[Federal Register Volume 65, Number 123 (Monday, June 26, 2000)]
[Notices]
[Pages 39456-39457]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-16064]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-42961; File No. SR-MBSCC-00-01]


Self-Regulatory Organizations; MBS Clearing Corporation; Notice 
of Filing of Proposed Rule Change Relating to Letters of Credit

June 20, 2000.
    Pursuant to Section 19(b) \1\ of the Securities Exchange Act of 
1934 (``Act''), notice is hereby given that on April 11, 2000, the MBS 
Clearing Corporation (``MBSCC'') filed with the Securities and Exchange 
Commission (``Commission'') and on June 13, 2000, amended the proposed 
rule change as described in Items I, II, and III below, which Items 
have been prepared primarily by MBSCC. The Commission is publishing 
this notice to solicit comments on the proposed rule change from 
interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
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I. Self-Regulatory Organization's Statement of the Terms of 
Substance of the Proposed Rule Change

    The proposed rule change will prohibit MBSCC from accepting a 
letter of credit from a participant when the participant or an 
affiliate of that participant issues the letter of credit.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, MBSCC 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. MBSCC has prepared summaries, set forth in sections (A), 
(B), and (C) below, of the most significant aspects of such 
statements.\2\
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    \2\ The Commission has modified the text of the summaries 
prepared by MBSCC.
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(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 modify Article IV, 
Rule 2, Section 9 of MBSCC's rules, which governs deposits of letters 
of credit by participants to the participants fund for margin purposes. 
This rule provides that MBSCC may approve as the issuer of a letter of 
credit any domestic or foreign bank or trust company meeting the 
requirements set forth in procedures adopted from time to time by 
MBSCC.
    The proposed rule change will amend Article IV, Rule 2, Section 9 
by adding a new subsection (b) which will prohibit MBSCC from accepting 
a letter of credit from a participant that is issued by that 
participant or by an affiliate of that participant.\3\ The proposed 
rule change will codify MBSCC's historical practice of requiring that a 
letter of credit deposited by a participant to the participants fund be 
issued by an approved letter of credit issuer other than the 
participant or an affiliate of the participant.
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    \3\ Article I, Rule 1 of MBSCC's rules will be amended as 
follows. ``The term an `Affiliate' of, or a person `Affiliated' 
with, a specified person, means a person that directly, or 
indirectly, through one or more intermediaries, controls, or is 
controlled by, or is under common control with, the person 
specified. For purposes of this definition, the term `control' 
(including the terms `controls,' `controlled by,' and `under common 
control with') means the possession, direct or indirect, of the 
power to direct or cause the direction of the management and 
policies of a person, whether through the ownership of voting 
securities, by contract, or otherwise.''
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    The proposed rule change also makes a technical modification to 
Article III, Rule 5 of MBSCC's rules to correct the reference contained 
within such rule from ``Rule 4'' to ``Rule 5.''
    MBSCC believes that the proposed rule change is consistent with the 
requirements of Section 17A(b)(3)(A) \4\ of the Act and the rules and 
regulations thereunder because it is designed to assure the 
safeguarding of securities and funds that are in the custody or control 
of MBSCC or for which it is responsible.
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    \4\ 15 U.S.C. 78q-1(b)(3)(A).
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(B) Self-Regulatory Organization's Statement on Burden on Competition

    MBSCC does not believe that the proposed rule change will have an 
impact on 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 relating to the proposed rule change have been 
solicited or received. MBSCC will notify the Commission of any written 
comments received by MBSCC.

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

[[Page 39457]]

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 Room in Washington, D.C. Copies of such filing will also be 
available for inspection and copying at MBSCC's principal office. All 
submissions should refer to File No. SR-MBSCC-00-01 and should be 
submitted by July 17, 2000.

    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority.\5\
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    \5\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 00-16064 Filed 6-23-00; 8:45 am]
BILLING CODE 8010-01-M