Self-Regulatory Organizations; MBS Clearing Corporation; Notice of Filing and Order Extending Temporary Registration as a Clearing Agency

Notice is hereby given that on February 8, 2000, MBS Clearing Corporation (“MBSCC”) filed with the Securities and Exchange Commission (“Commission”) an application pursuant to Section 19(a) of the Securities Exchange Act of 1934 (“Act”) requesting that the Commission grant MBSCC full registration as a clearing agency or in the alternative extend MBSCC's temporary registration as a clearing agency until such time as the Commission is able to grant MBSCC permanent registration. The Commission is publishing this notice and order to solicit comments from interested persons and to extend MBSCC's temporary registration as a clearing agency through March 31, 2001.

On February 2, 1987, pursuant to Sections 17A(b) and 19(a) of the Act and Rule 17Ab2-1 promulgated thereunder, the Commission granted MBSCC registration as a clearing agency on a temporary basis for a period of eighteen months. The Commission subsequently has extended MBSCC's registration through March 31, 2000.

As discussed in detailed in the original order granting MBSCC's registration, one of the primary reasons for MBSCC's registration was to enable it to provide for the safe and efficient clearance and settlement of transactions in mortgage-backed securities. Since its original temporary registration order, MBSCC has implemented many improvements and continues to work towards enhancing the safety and efficiency of its operations. For example, during the past year, MBSCC amended its risk management rules to: (i) Implement a net-out report, (ii) modify financial reporting by participants, (iii) modify certain special provisions applicable to non-domestic participants, (iv) add a provision for additional assurances, and (v) clarify MBSCC's role as a agent in a liquidation. MBSCC also modified its rules regarding letters of credit to implement the Uniform Letter of Credit developed by the Unified Clearing Group. In addition, MBSCC amended its rules to add net position and net-out position components to the formula MBSCC uses to calculate market margin differential deposits to the participants fund. MBSCC adopted rules to facilitate a smooth Year 2000 transition.

MBSCC has functioned effectively as a registered clearing agency for over ten years. Accordingly, in light of MBSCC's past performance and the need for continuity in the services MBSCC provides to its participants, the Commission believes that it is necessary and appropriate in the public interest and for the prompt and accurate clearance and settlement of securities transactions to extend MBSCC's temporary registration through March 31, 2001. During this temporary registration period, the Commission anticipates that it will act on MBSCC's application for permanent registration. Any comments received during MBSCC's temporary registration will be considered in conjunction with the Commission's review of MBSCC's request for permanent registration as a clearing agency under Section 17A of the Act.

Solicitation of Comments

Interested persons are invited to submit written data, views, and arguments with respect to whether the Commission should grant MBSCC permanent registration as a clearing agency. 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 request for permanent registration as a clearing agency that are filed with the Commission, and all written communications relating to the extension between the Commission and any person, other than those that may be withheld from the public in accordance with 5 U.S.C. 552, will be available for inspection and copying at the Commission's Public Reference Room, 450 Fifth Street, NW, Washington, DC 20549. Copies of such filing also will be available for inspection and copying at the principal office of MBSCC. All submissions should refer to File No. 600-22 and should be submitted by April 20, 2000.

Conclusion

It is therefore ordered pursuant to Sections 17A(b) and 19(a) of the Act that MBSCC's temporary registration as a clearing agency (File No. 600-22) be and hereby is extended through March 31, 2001.