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SIA URGES REGULATORS, PRIVATE SECTOR TO 'AGGRESSIVELY' PURSUE CHANGES IN U.S. CLEARANCE SYSTEM

SIA URGES REGULATORS, PRIVATE SECTOR TO 'AGGRESSIVELY' PURSUE CHANGES IN
    U.S. CLEARANCE SYSTEM
    /ADVANCE/ NEW YORK  -- Regulators and the private sector should aggressively pursue changes in the nation's clearance and settlement process which enhance safety, foster soundness and reduce risk, Thomas A. James, chairman, and Edward I. O'Brien, president, Securities Industry Association, said today (Thursday, Oct. 1).
    Earlier, SIA directors approved a letter to the Securities and Exchange Commission urging an aggressive approach for a number of industry-sponsored recommendations.
    The letter was prepared in response to SEC requests for comment on the "Report of the Bachmann Task Force on Clearance and Settlement Reform in U.S. Securities Markets" which was submitted to the SEC in May.
    SIA's letter reiterated directors' support for the work of the Bachmann Task Force, calling it "an important and constructive contribution to improvements in U.S. clearance and settlement systems."
                  SIA Recommendations Focus on Safety
                        and Soundness Issues
    Among its recommendations, SIA asked for industry-wide endorsement of the expansion of cross-margining efforts and the implementation of a system to coordinate payments of funds across all domestic markets.  The effort will increase marketplace liquidity and reduce costs of financing that occur today when settling multiple market transactions, Messrs. James and O'Brien said.
    In addition, SIA said there is a critical need to compress the period between the securities trade date and comparison of the trade between buyer and seller to accommodate a shortened settlement period between the purchase of the security and payment.
    Risk to the overall system can emanate from the lack of compared trades, the letter said.
    "For purposes of investor safety and soundness, national clearing corporations must complete implementation of a 'trade date plus one day' comparison system for those products and broker-dealer transactions which don't already have that system in place," Messrs. James and O'Brien said.  The letter cited corporate fixed income and municipal fixed income products as examples.
    SIA also urged a review of several regulations to ensure that investors, large or small, aren't "adversely impacted."
    Likewise, SIA said the development of an accelerated payment mechanism, such as automated clearing house payments, could help achieve the Bachmann Task Force's recommendation for a shorter settlement cycle.
          Recommendations Also Include Other Investor Concerns
    SIA's recommendations also stressed the need to address investor information issues related to development of an industry-wide securities glossary, common closing price data, electronic message standards and a system providing equal treatment of all shareholders in the distribution of interim reports and other corporate communications.
    SIA is working with members and other entities on these initiatives, Messrs. James and O'Brien said.
    The "comment letter" was formulated by SIA's clearance and settlement committee, chaired by George McNamee.  The standing committee, formed in December 1991 to evaluate and develop recommendations relative to U.S. clearance and settlement mechanisms, replaced an ad hoc committee formed about a year earlier.
    -0-             10/01/92
    CONTACT:  Art Samansky or Karen San Antonio of SIA, 212-608-1500 CO:  SECURITIES INDUSTRY ASSOCIATION IN:  FIN ST:  NY -- NY045 -- X828  10/01/92
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Date:Oct 1, 1992
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