[Federal Register Volume 65, Number 168 (Tuesday, August 29, 2000)]
[Notices]
[Page 52460]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-22017]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-43200; File No. SR-GSCC-00-03]


Self-Regulatory Organizations; Government Securities Clearing 
Corporation; Order Approving a Proposed Rule Change Relating to Choice 
of Law Rules

August 23, 2000.
    On April 27, 2000, the Government Securities Clearing Corporation 
(``GSCC'') filed with the Securities and Exchange Commission 
(``Commission'') a proposed rule change (File No. SR-GSCC-00-03) 
pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'').\1\ Notice of the proposal was published in the Federal 
Register on July 7, 2000.\2\ On August 21, 2000, GSCC filed an 
amendment to the proposed rule change.\3\ No Comment letters were 
received. For the reasons discussed below, the Commission is approving 
the proposed rule change.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ Securities Exchange Act Release No. 42991 (June 29, 2000), 
65 FR 42051.
    \3\ The amendment to the rule filing was nontechnical in nature 
and did not require republication of the notice.
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I. Description

    The rule change adds a new provision to GSCC's rules, section 1 of 
Rule 38, that specifies that GSCC's rules and the rights and 
obligations under the rules will be governed by and construed in 
accordance with the laws of the State of New York.\4\ Even though GSCC 
believes that New York law governs its rules since GSCC's membership 
agreement states that the agreement and rules are expressly governed by 
New York law, GSCC believes that the rule change eliminates any doubts 
as to which law governs its rules.
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    \4\ As a result of the rule change, old section 1 of Rule 38, 
which deals with captions used in GSCC rules, is now section 2 of 
Rule 38.
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II. Discussion

    Section 17A(b)(3)(F) \5\ of the Act requires, among other things, 
that the rules of a clearing agency be designed to promote the prompt 
and accurate clearance and settlement of securities transactions. The 
Commission believes that GSCC's rule change is consistent with GSCC's 
obligations under the Act because it should help reduce the legal 
uncertainty associated with GSCC providing depository, clearance, and 
settlement services to its participants in that these transactions 
could potentially be governed by numerous states' laws. The choice of 
New York law assures that GSCC and their respective participants will 
find harmonious commercial code provisions governing their extensive 
dealings. In addition, the Commission believes that being governed by 
New York law offers numerous advantages, including: (i) New York has 
well-established commercial law principles; (ii) GSCC is established 
under the New York Business Corporation Law; (iii) GSCC is located in 
New York; and (iv) the majority of GSCC's members have their principal 
office in New York.
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    \5\ 15 U.S.C. 78q-1(b)(3)(F).
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III. Conclusion

    On the basis of the foregoing, the Commission finds that the 
proposal is consistent with the requirements of the Act and in 
particular with the requirements section 17A of the Act and the rules 
and regulations thereunder.
    It is therefore ordered, pursuant to section 19(b)(2) of the Act, 
that the proposed rule change (File No. SR-GSCC-00-03) be, and hereby 
is, approved.

    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority.\6\
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    \6\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 00-22017 Filed 8-28-00; 8:45 am]
BILLING CODE 8010-01-M