[Federal Register Volume 66, Number 163 (Wednesday, August 22, 2001)]
[Notices]
[Pages 44192-44193]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-21120]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-44708; File No. SR-GSCC-00-09]


Self-Regulatory Organizations; Government Securities Clearing 
Corporation; Notice of Filing of Proposed Rule Change Relating to an 
Earlier Daily Trade Data Submission Deadline and the Imposition of 
Fines For Late Submissions

August 15, 2001.
    Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on August 23, 2000, 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 by GSCC. The Commission is publishing this notice to 
solicit comments on the proposed rule change from interested persons.
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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 adopt an earlier daily trade 
submission deadline of 8:00 p.m. EST and impose a fine schedule for 
late trade submission.

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 such statements.\2\
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    \2\ The Commission has modified the text of the summaries 
prepared by GSCC.
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A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    Since the inception of GSCC's netting system in July 1989, the 
daily deadline for submission of trade data to GSCC has been 10:00 p.m. 
Eastern Standard Time (``EST''). GSCC first announced its intention to 
move to an earlier trade submission deadline in 1997 in a White Paper 
detailing GSCC's plans for providing straight-through processing and a 
point of trade guarantee. GSCC explained that an earlier deadline would 
be necessary to ensure that members have enough time to reconcile all 
their activity by the end of the processing day. Plans to move the 
submission deadline from 10:00 p.m. to 8:00 p.m. were further announced 
in the Interactive Messaging and Real-time Comparison New Service 
Bulletin distributed to members in December 1999 and in the Interactive 
Messaging Participant Specifications (SWIFT formats) made available in 
February 2000.
    On June 2, 2000, GSCC informed its members by an Important Notice 
that in preparation for the planned implementation of Real-Time 
Comparison services members should begin submitting trade data to GSCC 
by 8:00 p.m. on July 10, 200. GSCC members have thus had the 
opportunity to make all necessary system and other internal changes in 
order to accommodate the earlier deadline and to become accustomed to 
it. GSCC has strongly encouraged all members to abide by the 8:00 p.m. 
deadline but has not enforced the deadline.
    GSCC now proposes to adopt the 8:00 p.m. trade submission deadline 
and to impose a fine schedule for late trade submission so that it may 
enforce the deadline. The earlier trade submission deadline provides 
members with more time to reconcile trading activity prior to end of 
day because GSCC will be able to prepare and its members will be able 
to view their comparison results at an earlier time. The earlier 
submission deadline is one of the first steps in accomplishing GSCC's 
plan to move to real-time interactive messaging and T+0 settlement. In 
the near future, GSCC will be actively encouraging members to submit 
trade data in real-time.
    The move to the earlier submission deadline is an important interim 
measure that will allow members to become accustomed to submitting 
trade data earlier in the day. After full implementation of the 
interactive messaging process, GSCC may ultimately establish an even 
earlier

[[Page 44193]]

submission deadline, as required, in accordance with future business 
developments and market practices. Finally, the earlier submission 
deadline supports GSCC's cross-margining initiatives with other 
clearing corporations, including those in Europe. Earlier submission 
will facilitate close coordination of data transfer among clearing 
corporation across multiple time zones.
    The imposition of the fine schedule is important in order to 
promote full compliance with the earlier submission deadline. The 
proposed fine schedule closely tracks GSCC's existing fine schedule for 
the late payment of funds settlement debits and the late satisfaction 
of clearing fund deficiency calls. Like the existing fine schedule, the 
proposed fine schedule provides for a warning mechanism before any fine 
is imposed. In addition, the dollar amounts of the fines in the 
proposed schedule are similar to those in the existing schedule.
    GSCC believes that the proposed rule change is consistent with the 
requirements of the Act and the rules and regulations thereunder 
because it will ensure that members will be able to reconcile their 
trading activity by the end of the processing day and will support GSCC 
initiatives that will provide important benefits to members such as 
real-time processing and cross-margining.

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-Regulatory 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.\3\ GSCC will notify the Commission of any 
written comments received by GSCC.
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    \3\ Members will be notified of the rule change filing and 
comments will be solicited by an Important Notice.
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III. Date of Effectiveness of the Proposed Rule Change and Timing 
for Commission Action

    Within thirty-five days of the date of publications 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 consents, 
the Commission will:
    (A) By order approve such proposed rule change or
    (B) institute proceeds 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 Room in Washington, DC. Copies of such 
filing will also be available for inspection and copying at GSCC's 
principal office. All submissions should refer to File No. SR-GSCC-00-
09 and should be submitted by September 12, 2001.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\4\
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    \4\ 17 CFR 220.30-3(a)(12).
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Jonathan G. Katz,
Secretary.
[FR Doc. 01-21120 Filed 8-21-01; 8:45 am]
BILLING CODE 8010-01-M