5622 Federal Register / Vol. 69, No. 24 / Thursday, February 5, 2004 / Notices 

14See supra note 6.

15 15 U.S.C. 78s(b)(3)(A).

16 17 CFR 240.19b–4(f)(6).

17For purposes only of accelerating the operative 

date of this proposal, the Commission has 

considered the proposed rule’s impact on 

efficiency, competition, and capital formation. 15 

U.S.C. 78c(f).

18See supra notes 8 and 9, and accompanying 

text.

19See supra note 6.

20 17 CFR 200.30–3(a)(12).

1 15 U.S.C. 78s(b)(1).

2Securities Exchange Act Release No. 48463 

(Sept. 9, 2003), 68 FR 54761.

3EMCC Rule 2 (Members), sec. 10 (Inactive 

Status); EMCC Rule 1 (Definitions).

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

The CBOE has filed 14 the proposed 

rule change pursuant to section 

19(b)(3)(A) of the Act 15 and 

subparagraph (f)(6) of Rule 19b–4 

thereunder.16 Because the foregoing 

proposed rule change: (1) Does not 

significantly affect the protection of 

investors or the public interest; (2) does 

not impose any significant burden on 

competition; and (3) is not proposed to 

become operative for 30 days, or such 

shorter time as the Commission may 

designate, and the CBOE provided the 

Commission with written notice of its 

intent to file the proposed rule change 

at least five business days prior to the 

filing date, the proposed rule change has 

become effective pursuant to section 

19(b)(3)(A) of the Act and Rule 19b–

4(f)(6) thereunder.

A proposed rule change filed under 

Rule 19b–4(f)(6) normally does not 

become operative prior to 30 days after 

the date of filing. However, Rule 19b–

4(f)(6)(iii) permits the Commission to 

designate a shorter time if such action 

is consistent with the protection of 

investors and the public interest. The 

CBOE has requested that the 

Commission waive the 30-day operative 

delay to allow the CBOE to implement 

its pilot program, which is similar to the 

ISE Pilot, without delay. 

The Commission believes that 

waiving the 30-day operative delay is 

consistent with the protection of 

investors and the public interest.17

Specifically, the Commission believes 

that allowing the CBOE to establish a 

pilot program that is similar to the ISE 

Pilot will help the CBOE to compete 

with the ISE. In addition, the 

Commission notes that the CBOE’s pilot 

program is substantially similar to the 

ISE Pilot, which the Commission 

approved previously on a six-month 

pilot basis and subsequently extended 

through January 31, 2004.18 The 

Commission believes that the CBOE’s 

proposal raises no new issues or 

regulatory concerns that the 

Commission did not consider in 

approving the ISE Pilot. For these 

reasons, the Commission designates that 

the proposal become operative 

immediately, with the pilot program to 

extend through June 29, 2004.

At any time within 60 days of the 

filing of such proposed rule change,19

the Commission may summarily 

abrogate such rule change if it appears 

to the Commission that such action is 

necessary or appropriate in the public 

interest, for the protection of investors, 

or otherwise in furtherance of the 

purposes of the Act.

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views and 

arguments concerning the foregoing, 

including whether the proposed rule 

change, as amended, is consistent with 

the Act. Persons making written 

submissions should file six copies 

thereof with the Secretary, Securities 

and Exchange Commission, 450 Fifth 

Street, NW., Washington, DC 20549–

0609. Comments may also be submitted 

electronically at the following e-mail 

address: rule-comments@sec.gov. All 

comment letters should refer to File No. 

SR–CBOE–2003–50. 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, your 

comments should be sent in hardcopy 

or by e-mail but not by both methods. 

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 will also be available for 

inspection and copying at the principal 

office of the CBOE. All submissions 

should refer to File No. SR–CBOE–

2003–50 and should be submitted by 

February 26 2004.

For the Commission, by the Division of 

Market Regulation, pursuant to delegated 

authority.20

J. Lynn Taylor, 

Assistant Secretary.

[FR Doc. 04–2359 Filed 2–4–04; 8:45 am] 

BILLING CODE 8010–01–P

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.

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

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 

Federal Register / Vol. 69, No. 24 / Thursday, February 5, 2004 / Notices 5623

4 15 U.S.C. 78q–1(b)(3)(F).

5 15 U.S.C. 78q–1.

6 17 CFR 200.30–3(a)(12).

1 15 U.S.C. 78s(b)(1).

2Securities Exchange Act Release No. 45656 

(March 27, 2002), 67 FR 15646 (April 2, 2002) [File 

No. SR–GSCC–2002–01].

3Securities Exchange Act Release No. 45335 

(January 25, 2002), 67 FR 4768 (January 31, 2001) 

[File No. SR–GSCC–2001–03]. FICC entered into the 

cross-margining agreement with the Board of Trade 

Clearing Corporation, predecessor to The Clearing 

Corporation.

4The Commission has modified the text of the 

summaries prepared by FICC.

5TCC recently announced that it will become the 

clearing corporation for another exchange and has 

approached FICC regarding establishing a new 

cross-margining arrangement. Upon the parties’

agreement on the details of the new arrangement, 

FICC will submit a proposed rule change to the 

Commission covering the proposed arrangement.

6 15 U.S.C. 78q–1(a)(2)(A)(ii).

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.

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.

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

Jill M. Peterson, 

Assistant Secretary.

[FR Doc. 04–2331 Filed 2–4–04; 8:45 am] 

BILLING CODE 8010–01–P

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–49142; File No. SR–FICC–

2004–02] 

Self-Regulatory Organizations; Fixed 

Income Clearing Corporation; Notice of 

Filing and Immediate Effectiveness of 

Proposed Rule Change To Remove 

From FICC’s Rules the CrossMargining Agreement With BrokerTec 

Clearing Company and the CrossMargining Agreement With The 

Clearing Corporation 

January 28, 2004. 

Pursuant to section 19(b)(1) of the 

Securities Exchange Act of 1934 

(‘‘Act’’),1 notice is hereby given that on 

January 12, 2004, the Fixed Income 

Clearing Corporation (‘‘FICC’’) 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 FICC. The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change from interested parties.

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The purpose of the proposed rule 

change is to remove from FICC’s Rules 

the cross-margining agreement with 

BrokerTec Clearing Company (‘‘BCC’’) 2

and to remove from FICC’s Rules the 

cross-margining agreement with The 

Clearing Corporation (‘‘TCC’’).3

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, 

FICC 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. FICC has prepared 

summaries, set forth in sections (A), (B), 

and (C) below, of the most significant 

aspects of these statements.4

(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 remove from FICC’s Rules 

the cross-margining agreement with 

BCC and the cross-margining agreement 

with TCC. Termination of the crossmargining agreement with BCC was 

necessitated by the fact that BCC ceased 

clearing operations on November 26, 

2003, as a result of the suspension of 

business by the exchange for which BCC 

was the clearing corporation, BrokerTec 

Futures Exchange. Termination of the 

cross-margining agreement with TCC 

was necessitated by the fact that on 

January 2, 2004, TCC ceased clearing the 

Chicago Board of Trade products that 

were the subject of the cross-margining 

arrangement.5

The proposed rule change is 

consistent with section 17A(a)(2)(A)(ii) 

of the Act 6 and the rules and 

regulations thereunder because it 

facilitates the establishment of linked or 

coordinated facilities for clearance and 

settlement of transactions in securities.

(B) Self-Regulatory Organization’s 

Statement on Burden on Competition 

FICC does not believe that the 

proposed rule change will have any 

impact on or impose any 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