[Federal Register: December 29, 2003 (Volume 68, Number 248)]
[Notices]
[Page 75013-75014]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr29de03-110]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-48954; File No. SR-SCCP-2003-04]
Self-Regulatory Organizations; Stock Clearing Corporation of
Philadelphia; Order Approving a Proposed Rule Change Relating to
Permanent Approval of SCCP's Restructured Limited Clearing Business
December 18, 2003.
On June 20, 2003, the Stock Clearing Corporation of Philadelphia
(``SCCP'') filed with the Securities and Exchange Commission
(``Commission'') a proposed rule change 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 30, 2003.\2\
No comment letters were received. For the reasons discussed below, the
Commission is approving the proposed rule change.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ Securities Exchange Act Release No. 48692 (Oct. 24, 2003),
68 FR 61846.
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I. Description
This order permanently approves SCCP's business whereby it provides
limited clearance and settlement services.
A. Background
Through an agreement dated June 18, 1997 (``Agreement''), among
SCCP, the Philadelphia Stock Exchange, Inc. (``Phlx''), the
Philadelphia Depository Trust Company (``Philadep''), the National
Securities Clearing Corporation (``NSCC''), and The Depository Trust
Company (``DTC''), Philadep and SCCP transferred most of their
depository and clearance services to DTC and NSCC. As a result, SCCP
stopped providing its continuous net settlement (``CNS'') system for
conducting settlements between SCCP and its participants and its cash
settlement services attendant to Philadep's same-day funds settlement
system and the Philadep settlement process. However, pursuant to the
Agreement, SCCP continued to offer
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limited clearing and settlement services to Phlx members.\3\
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\3\ This Agreement was executed in connection with Phlx's
withdrawal from the securities depository business (offered by its
wholly-owned subsidiary, Philadep) and Phlx's restructured and
limited clearance and settlement business (offered by its wholly-
owned subsidiary, SCCP).
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In December 1997, the Commission approved proposed rule changes
that implemented the Agreement.\4\ These rule changes reflected
Philadep's withdrawal from the depository business and temporarily
approved for one year SCCP's restructured and limited clearance and
settlement business.\5\ Subsequently, the Commission has extended the
temporary approval several times so that SCCP could continue to offer
restructured and limited clearance and settlement services.\6\
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\4\ Securities Exchange Act Release No. 39444 (Dec. 11, 1997),
62 FR 66703 (Dec. 19, 1997) [File Nos. SR-TC-97-16, SR-NSCC-97-08,
SR-Philadep-97-04, and SR-SCCP-97-04].
\5\ At that time, the Commission stated that ``because a part of
SCCP's proposed rule change concerns the restructuring of SCCP's
operations to enable SCCP to offer limited clearing and settlement
services to certain Phlx members, the Commission finds that it is
appropriate to grant only temporary approval to the portion of
SCCP's proposed rule change that amends SCCP's By-Laws, Rules, or
Procedures. This will allow the Commission and SCCP to see how well
SCCP's restructured operations are functioning under actual working
conditions and to determine whether any adjustments are necessary.
Thus, the Commission is approving the portion of SCCP's proposal
that amends its By-Laws, Rules and Procedures through Dec. 31,
1998.''
\6\ Securities Exchange Act Release Nos. 40872 (Dec. 31, 1998),
64 FR 1264 (Jan. 8, 1999) [File No. SR-SCCP-98-05]; 42320 (Jan. 6,
2000), 65 FR 2218 (Jan. 13, 2000) [File No. SR-SCCP-99-04]; 43781
(Dec. 28, 2000), 66 FR 1167 (Jan. 5, 2001) [File No. SR-SCCP-00-05];
45227 (Jan. 3, 2002), 67 FR 1259 (Jan. 9, 2002) [File No. SR-SCCP-
2001-11]; and 47016 (Dec. 17, 2000), 67 FR 78556 (Dec. 24, 2002)
[File No. SR-SCCP-2001-12].
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B. SCCP's Proposed Rule Change
In its current rule filing, SCCP proposed that the Commission
permanently approve SCCP's limited clearance and settlement business.
SCCP believes that its restructured operations have functioned
consistent with its original proposed rule change and are functioning
well under actual working conditions.
Accordingly, because this proposed rule change would not result in
any substantive or textual changes to its rules or its restructured
operations, SCCP will continue to offer the same services as it has
been since the 1997 rule changes took affect. Specifically, SCCP will
continue to offer trade confirmation and recording services to Phlx
members effecting transactions through what SCCP refers to as regional
interface operations (``RIO'') accounts and ex-clearing accounts. SCCP
will not provide clearing guarantees for these transactions. In
addition, SCCP will also continue to provide margin accounts for margin
members that clear and settle their transactions through SCCP's Omnibus
Clearance and Settlement Account at NSCC.\7\
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\7\ For a detailed discussion of the clearance and settlement
services SCCP will continue to provide, refer to the notice, supra
note 2.
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II. Discussion
Section 17A(b)(3)(F) of the Act \8\ requires, among other things,
that the rules of a clearing agency are designed to promote the prompt
and accurate clearance and settlement of securities transactions. The
Commission finds that SCCP's proposed rule change is consistent with
SCCP's obligations under section 17A(b)(3)(F) of the Act because
permanently approving the rules relating to SCCP's restructured
business should eliminate any uncertainty about and therefore provide
greater confidence in SCCP's long-term ability and commitment to
provide prompt and accurate clearance and settlement services to the
securities industry. In addition, since the proposed rule change does
not alter any of SCCP's rules or structure of its services and in light
of SCCP's actual performance since 1997, SCCP should be able to provide
for the prompt and accurate clearance and settlement of securities
transactions.
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\8\ 15 U.S.C. 78q-1(b)(3)(F).
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III. Conclusion
On the basis of the foregoing, the Commission finds that the
proposal is consistent with the requirements of the Act and in
particular with the requirements of section 17A of the Act \9\ and the
rules and regulations thereunder.
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\9\ 15 U.S.C. 78q-1.
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It is therefore ordered, pursuant to section 19(b)(2) of the Act,
that the proposed rule change (File No. SR-SCCP-2003-04) be, and hereby
is, approved.
For the Commission by the Division of Market Regulation,
pursuant to delegated authority.\10\
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\10\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 03-31811 Filed 12-24-03; 8:45 am]
BILLING CODE 8010-01-P