[Federal Register Volume 69, Number 9 (Wednesday, January 14, 2004)]
[Notices]
[Pages 2167-2168]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-800]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-49046; File No. SR-SCCP-2002-07]


Self-Regulatory Organizations; Stock Clearing Corporation of 
Philadelphia; Notice of Filing of a Proposed Rule Change Relating to 
Ex-Clearing Account Transactions

January 8, 2004.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on December 26, 2002, the 
Stock Clearing Corporation of Philadelphia (``SCCP'') 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 SCCP. 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 would amend SCCP Rule 11 (Ex-Clearing 
Accounts) to include a transaction in an ex-clearing account whereby 
both sides have agreed not to transmit the transaction from SCCP to the 
National Securities Clearing Corporation (``NSCC'') for clearance and 
settlement.

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

    In its filing with the Commission, SCCP 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. SCCP 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 parts of these statements.

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[[Page 2168]]

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 facilitate the 
efficient clearance and settlement of securities transactions by SCCP 
participants that have made their own arrangements to transmit such 
transactions directly to NSCC. SCCP anticipates that certain members of 
the Philadelphia Stock Exchange (``Phlx'') that participate in Phlx's 
program to trade Nasdaq securities will make arrangements for the 
clearing and settlement of their Nasdaq securities trading at Phlx 
directly with NSCC. SCCP intends to offer such Phlx members the use of 
an ex-clearing account for this purpose. Currently, SCCP uses ex-
clearing accounts in situations where both sides have agreed to settle 
a transaction outside any registered clearing agency mechanism such as 
NSCC. This is in addition to other accounts offered by SCCP, such as a 
RIO account \3\ and a margin account.\4\
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    \3\ RIO means regional interface organization, which is the 
system through which SCCP transmits to and receives trade data from 
NSCC. In a RIO account, SCCP records, confirms, and transmits 
transactions to the RIO participant's NSCC account or its 
correspondent account that ultimately settles directly with NSCC. 
SCCP makes no trade guarantees respecting RIO account transactions. 
SCCP is solely a trade recording, confirmation, and transmission 
agent of RIO account participants' transaction activity.
    \4\ Phlx specialists, alternate specialists, and other Phlx 
floor members may be specifically approved by NSCC to effect trading 
in a margin account. SCCP will provide margin accounts for margin 
members that clear and settle their transactions through SCCP's 
omnibus clearance and settlement account at NSCC.
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    SCCP now proposes to amend SCCP Rule 11 to add transactions whereby 
both sides have agreed not to transmit the transaction to NSCC for 
clearing and settlement via SCCP. Accordingly, both sides could agree 
to submit a transaction directly to NSCC instead of SCCP doing so. A 
SCCP ex-clearing account would then be available for the following two 
scenarios, where both sides have agreed to settle a transaction: (1) 
Outside of NSCC and (2) at NSCC but without SCCP submitting the 
transaction there.\5\
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    \5\ The use of ex-clearing accounts as proposed in this proposed 
rule change is not limited to trading in Nasdaq securities and may 
be used in any situation that otherwise meets the criteria for the 
use of ex-clearing accounts in this manner.
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    SCCP believes that the proposed rule change is consistent with 
Section 17A(b)(3)(F) of the Act \6\ which requires that the rules of a 
clearing agency be designed to promote the prompt and accurate 
settlement of securities transactions, to remove impediments to and 
perfect the mechanism of a national system, and to protect SCCP, its 
members, investors, and the public interest.
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    \6\ 15 U.S.C. 78q-1(b)(3)(F).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    SCCP does not believe that the proposed rule will impose any 
inappropriate burden on competition.

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

    SCCP has not solicited or received written comments 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 SCCP consents, the Commission will:
    (a) By order approve the 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-SCCP-2002-07. This file number should be included on the 
subject line if e-mail is used. To help the Commission process and 
review your 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 SCCP's principal office and on SCCP's Website at http://www.phlx.com/ exchange/memos/SCCP/memindex--sccpproposals.html. All 
submissions should refer to File No. SR-SCCP-2002-07 and should be 
submitted by February 4, 2004.

    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority.\7\
J. Lynn Taylor,
Assistant Secretary.
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    \7\ 17 CFR 200.30-3(a)(12).
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[FR Doc. 04-800 Filed 1-13-04; 8:45 am]
BILLING CODE 8010-01-P