[Federal Register Volume 64, Number 150 (Thursday, August 5, 1999)]
[Notices]
[Pages 42745-42746]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-20177]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-41671: File No. SR-EMCC-99-8]


Self-Regulatory Organizations; Emerging Markets Clearing 
Corporation; Notice of Filing and Order Granting Accelerated Approval 
of a Proposed Rule Change Relating to the Extension of Interim Margin 
and Loss Allocation Procedures

July 29, 1999.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on June 21, 1999, the 
Emerging Markets Clearing Corporation (``EMCC'') 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 EMCC. The Commission is publishing this notice 
and order to solicit comments from interested persons and to grant 
accelerated approval of 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

    The proposed rule change will extend EMCC's interim margin and loss 
allocation procedures until the earlier of (i) September 30, 1999, or 
(ii) the date on which Daiwa Securities America Inc. ceases to perform 
clearing functions for interdealer brokers.

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

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

    On July 31, 1998, the Commission temporarily approved EMCC's 
interim margin and loss allocation procedures (``Addendum G'') for a 
period of one year. Addendum G applies to interdealer brokers and U.S. 
Firms whose only business with EMCC consists of clearing for 
interdealer brokers.\3\ The only EMCC clearing member affected by 
Addendum G is Daiwa Securities America Inc. (``Daiwa'').
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    \3\ For a complete description of Addendum G, refer to 
Securities Exchange Act Release No. 40288 (July 31, 1998), 63 FR 
42087.
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    EMCC has been advised that Daiwa intends to cease performing 
clearing functions for interdealer brokers by the end of September 
1999. Because Addendum G expires on July 31, 1999, EMCC is requesting 
that the Commission extend the temporary approval of addendum G until 
the earlier of (i) September 30, 1999, (ii) the date on which Daiwa 
ceases to perform clearing functions for interdealer brokers.
    EMCC believes that the proposed rule change is consistent with the 
requirements Section 17A of the Act \4\ and the rules and regulations 
thereunder because extension of the temporary approval will avoid any 
potential disruption of EMCC's clearing services during this limited 
time period.
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    \4\ 15 U.S.C. 78q-1.
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B. Self-Regulatory Organization's Statement on Burden on Competition

    EMCC does not believe that the proposed rule change will impose any 
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. EMCC will notify the Commission of any written 
comments received by EMCC.

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 assure the safeguarding of securities 
and funds which are in the custody or control of the clearing agency or 
for which it is responsible. In light of the fact that the Commission 
has previously found that Addendum G should provide EMCC with margin 
that is adequate to protect EMCC from financial exposure if an 
interdealer broker experiences financial difficulty, the Commission 
finds that the brief extension of the effectiveness of Addendum G is 
consistent with EMCC's safeguarding obligations under the Act.
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    \5\ 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 the 
date of publication of notice of the filing. The Commission finds good 
cause for approving the proposed rule change prior to the thirtieth day 
after publication of notice because such approval will allow the 
protections of Addendum G to remain in effect without interruption 
until Daiwa ceases its interdealer clearing operations at EMCC.

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

[[Page 42746]]

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 Section, 450 Fifth Street, NW, Washington, DC 20549. 
Copies of such filing also will be available for inspection and copying 
at the principal office of EMCC. All submissions should refer to File 
No. SR-EMCC-99-8 and should be submitted by August 26, 1999.

V. Conclusion

    It is Therefore Ordered, pursuant to Section 19(b)(2) of the 
Act,\6\ that the proposed rule change (File No. SR-EMCC-99-8) be and 
hereby is approved until September 30, 1999.

    \6\ 15 U.S.C. 78s(b)(2).
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    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. 99-20177 Filed 8-4-99; 8:45 am]
BILLING CODE 8010-01-M