[Federal Register Volume 68, Number 169 (Tuesday, September 2, 2003)]
[Notices]
[Pages 52256-52257]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-22232]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-48411; File No. SR-GSCC-2002-04]


Self-Regulatory Organizations; Government Securities Clearing 
Corporation; Notice of Filing of Proposed Rule Change To Institute 
Informal Hearing Procedures for Fine Disputes

August 26, 2003.
    Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on June 28, 2002, the 
Government Securities Clearing Corporation (``GSCC'') filed with the 
Securities and Exchange Commission (``Commission'') and on August 19, 
2003, amended the proposed rule change 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 parties.
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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

    GSCC's current rules provide procedures whereby a member can 
dispute any fine through a formal hearing process. GSCC's rules also 
permit GSCC to establish procedures for a hearing not otherwise 
provided for in its rules. The proposed rule change would allow GSCC to 
institute informal hearing procedures for disputed fines.

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 these 
statements.\2\
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    \2\ The Commission has modified the text of the summaries 
prepared by OCC.
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(A) Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    Since 1998, GSCC has had the authority to impose fines in order to 
promote greater compliance with its funds settlement debit and clearing 
fund deposit deficiency call deadlines.\3\ GSCC Rule 37 contains 
procedures whereby a member can dispute any fine assessment through a 
formal hearing process. Rule 37 also permits GSCC to establish 
procedures for a hearing not otherwise provided for in the rules.\4\ 
With this proposed rule filing, GSCC seeks authority to specifically 
incorporate into its rules informal hearing procedures with respect to 
disputed fines.
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    \3\ Securities Exchange Act Release No. 39746 (March 12, 1998), 
63 FR 13439 (March 19, 1998) [File No. SR-GSCC-97-04].
    \4\ Government Securities Clearing Corporation Rule 37, Section 
7.
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    Pursuant to GSCC's new procedures, when a formal hearing is 
requested to dispute a fine, an informal hearing will automatically 
take place prior to a formal hearing occurring. Thus, if a member 
disputes a fine and asks for a formal hearing in the manner already 
specified in the rules, GSCC's management will automatically conduct a 
review of the disputed fine. Based on the documentation already 
required in the rules and/or a meeting arranged with the member, 
management may determine to waive the fine. If management determines to 
waive the fine, it must inform the Membership and Risk Management 
Committee of the waiver and management's reasons for granting the 
waiver. The Committee has the ability to accept or reject management's 
determination. If the Committee accepts management's determination, the 
fine will be waived. However, if the Committee chooses not to accept 
management's determination or if management initially determined not to 
waive the fine after conducting its review, the member has the right to 
the formal hearing already provided for in Rule 37.
    GSCC also seeks to change its rules to reflect that if a fine is 
assessed, the member must pay the fine within 30 calendar days after it 
receives the fine

[[Page 52257]]

imposition letter unless the member has requested a hearing to dispute 
the fine. Currently, GSCC's rules require that fines be paid within 90 
days. If a hearing has been requested, the fine is waived until the 
dispute is resolved.
    GSCC believes that the proposed rule change is consistent with the 
requirements of section 17A of the Act \5\ and the rules and 
regulations thereunder applicable to GSCC because it will promote the 
prompt and accurate clearance and settlement of securities transactions 
by clearly setting forth in GSCC's rules its procedures for conducting 
a review with respect to disputed fines, which procedures afford 
members a fair and less burdensome method for resolving fine disputes 
than is currently set forth in the rules.
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    \5\ 15 U.S.C. 78q-1.
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(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. Members will be notified of the rule change 
filing, and comments will be solicited by an Important Notice. 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

    Within thirty-five days of the date of publication of this notice 
in the Federal Register or within such longer period (i) as the 
Commission may designate up to ninety days of such date if it finds 
such longer period to be appropriate and publishes its reasons for so 
finding or (ii) as to which the self-regulatory organization consents, 
the Commission will:
    (A) by order approve such proposed rule change or
    (B) institute proceedings to determine whether the proposed rule 
change should be disapproved.

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-2002-04. 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 Section, 450 Fifth Street, NW., Washington, DC 20549. Copies 
of such filing also will be available for inspection and copying at the 
principal office of GSCC.
    All submissions should refer to File No. SR-GSCC-2002-04 and should 
be submitted by September 23, 2003.

    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority.\6\
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    \6\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 03-22232 Filed 8-29-03; 8:45 am]
BILLING CODE 8010-01-P