[Federal Register Volume 61, Number 154 (Thursday, August 8, 1996)]
[Notices]
[Pages 41437-41438]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-20184]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-37512; File No. SR-MBSCC-96-01]
Self-Regulatory Organizations; MBS Clearing Corporation; Order
Approving a Proposed Rule Change To Modify Participants Fund Deposit
Requirements
August 1, 1996.
On March 8, 1996, MBS Clearing Corporation (``MBSCC'') filed with
the Securities and Exchange Commission (``Commission'') a proposed rule
change (File No. SR-MBSCC-96-01) pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (``Act'') to modify its participants
fund deposit requirements.\1\ On March 25, and May 30, 1996, MBSCC
filed amendments to the proposed rule change.\2\ Notice of the proposal
was published in the Federal Register on June 14, 1996.\3\ No comment
letters were received. For the reasons discussed below, the Commission
is approving the proposed rule change.
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\1\ 15 U.S.C. Sec. 78s(b)(1) (1988).
\2\ Letters from Anthony H. Davidson, MBSCC, to Christine
Sibille, Division of Market Regulation (``Division''), Commission
(March 18, 1996) and to Mark Steffensen, Division, Commission (May
24, 1996).
\3\ Securities Exchange Act Release No. 37294 (June 10, 1996),
61 FR 30268.
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I. Description
The rule change revises the basic deposit component of the MBSCC
participants fund requirements to correlate more closely with
participants' actual usage of MBSCC services.\4\ The basic deposit
component is intended to ensure that participants' obligations to MBSCC
for fees will be satisfied if participants are unable to meet such
obligations.\5\ The rule change reduces the basic deposit requirement
for participants from $10,000 per account maintained at MBSCC to a
minimum of $1,000 for each participant regardless of the number of
accounts maintained.\6\ If a participant's average monthly services
bill, as determined by MBSCC on a semiannual basis, exceeds $1,000, the
participant's basic deposit requirement will be the amount of such
average monthly services bill up to a maximum amount of $10,000 per
account maintained by such participant.
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\4\ The MBSCC participants fund is composed of a basic deposit,
a minimum market margin differential deposit (``3MD''), and a daily
margin requirement referred to as a market margin differential
deposit (``MMD''). The purpose of the 3MD is to provide additional
assurances that each participant's fund contributions will be
adequate to satisfy all open commitments recorded with MBSCC.
Currently, the deposit required to satisfy this component of the
participants fund is $250,000 per participant. The purpose of the
MMD is to ensure that a participant. The purpose of the MMD is to
ensure that a participant's open obligations to MBSCC will be
satisfied in the event the participant is unable to meet such
obligations. MMD is derived from a formula which assesses various
factors including the type of position held and marked-to-market
value fluctuations. The rule change will not affect the requirements
of MBSCC participants with regard to the MMD and 3MD components of
the participants fund.
\5\ Notwithstanding the purposes of the basic deposit, MMD, and
3MD components of the participants fund, MBSCC is not limited in its
application of participants fund proceeds. Rather, MBSCC can utilize
the total participants fund to satisfy a participant's obligations
to MBSCC irrespective of the nature of the obligation.
\6\ MBSCC determined that its participants on average maintain
two accounts at MBSCC. The monthly maintenance fee per account is
$350 or $700 for two accounts. MBSCC based the minimum deposit
amount of $1,000 upon these averages and other participant usage
data.
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II. Discussion
Section 17A(b) (3) (F) \7\ 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 that MBSCC's
proposed rule change is consistent with MBSCC's obligations under the
Act because the revised basic deposit requirements should adequately
protect MBSCC from losses resulting from a participant's failure to pay
MBSCC fees without placing an undue burden on participants. Moreover,
revision of the basic deposit requirement should more closely
[[Page 41438]]
correlate a participant's actual usage of and billing for MBSCC
services with its correspondent deposit to the participants fund.
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\7\ 15 U.S.C. Sec. 78q-1(b)(3) (F) (1988).
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III. Conclusion
On the basis of the foregoing, the Commission finds that the
proposal is consistent with the requirements of the Act and in
particular with the requirements of 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-MBSCC-96-01) be, and hereby
is, approved.
For the Commission by the Division of Market Regulation,
pursuant to delegated authority.\8\
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\8\ 17 CFR 200.30-3(a)(12) 1995).
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Jonathan G. Katz,
Secretary.
[FR Doc. 96-20184 Filed 8-7-96; 8:45 am]
BILLING CODE 8010-01-M