[Federal Register Volume 68, Number 181 (Thursday, September 18, 2003)]
[Notices]
[Pages 54761-54762]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-23800]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-48463; File No. SR-EMCC-2003-04]


Self-Regulatory Organizations; Emerging Markets Clearing 
Corporation; Notice of Filing of Proposed Rule Change Creating an 
Inactive Member Category

September 9, 2003.
    Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on August 7, 2003, the 
Emerging Markets Clearing Corporation (``EMCC'') filed with the 
Securities and Exchange Commission (``Commission'') a proposed rule 
change as described in Items I, II, and III below, which Items have 
been prepared primarily by EMCC. The Commission is publishing this 
notice to solicit comments on the proposed rule change from interested 
persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The proposed rule change would create a new ``inactive member'' 
membership category in EMCC's rules.

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

    In its filing with the Commission, EMCC included statements 
concerning the purpose of and basis of 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. EMCC has prepared summaries, set forth in sections A, B, 
and C below, of the most significant aspects of such statements.\2\
---------------------------------------------------------------------------

    \2\ The Commission has modified the text of the summaries 
prepared by EMCC.
---------------------------------------------------------------------------

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

    The purpose of the proposed rule change is to create a new category 
of inactive membership. From time to time, participants find that their 
activity level in EMCC-cleared instruments does not warrant active 
membership status and the costs and risks associated with such status. 
At the same time, however, they are reluctant to terminate their active 
membership status because of the amount of time, effort, and cost that 
would be required to provide EMCC with the membership documents 
required to regain their active status should they later choose to take 
advantage of EMCC's services. To accommodate this need, EMCC proposes 
to add a category of inactive membership to its rules.
    In order to be eligible to be an inactive member, the participant 
must have no pending or fail positions or unpaid obligations. After a 
participant requests that they be placed in inactive status, management 
will act upon its request. It will not require the Membership and Risk 
Management Committee's approval (although those entities will be 
notified).
    A participant that requests to be placed on inactive status will be 
entitled to a refund of its clearing fund deposit thirty calendar days 
after it is placed on

[[Page 54762]]

inactive status. A participant that requests that it be placed on 
inactive status will no longer be assessable pursuant to Rule 4 for 
losses due to other members.
    While in inactive status, the participant must continue to provide 
the same financial reports that are required to active members and also 
must comply with all other reporting obligations. A participant that 
fails to do so will be subject the to the same terms and conditions as 
active members (e.g. fines, disciplinary action, termination, etc.). An 
inactive member will also be responsible for a reduced monthly account 
maintenance fee of $200.
    At the time the participant determines to reactivate its membership 
status, an initial clearing fund deposit will be determined in the same 
manner as for a new applicant, and membership approval must be granted 
by the Membership and Risk Management Committee. Inactive members will 
not be required to reexecute membership agreements or provide other 
documentation to the extent EMCC determines that it already has the 
required documentation or information (e.g. financials) necessary to 
make a determination on the reactivation request. If the participant is 
inactive for longer than eighteen months, EMCC will require an opinion 
of the participant's counsel in a form satisfactory to EMCC that 
affirms that there is not substantive change in the opinion(s) 
previously given as part of the member's original application for 
membership.
    EMCC believes that the proposed rule change is consistent with the 
requirements of section 17A of the Act \3\ and the rules and 
regulations thereunder because it will permit the equitable allocation 
of charges among participants.
---------------------------------------------------------------------------

    \3\ 15 U.S.C. 78q-1.
---------------------------------------------------------------------------

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

    EMCC does not believe that the proposed rule change will have an 
impact on or impose a burden on competition.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    Written comments from EMCC members have not been solicited or 
received on the proposed rule change.

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 5th Street NW., Washington, DC 20549-0069. 
Comments may also be submitted electronically at the following e-mail 
address: [email protected]. All comment letters should refer to 
File No. SR-EMCC-2003-04. 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 rule filing that 
are filed with the Commission, and all written communications relating 
to the rule filing between the Commission and any person, other than 
those that may be withheld from the public in accordance with 
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 EMCC's principal office. All submissions should refer to File No. 
SR-EMCC-2003-04 and should be submitted by October 9, 2003.

    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority.\4\
---------------------------------------------------------------------------

    \4\ 17 CFR 200.030-3(a)(12).
---------------------------------------------------------------------------

Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 03-23800 Filed 9-17-03; 8:45 am]
BILLING CODE 8010-01-M