[Federal Register Volume 65, Number 234 (Tuesday, December 5, 2000)]
[Notices]
[Pages 75988-75989]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-30880]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-43636; File No. SR-GSCC-00-14]


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 
GCF Repo Service

November 29, 2000.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ hereby given that on November 14, 2000, the Government 
Securities Clearing Corporation (``GSCC'') field 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

[[Page 75989]]

notice to solicit comments on the proposed rule change from interested 
parties.
---------------------------------------------------------------------------

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

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

    After offering the GCF Repo Service free of charge for two years, 
GSCC is proposing to amend its fee structure to begin charging for the 
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\
---------------------------------------------------------------------------

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

(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 repurchase transactions 
involving U.S. Government securities throughout the day without 
requiring trade for trade settlement on a delivery versus payment 
basis. Although the Commission has authorized GSCC to charge 
participants for GCF Repo transactions,\4\ GSCC has offered the GCF 
Repo Service without any charge for two years while it tailored the 
service to meet the needs of participants. Now that the service has 
succeeded in becoming an accepted means of processing general 
collateral repurchase transactions. GSCC has decided to begin charging 
participants for the service and is proposing to amend its fee 
structure for GCF Repo transactions. The new charges will be effective 
as of December 1, 2000.
---------------------------------------------------------------------------

    \3\ Securities Exchange Act Release Nos. 40623 (October 30, 
1998), 63 FR 59831 [File No. SR-GSCC-98-02] (order approving GSCC to 
implement the GCF Repo Service on an intrabank basis) and 41303 
(April 16, 1999), 64 FR 20346 [File No. SR-GSCC-99-01] (order 
approving GSCC to implement the second, interbank phase of the GSF 
Repo Service that has enabled participating dealers to engage in GCF 
Repo trading with participating dealers that use a different 
clearing bank).
    \4\ Securities Exchange Act Release No. 40623.
---------------------------------------------------------------------------

    The current fee schedule for GCF Repo Transactions includes (i) 
flat fees based on the number of legs of the repo transaction and the 
number of $50 million increments that make up the trade and (ii) basis 
point charges applied to the dollar amount of each GCF Repo 
Transaction.\5\ The revised fee schedule drops the flat fees, retains 
the basis point charges, and adds a recording fee that is also applied 
to the dollar amount if each GCF Transactions.\6\ Basis point charges 
will be applied to both overnight and term GCF Repo Transactions.
---------------------------------------------------------------------------

    \5\ As stated above, despite the existence of a fee schedule for 
GCF Repo transactions, GSCC has never charged for such transactions.
    \6\ The Revised Fee Structure, attached as Exhibit A to the GSCC 
filing, is available for inspection and copying in the Commission's 
Public Reference Section and at the principal office of GSCC.
---------------------------------------------------------------------------

    GSCC has determined to assess all fees for the GCF Repo Service 
based on the total value of a trade instead of including flat fees in 
the computation. This type of fee arrangement better reflects the risk 
of GSCC, which risk increases with the dollar amount of transactions 
that GSCC guarantees. Assessing fees in this manner works particularly 
well with GCF Repo transactions, which are settled in their full dollar 
amount by internal entries on the books of the clearing banks and not 
in $50 million increments as is required over the securities FedWire 
system.
    GSCC believes that the proposed rule change is consistent with the 
requirements of Section 17A of the Act \7\ and the rules and 
regulations thereunder applicable to GSCC, because it involves changes 
to GSCC's fee structure that fairly reflect the costs incurred by GSCC 
in providing services to its members.
---------------------------------------------------------------------------

    \7\ 15 U.S.C. 78q-1.
---------------------------------------------------------------------------

(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. 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.
---------------------------------------------------------------------------

    \8\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \9\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------

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, N.W., Washington, D.C. 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-00-14 and should be submitted by 
December 26, 2000.

    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority.\10\
---------------------------------------------------------------------------

    \10\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 00-30880 Filed 12-4-00; 8:45 am]
BILLING CODE 8010-01-M