[Federal Register Volume 61, Number 208 (Friday, October 25, 1996)]
[Notices]
[Pages 55341-55342]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-27435]
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SECURITIES AND EXCHANGE COMMISSION
[Release 34-37844; File No. 600-23]
Self-Regulatory Organizations; Government Securities Clearing
Corporation; Notice of Filing of an Application for Clearing Agency
Registration
October 21, 1996.
Notice is hereby given that on October 7, 1996, 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\ The
Commission is publishing this notice to solicit comments from
interested persons.
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\1\ 15 U.S.C. 78q-1, 78s(a) (1988).
\2\ Letter from Sal Ricca, President and Chief Operating
Officer, GSCC, to Richard Lindsey, Director, Division of Market
Regulation, Commission (October 2, 1996) (``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) promulgated thereunder \3\ the
application of GSCC for registration as a clearing agency for a period
of three years.\4\ The Commission subsequently has extended GSCC's
registration until November 30, 1996.\5\
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\3\ 17 CFR 240.17Ab2-1 (1996).
\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; 32385 (June 3, 1993), 58 FR 32405; 35787 (May 31,
1995), 60 FR 30324; and 36508 (November 27, 1995), 60 FR 61719.
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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, repurchase transactions (``repos''), 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 procedure and maintains margin to
offset netting and settlement risks.
GSCC believes that its efforts to enhance its system's safety and
capacity argue in favor of permanent approval. For example, GSCC
recently amended its rules (1) to enable GSCC to enter into one or more
limited cross guarantee agreements \6\ and (2) to allow GSCC's
interdealer broker netting members to become eligible for GSCC's repo
netting service.\7\ In addition, GSCC represents that it and the Board
of Trade Clearing Corporation have made progress toward establishing a
cross-margining arrangement for the benefit of market participants that
are active in both the cash and futures government markets. GSCC also
represents that it is working with The Options Clearing Corporation to
establish a link with the Intermarket Clearing Corporation for the
settlement of certain new treasury futures products that will be
offered by a futures exchange owned by the American Stock Exchange.
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\6\ Securities Exchange Act Release No. 37413 (July 9, 1996), 61
FR 36945.
\7\ Securities Exchange Act Release No. 37482 (July 25, 1996),
61 FR 40275.
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At the time of GSCC's initial registration, the Commission granted
GSCC exemptions from the fair representation requirements in Section
17A(b)(3)(C) of the Act.\8\ In its Registration Letter, GSCC has
requested that the Commission withdraw GSCC's exemption from the fair
representation requirements in Section 17A(b)(3)(C). GSCC believes that
its current selection process for its board of directors is equitable
and assures members fair representation because any GSCC member may
nominate candidates for election to GSCC's board and may vote for
candidates so nominated. The Commission is reviewing GSCC's request to
withdraw the exemption.
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\8\ In its order granting GSCC its initial temporary approval,
the Commission stated that while the composition of GSCC's Board of
Directors reasonably reflected GSCC's anticipated initial
membership, the Commission believed that it would be appropriate to
defer to a later date its determination of whether GSCC's process
for selecting its Board of Directors assures participants fair
representation. This decision was based on the fact that GSCC
planned on expanding its services during the temporary registration
period and on the uncertainty with regards to GSCC's future
participant base.
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Interested persons are invited to submit written data, views, and
arguments concerning the foregoing application by November 15, 1996.
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
[[Page 55342]]
Act.\9\ Persons making written submissions should file six copies
thereof with the Secretary, Securities and Exchange Commission, 450
Fifth Street, N.W., Washington, D.C. 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 Reference Room, 450 Fifth Street, N.W., Washington,
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D.C. 20549.
\9\ 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.\10\
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\10\ 17 CFR 200.30-3(a)(16) (1996).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 96-27435 Filed 10-24-96; 8:45 am]
BILLING CODE 8010-01-M