[Federal Register Volume 68, Number 208 (Tuesday, October 28, 2003)]
[Notices]
[Pages 61507-61508]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-27136]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-48678; File No. SR-GSCC-2002-04]


Self-Regulatory Organizations; Government Securities Clearing 
Corporation; Order Approving Proposed Rule Change to Institute Informal 
Hearing Procedures for Fine Disputes

October 22, 2003.

I. Introduction

    On June 28, 2002, the Government Securities Clearing Corporation 
(``GSCC'') filed with the Securities and Exchange Commission 
(``Commission'') and on August 19, 2003, amended proposed rule change 
SR-GSCC-2002-04 pursuant to Section 19(b)(1) of the Securities Exchange 
Act of 1934 (``Act'').\1\ Notice of the proposal was published in the 
Federal Register on September 2, 2003.\2\ For the reasons discussed 
below, the Commission is approving the proposed rule change.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ Securities Exchange Act Release No. 48411 (August 26, 2003), 
68 FR 52256.
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II. Description

    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\ 
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, 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 that the 
fine should be waived. If management determines that the fine should be 
waived, it must inform the Membership and Risk Management Committee of 
its determination and the reasons for that determination. 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 had not determined in its review that 
the fine should be waived, the member has the right to the formal 
hearing already provided for in Rule 37.
    In addition, GSCC's rules are being amended to require that if a 
fine is assessed, the member must pay the fine within 30 calendar days 
(currently 90 days) after it receives the fine imposition letter. If 
the member requests a hearing in accordance with GSCC's rules to 
dispute the fine, the fine will not be owing while the hearing is 
pending.

III. Discussion

    Section 17A(b)(3)(F) of the Act requires that the rules of a 
clearing agency be designed to perfect the mechanism of a national 
system for the

[[Page 61508]]

prompt and accurate clearance and settlement of securities 
transactions.\5\ The Commission finds that GSCC's proposed rule change 
is consistent with this requirement because it clearly sets forth in 
GSCC's rules its procedures for management's review and possible waiver 
of fines and should provide members with a more efficient and less 
burdensome method for the possible resolution of disputed fines before 
a full hearing takes place. This added efficiency should contribute to 
the perfection of the national system for clearance and settlement.
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    \5\ 15 U.S.C. 78q-1(b)(3)(F).
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IV. Conclusion

    On the basis of the foregoing, the Commission finds that the 
proposed rule change is 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 change (File No. SR-GSCC-2002-04) be and hereby 
is approved.
    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).

Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 03-27136 Filed 10-27-03; 8:45 am]
BILLING CODE 8010-01-P