[Federal Register Volume 63, Number 40 (Monday, March 2, 1998)] [Notices] [Page 10253] From the Federal Register Online via the Government Publishing Office [www.gpo.gov] [FR Doc No: 98-5255] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-39696; File No. 600-23] Self-Regulatory Organizations; Government Securities Clearing Corporation; Order Approving Application for Extension of Temporary Registration as a Clearing Agency February 24, 1998. Pursuant to Sections 17A and 19(a) of the Securities Exchange Act of 1934 (``Act''),\1\ on October 2, 1997, the Government Securities Clearing Corporation (``GSCC'') filed with the Securities and Exchange Commission (``Commission'') an application requesting that the Commission grant GSCC full registration as a clearing agency or in the alternative extend GSCC's temporary registration as a clearing agency until such time as the Commission is able to grant GSCC permanent registration.\2\ Notice of GSCC's request for permanent registration or for extension of temporary registration appeared in the Federal Register on January 15, 1998.\3\ No comments were received. This order extends GSCC's registration as a clearing agency until February 28, 1999. --------------------------------------------------------------------------- \1\ 15 U.S.C. 78q-1, 78s(a). \2\ Letter from Sal Ricca, President and Chief Operating Officer, GSCC (September 25, 1997). \3\ Securities Exchange Act Release No. 39526 (January 8, 1998), 63 FR 2435. --------------------------------------------------------------------------- On May 24, 1988, the Commission approved pursuant to Sections 17A and 19(a) of the Act and Rule 17Ab2-1(c) promulgated thereunder \4\ the application of GSCC for registration as a clearing agency for a period of three years.\5\ The Commission subsequently has extended GSCC's registration until February 28, 1998.\6\ --------------------------------------------------------------------------- \4\ 17 CFR 240.17Ab2-1(c). \5\ Securities Exchange Act Release No. 25740 (May 24, 1988), 53 FR 19839. \6\ Securities Exchange Act Release Nos. 29067 (April 22, 1991), 56 FR 14542; 32385 (June 3, 1993), 58 FR 32405; 35787 (May 31, 1995), 60 FR 30324; 36508 (November 27, 1995), 60 FR 61719; 37983 (November 25, 1996), 61 FR 64183; and 39698 (May 30, 1997), 62 FR 30911. --------------------------------------------------------------------------- GSCC provides clearance and settlement services for its members' transactions in government securities. GSCC offers its members services for next-day settling trades, forward settling trades, auction takedown activity, and repurchase agreement transactions. In connection with GSCC's clearance and settlement services, GSCC provides a centralized loss allocation procedure and maintains margin to offset netting and settlement risks. At the time of GSCC's initial registration, the Commission granted GSCC exemptions from the financial responsibility and operational capability standards of Sections 17A(b)(3)(B) and 17A(b)(4)(B) of the Act and from the fair representation requirements of Section 17A(b)(3)(C) of the Act.\7\ The Commission has since determined that GSCC is in compliance with these sections and has eliminated the exemption.\8\ In the order initially granting GSCC temporary registration, the Commission also discussed the need for GSCC to amend its standard of care with respect to functions affecting the settlement of government securities. --------------------------------------------------------------------------- \7\ 15 U.S.C. 78q-1(b)(3)(B), 78q-1(b)(4)(B), and 78q- 1(b)(3)(C). \8\ Securities Exchange Act Release Nos. 36508 (November 27, 1995), 60 FR 61719 (order extending registration as a clearing agency) and 39372 (November 28, 1997), 62 FR 64415 (order approving GSCC's procedures for election of directors). --------------------------------------------------------------------------- The Commission believes that several issues need to be resolved prior to GSCC obtaining permanent registration. In particular, the Commission is reviewing the appropriate standard(s) of liability of a clearing agency to its members. Therefore, the Commission believes that GSCC's temporary registration should be extended for an additional twelve months.\9\ --------------------------------------------------------------------------- \9\ The Commission expects to continue to process GSCC's request for permanent registration during this temporary registration period. --------------------------------------------------------------------------- It is therefore ordered that GSCC's temporary registration as a clearing agency be and hereby is extended through February 28, 1999. For the Commission by the Division of Market Regulation, pursuant to delegated authority.\10\ --------------------------------------------------------------------------- \10\ 17 CFR 200.30-3(a)(50)(i). --------------------------------------------------------------------------- Margaret H. McFarland, Deputy Secretary. [FR Doc. 98-5255 Filed 2-27-98; 8:45 am] BILLING CODE 8010-01-M