulent or dishonest conduct, and (3) whether a participant poses 
a financial risk to MCC or MSTC.
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II. Discussion

    The Commission believes that the proposals are consistent with the 
Act and particularly with Section 17A of the Act.\6\ Section 
17A(b)(3)(H) of the Act \7\ requires that the rules of a clearing 
agency provide fair disciplinary procedures with respect to the 
disciplining of participants, the denial of participation, and the 
prohibition or limitation by the clearing agency of any person 
regarding access to its services. Under the rules of MCC and MSTC, much 
of the determinations involved in such decisions has been delegated to 
committees, especially to the two Risk Management Committees.

    \6\ 15 U.S.C. Sec. 78q-1 (1988).
    \7\ 15 U.S.C. Sec. 78q-1(b)(3)(H) (1988).
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    The Commission believes that by affording appropriate protections 
to committee members, MCC and MSTC will remove impediments to 
attracting competent persons to serve on their committees, including 
the two Risk Assessment Committees. Accordingly, the Commission 
believes that these rule changes will, among other things, help MCC and 
MSTC to provide fair procedures, as required under the Act, with 
respect to the disciplining of their participants, the denial of 
participation to persons seeking participation in MCC or MSTC, and the 
prohibition or limitation of services to persons seeking access to MCC 
or MSTC.

III. Conclusion

    For the reasons discussed above, the Commission believes that the 
proposals are consistent with the requirements of the Act, and 
particularly with Section 17A of the Act and the rules and regulations 
thereunder.
    It Is Therefore Ordered, pursuant to Section 19(b)(2) of the 
Act,\8\ that the 

[[Page 42204]]
above-mentioned proposed rule changes (File Nos. SR-MCC-95-01 and SR-
MSTC-95-04) be, and hereby are, approved.

    \8\ 15 U.S.C. Sec. 78s(b)(2) (1988).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\9\

    \9\ 17 CFR 200.30-3(a)(12) (1994).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 95-20154 Filed 8-14-95; 8:45 am]
BILLING CODE 8010-01-M