[Federal Register: November 18, 1999 (Volume 64, Number 222)] [Notices] [Page 63097-63098] From the Federal Register Online via GPO Access [wais.access.gpo.gov] [DOCID:fr18no99-85] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-42127; File No. SR-EMCC-99-10] Self-Regulatory Organizations; Emerging Markets Clearing Corporation; Order Granting Accelerated Approval of a Proposed Rule Change Relating to the Requirements for a Class I, II, or III Director November 10, 1999. On September 24, 1999, the Emerging Markets Clearing Corporation (``EMCC'') filed with the Securities and Exchange Commission (``Commission'') a proposed rule change (File No. SR-EMCC-99-10) pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (``Act'').\1\ Notice of the proposal was published in the Federal Register on October 22, 1999.\2\ No comment letters were received. For the reasons discussed below, the Commission is granting accelerated approval of the proposed rule change. --------------------------------------------------------------------------- \1\ 15 U.S.C. 78s(b)(1). \2\ Securities Exchange Act Release No. 42016 (October 15, 1999), 64 FR 57169. --------------------------------------------------------------------------- I. Description The rule change amends Article II, Section 2.2 of EMCC's by-laws to postpone until the year 2000 annual shareholders meeting the requirement that individuals elected to Class I, II, or III directorships must be an officer or partner of a shareholder or of an affiliate or subsidiary of a shareholder. Similarly, the rule change amends Section 1(A) of EMCC's amended and restated shareholder agreement to postpone until the year 2000 annual shareholders meeting the requirement that directors elected to these classes must be an officer or partner of a ``participant shareholder'' (i.e., a shareholder that is also an EMCC participant) or of an affiliate of a participant shareholder. EMCC's previous rules would have implemented these provisions at the 1999 annual shareholders meeting.\3\ --------------------------------------------------------------------------- \3\ These amendments will allow EMCC to maintain the status quo with respect to the eligibility requirements for directors. For a description of EMCC's current rules and procedures governing EMCC's board of directors, see Securities Exchange Act Release No. 39661, International Series Release No. 1117 (February 13, 1998), 63 FR 8711. --------------------------------------------------------------------------- The rule change also amends the amended and restated shareholders agreement's definition of ``participant shareholder'' to mean a shareholder that holds one or more Class A Subject shares and is also a participant or an affiliate of a participant. Previously, a ``participant shareholder'' was defined as a shareholder that holds one or more Class A Subject shares. II. Discussion Section 17A(b)(3)(C) of the Act \4\ requires that the rules of a clearing agency assure fair representation of its shareholders in the selection and administration of its affairs. For the reasons set forth below, the Commission believes that EMCC's rule change is consistent with its obligations under the Act. --------------------------------------------------------------------------- \4\ 15 U.S.C. 78q-1(b)(3)(C). --------------------------------------------------------------------------- EMCC's membership is not yet as large as its management had anticipated it would be at this time, and there are a number or shareholders and other [[Page 63098]] industry participants who have not yet completed the membership process or have not yet acquired EMCC shares. The Commission believes that it is important for EMCC to maintain the current broad-based representation of industry participants on its board of directors while it continues to expand its participants base. If EMCC were to restrict its board membership to officers or partners of shareholders or of affiliates or subsidiaries of shareholders, EMCC could possibly have to replace current board members with representatives from shareholders already represented on the board. The rule change allows EMCC to maintain its current board membership, comprised of participants, shareholders, and founding contributors, which provides for a broad cross-section of the emerging markets community while providing EMCC with an additional year to continue to broaden its participant base. When EMCC was originally organized, it was expected than an entity that became a shareholder would also be the participant. However, EMCC participants have indicated that they may prefer that the shareholder and the participant be affiliated but different entities. The Commission believes that amending the definition of ``participant shareholder'' to include an affiliate of a participant will provide EMCC's participants with additional flexibility without adversely affecting EMCC's operations or its participants' ability to be represented on the EMCC Board. EMCC 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 prior to the thirtieth day after the date of publication of notice of the filing because accelerated approval will allow the amendments to take effect in time for EMCC's 1999 shareholders meeting. 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-EMCC-99-10) be and hereby is approved on an accelerated basis. For the Commission by the Division of Market Regulation, pursuant to delegated authority.\5\ --------------------------------------------------------------------------- \5\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Margaret H. McFarland, Deputy Secretary. [FR Doc. 99-30087 Filed 11-17-99; 8:45 am] BILLING CODE 8010-01-M