[Federal Register Volume 65, Number 166 (Friday, August 25, 2000)]
[Notices]
[Page 51880]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-21749]


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SECURITIES AND EXCHANGE COMMISSION

[Release 34-43182; File No. 600-23; International Series Release No. 
1230]


Self-Regulatory Organizations; Emerging Markets Clearing 
Corporation; Notice of Filing and Order Approving a Request for an 
Extension of Temporary Registration as a Clearing Agency

August 18, 2000.
    Notice is hereby given that on July 10, 2000, the Emerging Markets 
Clearing Corporation (``EMCC'') filed with the Securities and Exchange 
Commission (``Commission'') an application pursuant to Section 19(a) of 
the Securities Exchange Act of 1934 (``Act'')\1\ requesting that the 
Commission extend EMCC's temporary registration as a clearing 
agency.\2\ The Commission is publishing this notice and order to 
solicit comments from interested persons and to extend EMCC's temporary 
registration as a clearing agency through August 31, 2001.
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    \1\ 15 U.S.C. 78s(a).
    \2\ Letter from Merrie Faye Witkin, Assistant Secretary, EMCC 
(July 7, 2000).
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    On February 13, 1998, pursuant to Sections 17A(b) and 19(a)(1) of 
the Act \3\ and Rule 17Ab2-1 promulgated thereunder,\4\ the Commission 
granted EMCC's application for registration as a clearing agency until 
August 20, 1999.\5\ The Commission subsequently extended EMCC's 
registration as a clearing agency until August 20, 2000.\6\ EMCC was 
created to facilitate the clearance and settlement of transactions in 
U.S. dollar denominated Brady Bonds.\7\ Since that time, EMCC has added 
certain sovereign debt to the list of eligible securities that may be 
cleared and settled at EMCC.\8\
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    \3\ 15 U.S.C. 78q-1(b) and 78s(a)(1).
    \4\ 17 CFR 240.17Ab2-1.
    \5\ Securities Exchange Act Release No. 39661 (February 13, 
1998), 63 FR 8711 (``Registration Order'').
    \6\ Securities Exchange Act Release No. 41733 (August 12, 1999), 
64 FR 44982.
    \7\ Brady bonds are restructured bank loans. They were first 
issued pursuant to a plan developed by then U.S. Treasury Secretary 
Nicholas Brady to assist debt-ridden countries restructure their 
sovereign debt into commercially marketable securities. The plan 
provided for the exchange of bank loans for collateralized debt 
securities as part of an internationally supported sovereign debt 
restructuring. Typically, the collateral would be U.S. Treasury 
securities.
    \8\ Securities Exchange Act Release Nos. 41618 (July 14, 1999), 
64 FR 39181 and 40363 (August 25, 1998), 63 FR 46263.
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    EMCC began operating on April 6, 1998, with ten dealer members. 
EMCC currently has 21 members. During 1999, EMCC's members achieved an 
average trade-date matching rate of 89 percent and an average 
settlement-date success rate of over 92 percent.\9\
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    \9\ EMCC 1999 Annual Report.
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    As part of EMCC's initial temporary registration, the Commission 
granted EMCC temporary exemption from Section 17A(b)(3)(B) of the Act 
because EMCC did not provide for the admission of some of the 
categories of members required by that section.\10\ To date, EMCC 
continues to limit the categories of entities eligible for membership 
to U.S. broker-dealers, United Kingdom broker-dealers, U.S. banks, and 
non-U.S. banks. As the Commission noted in the Registration Order, the 
Commission believes that providing for limited categories of members is 
appropriate at least during a clearing agencies initial phases of 
operations especially when no one in a category not covered by EMCC 
desires to be a member. Accordingly, the Commission is extending EMCC's 
temporary exemption from Section 17A(b)(3)(B).
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    \10\ Registration Order at 8716.
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    The Commission also granted EMCC a temporary exemption from 
Sections 17A(b)(3)(A) and 17A(b)(3)(F) of the Act to permit EMCC to 
use, subject to certain limitations, ten percent of its clearing fund 
to collateralize a line of credit at Euroclear to finance on an 
intraday basis the receipt by EMCC of eligible instruments from one 
member that EMCC will redeliver to another member.\11\ The Registration 
Order limited EMCC's use of clearing fund deposits for this intraday 
financing to the earlier of one year after EMCC commenced operations or 
the date on which EMCC begins its netting service. On April 2, and May 
17, 1999, the Commission approved rule changes that permitted EMCC to 
implement a netting service and that extended EMCC's ability to use 
clearing fund deposits for intraday financing at Euroclear until all 
EMCC members are netting members (as opposed to the date on which 
netting services were made available or EMCC's first anniversary).\12\ 
Accordingly, the Commission is extending EMCC's temporary exemption 
from Section 17A(b)(3) (A) and (F).
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    \11\ Registration Order at 8720.
    \12\ Securities Exchange Act Release Nos. 41247 (April 2, 1999), 
64 FR 17705 (April 12, 1999) and 41415 (May 17, 1999), 64 FR 27841 
(May 21, 1999).
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    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing application. Such written data, 
views, and arguments will be considered by the Commission in granting 
registration or instituting proceedings to determine whether 
registration should be denied in accordance with Section 19(a)(1) of 
the Act.\13\ 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 amended 
application for registration and all written comments will be available 
for inspection at the Commission's Public Reference Room, 450 Fifth 
Street, NW, Washington, DC 20549. All submissions should refer to File 
No. 600-30 and should be submitted by September 15, 2000.
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    \13\ 15 U.S.C. 78s(a)(1).
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    It Is Therefore Ordered, pursuant to Section 19(a) of the Act, that 
EMCC's registration as a clearing agency (File No. 600-30) be and 
hereby is temporarily approved through August 31, 2001.

    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority.\14\
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    \14\ 17 CFR 200.30-3(a)(16)
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 00-21749 Filed 8-24-00; 8:45 am]
BILLING CODE 8010-01-M