Pursuant to Section 19(b)(1)  of the Securities Exchange Act of 1934 (the “Act”), notice is hereby given that on October 20, 1999, MBS Clearing Corporation (“MBSCC”) filed with the Securities and Exchange Commission Start Printed Page 7079(“Commission”) and on November 8, 1999, amended the proposed rule change as described in Items I, II, and III below, which Items have been prepared by MBSCC. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons.
I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change
The proposed rule change will amend MBSCC's rules to clarify MBSCC's procedures when there is a disruption in the Electronic Pool Notification (“EPN”) service. The proposed rule change will also allow MBSCC members to terminate their EPN service by providing MBSCC with written notice ten days prior to termination instead of thirty days prior to termination.
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.
(A) Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change
Currently, Article VIII, Rule 1, Section 3(d) of MBSCC's Rules requires EPN users to utilize the EPN service for all messages relating to EPN eligible securities except for messages that MBSCC specifically exempts in the EPN procedures and messages that both parties agree not to send through the EPN service. The proposed rule change makes explicit that in the event of an EPN system disruption and an extension of the cut-off times for communicating pool allocation information pursuant to The Bond Market Association Guidelines, EPN users will be relieved of their obligation to process messages through the EPN service until the beginning of the next business day after the EPN system has been recovered. This modification is intended to confirm an EPN's user's ability to revert to phone and fax communication of pool allocation information in the event of an EPN system disruption that results in a pool notification extension. EPN users will be relieved of their obligation to process messages through EPN until the beginning of the next business day after the EPN system has been recovered to give them flexibility in such situations. MBSCC believes, however, that if the EPN system recovers during a pool notification extension, EPN users will choose to utilize EPN rather than phone and fax communication to the extent possible.
The proposed rule change also changes Article VIII, Rule 2 of MBSCC's Rules, which currently provides that an EPN user may cease to maintain an EPN account or withdraw as an EPN user by giving MBSCC thirty days written notice prior to termination. The proposed rule change modifies this provision to require written notice ten days prior to termination. MBSCC believes that written notice ten days prior to termination is appropriate and is consistent with the notice of termination provision contained in MBSCC's rules governing its comparison and clearing services.
The proposed rule change also will:
- Delete references in the cover page and in Article VI, Rule 1 of MBSCC's Rules to the “EPN Division” because while EPN is a separate service from the comparison and clearing service, it is not a separately constituted division.
- Replace references in Article VI, Rule 1 of MBSCC's Rules to “Federal National Mortgage Association” with “Fannie Mae” to reflect the name change of such organization.
- Renumber the rules contained in Article IX that were inadvertently misnumbered and makes corresponding changes to cross-references to such rules and to the table of contents.
- Add Managing Director to Article X, Rules 1 and 3 as a person who may take certain actions with respect to certain actions taken by MBSCC.
- Renumber the EPN portion of MBSCC's Rules with consecutive page numbers throughout rather than page numbers by article for ease of reference.
MBSCC believes that the proposed rule change is consistent with the requirements of Section 17A(b)(3)(F) of the Act and the rules and regulations thereunder because the proposal is designed to promote the prompt and accurate clearance and settlement of securities transactions and, in general, to protect investors and the public interest.
(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, Participants, 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
Within thirty-five days of the date of publication of this notice in the Federal Register or within such longer period (i) as the Commission may designate up to ninety days of such date if it finds such longer period to be appropriate and publishes its reasons for so finding or (ii) as to which the self-regulatory organization consents, the Commission will:
(A) by order approve such proposed rule change or
(B) institute proceedings to determine whether the proposed rule change should be disapproved.
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 NW, Washington, DC 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 Room in Washington, D.C. Copies of such filing will also be available for inspection and copying at the principal office of the above-mentioned self-regulatory organization. All submissions should refer to File No. SR-MBSCC-99-8 and should be submitted by March 3, 2000.Start Signature
For the Commission by the Division of Market Regulation, pursuant to delegated authority.
Margaret H. McFarland,
2. The Commission has modified the text of the summaries prepared by MBSCC.Back to Citation
[FR Doc. 00-3169 Filed 2-10-00; 8:45 am]
BILLING CODE 8010-01-M