[Federal Register Volume 63, Number 42 (Wednesday, March 4, 1998)]
[Notices]
[Pages 10669-10670]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-5550]


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SECURITIES AND EXCHANGE COMMISSION

[Release 34-39700; International Series Release No. 1122; File No. 600-
20]


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

February 26, 1998.
    Notice is hereby given that on January 7, 1998, the International 
Securities Clearing Corporation (``ISCC'') filed with the Securities 
and Exchange Commission (``Commission'') an application pursuant to 
Section 19(a) of the Securities Exchange Act of 1934 (``Act'') \1\ to 
extend ISCC's temporary registration as a clearing agency.\2\ The 
Commission is publishing this notice and order to solicit comments from 
interested persons and to extend ISCC's temporary registration as a 
clearing agency through February 28, 1999.
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    \1\ 15 U.S.C. 78s(a).
    \2\ Letter from Julie Beyers, Associate Counsel, ISCC (January 
6, 1998) (``Registration Letter'').
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    On May 12, 1989, the Commission granted, pursuant to Sections 17A 
and 19(a) of the Act \3\ and Rule 17Ab2-1(c) thereunder,\4\ the 
application of ISCC for registration as a clearing agency on a 
temporary basis for a period of eighteen months.\5\ Since that time, 
the Commission has extended ISCC's temporary registration through 
February 28, 1998.\6\
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    \3\ 15 U.S.C. 78q-1 and 78s(a).
    \4\ 17 CFR 17Ab2-1(c).
    \5\ Securities Exchange Act Release No. 26812 (May 12, 1989), 54 
FR 21691.
    \6\ Securities Exchange Act Release Nos. 28606 (November 16, 
1990), 55 FR 47976; 30005 (November 27, 1991), 56 FR 63747; 33233 
(November 22, 1993), 58 FR 63195; 36529 (November 29, 1995), 60 FR 
62511; 37986 (November 25, 1996), 61 FR 64184; and 38703 (May 30, 
1997), 62 FR 31183.
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    One of the primary reasons for ISCC's registration as a clearing 
agency was to enable it to provide for the safe and efficient clearance 
and settlement of international securities transactions by providing 
links between centralized, efficient processing systems in the United 
States and foreign financial institutions. ISCC serves this function 
through its Global Clearance Network service and through its settlement 
links with foreign clearing entities such as the Euroclear system, 
which is operated by the Brussels Office of Morgan Guaranty Trust 
Company of New York (``Euroclear'').\7\
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    \7\ Securities Exchange Act Release Nos. 29841 (October 18, 
1991), 56 FR 55960 (order approving ISCC's Global Clearance Network 
service) and 32564 (June 30, 1993), 58 FR 36722 (order approving 
linkage with Euroclear).
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    As a part of ISCC's temporary registration, the Commission granted 
ISCC a temporary exemption from compliance with Section 17A(b)(3)(C) of 
the Act,\8\ which requires that the rules of a clearing agency assure 
the fair representation of its shareholders or members and participants 
in the selection of its directors and administration of its affairs. 
The Commission granted this temporary exemption due to ISCC's limited 
participant base at that time. The Commission recently approved ISCC's 
new structure for matters relating to its corporate governance.\9\ As a 
result of these changes, ISCC's board now consists of seven directors. 
Of the seven directors, NSCC selects two directors, both for one year 
terms. The other five directors (``participant directors'') are divided 
into three classes with staggered three year terms.
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    \8\ 15 U.S.C. 78q-1(b)(3)(C).
    \9\ Securities Exchange Act Release No. 38846 (July 17, 1997), 
62 FR 39562.
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    ISCC's nominating committee selects candidates for all vacancies on 
the nominating committee and for participant directors. Participants 
have the right to nominate candidates for the nominating committee and 
for participant directors through a petition signed by the lesser of 5% 
of all participants or fifteen participants. If a participant petition 
is filed or if the board nominates additional candidates to the 
nominating committee, the participants select the person to fill that 
vacancy.
    In the order approving ISCC's governance changes, the Commission 
stated that ISCC's procedures for election of directors were consistent 
with its obligations to provide fair representation to its 
participants. Therefore, the Commission is eliminating ISCC's exemption 
from Section 17A(b)(3)(C) of the Act. The Commission believes that 
several issues need to be resolved prior to ISCC 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 ISCC's temporary 
registration should be extended for an additional twelve months.\10\
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    \10\ The Commission expects to continue to process ISCC's 
request for permanent registration during this temporary 
registration period.
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    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing application, including whether such 
application is consistent with the Act. 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.\11\ 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 application and all written 
comments will be available for inspection and copying at the 
Commission's Public Reference Room,

[[Page 10670]]

450 Fifth Street, N.W., Washington, D.C. 20549. All submissions should 
refer to the File No. 600-20 and should be submitted by April 3, 1998.
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    \11\ 15 U.S.C. 78s(a)(1).
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    It is Therefore ordered, pursuant to Section 19(a) of the Act, that 
ISCC's registration as a clearing agency (File No. 600-20) be and 
hereby is temporarily approved through February 28, 1999.

    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority.\12\
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    \12\ 17 CFR 200.30-3(a)(16).
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[FR Doc. 98-5550 Filed 3-3-98; 8:45 am]
BILLING CODE 8010-01-M