Federal Register / Vol. 65, No. 3 / Wednesday, January 5, 2000 / Notices 541

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

2The Commission has modified the text of the

summaries prepared by GSCC.

3Euroclear was created in 1968 to provide

clearance and settlement for internationally traded

securities. It provides related services such as

custody, securities lending, and money transfer.

Euroclear has extensive experience in European

securities settlement.

4Morgan and Euroclear recently announced that

they have signed a letter of intent to create a new,

market-owned European bank to succeed Morgan as

operator and banker of Euroclear. The transition

from Morgan to the new bank operator is expected

to occur within approximately twenty months.

5 It was intended that GSCC would acquire a

minority ownership interest in Benelux.

6LCH was created in 1888 to clear certain

commodities transactions. It currently provides

clearing and netting services for a wide array of

financial products, including futures, equities,

swaps, and repos. LCH is a ‘‘recognized clearing

house’’ under the United Kingdom’s Financial

Services Act of 1986.

7 It should be noted that there is at least one other

competing netting vehicle in Europe, ClearNet,

which is owned by the ParisBourse. LCH to ESCC.

ESCC will be owned equally by the three parties.

It is intended that ESCC be governed by its market

participant users, who are expected to be major

participants in the European fixed-income

marketplace.

c. Vehicle license number (if

appropriate).

d. Social Security Number.

Individuals requesting access must

also follow the OPM’s Privacy Act

regulations regarding verification of

identity and amendment of records (5

CFR part 297).

CONTESTING RECORD PROCEDURES:

Individuals wishing to request

amendment of records about them

should contact the system manager.

Individuals must furnish the following

for their records to be located and

identified:

a. Full name.

b. Parking permit number (if

appropriate).

c. Vehicle license number (if

appropriate).

d. Social Security Number.

Individuals requesting amendment

must also follow OPM’s Privacy Act

regulations regarding verification of

identity and amendment of records (5

CFR part 297).

RECORD SOURCE CATEGORIES:

Information in this system of records

is obtained from:

a. The individuals to whom the

records pertain.

b. Information taken from official

OPM records.

c. Other Federal agency parking

records.

d. OPM Medical Doctors when

disability determinations are requested.

[FR Doc. 00–212 Filed 1–4–00; 8:45 am]

BILLING CODE 6325–01–P

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–42279; File No. SR–GSCC–

99–05]

Self-Regulatory Organizations;

Government Securities Clearing

Corporation; Notice of Filing of

Proposed Rule Change Relating to the

Formation of and Involvement in the

European Securities Clearing

Corporation

December 28, 1999.

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

Securities Exchange Act of 1934

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

November 16, 1999, the Government

Securities Clearing Corporation

(‘‘GSCC’’) 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 GSCC.

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 proposed rule change seeks the

Commission’s approval for GSCC to

become an initial shareholder and serve

on the Board of Directors of the

European Securities Clearing

Corporation (‘‘ESCC’’).

II. Self-Regulatory Organization’s

Statement of the Purpose of, and

Statutory Basis for, the Proposed Rule

Change

In its filing with the Commission,

GSCC 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. GSCC has prepared

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

and (C) below, of the most significant

aspects of these statements.2

(A) Self-Regulatory Organization’s

Statement of the Purpose of, and

Statutory Basis for, the Proposed Rule

Change

In 1998, GSCC was requested by its

board of directors, which is composed

of representatives of many organizations

active in the government debt securities

cash and repo markets both in the

United States and in Europe, to explore

the possibility of providing in Europe

the types of comparison, netting, and

risk management services that GSCC

provides in the United States. GSCC

originally planned to provide these

services through a joint venture with the

Euroclear Clearance System Societe

Cooperative (‘‘Euroclear’’) 3 and its

operator, Morgan Guaranty Trust

Company of New York, Brussels Branch

(‘‘Morgan’’).4 Specifically, GSCC and

Euroclear had planned to use J.P.

Morgan Benelux, S.A. (‘‘Benelux’’), an

existing Morgan subsidiary, as the

netting vehicle. Benelux would have

been renamed the European Securities

Clearing Corporation.5 The London

Clearing House (‘‘LCH’’) was also asked

by its members to provide these same

services in Europe.6 In response, LCH

began offering its RepoClear service in

August 1999 through which LCH

provides netting services for European

sovereign debt repo transactions.

GSCC, Euroclear, and LCH

(collectively, the ‘‘parties’’ and, each

individually, a ‘‘party’’) have

determined that it would be more

efficient to provide the services for

European sovereign debt buy-sell and

repo transactions through a single

netting vehicle, which will be LCH

through its RepoClear service.7 This

plan allows for a logical consolidation

of the efforts of the three parties and

maximizes the synergies to be achieved

by them. Each of the parties brings its

unique knowledge and experience to the

effort. GSCC has extensive netting and

risk management expertise as the

leading provider of these services for the

buy-sell and repo markets in the United

States. Euroclear has over thirty years

experience providing settlement,

custody, and collateral management

services in Europe. As mentioned above,

LCH provides clearing and netting

services for a wide array of financial

products, including repos. The parties

also share a large common membership

(mostly through affiliated entities).

The parties will form a new entity,

ESCC, which is proposed to be a United

Kingdom company and whose purpose

will be oversee the scope and nature of

the netting services offered by LCH.

Thus, there will be a transition of

control of LCH’s RepoClear service from

LCH to ESCC. ESCC will be owned

equally by the three parties. It is

intended that ESCC be governed by its

market participant users, who are

expected to be major participants in the

European fixed-income marketplace.

GSCC’s involvement in ESCC at the

outset will be a governance role that

should help ensure, among other things,

that LCH/RepoClear will draw upon

GSCC’s experience and knowledge and

542 Federal Register / Vol. 65, No. 3 / Wednesday, January 5, 2000 / Notices

8The proposed cross-margining arrangement will

be the subject of a separate rule filing in the future.

The parties intend to work towards implementing

the cross-margining arrangement by early 2001.

9 15 U.S.C. 78q–1. 10 17 CFR 200.30–3(a)(12).

carry United States-style features, such

as single-ticket data input, settlement of

contracts at current market value, the

facilitation of substitutions, and the

admission of inter-dealer brokers. These

features have proven very successful of

the U.S. Government debt market in the

United States.

GSCC’s management role in ESCC

will further ensure that the RepoClear

service will use, to the extent

appropriate, GSCC’s mark-to-market and

margining methodologies to provide

comprehensive, uniform risk

management processes. GSCC intends to

help ensure that: (i) Processing

efficiencies will be attained through the

utilization of standardized SWIFT

message formats for input and output;

(ii) participants’ margin requirements

will be reduced through cross-margining

both their European Government

securities activity and their combined

United States and European activity; 8

(iii) participants’ balance sheets will be

reduced and they will experience

increased capital utilization through a

maximization of the offsets available

from repo and reverse repo activity; and

(iv) the RepoClear service will support

global electronic trading systems,

allowing for more efficient settlement of

cash and futures activities engaged in

side-by-side through coordinated markto-market and margining processes and

standardized clearance and settlement

practices and through optimized crossmargining of correlated positions.

GSCC believes that the proposed rule

change is consistent with the

requirements of Section 17A of the Act 9

and the rules and regulations

thereunder applicable to GSCC because

it should help to ensure that United

States organizations operating abroad

either directly or through their

European affiliates obtain the significant

netting, risk management, and other

services and associated benefits that

GSCC provides in the United States.

(B) Self-Regulatory Organization’s

Statement on Burden on Competition

GSCC does not believe that the

proposed rule change will have any

impact or impose any burden on

completion.

(C) Self-Regulatory Organization’s

Statement on Comments on the

Proposed Rule Change Received From

Members, Participants or Others

Written comments relating to the

proposed rule change have not yet been

solicited or received. GSCC will notify

the Commission of any written

comments received by GSCC.

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.

Persons making written submissions

should file six copies thereof with the

Secretary, Securities and Exchange

Commission, 450 Fifth Street, N.W.,

Washington, D.C. 20549–0609. 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, N.W.,

Washington, D.C. 20549. Copies of such

filing also will be available for

inspection and copying at the principal

office of GSCC. All submissions should

refer to File No. SR–GSCC–99–05 and

should be submitted by January 26,

2000.

For the Commission by the Division of

Market Regulation, pursuant to delegated

authority.10

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 00–112 Filed 1–4–00; 8:45 am]

BILLING CODE 8010–01–M

DEPARTMENT OF STATE

[Public Notice 3193]

Bureau of Educational and Cultural

Affairs; Bosnia and Herzegovina

Undergraduate Development Program;

Notice: Request for Proposals

Summary

The Office of Academic Exchange

Programs of the Bureau of Educational

and Cultural Affairs (ECA) announces

an open competition for the Bosnia and

Herzegovina Undergraduate

Development Program. Four-year

colleges and universities meeting the

provisions described in IRS regulation

26 CFR 1.501(c) may submit proposals

to host between two and five Bosnian

students in a one-year, non-degree

undergraduate program for the academic

year 2000–2001. Organizations with less

than four years of experience in hosting

international exchange students are not

eligible for this competition.

Recruitment and selection will be

conducted by the U.S. Embassy Office of

Public Affairs, Sarajevo, Bosnia and

Herzegovina.

Program Information

The Bosnia and Herzegovina

Undergraduate Development Program is

designed to allow Bosnian students an

opportunity to obtain knowledge,

insight and cultural enrichment through

their academic studies at American

colleges and universities. ECA strongly

encourages institutions to guide

students to courses in American studies,

or other courses which emphasize

democracy, market economy, and civic

society per the intent of the Support for

Eastern European Democracy (SEED)

Act funding. ECA is holding an open

competition for four-year universities

and colleges giving preference to those

that meet the following criteria:

• Has demonstrated experience in

hosting Bosnian (or Balkan regional)

students, partnerships with Bosnian

higher education institutions, or

expertise and interest in the region

• Strong international student

advising offices with experience dealing

with cultural, educational and

adjustment issues for foreign students

• Accessibility to and opportunities

for cultural and social activities on- and

off-campus with access to public

transportation

• Mid-size institutions (generally

between 5,000-15,000 enrollement) that

offer all or most of the eligible fields of

study for this program

• Diverse student populations with

substantial foreign student

representation