[Federal Register Volume 63, Number 75 (Monday, April 20, 1998)]
[Notices]
[Pages 19546-19547]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-10341]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-39849; File No. SR-MBSCC-97-09]
Self-Regulatory Organizations; MBS Clearing Corporation; Notice
of Filing and Immediate Effectiveness of Proposed Rule Change Relating
to Fees and Charges
April 10, 1998.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ notice is hereby given that on November 5, 1997, MBS
Clearing Corporation (``MBSCC'') filed with the Securities and Exchange
Commission (``Commission'') and on November 13, 1997, and February 27,
1998, amended the proposed rule change as described in Items I, II, and
III below, which items have been prepared primarily by MBSCC. The
Commission is publishing this notice to solicit comments from
interested persons on the proposed rule change.
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\1\ 15 U.S.C. 78s(b)(1).
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I. Self-Regulatory Organization's Statement of the Terms of
Substance of the Proposed Rule Change
The proposed rule change revises MBSCC's fee schedule to add fees
for the late payment of participant's payment obligations.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, MBSCC 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
text of these statements may be examined at the places specified in
Item IV below. MBSCC has prepared summaries, set forth in sections (A),
(B), and (C) below, of the most significant aspects of such
statements.\2\
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\2\ The Commission has modified the text of the summaries
prepared by MBSCC.
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(A) Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
MBSCC's rules and procedures require participants to satisfy all
payment obligations by 12:00 p.m. Eastern Standard Time (``EST'') on
the day that they are due.\3\ This noon deadline provides MBSCC with
sufficient time to use such funds to pay participants in a credit
position or to liquidate a participant's collateral to cover a default
so that funds are available to pay such participant's obligations.
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\3\ These payment obligations result from settlement balance
order market differential obligations, cash adjustment obligations,
broker commissions, miscellaneous cash obligations, and MBSCC
clearing and electronic pool notification bills.
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Currently, participants that fail to satisfy a payment obligation
by the noon deadline are subject to a $50.00 charge. Although the
majority of payment obligations due to MBSCC are paid on the day on
which they are due, many are paid after the noon deadline. Failure by a
participant to timely satisfy its payment obligations could jeopardize
MBSCC's ability to fulfill its obligations to participants with a
credit position.
The purpose of the proposed rule change is to revise fees for late
payment of obligations by adding a late payment fee schedule. The
purpose of these new fees is to both motivate participants to pay their
obligations prior to the noon deadline and to compensate MBSCC for the
costs associated with monitoring such late payments. The late payment
fee schedule is based both on the size of the cash obligation payment
that is not timely made and the frequency of such participant's late
payments over a rolling ninety day period. MBSCC's late payment fine
schedule is set forth below.
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First Second Third Fourth
Payable cash obligation occurrence occurrence occurrence occurrence
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$50.00.00-100,000.00............................ $50.00 $100.00 $250.00 $500.00
100,000.01-1,000,000.00......................... 100.00 200.00 500.00 1,000.00
1,000,000.01-1,500,000.00....................... 200.00 400.00 1,000.00 2,000.00
1,500.000.01-3,000,000.00....................... 500.00 1,000.00 2,500.00 5,000.00
3,000,000.01-5,000,000.00....................... 1,000.00 2,000.00 5,000.00 10,000.00
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[[Page 19547]]
Calculation of charges for late payment obligations in excess of
$5,000,000 will be based on the ratio of the actual late obligation
(rounded to the next highest million) to $5,000,000, multiplied by the
late fee for obligations of $5,000,000.
Participants failing to timely satisfy payment obligations on more
than four occasions within a rolling ninety day period will be subject
to additional late fees for each occurrence. This amount will be
determined at MBSCC's discretion depending on the magnitude and history
of the participant's late payments, but any additional late fees can be
no more than twice the fourth occurrence fee. MBSCC also reserves the
discretion to waive or reduce late fees when a particular occurrence is
not deemed to be the participant's fault or the participant has
provided MBSCC with evidence that it is taking appropriate corrective
action to prevent recurrence.
Late fees will accrue on the date on which a late payment is made,
and participants will receive a letter notifying them of the late fee.
The late fee will be reflected on the participant's bill for the month
during which such fee was incurred and is payable at such time.
MBSCC believes that the proposed rule change is consistent with the
requirements of Section 17A of the Act \4\ and the rules and
regulations thereunder because it provides for the equitable allocation
of dues, fees, and other charges among MBSCC's participants.
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\4\ 15 U.S.C. 78q-1.
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(B) Self-Regulatory Organization's Statement on Burden on Competition
MBSCC does not believe that the proposed rule change will impose
any burden on competition that is 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
No comments on the proposed rule change were solicited or received.
III. Date of Effectiveness of the Proposed Rule Change and Timing
for Commission Action
The foregoing rule change has become effective pursuant to Section
19(b)(3)(A)(ii) \5\ of the Act and pursuant to Rule 19b-4(e)(2) \6\
promulgated thereunder because the proposal establishes or changes a
due, fee, or other charge imposed by MBSCC. At any time within sixty
days of the filing of such 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.
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\5\ 15 U.S.C. 78s(b)(3)(A)(ii).
\6\ 17 CFR 240.19b-4(e)(2).
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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 submission, 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 Section, 450 Fifth Street, N.W.,
Washington, D.C. 20549. Copies of such filing also will be available
for inspection and copying at the principal office of MBSCC. All
submissions should refer to File No. SR-MBSCC-97-09 and should be
submitted by May 11, 1998.
For the Commission by the Division of Market Regulation,
pursuant to delegated authority.7
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\7\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 98-10341 Filed 4-17-98; 8:45 am]
BILLING CODE 8010-01-M