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###### Securities and Exchange Commission

          - [Release No. 34-42721; File No. SR-MBSCC-99-8]

                    On October 20, 1999, MBS Clearing Corporation (“MBSCC”) filed with the Securities and Exchange Commission (“Commission”) a proposed rule change                           ( print page 25779)                        (File No. SR-MBSCC-99-8), and on November 8, 1999, amended the proposed rule change, pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”).[1]                                          Notice of the proposal was published in the                     **Federal Register**                     on February 11, 2000.[2]                                          No comment letters were received. For the reasons discussed below, the Commission is approving the proposed rule change.                

## I. Description

Revised Article VIII, Rule 1, Section 3(d) of MBSCC's Electronic Pool Notification (“EPN”) Rules requires EPN users to utilize the EPN service for all messages relating to EPN eligible securities unless MBSCC's procedures specifically exempt the message or both parties agree not to send the message through the EPN service. The rule change makes it explicit that in the event of an EPN system disruption and an extension of the cut-off times for communicating pool allocation information pursuant to The Bond Market Association (“BMA”) Guidelines, EPN users will be relieved of their obligation to process messages through the EPN service until the beginning of the next business day after the EPN system has been recovered.

The proposed rule change also will: 
    - Amends Article VIII, Rule 2 to require MBSCC members to give MBSCC written notice ten days, instead of thirty days, prior to termination of an EPN account or withdrawal as an EPN user.
    - Delete references in the cover page and in Article VI, Rule 1 to the “EPN Division” because while EPN is a separate service from the comparison and clearing service, it is not a separately constituted division.
    - Replace references in Article VI, Rule 1 to “Federal National Mortgage Association” with “Fannie Mae” to reflect the name change of such organization.
    - Renumbers the rules contained in Article IX and makes corresponding changes to cross-references to such rules and to the table of contents.
    - Add Managing Director to Article X, Rules 1 and 3 as a person who may take certain actions with respect to certain actions taken by MBSCC.
    - Repaginates with consecutive page numbers throughout rather than page numbers by article for ease of reference.

## II. Discussion

                    Section 17A(b)(3)(F) [3]                                          of the Act requires that the rules of a clearing agency be designed to promote the prompt and accurate clearance and settlement of securities transactions. As set forth below, the Commission finds that MBSCC's proposed rule change is consistent with MBSCC's obligations under the Act because the rule change provides explicit guidance to MBSCC's members on their obligations when there is an EPN system disruption and an extension of the cut-off times for communicating pool allocation information pursuant to the BMA guidelines. Further, expressly stating that MBSCC's members may use other communication methods, presumably the telephone and the fax machine, until the next business day after the EPN system has been recovered should reduce any confusion or uncertainty that could arise among MBSCC's members.                

The Commission finds that reducing the time period to provide MBSCC with written notification of withdrawal from the EPN service from thirty to ten days still provides MBSCC with sufficient time to process the withdrawal. The Commission also finds that the other amendments contained in the rule change are technical and do not raise substantive issues. Accordingly, the Commission finds that the rule change promotes the prompt and accurate clearance and settlement of securities transactions.

## 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 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-MBSCC-99-8) be, and hereby is, approved.                

                        For the Commission by the Division of Market Regulation, pursuant to delegated authority.[4] 

Margaret H. McFarland,

Deputy Secretary.

# Footnotes

1.                             15 U.S.C. 78s(b)(1) (1988).                    
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2.                             Securities Exchange Act Release No. 42390 (February 7, 2000), 65 FR 7078.                    
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3.                             15 U.S.C. 78q-1(b)(3)(F).                    
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4.                                 17 CFR 200.30-3(a)(12).                        
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[FR Doc. 00-11007  Filed 5-2-00; 8:45 am]

BILLING CODE 8010-01-M