[Federal Register Volume 64, Number 139 (Wednesday, July 21, 1999)]
[Notices]
[Page 39181]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-18516]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-41618; File No. SR-EMCC-99-04]


Self-Regulatory Organizations; Emerging Markets Clearing 
Corporation; Order Granting Approval on an Accelerated Basis of a 
Proposed Rule Change Regarding Expansion of Eligible Instruments

July 14, 1999.
    On March 26, 1999, the Emerging Markets Clearing Corporation 
(``EMCC'') filed with the Securities and Exchange Commission 
(``Commission'') a proposed rule change (File No. SR-EMCC-99-04) under 
Section 19(b)(1) of the Securities Exchange Act of 1934 (``Act'').\1\ 
Notice of the proposed rule change was published in the Federal 
Register on June 23, 1999, to solicit comments from interested 
persons.\2\ No comments have been received by the Commission. For the 
reasons discussed below, the Commission is approving the proposed rule 
change on an accelerated basis.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ Securities Exchange Act Release No. 41534 (June 16, 1999), 
64 FR 33540.
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I. Description

    The rule change expands the types of instruments eligible for 
processing by EMCC by amending the definition of ``eligible sovereign 
debt,'' which is set forth in EMCC's Rule 1, to mean any instruments 
which either:

    (1) Are issued by or on behalf of an emerging markets sovereign 
issuer or an agency or instrumentality thereof (including, without 
limitation, any central bank thereof); provided that, in the case of 
any instrument issued by an agency or instrumentality, the credit 
quality of those instruments is judged by one or more NRSROs or by 
market participants generally on the basis of the credit quality of 
the related sovereign issuer; or
    (2) Have the timely payment of principal and interest guaranteed 
by an issuer who meets the criteria set forth in (1).

    Initially, EMCC was established to facilitate the clearance and 
settlement of transactions in Brady Bonds but has always contemplated 
extending its services to include other emerging market debt 
instruments. In August 1998, EMCC amended its rules to expand the list 
of eligible EMCC instruments to include highly rated, liquid sovereign 
debt.\3\ As a result of that rule change, the sovereign debt of Brazil, 
Argentina, and Mexico became eligible for clearance and settlement at 
EMCC.
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    \3\ Securities Exchange Act Release No. 40363 (August 25, 1998), 
63 FR 46263.
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    As with all instruments that are EMCC eligible, eligible sovereign 
debt instruments must also meet the existing criteria set forth in Rule 
3, Section 1. That section requires that only instruments which are 
eligible for settlement at a qualified securities depository and that 
are U.S. dollar denominated may be eligible for clearance and 
settlement through EMCC.

II. Discussion

    Section 17A(b)(3)(F) of the Act requires that the rules of a 
clearing agency be designed to facilitate the development of a national 
system for the prompt and accurate clearance and settlement of 
securities transactions.\4\ The Commission finds that the rule change 
is consistent with this obligation because by making more emerging 
market securities eligible at EMCC, which will subject trades in these 
securities to EMCC's risk management systems and standardized 
processing, market participants' clearance and settlement of these 
instruments should be less risky and more efficient.
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    \4\ 15 U.S.C. 78q-1(b)(3)(F).
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    EMCC 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 the filing. The Commission finds good 
cause for approving the proposed rule change prior to the thirtieth day 
after publication of the notice of the filing because accelerated 
approval will permit EMCC to provide clearance and settlement services 
for the sovereign debt of other emerging market countries immediately.

III. Conclusion

    On the basis of the foregoing, the Commission finds that the 
proposal is consistent with the requirements of the Act and in 
particular with the requirements of Section 17A of the Act and the 
rules and regulations thereunder.
    It is therefore ordered, pursuant to Section 19(b)(2) of the Act 
\5\ that the above-mentioned proposed rule change (File No. SR-EMCC-99-
04) be, and hereby is, approved, on an accelerated basis.

    \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. 99-18516 Filed 7-20-99; 8:45 am]
BILLING CODE 8010-01-M