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Notice

Self-Regulatory Organizations; National Securities Clearing Corporation; Notice of Filing and Order Granting Accelerated Approval of a Proposed Rule Relating to Processing Government Securities Trades

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Information about this document as published in the Federal Register.

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Start Preamble June 2, 2000.

Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”),[1] notice is hereby given that on April 5, 2000, National Securities Clearing Corporation (“NSCC”) 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 NSCC. The Commission is publishing this notice and order to solicit comments from interested parties and to grant accelerated approval of the proposed rule change.

I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change

The proposed rule change will allow NSCC to receive government securities trade data from the American Stock Exchange (“AMEX”), process the trade data, and transmit the trade data to the Government Securities Clearing Corporation (“GSCC”).

II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change

In its filing with the Commission, NSCC 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. NSCC has prepared summaries, set forth in sections (A), (B) and (C) below, of the most significant aspects of these statements.[2]

(A) Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change

The purpose of the rule change is to amend NSCC's rules and procedurres to permit NSCC to: (1) Receive trade data concerning members' government security transactions conducted on the AMEX; (2) record trade information about those transactions on NSCC members' contract lists; and (3) transmit at the request of members the trade information to GSCC for processing.

Specifically, the rule change amends NSCC's rules and procedures as follows:

  • The AMEX may submit locked-in trade data for transactions in “eligible government securities” included in the AMEX Order File (“AOF”) System to NSCC. NSCC will maintain a list of “eligible government securities” which must be unmatured, marketable debt securities in book-entry form that are direct obligations of the United States Government; securities issued or guaranteed by the United States, a U.S. government agency or instrumentality, or a U.S. government-sponsored corporation; or such other security as determined by NSCC from time to time.[3]
  • The AMEX may submit its trade data throughout trade date (“T”) until a time specified by NSCC. The trade data must include quantity, security identification, identification of the marketplace of execution, contra-broker, trade value, and other identifying details that NSCC may require or permit.[4]
  • NSCC will report back to members their AOF trade data items, including final contract amount as calculated by NSCC, on the morning of T+1 in a separate section of NSCC's regular way T+1 contract list.[5]
  • Unless otherwise processed through GSCC, as described below, the settlement of AFO trade data items will be the responsibility of parties to the trade. Such items will not be settled through the facilities of NSCC.[6]

The rule change permits NSCC to transmit, at the request of members, AOF trade data items to GSCC for processing as follows [7] :

  • Each member that would like to settle its AFO trades through GSCC must complete and deliver to NSCC an authorization agreement.[8]
  • NSCC will submit AOF trade data items to GSCC within the timeframes established by NSCC.[9]

NSCC believes that the proposed rule change is consistent with the requirements of the Act,[10] and the rules and regulations thereunder. In particular, the proposed rule change is consistent with section 17A(b)(3)(F) 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 and, in general, to protect investors and the public interest.

(B) Self-Regulatory Organization's Statement on Burden on Competition

NSCC does not believe that the proposed rule change will impact 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 have been solicited or received. NSCC will notify the Commission of any written comments received by NSCC.

III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action

Section 17A(b)(3)(F) [11] of the Act requires that the rules of a clearing agency be designed to promote the prompt and accurate clearance and settlement of securities transactions. For the reasons set forth below, the Commission believes that NSCC's rule change is consistent with this obligation.

The rule change permits NSCC to build upon its existing facilities to receive and process trade data concerning government securities traded through the AMEX's AOF System by NSCC members. After processing this information, NSCC will report back to members trade information relating to their AOF trades. At the request of members who wish to settle these trades through GSCC, NSCC will then transmit trade data to GSCC for processing. By providing this service, NSCC will be facilitating the prompt and accurate clearance and settlement of Amex-traded government securities. Therefore, the Commission finds that the proposed rule change is consistent with NSCC's obligations to promote the prompt and Start Printed Page 36750accurate clearance and settlement of securities transactions.

NSCC has requested that the Commission find good cause for approving the proposed rule change prior to the thirtieth day after publication of the notice of filing. The Commission finds good cause for approving the proposed rule change prior to the thirtieth day after publication of the notice because accelerated approval will enable NSCC to coordinate with GSCC and the AMEX in order to begin providing these clearance and settlement services on the target start date of June 2, 2000.

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 Section, 450 Fifth Street, NW., Washington, DC 20549. Copies of such filing also will be available for inspection and copying at the principal office of NSCC. All submissions should refer to File No. SR-NSCC-00-03 and should be submitted by June 30, 2000.

It Is Therefore Ordered, pursuant to section 19(b)(2) of the Act, that the proposed rule change (File No. SR-NSCC-00-03) be and hereby is approved.

Start Signature
For the Commission by the Division of Market Regulation, pursuant to delegated authority.[12]

Margaret H. McFarland,

Deputy Secretary.

End Signature End Preamble

Footnotes

2.  The Commission has modified the text of the summaries prepred by NSCC.

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3.  NSCC Rule 3, Section 10.

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4.  NSCC Procedure 11.D4(a)(ii).

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5.  Id. at (iii).

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6.  Id. at (iv).

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7.  NSCC Procedure 11.D.4(b).

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8.  Id. at 4(b)(i).

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9.  Id. at 4(b)(ii).

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11.  15 U.S.C. 78q-1(b)(3)(F).

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[FR Doc. 00-14574 Filed 6-8-00; 8:45 am]

BILLING CODE 8010-01-M