[Federal Register Volume 65, Number 86 (Wednesday, May 3, 2000)]
[Notices]
[Pages 25778-25779]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-11007]


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SECURITIES AND EXCHANGE COMMISSION

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


Self-Regulatory Organizations; MBS Clearing Corporation; Order 
Approving a Proposed Rule Change Relating to Electronic Pool 
Notification Service Rules

April 25, 2000.
    On October 20, 1999, MBS Clearing Corporation (``MBSCC'') filed 
with the Securities and Exchange Commission (``Commission'') a proposed 
rule change

[[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.
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    \1\ 15 U.S.C. 78s(b)(1) (1988).
    \2\ Securities Exchange Act Release No. 42390 (February 7, 
2000), 65 FR 7078.
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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:
    <bullet> 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.
    <bullet> 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.
    <bullet> Replace references in Article VI, Rule 1 to ``Federal 
National Mortgage Association'' with ``Fannie Mae'' to reflect the name 
change of such organization.
    <bullet> Renumbers the rules contained in Article IX and makes 
corresponding changes to cross-references to such rules and to the 
table of contents.
    <bullet> 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.
    <bullet> 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.
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    \3\ 15 U.S.C. 78q-1(b)(3)(F).
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    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\
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    \4\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 00-11007 Filed 5-2-00; 8:45 am]
BILLING CODE 8010-01-M