[Federal Register Volume 66, Number 151 (Monday, August 6, 2001)]
[Notices]
[Pages 41073-41074]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-19584]


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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-44620; File No. SR-GSCC-2001-07]


Self-Regulatory Organizations; Government Securities Clearing 
Corporation; Notice of Filing and Immediate Effectiveness of Proposed 
Rule Change Imposing a Fee on Members That Fail To Submit Their 
Transaction Data Within One Hour of Trade Execution

July 30, 2001.
    Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''), \1\ notice is hereby given that on June 11, 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.
---------------------------------------------------------------------------

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

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

    To encourage use of its Real-Time Trade Matching (``RITM'') 
service, GSCC is proposing to impose a fee on members that do not 
submit their trade data within one hour of trade execution. 
Specifically, if a member does not submit all of the transactions in 
its account within one hour of trade execution, at the end of each 
month GSCC will charge 5 cents per side of a transaction other than a 
repo transaction or per repo transaction for each transaction in the 
account.

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

    During the latter part of 2000, GSCC implemented an interactive 
messaging facility for GSCC-eligible securities transactions. This 
facility has provided members with the ready ability to submit trade 
input on an automated basis to GSCC intraday as trades are executed. 
The facility will allow GSCC to establish an RTTM service which will 
provide straight-through processing by allowing for the prompt and easy 
identification and resolution of trades intraday to achieve 100 percent 
comparison. GSCC believes that interactive messaging and RTTM

[[Page 41074]]

processing are critical steps in helping reduce risk by ensuring that 
more transactions are compared earlier in the day and then promptly 
netted and guaranteed through GSCC so that intraday exposure to 
counterparties is minimized.
    While GSCC has continued to support its existing batch input and 
output facilities, it plans to discourage the use of and eventually 
stop supporting these older formats because the move to interactive 
messaging is so essential.\3\ As an initial step to encourage members 
to submit their transaction data closer to the time of trade execution, 
GSCC is proposing to impose a fee on members that do not submit their 
trade data within one hour of trade execution. Specifically, effective 
July 1, 2001, if a member does not submit all of the transactions in 
its account within one hour of trade execution, at the end of each 
month GSCC will charge 5 cents per side of a transaction other than a 
repo transaction or per repo transaction for each transaction in the 
account. Members can avoid the fee if they submit all of their 
transactions through their account: (i) Interactively as transactions 
occur using SWIFT-based messages, (ii) via a terminal within one hour 
of execution, or (iii) in multiple batch format within one hour of 
execution. GSCC has reserved the right to waive the charges for a 
particular month if GSCC determines, in its sole discretion, that a 
portion of a member's transactions were not submitted within one hour 
of trade execution because of a nonrecurring operational problem. The 
proposed fee is designed to encourage members to make the development 
investment necessary to join the RTTM service. This fee will be 
reviewed periodically by GSCC and may be increased if it is determined 
that it does not provide sufficient incentive for members to submit 
trade data on a timelier basis.
---------------------------------------------------------------------------

    \3\ In addition, other areas of the fixed-income industry are 
also moving to interactive messaging and RTTM. GSCC is currently in 
the process of developing RTTM services for mortgage-backed 
securities jointly with the MBS Clearing Corporation. Further, GSCC 
has begun working with The Depository Trust & Clearing Corporation 
to provide interactive messaging and a centralized RTTM service for 
other fixed-income products, including corporate and municipal 
bonds.
---------------------------------------------------------------------------

    GSCC believes that the proposed rule change is consistent with the 
requirements of Section 17A of the Act \4\ and the rules and 
regulations thereunder applicable to GSCC because it involves a change 
to GSCC's fee structure that will encourage members to move to 
interactive processing and thereby allow them to achieve important risk 
management benefits.
---------------------------------------------------------------------------

    \4\ 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, Participate 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) \5\ of the Act and Rule 19b-4(f)(2) \6\ 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 proposes of 
the Act.
---------------------------------------------------------------------------

    \5\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \6\ 17 CFR 2401.19b-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, 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 GSCC. All submissions 
should refer to File No. SR-GSCC-2001-07 and should be submitted by 
August 27, 2001.

    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority.\7\
---------------------------------------------------------------------------

    \7\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 01-19584 Filed 8-3-01; 8:45 am]
BILLING CODE 8010-01-M