[Federal Register Volume 68, Number 248 (Monday, December 29, 2003)]
[Notices]
[Pages 75013-75014]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-31811]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-48954; File No. SR-SCCP-2003-04]


Self-Regulatory Organizations; Stock Clearing Corporation of 
Philadelphia; Order Approving a Proposed Rule Change Relating to 
Permanent Approval of SCCP's Restructured Limited Clearing Business

December 18, 2003.
    On June 20, 2003, the Stock Clearing Corporation of Philadelphia 
(``SCCP'') filed with the Securities and Exchange Commission 
(``Commission'') a proposed rule change 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 October 30, 2003.\2\ 
No comment letters were received. 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. 48692 (Oct. 24, 2003), 
68 FR 61846.
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I. Description

    This order permanently approves SCCP's business whereby it provides 
limited clearance and settlement services.

A. Background

    Through an agreement dated June 18, 1997 (``Agreement''), among 
SCCP, the Philadelphia Stock Exchange, Inc. (``Phlx''), the 
Philadelphia Depository Trust Company (``Philadep''), the National 
Securities Clearing Corporation (``NSCC''), and The Depository Trust 
Company (``DTC''), Philadep and SCCP transferred most of their 
depository and clearance services to DTC and NSCC. As a result, SCCP 
stopped providing its continuous net settlement (``CNS'') system for 
conducting settlements between SCCP and its participants and its cash 
settlement services attendant to Philadep's same-day funds settlement 
system and the Philadep settlement process. However, pursuant to the 
Agreement, SCCP continued to offer

[[Page 75014]]

limited clearing and settlement services to Phlx members.\3\
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    \3\ This Agreement was executed in connection with Phlx's 
withdrawal from the securities depository business (offered by its 
wholly-owned subsidiary, Philadep) and Phlx's restructured and 
limited clearance and settlement business (offered by its wholly-
owned subsidiary, SCCP).
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    In December 1997, the Commission approved proposed rule changes 
that implemented the Agreement.\4\ These rule changes reflected 
Philadep's withdrawal from the depository business and temporarily 
approved for one year SCCP's restructured and limited clearance and 
settlement business.\5\ Subsequently, the Commission has extended the 
temporary approval several times so that SCCP could continue to offer 
restructured and limited clearance and settlement services.\6\
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    \4\ Securities Exchange Act Release No. 39444 (Dec. 11, 1997), 
62 FR 66703 (Dec. 19, 1997) [File Nos. SR-TC-97-16, SR-NSCC-97-08, 
SR-Philadep-97-04, and SR-SCCP-97-04].
    \5\ At that time, the Commission stated that ``because a part of 
SCCP's proposed rule change concerns the restructuring of SCCP's 
operations to enable SCCP to offer limited clearing and settlement 
services to certain Phlx members, the Commission finds that it is 
appropriate to grant only temporary approval to the portion of 
SCCP's proposed rule change that amends SCCP's By-Laws, Rules, or 
Procedures. This will allow the Commission and SCCP to see how well 
SCCP's restructured operations are functioning under actual working 
conditions and to determine whether any adjustments are necessary. 
Thus, the Commission is approving the portion of SCCP's proposal 
that amends its By-Laws, Rules and Procedures through Dec. 31, 
1998.''
    \6\ Securities Exchange Act Release Nos. 40872 (Dec. 31, 1998), 
64 FR 1264 (Jan. 8, 1999) [File No. SR-SCCP-98-05]; 42320 (Jan. 6, 
2000), 65 FR 2218 (Jan. 13, 2000) [File No. SR-SCCP-99-04]; 43781 
(Dec. 28, 2000), 66 FR 1167 (Jan. 5, 2001) [File No. SR-SCCP-00-05]; 
45227 (Jan. 3, 2002), 67 FR 1259 (Jan. 9, 2002) [File No. SR-SCCP-
2001-11]; and 47016 (Dec. 17, 2000), 67 FR 78556 (Dec. 24, 2002) 
[File No. SR-SCCP-2001-12].
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B. SCCP's Proposed Rule Change

    In its current rule filing, SCCP proposed that the Commission 
permanently approve SCCP's limited clearance and settlement business. 
SCCP believes that its restructured operations have functioned 
consistent with its original proposed rule change and are functioning 
well under actual working conditions.
    Accordingly, because this proposed rule change would not result in 
any substantive or textual changes to its rules or its restructured 
operations, SCCP will continue to offer the same services as it has 
been since the 1997 rule changes took affect. Specifically, SCCP will 
continue to offer trade confirmation and recording services to Phlx 
members effecting transactions through what SCCP refers to as regional 
interface operations (``RIO'') accounts and ex-clearing accounts. SCCP 
will not provide clearing guarantees for these transactions. In 
addition, SCCP will also continue to provide margin accounts for margin 
members that clear and settle their transactions through SCCP's Omnibus 
Clearance and Settlement Account at NSCC.\7\
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    \7\ For a detailed discussion of the clearance and settlement 
services SCCP will continue to provide, refer to the notice, supra 
note 2.
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II. Discussion

    Section 17A(b)(3)(F) of the Act \8\ requires, among other things, 
that the rules of a clearing agency are designed to promote the prompt 
and accurate clearance and settlement of securities transactions. The 
Commission finds that SCCP's proposed rule change is consistent with 
SCCP's obligations under section 17A(b)(3)(F) of the Act because 
permanently approving the rules relating to SCCP's restructured 
business should eliminate any uncertainty about and therefore provide 
greater confidence in SCCP's long-term ability and commitment to 
provide prompt and accurate clearance and settlement services to the 
securities industry. In addition, since the proposed rule change does 
not alter any of SCCP's rules or structure of its services and in light 
of SCCP's actual performance since 1997, SCCP should be able to provide 
for the prompt and accurate clearance and settlement of securities 
transactions.
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    \8\ 15 U.S.C. 78q-1(b)(3)(F).
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III. Conclusion

    On the basis of the foregoing, the Commission finds that the 
proposal is consistent with the requirements of the Act and in 
particular with the requirements of section 17A of the Act \9\ and the 
rules and regulations thereunder.
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    \9\ 15 U.S.C. 78q-1.
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    It is therefore ordered, pursuant to section 19(b)(2) of the Act, 
that the proposed rule change (File No. SR-SCCP-2003-04) be, and hereby 
is, approved.

    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority.\10\
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    \10\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 03-31811 Filed 12-24-03; 8:45 am]
BILLING CODE 8010-01-P