Federal Register / Vol. 62, No. 45 / Friday, March 7, 1997 / Notices 10601

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

management of uninvested cash

balances.

2. Cash in the Joint Accounts would

be invested in one or more of the

following, as directed by First Bank (or,

in the case of Cash Collateral, the

Securities Lending Agent): (a)

Repurchase agreements ‘‘collateralized

fully’’ as defined in Rule 2a–7 under the

Act; (b) interest-bearing or discounted

commercial paper, including dollar

denominated commercial paper of

foreign issuers; and (c) any other shortterm taxable and tax-exempt money

market instruments, including variable

rate demand notes, that constitute

‘‘Eligible Securities’’ (as defined in rule

2a–7 under the Act). Short-Term

Investments that are repurchase

agreements would have a remaining

maturity of 60 days or less and other

Short-Term Investments would have a

remaining maturity of 90 days or less,

each as calculated in accordance with

rule 2a–7 under the Act. Cash Collateral

in a Joint Account would be invested in

Short-Term Investments which have a

remaining maturity of 397 days or less,

as calculated in accordance with rule

2a–7 under the Act.

3. All assets held in the Joint

Accounts would be valued on an

amortized cost basis to the extent

permitted by applicable SEC releases,

rules, or orders.

4. Each Participant valuing its net

assets in reliance on rule 2a–7 under the

Act will use the average maturity of the

instruments in the Joint Accounts in

which such Participant has an interest

(determined on a dollar weighted basis)

for the purpose of computing its average

portfolio maturity with respect to its

portion of the assets held in a Joint

Account on that day.

5. In order to assure that there will be

no opportunity for any Participant to

use any part of a balance of a Joint

Account credited to another Participant,

no Participant will be allowed to create

a negative balance in any Joint Account

for any reason, although each

Participant would be permitted to draw

down its entire balance at any time.

Each Participant’s decision to invest in

a Joint Account would be solely at its

option, and no Participant will be

obligated to invest in the Joint Account

or to maintain any minimum balance in

the Joint Account. In addition, each

Participant will retain the sole rights of

ownership to any of its assets invested

in the Joint Account, including interest

payable on such assets in the Joint

Account.

6. First Bank would administer the

investment of cash balances in and

operation of the Joint Accounts as part

of its general duties under its existing or

any future investment advisory or subadvisory agreements with Participants

and will not collect any additional or

separate fees for advising any Joint

Account.

7. The administration of the Joint

Accounts would be within the fidelity

bond coverage required by section 17(g)

of the Act and rule 17g–1 thereunder.

8. Each Board will adopt procedures

pursuant to which the Joint Accounts

will operate, which will be reasonably

designed to provide that the

requirements of the application will be

met. Each Board will make and approve

such changes as it deems necessary to

ensure that such procedures are

followed. In addition, each Board will

determine, no less frequently than

annually, that the Joint Accounts have

been operated in accordance with the

proposed procedures and will permit a

Fund to continue to participate therein

only if it determines that there is a

reasonable likelihood that the Fund and

its shareholders will benefit from the

Fund’s continued participation.

9. Any Short-Term Investments made

through the Joint Accounts will satisfy

the investment criteria of all

Participants in that investment.

10. First Bank and the custodian of

each Participant will maintain records

documenting, for any given day, each

Participant’s aggregate investment in a

Joint Account and each Participant’s pro

rata share of each investment made

through such Joint Account. The records

maintained for each Participant shall be

maintained in conformity with section

31 of the Act and the rules and

regulations thereunder.

11. Short-Term Investments held in a

Joint Account generally will not be sold

prior to maturity except if: (a) First Bank

believes the investment no longer

presents minimal credit risks; (b) the

investment no longer satisfies the

investment criteria of all Participants in

the investment because of downgrading

or otherwise; or (c) in the case of a

repurchase agreement, the counterpart

defaults. First Bank may, however, sell

any Short-Term Investment (or any

fractional portion thereof) on behalf of

some or all Participants prior to the

maturity of the investment if the cost of

such transactions will be borne solely

by the selling Participants and the

transaction will not adversely affect

other Participants participating in that

Joint Account. In no case would an early

termination by less than all Participants

be permitted if it would reduce the

principal amount or yield received by

other Participants in a particular Joint

Account or otherwise adversely affect

the other Participants. Each Participant

in a Joint Account will be deemed to

have consented to such sale and

partition of the investments in the Joint

Account.

12. Short-Term Investments held

through a Joint Account with a

remaining maturity of more than seven

days, as calculated pursuant to rule

2a–7 under the Act, would be

considered illiquid and would be

subject to the restriction that a Fund

may not invest more than 15% or, in the

case of a money market fund, more than

10% (or, in either such case, such other

percentage as set forth by the

Commission from time to time) of its net

assets in illiquid securities, if First Bank

cannot sell the instrument, or the

Fund’s fractional interest in such

instrument, pursuant to the preceding

condition.

13. Not every Participant participating

in the Joint Accounts will necessarily

have its cash invested in every Joint

Account. However, to the extent a

Participant’s cash is applied to a

particular Joint Account, the Participant

will participate in and own a

proportionate share of the investment in

such Joint Account, and the income

earned or accrued thereon, based upon

the percentage of such investment in

such Joint Account purchased with

monies contributed by the Participant.

For the Commission, by the Division of

Investment Management, pursuant to

delegated authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 97–5675 Filed 3–6–97; 8:45 am]

BILLING CODE 8010–01–M

[Release No. 34–38350; File No. SR–NSCC–

96–20]

Self-Regulatory Organizations;

National Securities Clearing

Corporation; Notice of Filing of

Proposed Rule Change To Revise

Rules

February 27, 1997.

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

Securities Exchange Act of 1934

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

November 14, 1996, the National

Securities Clearing Corporation

(‘‘NSCC’’) 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 NSCC.

The Commission is publishing this

notice to solicit comments from

interested persons on the proposed rule

change.
10602 Federal Register / Vol. 62, No. 45 / Friday, March 7, 1997 / Notices

2The Commission has modified the text of the

summaries prepared by NSCC.

3Securities Exchange Act Release No. 33145

(November 3, 1993), 58 FR 59766 [File No. SR–

NSCC–93–07] (order approving proposed rule

change relating to a netting contract and limited

cross guaranty agreement (‘‘NSCC-DTC

Agreement’’)).

4Securities Exchange Act Release No. 35809

(June 5, 1995), 60 FR 30912 [File No. SR–NSCC–

93–06] (order approving proposed rule change

establishing CMS).

5The rules of the International Securities Clearing

Corporation (Rule 1—Definition of ‘‘Limited CrossGuaranty Agreement’’), the MBS Clearing

Corporation (Rule 1—Definition of ‘‘Limited CrossGuaranty Agreement’’), and the Government

Securities Clearing Corporation (Rule 1—Definition

of ‘‘Limited Cross-Guaranty Agreement’’) permit

entering into cross-guaranty agreements with

futures clearing entities.

6 17 CFR 200.30–3(a)(12).

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

I. Self-Regulatory Organization’s

Statement of the Terms of Substance of

the Proposed Rule Change

The proposed rule change revises

NSCC’s rules to modify the definition of

‘‘Clearing Agency Cross-Guaranty

Agreement’’.

II. Self-Regulatory Organization’s

Statement of the Purpose of, and

Statutory Basis for, the Proposed Rule

Change

In its filing with the Commission,

NSCC 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. NSCC 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

In 1993, the Commission approved a

proposed rule change filed by NSCC to

establish a Netting Contract and Limited

Cross-Guaranty Agreement between it

and The Depository Trust Company

(‘‘DTC’’).3 In connection with the

implementation of the NSCC–DTC

Agreement, a definition of a ‘‘Clearing

Agency Cross-Guaranty Agreement’’ was

added to NSCC’s rules. The definition

was limited to registered clearing

agencies because NSCC and DTC

believed that only registered clearing

agencies would enter into such

arrangements.

In 1995, the Commission approved a

proposed rule change filed by NSCC to

establish the Collateral Management

Service (‘‘CMS’’).4 In order to provide

their participants with a more accurate

and broader picture of the aggregate

amount of their clearing fund deposits

and collateral, NSCC and other

participating clearing entities

recognized that other types of clearing

entities should be included in the CMS.

This broad category of participating

entities is reflected in Rule 53 (CMS

Rule) of NSCC’s rules which includes

clearing organizations affiliated with or

designated by contract markets trading

specific futures products under the

oversight of the Commodity Futures

Trading Commission. NSCC believes the

rationale of providing a broad range of

clearing entities in the scope of the CMS

should be similarly applied to NSCC’s

ability to enter into limited crossguaranty agreements.5 Therefore, the

purpose of the proposed rule change is

to modify the definition of ‘‘Clearing

Agency Cross-Guaranty Agreement’’ to

permit NSCC to enter into limited cross

guaranty agreements with the same

broad category of clearing entities as

provided in the CMS.

NSCC believes the proposed rule

change is consistent with the

requirements of Section 17A of the Act

and the rules and regulations

thereunder because it makes technical

modifications to rules so that they

coincide with intended practice.

(B) Self-Regulatory Organization’s

Statement on Burden on Competition

NSCC 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. NSCC will notify

the Commission of any written

comments received by NSCC.

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 DTC 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, 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 NSCC. All submissions should

refer to File No. SR–NSCC–96–20 and

should be submitted by March 28, 1997.

For the Commission by the Division of

Market Regulation, pursuant to delegated

authority.6

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 97–5671 Filed 3–6–97; 8:45 am]

BILLING CODE 8010–01–M

[Release No. 34–38352; File No. SR–NSCC–

97–01]

Self-Regulatory Organizations;

National Securities Clearing

Corporation; Notice of Filing of a

Proposed Rule Change To Eliminate

NSCC’s Securities Transfer Service

February 28, 1997.

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

Securities Exchange Act of 1934

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

January 22, 1997, the National

Securities Clearing Corporation

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

Exchange Commission (‘‘Commission’’)

the proposed rule change (File No. SR–

NSCC–97–01) as described in Items I, II,

and III below, which items have been

prepared primarily by NSCC. 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 permit NSCC to eliminate

its Securities Transfer Service (‘‘STS’’).