Federal Register / Vol. 62, No. 186 / Thursday, September 25, 1997 / Notices 50415

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 submitted by GSCC.

3Securities Exchange Act Release No. 36491

(November 17, 1995), 60 FR 61577 [File No. SR–

GSCC–95–02] (order approving proposed rule

change implementing netting services for certain

repo transactions).

4Securities Exchange Act Release No. 37996

(November 27, 1996), 61 FR 64778 [File No. SR–

GSCC–96–11].

5 15 U.S.C. 78q–1(b)(3)(F).

6 Id.

or otherwise in furtherance of the

purposes of the Act.

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 DTC. All submissions should

refer to File No. SR–DTC–97–08 and

should be submitted by October 16,

1997.

For the Commission by the Division of

Market Regulation, pursuant to delegated

authority.8

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 97–25465 Filed 9–24–97; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–39099; File No. SR–GSCC–

97–08]

Self-Regulatory Organizations;

Government Securities Clearing

Corporation; Notice of Filing and Order

Granting Accelerated Approval of a

Proposed Rule Change to Extend the

Maximum Term for Repurchase

Agreements

September 19, 1997.

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

Securities Exchange Act of 1934

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

August 6, 1997, the Government

Securities Clearing Corporation

(‘‘GSCC’’) filed with the Securities and

Exchange Commission (‘‘Commission’’)

the proposed rule change (File No. SR–

GSCC–97–08) as described in Items I

and II below, which items have been

prepared primarily by GSCC. The

Commission is publishing this notice

and order to solicit comments on the

proposed rule change from interested

persons and to grant accelerated

approval of the proposal.

I. Self-Regulatory Organization’s

Statement of the Terms of Substance of

the Proposed Rule Change

GSCC proposes to amend the time

frame for the maximum allowable

number of calendar days that the term

of a repurchase agreement (‘‘repo’’) may

span.

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 that 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

section (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

GSCC proposes to extend the

maximum number of calendar days that

a repo’s term may span and still be

eligible for netting services from 360

calendar days to two calendar years.

GSCC Rule 11 states the requirements

that a repo must meet in order to be

eligible for netting services and provides

that the number of calendar days

between the scheduled settlement date

for the close leg and the business day on

which trade data is submitted may not

be greater than the ‘‘maximum number

of business days established by the

Corporation for such purpose and

published in a schedule made available

to members. * * *’’ When GSCC

introduced its repo netting service in

November 1995, it set the maximum

number of days allowable between

scheduled settlement and data

submission at 195 calendar days.3 Last

year, it received Commission approval

to extend this maximum time period to

360 calendar days.4

In response to rising repo volumes

and at the request of GSCC’s members

that engage in repos with a term of

greater than one year, GSCC proposes to

extend the time period that a repo term

may span and still be eligible for netting

services to two years. Members will

benefit from the inclusion of longer term

repos in the netting service because

clearing and settlement risks and costs

will be further reduced by

encompassing more repo transactions

into the net. GSCC believes that its risk

management procedures currently in

place are sufficient to protect against

any exposure created by longer repo

terms. GSCC will continue to monitor

and to evaluate all aspects of its repo

netting services.

GSCC believes that the proposed rule

change is consistent with the

requirements of Section 17A(b)(3)(F) 5 of

the Act and the rules and regulations

thereunder because it promotes the

prompt and accurate clearance and

settlement of securities transactions and

safeguards securities and funds in

GSCC’s custody or control.

(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

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

requires that the rules of a clearing

agency must be designed to promote the

prompt and accurate clearance and

settlement of securities transactions and

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.6 The

Commission believes that the proposed
50416 Federal Register / Vol. 62, No. 186 / Thursday, September 25, 1997 / Notices

7Supra note 3.

8 17 CFR 200.30–3(a)(12).

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

2Securities Exchange Act Release No. 38889 (July

30, 1997), 62 FR 42274.

3APS will process variable rate and fixed rate

annuity products. Letter from Julie Beyers,

Associate Counsel, NSCC (February 26, 1997).

4NSCC intends to implement additional phases

in the future to include the processing of annuity

contract applications and the settlement of

premium payments. In addition, the scope of

information included in APS may be expanded

beyond position and valuation information. NSCC

will be required to make the appropriate rule filings

with the Commission at such times as NSCC is

ready to implement these additional components.

5According to NSCC, this feature will not be

available when the APS becomes operational; it will

be added at a later date. Until the exit and cancel

features are added, an annuities agency or annuities

carrier member must go outside of APS to arrange

for the reversal of a commission and charge back

transaction that was erroneously entered into APS.

rule change is consistent with GSCC’s

obligations under the Act because the

proposal permits GSCC to provide the

benefits of centralized, automated

settlement to a broader segment of repos

involving government securities. Thus,

the proposal should assist in the prompt

and accurate clearance and settlement of

securities transactions.

As discussed in the order approving

GSCC’s repo netting system, the

Commission believes that GSCC has put

into place adequate risk management

procedures to limit the settlement risk

associated with repo transactions.7 The

Commission also believes that GSCC has

adequately analyzed the application of

these risk management procedures to

the risks associated with longer term

repo transactions and therefore will be

able to adequately safeguard itself and

its participants from the risk associated

with the inclusion of longer term repo

transactions in the netting system. Thus

the proposal is consistent with GSCC’s

obligation to assure the safeguarding of

securities and funds which are in its

custody or control or for which it is

responsible.

GSCC requests that the Commission

find good cause for approving the

proposed rule change prior to the

thirtieth day after the date of

publication of notice of the filing. The

Commission finds good cause exists for

approving the proposed rule change

prior to the thirtieth day after the date

of publication of notice of the filing

because accelerated approval will allow

GSCC to immediately expand its netting

services to include repos with terms

between 360 calendar days and two

years. This will permit more

participants that conduct repo

transactions to benefit from the positive

effects of netting.

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, 450 Fifth Street, N.W.,

Washington, D.C. 20549. 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–

08 and should be submitted by October

16, 1997.

It Is Therefore Ordered, pursuant to

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

proposed rule change (File No. SR–

GSCC–97–08) 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. 97–25462 Filed 9–24–97; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–39096; File No. SR–NSCC–

96–21]

Self-Regulatory Organizations;

National Securities Clearing

Corporation; Order Approving a

Proposed Rule Change Relating to the

Establishment of the Annuities

Processing Service

September 19, 1997.

On December 26, 1996, the National

Securities Clearing Corporation

(‘‘NSCC’’) filed with the Securities and

Exchange Commission (‘‘Commission’’)

a proposed rule change (File No. SR–

NSCC–96–21) pursuant to Section

19(b)(1) of the Securities Exchange Act

of 1934 (‘‘Act’’).1 On February 27, 1997,

and May 12, 1997, NSCC amended the

proposed rule change. Notice of the

proposal was published in the Federal

Register on August 6, 1997.2 For the

reasons discussed below, the

Commission is approving the proposed

rule change.

I. Description

The proposed rule change amends

NSCC’s rules to establish the Annuities

Processing Service (‘‘APS’’). APS will be

a centralized communication link that

connects participating insurance

carriers with broker-dealers, banks, and

the broker-dealers’ or banks’ affiliated

life insurance agencies where

appropriate. Only those annuity plans 3

that are purchased by individuals from

insurance carriers through brokerdealers, banks, or their affiliated

insurance agencies will be eligible for

processing through APS.

NSCC will implement APS in phases.

Phase I will provide NSCC’s

participants with the ability to send and

receive daily information regarding

annuity contract positions, the value of

a contract’s underlying assets, and

settlement of commission monies.4 This

information will be transmitted through

the ‘‘position and valuation,’’ and

‘‘commission and charge back’’

components of Phase I.

The position and valuation

component will permit insurance

carriers to transmit information

regarding the value of individual

annuity contracts and the value of the

assets underlying the contracts to

broker-dealers and insurance agencies.

Insurance carriers will submit position

and valuation information to NSCC,

which NSCC will forward to the party

designated as recipient by the insurance

carrier.

The commission and charge back

component will permit insurance

carriers and agencies to communicate

concerning periodic trail or asset-based

compensation and transaction-based

commission payments, each paid by an

insurance carrier to an agency, as well

as charge backs paid by an agency to an

insurance carrier. Insurance carriers and

agencies will settle these payments

through NSCC’s money settlement

system.

Insurance carriers will be able to

initiate commission and charge back

transactions by submitting instructions

to NSCC. On any day prior to

settlement, an annuities agency or

annuities carrier member may submit a

cancel instruction if the member does

not recognize the transaction or an exit

instruction if the member recognizes the

transaction but wants that transaction to

be processed outside of APS.5 A