[Federal Register Volume 69, Number 24 (Thursday, February 5, 2004)]
[Notices]
[Pages 5622-5623]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-2331]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-49150; File No. SR-EMCC-2003-04]


Self-Regulatory Organizations; Emerging Markets Clearing 
Corporation; Order Approving a Proposed Rule Change Creating an 
Inactive Member Category

January 29, 2004.
    On August 7, 2003, 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-
2003-04). Notice of the proposal was published in the Federal Register 
on September 18, 2003.\2\ No comment letters were received. For the 
reasons discussed below, the Commission is approving the proposed rule 
change.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ Securities Exchange Act Release No. 48463 (Sept. 9, 2003), 
68 FR 54761.
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I. Description

    The proposed rule change will create a new membership category for 
inactive members. From time to time, participants find that their 
activity level in EMCC-cleared instruments does not warrant active 
membership status and the costs and risks associated with such status. 
At the same time, however, they are reluctant to terminate their 
membership because of the amount of time, effort, and cost that would 
be required to provide EMCC with the membership documents required to 
regain their membership status should they later choose to take 
advantage of EMCC's services. To accommodate this need, EMCC proposes 
to add to its rules a new section for ``inactive status'' and a new 
definition for the term ``inactive member.'' \3\
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    \3\ EMCC Rule 2 (Members), sec. 10 (Inactive Status); EMCC Rule 
1 (Definitions).
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    In order to be eligible to be an inactive member, the participant 
must have no pending or fail positions and no unpaid money obligations. 
After a participant requests that it be placed in inactive status, 
management will act upon its request. Management's decision to grant a 
participant's request for inactive status will not require approval by 
EMCC's Membership and Risk Management Committee, but this committee 
will be notified.
    A participant that requests to be placed on inactive status will be 
entitled to a refund of its clearing fund deposit

[[Page 5623]]

30 calendar days after it is placed on inactive status. A participant 
that requests that it be placed on inactive status will no longer be 
assessable pursuant to Rule 4 for losses due to other members.
    While in inactive status, the participant must continue to provide 
the same financial reports that are required of active members and also 
must comply with all other reporting obligations. A participant that 
fails to do so will be subject to the same terms and conditions as 
active members (e.g. fines, disciplinary action, termination, etc.). An 
inactive member will also be responsible for a reduced monthly account 
maintenance fee of $200.
    If the participant determines to reactivate its membership status, 
an initial clearing fund deposit will be determined in the same manner 
as for a new applicant, and active membership status must be approved 
by the Membership and Risk Management Committee. Inactive members will 
not be required to reexecute membership agreements or provide other 
documentation to the extent EMCC determines that it already has the 
required documentation or information (e.g. financials) necessary to 
make a determination on the reactivation request. If the participant is 
inactive for longer than 18 months, EMCC will require an opinion of the 
participant's counsel in a form satisfactory to EMCC that affirms that 
there is no substantive change in the opinion(s) previously given as 
part of the member's original application for membership.

II. Discussion

    Section 17A(b)(3)(F) of the Act \4\ requires that the rules of a 
clearing agency assure the safeguarding of securities and funds that 
are in the custody or control of the clearing agency for which it is 
responsible. The Commission finds that the proposed rule change is 
consistent with EMCC's obligations under section 17A(b)(3)(F) because 
creating a new inactive membership category should provide efficiencies 
and cost reductions to certain low-volume EMCC members without 
compromising EMCC's risk management safeguards.
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    \4\ 15 U.S.C. 78q-1(b)(3)(F).
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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-2003-04) be, and hereby 
is, approved.

    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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Jill M. Peterson,
Assistant Secretary.
[FR Doc. 04-2331 Filed 2-4-04; 8:45 am]
BILLING CODE 8010-01-P