Federal Register / Vol. 65, No. 112 / Friday, June 9, 2000 / Notices 36749

21 17 CFR 200.30–3(a)(12).

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

2The Commission has modified the text of the

summaries prepred by NSCC.

3NSCC Rule 3, Section 10.

4NSCC Procedure 11.D4(a)(ii).

5 Id. at (iii).

6 Id. at (iv).

7NSCC Procedure 11.D.4(b).

8 Id. at 4(b)(i).

9 Id. at 4(b)(ii).

10 15 U.S.C. 78q–1.

11 15 U.S.C. 78q–1(b)(3)(F).

proposed rule change (SR–NASD–00–

18) be and hereby is approved.

For the Commission by the Division of

Market Regulation, pursuant to delegated

authority.21

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 00–14596 Filed 6–8–00; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–42893; File No. SR–NSCC–

00–03]

Self-Regulatory Organizations;

National Securities Clearing

Corporation; Notice of Filing and Order

Granting Accelerated Approval of a

Proposed Rule Relating to Processing

Government Securities Trades

June 2, 2000.

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

Securities Exchange Act of 1934

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

April 5, 2000, National Securities

Clearing Corporation (‘‘NSCC’’) filed

with the Securities and Exchange

Commission (‘‘Commission’’) the

proposed rule change as described in

Items I and II below, which items have

been prepared primarily by NSCC. The

Commission is publishing this notice

and order to solicit comments from

interested parties and to grant

accelerated approval of the proposed

rule change.

I. Self-Regulatory Organization’s

Statement of the Terms of Substance of

the Proposed Rule Change

The proposed rule change will allow

NSCC to receive government securities

trade data from the American Stock

Exchange (‘‘AMEX’’), process the trade

data, and transmit the trade data to the

Government Securities Clearing

Corporation (‘‘GSCC’’).

II. Self-Regulatory Organization’s

Statement of the Purpose of, and

Statutory Basis for, the Proposed Rule

Change

In its filing with the Commission,

NSCC 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. NSCC 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

The purpose of the rule change is to

amend NSCC’s rules and procedurres to

permit NSCC to: (1) Receive trade data

concerning members’ government

security transactions conducted on the

AMEX; (2) record trade information

about those transactions on NSCC

members’ contract lists; and (3) transmit

at the request of members the trade

information to GSCC for processing.

Specifically, the rule change amends

NSCC’s rules and procedures as follows:

• The AMEX may submit locked-in

trade data for transactions in ‘‘eligible

government securities’’ included in the

AMEX Order File (‘‘AOF’’) System to

NSCC. NSCC will maintain a list of

‘‘eligible government securities’’ which

must be unmatured, marketable debt

securities in book-entry form that are

direct obligations of the United States

Government; securities issued or

guaranteed by the United States, a U.S.

government agency or instrumentality,

or a U.S. government-sponsored

corporation; or such other security as

determined by NSCC from time to time.3

• The AMEX may submit its trade

data throughout trade date (‘‘T’’) until a

time specified by NSCC. The trade data

must include quantity, security

identification, identification of the

marketplace of execution, contra-broker,

trade value, and other identifying

details that NSCC may require or

permit.4

• NSCC will report back to members

their AOF trade data items, including

final contract amount as calculated by

NSCC, on the morning of T+1 in a

separate section of NSCC’s regular way

T+1 contract list.5

• Unless otherwise processed through

GSCC, as described below, the

settlement of AFO trade data items will

be the responsibility of parties to the

trade. Such items will not be settled

through the facilities of NSCC.6

The rule change permits NSCC to

transmit, at the request of members,

AOF trade data items to GSCC for

processing as follows 7:

• Each member that would like to

settle its AFO trades through GSCC

must complete and deliver to NSCC an

authorization agreement.8

• NSCC will submit AOF trade data

items to GSCC within the timeframes

established by NSCC.9

NSCC believes that the proposed rule

change is consistent with the

requirements of the Act,10 and the rules

and regulations thereunder. In

particular, the proposed rule change is

consistent with section 17A(b)(3)(F) of

the Act, which requires that the rules of

a clearing agency be designed to

promote the prompt and accurate

clearance and settlement of securities

transactions and, in general, to protect

investors and the public interest.

(B) Self-Regulatory Organization’s

Statement on Burden on Competition

NSCC does not believe that the

proposed rule change will impact or

impose a 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 have been

solicited or received. NSCC will notify

the Commission of any written

comments received by NSCC.

III. Date of Effectiveness of the

Proposed Rule Change and Timing for

Commission Action

Section 17A(b)(3)(F) 11 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. For

the reasons set forth below, the

Commission believes that NSCC’s rule

change is consistent with this

obligation.

The rule change permits NSCC to

build upon its existing facilities to

receive and process trade data

concerning government securities

traded through the AMEX’s AOF System

by NSCC members. After processing this

information, NSCC will report back to

members trade information relating to

their AOF trades. At the request of

members who wish to settle these trades

through GSCC, NSCC will then transmit

trade data to GSCC for processing. By

providing this service, NSCC will be

facilitating the prompt and accurate

clearance and settlement of Amextraded government securities. Therefore,

the Commission finds that the proposed

rule change is consistent with NSCC’s

obligations to promote the prompt and

36750 Federal Register / Vol. 65, No. 112 / Friday, June 9, 2000 / Notices

12 17 CFR 200.30–3(a)(12).

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

2Securities Exchange Act Release No. 42195

(December 1, 1999), 64 FR 68712.

3According to OCC, almost all clearing members

already contribute to both the equity and nonequity elements of the clearing fund and thus are

subject to the $75,000 minimum contribution for

each element. For those members, a merger of the

two elements into one combined clearing fund will

clause no aggregate change in the size of their

clearing fund contribution. Five clearing members

clear either only equity or only non-equity products

and therefore contribute to only one element of the

clearing fund. Three of these five members,

however, will not have their contributions affected

by the proposed $150,000 minimum. Thus, the

merger of the two elements into one clearing fund

will not materially change the overall size of the

clearing fund and will not have a minor impact on

a small number of members. 4 15 U.S.C. 78q–1(b)(3)(F).

accurate clearance and settlement of

securities transactions.

NSCC has requested that the

Commission find good cause for

approving the proposed rule change

prior to the thirtieth day after

publication of the notice of filing. The

Commission finds good cause for

approving the proposed rule change

prior to the thirtieth day after

publication of the notice because

accelerated approval will enable NSCC

to coordinate with GSCC and the AMEX

in order to begin providing these

clearance and settlement services on the

target start date of June 2, 2000.

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, NW.,

Washington, DC 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, NW.,

Washington, DC 20549. Copies of such

filing also will be available for

inspection and copying at the principal

office of NSCC. All submissions should

refer to File No. SR–NSCC–00–03 and

should be submitted by June 30, 2000.

It Is Therefore Ordered, pursuant to

section 19(b)(2) of the Act, that the

proposed rule change (File No. SR–

NSCC–00–03) be and hereby is

approved.

For the Commission by the Division of

Market Regulation, pursuant to delegated

authority.12

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 00–14574 Filed 6–8–00; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–42897; File No. SR–OCC–

99–9]

Self-Regulatory Organizations; The

Options Clearing Corporation; Order

Approving a Proposed Rule Change To

Merge the Equity and Non-Equity

Elements of OCC’s Clearing Fund

June 5, 2000.

On September 24, 1999, The Options

Clearing Corporation (‘‘OCC’’) filed with

the Securities and Exchange

Commission (‘‘Commission’’) a

proposed rule change (File No. SR–

OCC–99–9) 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

December 8, 1999. 2 No comment letters

were received. For the reasons

discussed below, the Commission is

approving the proposed rule change.

I. Description

Under the rule change, OCC will

merge the equity and non-equity

elements of its clearing fund into

combined clearing fund. A member’s

contribution to the combined clearing

fund will be based on the member’s

total margin requirements, with a

minimum contribution of $150,000.3

In 1982, when OCC first began

clearing non-equity products, including

treasury, currency, and stock index

options, OCC instituted a separate nonequity element to the clearing fund to

limit the impact of a member default in

one product base (i.e., either equity or

non-equity) on members trading only

the other product base. The element of

the clearing fund applicable to the

product(s) involved in the default

would be utilized first; only after that

element was exhausted would the other

element be used. Beginning in 1986,

with the introduction of the Theoretical

Intermarket Margin System (‘‘TIMS’’) for

non-equity products, some margin

offsets were allowed between equity and

non-equity products. Such offsets

further expanded following the

implementation of TIMS for equity

products in 1991. The blurring of the

distinction between equity and nonequity margin requirements and the

integration of OCC’s equity and nonequity systems in general has reached a

level such that clearing members only

receive a single margin requirement

each day. OCC computes distinct equity

and non-equity margin requirements

only on a monthly basis for the purpose

of determining the size of each element

of the clearing fund.

Consistent with Article VIII, Section 2

of OCC’s Bylaws, OCC will issue a

memorandum to its clearing members at

least five business days prior to the

effective date of the rule change

advising them of the change in the

minimum contribution and advising

them of their ability to withdraw from

membership should they choose not to

make the required clearing fund

contribution.

II. Discussion

Section 17A(b)(3)(F) 4 of the Act

requires that the rules of a clearing

agency be designed to assure the

safeguarding of securities and funds

which are in the custody or control of

the clearing agency or for which it is

responsible. The Commission finds that

combing the two clearing funds will

have no effect on OCC’s margining and

risk management procedures that

protect OCC against a member default.

As a result, OCC will maintain its

current level of protection while

enhancing the efficiency of its

operations. Accordingly, the rule change

is consistent with OCC’s obligation to

safeguard securities and funds which

are in OCC’s custody or control.

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–

OCC–99–9) be, and hereby is, approved.