[Federal Register Volume 63, Number 25 (Friday, February 6, 1998)]
[Notices]
[Pages 6250-6251]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-3011]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-39609; File No. SR-SCCP-97-06]


Self-Regulatory Organizations; Stock Clearing Corporation of 
Philadelphia; Notice of Filing and Order Granting Accelerated Approval 
of a Proposed Rule Change Regarding Certain Corporate Governing Changes

February 2, 1998.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on December 22, 1997, the 
Stock Clearing Corporation of Philadelphia (``SCCP'') filed with the 
Securities and Exchange Commission (``Commission'') the proposed rule 
change as described in Items I and II below, which items have been 
primarily prepared by SCCP. The Commission is publishing this notice 
and order to solicit comments on the proposed rule change from 
interested parties and to grant accelerated approval of the proposed 
rule change.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The proposed rule change involves amendments to SCCP's by-laws to 
reflect its current restructured securities clearing business and to 
streamline its board of directors and committee structures.\2\ More 
specifically, the proposed rule change involves amendments to SCCP's 
by-laws to require that nonparticipant directors compose at least fifty 
percent of the director positions on the board of directors.\3\
---------------------------------------------------------------------------

    \2\ Securities Exchange Act Release No. 39444 (December 11, 
1997), 62 FR 66703, (File Nos. SR-Philadep-97-04 and SR-SCCP-97-04) 
(order approving a proposed rule change relating to a decision by 
the Philadelphia Stock Exchange, Incorporated to withdraw from the 
securities depository business and to restructure and limit its 
clearance and settlement business).
    \3\ Pursuant to the Commission's administrative proceedings 
order entered against SCCP, SCCP is required to amend its by-laws to 
require that nonparticipant directors fill fifty percent of SCCP's 
board of directors. In the Matter of Stock Clearing Corporation of 
Philadelphia and Philadelphia Depository Trust Company, Respondents, 
Order Instituting Proceedings Pursuant to Sections 19(h) and 21C of 
the Securities Exchange Act of 1934, Making Findings and Imposing 
Remedial Sanctions, Administrative Proceeding File No. 3-9360, 
Securities Exchange Act Release No. 38918 (August 11, 1997).

---------------------------------------------------------------------------

[[Page 6251]]

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 the basis for the proposed rule change 
and discussed any comments that it received on the proposed rule 
change. The text of these statements may be examined at the places 
specified in Item IV below. SCCP has prepared summaries, as set forth 
in sections (A), (B), and (C) below, of the most significant aspects of 
such statements.\4\
---------------------------------------------------------------------------

    \4\ The Commission has modified the text of the summaries 
prepared by SCCP.
---------------------------------------------------------------------------

(A) Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    The proposed rule amends SCCP's by-laws in order to reflect its 
restructured securities clearing business and to streamline its board 
of directors and committee structures.\5\ In addition, the proposed 
rule change amends Article IV of SCCP's by-laws to require that 
nonparticipant directors compose at least fifty percent of the director 
positions on the board of directors. The by-laws now define 
nonparticipants as (a) Persons who are not officers, directors, or 
employees of participants and persons who have not been employed in any 
such capacity at any time within the prior three years and (b) persons 
who (i) Do not have a consulting nor employment relationship with the 
Philadelphia Stock Exchange, Incorporated (``PHLX''), SCCP, or 
Philadelphia Depository Trust Company (``Philadep''), (ii) do not 
provide professional services to PHLX, SCCP, or Philadep, and (iii) 
have not had any such relationship nor have provided any such services 
at any time within the prior three years. The proposed rule change also 
reduces the number of directors that may serve at one time from not 
less than fifteen or more than seventeen to not less than five or more 
than nine.
---------------------------------------------------------------------------

    \5\ These changes: (a) require SCCP to call a special meeting of 
shareholders if the by-laws regarding composition of the board are 
to be amended, (b) limit the nominating committee to three persons 
selected by the chairman of the board, (c) allow the chairman, 
instead of the president, to call special meetings of shareholders 
and of the board, and (d) reduce the number of board committees to 
an audit committee, a finance committee, a nominating committee, and 
an operations committee.
---------------------------------------------------------------------------

    SCCP believes the proposed rule change is consistent with Section 
17A(b)(3)(F) \6\ of the Act because the amendments to its by-laws 
reflect its restructured securities clearing business. In particular, 
SCCP believes that the proposed governance changes, such as the change 
in the composition of its board of directors, will help protect 
investors and the public interest.
---------------------------------------------------------------------------

    \6\ 15 U.S.C. 78q-1(b)(3)(F).
---------------------------------------------------------------------------

(B) Self-Regulatory Organization's Statement on Burden on Competition

    SCCP believes that the proposed rule change will not impose a 
burden on competition not contemplated under 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) \7\ of the Act 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 and to protect investors and the public 
interest. The Commission believes that the change in the composition of 
SCCP's board of directors should help SCCP to better safeguard 
securities and funds and to better protect investors and the public 
interest. The requirement that nonparticipant directors compose at 
least fifty percent of the director positions on the board of directors 
will provide a more diverse governance structure for SCCP. If carefully 
selected, nonparticipant directors should bring diverse experience to 
the board and thus enable SCCP to better perform its self-regulatory 
obligations. In addition, the Commission believes that the changes SCCP 
is making in connection with its current restructured securities 
clearing business are being made in a manner that is consistent with 
SCCP's obligations under Section 17A of the Act.
---------------------------------------------------------------------------

    \7\ 15 U.S.C. 78q-1(b)(3)(F).
---------------------------------------------------------------------------

    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 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 filing because accelerated 
approval will allow SCCP to institute reforms called for in the 
settlement of its administrative proceedings in an expedient fashion.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. 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 Section, 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 No. SR-SCCP-97-06 and should be 
submitted by February 27, 1998.
    It is therefore ordered, pursuant to Section 19(b)(2) of the Act, 
that the proposed rule change (File No. SR-SCCP-97-06) be and hereby is 
approved on an accelerated basis.

    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority.\8\
---------------------------------------------------------------------------

    \8\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 98-3011 Filed 2-5-98; 8:45 am]
BILLING CODE 8010-01-M