[Federal Register Volume 61, Number 18 (Friday, January 26, 1996)]
[Notices]
[Pages 2551-2552]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-1274]



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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-36743; File Nos. SR-SCCP-95-04 and SR-Philadep-95-06]


Self-Regulatory Organizations; Stock Clearing Corporation of 
Philadelphia and Philadelphia Depository Trust Company; Order Approving 
Proposed Rule Changes Authorizing the Release of Clearing Data Relating 
to Participants

January 19, 1996.
    On July 7, 1995, the Stock Clearing Corporation of Philadelphia 
(``SCCP'') and the Philadelphia Depository Trust Company (``Philadep'') 
filed with the Securities and Exchange Commission (``Commission'') 
proposed rule changes (File Nos. SR-SCCP-95-04 and SR-Philadep-95-06) 
pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'').\1\ On August 17, 1995, SCCP and Philadep each filed an 
amendment to its proposed rule change to clarify the parties to whom 
SCCP and Philadep will release clearing data and to define the term 
clearing data.\2\ On September 25, 1995, SCCP and Philadep each filed a 
second amendment to its proposed rule change to supersede the prior 
amendments.\3\ On November 16, 1995, SCCP and Philadep each filed a 
third amendment to its proposed rule change to make certain technical 
corrections.\4\ Notice of the proposals as amended was published in the 
Federal Register on November 29, 1995.\5\ No comment letters were 
received. For the reasons discussed below, the Commission is approving 
the proposed rule changes.

    \1\ 15 U.S.C. 78s(b)(1) (1988).
    \2\ Letters from Sharon S. Metzker, Staff Counsel, SCCP and 
Philadep, to Peter R. Geraghty, Senior Counsel, Division of Market 
Regulation (``Division''), Commission (August 15, 1995).
    \3\ Letter from Sharon S. Metzker, Staff Counsel, SCCP and 
Philadep, to Peter R. Geraghty, Senior Counsel, Division, Commission 
(September 22, 1995).
    \4\ Letter from Sharon S. Metzker, Staff Counsel, SCCP and 
Philadep, to Christopher Concannon, Division, Commission (November 
10, 1995).
    \5\ Securities Exchange Act Release No. 36506 (November 22, 
1995), 60 FR 61281.
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I. Description of the Proposal

    The purpose of the respective proposed rule changes is to modify 
SCCP Rule 28 and to add Rule 32 to Philadep's rules to authorize SCCP 
and Philadep to release data relating to their respective participants' 
clearance and settlement activities to authorized parties for risk 
monitoring and regulatory purposes. SCCP and Philadep receive 
transaction data and other data relating to their participants in the 
normal course of business. The rule changes set forth SCCP's and 
Philadep's obligations to preserve their participants' rights with 
respect to such data and the conditions under which SCCP and Philadep 
will disclose such data.
    The rules will permit SCCP and Philadep to disclose such data to 
regulatory organizations, self-regulatory organizations, clearing 
organizations affiliated with or designated by contract markets trading 
specific futures products under the oversight of the Commodity Futures 
Trading Commission, and others under certain conditions. The rule 
changes generally provide that the release of a participant's clearing 
data shall be conditioned upon either the submission of a written 
request or the execution of a written agreement.\6\ The rules also 
define ``clearing data'' to mean transaction and other data which is 
received by SCCP and Philadep in the clearance and/or settlement 
process or such data, reports, or summaries which may be produced as a 
result of processing such data.

    \6\ As self-regulatory organizations, SCCP and Philadep are 
authorized to cooperate and share data with other regulatory or 
self-regulatory organizations for regulatory purposes.
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    The rule changes also will facilitate SCCP's and Philadep's 
participation in the National Securities Clearing Corporation's 
(``NSCC'') Collateral Management Service (``CMS'').\7\ The 

[[Page 2552]]
proposals will enable SCCP and Philadep to provide information 
regarding their respective participants funds, including excess or 
deficit amounts, and to provide comprehensive data on underlying 
collateral to NSCC for inclusion in the CMS. Participants of SCCP or 
Philadep that desire access to the CMS data will be required to execute 
a CMS participation application.

    \7\ Generally, the CMS will provide participating participants 
and clearing agencies with access to information regarding clearing 
fund, margin, and other similar requirements and deposits. For a 
complete description of the CMS, refer to Securities Exchange Act 
Release No. 36091 (August 5, 1995), 60 FR 30912 [File No. SR-NSCC-
95-06] (order approving the CMS).
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II. Discussion

    Section 17A(b)(3)(F) of the Act requires that the rules of a 
clearing agency be designed to assure the safeguarding of securities 
and funds which are in the custody or control of the clearing agency or 
for which it is responsible.\8\ The Commission believes the proposed 
rule changes are consistent with SCCP's and Philadep's obligations 
under Section 17A(b)(3)(F) because the proposals set forth SCCP's and 
Philadep's responsibilities and obligations with regard to the release 
of participants' clearing data and facilitate SCCP's, Philadep's, and 
their participants' participation in NSCC's CMS by enabling SCCP and 
Philadep to provide information regarding their participants to NSCC 
for the CMS. The participation of SCCP, Philadep, and their 
participants in NSCC's CMS should help SCCP, Philadep and other 
clearing agencies to better monitor clearing fund, margin,and other 
similar required deposits that protect clearing agencies against loss 
should a member default on its obligations to the clearing agency.\9\

    \8\ 15 U.S.C. 78q-1(b)(3)(F) (1988).
    \9\ NSCC's CMS will be especially beneficial to those 
participating clearing entities that have executed cross-guaranty 
agreements or have other cross-guarantee arrangements. Currently, 
SCCP and Philadep have a cross-guarantee arrangement between 
themselves but not between themselves and other clearing entities. 
The Commission supports the use of cross-guaranty agreements and 
other similar arrangements among clearing agencies as a method of 
reducing clearing agencies' risk of loss due to a common 
participant's default and encourages SCCP and Philadep to explore 
such agreements or arrangements with other clearing entities.
    Generally, a cross-guaranty agreement, as the one between The 
Depository Trust Company (``DTC'') and NSCC, provides that in the 
event of a default of a common member, any resources remaining after 
the failed common member's obligations to the guaranteeing clearing 
agency have been satisfied will be made available to the other 
clearing agency. The guaranty is not absolute but rather is limited 
to the extent of the resources relative to the failed member 
remaining at the guaranteeing clearing agency. The principal 
resources will be the failed member's settlement net credit balances 
and deposits to the clearing agencies' clearing funds. For a 
complete description of DTC's and NSCC's agreement, refer to 
Securities Exchange Act Release No. 33548 (January 31, 1994), 59 FR 
5638 [File Nos. SR-DTC-93-08 and SR-NSCC-93-07].
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III. Conclusion

    On the basis of the foregoing, the Commission finds that the 
proposals are consistent with the requirements of Section 17A(b)(3)(F) 
of the Act and the rules and regulations thereunder.
    It is therefore ordered, pursuant to Section 19(b)(2) of the Act, 
that the proposed rule changes (File Nos. SR-SCCP-95-04 and SR-
Philadep-95-06) be, and hereby are, approved.

    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority.\10\

    \10\ 17 CFR 200.30-3(a)(12) (1994).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 96-1274 Filed 1-25-96; 8:45 am]
BILLING CODE 8010-01-M