[Federal Register Volume 63, Number 162 (Friday, August 21, 1998)]
[Notices]
[Pages 44940-44941]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-22479]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-40326; File No. SR-NSCC-98-08]


Self-Regulatory Organizations; National Securities Clearing 
Corporation; Notice of Filing and Order Granting Accelerated Approval 
of a Proposed Rule Change Amending the Securities Clearing Group 
Agreement

August 14, 1998.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on July 6, 1998, the National 
Securities Clearing Corporation (``NSCC'') filed with the Securities 
and Exchange Commission (``Commission'') the proposed rule change as 
described in Items I and II below, which items have been prepared 
primarily by NSCC. The Commission is publishing this notice and order 
to solicit comments from interested persons and to grant accelerated 
approval of the proposal.
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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

    Under the proposed rule change, Emerging Markets Clearing 
Corporation (``EMCC'') and Delta Clearing Corp. (``DCC'') will become 
members of the Securities Clearing Group (``SGC'').

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

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

    NSCC filed the proposed rule change on behalf of the SCG. The SCG 
was formed by seven registered clearing agencies under the terms of an 
agreement dated October 19, 1988 (``Agreement'').\3\ On July 18, 1989, 
the Commission approved the Agreement, which sets forth the purpose of 
the SCG, the method of participation in the SCG, the legal 
considerations relevant to the SCG's goals, and the formation of the 
SCG.\4\
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    \3\ The original members of the SCG were: NSCC, The Depository 
Trust Company, Midwest Clearing Corporation, Midwest Securities 
Trust Company, The Options Clearing Corporation, Philadelphia 
Depository Trust Company, and Stock Clearing Corporation of 
Philadelphia.
    \4\ Securities Exchange Act Release No. 27044 (July 18, 1989) 58 
FR 30963 (July 25, 1989) [File No. SR-NSCC-88-09].
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    The goal of the SCG is to promote coordinated action among its 
members in identifying, addressing, and minimizing the risks and 
problems common to more than one clearing agency. The SCG strives to 
reduce risk posed by common participation by providing a framework in 
which its members share appropriate financial, operational, and 
clearing data of common participants.

[[Page 44941]]

    The SCG believes that allowing EMCC and DCC to become SCG members 
will further the goals of the SCG. Both EMCC and DCC are clearing 
agencies and self-regulatory organizations as defined in sections 
3(a)(23)(A) and 3(a)(26) of the Act.\5\ Both EMCC and DCC have 
participants in common with other SCG members and therefore share 
exposure to those common members. The SCG believes that allowing EMCC 
and DCC to become SCG members will expand the SCG's sources for 
information sharing and will enable the SCG to minimize risks to the 
national system for the clearance and settlement of securities 
transactions.
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    \5\ 15 U.S.C. 78c(a)(23)(A) and 78c(a)(26). EMCC was formed by 
NSCC, the Emerging Markets Traders Association, and the 
International Securities Market Association for the purpose of 
facilitating the clearance and settlement of emerging market debt 
instruments. DCC is a clearing corporation for the clearance and 
settlement of repurchase agreements and over the counter options on 
U.S. government securities.
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    In its order approving the formation of the SCG, the Commission 
noted that a ``nexus'' exists among clearing agencies because of (1) 
common participants, (2) interfaces through which clearing agencies 
offer access to participants in other clearing agencies or access to 
services offered by other clearing agencies; (3) shared operational and 
financial exposure, and (4) common regulatory responsibilities.\6\ The 
SCG believes that the same ``nexus'' of common interests exists between 
the current SCG members and EMCC and DCC.
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    \6\ Securities Exchange Act Release No. 27044, supra note 4.
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    Pursuant to the terms of the Agreement, all of the current SCG 
members voted on May 12, 1998 to allow EMCC and DCC to become members 
of the SCG. Both EMCC and DCC have agreed to abide by the terms of the 
Agreement.
    The SCG believes that allowing EMCC and DCC to become members of 
the SCG is consistent with the requirements of the Act and the rules 
and regulations thereunder because their inclusion should foster 
cooperation and coordination with persons engaged in the clearance and 
settlement of securities transactions.

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

    NSCC does not believe that the proposed rule change will have an 
impact on or impose a burden on competition.

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

    No written comments relating to the proposed rule change have been 
solicited or received. The NSCC will notify the Commission of any 
written comments received by NSCC.

III. Date of Effectiveness of the Proposed Rule Change and Timing 
for Commission Action

    Section 17A(b)(3)(F) of the Act \7\ 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 Commission believes that the proposed rule change is 
consistent with this obligation because the SCG enables its members to 
share appropriate financial, operational, and clearing data with 
respect to common participants. Because among other things, EMCC and 
DCC have common participants, the Commission believes that allowing 
EMCC and DCC to become members of the SCG should enhance cooperation 
and coordination among clearing agencies. Therefore, the Commission 
believes that the proposed rule change is consistent with the Act.
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    \7\ 15 U.S.C. 78q-1(b)(3)(F).
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    The Commission finds good cause for approving the proposed rule 
change prior to the thirtieth day after the publication of notice of 
the filing. Approving prior to the thirtieth day after publication of 
notice should allow the SCG members to begin exchanging information 
about common participants in a more timely fashion. Consequently, SCG 
members should be better equipped to assure the safeguarding of 
securities and funds in their custody and control or for which they are 
responsible and to minimize their financial risks.

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, NW., Washington, DC 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, NW., 
Washington, DC 20549. Copies of such filing also will be available for 
inspection and copying at the principal office of NSCC. All submissions 
should refer to File No. SR-NSCC-98-08 and should be submitted by 
September 11, 1998.
    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\8\ that the proposed rule change (File No. SR-NSCC-98-08) be and 
hereby is approved.

    \8\ 15 U.S.C. 78s(b)(2).
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    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority.\9\
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    \9\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 98-22479 Filed 8-20-98; 8:45 am]
BILLING CODE 8010-01-M