[Federal Register Volume 65, Number 102 (Thursday, May 25, 2000)]
[Notices]
[Pages 33854-33855]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-13148]


=======================================================================
-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-42796; File No. SR-NSCC-00-06]


Self-Regulatory Organizations; National Securities Clearing 
Corporation; Notice of Filing and Order Granting Accelerated Approval 
of a Proposed Rule Change Related to General Motors Corporate Action

May 18, 2000.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on May 15, 2000, the National 
Securities Clearing Corporation (``NSCC'') 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 NSCC. The Commission is publishing this notice and order 
to solicit comments from interested persons and to grant accelerated 
approval of the proposal.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
---------------------------------------------------------------------------

1. Self-Regulatory Organization's Statement of the Terms of 
Substance of the Proposed Rule Change

    The purpose of the proposed rule change is to allow the General 
Motors Corporation (``GM'') corporate action to be processed through 
NSCC's continuous net settlement (``CNS'') system.

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\
---------------------------------------------------------------------------

    \2\ The Commission has modified the text of the summaries 
prepared by NSCC.
---------------------------------------------------------------------------

(A) Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    GM has offered to exchange 1.065 shares of Class H common stock for 
each share of $1 \2/3\ par value common stock up to an aggregate of 
86,396,977 shares of $1 \2/3\ par value common stock.\3\ Under the 
terms of this tender offer, the treatment of a tender is dependent on 
the number of shares tendered and the calculation of the broker 
solicitation fee. Under normal circumstances, the differing treatments 
caused the tender offer to be ineligible for processing in CNS, and 
NSCC would exit the security from CNS and would issue balance orders. 
However, because of the size of this issue and the operational impact 
exiting this security from CNS would have on NSCC's participants, NSCC 
has filed this rule change to allow NSCC to process this corporate 
action in CNS. This filing and the procedures established by it will 
only be applicable to the voluntary GM corporate action referenced 
therein.\4\
---------------------------------------------------------------------------

    \3\ According to GM, this offer will expire at midnight on 
Friday, May 19, 2000, unless extended, and the tender offer will 
have a three day protect that will expire on May 24, 2000, unless 
extended.
    \4\ For a detailed description of NSCC procedures for the GM 
voluntary reorganization, refer to NSCC Important Notice dated May 
12, 2000, a copy of which is attached to NSCC's filing as Exhibit A. 
NSCC's filing is available through the Commission's Public Reference 
Section or through NSCC.
---------------------------------------------------------------------------

    For the purposes of processing this tender offer only, the 
following additional procedures will be followed: NSCC will process 
both the round-lot (shareholders of more than 100 shares) and the odd-
lot (shareholders of 99 shares or less) portions of this tender offer 
by using both the CNS G and H reorganization subaccounts. The round-lot 
portion of this offer will be processed in the CNS G account and the 
odd-lot portion of this offer will be processed in the CNS H account. 
This differentiation will permit NSCC to credit long participants with 
positions in the H account at 100 percent and positions in the G 
account at the amount determined in accordance with the terms of the 
offer. Long participants must follow normal CNS by 6:00 p.m. on 
expiration plus two (``E+2''). Short participant will receive their 
potential liability report as usual on the morning of E+2 and will 
receive the liability report on the morning of E+4. NSCC notes that the 
total number of shares for which short participants will be liable will 
be based on the total number of odd lot shares plus the number of round 
lot shares eligible for the exchange. Submission of shares by a long 
participant to the G and H subaccounts constitutes a representation by 
such participant that the request for protection conforms to the terms 
of the offer.
    In addition to processing the corporate action as described above, 
NSCC will take the following steps with respect to the broker 
solicitation fee. NSCC will establish positions in a ``USER'' CUSIP for 
all shares moved to CNS subaccounts G and H (long and short). These 
positions do not represent separate instructions for the delivery and 
receipt of any shares. These positions will be valued at .01 cent per 
share. On the same day that the positions are established, the 
corresponding values will be debited and credited through NSCC. 
Reversals of these amounts will take place through NSCC the following 
business day.
    NSCC will issue special receive and deliver instructions naming 
long and short participants for positions established in the ``USER'' 
CUSIP. Each special deliver instruction issued to a short participant 
represents liability to the named contra participant for any 
solicitation fees for which such contra participant is entitled to make 
claim under the terms of the corporate action. All such claims will be 
made directly between the parties as promptly as possible and are not 
guaranteed by NSCC.
    NSCC believes that the proposed rule change is consistent with the 
requirements of the Act and the rules and regulations thereunder. In 
particular, the proposed rule change is consistent with Section 
17A(b)(3)(F) of the Act \5\ which requires that the rules of a clearing 
agency be designed to promote the prompt and accurate clearance and 
settlement of securities transactions.
---------------------------------------------------------------------------

    \5\ 15 U.S.C. 78q-1(b)(3)(F).
---------------------------------------------------------------------------

(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 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

    The Commission finds that the proposed rule change is consistent 
with the requirements of the Act and the rules and regulations 
thereunder and particularly with the requirements of Section 
17A(b)(3)(F).\6\ Section

[[Page 33855]]

17A(b)(3)(F) requires that the rules of a clearing agency be designed 
to promote the prompt and accurate clearance and settlement of 
securities transactions. Allowing this corporate action to be processed 
in the CNS system should help ensure the tenders processed through NSCC 
will be promptly and accurately cleared and settled.
---------------------------------------------------------------------------

    \6\ 15 U.S.C. 78q-1(b)(3)(F).
---------------------------------------------------------------------------

    NSCC has requested that the Commission approve the proposed rule 
change prior to the thirtieth day after publication of the notice of 
the filing. The Commission finds good cause for approving the rule 
change prior to the thirtieth day after publication because such 
approval will allow NSCC to process this corporate action in the CNS 
system.

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. 552, will be available for inspection and copying in the 
Commission's Public Reference Room, 450 Fifth Street, NW, Washington, 
DC 20549. Copies of such filing will also be available for inspection 
and copying at the principal office of NSCC. All submissions should 
refer to File No. SR-NSCC-00-06 and should be submitted by June 15, 
2000.
    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\7\ that the proposed rule change (File No. SR-NSCC-00-06) be and 
hereby is approved.
---------------------------------------------------------------------------

    \7\ 15 U.S.C. 78s(b)(2).

    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority.\8\
---------------------------------------------------------------------------

    \8\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Jonathan G. Katz,
Secretary.
[FR Doc. 00-13148 Filed 5-24-00; 8:45 am]
BILLING CODE 8010-01-M