[Federal Register Volume 66, Number 8 (Thursday, January 11, 2001)]
[Notices]
[Pages 2462-2463]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-895]


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SECURITIES AND EXCHANGE COMMISSION

[Docket No. Release No. 34-43810; File No. SR-EMCC-00-07]


Self-Regulatory Organizations; Emerging Markets Clearing 
Corporation; Notice of Filing and Order Granting Accelerated Approval 
of a Proposed Rule Change Related to Making a Security Ineligible for 
Processing

January 4, 2001.
    Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on August 28, 2000, the 
Emerging Markets Clearing Corporation (``EMCC'') filed with the 
Securities and Exchange Commission (``Commission'') the proposed rule 
change as described in Items I and II below, which items have been 
prepared primarily by EMCC. The Commission is publishing this notice 
and order to solicit comments from interested persons and to grant 
accelerated approval of the proposal.
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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 permits EMCC in certain circumstances to 
remove a security from its list of EMCC eligible instruments and to 
exit open

[[Page 2463]]

transactions in that security from its clearance system.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, EMCC 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. EMCC has prepared summaries, set forth in sections (A), 
(B), and (C) below, of the most significant aspects of such 
statements.\2\
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    \2\ The Commission has modified the text of the summaries 
prepared by EMCC.
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(A) Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    EMCC's rules permit EMCC to remove a security from its list of 
those securities eligible for processing through EMCC's system in 
certain circumstances. However, EMCC's rules do not permit EMCC to exit 
any pending trades in such a security from its system for any reason 
other than where the security is no longer deliverable through a 
qualified securities depository. Without the ability to exit pending 
trades from its processing system, there may be circumstances where a 
member may lose important rights in a security by virtue of the 
continued inclusion of its trades in EMCC's processing system.
    The proposed rule change therefore would permit EMCC to make a 
security ineligible for processing in its system and to exit pending 
trades in that security by issuing appropriate instructions to its 
affected members if in EMCC's judgment a member may lose important 
rights by reason of the security's continued status as an EMCC eligible 
instrument. For example, where an EMCC eligible instruments is subject 
to a restructuring which includes a voluntary exchange offer, a party 
to a pending trade in that security may lose the right to receive the 
exchange security of its original counterparty does not take 
appropriate protective action. In that case, the parties can best 
protect their rights by dealing directly with each other outside of 
EMCC. In that event, EMCC would notify all members of the security's 
removal and issue instructions in a manner it determines is appropriate 
to the affected members and to the extent applicable to the relevant 
qualified securities depository naming members as the contraparties to 
the affected transactions. EMCC would issue such instructions with a 
view towards minimizing the number of such instructions issued in a 
given instance.
    EMCC believes that this rule change will facilitate the prompt and 
accurate clearance and settlement of emerging market securities 
transactions and therefore believes that it is consistent with section 
17A(b)(3)(F) of the Act.\3\
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    \3\ 15 U.S.C. 78q-1(b)(3)(F).
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(B) Self-Regulatory Organization's Statement on Burden on Competition

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

    No written comments relating to the proposed rule change have been 
solicited or received. EMCC will notify the Commission of any written 
comments received by EMCC.

III. Date of Effectiveness of the Proposed Rule Change and Timing 
for Commission Action

    The Commission finds that the proposed rule change is consistent 
with the requirements of the Act and the rules and regulations 
thereunder and particularly with the requirements of section 
17A(b)(3)(F).\4\ Section 17A(b)(3)(F) requires that the rules of a 
clearing agency be designed to promote the prompt and accurate 
clearance and settlement of securities transactions. The proposed rule 
is designed and should enable EMCC to help its members not lose 
important rights with respect to emerging market debt securities which 
are subject to restructurings or other similar actions. As a result, 
the rule change should promote the prompt and accurate clearance and 
settlement of the securities transactions.
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    \4\ 15 U.S.C. 78q-1(b)(3)(F).
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    EMCC has requested that the Commission approve the proposed rule 
change prior to the thirtieth day after publication of the notice of 
the filing. The Commission finds good cause for approving the rule 
change prior to the thirtieth day after publication of the notice of 
filing because approval to this proposed rule filing will allow EMCC to 
be prepared to take the appropriate actions wherever the next 
restructuring or similar event occurs which involves an EMCC eligible 
instrument.

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 Room, 450 Fifth Street, NW., Washington, 
DC 20549. Copies of such filing will also be available for inspection 
and copying at the principal office of EMCC. All submissions should 
refer to File No. SR-EMCC-00-07 and should be submitted by February 1, 
2001.
    It is therefore ordered, pursuant to section 19(b)(2) of the 
Act,\5\ that the proposed rule change (File No. SR-EMCC-00-07) be and 
hereby is approved.
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    \5\ 15 U.S.C. 78s(b)(2).

    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. 01-895 Filed 1-10-01; 8:45 am]
BILLING CODE 8010-01-M