[Federal Register Volume 64, Number 51 (Wednesday, March 17, 1999)]
[Notices]
[Pages 13242-13243]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-6455]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-41153; File No. SR-GSCC-99-02]


Self-Regulatory Organizations; Government Securities Clearing 
Corporation; Notice of Filing and Order Granting Accelerated Approval 
of a Proposed Rule Change Regarding Year 2000 Testing

March 10, 1999.
    Pursuant to Section 19(b)(1) of the Security Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on February 5, 1999, the 
Government Securities Clearing corporation (``GSCC'') 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 GSCC. 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

    The propose of the proposed rule change is to clarify that GSCC's 
rules on operational capability include certain reporting and testing 
requirements such as the requirement that all GSCC members conduct Year 
2000 testing with GSCC.

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

    In its filing with the Commission, GSCC included statements 
concerning the purpose of and basis for the proposed rule change and 
discussed any comments it received on the proposed rule changes. The 
text of these statements may be examined at the places specified in 
Item IV below. GSCC 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 GSCC.
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(A) Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    The proposed rule change requires all GSCC members to participate 
in Year 2000 testing with GSCC. GSCC believes that its rules on 
operational requirements for members provide GSCC with the authority to 
require such testing. Nonetheless, GSCC proposes to supplement its 
rules on operational capability standards to clarify that these 
standards include the fulfillment of testing and related reporting 
requirements that may be imposed on members by GSCC from time to time 
to ensure the continuing operational capability of each member. The 
scope of such Year 2000 testing and reporting requirements have been 
determined by GSCC in its sole discretion and have been conveyed to 
members through Important Notices. GSCC believes that the rule change 
is broad enough to cover Year 2000 testing without specifically 
referring to Year 2000 in order to alleviate the need to rescind the 
rule when Year 2000 testing is no longer relevant and also to enable 
GSCC to apply it to other contexts in which testing might be required.
    GSCC expressly reserves the right to take remedial action against 
members that do not fulfill the testing and related reporting 
requirements referred to above within the time frames established by 
GSCC. The proposed rule change provides generally that GSCC may take 
the remedial actions already available to it in its rules (i.e., 
increased clearing fund deposit and termination of membership) in the 
event a member does not fulfill the operational testing and related 
reporting requirements within the time frames specified by GSCC. GSCC 
has specified these time frames in an Important Notice to members.
    GSCC believes that the proposed rule change is consistent with the 
requirements of the Act and the rules and regulations thereunder. In 
particular, the proposed rule change is consistent with Section 
17A(b)(3)(F) of the Act \3\ which requires that the rules of a clearing 
agency be designed to promote the prompt and accurate clearance and 
settlement of securities transactions and, in general, to protect 
investors and the public interest.
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    \3\ 15 U.S.C. 78q-1(b)(3)(F).
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(B) Self-Regulatory Organization's Statement on Burden on Competition

    GSCC does not believe that the proposed rule change will have an 
impact, 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

    Written comments relating to the proposed rule change have not yet 
been solicited or received. GSCC will notify

[[Page 13243]]

the Commission of any written comments received by GSCC.

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

    Section 17A(b)(3)(F) of the Act \4\ requires that the rules of a 
clearing agency be designed to promote the prompt and accurate 
clearance and settlement of securities transactions. The Commission 
believes that the proposed rule change is consistent with this 
obligation because the required Year 2000 testing should allow GSCC to 
address potential problems associated with its members' Year 2000 
readiness. As a result, GSCC should be able to continue to provide 
prompt and accurate clearance and settlement of securities transactions 
before, on, and after Year 2000 without interruption.
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    \4\ 15 U.S.C. 78q-1 (b)(3)(F).
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    GSCC requested that the Commission find good cause for approving 
the proposed rule change prior to the thirtieth day after the 
publication of notice of the 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 because such approval will 
allow GSCC to implement its mandatory Year 2000 testing program in a 
timely manner.

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. Sec. 552, will be 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 GSCC. All 
submissions should refer to the File No. SR-GSCC-99-02 and should be 
submitted by April 7, 1999.
    It is therefore ordered, pursuant to Section 19(b)(2) of the Act, 
\5\ that the proposed rule change (File No. SR-GSCC-99-2) be and hereby 
is approved.

    \5\ 15 U.S.C. 78s(b)(2).
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    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority. \6\
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    \6\ 17 CFR 200.30-3(a) (12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 99-6455 Filed 3-16-99; 8:45 am]
BILLING CODE 8010-01-M