[Federal Register Volume 64, Number 172 (Tuesday, September 7, 1999)]
[Notices]
[Pages 48693-48694]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-23111]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-41801; File No. SR-NSCC-99-05]
Self-Regulatory Organizations; National Securities Clearing
Corporation; Order Granting Accelerated Approval of a Proposed Rule
Change Relating to the Acceptance of Letters of Credit
August 27, 1999.
On April 20, 1999, the National Securities Clearing Corporation
(``NSCC'') filed with the Securities and Exchange Commission
(``Commission'') a proposed rule change (File No. SR-NSCC-99-05)
pursuant to section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'') \1\ to permit NSCC to replace its current letter of credit
form with a letter of credit form developed by the Uniform Clearing
Group (``UCG'').\2\ Notice of the proposal was published in the Federal
Register on August 13, 1999.\3\ No comment letters were received. For
the reasons discussed below, the Commission is granting accelerated
approval of the proposed rule change.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ The members of the UCG include the Boston Stock Exchange
Clearing Corporation, The Depository Trust Company, Government
Securities Clearing Corporation, MBS Clearing Corporation, NSCC, The
Options Clearing Corporation, Board of Trade Clearing Corporation,
Chicago Mercantile Exchange, Clearing Corporation of New York,
Kansas City Board of Trade, Minneapolis Grain Exchange, New York
Mercantile Exchange, Emerging Markets Clearing Corporation, and
Clearing Corporation for Options and Securities.
\3\ Securities Exchange Act Release No. 41716 (August 6, 1999),
64 FR 44252.
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I. Description
Rule 4, Section 1 of NSCC's Rules and Procedures permits NSCC to
accept letters of credit in addition to cash and government securities
as collateral for its clearing fund.\4\ The proposed rule change will
require that letters of credit delivered to NSCC on or after September
1, 1999, be in the form of the uniform letter of credit (``ULC'')
developed by the UCG.
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\4\ Securities Exchange Act Release No. 18052 (August 21, 1981),
46 FR 43341.
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The ULC consists of a cover page plus the uniform terms. All
variable terms of the ULC, such as the name of the clearing member, the
beneficiary clearing corporation, the issuing bank, the amount of the
credit, and the expiration date, are set forth on the cover page. To
assist members in completing the ULC, the UCG drafted general
instructions. In addition, NSCC has provided supplemental instructions
[[Page 48694]]
relating specifically to letters of credit furnished to NSCC.
NSCC expects that modifications may be made to the ULC in the
future. If and when that occurs, NSCC will require its members to use
the revised form.\5\
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\5\ NSCC will file a proposed rule change with the Commission
prior to requiring members to comply with any substantive changes
made to the ULC.
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II. Discussion
Section 17A(b)(3)(F) \6\ of the Act requires that the rules of a
clearing agency be designed to foster cooperation and coordination with
persons engaged in the clearance and settlement of securities
transactions. NSCC and the other members of the UCG developed the ULC
to foster uniformity among the various U.S. securities and futures
clearing organizations with respect to letters of credit that are
deposited as collateral. This uniformity will help reduce operational
burdens for securities and futures industry participants and their
letter of credit issuers. It should also enhance the legal certainty
that the letters of credit received by NSCC and other UCG members as
collateral will be enforceable. Accordingly, the Commission finds that
the rule change is consistent with NSCC's obligations under the Act.
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\6\ 15 U.S.C. 78q-1(b)(3)(F).
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NSCC has requested that the Commission find good cause for
approving the proposed rule change prior to the thirtieth day after the
date of publication of notice of the filing. The Commission finds good
cause for so approving the proposed rule change because accelerated
approval will permit NSCC to implement the ULC by September 1, 1999, at
which time its previous letters of credit expire. Since September 1,
1999, is the scheduled implementation date of the ULC by certain UCG
members, accelerated approval will also provide for a more coordinated
implementation of the ULC. Furthermore, the Commission has not received
any comment letters and does not expect to receive any comment letters
on the proposal.
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-NSCC-99-05) be and hereby is
approved.
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. 99-23111 Filed 9-3-99; 8:45 am]
BILLING CODE 8010-01-M