[Federal Register Volume 69, Number 130 (Thursday, July 8, 2004)]
[Notices]
[Page 41315]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-15454]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-49952; File No. SR-EMCC-2004-04]


Self-Regulatory Organizations; Emerging Markets Clearing 
Corporation; Order Granting Accelerated Approval of a Proposed Rule 
Change Relating to Buy-In and Sell-Out Procedures

June 30, 2004.
    On April 2, 2004, the Emerging Markets Clearing Corporation 
(``EMCC'') filed with the Securities and Exchange Commission 
(``Commission'') a proposed rule change pursuant to Section 19(b)(1) of 
the Securities Exchange Act of 1934 (``Act'')\1\ (File No. SR-EMCC-
2004-04). Notice of the proposal was published in the Federal Register 
on June 21, 2004.\2\ No comment letters have been received to date. For 
the reasons discussed below, the Commission is approving the proposed 
rule change on an accelerated basis.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ Securities Exchange Act Release No. 49851 (June 10, 2004), 
69 FR 34410.
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I. Description

    The proposed rule change will (a) revise EMCC Rule 7, sections 18 
(Buy-Ins) and 19 (Sell-Outs) to shorten the time period when a buy-in 
and sell-out may be initiated and when it may be executed and (b) make 
conforming, technical changes to EMCC Rule 1 (Definitions and 
Descriptions) and Rule 7.
    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 is also making 
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.

II. Discussion

    The Commission finds that the proposed rule change is consistent 
with the requirements of the Act and the rules and regulations 
thereunder and particularly with the requirements of section 
17A(b)(3)(F)\4\ of the Act, which requires that the rules of a clearing 
agency be designed to promote the prompt and accurate clearance and 
settlement of securities transactions. Because this proposed rule 
change aligns EMCC's buy-in and sell-out procedures with those of ISMA, 
EMCC should avoid any abrupt stoppage of the use of its services by 
members concerned with potential exposure from having two different 
buy-in and sell-out time frames. As a result, EMCC will be able to 
continue to provide for the prompt and accurate clearance and 
settlement of transactions in emerging markets securities.
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    \4\ 15 U.S.C. 78q-1(b)(3)(F).
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    EMCC has requested that the Commission find good cause for 
approving the proposed rule change prior to the 30th day after the date 
of publication of notice of filing. The Commission finds good cause for 
approving the proposed rule change prior to the 30th day after the date 
of publication of notice of filing because such approval will allow 
EMCC to have permanent buy-in and sell-out procedures that conform to 
the industry guidelines generally used in transactions cleared outside 
EMCC. This will help to avoid confusion and other adverse consequences 
to EMCC and its participants.
    The Commission also believes that there is good cause for approving 
the proposed rule change before the end of the comment period because 
such approval will allow EMCC to have permanent buy-in and sell-out 
procedures that conform to the industry guidelines generally used in 
transactions cleared outside EMCC. This will help to avoid confusion 
and other adverse consequences to EMCC and its participants.

III. Conclusion

    On the basis of the foregoing, the Commission finds that the 
proposal is consistent with the requirements of the Act and in 
particular with the requirements of section 17A of the Act \5\ and the 
rules and regulations thereunder.
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    \5\ 15 U.S.C. 78q-1.
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    It is therefore ordered, pursuant to section 19(b)(2) of the Act, 
that the proposed rule change (File No. SR-EMCC-2004-04) be, and hereby 
is, approved on an accelerated basis.
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    \6\ 17 CFR 200.30-3(a)(12).

    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority.\6\
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 04-15454 Filed 7-7-04; 8:45 am]
BILLING CODE 8010-01-P