Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Notices 6289

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

2Securities Exchange Act Release No. 38021

(December 5, 1996), 61 FR 65424.

3For a complete description of the participants

fund, refer to Securities Exchange Act Release Nos.

37294 (June 10, 1996), 61 FR 30268 [File No. SR–

MBSCC–96–01] (notice of filing of proposed rule

change] and 37512 (August 1, 1996), 61 FR 41437

[File No. SR–MBSCC–96–01] (order approving

proposing rule change).

4A depository receipt evidences the pledge of

specified securities held by a custodian for the

account of a pledgee. MBSCC advised the

Commission that as of October 1996, the year to

date average daily dollar value of the securities

pledged to MBSCC through the use of depository

receipts was $1.05 billion.

5 15 U.S.C. 78q–1(b)(3)(F).

6MBSCC has stated that the use of the depository

receipt presents certain risks to MBSCC, including:

(1) Forgery, (2) unauthorized individuals executing

on behalf of the participant or the custodian, (3)

improper segregation of the pledged securities from

other securities, (4) unauthorized releases of the

pledged securities, and (5) the possibility that the

custodian will not release the securities to MBSCC

upon MBSCC’s proper demand for such a release.

7 17 CFR 200.30–3(a)(12).

A closed meeting will be held on

Friday, February 14, 1997, at 10:00 a.m.

Commissioners, Counsel to the

Commissioners, the Secretary to the

Commission, and recording secretaries

will attend the closed meeting. Certain

staff members who have an interest in

the matters may also be present.

The General Counsel of the

Commission, or his designee, has

certified that, in his opinion, one or

more of the exemptions set forth in 5

U.S.C. 552b(c)(4), (8), (9)(A) and (10)

and 17 CFR 200.402(a)(4), (8), (9)(i) and

(10), permit consideration of the

scheduled matters at the closed meeting.

Commissioner Hunt, as deputy

officer, voted to consider the items

listed for the closed meeting in a closed

session.

The subject matter of the closed

meeting scheduled for Friday, February

14, 1997, at 10:00 a.m., will be:

Institution and settlement of injunctive

actions.

Institution and settlement of administrative

proceedings of an enforcement nature.

Regulatory matter bearing enforcement

implications.

At times, changes in Commission

priorities require alterations in the

scheduling of meeting items. For further

information and to ascertain what, if

any, matters have been added, deleted

or postponed, please contact:

The Office of the Secretary at (202) 942–

7070.

Dated: February 7, 1997.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 97–3540 Filed 2–7–97; 3:53 pm]

BILLING CODE 8010–01–M

[Release No. 34–38242; File No. SR–

MBSCC–96–06]

Self-Regulatory Organizations; MBS

Clearing Corporation; Order Approving

a Proposed Rule Change Relating to

the Satisfaction of Participants Fund

Deposit Requirements

February 5, 1997.

On October 7, 1996, MBS Clearing

Corporation (‘‘MBSCC’’) filed with the

Securities and Exchange Commission

(‘‘Commission’’) a proposed rule change

(File No. SR–MBSCC–96–06) pursuant

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

Exchange Act of 1934 (‘‘Act’’) to

eliminate the depository receipt as an

acceptable form of collateral to satisfy

its participants fund deposit

requirements.1 Notice of the proposal

was published in the Federal Register

on December 12, 1996.2 No comment

letters were received. For the reasons

discussed below, the Commission is

approving the proposed rule change.

I. Description

MBSCC presently requires each of its

participants to pledge or to provide

collateral to MBSCC to satisfy MBSCC’s

participants fund deposit requirements.3

These deposits form a nonmutualized

pool of collateral that is designed to

reflect each participant’s aggregate

projected obligations to its

counterparties and to MBSCC. MBSCC

currently accepts cash, certain

securities, and letters of credit issued by

an approved issuer as collateral in

satisfaction of its participants’ deposit

obligations. Previously, MBSCC’s

participants that used securities to

satisfy their deposit requirements were

required only to provide evidence of the

pledge of securities to MBSCC by using

a depository receipt; however,

participants were not required to effect

a book-entry transfer of such securities

to an MBSCC account.4 The rule change

eliminates the use of the depository

receipt and instead requires participants

that choose to use securities to satisfy

their participants deposit requirements

to deliver the securities by book-entry to

an MBSCC account at an entity

approved by MBSCC. In connection

with this rule change, MBSCC also will

be responsible for the payment of any

fees associated with the establishment

of a pledge account at a trust company

approved by MBSCC’s board of directors

for use in connection with the bookentry method.

II. Discussion

Section 17A(b)(3)(F)5 of the Act

requires that the rules of a clearing

agency be designed 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. The Commission believes

that MBSCC’s proposed rule change is

consistent with MBSCC’s obligations

under Section 17A of the Act. The

replacement of depository receipts with

the book-entry method should reduce

the risks associated with the use of

depository receipts.6 The exclusive use

of book-entry method as a means for

participants to pledge securities to

MBSCC as participants fund collateral

should enhance MBSCC’s ability to

access the collateral in the event of a

participant default. This should enable

MBSCC to better fulfill its obligation

under the Act to assure the safeguarding

of securities and funds which are in its

custody or control. Furthermore,

because MBSCC will be responsible for

all fees associated with the

establishment of the pledge account, the

rule change should help reduce any

burdens on MBSCC’s participants that

result from the elimination of

depository receipts as an acceptable

form of participants fund deposit.

III. Conclusion

On the basis of the foregoing, the

Commission finds that the proposal is

consistent with the requirements of the

Act and in particular with the

requirements of 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–

MBSCC–96–06) be, and hereby is,

approved.

For the Commission by the Division of

Market Regulation, pursuant to delegated

authority.7

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 97–3325 Filed 2–10–97; 8:45 am]

BILLING CODE 8010–01–M