[Federal Register Volume 67, Number 90 (Thursday, May 9, 2002)]
[Notices]
[Pages 31394-31398]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-11617]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-45868; File Nos. SR-DTC-2000-21, SR-OCC-2001-01, SR-
NSCC-2001-13, SR-EMCC-2001-02, SR-GSCC-2001-12, and SR-MBSCC-2001-03]


Self-Regulatory Organizations; The Depository Trust Company, The 
Options Clearing Corporation, National Securities Clearing Corporation, 
Emerging Markets Clearing Corporation, Government Securities Clearing 
Corporation, and MBS Clearing Corporation; Order Granting Approval of 
Proposed Rule Changes Seeking Authority To Enter Into a Multilateral 
Cross-Guaranty Agreement

May 2, 2002.

I. Introduction

    On December 14, 2000, February 20, 2001, June 26, 2001, June 27, 
2001, September 21, 2001, and September 25, 2001, The Depository Trust 
Company (``DTC''), The Options Clearing Corporation (``OCC''), National 
Securities Clearing Corporation (``NSCC''), Emerging Markets Clearing 
Corporation (``EMCC''), Government Securities Clearing Corporation 
(``GSCC''), and MBS Clearing Corporation (``MBSCC'') (collectively 
referred to as the ``clearing agencies''), respectively, filed with the 
Securities and Exchange Commission (``Commission'') proposed rule 
changes (File Nos. SR-DTC-2000-21, SR-OCC-2001-01, SR-NSCC-2001-13, SR-
EMCC-2001-02, SR-GSCC-2001-12, and SR-MBSCC-2001-03) pursuant to 
Section 19(b)(1) of the Securities Exchange Act of 1934 (``Act'').\1\ 
The purpose of the proposed rule change was to enable the clearing 
agencies to enter into a multilateral cross-guaranty agreement 
(``Multilateral Agreement''). Notice of the proposals was published in 
the Federal Register on March 14, 2002.\2\ No comment letters were 
received. For the reasons discussed below, the Commission is granting 
approval of the proposed rule changes.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ Securities Exchange Act Release No. 45524, (March 8, 2002), 
67 FR 11521.
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II. Description

    The clearing agencies have filed these proposed rule changes in 
order that they may enter into a multilateral cross-guaranty agreement 
that will replace the existing bilateral cross-guaranty agreements that 
are in place today.\3\ In general, each clearing agency that is a party 
to a bilateral agreement provides the other clearing agency with a 
limited guaranty of the obligations of any entity that is a member of 
both clearing agencies. This means that if a common member fails and if 
one clearing agency winds up its business with the common member with 
assets of the common member in excess of the clearing member's 
liabilities to the clearing agency and the other clearing agency winds 
up its business with the common member with liabilities of the clearing 
member in excess of the clearing member's assets, (i) the clearing 
agency with the excess assets pays the clearing agency with the 
deficiency an amount equal to the lesser of the excess or the 
deficiency and (ii) the amount paid by the clearing agency with the 
excess assets to the clearing agency with the deficiency becomes an 
obligation of the common member to the clearing agency with the excess 
assets which the clearing agency with the excess assets may satisfy if 
necessary (thereby reimbursing itself for the amount paid to

[[Page 31395]]

the clearing agency with the deficiency) from the assets of the common 
member. In this way, through the mechanism of a limited cross-guaranty 
and a compensating reimbursement obligation, the assets of a common 
member at one clearing agency in excess of its liabilities to that 
clearing agency may be made available to satisfy the liabilities of the 
common member to another clearing agency where the clearing member has 
a deficiency of assets to satisfy its liabilities.
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    \3\ At the present time, there are bilateral cross-guaranty 
agreements in effect between:
    (1) DTC and NSCC (forming part of the DTC-NSCC Agreement that 
also provides for the netting of settlement payments and the 
collateralization of transactions processed through the facilities 
of DTC and NSCC), Securities Exchange Act Release Nos. 36867 
(February 21, 1996) [File No. SR-DTC-96-06] and 36866 (February 21, 
1996) [File No. SR-NSCC-96-03];
    (2) MBSCC and Participants Trust Company, Securities Exchange 
Act Release No. 38604 (May 9, 1997) [File No. SR-PTC-97-01] 
(Participants Trust Company has been merged into DTC, Securities 
Exchange Act Release No. 40357 (August 24, 1998) [File Nos. SR-DTC-
98-12, SR-PTC-98-02]);
    (3) NSCC and each of MBSCC, GSCC and International Securities 
Clearing Corporation (``ISCC''), (ISCC has ceased operations and is 
no longer a registered clearing agency), Securities Exchange Act 
Release Nos. 37616 (August 28, 1996) [File Nos. SR-MBSCC-96-02, SR-
GSCC-96-03 and SR-ISCC-96-04] and 39020 (September 4, 1997) [File 
No. SR-NSCC-97-11];
    (4) NSCC and OCC, Securities Exchange Act Release No. 39022 
(September 4, 1997) [File Nos. SR-OCC-97-17 and SR-NSCC-97-12]; and
    (5) EMCC and each of NSCC, GSCC, and ISCC, Securities Exchange 
Act Release Nos. 42180 (November 29, 1999) [File No. SR-EMCC-99-7] 
and 37616 (August 28, 1996) [File Nos. SR-MBSCC-96-02, SR-GSCC-96-
03, and SR-ISCC-96-04].
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Background

    The Multilateral Agreement is similar in purpose to the bilateral 
agreements but differs in that (i) all of the parties to the several 
bilateral agreements will be parties to the Multilateral Agreement, 
(ii) all of the transactions of common members with any of the clearing 
corporations will be subject to the limited cross-guaranties of the 
Multilateral Agreement, (iii) all of the assets of common members with 
any of the parties to the Multilateral Agreement will be subject to 
application pursuant to the provisions of the Multilateral Agreement, 
(iv) all of the parties to the Multilateral Agreement will rank pari 
passu in terms of the payment of their respective guaranty obligations 
and entitlements, and (v) all such guaranty obligations and 
entitlements will be (A) calculated by DTC (based on information 
provided by the clearing agencies) pursuant to a formula set forth in 
the Multilateral Agreement and (B) settled through the facilities of 
DTC upon instructions from the clearing agencies required to make 
guaranty payments.
    Set forth below is a description of the material terms and 
conditions of the Multilateral Agreement:
    If a clearing agency that is a party to the Multilateral Agreement 
ceases to act for or suspends a person (``ceases to act'') and if that 
person is a member or participant of two or more clearing agencies 
(``common member''), such clearing agency (``participating clearing 
agency'') must give each other clearing agency a notice (``default 
notice'') that it has ceased to act for such common member (hereinafter 
referred to as the ``defaulting member''). Each other clearing agency 
that also ceases to act for the defaulting member within a period of 
ten business days after the default notice is given (also a 
``participating clearing agency'') will have fifteen business days to 
deliver to each other participating clearing agency an information 
statement that sets forth the positive or negative sum derived (after 
application of any applicable liquidation procedures) from adding the 
amounts (specified in the Multilateral Agreement) owed by the 
participating clearing agency to the defaulting member as of the close 
of business on the day on which such participating clearing agency 
ceased to act for such defaulting member and subtracting the amounts 
(specified in the Multilateral Agreement) owed by the defaulting member 
to the participating clearing agency as of the close of business on 
such date. The resulting amount is the ``available net resources'' of 
such participating clearing agency with respect to such defaulting 
member.
    Each participating clearing agency with positive available net 
resources (``payor clearing agency'') will have an obligation to make a 
payment (``guaranty obligation'') to each participating clearing agency 
with negative available net resources, and each participating clearing 
agency with negative available net resources (``payee clearing 
agency'') will have an entitlement to receive a payment (``guaranty 
entitlement'') from each participating clearing agency with positive 
available net resources. The amount of the guaranty obligation or 
guaranty entitlement will be determined by a formula set forth in the 
Multilateral Agreement which (i) limits the aggregate guaranty 
obligation of any payor clearing agency to the amount of its positive 
available net resources and prorates the aggregate guaranty obligations 
of all payor clearing agencies (based on their available net resources) 
if all positive available net resources of all payor clearing agencies 
exceeds all negative available net resources of all payee clearing 
agencies and (ii) limits the aggregate guaranty entitlement of any 
payee clearing agency to the amount of its negative available net 
resources and prorates the aggregate guaranty entitlements of all payee 
clearing agencies (based on their available net resources) if the 
negative available net resources of all payee clearing agencies exceeds 
the positive available net resources of all payor clearing agencies.
    Within two business days after the end of the period for submitting 
information statements with the available net resources of the 
participating clearing agencies, DTC, acting for the participating 
clearing agencies whether or not DTC is a participating clearing agency 
with respect to any particular claim under the Multilateral Agreement 
and using only the information on available net resources contained in 
the information statements, will calculate the guaranty obligations and 
the guaranty entitlements of the participating clearing agencies in 
accordance with the formula set forth in the Multilateral Agreement and 
will deliver a report thereon to the participating clearing agencies. 
Two business days after that, DTC, acting on appropriate payment 
instructions from the payor clearing agencies, will debit their 
settlement accounts at DTC the amounts of their guaranty obligations 
and will credit the settlement accounts of the payee clearing agencies 
at DTC the amounts of their guaranty entitlements. Such debits and 
credits then will be netted and settled with all other debits and 
credits to the settlement accounts of the participating clearing 
agencies. All of the clearing agencies are or will be prior to the 
execution of the Multilateral Agreement participants of DTC.
    It is important to note that a clearing agency cannot assert a 
claim and cannot be obligated to make or be entitled to receive a 
payment unless it ceases to act for a defaulting member. Each clearing 
agency will determine on the basis of its own rules whether or not to 
cease to act for a defaulting member. Generally, a clearing agency may 
cease to act for a defaulting member to protect the interests of the 
clearing agency, its other members or participants, and the national 
system for the clearance and settlement of securities transactions if, 
among other things, the defaulting member (a) has failed to pay a 
settlement debit, (b) has failed to pay or perform any other obligation 
to the clearing agency, or (c) has become the subject of an insolvency 
proceeding or has become a ``failed member'' within the meaning of the 
Federal Deposit Insurance Corporation Improvement Act of 1991 (e.g. it 
ceases to meet its obligations when due even if it has not become the 
subject of a formal insolvency proceeding). Ceasing to act for a member 
or participant is a serious measure which clearing agencies do not take 
lightly or do for minor defaults. Accordingly, by requiring that a 
clearing agency cease to act for a defaulting member before the 
procedures of the Multilateral Agreement can be implemented, the 
Multilateral Agreement ensures that the payment obligations of payor 
clearing agencies and the reimbursement obligations of defaulting 
participants to payor clearing agencies will not be triggered by minor 
defaults which do not pose a threat to the interests of the clearing 
agencies, their members or participants, or to the national system for 
the clearance and settlement of securities transactions.
    The Multilateral Agreement also provides for subsequent adjustments 
in guaranty obligations and guaranty entitlements among participating 
clearing agencies if information is

[[Page 31396]]

discovered which, if known at the time of the initial calculation, 
would have changed the amounts of such guaranty obligations and 
guaranty entitlements, subject to certain conditions and limitations as 
described below. If at any time within four years after any payment is 
made with respect to of a guaranty obligation any participating 
clearing agency has any information that could result in a change in 
the calculation of such payment, such participating clearing agency 
must give each other participating clearing agency an adjustment 
notice. Within a period of ten business days after the adjustment 
notice is given, each participating clearing agency must deliver to 
each other participating clearing agency (and to DTC if DTC is not a 
participating clearing agency with respect to such default) a 
supplemental information statement which sets forth (i) the amount of 
the available net resources of such participating clearing agency with 
respect to the defaulting member as of the close of business on the day 
on which such participating clearing agency ceased to act for such 
defaulting member but taking into account the effect, if any, of the 
information in the adjustment notice and (ii) the amount of its 
available net resources, if any, as of the close of business on the day 
it received the adjustment notice.
    Within two business days after the end of the period for submitting 
supplemental information statements with the available net resources of 
the participating clearing agencies, DTC, acting for the participating 
clearing agencies whether or not DTC is a participating clearing agency 
with respect to such default and using only the information on 
available net resources contained in the supplemental information 
statements, will recalculate the guaranty obligations and guaranty 
entitlements of the participating clearing agencies in accordance with 
the same formula originally used to calculate the guaranty obligations 
and guaranty entitlements of the participating clearing agencies and 
will deliver a report thereon to the participating clearing agencies. 
However, no participating clearing agency that is required to make a 
payment as a result of any recalculation of guaranty obligations and 
guaranty entitlements with respect to a prior default will be required 
to make any payment in excess of the positive amount of its available 
net resources on the date it received the adjustment notice plus any 
cash payments it previously received or minus any cash payments it 
previously paid pursuant to the terms of the Multilateral Agreement 
with respect to the same default. Two business days after that, DTC, 
acting on appropriate instructions from the participating clearing 
agencies required to make adjustment payments or entitled to receive 
adjustment payments as a result of the recalculation of the guaranty 
obligations and guaranty entitlements, will debit and credit the 
appropriate settlement accounts. Such debits and credits will then be 
netted and settled with all other debits and credits to the settlement 
accounts of the participating clearing agencies on the day of 
settlement.
    As the foregoing description of the process for determining and 
satisfying a claim under the Multilateral Agreement indicates, no 
clearing agency would ever be required under the Multilateral Agreement 
to deliver assets or the proceeds of assets of a defaulting member to 
another clearing agency except for assets or the proceeds thereof in 
excess of the obligations and liabilities of the defaulting member to 
the first clearing agency and then only up to the amount needed to 
discharge the liabilities and obligations of the defaulting member to 
the second clearing agency. Also, as the foregoing description of the 
process for adjusting guaranty obligations and guaranty entitlements 
under the Multilateral Agreement indicates, a clearing agency will 
never be required to use its own assets to pay the claim of any other 
clearing agency against a defaulting member. Only the available net 
assets of the defaulting member will ever be used for this purpose.
    Pursuant to the Multilateral Agreement, a clearing agency may be 
entitled to receive a guaranty payment from one or more other clearing 
agencies with respect to the obligations of a defaulting member. 
However, if a clearing agency receives a guaranty payment pursuant to 
the Multilateral Agreement, it will have a contingent obligation to 
refund some or all of such guaranty payment under two circumstances 
(each referred to as a ``clawback''):
    (i) A repayment as a result of a recalculation of the guaranty 
obligations and guaranty entitlements of participating clearing 
agencies, which, as described above, could take place at any time up to 
four years after the guaranty payment is received; or
    (ii) A payment or repayment as a result of a judicial determination 
that the defaulting member did not owe a participating clearing agency 
some or all of the amount of the charge covered by the guaranty 
payment, which, as explained below, could take place at any time up to 
six years after such charge.
    The Multilateral Agreement provides that if a court of competent 
jurisdiction determines that some or all of the amount paid by a payor 
clearing agency to a payee clearing agency was not owed by the 
defaulting member to the payee clearing agency, (i) the payee clearing 
agency will repay such amount (which may be some or all of the guaranty 
payment it received from the payor clearing agency) to the payor 
clearing agency or (ii) the payee clearing agency shall pay such amount 
to the defaulting member or its legal representative (e.g., a trustee 
or receiver) if so ordered by a court.
    There is no time limit expressed in the Multilateral Agreement 
within which a payee clearing agency can be required to make a court-
ordered repayment to the payor clearing agency or payment to the 
defaulting member or its legal representative because the parties to 
the Multilateral Agreement cannot by contract among themselves bind any 
court or any third party seeking relief in any court to any such time 
limit. Accordingly, the time within which a payee clearing agency could 
be required to make such payment or repayment would be the time within 
which a third party may bring a claim for such relief (i.e., the 
statutory limitations period applicable to such claim). Although it is 
difficult to predict how a claim that the payee clearing agency 
improperly charged the defaulting member and thereby received a 
guaranty payment from a payor clearing agency for an amount that the 
defaulting member did not in fact owe to the payee clearing agency 
would be framed, it is probable that it would be framed as a claim in 
contract (i.e., that the charge was not a proper charge under the rules 
of the payee clearing agency). Under the rules of each clearing agency, 
such rules constitute a contract between such clearing agency and its 
members or participants and are binding on all parties. In New York, 
which is the most likely venue of any proceeding and the law that would 
most likely govern any claim, the statutory limitations period 
applicable to a claim on contract is generally six years from the time 
of the breach.
    Although, as just discussed, a clawback could occur up to four or 
six years after a payee clearing agency receives a payment, as a 
practical matter, it is extremely unlikely that it would take (i) four 
years for participating clearing agencies to make all necessary 
adjustments in the calculation of guaranty obligations and guaranty 
entitlements under the

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Multilateral Agreement or (ii) six years for a defaulting member or its 
legal representative to assert a claim against a payee clearing agency 
that an amount was improperly charged against such defaulting member. 
Nevertheless, GSCC and MBSCC are amending their rules to better enable 
them to deal with a clawback should one ever arise. The following is a 
summary of the GSCC and MBSCC amendments.
GSCC
    GSCC is amending its rules to provide it with two options in 
dealing with a clawback:

Option 1

    GSCC has the option to apply any guaranty payment that it receives 
pursuant to the Multilateral Agreement upon receipt. If GSCC chooses 
this option:
    a. The members that would have been assessed in the absence of the 
guaranty payment will be required to reimburse GSCC for any amount 
subject to a clawback pro rata based on the benefits they received (in 
terms of the reduction or elimination of assessments made or that 
otherwise would be made against them) from such guaranty payment;
    b. The obligations of the members referred to in (a) above will be 
secured by requiring that such members must make and maintain 
additional deposits to the clearing fund in amounts equal to the 
benefits they received (in terms of the reduction or elimination of 
assessments made or that would have been made against them) from the 
guaranty payment;
    c. To deal with the possibility that a shortfall may occur in the 
situation where the additional clearing fund deposit of a particular 
member referred to in (a) above is no longer available at the time a 
clawback occurs (because, for example, that member became insolvent and 
its entire clearing fund deposit was used to cover losses incurred by 
GSCC), GSCC may treat such shortfall as an ``other loss'' pursuant to 
GSCC Rule 4, Section 8(g); and
    d. To deal with the fact that at least theoretically a clawback may 
not occur until four years (in the case of a recalculation of guaranty 
obligations and guaranty entitlements) or six years (in the case of a 
court determination of an improper charge) after receipt of a guaranty 
payment, the additional deposits made pursuant to (b) or (c) above by 
the members that would have been assessed must be retained by GSCC 
until GSCC is satisfied that (i) GSCC is no longer subject to a 
clawback under the Multilateral Agreement and (ii) the members are 
therefore no longer subject to a corresponding obligation to reimburse 
GSCC for the amount of any such clawback; and
    e. GSCC has the right (i) to waive the obligation of the members to 
make and maintain additional deposits to the clearing fund to secure an 
obligation on their part to reimburse GSCC for the amount of any 
clawback and/or (ii) to pay the clawback from the resources of GSCC 
without recourse to any member or their deposits to the clearing fund.

Option 2

    GSCC has the option to retain the guaranty payment and not apply it 
to its losses and/or liabilities arising from the default of the member 
until after the end of the clawback period. If GSCC chooses this 
option:
    a. The members would be assessed pursuant to GSCC's loss sharing 
rule and
    b. At the end of the clawback period, GSCC would distribute the 
guaranty payment to the members who were assessed (whether or not they 
are still members at the time of such distribution) pro rata the 
amounts of such assessments.
    Given that similar repayment issues are presented by GSCC's cross-
margining arrangements, GSCC is making comparable changes in its rules 
with respect to the repayment of cross-margining payments.
 MBSCC
    To deal with clawbacks, MBSCC is amending its rules as follows:
    a. Upon receipt of a guaranty payment, MBSCC will reduce or 
eliminate by an equivalent amount the assessments made or that 
otherwise would be made against the original contra-side participants 
pro rata as now provided in Rule 4 of Article III of its rules;
    b. The original contra-side participants will be required to 
reimburse MBSCC for any amount subject to a clawback pro rata the 
benefits they received (in terms of the reduction or elimination of 
assessments made or that otherwise would be made against them) from the 
guaranty payment;
    c. MBSCC will secure the obligations of the original contra-side 
participants referred to above by requiring that such original contra-
side participants must make and maintain additional deposits to the 
participants fund in amounts equal to the benefits they received (in 
terms of the reduction or elimination of assessments made or that 
otherwise would be made against them) from the guaranty payment;
    d. To deal with the possibility that the participants fund deposit 
of a particular original contra-side participant referred to in (3) 
above may no longer be available at the time the clawback occurs 
(because, for example, that participant became insolvent and its entire 
participant fund deposit was used to cover losses incurred by MBSCC), 
the remaining original contra-side participants referred to in (3) 
above would be required to replenish the deficiency by making 
additional deposits to the participants fund pro rata their additional 
deposits to the participants fund pursuant to (3) above;
    e. To deal with the fact that at least theoretically a clawback may 
not occur until four years (in the case of a recalculation of guaranty 
obligations and guaranty entitlements) to six years (in the case of a 
court determination of an improper charge) after receipt of a guaranty 
payment, the additional deposits made, pursuant to (3) or (4) above, by 
original contra-side participants must be retained by MBSCC until MBSCC 
is satisfied that (i) MBSCC is no longer subject to a clawback under 
the Multilateral Agreement and (ii) the original contra-side 
participants are therefore no longer subject to a corresponding 
obligation to reimburse MBSCC the amount of any such clawback; and
    f. MBSCC has the right to (i) waive the obligation of the original 
contra-side participants to make and maintain additional deposits to 
the participants fund to secure an obligation on their part to 
reimburse MBSCC for the amount of any clawback and/or (ii) to pay any 
clawback from the resources of MBSCC without recourse to any original 
contra-side participants or their deposits to the participants fund.
    Any clearing agency other than DTC may withdraw from the 
Multilateral Agreement with ten days advance written notice. Any 
clearing agency which resigns as a participant of DTC will also cease 
to be a party to the Multilateral Agreement effective upon such 
resignation. However, any such withdrawal or resignation will not 
effect the obligations of a withdrawing or resigning clearing agency 
with respect to a claim for which a default notice was delivered prior 
to such withdrawal or resignation and any such termination does not 
affect the obligations of any clearing agency with respect to a claim 
for which a default notice was delivered prior to such termination. DTC 
may terminate the Multilateral Agreement entirely with advance written 
notice of one year.
    In conjunction with entering into the Multilateral Agreement, NSCC, 
EMCC,

[[Page 31398]]

GSCC, MBSCC, and OCC will terminate their current bilateral agreements 
so that there will be no issues of conflict or of priority with the 
limited cross-guaranty provisions of the Multilateral Agreement. DTC 
and NSCC will enter into a Seconded Amended and Restated Netting 
Contract and Limited Cross-Guaranty Agreement (``New DTC-NSCC 
Agreement''). The New DTC-NSCC Agreement will modify and supercede the 
current Amended and Restated Netting Contract and Limited Cross-
Guaranty Agreement dated February 21, 1996, between DTC and NSCC (``Old 
DTC-NSCC Agreement'').\4\ The New DTC-NSCC Agreement will delete the 
limited net resources cross-guaranty provisions of the Old DTC-NSCC 
Agreement so that the limited net resources cross-guaranty provisions 
of the Multilateral Agreement will be the only such provisions of this 
type between DTC and NSCC and among DTC, NSCC and the other parties to 
the Multilateral Agreement.
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    \4\ Securities and Exchange Act Release Nos. 36867 (February 27, 
1996), 61 FR 7288 [File No. SR-DTC-96-06] and 36866 (February 27, 
1996), 61 FR 7288 [File No. SR-NSCC-96-03] ) orders amending rules 
and cross-guaranty agreement to accommodate same-day funds 
settlement.)
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III. 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 custody or control of the clearing agency or 
for which it is responsible and to foster cooperation and coordination 
with persons engaged in the clearance and settlement of securities 
transactions.\5\ For the reasons set forth below, the Commission finds 
that the proposed rule changes are consistent with these obligations.
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    \5\ 15 U.S.C. 78q-1(b)(3)(F).
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    The Commission has encouraged the use of cross-guaranty agreements 
and has previously granted approval to several bilateral cross-guaranty 
agreements.\6\ The Commission believes that by entering into the 
Multilateral Agreement, the clearing agencies will be improving their 
cross-guaranty system and their ability to assure the safeguarding of 
securities and funds in their custody or control. By providing for a 
mechanism for the use of a defaulting member's assets on deposit at any 
one of the clearing agencies which is a party to the Multilateral 
Agreement to reduce or eliminate the defaulting member's obligations at 
any clearing agency which is a party to the Multilateral Agreement, the 
Multilateral Agreement should reduce the risk of losses to the clearing 
agencies due to a member's default.
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    \6\ Supra note 3.
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    The Commission also finds that the Multilateral Agreement is 
consistent with the clearing agencies' obligations to foster 
cooperation and coordination with persons engaged in the clearance and 
settlement of securities transactions.

IV. Conclusion

    On the basis of the foregoing, the Commission finds that the 
proposed rule changes are 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 changes (File Nos. SR-DTC-2000-21, SR-OCC-2001-
01, SR-NSCC-2001-13, SR-EMCC-2001-02, SR-GSCC-2001-12, and SR-MBSCC-
2001-03) be and hereby are approved.

    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority.\7\
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    \7\ 17 CFR 200.30-3(a)(12)
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Lynn Taylor,
Assistant Secretary.
[FR Doc. 02-11617 Filed 5-8-02; 8:45 am]
BILLING CODE 8010-01-U