[Federal Register: March 2, 1999 (Volume 64, Number 40)] [Notices] [Page 10170-10171] From the Federal Register Online via GPO Access [wais.access.gpo.gov] [DOCID:fr02mr99-78] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-41087; File No. SR-MBSCC-99-01] Self-Regulatory Organizations; MBS Clearing Corporation; Notice of Filing and Immediate Effectiveness of a Proposed Rule Eliminating the Investment Service Fee February 22, 1999. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (``Act''),\1\ notice is hereby given that on January 29, 1999, the MBS Clearing Corporation (``MBSCC'') 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 MBSCC. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. --------------------------------------------------------------------------- \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 eliminates the investment service fee that MBSCC charges a participant to recover the handling costs associated with investing the cash the participant has on deposit in the participants fund. 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\ --------------------------------------------------------------------------- \2\ The Commission has modified the text of the summaries prepared by MBSCC. --------------------------------------------------------------------------- (A) Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change The purpose of the proposed rule change is to eliminate the investment service fee that MBSCC charges its participants. MBSCC's rules allow it to charge this fee to recover the handling costs associated with investing the cash that a participant has on deposit in the participants fund.\3\ MBSCC has historically charged a flat fee of one half of one percent of the amount invested.\4\ --------------------------------------------------------------------------- \3\ Specifically, Article IV, Rule 2, Section 7 of MBSCC's rules provides that investment income, if any, on cash deposits in excess of required basic deposits, less an amount to compensate the corporation for its handling costs, shall be paid to participants at such intervals, in such manner, and in such amounts as the corporation from time to time may determine. Under the proposed rule change, the provision ``less an amount to compensate the corporation for its handling costs,'' has been deleted. \4\ Telephone conversation between Anthony Davidson, Vice President and Associate General Counsel, MBSCC; Jeffrey Mooney, Special Counsel, Division of Market Regulation (``Division''), Commission; and Jessie L. Nice, Attorney, Division, Commission (February 2, 1999). --------------------------------------------------------------------------- MBSCC has determined that the investment service fee significantly exceeds the actual cost to MBSCC of handling investments. In addition, MBSCC does not charge participants for handling costs associated with other forms of collateral such as securities or letters of credit deposited to the participants fund. Accordingly, the proposed rule change deletes the provision of MBSCC's rules that allows it to recover its handling costs. MBSCC believes that the proposed rule change is consistent with Section 17A(b)(3)(D) of the Act \5\ and the rules and regulations thereunder because it provides for the equitable allocation of reasonable dues, fees, and other charges among MBSCC participants. --------------------------------------------------------------------------- \5\ 15 U.S.C. 78q-1(b)(3)(D). --------------------------------------------------------------------------- (B) Self-Regulatory Organization's Statement on Burden on Competition MBSCC does not believe that the proposed rule change will have an impact on or impose a burden on competition. (C) Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Partipants, or Others No Written comments relating to the proposed rule change have been solicited or received. MBSCC will notify the Commission of any written comments received by MBSCC. 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) of Act \6\ and pursuant to Rule 19b-4(f)(2) \7\ promulgated thereunder because the proposal 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 [[Page 10171]] necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. --------------------------------------------------------------------------- \6\ 15 U.S.C. 78s(b)(3)(A)(ii). \7\ 17 CFR 240.19b-4(f)(2). --------------------------------------------------------------------------- IV. Solicitation of Comments Interested persons are invited to submit written date, 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 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 Room, 450 Fifth Street, NW, Washington, DC 20549. Copies of such filing will also be available for inspection and copying at the principal office of MBSCC. All submissions should refer to File No. SR-MBSCC-99-01 and should be submitted by March 23, 1999. For the Commission by the Division of Market Regulation, pursuant to delegated authority.\8\ --------------------------------------------------------------------------- \8\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Margaret H. McFarland, Deputy Secretary. [FR Doc. 99-5088 Filed 3-1-99; 8:45 am] BILLING CODE 8010-01-M