[Federal Register Volume 69, Number 118 (Monday, June 21, 2004)]
[Notices]
[Pages 34410-34411]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-13902]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-49851; File No. SR-EMCC-2004-04]


Self-Regulatory Organizations; Emerging Markets Clearing 
Corporation; Notice of Filing of a Proposed Rule Change Relating to 
Buy-In and Sell-Out Procedures

June 10, 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 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 Organizations Statement of the Terms of Substance of 
the Proposed Rule Change

    The proposed rule change would (a) permanently amend Sections 18 
(``Buy-Ins'') and 19 (``Sell-Outs'') of EMCC Rule 7 (``Novation and 
Guaranty of Obligations and Receive, Deliver, and Settlement 
Obligations'') to shorten the time periods when buy-ins and sell-outs 
may be initiated and executed and (b) make conforming, technical 
changes to EMCC Rule 1 (``Definitions and Descriptions'') and Rule 7.

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 Organizations Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    When EMCC was formed, it was recognized that its buy-in and sell-
out procedures should be similar to those of the International 
Securities Market Association (``ISMA'') because of EMCC's 
understanding that ISMA's procedures are generally followed by emerging 
market trading parties for transactions settled outside EMCC. The 
reason for having similar buy-in and sell-out procedures was to 
preclude EMCC members from being subject to a buy-in or sell-out by a 
non-EMCC member and not be able to retransmit the buy-in or sell-out to 
an EMCC member in the same time frame. Accordingly, the time periods 
for buy-ins and sell-outs in EMCC rules followed the time periods that 
would be used by non-EMCC members for buy-ins and sell-outs.
    In December 2003, EMCC learned that effective January 1, 2004, ISMA 
was changing its buy-in and sell-out time frames for non-EMCC 
transactions. ISMA's changes had the effect of shortening the time 
period when a buy-in or sell-out could be initiated and when it could 
be executed. If EMCC had not made a corresponding change to its buy-in 
and sell-out rules at that time, it was possible that many EMCC members 
would have stopped submitting transactions to EMCC because they 
potentially could face buy-in and sell-out exposure due to the 
differences in EMCC's and ISMA's time frames. Accordingly, in order not 
to jeopardize the usage of EMCC for trade processing, or expose its 
members to risk, EMCC filed a proposed rule change with the Commission 
to conform its buy-in and sell-out time frames to those of ISMA. On 
December 30, 2003, the Commission approved on a temporary basis through 
June 30, 2004, EMCC's proposed rule change.\3\ Because the industry has 
not taken any action to date to rescind the changes ISMA made effective 
on January 1, 2004, EMCC is now seeking to have its buy-in and sell-out 
rules approved on a permanent basis.
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    \3\ Securities Exchange Act Release No. 49011 (Dec. 30, 2003), 
69 FR 711 (Jan. 6, 2004) [File No. SR-EMCC-2003-07].
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    In addition to these proposed rule changes, EMCC also seeks to make 
technical corrections to Rule 1 and Rule 7 regarding several rule and 
section references regarding its buy-in and sell-out provisions that 
inadvertently were not made in the past. This filing will correct that 
oversight.
    EMCC believes that the proposed rule change is consistent with the 
requirements of the Act and the rules and regulations thereunder 
because it will promote the prompt and accurate clearance and 
settlement of securities transactions.

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

    EMCC has not received any written comments from its members with 
regard to 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 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:

[[Page 34411]]

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-2004-04 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-2004-04. 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-2004-04 and should be submitted on 
or before July 12, 2004.

    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority.\4\
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    \4\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 04-13902 Filed 6-18-04; 8:45 am]
BILLING CODE 8010-01-P