23058 Federal Register / Vol. 66, No. 88 / Monday, May 7, 2001 / Notices

7 17 CFR 200.30-3(a)(12).

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

2The Commission has modified the text of the

summaries prepared by GSCC.

3Securities Exchange Act Release No. 33984 (May

2, 1994), 59 FR 24491 (order authorizing GSCC to

include in its comparison and netting services U.S.

Treasury securities purchases at auction).

4 Id.

5 In 2000, GSCC processed 88 percent more

agency security transactions than in 1999, and, in

2000, the par value of agency security transactions

and to protect investors and the public

interest.

B. Self-Regulatory Organization’s

Statement on Burden on Competition

The CBOE does not believe that the

proposed rule change will impose any

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 were solicited

or received with respect to the proposed

rule change.

III. Date of Effectiveness of the

Proposed Rule Change and Timing for

Commission Action

Within 35 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

90 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 the self-regulatory

organization 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,

including whether the proposal is

consistent with the Act. Persons making

written submissions should file six

copies thereof with the Secretary,

Securities and Exchange Commission,

450 Fifth Street, NW., Washington, DC

20549–0609. 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. Copies of such filing will also be

available for inspection and copying at

the principal office of CBOE. All

submissions should refer to File No.

CBOE–00–22 and should be submitted

by May 29, 2001.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.7

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 01–11336 Filed 5–4–01; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–44226; File No. SR–GSCC–

2001–02]

Self-Regulatory Organizations; The

Government Securities Clearing

Corporation; Notice of Filing and

Immediate Effectiveness of Proposed

Rule Change Relating to the Inclusion

of Netting-Eligible Federal Home Loan

Mortgage Corporation Securities in

Auction Takedown Service

April 26, 2001.

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

Securities Exchange Act of 1934

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

February 5, 2001, the Government

Securities Clearing Corporation

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

Exchange Commission (‘‘Commission’’)

and on March 12, 2001, amended the

proposed rule change as described in

Items I, II, and III below, which items

have been prepared primarily by GSCC.

The Commission is publishing this

notice to solicit comments on the

proposed rule change from interested

parties.

I. Self-Regulatory Organization’s

Statement of the Terms of Substance of

the Proposed Rule Change

The proposed rule change would

allow GSCC to expand its auction

takedown service to include nettingeligible Federal Home Loan Mortgage

Corporation (‘‘Freedie Mac’’) securities.

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 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 these statements.2

(A) Self-Regulatory Organization’s

Statement of the Purpose of, and

Statutory Basis for, the Proposed Rule

Change

GSCC introduced its auction

takedown service in 1994.3 The service

enables GSCC to accept data on a

locked-in basis with respect to

proprietary purchases of Treasury notes,

bills, and bonds made at auction by

members of GSCC’s netting system; to

net the purchases with when-issued

trades of such members in these

securities; and to deliver the purchased

securities through GSCC’s settlement

mechanism. In its approval of GSCC’s

rule filing, the Commission noted, ‘‘By

including auction securities in GSCC’s

netting system, the level of potential

netting is increased and the number of

required movements of securities are

reduced. Netting of auction securities

also may have the effect of increasing a

member’s liquidity. Previously, a GSCC

member with a short position would

have its required margin payments

calculated based on its short position,

even if it had an offsetting long position

in auction purchases. Once the

positions are netted, the member’s

margin payments will be calculated

based on the position after taking into

account the auction purchases, perhaps

creating a lower margin payment. the

additional liquidity may assist in the

prompt and accurate clearance and

settlement of securities transactions. In

this manner, the proposal removes

impediments to the national system for

the prompt and accurate clearance and

settlement of securities transactions,

and fosters cooperation and

coordination with persons engaged in

clearance and settlement of securities

transactions.’’ 4 The auction takedown

service also reduces the counterparty

risk to the Department of the Treasury

and makes the information that GSCC

maintains on the net settlement position

of its members more complete for risk

management purposes.

GSCC has recently been approached

by Freddie Mac to extend GSCC’s

comparison and netting services to

include netting-eligible Freddie Mac

securities purchased at auction

commencing in February 2001. Agency

securities are steadily constituting an

increasing portion of GSCC’s processing

activity.5 Including Freddie Mac

Federal Register / Vol. 66, No. 88 / Monday, May 7, 2001 / Notices 23059

increased 131 percent over the par value of these

transactions in 1999.

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

2 17 CFR 240.19b–4.

securities in GSCC’s auction takedown

service would provide GSCC and its

members that trade these securities with

all the benefits described above.

In order to meet the February

deadline, it is necessary for GSCC to

apply its current auction takedown

procedures without any material

alteration to the Freddie Mac auctions.

Only minor changes to GSCC’s rules are

necessary. Such changes include the

following:

The Department of the Treasury

utilizes the Federal Reserve Banks, its

fiscal agents, to furnish details of its

auction awards to GSCC. GSCC

therefore designated both the Treasury

Department and the Federal Reserve

Banks as locked-in trade sources when

it instituted the auction takedown

service. GSCC will now add Freddie

Mac as a locked-in trade source. The

Commission has already given GSCC

permission to designate locked-in trade

sources on an as-needed basis. It should

be noted that Freddie Mac will furnish

details of its auction awards directly to

GSCC without the involvement of its

fiscal agent, the Federal Reserve Bank of

New York.

Various definitions will be expanded

to include Freddie Mac and its

securities in the rules referencing the

auction takedown service.

Freddie Mac has indicated that,

unlike the Department of the Treasury,

it desires that awards made to nonnetting members also be handled by

GSCC to the extent possible. GSCC thus

will make changes to its existing rules,

which already allow for secondary

market trades executed by non-members

to be submitted by members for the net,

to specify that it will process auction

purchases made by its netting members

for their customers as well as for their

proprietary accounts. The netting

members will remain liable to GSCC as

principals with respect to all auction

purchase awarded to them whether the

purchase is for their own accounts or for

customers.

Unlike the Treasury Department,

Freddie Mac does not require the

clearing banks to effectively guarantee

payment in advance for any newly

issued securities. thus, there will be no

need for the execution of autocharge

agreements by the clearing banks.

Freddie Mac retains the right to

cancel auctions. GSCC has made it clear

in its rules what has always been

implicit for an issuer of auction awards

that GSCC will have no obligation with

respect to any when-issued trades if

securities are not ultimately issued by

Freddie Mac. GSCC has also added the

right to delete or modify trade data with

respect to when-issued trades if any

event occurs that gives rise to the

obligation to substitute securities under

guidelines published by The Bond

Market Association.

The Department of the Treasury is not

a member of GSCC and is therefore not

required to make any clearing fund

deposits or funds settlement payments

to GSCC. Since Freddie Mac is a GSCC

netting member and would otherwise be

responsible for these deposits and

payments, GSCC has exempted Freddie

Mac from these requirements but only

in connection with its auction

deliveries.

The proposed rule change is

consistent with the requirements of

Section 17A of the Act and the rules and

regulations thereunder because it will

enhance GSCC’s auction takedown

service by making it more responsive to

the needs of GSCC’s members.

(B) Self-Regulatory Organization’s

Statement on Burden on Competition

GSCC does not believe that the

proposed rule change will have an

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

Written comments relating to the

proposed rule change have not yet been

solicited or received. Members will be

notified of the rule change filing and

comments will be solicited by an

Important Notice. 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

The foregoing rule change has become

effective pursuant to Section 19(b)(3) of

the Act and Rule 19b–4(f)(4) thereunder,

because the proposed rule is effecting a

change in an existing service that does

not adversely affect the safeguarding of

securities or funds in the custody or

control of the clearing agency and does

not significantly affect the respective

rights or obligations of the clearing

agency or person using the service. At

any time within 60 days of the filing of

such proposed 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 Securities Exchange Act

of 1934.

IV. Solicitation of Comments

Interested persons are invited to

submit written data, views, and

arguments concerning the foregoing,

including whether the proposed rule

change is consistent with the Act.

Persons making written submissions

should file six copies thereof with the

Secretary, Securities and Exchange

Commission, 450 Fifth Street, NW.,

Washington, DC 20549–0609. 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, NW.,

Washington, DC 20549. Copies of such

filing also will be available for

inspection and copying at the principal

office of GSCC. All submissions should

refer to File No. SR–GSCC–2001–02 and

should be submitted by May 29, 2001.

For the Commission by the Division of

Market Regulation, pursuant to delegated

authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 01–11338 Filed 5–4–01; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–44234; File No. SR–PCX–

00–03]

Self-Regulatory Organizations Notice

of Filing of Proposed Rule Change by

the Pacific Exchange, Inc.

Implementing a One-Year Pilot

Program Relating to Its Automatic

Executive System

April 30, 2001.

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

Securities Exchange Act of 1934

(‘‘Act’’),1 and Rule 19b–4 thereunder,2

notice is hereby given that on February

15, 2000, the Pacific Exchange, Inc.

(‘‘PCX’’ or ‘‘Exchange’’) filed with the

Securities and Exchange Commission

(‘‘Commission’’ or ‘‘SEC’’) the proposed

rule change as described in Items I, II

and III below, which Items have been