[Federal Register Volume 69, Number 33 (Thursday, February 19, 2004)]
[Notices]
[Pages 7832-7833]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-3541]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-49221; File No. SR-EMCC-2003-08]


Self-Regulatory Organizations; Emerging Markets Clearing 
Corporation; Notice of Filing and Immediate Effectiveness of a Proposed 
Rule Change Relating to Clearing Fund Requirements for Special Members

February 11, 2004.
    Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on December 22, 2003, the 
Emerging Markets Clearing Corporation (``EMCC'') 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 EMCC. 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 revises Addendum I (Clearing Fund 
Requirement for Special Member) of EMCC's Rules to establish a capped 
clearing fund requirement of $50 million for ``special members.''

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

    In rule filing SR-EMCC-2003-02, EMCC created the membership 
category ``special member.'' \3\ A special member is either an inter-
dealer broker (``IDB'') or another entity that clears for entities that 
are IDB's. The function of an IDB is to bring principals together in 
transactions on a matched and anonymous basis while taking no principal 
risk themselves, so if every dealer who interacted with an IDB were a 
member of EMCC, the IDB or its clearing firm would have to deposit only 
a minimal clearing fund amount. To the extent that one side of an IDB 
trade is not an EMCC member, the clearing fund requirement for the IDB 
or its clearing firm are based only on one side of the matched 
transaction. This one-sided calculation creates a clearing

[[Page 7833]]

fund obligation of a significant financial amount for the IDB or its 
clearing firm.
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    \3\ Securities Exchange Act Release No. 48366 (Aug. 19, 2003), 
68 FR 51311 (Aug. 26, 2003) (EMCC-2003-02).
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    This proposed rule change modifies the rule language adoption in 
SR-EMCC-2003-02 to establish a capped, as opposed to a fixed clearing 
fund obligation of $50 million to be deposited by special members. 
Under the proposed rule change, if the calculated clearing fund 
requirement were less than $50 million, the special member would only 
deposit the calculated required amount. If the calculated amount 
exceeds the $50 million cap for any day, the other EMCC members are 
required to deposit the difference between the calculated amount and 
the capped amount on a pro-rata basis based on their average clearing 
fund requirements over the previous thirty calendar day period. To have 
a capped clearing fund obligation of $50 million for special members 
was EMCC's intent in File No. SR-EMCC-2003-02.
    EMCC believes that the proposed rule change is consistent with the 
requirements of the Act and the rules and regulations thereunder 
because it will permit a more equitable allocation of charges among 
participants since it will not require a participant to deposit funds 
greater than the calculated required amount.

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

    The foregoing rule change has become effective pursuant to section 
19(b)(3)(A)(i) of the Act \4\ and Rule 19b-4(f)(1) \5\ thereunder 
because it constitutes an interpretation with respect to the meaning of 
an existing rule. At any time within sixty days of the filing of such 
rule change, the Commission may summarily abrogate such rule change if 
it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act.
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    \4\ 15 U.S.C. 78S(b)(3)(a)(i).
    \5\ 17 CFR 240.19b-4(f)(1).
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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-2003-08. This file number should be included on the 
subject line if e-mail is used. To help the Commission process and 
review comments your 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 and on 
EMCC's Web site at http://www.e-m-c-c.com/legal/index.html. All 
submissions should refer to File No. SR-EMCC-2003-08 and should be 
submitted within March 11, 2004.

    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. 04-3541 Filed 2-18-04; 8:45 am]
BILLING CODE 8010-01-P