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[Federal Register Volume 62, Number 183 (Monday, September 22, 1997)]
[Notices]
[Pages 49548-49553]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-25028]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-39068; File No. SR-GSCC-97-07]

Self-Regulatory Organizations; Government Securities Clearing 
Corporation; Notice of Filing of a Proposed Rule Change Relating to 
Election of Directors

September 12, 1997.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(the ``Act''),\1\ notice is hereby given that on July 23, 1997, the 
Government Securities Clearing corporation (``GSCC'') filed with the 
Securities and Exchange Commission (the ``Commission'') and on August 
18, 1997, amended 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 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

    GSCC is filing the proposed rule change to amend its Shareholder 
Agreement (``Agreement''), By-laws, and Certificate of Incorporation in 
order to revise GSCC's procedures for election of directors and to 
revise restrictions currently placed on transfers of GSCC's securities.

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 such 
statements.\2\
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    \2\ The Commission has modified the text of the summaries 
prepared by GSCC.
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A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    GSCC recently completed a comprehensive review of its Agreement, 
By-laws, and Certificate of Incorporation. Pursuant to that review, 
GSCC proposes to amend the Agreement, By-laws, and Certificate of 
Incorporation as described below.\3\
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    \3\ GSCC currently has forty-six shareholders, each of which is 
a party to the Agreement. The National Securities Clearing 
Corporation (``NSCC''), is the largest shareholder, holding 
approximately eighteen percent of GSCC's shares.
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1. Background
    The Agreement was first executed in 1988 before GSCC had a set of 
rules in place and before there was any business history on which to 
base certain provisions of the Agreement. Consequently, the Agreement 
covers a broad range of issues, including certain business matters not 
found in most shareholder agreements. For example, the Agreement 
includes provisions relating to loss allocation procedures, which are 
now comprehensively covered by GSCC's rules.
    Moreover, since 1988 there have been many significant changes in 
GSCC's services and membership and in the government securities 
marketplace in

[[Page 49549]]

general making the Agreement inadequate to meet the realities of that 
marketplace and GSCC's business as it is conducted today. For example, 
when the Agreement was drafted, participation in the interdealer broker 
government securities marketplace was limited exclusively to primary 
and aspiring primary dealers and their brokers. Therefore, the 
Agreement contemplates only primary dealers, aspiring primary dealers, 
and brokers as participants in GSCC. Today, there is a much broader 
range of participation in the interdealer broker government securities 
marketplace, including nonprimary dealers and nondealers.
    Furthermore, GSCC believes that the Agreement sets forth a great 
number of fixed standards relating to corporate governance and 
shareholder rights, particularly related to participation on the board 
of directors and the issuance and sale of shares, that are 
unnecessarily and overly specific and rigid and that do not best serve 
the interest of GSCC members, shareholders, and the industry in 
general. For example, the Agreement currently allows for only a set 
number of board seats for each category of dealer, broker, and clearing 
agent bank. As described below, the proposed revisions would provide 
for the addition of an ``at-large'' director seat in lieu of one of the 
clearing agent bank seats, which would allow for participation on the 
board by an individual from a nonmember firm. Also, certain proposed 
revisions will allow for much greater transferability of GSCC shares, 
including shares held by entities that are no longer involved in the 
government securities marketplace or that are no longer in business.
    Finally, the proposed revisions will allow for more flexibility of 
action by GSCC to meet future business needs, including potential 
matters such as business partnerships and acquisitions. Thus, they 
would provide more flexibility to GSCC in its business planning and 
make the Agreement a more dynamic, ``living'' document.
2. Proposed Changes
    As described more fully below, the proposed changes fall under four 
major categories: (a) nomination and election process for board 
members, (b) composition of the board, (c) restrictions on issuance and 
transfer of shares, and (d) miscellaneous.
    (a) Nomination and Election Process for Board Members. The current 
nomination process for participant directors is open to all members 
with every member being able to nominate any shareholder member, 
including itself. However, a member is restricted to submitting 
nominations only for its own correlative participant category (i.e., 
broker participants nominate broker participant directors, clearing 
agent bank participants nominate clearing agent bank participant 
directors, and all other participants nominate dealer participant 
directors). The election process involves ballots being circulated to 
every member with such voting being similarly limited to one's own 
correlative participant category.
    (i) Creation of a Nominating Committee. Similar to the process in 
place at NSCC and other clearing corporations, GSCC proposes to create 
a nominating committee that will be responsible for nominating 
candidates for election as participant directors to the board. NSCC 
will continue to nominate and to elect two directors to the board 
outside the nominating committee process. The board seat for a 
management representative and for the GSCC president will also remain 
outside the nominating committee process.
    With respect to the composition of the nominating committee, it is 
proposed that the nominating committee be comprised of five 
individuals, a majority of which will be representatives from active 
participants and which may be but are not required to be former board 
members. With the exception of the initial nominating committee, GSCC 
proposes that there must be a one year break between serving on the 
board and serving on the nominating committee (i.e., a year must pass 
between a board member's serving on the board and being eligible to 
serve on the nominating committee and likewise between a nominating 
committee member's serving on the nominating committee and being 
eligible to serve on the board).
    With the exception of the first nominating committee, GSCC proposes 
that incoming nominating committee members be designated by the board 
taking into account but not being bound by the recommendations of 
current nominating committee members. GSCC also proposes that 
participant category be irrelevant for purposes of the selection of 
nominating committee members. However, as a general guideline, the 
individuals serving on the nominating committee will be reflective of 
GSCC's overall membership and potential membership base.
    The term of a nominating committee member will be two years. There 
must be a one year absence from the nominating committee before a 
former committee member is eligible to serve again. The terms of 
nominating committee members will be staggered. For example, one class 
with three individuals will be designated in the first year for a two 
year term and another class with two individuals will be designated for 
a one year term. After these initial terms, both classes will serve for 
two year terms. Therefore, subsequent nominating committees will have 
two staggered classes of members.
    (ii) Nomination Process for Board Members. GSCC proposes that there 
be two levels of nomination processes for board members. The first 
level will be a standard process for the nominating committee to name 
candidates for board seats. The second level will be a supplemental 
process to allow participants to formally nominate candidates in 
addition to those named by the nominating committee. As with the 
designation of nominating committee members described above, nominating 
committee members and participants will be able to nominate individuals 
in all participant categories, not only the committee member's or 
participant's own category.
    In the standard nomination process, the nominating committee will 
nominate one nominee for each open participant director seat. The 
nominating committee will select candidates based on both suggestions 
solicited from participants as well as from its own deliberations. GSCC 
proposes that participants be provided an opportunity early in the 
nomination process to suggest one nominee for each open board seat. 
Participants will then be notified of the nominating committee's slate 
of candidates for open board seats.
    After participants are notified of the nominating committee's 
selections, participants will be given the opportunity to suggest 
additional nominees pursuant to a formal supplemental nomination 
process. Specifically, participants will be invited to nominate 
additional nominees with a petition signed by the lesser of seven 
participants or five percent of GSCC's participants. Each participant 
will be limited to signing one petition for each open board seat.
    (iii) Election Process for Board Members. Similar to the nomination 
process described above, there will also be two levels of election 
processes for participant directors. In the standard election process, 
which will be followed if no nominating petitions have been filed by 
participants, the nominating committee will certify to the shareholders 
the participant directors selected by the nominating committee. 
Shareholders will then be bound to cast their votes supporting the 
nominating

[[Page 49550]]

committee selections at the annual meeting.
    However, if participants have filed one or more formal nominating 
petitions, the supplemental election process will be followed. This 
process will involve circulating ballots to all participants and 
permitting them to cast their votes to fill each open participant 
director seat in the contested participant category or categories. GSCC 
proposes to eliminate the requirement that participants only may vote 
for directors of their participant category.
    Participants will have the following voting entitlements: (i) 
active comparison only participants will be entitled to one vote per 
open board seat, (ii) active netting participants will be entitled to 
at least two votes per open seat, and (iii) active clearing agent bank 
participants will be entitled to two votes per open seat.\4\ 
Supplemental voting entitlements will be allocated to netting members 
based on their level of clearing fund deposit. Each netting member will 
receive an additional two votes for approximately every ten million 
dollars of its clearing fund deposit up to a total of twelve votes.\5\ 
Finally, cumulative voting rights will be removed.
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    \4\ Affiliated members will be considered one participant for 
purposes of determining voting entitlements.
    \5\ The clearing fund of affiliated members will be aggregated 
to determine their number of votes.
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    (iv) Vacancies on the Board. Currently, the board appoints new 
directors to replace directors who resign or are removed. (NSCC 
designates the person to be appointed by the board if the vacating 
director was an NSCC director.) The replacement director must be in the 
same participant category as the vacating director. Such replacement 
directors serve on the board until the next annual meeting, at which 
point the current nomination and election process is followed to refill 
that board seat with a permanent replacement. This permanent 
replacement director then serves until the vacating director's original 
term would have expired.
    GSCC proposes to retain the current replacement mechanism but to 
conform the nomination and election processes that occur at the annual 
meeting following the board's appointment of the replacement director 
with the revised nominating and election processes. For example, the 
nominating committee will select a nominee for the open replacement 
director's seat. If no participant petitions have been filed, 
shareholders will vote their shares to support the nominating 
committee's selection. If a participant petition has been filed, the 
participants will then elect the permanent replacement director.
    (v) Election Process for the Chairman of the Board. Currently, 
there is no provision in the Agreement for selecting the chairman of 
the board. GSCC proposes that the incoming board based upon the 
recommendation of the outgoing executive committee will designate the 
chairman of the board. The chairman will be elected for a one year item 
with no overall term limit other than the six year term limit 
applicable to all participant directors.
    (b) Composition of the Board. Currently, the Agreement provides for 
twelve participant directors consisting of a set number of directors 
from each of the three categories of participants. The categories and 
number of participants are six dealer participant directors, three 
broker participant directors, and three clearing agent bank participant 
directors. GSCC believes that the current composition is inadequate to 
meet the reality of GSCC's business as it is conducted today. For many 
years now, there have been only two clearing agent banks eligible to 
fill three director seats. Moreover, while all participants are 
eligible to nominate participant directors, not all participants are 
eligible to serve as participant directors. Thus, GSCC proposes to 
restructure the board's composition and the methodology used to fix its 
composition in a manner that will provide enough flexibility to reflect 
future demographic changes in GSCC membership.
    GSCC believes that specific board composition requirements should 
be removed from the Agreement and that the Agreement should outline 
only broad parameters such as a maximum number of board seats and a 
minimum required number of categories of directors that will be 
represented. This will allow the Agreement to be a flexible, ``living'' 
document that will enable GSCC to deal readily with significant changes 
in its membership base, largest shareholders, and business 
relationships.
    The By-laws will state that the composition of the board may be 
changed by majority vote of the shareholders or by majority vote of the 
board. In this manner, the board will be empowered to make changes 
within the Agreement's broad parameters, including changing the size or 
composition requirements of the board in order to reflect membership 
demographics and other criteria.\6\
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    \6\ Before changing the number of directors, GSCC must file a 
proposed rule change with the Commission.
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    GSCC believes that major changes in the board's composition are not 
now necessary because the current members, the vast majority of which 
are brokers, dealers, or banks, are adequately represented. However, 
GSCC proposes revisions to the Agreement and By-laws that will 
restructure and redefine the board's composition in order to ensure 
continued fair representation in the future and to ensure 
representation to those types of entities that are neither brokers, 
dealers, nor banks. As the most significant step towards that end, the 
dealer participant category will be replaced with a ``general user 
participant'' category to include more types of participants. In 
addition, one of the clearing agent bank director positions will be 
recategorized as a new ``at-large'' director position which will be 
filled by any person whose service as a board member will be beneficial 
to GSCC. The current board composition is fifteen directors, which will 
be recategorized as one management director, one at-large director, two 
NSCC directors, six general user participant directors, three broker 
participant directors, and two clearing agent bank directors.
    In order to effect these changes, the proposal will amend certain 
definitions in the Agreement. ``Broker'' is currently defined as an 
entity regularly engaged in the business of effecting transitions 
specifically in treasury securities and specifically for the account of 
primary dealers and aspiring primary dealers. GSCC believes this 
definition is too narrow and limiting. Hence, GSCC proposes to broaden 
the definition of ``broker'' to include any entity regularly engaged in 
the business of effecting transactions in any securities eligible for 
processing by GSCC on behalf of participants. In a related matter, 
references to treasury securities in the Agreement generally will be 
changed to reference all securities eligible for GSCC services.
    ``Clearing agent bank'' is currently defined as any clearing bank 
regularly used by brokers, primary dealers, and aspiring primary 
dealers for the clearance and settlement of transactions in treasury 
securities. Under the proposal, ``clearing agent bank'' will be more 
broadly defined essentially to mean any commercial bank member of the 
Federal Reserve System that provides clearing services with respect to 
GSCC eligible securities on behalf of others for at least ten percent 
of GSCC's participants and that provides those services using its own 
Federal Reserve account.
    ``Dealer participant'' is currently defined as a primary dealer or 
an

[[Page 49551]]

aspiring primary dealer that is a participant. Again, GSCC believes 
this definition is too narrow and limiting. Thus, GSCC proposes to use 
the term ``general user participant'' instead of ``dealer 
participant.'' In addition, GSCC proposes to use the corresponding term 
``general user participant director'' instead of ``dealer participant 
director.'' The definition of general user participant will be broader 
than the current dealer member category defined in the rules in that it 
will include essentially any participant that is not a broker or 
clearing agent bank, including futures commission merchants and 
registered investment companies.
    A related proposal will remove all references to primary and 
aspiring primary dealers from the Agreement. As noted above, 
restricting nonbroker participants to primary and aspiring primary 
dealers, the latter of which the Federal Reserve no longer recognizes, 
disenfranchises participants that nonetheless act in a traditional 
dealer capacity.
    As noted above, GSCC proposes to add an at-large category of 
director to further fair representation. The use of this category will 
allow GSCC the flexibility to add to the board a representative from a 
type of member not already represented on the board or an individual 
from an entity that plays an important role in the government 
securities marketplace but is not a GSCC member or shareholder.
    Finally, GSCC directors are currently limited to serving two 
consecutive three year terms on the board. GSCC is proposing to retain 
the current term limits for all but the vice chairman and management 
director, who will not have term limits. Furthermore, the Agreement 
will specify that there must be a one year absence from the board 
before a former director is eligible for a new overall six year term 
limit. GSCC proposes to retain the three staggered classes of 
directors. The By-laws will specify the categories of directors that 
compose each of the three classes.
    (c) Restrictions on Issuance and Transfer of GSCC Shares. GSCC is 
subject to restrictions on the issuance and repurchase of its shares. 
In addition, GSCC's shareholders, including NSCC, are subject to 
restrictions on the transfer GSCC shares. The restrictions differ for 
Class A voting shares and Class B non-voting shares.
    (i) Restrictions on Shares. One of the primary restrictions that 
GSCC would like to remove from its shares is the price restrictions. 
Generally, both Class A and Class B shares must be issues, sold, or 
transferred at a price of $500 per share. Only NSCC and GSCC, if 
selling shares it acquired from NSCC, are authorized to sell or 
transfer Class A shares for a price other than $500. GSCC proposes to 
remove this price restriction completely which will provide a great 
deal more flexibility to shareholders wishing to sell their shares. One 
exception to removing the price restriction will be that GSCC generally 
will not be able to sell shares at less than current book value.
    GSCC currently may issue Class A shares only to participants not 
already holding Class A shares. GSCC proposes to provide itself more 
flexibility by being able to issue Class A shares to an existing Class 
A shareholder, participant, or affiliate of a participant.\7\ This 
expansion will help GSCC broaden its shareholder base in an appropriate 
manner.
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    \7\ If GSCC issues additional Class A shares, NSCC has the right 
to request that enough additional Class A shares be issued to it in 
order for NSCC to retain its twenty percent holdings in GSCC. The 
proposal will not change this provision.
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    GSCC currently may issue Class B shares only to holders of Class A 
shares. However, the board recently stated its intention to repurchase 
the existing Class B shares when GSCC is determined to be adequately 
capitalized which is expected to occur by year end 1997. Because GSCC's 
intention is to repurchase and then cancel all its Class B shares, GSCC 
proposes to remove from the Agreement GSCC's authority to issue new 
Class B shares.
    In addition, the Agreement contains restrictions on transfers of 
Class A shares by participant shareholders including a requirement that 
the Class A shareholder must transfer all of its Class A shares and 
that the transfer must be to a single participant not already holding 
Class A shares. GSCC proposes to make Class A shares more freely 
transferable by permitting sales to any existing Class A shareholder, 
participant, or affiliate of a participant in lots of 300 shares. 
However, no shareholder other than NSCC will be able to own more than 
five percent of Class A shares unless such shares are held as a result 
of acquisition, merger, or a comparable event. Similarly, holders of 
Class B shares can sell such shares only to participant shareholders in 
lots of 200 and only with GSCC's consent. GSCC proposes to authorize 
shareholders to sell Class B shares to any existing shareholder, 
participant, or affiliate of a participant in lots of 200 shares. This 
loosening of the transfer restrictions would provide a benefit to 
existing shareholders in the form of more flexibility in ownership. For 
example, it would allow shareholders that have multiple sets of GSCC 
shares by virtue of acquisitions or mergers to transfer the ownership 
of one or more share sets to an affiliated entity.
    Currently, GSCC has a right of first refusal only with respect to 
NSCC's sale of its Class A shares. GSCC proposes to extend its right of 
first refusal to any sale or transfer of shares by any shareholder. 
GSCC may purchase such shares at the lesser of the agreed price or the 
current book value. GSCC may resell such securities for a price at 
least equal to the book value unless the board approves a lower price.
    Unlike other shareholders, NSCC may sell any number of its Class A 
shares at any price to nonparticipants. However, GSCC has a right of 
first refusal to purchase any of NSCC's Class A shares for $500 per 
share. GSCC can then sell these repurchased Class A shares to 
participants not already holding Class A shares or to any person at any 
price if approved by GSCC's board. The proposed rule change will amend 
GSCC's right of refusal to require the sale price to be the lesser of 
book value or the negotiated price. Similar to its proposal with 
respect to the issuance of shares, GSCC's proposal will permit GSCC to 
sell repurchased Class A shares to any existing Class A shareholder, 
participant, or affiliate of a participant at a price equal to current 
book value.
    With respect to shareholders other than NSCC, GSCC can request to 
purchase Class A shares from participant shareholders provided that 
each participant shareholder sells the same percentage of Class A 
shares as each other participant shareholder and NSCC continues to hold 
twenty percent of GSCC's Class A shares unless NSCC agrees otherwise. 
The Agreement currently provides that GSCC does not intend to 
repurchase outstanding Class A shares unless all Class B shares have 
been converted to Class A shares or have already been repurchased by 
GSCC. The proposal will allow GSCC to repurchase shares at current book 
value or at any price determined by the board.
    Class B shares are also subject to restrictions on conversions. 
Participant shareholders can convert Class B shares to Class A shares 
only upon GSCC's request to convert. GSCC is only authorized to issue 
such a request in order to effect a transfer of converted shares to one 
or more participants that do not hold any Class A shares. Because 
GSCC's intention is to repurchase and then cancel all its Class B 
shares, GSCC proposes to delete the conversion provisions.
    (ii) Provision for Extraordinary Corporate Action. The proposed 
changes to the Agreement will allow GSCC to issue shares in response to 
an

[[Page 49552]]

extraordinary corporate action. For example, in the event GSCC engages 
in a joint business venture with another entity or enters into a profit 
sharing agreement with another entity, it will be able to issue Class A 
shares or a new class of shares. Pursuant to such an issuance, GSCC may 
exchange or transfer such shares for cash in any amount or for any 
noncash consideration.
    (iii) Shareholder Ceasing To Be a Participant. Regardless of the 
class of shares, if a shareholder ceases to be a GSCC participant, GSCC 
has the discretionary right to repurchase its shares provided that GSCC 
repurchases all of the shares for $500 per share. However, GSCC is not 
obligated to repurchase such shares. Difficulties arise when a GSCC 
shareholder is no longer a participant due to insolvency or merger or 
because it no longer engages in the business of trading in government 
securities. In these types of instances, contacting the shareholder or 
obtaining required shareholder action such as shareholder votes is made 
more difficult.
    GSCC proposes to expand its authorized process for dealing with 
situations where a shareholder no longer is a participant. GSCC 
proposes to amend its current authority to mandate repurchase of shares 
of such a shareholder at book value. However, the proposal also will 
authorize GSCC to offer to repurchase shares for any price determined 
by the board.
    (d) Miscellaneous Amendments. There are a number of other 
provisions in the Agreement that GSCC proposes to amend including: (i) 
loss allocation provisions, (ii) specific time and name references, 
(iii) supermajority voting requirements, and (iv) changes in GSCC's 
business.
    With respect to loss allocation, the Agreement currently has 
detailed loss allocation provisions that are redundant with the loss 
allocation provisions set forth in GSCC's rules. These loss allocation 
provisions represent business considerations that are not typically 
covered by a shareholder agreement. Therefore, because GSCC believes 
that the rules are inherently more flexible than the Agreement, GSCC 
proposes to delete the loss allocation provisions from the Agreement as 
they are more appropriately handled in the rules. Furthermore, 
according to GSCC, inconsistencies can be avoided by having the loss 
allocation provisions in only one document.
    With respect to time and name references, there are a number of 
references that are no longer relevant to the Agreement. For example, 
there are provisions in the Agreement relating to shareholder meetings, 
classes of directors, and staggered elections. These developmental 
provisions make a number of references to procedures that had to be 
followed during the period between 1988 and 1991 at which time standard 
procedures went into effect. Similar to the time references, the 
Agreement specifically refers to NSCC in a number of sections and names 
a specific individual to hold one NSCC director seat and another 
specific individual to act as the management director for purposes of 
the 1988 annual meeting. GSCC propose to remove all timing references 
and procedures specific to the period between 1988 and 1991. In 
addition, GSCC proposes to remove the obsolete provision naming the 
specific individuals.
    The Agreement now also sets forth a number of supermajority board 
voting requirements that must be met in order to make certain changes 
to the Agreement. These changes to the Agreement include classification 
of directors, procedures for electing and replacing directors, 
provisions related to loss allocation, and procedures and requirements 
for amending the Agreement. Furthermore, eighty percent of the entire 
board must vote to change GSCC's business.
    GSCC proposes to remove these supermajority voting requirements 
with respect to future amendments of the Agreement. Many of the 
provisions affected by the supermajority voting requirements will be 
changed to such an extent that such requirements will no longer be 
logical. Furthermore, one of the overall goals of amending the 
Agreement is to make it more flexible.
    Notwithstanding the above, GSCC would retain the requirement that 
it be authorized to change its business from that of a registered 
clearing agency including any change that would put GSCC in the 
business of being a broker or of performing brokered transactions, only 
upon an affirmative vote of at least eighty percent of the entire 
board. Moreover, for the protection of its shareholders and members, 
GSCC proposes that any change of business that puts GSCC in competition 
with clearing agent banks also be subject to a veto by a unanimous vote 
of all the clearing agent bank directors and one other participant 
director.
    According to GSCC, the proposed rule change will benefit GSCC's 
members by allowing a more flexible, efficient, and responsive 
administration. Therefore, GSCC believes that the proposed rule change 
is consistent with the requirements of Section 17A of the Act and the 
rules and regulations promulgated thereunder.

B. Self-Regulatory Organization's Statement on Burden on Competition

    GSCC does not believe that the proposed rule change will have an 
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

    Written comments relating to the proposed rule change have not yet 
been solicited or received. Members will be notified of the rule change 
filing and comments will be solicited by an Important Notice. 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 GSCC 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 Room in Washington, D.C. Copies of such 
filing will also be available for inspection and copying at the 
principal office of GSCC. All submissions should refer to the file 
number SR-GSCC-97-

[[Page 49553]]

07 and should be submitted by October 14, 1997.
    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority.\8\
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    \8\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 97-25028 Filed 9-19-97; 8:45 am]
BILLING CODE 8010-01-M
```