[Federal Register Volume 65, Number 138 (Tuesday, July 18, 2000)]
[Notices]
[Pages 44555-44556]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-18088]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-43026; File No. SR-GSCC-00-07]


Self-Regulatory Organizations; Government Securities Clearing 
Corporation; Notice of Filing and Immediate Effectiveness of Proposed 
Rule Change Relating to Changes to GSCC's Fee Structure With Respect to 
Minimum Monthly Fees and Additional Accounts Fees

    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''), \1\ notice is hereby given that on June 29, 2000, 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

    GSCC is proposing to amend its fee structure with respect to (i) 
minimum monthly fees and (ii) fees for additional accounts maintained 
by a single member to fairly reflect the costs incurred by GSCC in 
providing services to its members.\2\
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    \2\ The revised fee structure, attached as ``Exhibit A'' to 
GSCC's filing, is available for inspection and copying in the 
Commission's Public Reference Section and through GSCC.
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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, 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.\3\
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    \3\ 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 is proposing to amend its fee structure with respect to (i) 
Minimum monthly fees and (ii) fees for additional accounts maintained 
by a single member. These changes were effective as of July 3, 2000.
(i) Minimum Monthly Fees
    Under GSCC's current fee structure, a member is charged a minimum 
monthly fee if the fees associated with its actual level of activity do 
not equal or exceed the minimum fee. Specifically, each comparison-only 
member is subject to a minimum monthly fee of $500 ($250 if it has an 
affiliate that is a netting member), and each netting member is subject 
to minimum monthly fees of $500 for its comparison system activity and 
$500 for its netting system activity.
    The proposed rule change imposes a $1,000 minimum monthly fee on 
each comparison-only member (regardless of whether it has an affiliate 
that is a netting member) and each netting member. The increase to the 
$1,000 minimum for comparison-only members is necessary in order to 
cover the administrative and operational costs involved in opening and 
maintaining the comparison-only accounts. The change to the $1,000 
minimum fee for netting members from the $500-$500 fee is being 
implemented for administrative convenience; it allows for a member's 
total GSCC activity to be calculated and compared against one minimum. 
This change will result in a decrease in fees for some netting members.
(ii) Fees Applicable to Additional Accounts
    Some GSCC members maintain more than one GSCC account.\4\ 
Additional accounts fall into two categories: (A) those that are opened 
at the request of a member \5\ and (B) those that are opened at the 
direction of GSCC.\6\
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    \4\ For fee purposes, GSCC will consider the account with the 
most activity to be the member's primary account.
    \5\ Under certain circumstances, a member is permitted to open 
one or more additional accounts in order to separate certain GSCC 
activity from its primary GSCC account. Such accounts can be 
maintained for comparison-only or netting activity. Each additional 
account is governed by an agreement between the member and GSCC and 
is subject to GSCC's rules.
    \6\ For example, under GSCC's rules, interdealer broker netting 
members are required to maintain separate accounts for their buy-
sell and repo activity.
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(A) Additional Account Opened at the Request of a Member

    The proposed rule change imposes a monthly maintenance fee of 
$1,000 for each additional account maintained by a member in addition 
to its primary account that is opened at the member's request. The 
maintenance fee will be in

[[Page 44556]]

addition to any actual transaction-based fees and applicable non-
transaction-based fees, such as communication fees.
    The new maintenance fee reflects the costs incurred by GSCC in 
maintaining additional accounts for members. Such costs include the 
administrative costs of opening additional accounts, the operational 
costs of maintaining the accounts, the continuous risk surveillance 
that is conducted on the accounts, and the reports necessary to be 
provided with respect to activity in the accounts. The imposition of 
the proposed fee is consistent with GSCC's policy of charging fees that 
fairly reflect the costs incurred by GSCC in providing services to its 
members.

(B) Additional Accounts Opened at the Direction of GSCC

    Any additional account that is opened at the direction of GSCC will 
not be subject to a maintenance fee. Such account's transaction-based 
fees will be subject to a minimum monthly fee of $1,000 per account.
    GSCC believes that the proposed rule change is consistent with the 
requirements of the Act \7\ and the rules and regulations thereunder 
applicable to GSCC because it proposes changes to GSCC's fee structure 
that fairly reflect the costs incurred by GSCC in providing services to 
its members.
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    \7\ 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. Members will be notified of the rule change 
filing and comments will be solicited by an Important Notice. 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) \8\ of the Act and Rule 19b-4(f)(2) \9\ 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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    \8\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \9\ 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, 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-00-07 and should be submitted by 
August 8, 2000.

    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority.\10\
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    \10\ 17 CFR 200.30-3(a)(12)
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 00-18088 Filed 7-17-00; 8:45 am]
BILLING CODE 8010-01-M