[Federal Register Volume 68, Number 15 (Thursday, January 23, 2003)]
[Notices]
[Pages 3287-3288]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-1452]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-47182; File No. SR-GSCC-2002-06]


Self-Regulatory Organizations; Government Securities Clearing 
Corporation; Notice of Filing and Immediate Effectiveness of a Proposed 
Rule Change Relating to the Imposition of a Fee on Members That Fail To 
Submit Transaction Data in an Interactive and Timely Manner

January 14, 2003.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on August 12, 2002, 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 primarily 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 will adjust the trade comparison fees for 
GSCC members that use GSCC's real time trade matching (``RTTM'') 
process but do not submit trade data on an interactive and timely 
basis.

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 NSCC.
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A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    Since its inception in December 2000, GSCC's RTTM service has grown 
to encompass an increasing portion of trades that are submitted to 
GSCC. The expansion of the use of RTTM for government securities, its 
introduction for mortgage backed securities products (which is 
scheduled for September 2002), and ultimately its use for other fixed-
income products remains GSCC's most significant initiative.
    In order to encourage members to shift to interactive processing, 
GSCC imposed, effective July 1, 2001, a five-cent per side comparison 
surcharge for non-interactive members.\3\ The imposition of this 
financial incentive and the growing use of interactive messaging in 
connection with the RTTM service have not, however, ensured that 
members are submitting transaction data promptly after trade execution.
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    \3\ A transaction is considered non-interactive if it is 
submitted more than one hour after its execution.
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    In order to ensure that members not only participate in the RTTM 
process but also submit transaction data on a timely basis and in order 
to cover the cost of batch processing, GSCC is imposing the following 
new fees (which fees are in addition to the normal 50-cent per side 
comparison fee and in lieu of the current five cent per side 
surcharge):


[[Page 3288]]


1. For members that participate in GSCC's RTTM process using a GSCC 
Interactive Submission method,\4\ there is no charge.
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    \4\ An ``Interactive Submission Method'' (``ISM'') is defined in 
GSCC's rules as ``a trade submission method that is used to submit 
data on individual trades to [GSCC] immediately after trade 
execution pursuant to communication links, formats, timeframes, and 
deadlines established by [GSCC] for such purpose. The [ISM] includes 
two different types of submission methods: (i) Computer-to-computer, 
where the trade is fed to [GSCC's] computer directly from the 
submitter's computer, and (ii) terminal interface, where the trade 
is manually entered into [GSCC's] system.
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2. For a member that participates in GSCC's RTTM process using multi-
batch submissions or submits data to GSCC via terminal: (a) Ten cents 
per side imposed on all of its comparison activity if at least 80% of 
its overall activity is submitted to GSCC within one hour of trade 
execution and (b) 25 cents per side fee imposed on all of its 
comparison activity if more than 20% of its overall activity is not 
submitted to GSCC within one hour of trade execution.

The percentage calculations described above will only be applied to 
data on new activity (i.e., not on cancellations or modifications).
    The fees became effective on September 1, 2002, for netting members 
and on January 1, 2003, for comparison-only members.
    GSCC believes that the proposed rule change is consistent with the 
requirements of the Act and the rules and regulations thereunder 
because it involves a change to GSCC's fee structure that will 
encourage members to move to interactive processing and thereby allow 
GSCC and its members to achieve important risk management benefits.

B. Self-Regulatory Organization's Statement on Burden on Competition

    GSCC does not believe that the proposed rule change will have any 
impact or impose any 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. GSCC will notify the Commission of any 
written comments received by GSCC.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    The foregoing rule change has become effective pursuant to Section 
19(b)(3)(A)(ii) of the Act \5\ and Rule 19b-4(f)(2) \6\ thereunder 
because the proposed rule change is changing a due, fee, or other 
charge. At any time within sixty days of the filing of such proposed 
rule change, the Commission may summarily abrogate such rule change if 
it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act.
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    \5\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \6\ 17 CFR 240.19b-4(f)(2).
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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. 
Comments may also be submitted electronically at the following e-mail 
address: [email protected]. All comment letters should refer to 
File No. SR-GSCC-2002-06. This file number should be included on the 
subject line if e-mail is used. To help us process and review comments 
more efficiently, comments should be sent in hardcopy or by e-mail but 
not by both methods. 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. GSCC-2002-06 and should be 
submitted within February 13, 2002.

    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority.\7\
Margaret H. McFarland,
Deputy Secretary.
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    \7\ 17 CFR 200.30-3(a)(12).
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[FR Doc. 03-1452 Filed 1-22-03; 8:45 am]
BILLING CODE 8010-01-M