[Federal Register Volume 64, Number 222 (Thursday, November 18, 1999)]
[Notices]
[Pages 63097-63098]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-30087]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-42127; File No. SR-EMCC-99-10]


Self-Regulatory Organizations; Emerging Markets Clearing 
Corporation; Order Granting Accelerated Approval of a Proposed Rule 
Change Relating to the Requirements for a Class I, II, or III Director

November 10, 1999.
    On September 24, 1999, the Emerging Markets Clearing Corporation 
(``EMCC'') filed with the Securities and Exchange Commission 
(``Commission'') a proposed rule change (File No. SR-EMCC-99-10) 
pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'').\1\ Notice of the proposal was published in the Federal 
Register on October 22, 1999.\2\ No comment letters were received. For 
the reasons discussed below, the Commission is granting accelerated 
approval of the proposed rule change.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ Securities Exchange Act Release No. 42016 (October 15, 
1999), 64 FR 57169.
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I. Description

    The rule change amends Article II, Section 2.2 of EMCC's by-laws to 
postpone until the year 2000 annual shareholders meeting the 
requirement that individuals elected to Class I, II, or III 
directorships must be an officer or partner of a shareholder or of an 
affiliate or subsidiary of a shareholder. Similarly, the rule change 
amends Section 1(A) of EMCC's amended and restated shareholder 
agreement to postpone until the year 2000 annual shareholders meeting 
the requirement that directors elected to these classes must be an 
officer or partner of a ``participant shareholder'' (i.e., a 
shareholder that is also an EMCC participant) or of an affiliate of a 
participant shareholder. EMCC's previous rules would have implemented 
these provisions at the 1999 annual shareholders meeting.\3\
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    \3\ These amendments will allow EMCC to maintain the status quo 
with respect to the eligibility requirements for directors. For a 
description of EMCC's current rules and procedures governing EMCC's 
board of directors, see Securities Exchange Act Release No. 39661, 
International Series Release No. 1117 (February 13, 1998), 63 FR 
8711.
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    The rule change also amends the amended and restated shareholders 
agreement's definition of ``participant shareholder'' to mean a 
shareholder that holds one or more Class A Subject shares and is also a 
participant or an affiliate of a participant. Previously, a 
``participant shareholder'' was defined as a shareholder that holds one 
or more Class A Subject shares.

II. Discussion

    Section 17A(b)(3)(C) of the Act \4\ requires that the rules of a 
clearing agency assure fair representation of its shareholders in the 
selection and administration of its affairs. For the reasons set forth 
below, the Commission believes that EMCC's rule change is consistent 
with its obligations under the Act.
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    \4\ 15 U.S.C. 78q-1(b)(3)(C).
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    EMCC's membership is not yet as large as its management had 
anticipated it would be at this time, and there are a number or 
shareholders and other

[[Page 63098]]

industry participants who have not yet completed the membership process 
or have not yet acquired EMCC shares. The Commission believes that it 
is important for EMCC to maintain the current broad-based 
representation of industry participants on its board of directors while 
it continues to expand its participants base. If EMCC were to restrict 
its board membership to officers or partners of shareholders or of 
affiliates or subsidiaries of shareholders, EMCC could possibly have to 
replace current board members with representatives from shareholders 
already represented on the board. The rule change allows EMCC to 
maintain its current board membership, comprised of participants, 
shareholders, and founding contributors, which provides for a broad 
cross-section of the emerging markets community while providing EMCC 
with an additional year to continue to broaden its participant base.
    When EMCC was originally organized, it was expected than an entity 
that became a shareholder would also be the participant. However, EMCC 
participants have indicated that they may prefer that the shareholder 
and the participant be affiliated but different entities. The 
Commission believes that amending the definition of ``participant 
shareholder'' to include an affiliate of a participant will provide 
EMCC's participants with additional flexibility without adversely 
affecting EMCC's operations or its participants' ability to be 
represented on the EMCC Board.
    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 so approving the proposed rule change prior to the thirtieth 
day after the date of publication of notice of the filing because 
accelerated approval will allow the amendments to take effect in time 
for EMCC's 1999 shareholders meeting. Furthermore, the Commission has 
not received any comment letters and does not expect to receive any 
comment letters on the proposal.

III. Conclusion

    On the basis of the foregoing, the Commission finds that the 
proposed rule change is consistent with the requirements of the Act and 
in particular Section 17A of the Act and the rules and regulations 
thereunder.
    It is therefore ordered, pursuant to Section 19(b)(2) of the Act, 
that the proposed rule change (File No. SR-EMCC-99-10) be and hereby is 
approved on an accelerated basis.

    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. 99-30087 Filed 11-17-99; 8:45 am]
BILLING CODE 8010-01-M