[Federal Register Volume 66, Number 103 (Tuesday, May 29, 2001)]
[Notices]
[Pages 29199-29200]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-13384]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-44334; File No. SR-SCCP-2001-04]


Self-Regulatory Organizations; The Stock Clearing Corporation of 
Philadelphia; Notice of Filing of Proposed Rule Change Relating to the 
Establishment of Fines for Late Margin Call Payments and an Appeal 
Process for Such Fines

May 22, 2001.

    Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''), as amended, notice is hereby given that on, February 27, 
2001, The Stock Clearing Corporation of Philadelphia (``SCCP'') 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 SCCP. The Commission is 
publishing this notice to solicit comments on the proposed rule change 
from interested parties.\1\
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    \1\ A copy of the text of SCCP's proposed rule change and the 
attached exhibits are available at the Commission's Public Reference 
Section or through SCCP.
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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 SCCP Rule 9, 
Margin Accounts, to include a fine schedule for late payments of margin 
calls. The proposed rule change will also allow SCCP to amend Rule 23, 
Right of Appeal, to provide for a right of appeal for margin members 
\2\ who wish to appeal imposition of the fine for late payments of 
margin calls.
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    \2\ The term ``margin member'' means participants who are 
Philadelphia Stock Exchange specialists, alternate specialists, and 
other Phlx floor members specifically approved by the National 
Securities Clearing Corporation to effect trading in a margin 
account in accordance with SCCP Rule 9.
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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 it received on the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV below. SCCP has prepared summaries, set forth in sections (A), 
(B), and (C) below, of the most significant aspects of these 
statements.

(A) Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    The purpose of the proposed rule change is to implement late fines 
on SCCP margin members who are late meeting a margin call payment. The 
proposed rule change is intended to encourage the timely payments of 
margin calls. Rule 9 provides, in part, that SCCP will provide margin 
accounts for margin members that clear and settle their transactions 
through SCCP's omnibus clearance and settlement account. SCCP provides 
margin for such accounts based on its procedures and Regulation T of 
the Board of Governors of the Federal Reserve System. Margin members 
who are designated as specialists or alternate specialists in a 
security receive margin credit of 15% with respect to positions in that 
security held in their specialist accounts. Members holding positions 
for which they are not designated as a specialist or alternate 
specialist receive non-specialist margin credit of 50%. SCCP may issue 
margin calls to any margin member when the margin requirement exceeds 
the account equity. Pursuant to SCCP procedures, margin call payments 
are due by 12:00 p.m. EST the business day of the call. Late margin 
payments are not currently subject to a specific late fine although 
members may be subject to possible disciplinary action pursuant to SCCP 
Rule 22.
    SCCP believes that implementation of the proposed fine schedule 
will reduce the number of incidents of late margin call payments by 
members. Notwithstanding the late margin call payment fine, members 
would continue to be subject to possible disciplinary action pursuant 
to SCCP Rule 22.
    Currently, Rule 23 provides, in relevant part, a SCCP participant 
\3\ with the right to appeal from any decision or decisions of SCCP 
resulting in sanctions or penalties imposed under Rule 20 or 22.\4\ 
SCCP proposes to include fines imposed under Rule 9 to the list of 
applicable actions specified in Rule 23. The proposed inclusion in Rule 
23 of a margin member's right to appeal a fine for late margin call 
payments will provide members a process by which to dispute 
implementation of such fines.
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    \3\ The term ``participants'' means persons or organizations 
which have qualified for membership in SCCP pursuant to SCCP Rules 2 
and 3. Participants are also referred to in SCCP Rules as 
``members.''
    \4\ See SCCP Rule 23 section 1(c).
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    SCCP believes that the proposed rule change will facilitate 
ensuring compliance with SCCP's rules regarding margin and Regulation T 
and is therefore consistent with section 17A(b)(3)(A) of the Act and 
specifically with section 17A(b)(3)(F) of the Act in that it is 
designated to promote the prompt and accurate settlement of securities 
transactions and to remove impediments to and perfect the mechanism of 
a national system in that the proposed fine for late margin calls will 
encourage margin members to submit margin payments in a timely manner 
therefore reducing the frequency of late margin call payments.

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

    SCCP does not believe that the proposed rule change will impose any 
inappropriate 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 either solicited or received.

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 SCCP 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 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

[[Page 29200]]

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 SCCP. All submissions should refer to File No. SR-
SCCP-2001-04 and should be submitted by June 19, 2001.

    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 01-13384 Filed 5-25-01; 8:45 am]
BILLING CODE 8010-01-M