[Federal Register Volume 64, Number 233 (Monday, December 6, 1999)]
[Notices]
[Pages 68124-68125]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-31529]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-42183; File No. SR-GSCC-99-04]


Self-Regulatory Organizations; Government Securities Clearing 
Corporation; Notice of Filing and Immediate Effectiveness of Proposed 
Rule Change Relating to Fees and Charges

November 29, 1999.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934

[[Page 68125]]

(``Act''),\1\ notice is hereby given that on August 19, 1999, the 
Government Securities Clearing Corporation (``GSCC'') 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 GSCC. The Commission is publishing this notice to 
solicit comments on the proposed rule change from interested parties.
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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, GSCC will reduce the clearance fee 
that it charges to its netting members.

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

    In its filing with the Commission, GSCC 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. GSCC has prepared summaries, set forth in sections (A), 
(B) and (C) below, of the most significant aspects of these 
statements.\2\
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    \2\ The Commission has modified the text of the summaries 
prepared by GSCC.
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(A) Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    GSCC passes through to its netting members (with the exception of 
category 1 interdealer broker netting members engaged in blind broker 
repo activity) the cost to GSCC of obtaining and providing clearance 
services. Currently, the fee charged by GSCC to netting members to 
recoup its own external and internal clearance costs is $2.90 per 
deliver and receive obligation. The level of this fee is periodically 
reviewed to ensure that it equates sufficiently close to GSCC's actual 
expense.
    Recently, the Board of Governors of the Federal Reserve System 
(``Federal Reserve'') lowered its Fedwire funds and securities transfer 
fees.\3\ GSCC's clearance fee is a blended combination of the clearance 
charges levied upon GSCC by both its clearing banks and by the Federal 
Reserve Bank of New York for transfers made through the Fedwire book 
entry system. Internalized settlements at the clearing banks (i.e., 
those settlements occurring between GSCC and dealers within the same 
clearing bank) substantially reduce the amount of Federal Reserve fees 
included in GSCC's blended rate. As a result, there is not a direct 
correlation between Federal Reserve clearance fees and GSCC's clearance 
fee. Nonetheless, GSCC's processing costs were lowered because of the 
Federal Reserve's action, and a reduction in GSCC's clearance fee is 
therefore warranted.
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    \3\ 63 FR 63552 (November 13, 1998) (notice of schedule of fees 
for Federal Reserve Bank Services).
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    GSCC has determined that the clearance fee level now needed to 
offset its own clearance costs is roughly $2.75 per settlement. Thus, 
GSCC has determined it appropriate, effective as of October 1, 1999, to 
reduce GSCC's unit fee for clearance from $2.90 to $2.75. This adjusted 
fee reflects GSCC's ongoing commitment to effectively translate 
reductions in GSCC's processing costs into membership savings. The 
level of clearance fee will continue to be periodically monitored for 
appropriateness.
    GSCC believes that the proposed rule change is consistent with the 
requirements of Section 17A of the Act \4\ and the rules and 
regulations thereunder applicable to GSCC because it involves a fee 
change which fairly reflects the costs incurred by GSCC in providing 
services to its members.
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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

    GSCC does not believe that the proposed rule change will have any 
impact or impose any burden on competition.

(C) Self-Regulatory Organization's Statement on Comments on the 
Proposed Rule Change Received from members, Participants or Others

    Written comments relating to the proposed rule change have not yet 
been solicited or received. GSCC will notify the Commission of any 
written comments received by GSCC.

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

    The foregoing rule change has become effective pursuant to section 
19(b)(3)(A)(ii) \5\ of the Act and Rule 19b-4(f)(2) \6\ promulgated 
thereunder because the proposal establishes or changes a due, fee, or 
other charge imposed by GSCC. At any time within sixty days of the 
filing of such proposed rule change, the Commission may summarily 
abrogate such rule change if it appears to the Commission that such 
action is necessary or appropriate in the public interest, for the 
protection of investors, or otherwise in furtherance of the purposes of 
the Act.
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    \5\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \6\ 17 CFR 240.19b-4(f)(2).
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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 GSCC. All 
submissions should refer to File No. SR-GSCC-99-04 and should be 
submitted by December 27, 1999.

    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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Jonathan G. Katz,
Secretary.
[FR Doc. 99-31529 Filed 12-3-99 8:45 am]
BILLING CODE 8010-01-M