[Federal Register Volume 63, Number 217 (Tuesday, November 10, 1998)]
[Notices]
[Pages 63095-63096]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-30100]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-40635; File No. SR-GSCC-98-03]


Self-Regulatory Organizations; Government Securities Clearing 
Corporation; Order Approving a Proposed Rule Change Regarding 
Amendments to GSCC's By-Laws

November 4, 1998.
    On August 31, 1998, the Government Securities Clearing Corporation 
(``GSCC'') filed with the Securities and Exchange Commission 
(``Commission'') a proposed rule change (File No. SR-GSCC-98-03) 
pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'').\1\ Notice of the proposal was published in the Federal 
Register on September 30, 1998.\2\ No comment

[[Page 63096]]

letters were received. For the reasons discussed below, the Commission 
is approving the proposed rule change.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ Securities Exchange Act Release No. 40463 (September 23, 
1998), 63 FR 52313.
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I. Description

    GSCC was formed by the National Securities Clearing Corporation 
(``NSCC'') in 1986. Initially, GSCC was a wholly-owned subsidiary of 
NSCC. However, in December 1987 GSCC shares were issued in a private 
placement, and now approximately seventy-five percent of GSCC's shares 
are owned by its member firms.
    GSCC's shareholders agreement provides that NSCC has the right to 
nominate two individuals for election to the GSCC Board and that GSCC 
is to designate one of those individuals to the position of Vice-
Chairman. Since GSCC was incorporated in 1986, GSCC's by-laws have 
provided that the Vice-Chairman of GSCC's Board shall automatically be 
its CEO and that GSCC's President shall automatically be the COO.
    GSCC believes that in order to ensure its independence, GSCC's 
Board of Directors should determine itself which individuals should 
serve as the CEO and COO. Therefore, the rule change amends GSCC's by-
laws to:
    (1) Delete the provision that states that the Vice Chairman of the 
Board shall be CEO of GSCC,
    (2) Delete the provision that states that the President shall be 
the COO of GSCC, and
    (3) Make other conforming changes to appropriately reflect the 
responsibilities of the CEO and COO.

II. Discussion

    Section 17A(b)(3)(C) of the Act \3\ requires that the rules of a 
clearing agency be designed to assure a fair representation of its 
shareholders (or members) and participants in the selection of its 
directors and administration of its affairs. The Commission believes 
that the rule change is consistent with GSCC's obligations under 
Section 17A(b)(3)(C) because the amendments to GSCC's by-laws should 
increase the flexibility of GSCC's Board of Directors to determine 
which individuals should serve as GSCC's CEO and COO. As a result, the 
rule should give GSCC's member firms better representation and control 
the administration of GSCC's affairs.
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    \3\ 15 U.S.C. 78q-(b)(3)(C).
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III. Conclusion

    On the basis of the foregoing, the Commission finds that the 
proposed rule change is consistent with the requirements of the Act and 
in particular with Section 17A of the Act \4\ and the rules and 
regulations thereunder.
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    \4\ 15 U.S.C. 78q-1.
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    It is therefore ordered, pursuant to Section 19(b)(2) of the Act, 
that the proposed rule change (File No. SR-GSCC-98-03) be and hereby is 
approved.

    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority.\5\
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    \5\ 17 CFR 200.30-3(a)(12).
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Jonathan G. Katz,
Secretary.
[FR Doc. 98-30100 Filed 11-9-98; 8:45 am]
BILLING CODE 8010-01-M