50414 Federal Register / Vol. 62, No. 186 / Thursday, September 25, 1997 / Notices

9 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 DTC.

3For a detailed description of memo seg, refer to

Securities Exchange Act Release No. 26250

(November 3, 1988), 53 FR 45638 (File No. SR–

DTC–88–16) (order permanently approving DTC’s

proposed rule change).

4 17 CFR 240.15c3–3.

5 15 U.S.C. 78q–1(b)(3)(A).

6 15 U.S.C. 78s(b)(3)(A).

7 17 CFR 240.19b–4(e).

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. Copies of such filing will also be

available for inspection and copying at

the principal office of the Exchange. All

submissions should refer to File No.

SR–CBOE–97–44 and should be

submitted by October 16, 1997.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.9

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 97–25374 Filed 9–24–97; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–39095; File No. SR–DTC–

97–08]

Self-Regulatory Organizations; The

Depository Trust Company; Notice of

Filing and Immediate Effectiveness of

Proposed Rule Change Regarding the

Memo Segregation Service

September 19, 1997.

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

Securities Exchange Act of 1934

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

June 1, 1997, The Depository Trust

Company (‘‘TDC’’) 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 DTC. 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 proposed rule change will modify

the procedures for participants to

control their collateral in connection

with the use of DTC’s memo segregation

service (‘‘memo seg’’).

II. Self-Regulatory Organization’s

Statement of the Purpose of, and

Statutory Basis for, and Proposed Rule

Change

In its filing with the Commission,

DTC 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. DTC 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

DTC developed memo seg to assist

participants in their compliance with

Rule 15c3–3 under the Act.3 Rule 15c3–

3, among other things, requires that

broker-dealers maintain control of all

fully-paid and excess margin securities

they hold for the accounts of

customers.4 Memo seg enables

participants, particularly broker-dealer

participants, to segregate customer fullypaid and excess margin securities by

creating a memo position within their

free accounts. This memo position

enables participants to protect

themselves from unintended deliveries

of customer fully-paid and excess

margin securities that either are in the

participant’s free account or that may be

received during the daily processing

cycle.

One of DTC’s primary risk

management controls to protect DTC in

the event of a participant’s failure to

settle is DTC’s collateralization

procedures. These procedures are

designed to assure that a participant’s

net debit does not exceed the total

collateral available in its account. One

of the methods available to a participant

to collateralize its account is to give

DTC a standing instruction that

designates as collateral those securities

in its free account at the start of the

processing day. Currently, this

instruction would apply to all securities

in the participant’s free account,

including securities for which a memo

seg position has been created.

Accordingly, the proposed rule

change will amend DTC’s participant

collateralization procedures to exclude

start-of-day memo seg positions from

classification as collateral even if the

participant has given DTC a standing

instruction to designate as collateral all

securities in its free account. If a

participant subsequently wishes to

utilize memo seg positions as collateral,

it will be permitted to do so by giving

DTC the appropriate instructions. DTC

believes that the proposed rule change

will assist participants in retaining the

protections of memo seg from one day

to the next which should reduce the

potential for unintended deliveries of

customer fully paid or excess margin

securities.

DTC believes that the proposed rule

change is consistent with the

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

the Act 5 and the rules and regulations

thereunder because it promotes

efficiencies in the clearance and

settlement of securities transactions.

(B) Self-Regulatory Organization’s

Statement on Burden on Competition

DTC perceives no impact on

competition by reason of the proposed

rule change.

(C) Self-Regulatory Organization’s

Statement on Comments on the

Proposed Rule Change Received From

Members, Participants or Others

Written comments from DTC

participants or others have not been

solicited or received on the proposed

rule change.

III. Date of Effectiveness of the

Proposed Rule Change and Timing for

Commission Action

The foregoing rule change has become

effective pursuant to Section 19(b)(3)(A)

of the Act 6 and Rule 19b–4(e)(4)

thereunder 7 because it effects a change

in an existing service of DTC that (i)

does not adversely affect the

safeguarding of securities or funds in

the custody or control of DTC or for

which it is responsible and (ii) does not

significantly affect the respective rights

or obligations of DTC or persons using

the service. At any time within sixty

days of the filing of such rule change,

the Commission may summarily

abrogate such rule change if it appears

to the Commission that such action is

necessary or appropriate in the public

interest, for the protection of investors,
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