[Federal Register Volume 63, Number 40 (Monday, March 2, 1998)]
[Notices]
[Page 10253]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-5255]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-39696; File No. 600-23]


Self-Regulatory Organizations; Government Securities Clearing 
Corporation; Order Approving Application for Extension of Temporary 
Registration as a Clearing Agency

February 24, 1998.
    Pursuant to Sections 17A and 19(a) of the Securities Exchange Act 
of 1934 (``Act''),\1\ on October 2, 1997, the Government Securities 
Clearing Corporation (``GSCC'') filed with the Securities and Exchange 
Commission (``Commission'') an application 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\ Notice of GSCC's request for permanent registration or 
for extension of temporary registration appeared in the Federal 
Register on January 15, 1998.\3\ No comments were received. This order 
extends GSCC's registration as a clearing agency until February 28, 
1999.
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    \1\ 15 U.S.C. 78q-1, 78s(a).
    \2\ Letter from Sal Ricca, President and Chief Operating 
Officer, GSCC (September 25, 1997).
    \3\ Securities Exchange Act Release No. 39526 (January 8, 1998), 
63 FR 2435.
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    On May 24, 1988, the Commission approved pursuant to Sections 17A 
and 19(a) of the Act and Rule 17Ab2-1(c) promulgated thereunder \4\ the 
application of GSCC for registration as a clearing agency for a period 
of three years.\5\ The Commission subsequently has extended GSCC's 
registration until February 28, 1998.\6\
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    \4\ 17 CFR 240.17Ab2-1(c).
    \5\ Securities Exchange Act Release No. 25740 (May 24, 1988), 53 
FR 19839.
    \6\ Securities Exchange Act Release Nos. 29067 (April 22, 1991), 
56 FR 14542; 32385 (June 3, 1993), 58 FR 32405; 35787 (May 31, 
1995), 60 FR 30324; 36508 (November 27, 1995), 60 FR 61719; 37983 
(November 25, 1996), 61 FR 64183; and 39698 (May 30, 1997), 62 FR 
30911.
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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, and repurchase agreement transactions. 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 registration, the Commission granted 
GSCC exemptions from the financial responsibility and operational 
capability standards of Sections 17A(b)(3)(B) and 17A(b)(4)(B) of the 
Act and from the fair representation requirements of Section 
17A(b)(3)(C) of the Act.\7\ The Commission has since determined that 
GSCC is in compliance with these sections and has eliminated the 
exemption.\8\ In the order initially granting GSCC temporary 
registration, the Commission also discussed the need for GSCC to amend 
its standard of care with respect to functions affecting the settlement 
of government securities.
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    \7\ 15 U.S.C. 78q-1(b)(3)(B), 78q-1(b)(4)(B), and 78q-
1(b)(3)(C).
    \8\ Securities Exchange Act Release Nos. 36508 (November 27, 
1995), 60 FR 61719 (order extending registration as a clearing 
agency) and 39372 (November 28, 1997), 62 FR 64415 (order approving 
GSCC's procedures for election of directors).
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    The Commission believes that several issues need to be resolved 
prior to GSCC obtaining permanent registration. In particular, the 
Commission is reviewing the appropriate standard(s) of liability of a 
clearing agency to its members. Therefore, the Commission believes that 
GSCC's temporary registration should be extended for an additional 
twelve months.\9\
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    \9\ The Commission expects to continue to process GSCC's request 
for permanent registration during this temporary registration 
period.
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    It is therefore ordered that GSCC's temporary registration as a 
clearing agency be and hereby is extended through February 28, 1999.

    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority.\10\
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    \10\ 17 CFR 200.30-3(a)(50)(i).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 98-5255 Filed 2-27-98; 8:45 am]
BILLING CODE 8010-01-M