[Federal Register Volume 60, Number 248 (Wednesday, December 27, 1995)]
[Notices]
[Pages 67003-67005]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-31309]



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[[Page 67004]]


SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-36605; International Series Release No. 904; File No. 
SR-ISCC-95-5]


Self-Regulatory Organizations; International Securities Clearing 
Corporation; Notice of Filing of Proposed Rule Change Relating to 
Global Clearance Network Service

December 20, 1995.
    Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on November 22, 1995, the 
International Securities Clearing Corporation (``ISCC'') 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 primarily by ISCC. On November 29, 1995, and on November 
30, 1995, ISCC filed amendments to its proposed rule change.\2\ 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).
    \2\ Letters from Julie Beyers, Associate Counsel, ISCC, to 
Christine Sibille, Division of Market Regulation, Commission 
(November 28, 1995 and November 30, 1995).
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1. Self-Regulatory Organization's Statement of the Terms of 
Substance of the Proposed Rule Change

    The proposed rule change is to accommodate an additional service 
provider in ISCC's Global Clearance Network (``GCN'') service.

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

    In its filing with the Commission, ISCC 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. ISCC has prepared summaries, set forth in sections (A), 
(B), and (C) below, of the most significant aspects of such 
statements.\3\

    \3\ The Commission has modified parts of these statements.
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(A) Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    ISCC's Rule 50 provides that ISCC may establish a foreign 
clearance, settlement, and custody service known as the Global 
Clearance Network (``GCN'') in conjunction with banks, trust companies, 
and other entities. Presently, ISCC has established GCN relationships 
with Citibank, N.A., Standard Bank of South Africa, Westpac Custodian 
Nominees Limited of Australia, and Westpac Nominees-NZ-Limited.\4\ The 
proposed rule change will accommodate S.D. INDEVAL, S.A. de C.V. 
(``INDEVAL'') as an additional GCN service provider.

    \4\ Securities Exchange Act Release Nos. 29841 (October 18, 
1991), 56 FR 55960; 35392 (February 16, 1995), 60 FR 10415; and 
36339 (October 5, 1995), 60 FR 53447.
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    ISCC in conjunction with the International Operations Association 
(``IOA) \5\ has developed a cross-border communications link to INDEVAL 
using the telecommunication system provided by the Society for 
Worldwide Interbank Financial Telecommunications S.C. (``SWIFT''). 
INDEVAL was created under Mexican securities law in 1978 and has been 
privately owned since 1987.\6\ INDEVAL is regulated by the Government 
of Mexico. INDEVAL provides clearance, settlement, and custodial 
services for all transactions executed on the Mexican Stock Exchange 
and for transactions in other securities that are publicly traded in 
Mexico. INDEVAL accepts any security publicly offered in Mexico for 
custody and clearing except for certain Mexican government 
securities.\7\ As of December 31, 1994, 415 institutions were 
registered with INDEVAL, and the value of assets under custody was 
744.2 billion Mexican pesos. INDEVAL may act as an eligible foreign 
custodian under Rule 17f-5 under the Investment Company Act of 1940.\8\

    \5\ IOA was established in 1980 to promote and facilitate the 
development of cross-border investment activities. IOA is a division 
of the Securities Industry Association and has membership of 
approximately 800 internationally active broker-dealers, banks, 
custodians, clearing organizations, and other service providers.
    \6\ Its shareholders are brokerage houses, banks, insurance 
companies, Banco de Mexico (the central bank of Mexico), and the 
Mexican Stock Exchange.
    \7\ Starting in April 1994, Banco de Mexico authorized INDEVAL 
to offer custodial and transfer services for government debt 
securities to foreign direct account depositors by means of a link 
between Banco de Mexico and INDEVAL.
    \8\ Letter from Richard F. Jackson, Division of Investment 
Management, Commission, File No. 132-3 (October 19, 1990). An 
``eligible foreign custodian'' includes a securities depository or 
clearing agency which is incorporated or organized under the laws of 
a country other than the United States and which operates the 
central system for handling of securities or equivalent book-entries 
in that country. 17 CFR 270.17f-5(c)(2)(iii) (1994).
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    INDEVAL has entered into an agreement with ISCC pursuant to which 
INDEVAL has agreed to provide access to its clearance, settlement, and 
custody services to GCN participants that qualify to be customers of 
INDEVAL.\9\ The link permits ISCC members that also are members of 
INDEVAL to send instructions through ISCC to INDEVAL regarding such 
participants' INDEVAL accounts. The link does not provide a mechanism 
for transferring securities or funds into or out of the United States. 
INDEVAL is providing the services at its scheduled rates and is 
responsible for collecting fees directly from the participants. The 
agreement is terminable on ninety days prior notice. However, if ISCC 
notifies INDEVAL within such ninety day period that it has not been 
able to make arrangements with an alternative service provider, the 
agreement terminates thirty days after the expiration of such ninety 
day period.

    \9\ Such agreement is governed by the laws of the United Mexican 
States.
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    The proposed rule change will facilitate and centralize the 
processing of international transactions at a beneficial cost to 
members which ultimately will be reflected in services to the investing 
public. Accordingly, these changes are 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

    ISCC does not believe that the proposed rule change will have an 
impact on 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

    No written comments relating to the proposed rule change have been 
solicited or received. ISCC will notify the Commission of any written 
comments received by ISCC.

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 published 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 approved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing. 

[[Page 67005]]
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 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 the above-mentioned self-regulatory organization. 
All submissions should refer to the file number SR-ISCC-95-05 and 
should be submitted by January 17, 1995.

    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 95-31309 Filed 12-26-95; 8:45 am]
BILLING CODE 8010-01-M