[Federal Register Volume 63, Number 182 (Monday, September 21, 1998)]
[Notices]
[Pages 50271-50272]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-25133]



[[Page 50271]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-40433; File No. SR-EMCC-98-08]


Self-Regulatory Organizations; Emerging Markets Clearing 
Corporation; Notice of Filing of a Proposed Rule Change Relating to the 
Offering of Shares of Common Stock

September 11, 1998.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on August 17, 1998, Emerging 
Markets Clearing Corporation (``EMCC'') filed with the Securities and 
Exchange Commission (``Commission'') the proposed rule change as 
described in Items I, II, and III below, which items have been prepared 
primarily by EMCC. The Commission is publishing this notice to solicit 
comments from interested persons 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

    Under the proposed rule change, EMCC will reclassify 2,000 shares 
of previously authorized EMCC common stock as Class A common stock 
(``Class A stock'') and will create a second class of common stock. In 
addition, EMCC will amend its shareholder agreement to reflect the 
changes to its common stock.

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

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

    On March 2, 1998, the Commission authorized EMCC to issue 2,000 
shares of common stock (``original stock'').\3\ On July 31, 1998, EMCC 
filed an amendment to its certificate of incorporation to reclassify 
the original stock as Class A stock and to authorize the issuance of 
non-voting Class B stock. The creation and offering of the Class B 
stock will permit EMCC to raise additional capital which EMCC will use 
in part to fund the development of EMCC projects.
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    \3\ Securities Exchange Act Release No. 39694 (March 2, 1998), 
63 FR 10251 [File No. SR-EMCC-98-01].
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    EMCC will offer shares of Class B stock to the same entities that 
were offered the opportunity to purchase the original stock.\4\ The 
purchase price of Class B stock is $1,000 per share with a minimum 
purchase requirement of $25,000. EMCC will offer the Class B shares to 
prospective buyers through an offering letter.\5\
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    \4\ The original stock was offered to the entities that 
contributed to the development fund for the organization and initial 
operation of EMCC.
    \5\ Each prospective purchase of the original stock was provided 
with a copy of EMCC's Form CA-1 (excluding the confidential 
documents). EMCC will provide the prospective purchasers of the 
Class B stock with updates to the Form CA-1 as appropriate.
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    The Class B stock is non-voting and is subject to repurchase upon 
the determination of EMCC's Board. However, EMCC has no obligation to 
repurchase Class B shares owned by a member that terminates its EMCC 
membership prior to the repurchase of all Class B shares. All 
purchasers of Class A and Class B stock will be required to enter into 
an amended version of EMCC's shareholder agreement. No dividends will 
be paid on either the Class A or Class B stock and shareholders may 
sell or transfer their shares only in compliance with EMCC's 
shareholder agreement.
    EMCC's amended shareholder agreement will replace the shareholder 
agreement written for the original offering.\6\ The changes to the 
shareholder agreement will reflect (i) the creation and offering of the 
Class B stock, (ii) the conditions under which EMCC may repurchase the 
Class B stock, and (iii) the fact that EMTA has not yet been issued any 
shares of EMCC stock. In addition, the amended shareholder agreement 
will permit EMCC to issue EMTA 300 Class A shares prior to, concurrent 
with, or after the closing of the issuance of Class A stock to all 
other persons. A further modification will reflect that the issuance of 
the original stock did not occur prior to the previously established 
deadline of June 30, 1998, and that the issuance and sale of Class A 
stock must be completed by December 31, 1998. EMCC contemplates issuing 
the Class A and Class B stock on September 25, 1998. Each purchaser of 
Class A or Class B shares will be obligated to enter into the amended 
shareholder agreement.
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    \6\ The signatories of the amended shareholder agreement are the 
National Securities Clearing Corporation (``NSCC''), the 
International Securities Markets Association (``ISMA''), and the 
Emerging Markets Traders Association (``EMTA'').
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    After the Class A stock has been issued, EMCC will amend its 
articles of incorporation to permit the following actions to be taken 
upon a two-thirds vote of the shareholders instead of the current 
requirement of unanimity: (i) any amendment or change to EMCC's 
certificate of incorporation; (ii) any adoption, amendment or repeal by 
the shareholders of by-laws of the corporation; (iii) any repurchase of 
any securities issued by the corporation; and (iv) any issuance of any 
securities by the corporation.
    EMCC believes the proposed rule change is consistent with the 
requirements of Section 17A of the Act \7\ and the rules and 
regulations thereunder because the additional capital raised by the 
Class B offering will further EMCC's ability to provide for the prompt 
and accurate clearance and settlement of emerging markets securities.
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    \7\ 15 U.S.C. 78q-1.
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(B) Self-Regulatory Organization's Statement on Burden on Competition

    EMCC 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. EMCC will notify the Commission of any written 
comments received by EMCC.

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

    Within thirty-five days of the date of publication of this notice 
in the Federal Register or within such longer period (i) as the 
Commission may designate up to ninety days of such date if it finds 
such longer period to be appropriate and publishes its reasons for so 
finding or (ii) as to which EMCC consents, the Commission will:

(A) by order approve such proposed rule change or
(B) institute proceedings to determine whether the proposed rule change 
should be disapproved.

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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 EMCC.
    All submissions should refer to File No. SR-EMCC-98-08 and should 
be submitted by October 13, 1998.

    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority.\8\
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    \8\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 98-25133 Filed 9-18-98; 8:45 am]
BILLING CODE 8010-01-M