[Federal Register Volume 67, Number 27 (Friday, February 8, 2002)]
[Notices]
[Pages 6064-6065]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-3047]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-45378; File No. SR-GSCC-2001-13]


Self-Regulatory Organization; Government Securities Clearing 
Corporation; Order Granting Accelerated Approval of a Proposed Rule 
Change Relating to a New Governance Structure

January 31, 2002.
    On October 11, 2001, the Government Securities Clearing Corporation 
(``GSCC'') filed with the Securities and Exchange Commission 
(``Commission'') pursuant to section 19(b)(1) of the Securities 
Exchange Act of 1934 (``Act'') \1\ a proposed rule change (File No. 
GSCC-2001-13). On December 26, 2001, GSCC filed an amendment to the 
proposed rule change. Notice of the proposal was published in the 
Federal Register on January 15, 2001.\2\ No comment letters were 
received.\3\ For the reasons discussed below, the Commission is 
approving the proposed rule change on an accelerated basis.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ Securities Exchange Act Release No. 45248 (Jan. 7, 2002), 67 
FR 2005.
    \3\ This proposed rule change had a fifteen day comment period.
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I. Description

    The proposed rule change will amend GSCC's rules to reflect GSCC's 
new ownership and governance structure that will result from the 
integration of GSCC, MBS Clearing Corporation (``MBSCC''), and Emerging 
Markets Clearing Corporation (``EMCC'') with the Depository Trust & 
Clearing Corporation (``DTCC'') whereby GSCC. MBSCC, and EMCC will 
become operating subsidiaries of DTCC.\4\
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    \4\ For explanations of the mechanics of these integration 
plans, refer to Securities Exchange Act Release Nos. 44989 (Oct. 25, 
2001), 66 FR 55220 (Nov. 1, 2001) (order approving integration of 
GSCC); 44988 (Oct. 25, 2001), 66 FR 55222 (Nov. 1, 2001) (order 
approving integration of MBSCC); and 44987 (Oct. 25, 2001), 66 FR 
55218 (Nov. 1, 2001) (order approving integration of EMCC). The 
Depository Trust Company (``DTC'') and National Securities Clearing 
Corporation (``NSCC'') are currently operating subsidiaries of DTCC. 
Securities Exchange Act Release Nos. 41786 (Aug. 24, 1999), 64 FR 
47882 (Sept. 1, 1999) and 41800 (Aug. 27, 1999), 64 FR 48694 (Sept. 
7, 1999) (orders approving integration of DTC, NSCC, and DTCC).
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    In order for GSCC to maintain orderly and efficient operations, 
GSCC will implement a three-tiered governance structure. The first tier 
will be the Board of Directors of GSCC that will be identical in 
composition to the Board of Directors of MBSCC, EMCC, DIT, NSCC, and 
DTCC. GSCC's business will be managed under the direction of the

[[Page 6065]]

GSCC Board, which will set the basic policy direction for GSCC. The 
second tier will consist of committees of or established by the GSCC 
Board and committees of or established by the DTCC Board.\5\ The third 
tier will be GSCC management, which will oversee the daily routine 
operations of GSCC. The changes to GSCC's rules will reassign various 
management responsibilities to the GSCC Board, the new committees, or 
GSCC management in light of the revised management structure summarized 
above.
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    \5\ Many of GSCC's Board committees will be joint committees of 
the Boards of DTCC and its operating subsidiaries. For example, 
there will be a DTCC/DTC/NSCC/GSCC/MBSCC/EMCC Nominating Committee, 
a DTCC/DTC/NSCC/GSCC/MBSCC/EMCC Fixed Income Operations and Planning 
Committee, a DTCC/DTC/NSCC/GSCC/MBSCC/EMCC Audit Committee, and a 
GSCC/MBSCC Membership and Risk Management Committee.
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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)(A) \6\ of the Act, which requires, among other things, that a 
clearing agency be so organized and have the capacity to facilitate the 
prompt and accurate clearance and settlement of securities 
transactions. The Commission finds that the proposed rule change is 
consistent with this obligation because GSCC's new governance structure 
should help ensure that GSCC's operations will continue to be conducted 
in an efficient and orderly manner once it is integrated into the DTCC 
organization.
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    \6\ 15 U.S.C. 78q-1(b)(3)(A).
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    The Commission has previously found that GSCC's integration plan 
satisfies the requirement of section 17A(b)(3)(C) \7\ that GSCC assure 
the fair representation of its members in the selection of its 
directors and in the administration of its affairs.\8\ The Commission 
finds that this proposal is also consistent with the fair 
representation requirement because the integration plan has been 
refined so that the Board committees primarily responsible for GSCC's 
operations are now also joint committees of the GSCC Board.
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    \7\ 15 U.S.C. 78q-1(b)(3)(C).
    \8\ Securities Exchange Act Release No. 44989 (Oct. 25, 2001), 
66 FR 55220 (Nov. 1, 2001) (order approving integration of GSCC).
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    GSCC has requested that the Commission find good cause for 
approving the proposed rule change prior to the thirtieth day after the 
date of publication of notice of filing. The Commission finds good 
cause for approving the proposed rule change prior to the thirtieth day 
after the date of publication of notice of filing because such approval 
will allow GSCC to implement changes to its governance structure in an 
efficient, orderly, and expeditious manner once its integrated into the 
DTCC organization.

III. Conclusion

    On the basis of the foregoing, the Commission finds that the 
proposal 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-2001-13) be, and hereby 
is, approved.

    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority.\9\
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    \9\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 02-3047 Filed 2-7-02; 8:45 am]
BILLING CODE 8010-01-M