[Federal Register Volume 69, Number 85 (Monday, May 3, 2004)]
[Notices]
[Pages 24208-24209]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-9932]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-49623; File No. SR-EMCC-2004-01]


Self-Regulatory Organizations; Emerging Markets Clearing 
Corporation; Notice of Filing of a Proposed Rule Change To Amend the 
Emerging Markets Clearing Corporation's Rules With Regard to the 
Imposition of Fines Upon Its Members

April 27, 2004.
    Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on March 4, 2004, the 
Emerging Markets Clearing Corporation (``EMCC'') filed with the 
Securities and Exchange Commission (``Commission'') the proposed rule 
change 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 parties.
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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

    EMCC is seeking to amend its rules with regard to the imposition of 
fines upon its 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 these 
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

    The purpose of the proposed rule change is to expand EMCC's rules 
with regard to the imposition of fines upon its members and to more 
specifically identify the actions or inactions of members that will 
result in the imposition of fines.
    Rule 35, ``Disciplinary Proceedings,'' permits EMCC to impose fines 
upon members for violations of any provision of EMCC's rules or 
member's agreements with EMCC, for any error, delay, or other conduct 
that is determined by EMCC to be detrimental to the EMCC's operations 
or for not providing adequate facilities for members' business with 
EMCC.\3\
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    \3\ Previously, EMCC did not impose fines upon members for 
violations of its rules. It has, however, charged members a fee for 
late margin payments in the amount of $500.00. If the fine schedule 
contemplated by the proposed rule change is approved, the late 
margin payment fee will be elimianted from EMCC's Fee Schedule and 
will be replaced with a specified fine.
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    Section 3 of Rule 13, ``Financial Responsibility and Operational 
Capability,'' permits EMCC to request that members furnish to EMCC such 
adequate assurances of their financial responsibility and operational 
capability as EMCC may at any time deem necessary. Pursuant to Rule 13 
and in furtherance of EMCC's responsibilities, EMCC may periodically 
request that its members provide financial and operational information 
about their business.\4\ Failure to timely receive requested 
information could create risk to EMCC. To address this concern, EMCC 
intends to fine members who fail to timely respond to requests for 
information. Additional fines will be imposed in the event a member 
fails to respond to subsequent requests for information.
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    \4\ In this regard, EMCC will notify all members that is will 
require members to provide certain information on an ongoing basis 
and that failure to provide the information will result in a fine 
being imposed. Imposition of fines would commence not earlier than 
three months after effectiveness of this proposed rule change.
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    In addition to the obligation to provide adequate assurances 
described above, members have an ongoing responsibility as stated in 
Rule 2, ``Members,'' Section 7, ``General Continuance Standards,'' to 
notify EMCC both in writing and orally of certain conditions, 
including, but not limited to, material changes in control or financial 
condition. It is EMCC's intent to fine members that fail to comply with 
these notification requirements with each failure considered a separate 
finable event.
    To implement the changes described above, EMCC will create Addendum 
J, ``Fine Schedule,'' to its rules,\5\ which will list all finable 
offenses and their associated fines. In addition, EMCC will: (1) Modify 
Rule 35, ``Disciplinary Proceedings,'' Section 1 to increase the 
maximum fine for any single offense

[[Page 24209]]

from $5,000 to $10,000, which is the new maximum fine under Addendum J; 
(2) make a corresponding change to Rule 31, ``Hearing Procedures;'' and 
(3) modify Addendum F, ``Fee Schedule,'' to eliminate the fee for late 
margin payments described above. EMCC will collect fines imposed on 
members through a miscellaneous charge in the member's monthly 
statement of charges, and in order to comply with section 19(d)(1) of 
the Act,\6\ EMCC will provide the Commission with pertinent information 
regarding each fine imposed.
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    \5\ While Rule 2, ``Members,'' and Rule 13, ``Financial 
Responsibility and Operational Capability,'' are specifically noted 
within this filing, they are not the only rules under which a fine 
may be imposed by EMCC.
    \6\ 15 U.S.C. 78s(d)(1).
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    The proposed rule change to impose fines upon members for conduct 
detrimental to the operations of EMCC will further ensure that EMCC may 
appropriately discipline its members for violation of its Rules, as 
well as improve EMCC's ability to enforce compliance with its Rules. 
Therefore, EMCC believes that the proposed rule change is consistent 
with the requirements of section 17A of the Act and the rules and 
regulations thereunder.

(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 35 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. Comments may be submitted by any of 
the following methods:
    Electronic comments:
     Use the Commission's Internet comment form 
(http://www.sec.gov/rules/sro.shtml) or
     Send an e-mail to [email protected]. Please 
include File Number SR-EMCC-2004-01 on the subject line.
    Paper comments:
     Send paper comments in triplicate to Jonathan G. 
Katz, Secretary, Securities and Exchange Commission, 450 Fifth Street, 
NW., Washington, DC 20549-0609.
All submissions should refer to File Number SR-EMCC-2004-01. 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, 
please use only one method. The Commission will post all comments on 
the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). 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 the principal office of EMCC and on 
EMCC's Web site at http://www.e-m-c-c.com. All comments received will 
be posted without change; the Commission does not edit personal 
identifying information from submissions. You should submit only 
information that you wish to make available publicly. All submissions 
should refer to File Number SR-EMCC-2004-01 and should be submitted on 
or before May 24, 2004.

    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority.\7\
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    \7\ 17 CFR 200.30-3(a)(12).
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Jill M. Peterson,
Assistant Secretary.
[FR Doc. 04-9932 Filed 4-30-04; 8:45 am]
BILLING CODE 8010-01-P