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
8070 Federal Register / Vol. 62, No. 35 / Friday, February 21, 1997 / Notices

5A copy of the Amendment is attached to NSCC’s

filing. A copy of the filing is available for copying

and inspection in the Commission’s Public

Reference Room or through NSCC.

6 15 U.S.C. 78q–1(b)(3)(F).

7 17 CFR 200.30–3(a)(12).

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

2For a complete description of these

modifications to the standards for letters of credit,

refer to Securities Exchange Act Release No. 29641

(August 30, 1991), 56 FR 46027 [File No. SR–OCC–

91–13] (order temporarily approving proposed rule

change through February 28, 1992).

3The Commission has modified the text of the

summaries prepared by OCC.

4Securities Exchange Act Release Nos. 29641

(August 30, 1991), 56 FR 46027 [File No. SR–OCC–

91–13] (order temporarily approving proposed rule

change through February 28, 1992); 30424

(February 28, 1992), 57 FR 8106 [File No. SR–OCC–

92–06] (order temporarily approving proposed rule

change through May 31, 1992); 30763 (June 1,

1992), 57 FR 24284 [File No. SR–OCC–92–11]

(order temporarily approving proposed rule change

through August 31, 1992); 31126 (September 1,

1992), 57 FR 40925 [File No. SR–OCC–92–19]

(order temporarily approving proposed rule change

through December 31, 1992); 31614 (December 17,

1992), 57 FR 61142 [File No. SR–OCC–92–37]

(order temporarily approving proposed rule change

through June 30, 1993); 32532 (June 28, 1993), 58

FR 36232 [File No. SR–OCC–93–14] (order

temporarily approving proposed rule change

through June 30, 1994); 34206 (June 13, 1994), 59

FR 31661 [File No. SR–OCC–94–06] (order

temporarily approving proposed rule change

through June 30, 1995); 36138 (August 23, 1995), 60

FR 44926 [File No. SR–OCC–95–9] (order

temporarily approving proposed rule change

through June 28, 1996); and 37618 (August 29,

1996), 61 FR 46889 [File No. SR–OCC–96–07]

(order temporarily approving proposed rule change

through June 30, 1997).

contained in the SCG data base but will

also provide members with enhanced

features and capabilities. For example,

the SCG data base contains aggregate

information on clearing fund and

margin deposits including excess and

deficit amounts whereas the CMS

contains both aggregate information on

clearing fund and margin deposits

including excess and deficit amounts as

well as detailed information on the

underlying collateral comprising

clearing fund and margin deposits (i.e.,

cash, securities, and letters of credit).

The SCG members recognize that

termination of the SCG data base is

desirable at this point to avoid

redundancies with the CMS.

Second, termination of the SCG data

base will eliminate the occurrence of a

significant increase in costs that would

be required to maintain the SCG data

base because the data base on which it

is built is no longer supported by the

original vendor. As a result, SCG

members would be required to enter

into a new and more costly contract

with a new vendor. Third, because the

CMS contains more detailed

information and more features than the

SCG data base, use of the CMS in place

of the SCG data base should enable the

SCG members to better coordinate and

share information and to monitor

clearing fund and margin deposits with

respect to common participants.

Accordingly, the SCG members have

executed Amendment No. 6 to the SCG

Agreement.5 The Amendment: (i)

authorizes the termination of the SCG

data base, (ii) authorizes NSCC to use all

data information, computer coding, and

programs contained in the SCG data

base in establishing and maintaining the

operation of CMS, and (iii) grants to

each SCG Member a nonexclusive and

nontransferable license to use NSCC’s

CMS.

II. Discussion

Section 17A(b)(3)(F) provides that the

rules of a clearing agency must be

designed to assure the safeguarding of

securities and funds in the custody or

control of the clearing agency or for

which it is responsible and to foster

cooperation and coordination with

persons engaged in the clearance and

settlement of securities transactions.6

The Commission believes that the

proposed rule change is consistent with

the Act because the amendment to the

SCG Agreement provides for each SCG

member to have access to the CMS, and

the Commission believes the CMS and

the data contained in it should assist

SCG members in assuring the

safeguarding of securities and funds in

their custody or control. The

Commission also believes the

termination of the SCG data base in

conjunction with NSCC’s grant to each

SCG member of a nonexclusive and

nontransferable license to use the CMS,

should foster cooperation and

coordination with persons engaged in

the clearance and settlement of

securities transactions.

III. Conclusion

On the basis of the foregoing, the

Commission finds that the proposed

rule change is consistent with the

requirements of the Act and in

particular 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–

NSCC–96–19) 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. 97–4235 Filed 2–20–97; 8:45 am]

BILLING CODE 8010–01–M

[Release No. 34–38284; File No. SR–OCC–

96–15)

Self-Regulatory Organizations; The

Options Clearing Corporation; Notice

of Filing of a Proposed Rule Change

Relating to Revisions to the Standards

for Letters of Credit Deposited as

Margin

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

Securities Exchange Act of 1934

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

November 4, 1996, The Options

Clearing Corporation (‘‘OCC’’) filed with

the Securities and Exchange

Commission (‘‘Commission’’) the

proposed rule change (File No. SR–

OCC–96–15) as described in Items I, II,

and III below, which items have been

prepared primarily by OCC. 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 request the Commission’s

permanent approval for OCC’s

modifications to its standards for letters

of credit deposited with OCC as a form

of margin.2

II. Self-Regulatory Organization’s

Statement of the Purpose of, and

Statutory Basis for, the Proposed Rule

Change

In its filing with the Commission,

OCC 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. OCC 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 Purposed Rule

Change

In previous filings, OCC has proposed

and the Commission has approved on a

temporary basis OCC’s modifications to

its rules governing letters of credit

deposited with OCC as a form of

margin.4 This filing proposes to make

permanent the Commission’s temporary

approval of OCC’s modifications to its

Rule 604, which sets forth the standards

for letters of credit deposited with OCC

as a form of margin.

The modifications for which OCC has

temporary approval are as follows. First,

in order to conform to the Uniform

Commercial Code and to avoid any