8068 Federal Register / Vol. 62, No. 35 / Friday, February 21, 1997 / Notices

3 15 U.S.C. 78q–1(b)(3)(D).

4 15 U.S.C. 78s(b)(3)(A)(ii).

5 17 CFR 240.19b–4(e)(2).

6 17 CFR 200.30–3(a)(12).

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

2Letter from Karen Walraven, Vice President and

Associate Counsel, GSCC (November 26, 1996).

3The Commission has modified the text of the

summaries submitted by GSCC.

recovered. Pass-through charges to

participants, such as the cost of

Participant Terminal System terminals

and lines and transfer agent fees, will be

excluded from the surcharge. DTC

anticipates that the surcharge will raise

$11 million in 1997. DTC will evaluate

the surcharge at least annually and will

modify the rate if necessary.

DTC believes that the proposed rule

change is consistent with Section

17A(b)(3)(D) of the Act 3 and the rules

and regulations thereunder because it

provides for the equitable allocation of

reasonable dues, fees, and other charges

among DTC’s participants.

(B) Self-Regulatory Organization’s

Statement on Burden on Competition

DTC does not believe that the

proposed rule change will impose any

burden on competition not necessary or

appropriate in furtherance of the

purposes of the Act.

(C) Self-Regulatory Organization’s

Statement on Comments on the

Proposed Rule Change Received From

Members, Participants or Others

No written comments have been

solicited or received. DTC will notify

the Commission of any written

comments received by DTC.

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)(ii) of the Act 4 and pursuant

to Rule 19b–4(e)(2) 5 promulgated

thereunder because the proposal

changes a due, fee, or other charge

imposed by DTC. 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,

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 respected 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–96–24 and

should be submitted by March 14, 1997.

For the Commission by the Division of

Market Regulation, pursuant to delegated

authority.6

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 97–4236 Filed 2–20–97; 8:45 am]

BILLING CODE 8010–01–M

[Release No. 34–38287; File No. SR–GSCC–

96–12]

Self-Regulatory Organizations;

Government Securities Clearing

Corporation; Notice of Filing of a

Proposed Rule Change Relating to

Interdealer Broker Repurchase

Agreement Transactions

February 13, 1997.

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

Securities Exchange Act of 1934

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

November 21, 1996, the Government

Securities Clearing Corporation

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

Exchange Commission (‘‘Commission’’)

the proposed rule change (File No. SR–

GSCC–96–12) as described in Items I, II,

and III below, which items have been

prepared primarily by GSCC. On

December 3, 1996, GSCC filed with the

Commission an amendment to the

proposed rule change.2 The Commission

is publishing this notice to solicit

comments on the proposed rule change

from interested persons.

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 amend GSCC rules to

authorize GSCC to assess the clearing

fund margin and mark-to-market

consequences of a brokered repurchase

agreement transaction (‘‘repro’’) that is

uncompared on one side as if it were

fully compared.

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

sections (A), (B), and (C) below, of the

most significant aspects of such

statements.3

(A) Self-Regulatory Organization’s

Statement of the Purpose of, and

Statutory Basis for, the Proposed Rule

Change

Occasionally, an interdealer broker

(‘‘IDB’’) and one of its non-IDB

counterparties to a repo transaction

submit to GSCC on a timely basis the

relevant data for a transaction, but the

other non-IDB counterparty fails to

submit in a timely or accurate fashion

data related to the transaction. When

this occurs, the IDB’s trade with the

non-submitting counterparty will not

compare and will not enter GSCC’s

netting system. The corresponding side

between the IDB and the submitting

counterparty will compare and will

enter the net assuming all comparison

requirements have been met. As a result,

the IDB will not have offsetting

compared and netted trades with its two

counterparties and will carry a net

settlement position. Thus, the IDB may

incur clearing fund and mark-to-market

(particularly forward margin)

assessments. Given the intermediary

role of IDBs in the marketplace and their

more limited financial resources, GSCC

believes that its risk management

process works best and most safely if

IDBs are netted out of their positions as

intermediaries in brokered repo

transactions.

To promote the overall risk

management process, GSCC believes

that the clearing fund and the fundsonly settlement consequences of any

trade that does not compare because of

a non-IDB’s failure to submit data

should fall on that non-IDB

counterparty and not on the IDB. Thus,

GSCC proposes to amend Rule 19,

which sets forth special provisions for

brokered repo transactions, by adding

Section 3 to: (1) reaffirm the obligation
Federal Register / Vol. 62, No. 35 / Friday, February 21, 1997 / Notices 8069

4 GSCC rules currently require that repo netting

members submit either to GSCC or to another

registered clearing agency or a clearing agency that

has been exempted from registration as a clearing

agency by the Commission in a timely manner data

on all eligible repo transactions. Currently, only one

other registered clearing agency clears and settles

repo transactions in government securities.

Typically, dealers enter into a brokered transaction

with the understanding that such trade will be

cleared and settled through a specified clearing

agency. Therefore if the counterparties to a repo

transaction have selected GSCC as the clearing

agency to be used, failure to submit the relevant

data may be a violation of GSCC’s rules. 5 17 CFR 200.30–3(a)(12).

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

2Securities Exchange Act Release No. 37904

(October 31, 1996), 61 FR 57506.

3The SCG was established in 1989 as a result of

developments surrounding the October market

break and subsequent studies on the causes of the

market break. The stated purpose of the SCG is to

increase cooperation and coordination among

securities clearing entities and to facilitate the

sharing of certain clearance and settlement

information regarding surveillance and member risk

monitoring. For a further description of the SCG,

refer to Securities Exchange Act Release No. 27044

(July 25, 1989), 54 FR 30963 [File Nos. SR–DTC–

88–20, SR–MCC–88–10, SR–MSTC–88–07, SR–

NSCC–88–09, SR–OCC–89–02, SR–Philadep–89–01,

and SR–SCCP–89–01] (order approving the

establishment of the SCG).

4For a description of the Collateral Management

Service, refer to Securities Exchange Act Release

No. 36091 (August 10, 1995), 60 FR 42931 [File No.

SR–NSCC–95–06] (order approving a proposed rule

change establishing the CMS).

of a non-IDB netting member to submit

in a timely and accurate manner to

GSCC or to another registered or

exempted clearing agency data on all of

its brokered repo transactions 4 and (2)

provide that if a non-IDB member fails

without good cause to submit data on a

brokered repo transaction in a timely or

accurate basis, GSCC may treat the

transaction as compared based on the

data submission received from the

counterparty IDB for purposes of

assessing all clearing fund. Prior to

GSCC’s assessing clearing fund and

funds-only settlement consequences to a

non-IDB netting member that has failed

to submit such trade data in a timely

and accurate basis, GSCC would attempt

to contact (e.g., by telephone) as

promptly as possible such non-IDB

netting member in order to confirm the

accuracy of the data submitted by its

IDB netting member counterparty. If the

lack of comparison arose because of

operational or other problems on the

part of the IDB party and the non-IDB

netting member therefore does not know

the trade, GSCC would not assess

margin consequences against the nonIDB netting member.

GSCC believes the proposed rule

change is consistent with the

requirements of Section 17A of the Act

and the rules and regulations

thereunder because the rule proposal

will promote the prompt and accurate

clearance and settlement of securities

transactions and will assure the

safeguarding of securities and funds in

the custody or control of GSCC or for

which GSCC is responsible.

(B) Self-Regulatory Organization’s

Statement on Burden on Competition

GSCC does not believe that the

proposed rule change will 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

No written comments have been

solicited or received. 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, NW.,

Washington, DC 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, NW.,

Washington, DC 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–96–

12 and should be submitted by March

14, 1997.

For the Commission by the Division of

Market Regulation, pursuant to delegated

authority.5

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 97–4232 Filed 2–20–97; 8:45 am]

BILLING CODE 8010–01–M

[Release No. 34–38283; File No. SR–NSCC–

96–19]

Self-Regulatory Organizations;

National Securities Clearing

Corporation; Order Granting Approval

of a Proposed Rule Change To

Discontinue the Operation of the

Securities Clearing Group’s Data Base

February 13, 1997.

On October 3, 1996, the National

Securities Clearing Corporation

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

Exchange Commission (‘‘Commission’’)

the proposed rule change (File No. SR–

NSCC–96–19) pursuant to Section

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

of 1934 (‘‘Act’’).1 Notice of the proposal

was published in the Federal Register

on November 6, 1996.2 No comment

letters were received. For the reasons

discussed below, the Commission is

granting approval of the proposed rule

change.

I. Description

The proposed rule change amends the

Securities Clearing Group Agreement of

the Securities Clearing Group (‘‘SCG’’)3

to discontinue the operation of the SCG

data base. The SCG data base contains

information on common participants of

the SCG members relating to settlement

payment obligations, clearing fund and

margin requirements and deposits, and

other related information. The members

of the SCG created the SCG data base as

a means to coordinate and share

information on common participants

and increase cooperation among the

SCG members.

Termination of the SCG data base is

desirable for several reasons. First,

NSCC has established and agreed to

make available to the SCG members

access to its Collateral Management

Service (‘‘CMS’’).4 The CMS will not

only make available to the SCG

members information similar to that