[Federal Register Volume 69, Number 116 (Thursday, June 17, 2004)]
[Notices]
[Pages 33964-33965]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-13634]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-49825; File No. SR-EMCC-2004-06]


Self-Regulatory Organizations; Emerging Markets Clearing 
Corporation; Notice of Filing and Immediate Effectiveness of a Proposed 
Rule Change to Clarify the Form and Substance of Opinions of Counsel

June 8, 2004.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on April 2, 2004, the 
Emerging Markets Clearing Corporation (``EMCC'') filed a proposed rule 
change with the Securities and Exchange Commission (``Commission'') and 
on June 4, 2004, amended its 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 will amend Rule 2 (``Members'') and 
Annexes 1 and 2 of Addendum D (``Opinion'') of EMCC's rules by 
clarifying the legal issues that the opinion of counsel that must be 
filed by EMCC applicants must address.

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

    Prior to this rule change, EMCC Rule 2, Section 2(b) required each 
applicant for EMCC membership to provide EMCC an opinion of counsel 
that was ``substantially to the effect of'' Annex 1 (for non-U.S. 
registered broker-dealers) or Annex 2 (for U.S. registered broker-
dealers) of Addendum D of EMCC's rules. In each case, the opinion 
nevertheless had to be ``acceptable'' to EMCC.
    Recently, there has been some question about whether EMCC's rule 
require an applicant to obtain an opinion of counsel ``in the form of'' 
as opposed to ``to the effect of'' the annexes to Addendum D. There has 
also been some question about whether an opinion must be ``clean'' or 
if it can have exceptions because the annexes do not clearly indicate 
whether an opinion may set forth a reservation or exception. To clarify 
this, EMCC is replacing each annex with a list of items that set forth 
the legal issues that an opinion must address. As a result, the annexes 
will not contain any opinion of counsel forms, which forms EMCC had 
only intended to be used as examples. Additionally, in its revisions to 
Addendum D, EMCC is making clear which items in the lists of legal 
issues to be addressed may contain exceptions, restrictions, or 
limitations.
    Annex 1 will now provide that for non-U.S. applicants the opinion 
will be required to:
    1. Address whether the applicant is duly organized, validly 
existing and in good standing and the jurisdiction in which this 
applies.
    2. Address whether the applicant has full power and authority to 
enter into the agreements.
    3. Confirm That the agreements are legal, binding and enforceable 
and specify the jurisdiction in which this applies or confirm that the 
courts in that jurisdiction would give effect to the choice of New York 
Law as the governing law and any exceptions that need to be noted.
    4. Confirm that submission to the jurisdiction of the federal and 
state courts in New York is enforceable in the jurisdiction referenced 
in point 3 and any exceptions which must be noted.
    5. Explain how netting and novation are treated in the jurisdiction 
referenced in point 3 and how this would impact the obligations of the 
applicant.
    6. Explain the extent to which a court in the jurisdiction 
referenced in point 3 would apply New York law to perfected security 
interests under the agreements.
    7. Explain how insolvency, liquidation or other similar actions 
affecting creditor's rights impact the obligations of the applicant.
    8. Confirm that the agreements will not conflict with or be impeded 
by the laws or regulations issued in the jurisdiction referenced in 
point 3 or explain any exceptions to this statement.
    9. Explain the degree to which EMCC may initiate an action against 
the applicant in the jurisdiction referenced in point 3 without having 
to first obtain a judgment against the applicant in the United States.
    10. Explain whether there are any restrictions or limitations on 
the applicant's ability to provide information or documents that may be 
requested pursuant to EMCC's rules.
    11. Confirm that no other authorizations or actions are required 
from any regulatory authority in connection with the execution, 
delivery and performance of the agreements or

[[Page 33965]]

specify those that are required to be obtained and the status of those 
actions.
    Annex 2 will now provide that for domestic applicants the opinion 
will be required to:
    1. Address whether the applicant is duly organized, validity 
existing and in good standing and the jurisdiction in which this 
applies.
    2. Address whether the applicant has full power and authority to 
enter into the agreements.
    3. Confirm that the execution, delivery and performance of the 
agreements are not in contravention of any authorizing document, rule 
or regulation or, to the extent that a blanket representation can not 
be given, an explanation of any limitations.
    4. Confirm that no other authorizations or actions are required 
from any regulatory authority in connection with the execution, 
delivery and performance of the agreements or specify those that are 
required to be obtained and the status of those actions.
    5. Indicate that the agreements are legal, valid, binding and 
enforceable obligations against the company and any exceptions that 
need to be noted.
    All changes being made are to clarify or codify existing EMCC 
practices with respect to applicants' opinion of counsel. The rule will 
continue to provide that all opinions must still be acceptable to EMCC.
    EMCC believes that the proposed rule change is consistent with the 
requirements of Section 17A of the Act \3\ and the rules and 
regulations thereunder, as the proposed rule change eliminates the 
confusion with respect to the form of the opinion of counsel that EMCC 
requires its applicants to submit.
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    \3\ 15 U.S.C. 78q-1.
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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

    No written comments relating to the proposed rule change have been 
solicited or received. EMCC will notify the Commission of any written 
comments it receives.

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 a stated policy, practice, or interpretation 
with respect to the meaning, administration, or enforcement of an 
existing rule. At any time within sixty days of the filing of such rule 
change, the Commission could have summarily abrogated such rule change 
if it appeared to the Commission that such action was 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. 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-2004-06 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-2004-06. 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-2004-06 and should be submitted on 
or before July 8, 2004.

    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority.\6\

    \6\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 04-13634 Filed 6-16-04; 8:45 am]
BILLING CODE 8010-01-P