[Federal Register Volume 66, Number 226 (Friday, November 23, 2001)]
[Notices]
[Page 58771]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-29197]


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SECURITIES AND EXCHANGE COMMISSION


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

November 14, 2001.

[Release No. 34-45053; File No. SR-GSCC-00-09]

    On August 23, 2000, the Government Securities Clearing Corporation 
(``GSCC'') filed with the Securities and Exchange Commission 
(``Commission'') a proposed rule change (File No. SR-GSCC-00-09) 
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 August 22, 2001.\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. 44708 (Aug. 15, 2001), 
66 FR 44192.
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I. Description

    The proposed rule change will change GSCC's daily trade submission 
deadline from 10:00 p.m. to 8:00 p.m. Eastern Standard Time (``EST'') 
and impose a fine schedule for late trade submissions.
    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. 
In that paper, GSCC explained that an earlier deadline is necessary to 
ensure that its members have enough time to reconcile all their 
activity by the end of the processing day. GSCC also announced its 
plans to move the submission deadline from 10:00 p.m. to 8:00 p.m. in 
its Interactive Messaging and Real-time Comparison New Service Bulletin 
distributed to members in December 1999 and in the Interactive 
Messaging Participant Specifications in February 2000.
    On June 2, 2000, GSCC informed its members by an Important Notice 
that in preparation for the planned implementaiton of real-time 
comparison services members should begin submitting trade data to GSCC 
by 8:00 p.m. on July 10, 2000. 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 will now formally adopt the 8:00 p.m. trade submission 
deadline and impose a fine schedule for late trade submission to 
enforce the deadline. The earlier submission deadline is one of the 
first steps to accomplish GSCC's plan to move to real-time interactive 
messaging and T+0 settlement. The move to the earleir submission 
deadline is also an important measure that will allow GSCC 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 submission deadline in accordance 
with future business developments and market practices.\3\ Finally, the 
earlier submission deadline supports GSCC's cross-margining initiatives 
with other clearing corporations, including those in Europe, as earlier 
submission will facilitate close coordination of data transfer among 
clearing corporations across multiple time zones.
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    \3\ GSCC will soon be actively encouraging members to submit 
trade data in real-time and might ultimately establish an even 
earlier submission deadline in accordance with future business 
developments and market practices.
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    GSCC's new fine schedule closely tracks its old fine schedule 
concerning late payments of funds settlement debits and late 
satisfactions of clearing fund deficiency calls. Like the old fine 
schedule, the new schedule provides a warning mechanism before any fine 
is imposed. In addition, the dollar amounts of the fines in the new 
schedule are similar to those in the old schedule.

II. Discussion

    The Commission finds that the proposed rule change is consistent 
with the requirements of the Act and the rules and regulations 
thereunder and particularly with the requirements of section 
17A(b)(3)(F) \4\ of the Act. 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. The 
Commission finds that GSCC's rule change meets this requirment because 
GSCC will now be able to prepare and its members will be able to view 
their comparison results at an earlier time thereby affording GSCC 
members more time to reconcile their trading activity before the end of 
the processing day. In addition, the earlier trade submission deadline 
should support GSCC's future initiatives, such as real-time processing, 
which should further GSCC's ability to provide for the prompt and 
accurate clearance and settlement of securities transactions. Finally, 
the imposition of the fine schedule is necessary for GSCC to promote 
and enforce full compliance with the earlier submission deadline.
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    \4\ 15 U.S.C. 78q-1(b)(3)(F).
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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 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-GSCC-00-09) 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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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 01-29197 Filed 11-21-01; 8:45 am]
BILLING CODE 8010-01-M