[Federal Register Volume 62, Number 35 (Friday, February 21, 1997)]
[Notices]
[Pages 8074-8075]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-4238]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-38282; File No. SR-SCCP-96-06]
Self-Regulatory Organizations; Stock Clearing Corporation of
Philadelphia; Notice of Filing and Order Granting Accelerated Approval
of a Proposed Rule Change To Amend and Clarify Same-Day Funds
Settlement Procedures
February 13, 1997.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ notice is hereby given that on August 6, 1996, the Stock
Clearing Corporation of Philadelphia (``SCCP'') filed with the
Securities and Exchange Commission (``Commission'') the proposed rule
change (File No. SR-SCCP-96-06) as described in Items I and II below,
which items have been prepared primarily by SCCP. The Commission is
publishing this notice and order to solicit comments from interested
persons and to grant accelerated approval of the proposed rule change.
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\1\ 15 U.S.C. 78s(b)(1).
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The purpose of the proposed rule change is to amend and clarify
SCCP's same-day funds settlement (``SDFS'') procedures.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for the Proposed Rule Change
In its filing with the Commission, SCCP included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments they received on the proposed rule changes. The
text of these statements may be examined at the places specified in
Item IV below. SCCP has prepared summaries, set forth in
[[Page 8075]]
sections (A), (B), and (C) below, of the most significant aspects of
such statements.\2\
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\2\ The Commission has modified the text of the summaries
submitted by SCCP.
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(A) Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
On February 22, 1996, the Commission granted partial permanent
approval and partial temporary approval of proposed rule changes filed
by SCCP and the Philadelphia Depository Trust Company (``Philadep'') to
establish an SDFS system.\3\ The purpose of the proposed rule change is
to amend and clarify certain SDFS procedures relating to the risk
management controls (i.e., collateral monitor and net debit cap).
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\3\ Securities Exchange Act Release Nos. 36875 (February 22,
1996), 61 FR 7846 File No. SR-SCCP-95-06] and 36876 (February 22,
1996), 61 FR 7841 [SR-Philadep-95-08] (orders granting partial
temporary approval and partial permanent approval of proposed rule
changes to convert to same-day funds settlement systems) (``SDFS
Approval Orders'').
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Pursuant to SCCP's SDFS Approval Order, SCCP provides each
participant with a settlement amount which is an aggregate of the
participant's end-of-the-day net debits and net credits in its SCCP and
Philadep accounts.\4\ Because of this common net settlement feature,
Philadep's SDFS Approval Order sets forth that Philadep's SDFS system
risk management controls would be applied in a limited manner to SCCP's
Continuous Net Settlement (``CNS'') activity. Specifically, SCCP will
not suspend the processing of a participant's CNS activity when the
participant's collateral monitor is negative on its net debit cap is
exceeded.
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\4\ Philadep's collateral monitor and net debit cap analysis
were structured to incorporate this netting of SCCP and Philadep
settlements.
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Pursuant to Philadep's SDFS Approval Order, a participant's
activities at SCCP, such as CNS securities delivered to a SCCP
participant, are included in the participant's Philadep collateral
monitor. Additionally, a participant's net debit cap is determined by a
participant's combined net debit history at Philadep and SCCP, and for
purpose of calculating a participant's net debit settlement, Philadep
includes net CNS settlements.
The purpose of the proposed rule change is to formally restate and
clarify in SCCP's procedures the limited applicability of Philadep SDFS
risk management controls on SCCP participants' activity. The proposed
rule change also provides that all collateral derived from any SCCP CNS
participant contained in Philadep's collateral monitor may be used by
Philadep to address any settlement default by such joint participant.
Collateral derived from a SCCP CNS participant generally includes the
participant's SCCP participants fund contribution and CNS securities
received.
Furthermore, SCCP authorizes Philadep to utilize any collateral
derived from a defaulting SCCP/Philadep participant to address a
default in accordance with Philadep Rule 4(a) and any subsequent
amendments thereto.
SCCP believes the proposed rule change is consistent with Section
17A of the Act and the rules and regulations thereunder because the
proposal should promote the prompt and accurate clearance and
settlement of securities transactions.
(B) Self-Regulatory Organization's Statement on Burden on Competition
SCCP believes that the proposed rule change will not impose any
burden on competition not permitted by the Act.
(C) Self-Regulatory Organization's Statement on Comments on the
Proposed Rule Change Received From Members, Participants, or Others
Written comments were neither solicited nor received with respect
to the proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Section 17A(b)(3)(F) of the Act \5\ 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. The Commission believes hat SCCP's
proposed rule change clarifying certain SDFS procedures are consistent
with such obligations because the proposal should provide participants
with some certainty with respect to SCCP's application of SDFS risk
management controls to CNS activity.
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\5\ 15 U.S.C. 78q-1(b)(3)(F).
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SCCP has requested that the Commission find good cause for
approving the proposed rule change prior to the thirtieth day after the
date of publication of notice of filing. The Commission finds good
cause for approving the proposed rule change prior to the thirtieth day
after the date of publication of notice of filing because the proposal,
which should clarify certain SDFS procedures that are currently being
applied to participants, should become effective as soon as possible.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing. 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.
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 the provisions
of 5 U.S.C. 552, will be available for inspection and copying in the
Commission's Public Reference Room, 450 Fifth Street, N.W., Washington,
D.C. 20549. Copies of such filing will also be available for inspection
and copying at the principal office of SCCP. All submissions should
refer to the file number SR-SCCP-96-06 and should be submitted by March
14, 1997.
It is therefore ordered, pursuant to Section 19(b)(2) of the Act,
that the proposed rule change (File No. SR-SCPP-96-06) be, and hereby
is, approved.
For the Commission by the Division of Market Regulation,
pursuant to delegated authority.\6\
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\6\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 97-4238 Filed 2-20-97; 8:45 am]
BILLING CODE 8010-01-M