[Federal Register Volume 64, Number 5 (Friday, January 8, 1999)]
[Notices]
[Pages 1264-1266]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-416]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-40872; File No. SR-SCCP-98-05]


Self-Regulatory Organizations; Stock Clearing Corporation of 
Philadelphia; Notice of Filing and Order Granting Accelerated Approval 
of a Proposed Rule Change Relating to Continuation of Limited Clearance 
and Settlement Services

December 31, 1998.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on December 9, 1998, Stock 
Clearing Corporation of Philadelphia (``SCCP'') filed with the 
Securities and Exchange Commission (``Commission'') the proposed rule 
change (File No. SR-SCCP-98-05) as described in Items I and II below, 
which items have been prepared primarily by SCCP. The Commission is 
publishing this notice and order to solicit comments on the proposed 
rule change 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, SCCP will be permitted to provide 
limited clearance and settlement services for an additional one year 
period ending December 31, 1999.

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

    In its filing with the Commission, SCCP included statements 
concerning

[[Page 1265]]

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

Background
    In an agreement dated as of June 18, 1997, (``Agreement'') by and 
among the Philadelphia Stock Exchange, Incorporated (``PHLX''), SCCP, 
Philadelphia Depository Trust Company (``Philadep''), National 
Securities Clearing Corporation (``NSCC''), and The Depository Trust 
Company (``DTC''), it was agreed that as a part of SCCP's restructuring 
and limiting its clearance and settlement business SCCP participants 
would have access to the facilities of one or more other organizations 
providing full securities clearing services and that SCCP would 
transfer to the books of such other organizations the continuous net 
settlement (``CNS'') system open positions of SCCP participants shown 
on the books of SCCP.
    On December 11, 1997, the Commission issued an order approving 
proposed rule changes related to the Agreement and SCCP's restructured 
and limited clearance and settlement business.\3\ The approval order 
stated that:

    \3\ Securities Exchange Act Release No. 39444 (December 11, 
1997), 62 FR 66703 [File Nos. SR-DTC-97-16, SR-NSCC-97-08, SR-
Philadep-97-04, SR-SCCP-97-04] (order granting SCCP temporary 
approval through December 31, 1998, to provide limited clearance and 
settlement services to certain PHLX members). See also Securities 
Exchange Act Release No. 39445 (December 11, 1997), 62 FR 66709 
[File No. SR-PHLX-97-59] (order granting PHLX approval to limit its 
clearing services and to stop providing depository services through 
its subsidiaries SCCP and Philadep in order to focus its resources 
on the operation of the exchange).

    However, because a part of SCCP's proposed rule change concerns 
the restructuring of SCCP's operations to enable SCCP to offer 
limited clearing and settlement services to certain PHLX members, 
the Commission finds that it is appropriate to grant only temporary 
approval to the portion of SCCP's proposed rule change that amends 
SCCP's By-Laws, Rules, or Procedures. This will allow the Commission 
and SCCP to see how well SCCP's restructured operations are 
functioning under actual working conditions and to determine whether 
any adjustments are necessary. Thus, the Commission is approving the 
portion of SCCP's proposal that amends its By-Laws, Rules, or 
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Procedures through December 31, 1998.

    SCCP proposes a one year extension of the approval order to 
continue SCCP's services to its participants. SCCP believes that its 
restructured operations have functioned consistently with the existing 
order and will continue to evaluate whether any adjustments are 
necessary.
Purpose
    In the Commission's order approving the Agreement, many SCCP rules 
were amended and discussed at length. No changes to SCCP's rules are 
proposed at this time. Under the proposed rule change, SCCP will 
continue to provide trade confirmation and recording services for 
members of the PHLX that effect transactions through regional interface 
operations (``RIO'') and ex-clearing accounts. SCCP will also continue 
to provide margin accounts to certain participants that will be cleared 
through an account established by SCCP at NSCC.
Statutory Basis
    SCCP believes the proposed rule change is consistent with the 
requirements of the Act and the rules and regulations thereunder 
applicable to SCCP and in particular with Section 17A(b)(3)(F) of the 
Act,\4\ which requires that a clearing agency be organized and its 
rules be designed among other things to promote the prompt and accurate 
clearance and settlement of securities transactions, to safeguard funds 
and securities in its possession and control, and to remove impediments 
to and perfect the mechanism of a national system for the prompt and 
accurate clearance and settlement of securities transactions. SCCP 
believes that an extension of the approval of SCCP's restructured 
business should promote the prompt and accurate clearance and 
settlement of securities transactions by integrating and consolidating 
clearing services available to the industry and should assure the 
safeguarding of securities and funds in the custody or contract of SCCP 
or for which SCCP is responsible consistent with the aforementioned 
provisions of the Act.
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    \4\ 15 U.S.C. 78q-1(b)(3)(F).
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B. Self-Regulatory Organization's Statement on Burden on Competition.

    SCCP does not believe that the proposed rule change should impose 
any burden on competition not necessary or appropriate in furtherance 
of the purposes of the Act.

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

    Written comments were neither solicited nor received with respect 
to the proposed rule change.

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

    Section 17A(b)(3)(F) of the Act \5\ requires that the rules of a 
clearing agency be designed to promote the prompt and accurate 
clearance and settlement of securities transactions. Based on the 
information the Commission has to date, the Commission believes that 
SCCP's restructured operations have functioned satisfactorily under 
actual working conditions to provide prompt and accurate clearance and 
settlement. During the upcoming temporary approval period, the 
Commission will review with SCCP in further detail SCCP's restructured 
operations.
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    \5\ 15 U.S.C. 78q-1(b)(3)(F).
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    SCCP has requested that the Commission find good cause for 
approving the proposed rule change prior to the thirtieth day after 
publication of the notice of filing. 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 will allow SCCP to continue 
its restructured operations for another year (i.e., through December 
31, 1999) without interruption when the initial temporary approval 
order expires on December 31, 1998.

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, N.W., Washington, D.C. 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

[[Page 1266]]

available for inspection and copying in the Commission's Public 
Reference Room, 450 Fifth Street, N.W., Washington, D.C. 20549. Copies 
of such filing will also be available for inspection and copying at the 
principal office of SCCP. All submissions should refer to the file 
number SR-SCCP-98-05 and should be submitted by January 29, 1999.
    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\6\ that the proposed rule change (File No. SR-SCCP-98-05) be and 
hereby is approved through December 31, 1999.
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    \6\ 15 U.S.C. 78s(b)(2).

    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority.\7\
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    \7\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 99-416 Filed 1-7-99; 8:45 am]
BILLING CODE 8010-01-M