[Federal Register Volume 63, Number 75 (Monday, April 20, 1998)]
[Notices]
[Pages 19546-19547]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-10341]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-39849; File No. SR-MBSCC-97-09]


Self-Regulatory Organizations; MBS Clearing Corporation; Notice 
of Filing and Immediate Effectiveness of Proposed Rule Change Relating 
to Fees and Charges

April 10, 1998.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on November 5, 1997, MBS 
Clearing Corporation (``MBSCC'') filed with the Securities and Exchange 
Commission (``Commission'') and on November 13, 1997, and February 27, 
1998, amended the proposed rule change as described in Items I, II, and 
III below, which items have been prepared primarily by MBSCC. The 
Commission is publishing this notice to solicit comments from 
interested persons on 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 proposed rule change revises MBSCC's fee schedule to add fees 
for the late payment of participant's payment obligations.

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

    In its filing with the Commission, MBSCC 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. MBSCC has prepared summaries, set forth in 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 
prepared by MBSCC.
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(A) Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    MBSCC's rules and procedures require participants to satisfy all 
payment obligations by 12:00 p.m. Eastern Standard Time (``EST'') on 
the day that they are due.\3\ This noon deadline provides MBSCC with 
sufficient time to use such funds to pay participants in a credit 
position or to liquidate a participant's collateral to cover a default 
so that funds are available to pay such participant's obligations.
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    \3\ These payment obligations result from settlement balance 
order market differential obligations, cash adjustment obligations, 
broker commissions, miscellaneous cash obligations, and MBSCC 
clearing and electronic pool notification bills.
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    Currently, participants that fail to satisfy a payment obligation 
by the noon deadline are subject to a $50.00 charge. Although the 
majority of payment obligations due to MBSCC are paid on the day on 
which they are due, many are paid after the noon deadline. Failure by a 
participant to timely satisfy its payment obligations could jeopardize 
MBSCC's ability to fulfill its obligations to participants with a 
credit position.
    The purpose of the proposed rule change is to revise fees for late 
payment of obligations by adding a late payment fee schedule. The 
purpose of these new fees is to both motivate participants to pay their 
obligations prior to the noon deadline and to compensate MBSCC for the 
costs associated with monitoring such late payments. The late payment 
fee schedule is based both on the size of the cash obligation payment 
that is not timely made and the frequency of such participant's late 
payments over a rolling ninety day period. MBSCC's late payment fine 
schedule is set forth below.

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                                                       First          Second           Third          Fourth    
             Payable cash obligation                occurrence      occurrence      occurrence      occurrence  
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$50.00.00-100,000.00............................          $50.00         $100.00         $250.00         $500.00
100,000.01-1,000,000.00.........................          100.00          200.00          500.00        1,000.00
1,000,000.01-1,500,000.00.......................          200.00          400.00        1,000.00        2,000.00
1,500.000.01-3,000,000.00.......................          500.00        1,000.00        2,500.00        5,000.00
3,000,000.01-5,000,000.00.......................        1,000.00        2,000.00        5,000.00       10,000.00
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[[Page 19547]]

    Calculation of charges for late payment obligations in excess of 
$5,000,000 will be based on the ratio of the actual late obligation 
(rounded to the next highest million) to $5,000,000, multiplied by the 
late fee for obligations of $5,000,000.
    Participants failing to timely satisfy payment obligations on more 
than four occasions within a rolling ninety day period will be subject 
to additional late fees for each occurrence. This amount will be 
determined at MBSCC's discretion depending on the magnitude and history 
of the participant's late payments, but any additional late fees can be 
no more than twice the fourth occurrence fee. MBSCC also reserves the 
discretion to waive or reduce late fees when a particular occurrence is 
not deemed to be the participant's fault or the participant has 
provided MBSCC with evidence that it is taking appropriate corrective 
action to prevent recurrence.
    Late fees will accrue on the date on which a late payment is made, 
and participants will receive a letter notifying them of the late fee. 
The late fee will be reflected on the participant's bill for the month 
during which such fee was incurred and is payable at such time.
    MBSCC believes that the proposed rule change is consistent with the 
requirements of Section 17A of the Act \4\ and the rules and 
regulations thereunder because it provides for the equitable allocation 
of dues, fees, and other charges among MBSCC's participants.
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    \4\ 15 U.S.C. 78q-1.
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(B) Self-Regulatory Organization's Statement on Burden on Competition

    MBSCC does not believe that the proposed rule change will impose 
any burden on competition that is 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 comments on the proposed rule change were solicited or received.

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) \5\ of the Act and pursuant to Rule 19b-4(e)(2) \6\ 
promulgated thereunder because the proposal establishes or changes a 
due, fee, or other charge imposed by MBSCC. 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.
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    \5\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \6\ 17 CFR 240.19b-4(e)(2).
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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 MBSCC. All 
submissions should refer to File No. SR-MBSCC-97-09 and should be 
submitted by May 11, 1998.

    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority.<SUP>7</SUP> 
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    \7\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 98-10341 Filed 4-17-98; 8:45 am]
BILLING CODE 8010-01-M