[Federal Register Volume 64, Number 148 (Tuesday, August 3, 1999)]
[Notices]
[Pages 42160-42161]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-19875]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-41662; File No. SR-NSCC-99-07]


Self-Regulatory Organizations; National Securities Clearing 
Corporation; Notice of Filing of a Proposed Rule Change Relating to 
Liability With Respect to Affiliated Entities

July 27, 1999.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on May 13, 1999, the National 
Securities Clearing Corporation (``NSCC'') filed with the Securities 
and Exchange Commission (``Commission'') a proposed rule change as 
described in Items I, II, and III below, which items have been prepared 
primarily by NSCC. The Commission is publishing this notice to solicit 
comments from interested persons on the proposed rule change.
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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, NSCC will amend its rules to limit 
its liability with respect to affiliated entities. Specifically, NSCC 
will amend its rules to provide that notwithstanding any affiliation 
between NSCC and any other entity, including any clearing agency, 
except as otherwise expressly provided by written agreement NSCC shall 
not be liable for any obligations of such other entity, the clearing 
fund or other assets of NSCC shall not be available to such other 
entity, such other entity shall not be liable for any obligations of 
NSCC, and any assets of such other entity shall not be available to 
NSCC.

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

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

    The Boards of Directors of NSCC and The Depository Trust Company 
(``DTC'') have determined to proceed with a plan for the integration 
over time of NSCC and DTC. As an initial step in this plan, NSCC and 
DTC have elected uniform Boards of Directors. The next step proposed in 
the plan is to establish a holding company with NSCC and DTC as 
operating subsidiaries.
    A prime consideration of the proposed integration plan is to assure 
that NSCC, its members, and its clearing fund will continue to be 
insulated from the risks and obligations arising from DTC's activities 
(including the custody of securities). Similarly, the plan contemplates 
that DTC will continue to be insulated from the risks of NSCC's 
business (including the CNS settlement guaranty). Under the proposed 
rule change, NSCC will adopt Rule 58, limitations on liability, to 
clarify that it will not be liable for the obligations of any other 
clearing agency (including DTC) and to disclaim liability for any 
obligations of any other clearing agency. DTC has proposed similar 
revisions to its Rules.\3\
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    \3\ File No. SR-DTC-99-11.
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    NSCC believes that the proposed rule change is consistent with the 
requirements of Section 17A of the Act \4\ and the rules and 
regulations thereunder because it promotes the safeguarding of 
securities and funds in NSCC's custody or control of for which it is 
responsible.
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    \4\ 15 U.S.C. 78q-1.

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[[Page 42161]]

(B) Self-Regulatory Organization's Statement on Burden on Competition

    NSCC 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, Participants or Others

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

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

    Within thirty-five days of the date of publication of this notice 
in the Federal Register or within such longer period (i) as the 
Commission may designate up to ninety days of such date if it finds 
such longer period to be appropriate and publishes its reasons for so 
finding or (ii) as to which NSCC consents, the Commission will:
    (A) by order approved such proposed rule change or
    (b) Institute proceedings to determine whether the proposed rule 
change should be disapproved.

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-
0609. 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 Section, 450 Fifth Street, N.W., 
Washington, D.C. 20549. Copies of such filing also will be available 
for inspection and copying at the principal office of NSCC. All 
submissions should refer to File No. SR-NSCC-99-07 and should be 
submitted by August 24, 1999.

    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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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 99-19875 Filed 8-2-99; 8:45 am]
BILLING CODE 8010-01-M