[Federal Register Volume 60, Number 234 (Wednesday, December 6, 1995)]
[Notices]
[Page 62511]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-29689]



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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-36529; International Series Release No. 892; File No. 
600-20]


Self-Regulatory Organizations; International Securities Clearing 
Corporation; Order Approving Extension of Temporary Registration as a 
Clearing Agency Through November 30, 1996

November 29, 1995.
    Pursuant to Section 19(a) of the Securities Exchange Act of 1934 
(``Act''),\1\ on October 23, 1995, the International Securities 
Clearing Corporation (``ISCC'') filed with the Securities and Exchange 
Commission (``Commission'') a request that the Commission extend ISCC's 
temporary registration as a clearing agency until November 30, 1997.\2\ 
Notice of ISCC's request for extension of temporary registration 
appeared in the Federal Register on October 31, 1995.\3\ No comments 
were received. This order approves ISCC's amendment by extending ISCC's 
registration as a clearing agency through November 30, 1996.

    \1\15 U.S.C. Sec. 78q-1 (1988).
    \2\Letter from Julie Beyers, Associate Counsel, ISCC, to 
Christine Sibille, Division of Market Regulation, Commission 
(October 20, 1995).
    \3\Securities Exchange Act Release No. 36411 (October 20, 1995), 
60 FR 55399.
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    On May 12, 1989, the Commission granted the application of ISCC for 
registration as a clearing agency pursuant to Sections 17A and 19(a) of 
the Act\4\ and Rule 17Ab2-1(c)\5\ thereunder for a period of eighteen 
months.\6\ At that time, the Commission granted ISCC an exemption from 
compliance with Section 17A(b)(3)(C) of the Act.\7\ Section 
17A(b)(3)(C) of the Act requires that ISCC's rules assure fair 
representation of its shareholders (or members) and participants in the 
selection of its directors and administration of its affairs. The 
Commission subsequently extended ISCC's temporary registration as a 
clearing agency and temporary exemption from Section 17A(b)(3)(C) of 
the Act until November 30, 1995.\8\

    \4\15 U.S.C. Secs. 78q-1 and 78s(a) (1988).
    \5\17 CFR 240.17Ab2-1(c).
    \6\Securities Exchange Act Release No. 26812 (May 12, 1989), 54 
FR 21691.
    \7\15 U.S.C. Sec. 78q-1(b)(3)(C) (1988).
    \8\Securities Exchange Act Releases Nos. 28606 (November 16, 
1990), 55 FR 47976; 30005 (November 27, 1991), 56 FR 63747; and 
33233 (November 22, 1993), 58 FR 63195.
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    As discussed in the order first granting ISCC's temporary 
registration as a clearing agency, one of the primary reasons for 
ISCC's registration was to enable it to provide for the safe and 
efficient clearance and settlement of international securities 
transactions by providing links to centralized, efficient processing 
systems in the United States and to foreign financial institutions. 
ISCC continues to develop its capacity to offer these services.\9\

    \9\ISCC has added three service providers, Standard Bank of 
South Africa, Westpac Custodian Nominees Limited of Australia, and 
Westpac Nominees-NZ-Limited, to its Global Clearance Network Service 
to provide settlement and custody services in South Africa, 
Australia, and New Zealand, respectively. Securities Exchange Act 
Release Nos. 35392 (February 16, 1995), 60 FR 10415 and 36339 
(October 5, 1995), 60 FR 53447. ISCC also has established links with 
Monte Titoli, S.p.A., an Italian settlement and depository service, 
and Caja de Valores, S.A., an Argentine settlement and depository 
service. Securities Exchange Act Release Nos. 35219 (January 11, 
1995), 60 FR 3685 and 35218 (January 11, 1995), 60 FR 3686.
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    As stated above, ISCC has an exemption from the fair representation 
requirements of Section 17A(b)(3)(C) of the Act. Pursuant to this 
exemption, ISCC's sole shareholder, the National Securities Clearing 
Corporation (``NSCC'') elects ISCC's Board of Directors. ISCC's rules 
for election of directors are not operatives.\10\ At the time of ISCC's 
initial registration, ISCC requested that the exemption from the fair 
representation requirement of the Act remain in place until the earlier 
of (1) the time ISCC has twenty-five active members or (2) 1992. 
Although both these benchmarks have been surpassed, ISCC continues to 
believe that it does not have a meaningful participant base with only 
thirty-seven of its forty-four members currently using ISCC services. 
ISCC states that if its participants have the ability to participate in 
the selection of the board of directors these participants will have an 
inordinate and unintended control of the nomination and voting 
processes.\11\

    \10\ISCC's rules provide for ISCC's Board of Directors to 
consist of a maximum of twenty-two members. ISCC's rules further 
provide that (1) twelve of those directors are to be selected from 
the general partners or officers of participants by ISCC's 
nominating committee, (2) two directors are to be officers of ISCC, 
and (3) eight directors are to be nominees of NSCC. Participants may 
submit names to ISCC's Nominating committee by submitting a petition 
to ISCC's Secretary signed by the lesser of 5% of the participants 
or fifteen participants. If a participant nominates a candidate for 
participant director, ballots would be sent out to all participants 
to vote in accordance with their usage of ISCC's system. NSCC would 
vote its shares to elect the participant directors selected by the 
participants.
    \11\Supra note 6.
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    The Commission believes that ISCC should diligently work towards 
compliance with the requirements of Section 17A(b)(3)(C) and expects 
that ISCC will no longer require an exemption from the fair 
representation requirements no later than the end of this extension of 
its registration as a clearing agency.
    It is therefore ordered, that ISCC's registration as a clearing 
agency be, and hereby is, approved until November 30, 1996.
    For the Commission by the Division of Market Regulation, pursuant 
to delegated authority.\12\

    \12\17 C.F.R. Sec. 240.30-3(a)(50) (1994).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 95-29689 Filed 12-5-95; 8:45 am]
BILLING CODE 8010-01-M