Federal Register / Vol. 60, No. 246 / Friday, December 22, 1995 / Notices 66571

5Section 2(a) of Rule 29 already permits GSCC to

release clearing data to other self-regulatory

organizations such as NSCC that have regulatory

authority over a GSCC member. The purpose of new

Section 2(b) is to make explicit GSCC’s authority to

release clearing data to NSCC for its CMS.

6 15 U.S.C. 78q–1(b)(3)(F) (1988).

7Although GSCC currently does not have any

cross-guarantee agreements or arrangements with

other clearing agencies, NSCC’s CMS will be

especially beneficial to those participating clearing

entities that have executed cross-guaranty

agreements or have other cross-guarantee

arrangements. The Commission supports the use of

cross-guaranty agreements and other similar

arrangements among clearing agencies as a method

of reducing clearing agencies’ risk of loss due to a

common participant’s default and encourages GSCC

to explore such agreements or arrangements.

Currently, The Depository Trust Company

(‘‘DTC’’) and NSCC are the only clearing agencies

registered with the Commission that have executed

a cross-guaranty agreement. The agreement

provides that in the event of a default of a common

member, any resources remaining after the failed

common member’s obligations to the guaranteeing

clearing agency have been satisfied will be made

available to the other clearing agency. The guaranty

is not absolute but rather is limited to the extent

of the resources relative to the failed member

remaining at the guaranteeing clearing agency. The

principal resources will be the failed members’s

settlement net credit balances and deposits to the

clearing agencies’ clearing funds. For a complete

description of DTC’s and NSCC’s agreement, refer

to Securities Exchange Act Release No. 33548

(January 31, 1994), 59 FR 5638 [File Nos. SR–DTC–

93–08 and SR–NSCC–93–07].

The Midwest Securities Trust Company

(‘‘MSTC’’) and Midwest Clearing Corporation

(‘‘MCC’’) and the Philadelphia Depository Trust

Company (‘‘Philadep’’) and the Stock Clearing

Corporation of Philadelphia (‘‘SCCP’’) each have

cross-guarantee arrangements with their related

affiliate. Pursuant to Section 3, Rule 2, Article VI

of MSTC’s Rules, a defaulting participant’s

obligations at MSTC or MCC will be discharged by

application of that participant’s deposits at either

clearing agency if that participant is a common

member to both clearing agencies. MCC’s Rules

contain a similar provision. Similarly, pursuant to

Section 4, Rule 4 of SCCP’s Rules, SCCP will make

available any portion of a defaulting participant’s

contribution to its participants fund to offset a loss

suffered by Philadep by reason of that participant’s

default. Philadep’s Rules contain an identical

provision.

8 17 CFR 200.30–3(a)(12) (1994).

Commission.’’ The term ‘‘Collateral

Management Service’’ also is added to

Rule 1 and defined as ‘‘the collateral

management information-sharing

service operated by the National

Securities Clearing Corporation.’’

Section 2 of Rule 29 (‘‘Release of

Clearing Data’’) is amended to permit

GSCC to release clearing data to CFTCRecognized Clearing Organizations and

to NSCC solely in connection with

NSCC providing CMS.5 Section 4 of

Rule 29 is amended to clarify that the

term ‘‘Clearing Data’’ includes, in

addition to transaction data, other data

that is received by GSCC in the

clearance and/or settlement process.

II. Discussion

Section 17A(b)(3)(F) 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.6 As discussed below, the

Commission believes the proposed rule

change is consistent with GSCC’s

obligation under Section 17A(b)(3)(F)

because the proposal sets forth GSCC’s

responsibilities and obligations with

regard to releasing participants’ clearing

data and facilitates GSCC’s participation

in NSCC’s CMS by enabling GSCC to

provide information regarding GSCC’s

participants to NSCC for its CMS.

GSCC’s and its participants’

participation in NSCC’s CMS should

help GSCC and other clearing agencies

to better monitor clearing fund, margin,

and other similar required deposits that

protect a clearing agency against loss

should a member default on its

obligations to the clearing agency.7

III. Conclusion

On the basis of the foregoing, the

Commission finds that the proposal is

consistent with the requirements of

Section 17A(b)(3)(F) 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–95–03) be, and hereby is,

approved.

For the Commission by the Division of

Market Regulation, pursuant to delegated

authority.8

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 95–31179 Filed 12–21–95; 8:45 am]

BILLING CODE 8010–01–M

[Release No. 34–36596; File No. SR–MSRB–

95–18]

Self-Regulatory Organizations; Notice

of Filing and Immediate Effectiveness

of Proposed Rule Change by the

Municipal Securities Rulemaking

Board Relating to Customer

Confirmations

December 15, 1995.

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

Securities Exchange Act of 1934

(‘‘Act’’), 15 U.S.C. 78s(b)(1), and Rule

19b–4 thereunder, notice is hereby

given that on November 28, 1995, the

Municipal Securities Rulemaking Board

(‘‘Board’’ or ‘‘MSRB’’) filed with the

Securities and Exchange Commission

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

rule change (SR–MSRB–95–18) as

described in Items I, II, and III below,

which Items have been prepared by the

Board. The Commission is publishing

this notice to solicit comments on the

proposed rule change from interested

persons.

I. Self-regulatory Organization’s

Statement of the Terms of Substance of

the Proposed Rule Change

The MSRB is filing herewith a

proposed rule change to rule G–15(a) on

customer confirmations (hereafter

referred to as the ‘‘proposed rule

change’’). On July 11, 1995, the

Commission approved an amendment to

rule G–15(a) which completely revised

the test and incorporated many

interpretations that had been issued

over the years. The proposed rule

change makes several clarifying and

technical changes to the text. In order to

simplify compliance for dealers, the

Board requests that the provision in rule

G–15(a)(i)(A)(6)(h) regarding disclosure

of the ‘‘premium paid over accreted

value’’ be withdrawn, effective upon

filing. The Board requests that the

proposed rule change be made operative

90 days after filing, pursuant to Section

19(b)(3)(A) of the Act. The text of

proposed rule change is as follows.

(Additions are italicized; deletions are

bracketed.) Rule G–15(a). Customer

Confirmations.

(i)(A)(1)–(5) No change.

(6) Final Monies. The following

information relating to the calculation and

display of final monies shall be shown:

(a)–(g) No change.

(h) for callable zero coupon securities, [any

premium paid over the accreted value of the

securities] if applicable, the percentage of the

purchase price at risk due to the lowest

possible call, which shall be calculated based

upon the ratio between (i) the difference

between the price paid by the customer and

the lowest possible call price, and (ii) the

price paid by the customer.

(7)–(8) No change.

(B) No change.

(C) Securities descriptive information. The

confirmation shall include descriptive

information about the securities which

includes, at a minimum:

(1) Credit backing. The following

information, if applicable, regarding the

credit backing of the security:

(a) Revenue securities. For revenue

securities, a notation of that fact, [regardless

of whether such designation appears in the

formal title of the security,] and a notation of

the primary source of revenue (e.g., project

name). This subparagraph will be satisfied if

these designations appear on the

confirmation in the formal title of the

security or elsewhere in the securities

description.

(b) No change.

(2)–(3) No change.

(4) Tax information. The following

information that may be related to the tax

treatment of the security:

(a)–(b) No change.

(c) Original issue discount securities. If the

securities pay periodic interest and are sold
66572 Federal Register / Vol. 60, No. 246 / Friday, December 22, 1995 / Notices

1See Securities Exchange Act Release No. 35953

(July 11, 1995), 60 FR 36843.

2 In contrast, the Board believes that a customer

purchasing a normal coupon bond at a price above

par in the secondary market usually understands

that, if any of the bonds are called at par, the

premium paid in the market may be lost.

3Section 15B(b)(2)(C) states in pertinent part that

the rules of the Board ‘‘shall be designed to prevent

fraudulent and manipulative acts and practices, to

promote just and equitable principles of trade, to

foster cooperation and coordination with persons

engaged in regulating, clearing, settling processing

information with respect to, and facilitating

transactions in municipal securities, to remove

impediments to and perfect the mechanism of a free

and open market in municipal securities, and in

general, to protect investors in the public interest.’’

by the underwriter as original issue discount

securities a designation that they are

‘‘original issue discount’’ securities and a

statement of the initial public offering price

of the securities, expressed as a dollar price.

(D) Disclosure statements:

(1) The confirmation for zero coupon

securities shall include a statement to the

effect that ‘‘No periodic payments,’’ and, if

applicable, ‘‘callable below maturity value

without notice by mail to holder unless

registered.’’

(2) No change.

(E) No change.

(ii) Separate confirmation for each

transaction. Each broker, dealer or municipal

securities dealer for each transaction in

municipal securities shall give or send to the

customer a separate written confirmation in

accordance with the requirements of (i)

above. Multiple confirmations may be

printed on one page, provided that each

transaction is clearly segregated and the

information provided for each transaction

complies with the requirements of (i) above;

provided, however, that if multiple

confirmations are printed in a continuous

manner within a single document, it is

permissible for the name and address of the

broker, dealer, or municipal securities dealer

and the customer to appear once at the

beginning of the document, rather than being

included in the confirmation information for

each transaction.

II. Self-Regulatory Organization’s

Statement of the Purpose of, and

Statutory Basis for, the Proposed Rule

Change

In its filing with the Commission, the

Board 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 texts of these

statements may be examined at the

places specified in Item IV below. The

Board has prepared summaries, set forth

in Section (A), (B), and (C) below, of the

most significant aspects of such

statements.

A. Self-Regulatory Organization’s

Statement of the Purpose of, and

Statutory Basis for, the Proposed Rule

Change

On July 11, 1995, the Commission

approved the Board’s recent amendment

to rule G–15(a), on customer

confirmations, which became effective

on November 15, 1995.1 This

amendment constituted a major revision

of the rule, which not only revised and

reorganized the rule, but incorporated

many interpretations that had been

issued over the years.

The Board has identified a need for

several technical amendments to clarify

certain provisions of the rule. First, the

proposed rule change would clarify that

the requirement in rule G–15(a)(i)(D)(1)

to provide a disclosure statement

relating to call features of zero coupon

bonds is necessary on confirmations

only if the bonds are callable. Therefore,

the proposed rule change adds the

language ‘‘if applicable’’ before the

disclosure statement for call provisions.

Second, rule G–15(a)(ii) requires dealers

to provide a separate written

confirmation for each transaction. The

proposed rule change would clarify that

separate confirmations may be printed

as part of one document, as long as the

information unique to each trade (e.g.,

securities description, yield, call

information) is segregated and complies

with the requirements of the rule.

Third, rule G–15(a)(i)(C)(1)(a) states

that revenue bonds must be so

identified, regardless of whether such

designation appears in the title of the

bond. In some cases, this provision

leads to the revenue designation being

stated twice on the confirmation, one in

the title, and again in a separate

information block. The proposed rule

change makes clear that, if the bond is

identified as a revenue bond on the title,

there is no need to make an additional

disclosure that the bond is a revenue

bond. Fourth, dealers are required to

disclose the initial public offering price

of original issue discount securities in

rule G–15(a)(i)(C)(4)(c). The proposed

rule change would make clear that the

initial public offering price would be

expressed as a dollar price, rather than

a yield.

Finally, rule G–15(a)(i)(A)(6)(h) states

that the confirmation shall disclose any

premium paid over the ‘‘accreted value’’

for callable zero coupon bonds. The

rationale behind this provision is that

customers purchasing callable zero

coupon bonds in the secondary market

can include a premium over the price at

which all or some of the bonds may be

called. This portion of the customer’s

investment is at risk to call.2 The Board

believes that the most important

information for the customer in this

situation is the amount of the purchase

price at risk to a call at the lowest price

at which all or some of the customer’s

bonds can be called. While the current

language of rule G–15(a)(i)(A)(6)(h)

stated this information in terms of

‘‘premium over accreted value,’’ it is not

entirely accurate because a cusomter’s

bonds are not always callable at

accreted value. For example, a call may

be possible at a price that is a

percentage of accreted value.

Accordingly, the text of the proposed

rule change states simply that the

amount to be disclosed is the percentage

of the purchase price at risk due to the

lowest possible call price that might be

experienced by the customer. It further

clarifies that the percentage must be

calculated as the ratio between (i) the

difference between the price paid by the

customer and the lowest possible call

price, and (ii) the price paid by the

customer. It also makes clear that such

an at-risk percentage must be disclosed

only if it is applicable to the transaction.

The Board believes that the proposed

rule change more clearly reflects the

rationale behind the provision than the

current language.

In order to simplify compliance for

dealers, the Board requests that the

language in rule G–15(a)(i)(A)(6)(h)

regarding disclosure of the premium

paid over accreted value be withdrawn,

effective upon filing. However, in order

to allow dealers an opportunity to revise

their confirmation procedures to

accommodate the proposed rule change,

the Board requests that the proposed

rule change be made operative 90 days

after filing with the Commission under

Section 19(b)(3)(A) of the Act.

The Board believes the proposed rule

change is consistent with Section

15B(b)(2)(C) of the Act.3

B. Self-Regulatory Organization’s

Statement on Burden on Competition

The Board does not believe that the

proposed rule change will impose any

burden on competition 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

Written comments were neither

solicited nor received.

III. Date of Effectiveness of the

Proposed Rule Change and Timing for

Commission Action

Because the foregoing proposed rule

change: (i) does not significantly affect

the protection of investors or the public

interest; (ii) does not impose any
Federal Register / Vol. 60, No. 246 / Friday, December 22, 1995 / Notices 66573

significant burden on competition; (iii)

was provided to the Commission for its

review at least five days prior to the

filing date; and (iv) does not become

operative for ninety (90) days from the

date of its filing on November 28, 1995,

the proposed rule change has become

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

of the Act and Rule 19b–4(e)(6)

thereunder. In particular, the

Commission believes the proposed rule

change qualifies as a ‘‘non-controversial

filing’’ in that the proposed standards

do not significantly affect the protection

of investors or the public interest and do

not impose any significant burden on

competition, and because it makes

technical and clarifying changes to an

existing MSRB rule. At any time within

sixty (60) days of the filing of the

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

Act.

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

submissions, 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 the filing will also be

available for inspection and copying at

the Board’s principal offices. All

submissions should refer to File No.

SR–MSRB–95–18 and should be

submitted by January 12, 1996.

For the Commission by the Division of

Market Regulation, pursuant to delegated

authority, 17 CFR 200.30–3(a)(12).

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 95–31178 Filed 12–21–95; 8:45 am]

BILLING CODE 8010–01–M

SOCIAL SECURITY ADMINISTRATION

Agency Forms Submitted to the Office

of Management and Budget for

Clearance

Normally on Fridays, the Social

Security Administration publishes a list

of information collection packages that

will require submission to the Office of

Management and Budget (OMB) for

clearance in compliance with Public

Law 96–511, as amended (Pub. L. 104–

13 effective October 1, 1995), The

Paperwork Reduction Act. Since the last

list was published in the Federal

Register on December 8, 1995, the

information collection listed below will

require extension of the current OMB

approval.

(Call the SSA Reports Clearance Officer

on (410) 965–4142 for a copy of the

form(s) or package(s), or write to the

SSA Reports Clearance Officer at the

address listed after the information

collections)

Application for U.S. Benefits Under

the Canada-U.S. International

Agreement—0960–0371. The

information collected on form SSA–

1294 is used to determine entitlement to

benefits. The respondents are

individuals who live in Canada and file

for U.S. Social Security Benefits.

Number of Respondents: 1000.

Frequency of Response: 1.

Average Burden Per Response: 15

minutes.

Estimated Annual Burden: 250 hours.

Written comments and

recommendations regarding this

information collection should be sent

within 60 days from the date of this

publication, directly to the SSA Reports

Clearance Officer at the following

address: Social Security Administration,

DCFAM, Attn: Charlotte S. Whitenight,

6401 Security Blvd., 1–A–21 Operations

Bldg., Baltimore, MD 21235.

In addition to your comments on the

accuracy of the agency’s burden

estimate, we are soliciting comments on

the need for the information; its

practical utility; ways to enhance its

quality, utility and clarity; and on ways

to minimize burden on respondents,

including the use of automated

collection techniques or other forms of

information technology.

Dated: December 15, 1995.

Charlotte Whitenight,

Reports Clearance Officer, Social Security

Administration.

[FR Doc. 95–31162 Filed 12–21–95; 8:45 am]

BILLING CODE 4190–29–P

Notice of Meeting of the

Representative Payment Advisory

Committee

Date and Time: February 15, 1996, 9

a.m.–9 p.m.; February 16, 1996, 9 a.m.–

5 p.m.

Place: Environmental Protection

Agency Classrooms, 75 Hawthorne

Street, First Floor, San Francisco, CA

94105.

Type of Meeting: The meeting is open

to the public.

Purpose: In accordance with section

10(a)(2) of the Federal Advisory

Committee Act, the Social Security

Administration (SSA) announces the

fourth meeting of the Representative

Payment Advisory Committee. The

Committee will discuss issues related to

payee selection, payee recruitment and

retention, standards for payee

performance and payee oversight. The

Committee will focus its discussion on

use/misuse of benefits and

accountability. The Committee is also

interested in the value of automated

accounting systems to track

expenditures on behalf of beneficiaries

as well as funds conserved for future

use.

Current guidelines on the use of

benefits clearly distinguish acceptable

uses of benefits from misuse. However,

SSA is interested in learning if

additional guidance on choosing the

most appropriate among several

acceptable uses of benefits is necessary

or appropriate. Increasingly, SSA is

being asked to resolve disputes

concerning use of benefits, especially in

balancing current maintenance costs

and needs against possible future needs.

Payee accountability also is an area in

which SSA would be helped by external

views. For some years, SSA has required

an annual accounting by all payees

except certain State custodial

institutions which are subject to an

onsite review process. The form used for

this accounting elicits information from

the payee about how benefits were used

during the 12-month report period

(including any savings or investments);

whether any changes occurred in the

beneficiary’s living arrangement or

custody which could affect entitlement

or benefit amount; and other

information related to the payee’s

continued suitability. The process is

expensive, currently costing about $60

million yearly and has been criticized as

cumbersome for the agency and payees

alike.

The representative payment program

is so critical to the well being of SSA’s

most vulnerable beneficiaries that its

continuous improvement is of

compelling national interest. One in six