[Federal Register Volume 65, Number 133 (Tuesday, July 11, 2000)]
[Notices]
[Pages 42740-42741]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-17422]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-42996; File No. SR-GSCC-00-04]


Self-Regulatory Organizations; Government Securities Clearing 
Corporation; Notice of Filing and Immediate Effectiveness of Proposed 
Rule Change Relating to Accepting Mortgage-Backed Securities for 
Processing in the GCF Repo Service

June 30, 2000.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on June 1, 2000, 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

    The proposed rule change would allow GSCC to accept non-Fedwire 
eligible mortgage-backed securities for processing in GSCC's GCF Repo 
Service.

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 introduced its GCF Repo Service in November 1998.\3\ The GCF 
Repo Service allows GSCC's non-inter-dealer broker netting members 
(``dealers'') to trade general collateral repos involving U.S. 
Government securities throughout the day without requiring trade for 
trade settlement on a delivery versus payment basis.
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    \3\ On November 5, 1998, the Commission approved a rule change 
(Release No. 34-40623, File No. SR-GSCC-98-02) that allowed GSCC to 
implement the GCF Repo Service on an intrabank basis. On April 16, 
1999, the Commission approved a rule change (Release No. 34-41303, 
File No. SR-GSCC-99-01) that allowed GSCC to implement an 
enhancement to the GCF Repo Service to enable participating dealers 
to engage in GCF Repo trading with participating dealers that use a 
different clearing bank.
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    GSCC has been activating the generic CUSIP numbers representing the 
securities that are eligible for GCF Repo processing in stages. U.S. 
Treasury securities with a maturity of ten years or less and U.S. 
Treasury securities with a maturity of thirty years or less were the 
first products to be made eligible for GCF Repo processing. At the 
beginning of this year, GSCC also began accepting non-mortgage-backed 
agency securities for GCF Repo processing and then more recently began 
accepting mortgage-backed securities ``MBS'') for GCF Repo 
processing.\4\
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    \4\ On March 20, 2000, GSCC activated the generic CUSIP number 
representing Federal Home Loan Mortgage Corporation and Federal 
National Mortgage Association fixed-rate MBS.
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    GSCC members active in the MBS markets have expressed an interest, 
both directly and through The Bond Market Association, in having GSCC 
process all types of MBS, especially those issued by the Government 
National Mortgage Association (Commonly referred to as ``GNMAs'').\5\ 
Because these members engage in transactions involving all types of 
MBS, not just Fedwire-eligible MBS, they desire to have the risk 
reducing benefits associated with GSCC processing extend to GCF Repo 
transactions involving non-Fedwire-eligible MBS.
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    \5\ The Government National Mortgage Association recently 
announced that it has decided to move its NBS clearance and 
settlement activities to the Federal Reserve System. No specific 
timetable has been specified for this move which will make GNMAs 
Fedwire-eligible.
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    When GSCC submitted its original GCF Repo rule filing to the 
Commission, it only contemplated Fedwire-eligible securities 
(treasuries, agencies, and certain MBS) as eligible products. In 
response to the industry demand, GSCC desires to expand the acceptable 
types of underlying securities processed in the GCF Repo Service to 
include all types of MBS, not just Fedwire-eligible MGS.
    The proposed rule change is consistent with the requirements of the 
Act and the rules and regulations thereunder because it will enhance 
the GCF Repo Service by making it more responsive to the needs of 
GSCC's members.

(B) Self-Regulatory Organization's Statement on Burden on Competition

    GSCC does not believe that the proposed rule change will have an 
impact 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

    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)(iii) \6\ of the Act and Rule

[[Page 42741]]

19b-4(f)(4) \7\ promulgated thereunder because the proposal effects a 
change in an existing service of a registered clearing agency that does 
not adversely affect the safeguarding of securities or funds in the 
custody or control of the clearing agency or for which it is 
responsible and it does not significantly affect the respective rights 
or obligations of the clearing agency or persons using the service. 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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    \6\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \7\ 17 CFR 240.19b-4(f)(4).
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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, 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 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 GSCC. All submissions 
should refer to File No. SR-GSCC-00-04 and should be submitted by 
August 1, 2000.

    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority.\8\
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    \8\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 00-17422 Filed 7-10-00; 8:45 am]
BILLING CODE 8010-01-M