[Federal Register: August 5, 1999 (Volume 64, Number 150)] [Notices] [Page 42745-42746] From the Federal Register Online via GPO Access [wais.access.gpo.gov] [DOCID:fr05au99-138] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-41671: File No. SR-EMCC-99-8] Self-Regulatory Organizations; Emerging Markets Clearing Corporation; Notice of Filing and Order Granting Accelerated Approval of a Proposed Rule Change Relating to the Extension of Interim Margin and Loss Allocation Procedures July 29, 1999. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (``Act''),\1\ notice is hereby given that on June 21, 1999, the Emerging Markets Clearing Corporation (``EMCC'') filed with the Securities and Exchange Commission (``Commission'') the proposed rule change as described in Items I and II below, which items have been prepared primarily by EMCC. The Commission is publishing this notice and order to solicit comments from interested persons and to grant accelerated approval of the proposed rule change. --------------------------------------------------------------------------- \1\ 15 U.S.C. 78s(b)(1). --------------------------------------------------------------------------- I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The proposed rule change will extend EMCC's interim margin and loss allocation procedures until the earlier of (i) September 30, 1999, or (ii) the date on which Daiwa Securities America Inc. ceases to perform clearing functions for interdealer brokers. II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, EMCC 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. EMCC has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements.\2\ --------------------------------------------------------------------------- \2\ The Commission has modified the text of the summaries prepared by EMCC. --------------------------------------------------------------------------- A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change On July 31, 1998, the Commission temporarily approved EMCC's interim margin and loss allocation procedures (``Addendum G'') for a period of one year. Addendum G applies to interdealer brokers and U.S. Firms whose only business with EMCC consists of clearing for interdealer brokers.\3\ The only EMCC clearing member affected by Addendum G is Daiwa Securities America Inc. (``Daiwa''). --------------------------------------------------------------------------- \3\ For a complete description of Addendum G, refer to Securities Exchange Act Release No. 40288 (July 31, 1998), 63 FR 42087. --------------------------------------------------------------------------- EMCC has been advised that Daiwa intends to cease performing clearing functions for interdealer brokers by the end of September 1999. Because Addendum G expires on July 31, 1999, EMCC is requesting that the Commission extend the temporary approval of addendum G until the earlier of (i) September 30, 1999, (ii) the date on which Daiwa ceases to perform clearing functions for interdealer brokers. EMCC believes that the proposed rule change is consistent with the requirements Section 17A of the Act \4\ and the rules and regulations thereunder because extension of the temporary approval will avoid any potential disruption of EMCC's clearing services during this limited time period. --------------------------------------------------------------------------- \4\ 15 U.S.C. 78q-1. --------------------------------------------------------------------------- B. Self-Regulatory Organization's Statement on Burden on Competition EMCC does not believe that the proposed rule change will impose any burden on competition. C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants or Others No written comments relating to the proposed rule change have been solicited or received. EMCC will notify the Commission of any written comments received by EMCC. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Section 17A(b)(3)(F) of the Act \5\ 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. In light of the fact that the Commission has previously found that Addendum G should provide EMCC with margin that is adequate to protect EMCC from financial exposure if an interdealer broker experiences financial difficulty, the Commission finds that the brief extension of the effectiveness of Addendum G is consistent with EMCC's safeguarding obligations under the Act. --------------------------------------------------------------------------- \5\ 15 U.S.C. 78q-1(b)(3)(F) --------------------------------------------------------------------------- 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 approving the proposed rule change prior to the thirtieth day after publication of notice because such approval will allow the protections of Addendum G to remain in effect without interruption until Daiwa ceases its interdealer clearing operations at EMCC. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Persons making written submissions should file six copies thereof with the Secretary, Securities and Exchange [[Page 42746]] Commission, 450 Fifth Street, NW, Washington, DC 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, NW, Washington, DC 20549. Copies of such filing also will be available for inspection and copying at the principal office of EMCC. All submissions should refer to File No. SR-EMCC-99-8 and should be submitted by August 26, 1999. V. Conclusion It is Therefore Ordered, pursuant to Section 19(b)(2) of the Act,\6\ that the proposed rule change (File No. SR-EMCC-99-8) be and hereby is approved until September 30, 1999. \6\ 15 U.S.C. 78s(b)(2). --------------------------------------------------------------------------- For the Commission by the Division of Market Regulation, pursuant to delegated authority.\7\ --------------------------------------------------------------------------- \7\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Margaret H. McFarland, Deputy Secretary. [FR Doc. 99-20177 Filed 8-4-99; 8:45 am] BILLING CODE 8010-01-M