[Federal Register Volume 64, Number 156 (Friday, August 13, 1999)]
[Notices]
[Pages 44250-44251]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-21045]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-41717; SR-MDSCC-99-05]
Self-Regulatory Organizations; MBS Clearing Corporation; Notice
of Filing of Proposed Rule Change Relating To Acceptance of Letters of
Credit
August 6, 1999.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ notice is hereby given that on June 25, 1999, 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
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
The purpose of the proposed rule change is to modify MBSCC's rule
regarding letters of credit accepted for clearing fund purposes to
facilities implementation of the uniform letter of credit developed by
the Uniform Clearing Group.\2\
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\2\ MBSCC attached a copy of the uniform letter of credit as
Exhibit B to the filing.
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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.\3\
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\3\ 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
Article IV, Rule 2, Section 9 of MBSCC's rules governs deposits of
letters of credit by participants to the participants' fund for margin
purposes. Currently, the rule requires participants to amend letters of
credit expiring on September 1 by extending the expiration date to
March 1 of the following year, and to deposit new letters of credit on
March 1 of the following year. The proposed rule change will reverse
these dates and require participants to annually provide new letters of
credit by September 1 and to amend letters of credit by March 1. The
proposed rule change will also require that letters of credit delivered
to MBSCC on or after September 1, 1999, be in the form of the uniform
letter of credit (``ULC'') developed by the United Clearing Group
(``UCG'').
The UCG is an organization comprised of all of the major securities
and futures clearing organizations and depositories in the U.S.\4\ The
ULC was developed to foster uniformity among the various U.S.
securities and futures clearing organizations with respect to the
acceptable terms of letters of credit that are deposited as margin and
to reduce operational burdens for industry participants and their
letters of credit issuers. In developing the ULC, the UCG consulted
with the National Standby Letter of Credit Committee of the
International Financial Services Association (formerly known as the
U.S. Council on International Banking) and several letters of credit
issuing banks.
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\4\ The members of the UCG include the Boston Stock Exchange
Clearing Corporation, The Depository Trust Company, Government
Securities Clearing Corporation, MBSCC, National Securities Clearing
Corporation, Options Clearing Corporation, Board of Trade Clearing
Corporation, Chicago Mercantile Exchange, Clearing Corporation of
New York, Kansas City Board of Trade, Minneapolis Grain Exchange,
New York Mercantile Exchange, Emerging Markets Clearing Corporation,
and Clearing Corporation for Options and Securities.
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The ULC consists of a cover page with variable terms plus
preprinted uniform terms. Variable terms include the name of the
participant, the beneficiary clearing organization, the issuing bank,
the amount of the credit, and the expiration date. To assist letter of
credit issues and participants in completing the ULC, the UCG has
drafted general instructions. In addition, MBSCC has provided
supplemental instructions relating specifically to letters of credit
furnished by MBSCC.
MBSCC expects that in the future modifications may be made to the
ULC. If and when that occurs, MBSCC will require its members to use the
revised form.\5\
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\5\ MBSCC will file proposed rule changes with the Commission
prior to requiring members to comply with substantive changes made
to the ULC by the UCG.
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MBSCC believes that the proposed rule change is consistent with the
requirements of Section 17A of the Act and the rules and regulations
thereunder because, among other things, it is designed to assure the
safeguarding of securities and funds which are in the custody or
control of MBSCC or for which it is responsible and to foster
cooperation and coordination with persons engaged in the clearance and
settlement of securities transactions.
(B) Self-Regulatory Organization's Statement on Burden on Competition
MBSCC 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 comments on the proposed rule change were solicited or received.
MBSCC will notify the Commission of any written comments it receives.
[[Page 44251]]
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 the self-regulatory organization consents,
the Commission will:
(a) By order approve the 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, NW., Washington, DC 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. Sec. 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 MBSCC. All
submissions should refer to File No. SR-MBSCC-99-05 and should be
submitted by September 3, 1999.
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. 99-21045 Filed 8-12-99; 8:45 am]
BILLING CODE 8010-01-M