[Federal Register Volume 62, Number 83 (Wednesday, April 30, 1997)]
[Notices]
[Pages 23519-23520]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-11091]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-38540; International Series Release No. 1076; File No. 
SR-ISCC-97-1]


Self-Regulatory Organizations; International Securities Clearing 
Corporation; Notice of Filing and Order Granting Accelerated Approval 
of Proposed Rule Change Regarding the London Stock Exchange Link

April 22, 1997.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on March 21, 1997, the 
International Securities Clearing Corporation (``ISCC'') filed with the 
Securities and Exchange Commission (``Commission'') the proposed rule 
change as described in Items I and II below, which items have been 
prepared primarily by ISCC. The Commission is publishing this notice to 
solicit comments on the proposed rule change from interested

[[Page 23520]]

persons and to grant accelerated approval of the proposed rule change.
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    \1\ 15 U.S.C. 78s(b)(91).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The proposed rule change eliminates ISCC's link with the London 
Stock Exchange (``LSE'').

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.\2\
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    \2\ The Commission has modified the text of the summaries.
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A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    The purpose of the proposed rule change is to permit ISCC to 
eliminate its link with the LSE. In 1986, ISCC and the LSE entered into 
an Interim Linkage Agreement and an Interim Safe Custody Agreement 
pursuant to which ISCC could obtain on behalf of ISCC members 
comparison, settlement, and custody services in the United Kingdom from 
the LSE. At the same time, ISCC filed an application to become 
registered as a clearing agency. While the application was undergoing 
the review process, ISCC by letter dated August 22, 1986,\3\ sought 
advice from the Commission staff that the Division of Market Regulation 
(``Division'') would not recommend enforcement action against ISCC if 
it operated the link with the LSE. On September 10, 1986, the Division 
issued a no-action letter to ISCC.\4\
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    \3\ Letter from Karen Saperstein, Associate General Counsel, 
ISCC, to Jonathan Kallman, Assistant Director, Commission (August 
22, 1986).
    \4\ Letter from Jonathan Kallman, Assistant Director, 
Commission, to Karen Saperstein, Associate General Counsel, ISCC 
(September 10, 1986).
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    Subsequently, ISCC and the LSE renegotiated the linkage agreement 
and by letter dated December 23, 1988,\5\ ISCC once again sought no-
action relief with respect to its link with LSE. The Division issued a 
new no-action letter on March 12, 1990.\6\
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    \5\ Letter from Karen Saperstein, Associate General Counsel, 
ISCC, to Jonathan Kallman, Assistant Director, Commission (December 
23, 1988).
    \6\ Letter from Jonathan Kallman, Assistant Secretary, 
Commission, to Karen Saperstein, Associate General Counsel (March 
12, 1990).
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    ISCC's London link was originally implemented by ISCC to allow U.S. 
broker-dealers to compare and to settle transactions in U.K. equity 
securities with LSE members and other ISCC members. U.S. firms 
participating in ISCC's London link were given access to the LSE's 
TALISMAN (LSE's computerized settlement system) as well as the LSE's 
Checking (comparison) and Institutional Net Settlement (redelivery) 
systems.
    The LSE is currently phasing out its TALISMAN system in order to 
convert to the CREST system. This phase out will be complete on April 
22, 1997. Accordingly, the services to which ISCC's London link 
provides access will no longer exist. Thus, ISCC has filed requesting 
Commission approval of the elimination of the London link.

(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

    Section 17A(b)(3)(F) of the Act requires that the rules of a 
clearing agency must be designed to promote the prompt and accurate 
clearance and settlement of securities transactions.\7\ By 
discontinuing a service that does not provide a useful function, ISCC 
will eliminate an unnecessary drain on its resources. Such resources 
may be used towards other services that provide a more substantial 
benefit to the clearance and settlement process. Thus, the Commission 
believes that ISCC's proposal is consistent with Section 17A(b)(3)(F) 
of the Act.
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    \7\ 15 U.S.C. 78q-1(b)(3)(F).
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    ISCC requests the Commission find good cause for approving the 
proposed rule change prior to the thirtieth day after the date of 
publication of notice of the 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 the filing because LSE will 
terminate TALISMAN as of April 22, 1997, and ISCC's continuance of the 
link will serve no useful function or provide a benefit to its members.

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 provisions of 5 
U.S.C. 552, will be available for inspection and copying in the 
Commission's Public Reference Room in Washington, D.C. Copies of such 
filing will also be available for inspection and copying at ISCC. All 
submissions should refer to the File No. SR-ISCC-97-1 and should be 
submitted by May 21, 1997.

V. Conclusion

    On the basis of the foregoing, the Commission finds that the 
proposed rule change is consistent with the requirements of the Act and 
in particular Section 17A 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 change (File No. SR-ISCC-97-1) be and hereby is 
approved.

    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 97-11091 Filed 4-29-97; 8:45 am]
BILLING CODE 8010-01-M