[Federal Register Volume 66, Number 84 (Tuesday, May 1, 2001)]
[Notices]
[Page 21796]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-10748]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-44217; File No. SR-EMCC-00-04]


Self-Regulatory Organizations; Emerging Markets Clearing 
Corporation; Order Approving a Proposed Rule Change Relating to 
Membership Criteria for Inter-Dealer Brokers Regulated by the 
Securities and Futures Authority Limited

April 24, 2001.
    On July 3, 2000, the Emerging Markets Clearing Corporation 
(``EMCC'') filed with the Securities and Exchange Commission 
(``Commission'') a proposed rule change (File No. SR-EMCC-00-04) 
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 December 13, 2000.\2\ 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. 43680 (December 6, 
2000), 65 FR 77947.
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I. Description

    The rule change establishes admission criteria for brokers or 
dealers who are regulated by the Securities and Futures Authority 
Limited (``SFA'') \3\ and act as inter-dealer brokers (``IDBs''). 
EMCC's membership criteria for IDBs that are registered by the SFA will 
mirror the requirements of U.S. registered broker-dealers acting as 
IDBs \4\ except SFA regulated IDBs will be required to maintain 
``excess financial resources'' of $10,000,000 US as opposed to excess 
net capital of $10,000,000.
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    \3\ SFA is the United Kingdom financial services regulator.
    \4\ EMCC's Rules define an IDB as ``a broker-dealer that 
conducts securities trading which matches buyers and sellers who are 
banks or dealers, and who is designated as such by the 
Corporation.'' EMCC's membership criteria for broker-dealers acting 
as IDBs require an applicant to demonstrate to the EMCC Board or 
Membership and Risk Committee that: (1) The applicant has the 
operational capacity to perform its membership functions in a 
satisfactory manner; (2) the applicant has an established business 
history of at least three years or personnel with sufficient 
operational background and experience to ensure the ability of the 
applicant to conduct its business; (3) the applicant has the 
financial ability to make all anticipated payments required by EMCC; 
(4) the applicant is in compliance with the capital requirements 
imposed by its appropriate regulatory authority; and (5) no adverse 
conditions exist which might prohibit applicant's membership in 
EMCC.
    \5\ 15 U.S.C. 78q-1(b)(3)(F).
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II. Discussion

    Section 17A(b)(3)(F) of the Act requires that the rules of a 
clearing agency be designed to promote the prompt and accurate 
clearance and settlement of securities transactions.\5\ Since the 
Commission's approval of EMCC Rule 2, EMCC has been informed that 
brokers or dealers who are regulated by the SFA also act as IDBs and, 
in fact, that there are broker-dealers who are regulated by the SFA who 
would like to be IDB members of EMCC. The Commission believes it is 
prudent for EMCC to establish criteria for broker-dealers that act as 
IDBs and that are regulated by the SFA because it will encourage IDBs 
regulated by the SFA to become participants in EMCC and therefore 
should facilitate the prompt and accurate clearance and settlement of 
emerging market securities transactions.

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 of 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-EMCC-00-04) 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).

Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 01-10748 Filed 4-30-01; 8:45 am]
BILLING CODE 8010-01-M