[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