[Federal Register Volume 66, Number 133 (Wednesday, July 11, 2001)]
[Notices]
[Pages 36351-36352]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-17267]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-44502; File No. SR-GSCC-2001-05]


Self-Regulatory Organizations; Government Securities Clearing 
Corporation; Notice of Filing and Immediate Effectiveness of a Proposed 
Rule Change Regarding a Participant Rebate Program

July 2, 2001.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on May 14, 2001, the 
Government Securities Clearing Corporation (``GSCC'') filed 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 
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 purpose of the proposed rule change is to initiate a 
participant rebate program that will distribute excess income pro rata 
back to members each calendar quarter based upon their gross fees paid 
to GSCC.

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

    In its filing with the Commission, GSCC included statements 
concerning the purpose of and statutory basis for 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 
such statements.\2\
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    \2\ The Commission has modified parts of these statements.
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(A) Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    The purpose of the proposed rule change is to initiate a 
participant rebate program that will distribute excess income pro rata 
back to members each calendar quarter based upon their gross fees paid 
to GSCC. The rebate program is immediately effective and the first 
rebate, if any, will be paid with respect to activity that took place 
during the second quarter of 2001.
    GSCC states that there is no longer a need to continue to increase 
GSCC's level of shareholders' equity beyond a $30 million level since a 
sustained capital level of $30 million will be sufficient to provide 
for: (1) Adequate risk protection and (2) a cushion for temporary 
decreases in volumes and revenues. Moreover, GSCC expects that it will 
be able to fund all projects out of current revenues.
    GSCC has structured the rebate program so that: (1) Rebates of 
excess net income will be made on a quarterly basis; (2) the amount of 
rebate provided to individual members will be based on

[[Page 36352]]

the amount of fees paid by the member to GSCC with respect to the 
calendar quarter (adjusted as appropriate for rebates, clearance 
charges, and other miscellaneous charges); (3) the amount of rebate for 
each of the first three calendar quarters of a year will be equal to 50 
percent of accumulated net income; and (4) the rebate for the last 
calendar quarter of a year will be equal to 100 percent of the 
remaining excess net income for the year.
    GSCC has the right to exclude or include, as applicable, 
anticipated expenses, losses, liabilities, and revenues from its 
calculation of excess net income. For example, GSCC has the discretion 
to reserve for development expenses and the costs of special projects.
    GSCC believes that the proposed rule change is consistent with the 
requirements of Section 17A of the Act and the rules and regulations 
thereunder because it fulfills GSCC's mission of operating in a not-
for-profit manner consistent with maintaining the integrity of GSCC's 
capital base, financial structure, and risk management process.

(B) Self-Regulatory Organization's Statement on Burden on Competition

    GSCC does not believe that the proposed rule change will have an 
impact or impose a burden on competition.

(C) Self-Regulation 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. Members will be notified of the rule change 
filing and comments will be solicited by an Important Notice. GSCC will 
notify the Commission of any written comments received by GSCC.

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

    Because the foregoing change establishes or changes a due, fee, or 
other charge imposed by GSCC, it has become effective pursuant to 
Section 19(b)(3)(A)(ii) of the Act \3\ and Rule 19b-4(f)(2) 
thereunder.\4\ At any time within sixty days of the filing of the 
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.
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    \3\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \4\ 17 CFR 240.19b-4(f)(2).
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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 will also be available for 
inspection and copying at GSCC. All submissions should refer to the 
File No. SR-GSCC-2001-05 and should be submitted by August 1, 2001.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\5\
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    \5\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 01-17267 Filed 7-10-01; 8:45 am]
BILLING CODE 8010-01-M