[Federal Register Volume 62, Number 108 (Thursday, June 5, 1997)]
[Notices]
[Pages 30911-30912]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-14691]


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SECURITIES AND EXCHANGE COMMISSION

[Release 34-38698; File No. 600-23]


Self-Regulatory Organizations; Government Securities Clearing 
Corporation; Notice of Filing and Order Approving a Request for 
Extension of Temporary Registration as a Clearing Agency

May 30, 1997.
    Notice is hereby given that on May 8, 1997, the Government 
Securities Clearing Corporation (``GSCC'') filed with the Securities 
Exchange Commission (``Commission'') an application pursuant to Section 
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 and 
order to solicit comments form interested persons and to extend GSCC's 
temporary registration as a clearing agency until February 28, 1998.
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    \1\ 15 U.S.C. 78s(a).
    \2\ Letter from Sal Ricca, President and Chief Operating 
Officer, GSCC (April 11, 1997) (``Registration Letter'').
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    On May 24, 1988, pursuant to Sections 17A(b) and 19(a) of the Act 
\3\ and Rule 17Ab2-1 promulgated thereunder,\4\ the Commission granted 
GSCC registration as a clearing agency on a temporary basis for a 
period of three years.\5\ The Commission subsequently has extended 
GSCC's registration through May 31, 1997.\6\
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    \3\ 15 U.S.C. 78q-1(b) and 78s(a).
    \4\ 17 CFR 240.17Ab2-1.
    \5\ Securities Exchange Act Release No. 25740 (May 24, 1988), 53 
FR 19639.
    \6\ 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; 36508 (November 27, 1995), 60 FR 61719; and 
37983 (November 25, 1996), 61 FR 64183.
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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, 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 allocation procedure and maintains margin to offset 
netting and settlement risks.
    At the time of GSCC's initial temporary registration, the 
Commission granted GSCC an exemption from compliance with the fair 
representation requirements in Section 17A(b)(3)(C) of the Act.\7\ 
GSCC's current selection process for its board of directors permits any 
GSCC member to nominate candidates for election to the board and to 
vote for candidates so nominated.
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    \7\ 15 U.S.C. 78q-1(b)(3)(C). GSCC had also received a temporary 
exemption from the membership requirements contained in Sections 
17A(b)(3)(B) and 17A(b)(4)(B) (15 U.S.C. 78q-1(b)(3)(B) and 78q-
1(b)(4)(B)). Subsequently, the Commission determined that GSCC is in 
compliance with such requirements. Securities Exchange Act Release 
No. 36508 (November 27, 1995), 60 FR 61719.
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    However, the shareholder agreement requires the six directors be 
dealer participants, three directors be broker participants, and three 
directors be clearing agent bank participants.\8\
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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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    As part of GSCC's request for full clearing agency registration, 
GSCC states that it is finalizing a number of changes to its 
Shareholders Agreement and

[[Page 30912]]

Bylaws as a result of GSCC management's review of its nomination and 
election process.\9\ GSCC states that these changes are designed to 
make its nomination and election process more efficient and flexible 
while enhancing the degree of fair representation provided. GSCC 
anticipates distributing these changes to its shareholders for their 
approval and making the requisite rule filings with the Commission 
later this year. Therefore, the Commission will defer its decision on 
whether GSCC meets the fair representation requirement of Section 17A 
and should be granted permanent registration until GSCC submits its new 
selection procedures and the Commission has had an opportunity to 
evaluate them.
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    \9\ Registration Letter, supra note 2.
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    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing application. 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 Act.\10\ Persons making written submissions should file six copies 
thereof with the Secretary, Securities and Exchange Commission, 450 
Fifth Street, NW., Washington, DC 20549. 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, NW., Washington, DC 20549. All submissions should refer to File 
No. 600-23 and should be submitted by June 26, 1997.
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    \10\ 15 U.S.C. 78s(a)(1).
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    It is Therefore Ordered that GSCC's registration as a clearing 
agency (File No. 600-23) be and hereby is temporarily approved through 
February 28, 1998.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\11\
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    \11\ 17 CFR 200.30-3(a)(16).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 97-14691 Filed 6-4-97; 8:45 am]
BILLING CODE 8010-01-M