[Federal Register Volume 66, Number 165 (Friday, August 24, 2001)]
[Notices]
[Page 44661]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-21420]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-44722; File No. SR-SCCP-2001-04]


Self-Regulatory Organizations; The Stock Clearing Corporation of 
Philadelphia; Order Granting Approval of a Proposed Rule Change 
Establishing Fines for Late Margin Call Payments and an Appeal for Such 
Fines

August 20, 2001.
    On February 27, 2001, the Stock Clearing Corporation of 
Philadelphia (``SCCP'') filed with the Securities and Exchange 
Commission (``Commission'') a proposed rule change (File No. SR-SCCP-
2001-04) pursuant to section 19(b)(1) of the Securities Exchange Act of 
1934 (``Act'').\1\ Notice of the proposed rule change was published in 
the Federal Register on May 29, 2001.\2\ No comment letters were 
received. For the reasons discussed below, the Commission is granting 
approval of the proposed rule change.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ Securities Exchange Act Release No. 44334 (May 22, 2001), 66 
FR 29199.
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I. Description

    The purpose of the filing is to implement a fine schedule for SCCP 
margin members who are late meeting a margin call payment. The proposed 
rule change is intended to encourage the timely payments of margin 
calls. Rule 9 provides, in part, that SCCP will provide margin accounts 
for margin members that clear and settle their transactions through 
SCCP's omnibus clearance and settlement account. SCCP provides margin 
for such accounts based on its procedures and Regulation T of the Board 
of Governors of the Federal Reserve System. Margin members who are 
designated as specialists or alternate specialists in a security 
receive margin credit of 15% with respect to positions in that security 
held in their specialist accounts. Members holding positions for which 
they are not designated as a specialist or alternate specialist receive 
non-specialist margin credit of 50%. SCCP may issue margin calls to any 
margin member when the margin requirement exceeds the account equity. 
Pursuant to SCCP procedures, margin call payments are due by 12:00 p.m. 
EST the business day of the call. Late margin payments are not 
currently subject to a specific late fine although members may be 
subject to possible disciplinary action pursuant to SCCP Rule 22.
    SCCP believes that implementation of the proposed fine schedule 
will reduce the number of incidents of later margin call payments by 
members. Notwithstanding the late margin call payment fine, members 
would continue to be subject to possible disciplinary action pursuant 
to SCCP Rule 22.
    Currently, Rule 23 provides, in relevant part, a SCCP participant 
\3\ with the right to appeal from any decision or decisions of SCCP 
resulting in sanctions or penalties imposed under Rule 20 or 22.\4\ 
SCCP proposes to include fines imposed under Rule 9 to the list of 
applicable actions specified in Rule 23.
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    \3\ The term ``participants'' means persons or organizations 
which have qualified for membership in SCCP pursuant to SCCP Rules 2 
and 3. Participants are also referred to in SCCP Rules as 
``members.''
    \4\ SCCP Rule 23 Section 1(c).
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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 assure the safeguarding of securities 
and funds which are in the clearing agency's custody or control or for 
which it is responsible. The rule change allows SCCP to fine members 
for making later margin payments. Implementing the fine schedule should 
encourage margin members to submit margin payments in a timely manner 
thereby providing SCCP with adequate collections so that it may fulfill 
its safeguarding obligations. Therefore, the Commission finds that 
SCCP's proposed rule change is consistent with section 17A of the Act 
and the rules and regulations thereunder.

III. Conclusion

    On the basis of the foregoing, the Commission finds that the 
proposed rule change is consistent with the requirements of the Act and 
in particular 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-SCCP-2001-04) be and hereby 
is approved.

    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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Jonathan G. Katz,
Secretary.
[FR Doc. 01-21420 Filed 8-23-01; 8:45 am]
BILLING CODE 8010-01-M