Federal Register / Vol. 62, No. 18 / Tuesday, January 28, 1997 / Notices 4089

5The end of the reclamation period is

approximately 3:30, but this deadline may vary

slightly depending upon the timing of the release

of other DTC controls.

6 DTC’s Rule 12 which governs insolvency

provides: ‘‘An issuer of MMI securities subject of

any transaction in the MMI Program shall be treated

by [DTC] in all respects as insolvent in the event

that the issuer is determined to be insolvent by any

agency which regulates such issuer or in the event

of the entry of a decree or order by a court having

jurisdiction in the premises adjudging the issuer a

bankrupt or insolvent, or approving as properly

filed a petition seeking reorganization, arrangement,

adjustment or composition of or in respect of the

issuer under the Federal Bankruptcy Code or any

other applicable Federal or State law or appointing

a receiver, liquidator, assignee, trustee, sequester (or

other similar official) of the issuer or of any

substantial part of its property, or ordering the

winding up or liquidation of its affairs or the

institution by the issuer of proceedings to be

adjudicated a bankrupt or insolvent or the consent

by it to the institution of bankruptcy or insolvency

proceedings against it, or the filing by it of a

petition or answer or consent seeking

reorganization or relief under the Federal

Bankruptcy Code or any other applicable Federal or

State law, or the consent by it to the filing of any

such petition or to the appointment of a receiver,

liquidator, assignee, trustee, sequester (or other

similar official) of the issuer or of any substantial

part of its property, or the admission by it in writing

of its inability to pay its debts generally as they

become due, or the taking of corporate action by the

issuer in furtherance of any such action and,

notwithstanding the foregoing, upon the filing by

the issuer of a petition seeking reorganization,

arrangement, adjustment or composition of or in

respect of the issuer under the Federal Bankruptcy

Code or any other applicable Federal or State law,

or the filing against it or any such petition, at any

time [DTC] receives notice thereof, either written or

oral and from whatsoever source and, without

awaiting any further adjudication, consent thereto,

acceptance or approval of such filing, determines to

its reasonable satisfaction that such has occurred.’’

7 15 U.S.C. 78q–1(b)(3)(F)

8 17 CFR 200.30–3(a)(12).

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

2The Commission has modified the text of the

summaries prepared by OCC.

reclamation period that allowed

participants to reclaim deliveries (i.e.,

return deliveries) until 3:30 p.m.5 The

reclamation procedure is designed to

provide the recipient of a delivery with

the opportunity to reject the delivery.

Prior to this amendment, a participant

could unwind through the reclamation

process issuances previously made by

the IPA between 3:00 p.m. and 3:30

p.m., but an IPA was not able to unwind

after 3:00 p.m. income and maturity

payments it had made. The rule change

extends the IPA’s refusal to pay

opportunity with respect to

reclamations made to its account

between 3:00 p.m. and the end of the

reclamation period. The rule change

allows IPAs to instruct DTC to reverse

those reclaims that are processed after

3:00 p.m. in the event that the IPA

believes the reclaims are associated with

the issuer’s insolvency. The IPA is able

to request the reversal of these

reclamations by giving DTC oral notice

within fifteen minutes after the end of

the reclamation period. Within thirty

minutes after the end of the reclamation

period, the IPA is required to provided

DTC with written notice of the basis for

which DTC could treat the issuer as

insolvent under its rules.6 A copy of the

IPA’s written notice would then be

provided to all participants.

II. Discussion

Section 17A(b)(3)(F) provides that the

rules of a clearing agency must be

designed to assure the safeguarding of

securities and funds which are in the

custody or control of the clearing

agency.7 The Commission believes that

the rule change is consistent with DTC’s

obligations under the Act because it

enables IPAs to make issuances and

payments with respect to a particular

MMI program throughout the day while

still affording the IPAs certain

protections in the event of an issuer

default. By extending IPA’s ability to

reverse payments in the event of issuer

default, the proposal should result at the

end of the day in a decrease in the

number of money transfers that have

been made to participants but to which

the participants are not entitled because

of issuer defaults while still providing

for credits to be made available to

participants during the day. As a result,

the proposal should help facilitate the

clearance and settlement of securities

transactions, while still providing for

the safeguarding of securities and funds

which are in the custody or control of

the clearing agency or for which it is

responsible.

III. Conclusion

On the basis of the foregoing, the

Commission finds that the proposed

rule change is consistent with the

requirements of the Act and in

particular 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–

DTC–96–21) be and hereby is approved.

For the Commission by the Division of

Market Regulation, pursuant to delegated

authority.8

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 97–2011 Filed 1–27–97; 8:45 am]

BILLING CODE 8010–01–M

[Release No. 34–38188; File No. SR–OCC–

96–18]

Self-Regulatory Organizations; The

Options Clearing Corporation; Notice

of Filing of Proposed Rule Change To

Revise Rules To Include Limited

Cross-Guarantee Agreements

January 21, 1997.

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

Securities Exchange Act of 1934

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

December 9, 1996, The Options Clearing

Corporation (‘‘OCC’’) 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 OCC. The

Commission is publishing this notice to

solicit comments from interested

persons on the proposed rule change.

I. Self-Regulatory Organization’s

Statement of the Terms of Substance of

the Proposed Rule Change

The purpose of the proposed rule

change is to revise OCC’s by-laws and

rules to authorize OCC to execute

‘‘limited cross-guarantee agreements’’

with other clearing agencies.

II. Self-Regulatory Organization’s

Statement of the Purpose of, and

Statutory Basis for, the Proposed Rule

Change

In its filing with the Commission,

OCC 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. OCC has prepared

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

and (C) below, of the most significant

aspects of such statements.2

(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 revise OCC’s by-laws and

rules to authorize OCC to execute

‘‘limited cross-guarantee agreements’’

with other clearing agencies. A limited

cross-guarantee agreement is an

agreement between two or more clearing

agencies that provides that if the parties

to the agreement must liquidate the

assets of an entity that is a member of

two or more of the agencies (‘‘common

member’’) and at least one of the

clearing agencies liquidates the assets of
4090 Federal Register / Vol. 62, No. 18 / Tuesday, January 28, 1997 / Notices

3Securities Exchange Act Release No. 37616

(August 28, 1996), 61 FR 46887 [File Nos. SR–

MBSCC–96–02, SR–GSCC–96–03, and SR–ISCC–

96–04] (order approving proposed rule changes

seeking authority to enter into limited crossguaranty agreements filed by MBS Clearing

Corporation, Government Securities Clearing

Corporation and International Securities Clearing

Corporation).

the common member in its control to a

loss and at least one liquidates the

assets of the common member to a gain,

each clearing agency liquidating to a

gain will make the excess assets of the

common member in its control available

to each clearing agency liquidating to a

loss up to the amount of the loss. If all

of the parties to a limited crossguarantee agreement liquidate the assets

of a common member in their respective

control to a gain or if all liquidate to a

loss, the agreement provides that no

assets will be made available by any

party to the agreement to any other

party. The cross-guaranties established

in a limited cross-guarantee agreement

are limited in the sense that each party

to the agreement guarantees funds to the

other parties only if it liquidates the

assets of a common member in its

control to a net gain and only up to the

amount of the net again.

The effect of a limited cross-guarantee

agreement is to enable each party to the

agreement to have recourse to the assets

of a defaulting common member in the

control of the other parties to the

agreement. Therefore, a limited crossguarantee agreement should reduce the

risk of each of the clearing agencies

which is a party to the agreement

because a defaulting common member

may have positions spread across

markets in such a manner that its net

asset position at one clearing agency is

positive even though its net asset

position at another clearing agency is

negative.

OCC is currently pursuing discussions

of the terms of a limited cross-guarantee

agreement with other clearing agencies.

OCC anticipates that it will be filing

with the Commission one or more

limited cross-guarantee agreements to

which it has become a party following

the conclusion of those discussions.

The Commission has generally stated

its support of the use of limited crossguarantee agreements as a means of

reducing the exposure of clearing

agencies to loss as a result of the default

of common members.3 OCC proposes to

add definitions of ‘‘common member,’’

‘‘cross-guarantee party,’’ and ‘‘limited

cross-guarantee agreement’’ to Article I

of its by-laws.

OCC proposes to add new paragraph

(i) to Section 5 of Article VIII of its bylaws to provide explicitly that OCC may

use the clearing fund contributions of a

clearing member to satisfy its limited

cross-guarantee obligations to other

clearing agencies with respect to that

clearing member. New paragraph (i)

provides that the amount charged

against a clearing member’s

contributions to the stock clearing fund

and non-equity securities clearing fund

will be in proportion to the clearing

member’s contributions to the stock

clearing fund and the non-equity

securities clearing fund as fixed at the

time of the suspension of the clearing

member. New paragraph (i) does not

provide OCC with any authority to use

the clearing fund contributions of other

clearing members (i.e., other than the

defaulting clearing member) to satisfy

any limited cross-guarantee obligation

that OCC has to another clearing agency

because OCC will not have any

obligation pursuant to a limited crossguarantee agreement which could

require recourse to the clearing fund

contributions of other clearing members.

OCC also proposes to add new

paragraph (j) to Section 5 of Article VIII

of its by-laws to establish a rule for

allocating funds received by OCC

pursuant to a limited cross-guarantee

agreement where OCC has charged, or

will charge, the stock clearing fund and

the non-equity securities clearing fund.

The new paragraph provides that the

funds will be credited to the stock

clearing fund and the non-equity

securities clearing fund in proportion to

the computed contributions of the

suspended clearing member to the two

clearing funds as fixed at the time of the

suspension of the clearing member. If

one of the two clearing funds is made

whole then the remainder of the funds

will be credited entirely to the other

clearing fund.

OCC proposes to add three new

interpretations to Article VIII, Section 5

of its by-laws. New interpretation .03

states explicitly that if OCC has a

deficiency after the application of all

available funds of a suspended clearing

member and if OCC cannot determine

whether or in what amount it will be

entitled to receive funds from a crossguarantee party or when it will receive

such funds, with respect to the clearing

member, OCC may, in its discretion,

make a charge against other clearing

members; contributions to the stock

clearing fund and/or the non-equity

securities clearing fund. New

interpretation .04 states explicitly that if

OCC determines that it is likely to

receive funds from a cross-guarantee

party with respect to the clearing

member, OCC may in anticipation of

receipt of the funds from the crossguarantee party, forego making a charge,

or make a reduced charge against other

clearing members’ contributions to the

stock clearing fund and/or the nonequity securities clearing fund. If OCC

does not receive the anticipated funds

or receives funds in a smaller amount

than anticipated, OCC may make a

charge or an additional charge against

other clearing members’ contributions to

the stock clearing fund and/or the nonequity securities clearing fund. New

interpretation .05 states explicitly that if

OCC were ever to be required to refunds

funds which it had received from a

cross-guarantee party back to the crossguarantee party, OCC could make a

charge or an additional charge against

other clearing members’ contributions to

the stock clearing fund and/or the nonequity securities clearing fund to make

itself whole. The charge would be based

on the other clearing members’

computed contributions as fixed at the

time of the refund and not at the time

of the suspension of the clearing

member.

OCC also proposes to add a new

paragraph (d) to its Rule 1104 to state

explicitly that OCC may use any

positive balance remaining in a clearing

member’s liquidating settlement

account to satisfy any obligation with

respect to that clearing member which

OCC may have to any other clearing

agency pursuant to a limited crossguarantee agreement. OCC believes the

new paragraph is needed to assure that

OCC’s use of the assets of a clearing

member in this manner is authorized by

OCC’s rules because Rule 1104(a) states

that funds of a suspended clearing

member subject to OCC’s control shall

be placed in the clearing member’s

liquidating settlement account and used

‘‘for the purposes hereinafter specified.’’

OCC believes the proposed rule

change is consistent with the

requirements of Section 17A of the Act

and the rules and regulations

thereunder because the proposal assures

the safeguarding of securities and funds

in its custody or control or for which

OCC is responsible.

B. Self-Regulatory Organization’s

Statement on Burden on Competition

OCC does not believe that the

proposed rule change will have any

material impact on competition.

(C) Self-Regulatory Organization’s

Statement on Comments on the

Proposed Rule Change Received From

Members, Participants or Others

Written comments were not and are

not intended to be solicited by OCC

with respect to the proposed rule

change, an none have been received.
Federal Register / Vol. 62, No. 18 / Tuesday, January 28, 1997 / Notices 4091

4 17 CFR 200.30–3(a) (12).

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 OCC 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.

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. 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 OCC. All submissions should

refer to File No. SR–OCC–96–18 and

should be submitted by February 18,

1997.

For the Commission by the Division of

Market Regulation, pursuant to delegated

authority.4

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 97–2012 Filed 1–27–97; 8:45 am]

BILLING CODE 8010–01–M

SMALL BUSINESS ADMINISTRATION

Tangent Growth Fund, L.P. (License

No. 09/09–0408); Notice of Issuance of

a Small Business Investment Company

License

On January 4, 1995, an application

was filed by Tangent Growth Fund, L.P.,

944 Market Street, Suite 800, San

Francisco, California, with the Small

Business Administration (SBA)

pursuant to Section 107.102 of the

Regulations governing small business

investment companies (13 C.F.R.

107.102 (1996)) for a license to operate

as a small business investment

company.

Notice is hereby given that, pursuant

to Section 301(c) of the Small Business

Investment Act of 1958, as amended,

after having considered the application

and all other pertinent information, SBA

issued License No. 09/09/–0408 on

January 10, 1997, to Tangent Growth

Fund, L.P. to operate as a small business

investment company.

(Catalog of Federal Domestic Assistance

Program No. 59.011, Small Business

Investment Companies)

Dated: January 21, 1997.

Don A. Christensen,

Associate Administrator for Investment.

[FR Doc. 97–1957 Filed 1–27–97; 8:45 am]

BILLING CODE 8025–01–P

DEPARTMENT OF TRANSPORTATION

Office of the Secretary

White House Commission on Aviation

Safety and Security; Cancellation of

Meeting

AGENCY: Office of the Secretary, DOT.

ACTION: Cancellation of Meeting.

SUMMARY: The White House

Commission on Aviation Safety and

Security has canceled its meeting

scheduled for Tuesday, January 28,

1997, from 9:00 AM–12:00 noon and

2:00 PM to 5:00 PM. It will be set for

another date and time, and notice will

be given.

FOR FURTHER INFORMATION CONTACT:

Richard K. Pemberton, Administrative

Officer, Room 6210, GSA Headquarters,

18th & F Streets, NW, Washington, DC

20405; telephone 202.501.3863;

telecopier 202.501.6160.

Issued in Washington, DC, on January

23, 1997.

Nancy E. McFadden,

General Counsel, Department of

Transportation.

[FR Doc. 97–2240 Filed 1–27–97; 8:45 am]

BILLING CODE 4910–62–P

Office of the Secretary

[Docket No. OST–97–2085]

Proposed Policy Encouraging

Metropolitan Planning Organizations

and Airport Operators to Cooperate in

Transportation Planning

AGENCY: Office of the Secretary, DOT.

ACTION: Proposed policy statement.

SUMMARY: The Department of

Transportation (DOT) is publishing for

comment a proposed policy statement

regarding the need for coordination

between aviation and surface

transportation planning efforts,

particularly between airport operators

and metropolitan planning

organizations, with emphasis on

urbanized areas over one million

population as defined by the latest

Decennial Census.

There are a number of concerns and

issues shared by policy makers

responsible for airport and surface

transportation decision making,

including the need to plan for and

develop adequate surface transportation

access serving airports. This policy

addresses the need to enhance

cooperation across transportation

modes. This type of cooperation is

especially important because planning

requirements for the individual

transportation modes (highway, transit,

rail, and aviation) are contained in

separate statutory authority. The DOT

believes that it is desirable to stimulate

and revitalize the cooperative

relationship between airport operators

and metropolitan planning

organizations to achieve a thoughtful

and carefully coordinated program of

intermodal and multimodal system

planning and development.

This proposed policy is consistent

with the statutory policy provisions

guiding the Federal airport

improvement program, such as

encouraging the efficient and effective

development of intermodal

transportation systems. 49 U.S.C.

47101(a)(5). This proposed policy also

implements the statutory policy

directing the Department to integrate

airport improvement planning with

intermodal planning. 49 U.S.C.

47101(g), as amended by section 141 of

the Federal Aviation Authorization Act

of 1996. Pub. L. No. 104–264, October

9, 1996.

DATES: Comments on this proposal

should be received by March 31, 1997.

ADDRESSES: Submit written, signed

comments to Docket No. OST–97–2085,

the Docket Clerk, U.S. Department of

Transportation, Room PL–401, SVC–