[Federal Register Volume 64, Number 40 (Tuesday, March 2, 1999)]
[Notices]
[Pages 10170-10171]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-5088]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-41087; File No. SR-MBSCC-99-01]


Self-Regulatory Organizations; MBS Clearing Corporation; Notice 
of Filing and Immediate Effectiveness of a Proposed Rule Eliminating 
the Investment Service Fee

February 22, 1999.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on January 29, 1999, the MBS 
Clearing Corporation (``MBSCC'') 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 
MBSCC. The Commission is publishing this notice to solicit comments on 
the proposed rule change from interested persons.
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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

    The proposed rule change eliminates the investment service fee that 
MBSCC charges a participant to recover the handling costs associated 
with investing the cash the participant has on deposit in the 
participants fund.

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

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

    The purpose of the proposed rule change is to eliminate the 
investment service fee that MBSCC charges its participants. MBSCC's 
rules allow it to charge this fee to recover the handling costs 
associated with investing the cash that a participant has on deposit in 
the participants fund.\3\ MBSCC has historically charged a flat fee of 
one half of one percent of the amount invested.\4\
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    \3\ Specifically, Article IV, Rule 2, Section 7 of MBSCC's rules 
provides that investment income, if any, on cash deposits in excess 
of required basic deposits, less an amount to compensate the 
corporation for its handling costs, shall be paid to participants at 
such intervals, in such manner, and in such amounts as the 
corporation from time to time may determine. Under the proposed rule 
change, the provision ``less an amount to compensate the corporation 
for its handling costs,'' has been deleted.
    \4\ Telephone conversation between Anthony Davidson, Vice 
President and Associate General Counsel, MBSCC; Jeffrey Mooney, 
Special Counsel, Division of Market Regulation (``Division''), 
Commission; and Jessie L. Nice, Attorney, Division, Commission 
(February 2, 1999).
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    MBSCC has determined that the investment service fee significantly 
exceeds the actual cost to MBSCC of handling investments. In addition, 
MBSCC does not charge participants for handling costs associated with 
other forms of collateral such as securities or letters of credit 
deposited to the participants fund. Accordingly, the proposed rule 
change deletes the provision of MBSCC's rules that allows it to recover 
its handling costs.
    MBSCC believes that the proposed rule change is consistent with 
Section 17A(b)(3)(D) of the Act \5\ and the rules and regulations 
thereunder because it provides for the equitable allocation of 
reasonable dues, fees, and other charges among MBSCC participants.
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    \5\ 15 U.S.C. 78q-1(b)(3)(D).
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(B) Self-Regulatory Organization's Statement on Burden on Competition

    MBSCC 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, Partipants, or Others

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

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

    The foregoing rule change has become effective pursuant to Section 
19(b)(3)(A)(ii) of Act \6\ and pursuant to Rule 19b-4(f)(2) \7\ 
promulgated thereunder because the proposal changes a due, fee, or 
other charge imposed by MBSCC. At any time within sixty days of the 
filing of such rule change, the Commission may summarily abrogate such 
rule change if it appears to the Commission that such action is

[[Page 10171]]

necessary or appropriate in the public interest, for the protection of 
investors, or otherwise in furtherance of the purposes of the Act.
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    \6\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \7\ 17 CFR 240.19b-4(f)(2).
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IV. Solicitation of Comments

    Interested persons are invited to submit written date, 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 Room, 450 Fifth Street, NW, Washington, 
DC 20549. Copies of such filing will also be available for inspection 
and copying at the principal office of MBSCC.
    All submissions should refer to File No. SR-MBSCC-99-01 and should 
be submitted by March 23, 1999.
    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. 99-5088 Filed 3-1-99; 8:45 am]
BILLING CODE 8010-01-M