[Federal Register Volume 62, Number 248 (Monday, December 29, 1997)]
[Notices]
[Pages 67672-67673]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-33716]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-39448; File No. SR-MBSCC-97-6]


Self-Regulatory Organizations; MBS Clearing Corporation; Notice 
of Filing and Order Granting Accelerated Approval of Proposed Rule 
Change Relating to Trade Restrictions Between Accounts and Transfer of 
Trades

December 15, 1997.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on September 15, 1997, MBS 
Clearing Corporation (``MBSCC'') filed with the Securities and Exchange 
Commission (``Commission'') and on September 24, 1997, amended the 
proposed rule change (File No. SR-MBSCC-97-6) as described in Items I 
and II below, which items have been prepared primarily by MBSCC. The 
Commission is publishing this notice and order to solicit comments from 
interested persons and to grant accelerated approval on 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 proposed rule change will amend MBSCC's rules to incorporate 
previously approved procedures regarding trade restrictions between 
accounts and transfer of trades.

[[Page 67673]]

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, MBSCC 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. MBSCC 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 
prepared by MBSCC.
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(A) Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    MBSCC publishes a manual known as the Clearing Source Book 
(``Source Book''). The Source Book is designed to be a self-
instructional tool for MBSCC participants that offers guidance about 
MBSCC services, procedures, forms, schedules, and regulations. It is 
referred to in the rules of MBSCC as the ``Procedures.''
    In 1996, the Commission approved a proposed rule change to the 
Source Book relating to trade restrictions between accounts.\3\ Upon 
subsequent review, MBSCC realized it inadvertently omitted this Source 
Book section from the rules of MBSCC. The proposed rule change will add 
a new Article II, Section 3 to MBSCC's rules to restrict participants 
with multiple accounts from submitting to the settlement balance order 
(``SBO'') system trades between those accounts as well as between a 
participant's account and the account of a related participant. The SBO 
settlement netting process was not intended for such trades, and the 
implementation of these trading restrictions is designed to help 
prevent MBSCC's clearance and settlement process from being 
inappropriately influenced. However, MBSCC will waive the restrictions 
upon a showing by a participant that its trades will not be effected 
for an improper purpose. In all instance, participants may record these 
trades on a trade-for-trade basis.
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    \3\ Securities and Exchange Act Release No. 37205 (May 13, 
1996), 61 FR 24989 (File No. SR-MBSCC-95-8).
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    To provide participants with operational and administrative 
flexibility, the Source book provides that, subject to contraside 
approval, MBSCC participants may transfer trades from one account to 
another or may change the type of trades recorded within a specific 
account under specified circumstances.\4\ The proposed rule change will 
add Article II, Section 4, to MBSCC's rules to mirror this provision. 
Where participants are parties to an acquisition, merger, or 
reorganization, this process assists participants when they must assume 
obligations or transfer trades. It also aids participants generally in 
facilitating transfers through a uniform and streamlined process as 
compared to a multistep cancellation and rebooking procedure.
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    \4\ Since its inclusion in the October 1992 edition of the 
Source Book, the transfer of trade process has been an unchanged 
component of MBSCC's procedures. Source book Chapter III, Account 
Structure.
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    MBSCC believes that the proposed rule change is consistent with the 
requirements of Section 17A of the Act \5\ and the rules and 
regulations thereunder because it clarifies the rules of MBSCC relating 
to trade restrictions between accounts and transfer of trades and 
thereby should facilitate the prompt and accurate clearance and 
settlement of securities transactions.
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    \5\ 15 U.S.C. 78q-1.
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(B) Self-Regulatory Organization's Statement on Burden on Competition

    MBSCC does not believe that the proposed rule change will impose 
any burden on competition that is not necessary or appropriate in 
furtherance of the purposes of the Act.

(C) Self-Regulatory Organization's Statement on Comments on the 
Proposed Rule Change Received from Members, Participants or Others

    No comments on the proposed rule change were solicited or received. 
MBSCC will notify the Commission of any written comments it receives.

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 be designed to foster cooperation and coordination with 
persons engaged in the clearance and settlement of securities 
transactions. The proposed rule facilitates a uniform and streamlined 
process by clarifying the rules of MBSCC relating to trade restrictions 
and transfer of trades and thus should foster cooperation and 
coordination with persons engaged in the clearance and settlement of 
securities transactions.
    The Commission finds good cause for approving the proposed rule 
change prior to the thirtieth day after the date of publication of 
notice thereof in the Federal Register because the procedures 
incorporated in the proposed rule change were previously approved by 
the Commission, they have no substantive effect on participants, and 
they eliminate inconsistencies between MBSCC's rules and Source Book.

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. Sec. 552, will be available for inspection and copying in 
the Commission's Public Reference Section, 450 Fifth street, N.W., 
Washington, D.C. 20549. Copies of such filing also will be available 
for inspection and copying at the principal office of MBSCC. All 
submissions should refer to File No. SR-MBSCC-97-6 and should be 
submitted by January 20, 1998.

V. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the Act, 
that the proposed rule change (File No. SR-MBSCC-97-6) be and hereby is 
approved on an accelerated basis.

    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. 97-33716 Filed 12-24-97; 8:45 am]
BILLING CODE 8010-01-M