[Federal Register Volume 62, Number 35 (Friday, February 21, 1997)]
[Notices]
[Pages 8074-8075]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-4238]


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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-38282; File No. SR-SCCP-96-06]


Self-Regulatory Organizations; Stock Clearing Corporation of 
Philadelphia; Notice of Filing and Order Granting Accelerated Approval 
of a Proposed Rule Change To Amend and Clarify Same-Day Funds 
Settlement Procedures

February 13, 1997.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on August 6, 1996, the Stock 
Clearing Corporation of Philadelphia (``SCCP'') filed with the 
Securities and Exchange Commission (``Commission'') the proposed rule 
change (File No. SR-SCCP-96-06) as described in Items I and II below, 
which items have been prepared primarily by SCCP. The Commission is 
publishing this notice and order to solicit comments from interested 
persons and to grant accelerated approval of the proposed rule change.
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    \1\ 15 U.S.C. 78s(b)(1).
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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 and clarify 
SCCP's same-day funds settlement (``SDFS'') procedures.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for the Proposed Rule Change

    In its filing with the Commission, SCCP included statements 
concerning the purpose of and basis for the proposed rule change and 
discussed any comments they received on the proposed rule changes. The 
text of these statements may be examined at the places specified in 
Item IV below. SCCP has prepared summaries, set forth in

[[Page 8075]]

sections (A), (B), and (C) below, of the most significant aspects of 
such statements.\2\
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    \2\ The Commission has modified the text of the summaries 
submitted by SCCP.
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(A) Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    On February 22, 1996, the Commission granted partial permanent 
approval and partial temporary approval of proposed rule changes filed 
by SCCP and the Philadelphia Depository Trust Company (``Philadep'') to 
establish an SDFS system.\3\ The purpose of the proposed rule change is 
to amend and clarify certain SDFS procedures relating to the risk 
management controls (i.e., collateral monitor and net debit cap).
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    \3\ Securities Exchange Act Release Nos. 36875 (February 22, 
1996), 61 FR 7846 File No. SR-SCCP-95-06] and 36876 (February 22, 
1996), 61 FR 7841 [SR-Philadep-95-08] (orders granting partial 
temporary approval and partial permanent approval of proposed rule 
changes to convert to same-day funds settlement systems) (``SDFS 
Approval Orders'').
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    Pursuant to SCCP's SDFS Approval Order, SCCP provides each 
participant with a settlement amount which is an aggregate of the 
participant's end-of-the-day net debits and net credits in its SCCP and 
Philadep accounts.\4\ Because of this common net settlement feature, 
Philadep's SDFS Approval Order sets forth that Philadep's SDFS system 
risk management controls would be applied in a limited manner to SCCP's 
Continuous Net Settlement (``CNS'') activity. Specifically, SCCP will 
not suspend the processing of a participant's CNS activity when the 
participant's collateral monitor is negative on its net debit cap is 
exceeded.
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    \4\ Philadep's collateral monitor and net debit cap analysis 
were structured to incorporate this netting of SCCP and Philadep 
settlements.
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    Pursuant to Philadep's SDFS Approval Order, a participant's 
activities at SCCP, such as CNS securities delivered to a SCCP 
participant, are included in the participant's Philadep collateral 
monitor. Additionally, a participant's net debit cap is determined by a 
participant's combined net debit history at Philadep and SCCP, and for 
purpose of calculating a participant's net debit settlement, Philadep 
includes net CNS settlements.
    The purpose of the proposed rule change is to formally restate and 
clarify in SCCP's procedures the limited applicability of Philadep SDFS 
risk management controls on SCCP participants' activity. The proposed 
rule change also provides that all collateral derived from any SCCP CNS 
participant contained in Philadep's collateral monitor may be used by 
Philadep to address any settlement default by such joint participant. 
Collateral derived from a SCCP CNS participant generally includes the 
participant's SCCP participants fund contribution and CNS securities 
received.
    Furthermore, SCCP authorizes Philadep to utilize any collateral 
derived from a defaulting SCCP/Philadep participant to address a 
default in accordance with Philadep Rule 4(a) and any subsequent 
amendments thereto.
    SCCP believes the proposed rule change is consistent with Section 
17A of the Act and the rules and regulations thereunder because the 
proposal should promote the prompt and accurate clearance and 
settlement of securities transactions.

(B) Self-Regulatory Organization's Statement on Burden on Competition

    SCCP believes that the proposed rule change will not impose any 
burden on competition not permitted by the Act.

(C) Self-Regulatory Organization's Statement on Comments on the 
Proposed Rule Change Received From Members, Participants, or Others

    Written comments were neither solicited nor received with respect 
to the proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Section 17A(b)(3)(F) of the Act \5\ 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 hat SCCP's 
proposed rule change clarifying certain SDFS procedures are consistent 
with such obligations because the proposal should provide participants 
with some certainty with respect to SCCP's application of SDFS risk 
management controls to CNS activity.
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    \5\ 15 U.S.C. 78q-1(b)(3)(F).
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    SCCP has requested 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 filing. The Commission finds good 
cause for approving the proposed rule change prior to the thirtieth day 
after the date of publication of notice of filing because the proposal, 
which should clarify certain SDFS procedures that are currently being 
applied to participants, should become effective as soon as possible.

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 SCCP. All submissions should 
refer to the file number SR-SCCP-96-06 and should be submitted by March 
14, 1997.
    It is therefore ordered, pursuant to Section 19(b)(2) of the Act, 
that the proposed rule change (File No. SR-SCPP-96-06) be, and hereby 
is, approved.

    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority.\6\
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    \6\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 97-4238 Filed 2-20-97; 8:45 am]
BILLING CODE 8010-01-M