[Federal Register: January 6, 2004 (Volume 69, Number 3)]
[Notices]
[Page 711-712]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr06ja04-130]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-49011; File No. SR-EMCC-2003-07]
Self-Regulatory Organizations; Emerging Markets Clearing
Corporation; Notice of Filing and Order Granting Accelerated Approval
on a Temporary Basis of a Proposed Rule Change Relating to Buy-In and
Sell-Out Procedures
December 30, 2003.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ notice is hereby given that on December 22, 2003, 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 temporarily through June 30, 2004, to the proposed
rule change.
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\1\ 15 U.S.C. 78s(b)(1).
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The proposed rule change would (a) revise EMCC Rule 7, Sections 18
(Buy-Ins) and 19 (Sell-Outs) to shorten the time period when a buy-in
and sell-out may be initiated and when it may be executed and (b) make
conforming, technical changes to EMCC Rule 1 (Definitions and
Descriptions) and Rule 7.
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\
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\2\ The Commission has modified the text of the summaries
prepared by EMCC.
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A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
When EMCC was formed, it was recognized that its buy-in and sell-
out procedures should be similar to those of the International
Securities Market Association (``ISMA'') because of EMCC's
understanding that ISMA's procedures are generally followed by emerging
market trading parties for transactions settled outside EMCC. The
reason for this was to preclude EMCC members from being subject to a
buy-in or sell-out by a non-EMCC member and not be able to retransmit
the buy-in or sell-out to an EMCC member in the same time frame.
Accordingly, EMCC's buy-in and sell-out rules followed the time periods
that would be used by non-EMCC members for these processes.
EMCC recently learned that the ISMA buy-in and sell-out time frames
will be changed effective January 1, 2004. If EMCC does not make
corresponding changes to its rules by that date, it is possible that to
avoid potential buy-in and sell-out exposure EMCC members will no
longer submit transactions to EMCC. If EMCC members were to submit such
transactions, they could be adversely affected due to the differences
in buy-in time frames for ex-clearing trades. Accordingly, in order not
to jeopardize the use of EMCC for trade processing and to not expose
its members to risk, EMCC seeks to change its rules to conform to the
industry change that is expected to become effective January 1, 2004.
Basically, the change will shorten the time period when a buy-in and
sell-out may be initiated and when it may be executed.\3\ EMCC
understands that the emerging markets securities industry is favorably
disposed to EMCC's proposed rule change.
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\3\ A copy of the proposed rule language which sets out the
timing for buy-ins and sell-outs is attached as an exhibit to EMCC's
filing.
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In addition to the above proposed changes, EMCC also seeks to make
technical corrections to its Rule 1 (Definitions and Descriptions) and
Rule 7 with regard to several rule and section references regarding
buy-in and sell-out provisions. Rules 7 and 8 were revised in 1999,\4\
but some references to those rules and to specific sections therein
were not amended to reflect those changes. This filing will correct
that oversight.
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\4\ Securities Exchange Act Release No. 41415 (May 17, 1999), 64
FR 27841 (May 21, 1999) [File No. SR-EMCC-98-10].
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EMCC believes that the proposed rule change is consistent with the
requirements of the Act and the rules and regulations thereunder
because it will promote the prompt and accurate clearance and
settlement of securities transactions.
B. Self-Regulatory Organization's Statement on Burden on Competition
EMCC 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, Participants, or Others
No written comments relating to the proposed rule change have been
solicited or received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The Commission finds that the proposed rule change is consistent
with the requirements of the Act and the rules and regulations
thereunder and particularly with the requirements of section
17A(b)(3)(F) \5\ of the Act, which requires that the rules of a
clearing agency be designed to promote the prompt and accurate
clearance and settlement of securities transactions. Because this
proposed rule change aligns EMCC's buy-in and sell-out procedures with
those of ISMA, EMCC should avoid any abrupt stoppage of the use of its
services thereby enabling EMCC to continue to provide for the prompt
and accurate clearance and settlement of transactions in emerging
markets securities.
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\5\ 15 U.S.C. 78q-1(b)(3)(F).
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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 filing. The Commission finds good
cause for approving the proposed rule change prior to the thirtieth day
after the date of publication of notice of filing because by so
approving EMCC will be able to conform its buy-in and sell-out
procedures to the new industry guidelines generally used in
transactions cleared outside EMCC when those industry guidelines become
effective January 1, 2004. This will help to avoid confusion and other
adverse
[[Page 712]]
consequences among EMCC's participants.
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 5th Street NW, Washington, DC 20549-0069.
Comments may also be submitted electronically at the following e-mail
address: rule-comments@sec.gov. All comment letters should refer to
File No. SR-EMCC-2003-07. This file number should be included on the
subject line if e-mail is used. To help the Commission process and
review comments more efficiently, comments should be sent in hardcopy
or by e-mail but not by both methods. Copies of the submission, all
subsequent amendments, all written statements with respect to the rule
filing that are filed with the Commission, and all written
communications relating to the rule filing between the Commission and
any person, other than those that may be withheld from the public in
accordance with provisions of 5 U.S.C. 552, will be available for
inspection and copying in the Commission's Public Reference Room in
Washington, DC. Copies of such filing will also be available for
inspection and copying at EMCC's principal office and on EMCC's Web
site at http://www.e-m-c-c.com/legal/index.html. All submissions should
refer to File No. SR-EMCC-2003-07 and should be submitted January 27,
2004.
It is therefore ordered, pursuant to section 19(b)(2) of the Act,
that the proposed rule change (File No. SR-EMCC-2003-07) be, and hereby
is, approved on an accelerated basis through June 30, 2004.
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\6\ 17 CFR 200.30-3(a)(12).
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For the Commission by the Division of Market Regulation, pursuant
to delegated authority.\6\
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 04-219 Filed 1-5-04; 8:45 am]
BILLING CODE 8010-01-P