[Federal Register Volume 66, Number 8 (Thursday, January 11, 2001)]
[Notices]
[Pages 2463-2464]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-896]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-43808; File No. EMCC-00-08]


Self-Regulatory Organizations; Emerging Markets Clearing 
Corporation; Notice of Filing of Proposed Rule Change to Permit Members 
to Satisfy Clearing Fund Obligations With Either Immediately Available 
Funds or Eligible Treasury Securities

January 4, 2001.
    Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on November 3, 2000, the 
Emerging Markets Clearing Corporation (``EMCC'') filed with the 
Securities and Exchange Commission (``Commission'') the

[[Page 2464]]

proposed rule change as described in Items I, II, and III below, which 
items have been prepared primarily by EMCC. 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

    The proposed rule change would allow EMCC members to satisfy their 
obligations to make additional clearing fund deposits with either 
immediately available funds, as currently required, or eligible 
treasury securities.

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 receive 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 these 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 Rule 4, section 5(iii) currently requires that members 
satisfy their obligation to make additional required deposits 
(``margin'') to the clearing fund in immediately available funds. EMCC 
Rule 4, section 8 permits the substitution of eligible collateral for 
clearing fund cash. On the same day a cash deposit is made, members may 
substitute eligible treasury securities \3\ or an eligible letter of 
credit \4\ for all or a portion of any such margin cash deposited 
provided the member maintains the requisite minimum ratios of cash to 
securities and/or letters of credit.\5\
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    \3\ As defined in EMCC Rule 1, the term ``eligible treasury 
security'' means an unmatured, marketable debt security in book-
entry form that is a direct obligation of the United States 
Government.
    \4\ As defined in EMCC Rule 1, the term ``eligible letter of 
credit'' means a letter of credit that:
    (a) Is issued by an approved letter of credit issuer;
    (b) Contains the unqualified commitment of such issuer to pay a 
specified sum of money upon demand (properly drawn under the letter 
of credit) at any time prior to the expiration of the letter of 
credit;
    (c) Is irrevocable and may be neither revoked nor amended to 
reduce its amount except upon the issuer's written notice to EMCC of 
its intent to revoke or amend, which must be given not less than 
five full business days prior to the date fixed for such revocation 
or amendment, and EMCC's consent to the revocation or amendment, 
which shall be given promptly upon EMCC's determination that the 
member either has substituted other collateral of at least equal 
value prior to such revocation or amendment or otherwise will have 
sufficient remaining value in its clearing fund deposit at the time 
of such revocation or amendment to satisfy its anticipated required 
fund deposit;
    (d) States that (1) it will be duly honored upon presentment of 
it to the issuing bank and (2) partial drawings are permitted; and
    (e) Is in a form and contains such other terms and conditions as 
may be required by EMCC.
    \5\ EMCC Rule 4, Sections 2 and 8(c).
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    To accommodate member requests, EMCC proposes changing Rule 4, 
section 5(iii) to allow members the option of meeting clearing fund 
margin calls with either cash or eligible treasury securities. The 
proposed rule change increases operating efficiencies by transforming 
what is currently a two-step process into a single step process. 
Eligible treasury securities so deposited would be valued at 96% of 
their current market value as provided in Section 8 of EMCC Rule 4. 
Notwithstanding the change, EMCC would retain the right, in its 
discretion, to require additional deposits to be made in cash.
    EMCC believes that the proposed rule change is consistent with the 
requirements of section 17A of the Act \6\ and the rules and 
regulations thereunder applicable to EMCC because it will promote 
operating efficiencies and will facilitate the prompt and accurate 
clearance and settlement of emerging market securities transactions.
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    \6\ 15 U.S.C. 78q-1.
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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

    Within thirty-five days of the date of publication of this notice 
in the Federal Register or within such longer period (i) as the 
Commission may designate up to ninety days of such date if it finds 
such longer period to be appropriate and publishes its reasons for so 
finding or (ii) as to which the self-regulatory organization consent, 
the Commission will:
    (A) By order approve such proposed rule change or
    (B) institute proceedings to determine whether the proposed rule 
change should be disapproved.

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 EMCC. All submissions 
should refer to File No. SR-EMCC-00-08 and should be submitted by 
February 1, 2001.

    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority.\7\
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    \7\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 01-896 Filed 1-10-01; 8:45 am]
BILLING CODE 8010-01-M