[Federal Register Volume 60, Number 239 (Wednesday, December 13, 1995)]
[Notices]
[Page 64083]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-30301]



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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-36559; File No. SR-GSCC-95-04]


Self-Regulatory Organizations; Government Securities Clearing 
Corporation; Order Approving a Proposed Rule Change Modifying GSCC's 
By-laws To Provide Indemnification Protection for Members of Committees

December 6, 1995.
    On August 25, 1995, the Government Securities Clearing Corporation 
(``GSCC'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change (File No. SR-GSCC-95-04) 
pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'') \1\ Notice of the proposal was published in the Federal 
Register on November 6, 1995.\2\ No comment letters were received. For 
the reasons discussed below, the Commission is granting approval of the 
proposed rule change.

    \1\ 15 U.S.C. 78s(b)(1) (1988).
    \2\ Securities Exchange Act Release No. 36435 (October 30, 
1995), 60 FR 56082.
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I. Description

    GSCC has amended its by-laws to provide indemnification protection 
for members of committees established by GSCC's Board of Directors who 
are not officers or directors of GSCC. Article IV, Section 4.1, of 
GSCC's by-laws currently requires that GSCC indemnify to the full 
extent permitted by law a present or past director or officer of GSCC 
who is made a party to any action or proceeding, whether civil or 
criminal, by reason of the fact that such person is or was a director 
or officer of GSCC.
    The indemnification obligation under Article IV, Section 4.1, did 
not extend to members of committees established by GSCC's Board of 
Directors if the members of the committees were not directors or 
officers of GSCC. Thus, for example, the indemnification protection in 
GSCC's by-laws did not cover most of the members of GSCC's Risk 
Management Committee who are senior credit officers of GSCC member 
firms.\3\ The amendment provides members of Board-established 
committees with indemnification protection comparable to the protection 
currently given to GSCC's directors and officers.

    \3\ The Risk Management Committee provides advice to GSCC on the 
creditworthiness of individual applicants for netting system 
membership, on the assessment of the financial status of current 
netting system members, and on market conditions affecting the 
government securities market.
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II. Discussion

    Section 17A(b)(3)(F) \4\ of the Act requires that the rules of a 
clearing agency be designed to assure the safeguarding of securities 
and funds which are in the custody or control of the clearing agency or 
for which it is responsible. The Commission believes GSCC's proposed 
rule change is consistent with the requirements of Section 17A(b)(3)(F) 
because the proposal, by affording appropriate protection to committee 
members, should enable GSCC to obtain the services of qualified 
individuals on its Board-established committees and should help ensure 
that such individuals may act freely and objectively in the exercise of 
their duties. By enhancing the selection and objectivity of its 
committee members, GSCC's committees may better fulfill their 
obligations to limit credit and market risks to GSCC's system thus 
assuring GSCC's ability to safeguard securities and funds under its 
control.

    \4\ 15 U.S.C. 78q-1(b)(3)(F) (1988).
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III. Conclusion

    On the basis of the foregoing, the Commission finds that the 
proposed rule change is consistent with the requirements of the Act and 
in particular Section 17A of the Act and the rules and regulations 
thereunder.
    It is therefore ordered, pursuant to Section 19(b)(2) of the Act, 
that the proposed rule change (File No. SR-GSCC-95-04) be and hereby is 
approved.

    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority.\5\

    \5\ 17 CFR 200.30-3(a)(12) (1994).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 95-30301 Filed 12-2-95; 8:45 am]
BILLING CODE 8010-01-M