[Federal Register: December 6, 1999 (Volume 64, Number 233)] [Notices] [Page 68124-68125] From the Federal Register Online via GPO Access [wais.access.gpo.gov] [DOCID:fr06de99-93] ======================================================================= ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-42183; File No. SR-GSCC-99-04] Self-Regulatory Organizations; Government Securities Clearing Corporation; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to Fees and Charges November 29, 1999. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 [[Page 68125]] (``Act''),\1\ notice is hereby given that on August 19, 1999, the Government Securities Clearing Corporation (``GSCC'') filed with the Securities and Exchange Commission (``Commission'') the proposed rule change as described in Items I, II and III below, which items have been prepared primarily by GSCC. The Commission is publishing this notice to solicit comments on the proposed rule change from interested parties. --------------------------------------------------------------------------- \1\ 15 U.S.C. 78s(b)(1). --------------------------------------------------------------------------- I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change Under the proposed rule change, GSCC will reduce the clearance fee that it charges to its netting members. II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, GSCC 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. GSCC has prepared summaries, set forth in sections (A), (B) and (C) below, of the most significant aspects of these statements.\2\ --------------------------------------------------------------------------- \2\ The Commission has modified the text of the summaries prepared by GSCC. --------------------------------------------------------------------------- (A) Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change GSCC passes through to its netting members (with the exception of category 1 interdealer broker netting members engaged in blind broker repo activity) the cost to GSCC of obtaining and providing clearance services. Currently, the fee charged by GSCC to netting members to recoup its own external and internal clearance costs is $2.90 per deliver and receive obligation. The level of this fee is periodically reviewed to ensure that it equates sufficiently close to GSCC's actual expense. Recently, the Board of Governors of the Federal Reserve System (``Federal Reserve'') lowered its Fedwire funds and securities transfer fees.\3\ GSCC's clearance fee is a blended combination of the clearance charges levied upon GSCC by both its clearing banks and by the Federal Reserve Bank of New York for transfers made through the Fedwire book entry system. Internalized settlements at the clearing banks (i.e., those settlements occurring between GSCC and dealers within the same clearing bank) substantially reduce the amount of Federal Reserve fees included in GSCC's blended rate. As a result, there is not a direct correlation between Federal Reserve clearance fees and GSCC's clearance fee. Nonetheless, GSCC's processing costs were lowered because of the Federal Reserve's action, and a reduction in GSCC's clearance fee is therefore warranted. --------------------------------------------------------------------------- \3\ 63 FR 63552 (November 13, 1998) (notice of schedule of fees for Federal Reserve Bank Services). --------------------------------------------------------------------------- GSCC has determined that the clearance fee level now needed to offset its own clearance costs is roughly $2.75 per settlement. Thus, GSCC has determined it appropriate, effective as of October 1, 1999, to reduce GSCC's unit fee for clearance from $2.90 to $2.75. This adjusted fee reflects GSCC's ongoing commitment to effectively translate reductions in GSCC's processing costs into membership savings. The level of clearance fee will continue to be periodically monitored for appropriateness. GSCC believes that the proposed rule change is consistent with the requirements of Section 17A of the Act \4\ and the rules and regulations thereunder applicable to GSCC because it involves a fee change which fairly reflects the costs incurred by GSCC in providing services to its members. --------------------------------------------------------------------------- \4\ 15 U.S.C. 78q-1. --------------------------------------------------------------------------- (B) Self-Regulatory Organization's Statement on Burden on Competition GSCC does not believe that the proposed rule change will have any impact or impose any burden on competition. (C) Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received from members, Participants or Others Written comments relating to the proposed rule change have not yet been solicited or received. GSCC will notify the Commission of any written comments received by GSCC. 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 Rule 19b-4(f)(2) \6\ promulgated thereunder because the proposal establishes or changes a due, fee, or other charge imposed by GSCC. At any time within sixty days of the filing of such proposed 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. --------------------------------------------------------------------------- \5\ 15 U.S.C. 78s(b)(3)(A)(ii). \6\ 17 CFR 240.19b-4(f)(2). --------------------------------------------------------------------------- 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 Commission, 450 Fifth Street, N.W., Washington, D.C. 20549- 0609. 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 GSCC. All submissions should refer to File No. SR-GSCC-99-04 and should be submitted by December 27, 1999. For the Commission by the Division of Market regulation, pursuant to delegated authority.\7\ --------------------------------------------------------------------------- \7\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Jonathan G. Katz, Secretary. [FR Doc. 99-31529 Filed 12-3-99 8:45 am] BILLING CODE 8010-01-M