File No. SR-NSCC-99-5

Securities and Exchange Commission

Washington, D.C. 20549

_____________________________________

Form 19b-4

Proposed Rule Change

By

Pursuant to Rule 19b-4 under the

Securities Exchange Act of 1934

1. Text of Proposed Rule Change.

(a) The proposed rule change consists of a revised letter of credit form as modified from time to time by the Unified Clearing Group ("UCG"). The current form of which is attached hereto as Exhibit A.

(b) Not applicable.

(c) Not applicable.

2. Procedures of the Self-Regulatory Organization.

(a) The proposed rule change does not require approval by NSCC’s Board of Directors.

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

(a) NSCC’s Rule 4 Section 1 permits NSCC to accept letters of credit in addition to cash and government securities for clearing fund purposes (originally approved as SR-NSCC-80-15). The proposed rule change would require that letters of credit delivered to NSCC on or after September 1, 1999 be the same as the uniform form of letter of credit (the "Uniform Letter of Credit") adopted by the UCG.

The Uniform Letter of Credit was developed to (i) foster uniformity among the various United States securities and futures clearing organizations with respect to the acceptable terms of letters of credit that are deposited as margin, and (ii) reduce operational burdens for industry participants and their letter of credit issuers.

In developing the Uniform Letter of Credit, the UCG consulted with several letter of credit issuing banks and the National Standby Letter of Credit Committee of the International Financial Services Association (formerly known as the US. Council on International Banking). In addition, various regulatory agencies, including the staffs of the Securities and Exchange Commission, the Commodity Futures Trading Commission and Board of Governors of the Federal Reserve System participated in the UCG meetings where the Uniform Letter of Credit was discussed.

The Uniform Letter of Credit consists of a covering page plus the uniform terms. All variable terms of the Uniform Letter of Credit - such as the name of the clearing member, beneficiary clearing corporation, issuing bank, the amount of the credit, the expiration date, etc. - are set forth on the cover page. To assist Members in completing the Uniform Letter of Credit, Members will be provided with general instructions which were also drafted by the UCG and supplemental instructions relating specifically to letters of credit furnished to NSCC. It is expected that form time to time modifications will be made to the Uniform Letter of Credit. If and when that occurs, NSCC will require its Members to use the revised form.

NSCC will accept letters of credit in the form of the Uniform Letter of Credit immediately, and as stated above will require that all letters of credit on deposit with NSCC as of September 1, 1999 must be in the form of the Uniform Letter of Credit.

(b) The proposed rule change is consistent with the requirements of the Securities Exchange Act of 1934, as amended (the "Act"), and the rules and regulations thereunder, since it will facilitate the prompt and accurate processing of transactions and fosters cooperation within the financial community.

4. Self-Regulatory Organization's Statement on Burden on Competition.

NSCC does not believe that the proposed rule change will have an impact on or impose a burden on competition.

5. 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. NSCC will notify the Commission of any written comments received by NSCC.

6. Extension of Time Period for Commission Action.

NSCC does not consent to an extension of the time period specified in Section 19(b)(2) of the Act for Commission action.

7. Basis for Summary Effectiveness Pursuant to Section 19(b)(3) or for Accelerated Effectiveness Pursuant to Section 19(b)(2).

(a) Not applicable.

(b) Not applicable.

(c) Not applicable.

(d) Not applicable.

8. Proposed Rule Change Based on Rules of Another Self-Regulatory Organization or of the Commission.

The proposed rule change is similar to that filed by The Options Clearing Corporation (SR-OCC-99-01).

9. Exhibits

Exhibit A - Uniform Letter of Credit.

Exhibit B - General Instructions.

Exhibit C - NSCC Supplemental Instructions.

Exhibit D - Notice of the proposed rule change for publication in the Federal Register.

Pursuant to the requirements of the Securities Exchange Act of 1934, the self-regulatory organization has duly caused this filing to be signed on its behalf by the undersigned thereunto duly authorized.

NATIONAL SECURITIES CLEARING CORPORATION

BY:_________________________________________

Karen L. Saperstein

Managing Director and General Counsel

The terms of this letter of credit shall be the UCG Uniform Letter of Credit Terms dated 4/16/99, including paragraphs 1 through 8 thereof and Exhibits A through F-2 thereto, which are incorporated herein by reference.

Very truly yours,

By: [Signature]

As Its: [Title].

1. (a) We, the Issuing Bank, hereby establish, effective immediately, in favor of you, the Beneficiary, our Irrevocable Standby Letter of Credit numbered as set forth on the Cover Page above ("Letter of Credit"), which is available for payment at sight upon presentation of a demand for payment as follows:

(i) hand delivery of your signed demand for payment containing the text of Exhibit A attached hereto at our office identified on the Cover Page as the primary office to which a demand is to be made ("Primary Office") or, if such Primary Office is not Open for Business because of an interruption of business as described in Article 17 of the UCP, then at one of the alternative offices (each an "Alternative Office") specified on the Cover Page (if any such office is specified); or

(ii) transmission by facsimile of your signed demand for payment containing the text of Exhibit A to the facsimile number specified on the Cover Page for our Primary Office or, if such Primary Office is not Open for Business because of an interruption of business as described in Article 17 of the UCP, then to the facsimile number specified on the Cover Page for an Alternative Office (if any such office is specified); or

(iii) transmission to us at our Primary Office or, if such Primary Office is not Open for Business because of an interruption of business as described in Article 17 of the UCP, then to an Alternative Office (if any such office is specified), of a S.W.I.F.T. MT 799 message containing the text of Exhibit A ; or

(iv) if the Amount specified on the Cover Page is in a currency other than U.S. Dollars, then a Demand may be made, at the election of the Beneficiary, either (A) in accordance with paragraph 1(a)(i), (ii) or (iii) hereof or (B) at the non-U.S. office specified on the Cover Page ("Non-U.S. Office") by presentation of your signed demand for payment containing the text of Exhibit A either by hand delivery or transmission by facsimile to the applicable facsimile number specified on the Cover Page for the Non-U.S. Office or by transmission to the Non-U.S. Office of a S.W.I.F.T. MT 799 message containing the text of Exhibit A.

Presentation of a demand for payment in accordance with paragraph 1(a)(i), (ii), (iii) or (iv) hereof is hereinafter referred to as a "Demand." The Issuing Bank agrees that it will promptly notify the Beneficiary of any change in the facsimile numbers referred to on the Cover Page via an amendment transmitted by Approved Means (as defined below) substantially in the form of Exhibit C attached hereto. A Demand made by facsimile transmission or S.W.I.F.T. is effective in accordance with the terms of this Letter of Credit whether or not it is accompanied or followed by a copy of such Demand in any other form. As used throughout this Letter of Credit and the Exhibits hereto, references to specific forms of S.W.I.F.T. messages shall be deemed to include references to any successor forms that may be designated by S.W.I.F.T. from time to time.

(b) Funds may be drawn under this Letter of Credit in one drawing or from time to time in one or more partial drawings on or before the Expiry Date specified on the Cover Page or in an amendment effected in accordance with paragraph 4 hereof, provided that the aggregate amount drawn shall not exceed the Amount specified on the Cover Page as it may be amended from time to time.

(c) A Demand in conformity with paragraph 1(a)(i), (ii) or (iv) hereof may be made at any time when our office to which presentation is made is Open for Business on or prior to the Expiry Date. A Demand in conformity with paragraph 1(a)(iii) hereof may be made at any time prior to 11:59 p.m. on the Expiry Date. Notwithstanding the foregoing, if: (i) this Letter of Credit is identified on its face as replacing a letter of credit previously issued by us, or (ii) you receive a letter of credit issued by us that is identified on its face as replacing this Letter of Credit, then, in either case, you may make a Demand or Demands under only one of the two letters of credit and the other letter of credit shall be terminated upon the making of any such Demand that is honored by us.

2. (a) Except to the extent otherwise provided in paragraph 2(f) hereof with respect to payment of currency other than U.S. Dollars, if a Demand is made by you on any Business Day at a time prior to the Cutoff Time (as specified on the Cover Page) when our office to which the Demand is made is Open for Business, we will effect payment in accordance with paragraph 2(c) hereof within 60 minutes after our receipt of such Demand. If your Demand occurs after the Cutoff Time on any Business Day or at a time when the office to which your Demand is made is not Open for Business, we will effect payment in accordance with paragraph 2(c) hereof as soon as possible thereafter but in any event within 60 minutes after the earliest time when such office is next Open for Business.

(b) If on the Expiry Date our Primary Office is not Open for Business for reasons other than an interruption of business as described in Article 17 of the UCP (hereinafter defined), payment will nevertheless be made within 60 minutes following your Demand if such Demand is made prior to the Cutoff Time on the third (3rd) Business Day on which such office is next Open for Business. If this Letter of Credit expires at a time when such office is not Open for Business because of an interruption of business as described in Article 17 of the UCP, we will make payment if a Demand that is otherwise in conformity with paragraph 1 is presented to us either: (i) at one of the Alternative Offices of the Issuing Bank specified on the Cover Page (including the Non-U.S. Office, if one is specified) not later than the third (3rd) Business Day on which such office is Open for Business following the Expiry Date, or (ii) at our Primary Office not later than the tenth (10th) Business Day after the date on which such office is again Open for Business.

(c) Not later than the time specified in paragraph 2(a) or 2(f) hereof , as applicable, we will, irrevocably and without setoff, reserve or other condition, effect payment of the full amount demanded by you in funds which are immediately available to you either: (i) by crediting such funds to the account in your name at our bank that is designated in the Demand; or (ii) by transmitting such funds by wire transfer to the account in your name at another bank that is designated by you in the Demand.

(d) As used in this Letter of Credit, (i) "Open for Business" shall mean, with respect to an office of the Issuing Bank, open to the public for the transaction of banking business on any day other than a Saturday, a Sunday or a banking holiday in the city where such office is located, and such office shall be deemed to continue to be "Open for Business" until such office is closed to the public for such day without regard to any earlier designated legal cut-off hour for the handling of items and balancing of books, and without regard to any reopening for limited purposes during late afternoon or evening hours on such day, and (ii) a "Business Day" shall mean, with respect to an office of the Issuing Bank, any day that such office is Open for Business.

(e) All times specified in this Letter of Credit refer to local time in effect at the office of the Issuing Bank at which presentation of a Demand is made.

(f) In the event that the Amount is in a currency other than U.S. Dollars and is payable at the Non-U.S. Office, the provisions of this paragraph 2(f) shall replace the provisions of paragraph 2(a) hereof. If a Demand is made either at our Primary Office or at the Non-U.S. Office, or at an Alternative Office when permitted under paragraph 2(b) hereof, on any Business Day at a time prior to the Cutoff Time when our office to which the Demand is made is Open for Business, we will, within 60 minutes after our receipt of such Demand, either effect payment or transmit to you by facsimile or by Approved Means, our irrevocable and unconditional commitment in the form of Exhibit B attached hereto ("Commitment") to honor your Demand, which Commitment shall specify the latest time by which payment will be effected. If your Demand occurs after the Cutoff Time on any Business Day or at a time when the office to which your Demand is made is not Open for Business, we will either effect such payment or transmit such Commitment as soon as possible thereafter but in any event within 60 minutes after the earliest time when such office is next Open for Business. In the case of any Demand made in accordance with this paragraph 2(f), we will effect payment in accordance with paragraph 2(c) hereof as soon as possible and in any event prior to the close of business at our office at which payment is to be effected on the Business Day next following the day on which such Commitment is due.

3. We agree with you that:

(a) The times set forth herein within which payment must be made by us are reasonable and sufficient to enable us: (i) to examine the text of the presented Demand so as to ascertain that on its face it complies with the terms of this credit; and (ii) thereafter to effect payment in accordance with the provisions of paragraph 2(c) hereof.

(b) Payment hereunder shall be made regardless of:

(i) any written or oral direction, request, notice or other communication now or hereafter received by us from the Applicant, or any other person except you, including, without limitation, any communication regarding fraud, forgery, lack of authority or other defect not apparent on the face of the signed Demand presented by you;

(ii) the solvency, existence or condition (financial or other) of, or the pendency of any proceeding under the United States Bankruptcy Code or any other insolvency law or the Securities Investor Protection Act with respect to, the Applicant or any other person or any property from whom or out of which we may be entitled to reimbursement for such payment, or the value of any such property; and

(iii) without limiting clause (ii) above, whether we are in receipt of or expect to receive funds or other property to use as payment to you or as reimbursement, in whole or in part, for such payment to you or whether the consideration for this Letter of Credit has been performed or has failed.

(c) We will not take any action, including but not limited to any action to cause the issuance of an order of any court, relieving us of our obligations, or determining whether or not we are obligated, to make payment in accordance with the terms of this Letter of Credit.

(d) All fees and other costs chargeable by us or otherwise associated with this Letter of Credit and any Demands or payments under this Letter of Credit or amendments thereto shall be for the account of the Applicant and shall not in any manner be a liability of yours, and failure of the Applicant or Clearing Member to pay any amount in respect hereof shall not affect our obligation to make payment to you hereunder.

(e) This Letter of Credit is the complete undertaking of the Issuing Bank and it is not, and shall not be deemed to be, modified by any references to any other document (except only the Exhibits attached hereto and the UCP, referenced below) or any written or oral agreement.

(f) The Beneficiary is not bound by, and the rights of the Beneficiary hereunder shall not be affected in any manner by, the existence of, or your knowledge or notice (whether actual or constructive) of, any written or oral agreement of any type, whether now or hereafter existing, with respect to this Letter of Credit (or otherwise) between us and the Applicant or any other person, or by the existence of, or your knowledge or notice (whether actual or constructive) of, any other matter.

(g) Failure of the Issuing Bank to make any payment demanded by the Beneficiary in conformity herewith within the times specified herein shall constitute dishonor of such Demand and of this Letter of Credit, notwithstanding any provision of law or any custom or usage of trade that would otherwise permit us to defer payment for a longer period of time without dishonor.

4. (a) Subject to all other provisions of this Letter of Credit, certain information on the Cover Page of this Letter of Credit may be amended by our transmission to you by Approved Means of an amendment containing the text of Exhibit C attached hereto, the stated amount of this Letter of Credit may be increased or decreased by our transmission to you by Approved Means of an amendment containing the text of Exhibit D attached hereto, and the Expiry Date may be amended by our transmission to you by Approved Means of an amendment containing the text of Exhibit E attached hereto. Any such amendment having the sole effect of (i) providing notice to the Beneficiary of any change in the address, facsimile number or telephone number for our Primary Office, an Alternative Office or the Non-U.S. Office specified on the Cover Page hereof, (ii) increasing the stated amount, or (iii) extending the Expiry Date of this Letter of Credit to an Expiry Date which is later than the then current Expiry Date shall be effective upon receipt by the Beneficiary. Any amendment that: (i) reduces the stated amount, or (ii) specifies an Expiry Date which is earlier than the then specified Expiry Date, shall be effective when and only when accepted by the Beneficiary by (i) returning to us an executed counterpart of a manually executed amendment, (ii) delivery of a tested telex indicating acceptance of such amendment, or (iii) delivery of a S.W.I.F.T. 730 message referring to such amendment that does not indicate that such amendment has been rejected.

(b) Except to the extent expressly provided in paragraph 4(a) hereof, this Letter of Credit may not be amended by us without your consent.

(c) For purposes of this Letter of Credit, "Approved Means" refers to any one of the means of transmission identified as an "Approved Means" on the Cover Page of this Letter of Credit.

5. (a) This Letter of Credit is transferable to the extent, and only to the extent, provided in this paragraph 5 and in Exhibits F-1 and F-2 attached hereto.

(b) Except as provided in paragraph 5(e) hereof, the Beneficiary named on the Cover Page at the date of issuance of this Letter of Credit ("Original Beneficiary") may transfer the right to draw, in a single draw or one or more partial draws, the entire amount available to be drawn under this Letter of Credit (but not less than such entire amount). Such transfer shall be effective upon delivery to us at our Primary Office specified on the Cover Page of a transfer of this Letter of Credit in the form of Exhibit F-1 attached hereto, appropriately completed and manually executed by the Original Beneficiary.

(c) The transferee under any transfer pursuant to paragraph 5(b) hereof ("Transferee") shall not be entitled to transfer this Letter of Credit except, subject to paragraph 5(e) hereof, to transfer this Letter of Credit back to the Original Beneficiary. Each such transfer shall be effective upon such Transferee's hand delivery to us at our Primary Office specified on the Cover Page of a fully executed transfer in the form of Exhibit F-2 attached hereto. Upon our receipt of any such transfer back to the Original Beneficiary by a Transferee, such Transferee shall cease to have the status of a Transferee under this Letter of Credit and the Original Beneficiary may again transfer this Letter of Credit as provided in this paragraph 5.

(d) Neither the Original Beneficiary nor the Transferee shall be charged any fee by us in connection with any transfer under this paragraph 5.

(e) This Letter of Credit may not be transferred if: (i) it is identified on its face as replacing another letter of credit issued by us and such other letter of credit has not expired or was drawn upon prior to its expiration; or (ii) the Original Beneficiary or Transferee seeking to effect such transfer has received a letter of credit issued by us that indicates on its face that it is replacing this Letter of Credit.

6. Except to the extent that the right of the Transferee to transfer this Letter of Credit is limited as set forth in paragraph 5 hereof, the Transferee shall be the Beneficiary hereunder unless and until this Letter of Credit is transferred back to the Original Beneficiary.

7. This Letter of Credit is subject to the Uniform Customs and Practice for Documentary Credits (1993 Revision), International Chamber of Commerce Publication No. 500 (the "UCP") and to the law of the jurisdiction selected on the Cover Page hereof including , if the jurisdiction selected is Illinois, the Uniform Commercial Code ("UCC") as in effect in Illinois. In the event of any conflict between the express terms stated herein and the UCP or the UCC, the terms of this Letter of Credit shall control, and in the event of any conflict between the terms of the UCC and the UCP, the terms of the UCP shall control.

8. If the jurisdiction selected on the Cover Page hereof is New York, we irrevocably and unconditionally submit to the non-exclusive jurisdiction of the United States District Court for the Southern District of New York or any New York State court sitting in New York County, New York in respect of any action brought against us relating in any way to this letter of credit. If the jurisdiction selected on the Cover Page hereof is Illinois, we irrevocably and unconditionally submit to the non-exclusive jurisdiction of the United States District Court for the Northern District of Illinois or any court of the State of Illinois sitting in Cook County, Illinois in respect of any action brought against us relating in any way to this letter of credit. We irrevocably and unconditionally waive any objection to the laying of venue in the courts designated in accordance with the foregoing provisions of this paragraph. We agree not to, and irrevocably and unconditionally waive any right we might otherwise have to, bring any action or proceeding against you or your Transferee in any forum other than in one of such courts; provided, however, that in any action or proceeding that you or your Transferee brings against us in any forum, we may bring our responsive proceeding in that same forum.

To: [Name of Issuing Bank] Date _______________________

 

NOTICE TO ISSUING BANK: PAYMENT OR, IN THE CASE OF CREDITS PAYABLE IN CURRENCY OTHER THAN USD, IRREVOCABLE COMMITMENT TO HONOR IS DUE WITHIN 60 MINUTES OF RECEIPT OF THIS DEMAND.

 

Pursuant to your Irrevocable Standby Letter of Credit No. ____________, issued _____________ (the "Letter of Credit"), established for the account of __________________, as Applicant, demand is hereby made that ___________ [specify amount and currency] be [deposited in immediately available funds to account number_________ carried in our name at your Bank] [transferred via wire transfer (Fedwire in the case of USD)in immediately available funds to account number ___________________carried in our name at __________________ ] within 60 minutes of your receipt of this demand or by such later time as may be permitted under paragraph 2(a) or 2(f) of the Letter of Credit. If we are a Transferee of the Letter of Credit, we hereby certify to you that we are entitled to draw the above sum as Transferee.

 

Very truly yours,

 

[Name of Beneficiary]

 

 

By: [Signature]

[Name Typed or Printed]

 

As its: [Title]

 

 

To: [Name of Beneficiary] Date _______________________

This is notice to you that we irrevocably and unconditionally commit ourselves to honor your Demand and will effect payment of the amount demanded, without presentment of this or any other document or any further action on your part, to the account specified in the Demand no later than: _______ local time in on ____________, ______.

This document is not an "instrument" governed by Article 3 of the Uniform Commercial Code.

Very truly yours,

By: [Signature]

As its: [Title]

Exhibit C

To: [Name of Beneficiary] Date: _________________________

Please take notice that certain information on the Cover Page of our Irrevocable Standby Letter of Credit No. ________, issued _______________, ("Letter of Credit") is hereby amended as follows (leave blank if no change):

Issuing Bank Primary Office: Alternative Office 1:

Address: Address:

Telephone number: Telephone number:

Facsimile number: Facsimile number:

S.W.I.F.T. Bank Identifier No. S.W.I.F.T. Bank Identifier No.

Alternative Office 2:

Address:

Telephone number:

Facsimile number:

S.W.I.F.T. Bank Identifier No.

Address:

Telephone number:

Facsimile number

S.W.I.F.T. Bank Identifier No.

This amendment is effective upon your receipt following our transmission of it to you via Approved Means (as defined in the Letter of Credit).

Very truly yours,

By: [Signature]

As its: [Title]

Exhibit D

To: [Name of Beneficiary] Date: ____________________________

Please take notice that our Irrevocable Standby Letter of Credit No. _____________, issued ____________ ("Letter of Credit") is hereby amended as follows:

The stated amount is increased/decreased (strike one) by ____________ to a new stated amount of ____________________________ (______________________).

This amendment is effective when, and only when, accepted by you as provided in the Letter of Credit unless the only effect of this amendment is to increase the stated amount of the Letter of Credit, in which case it is effective upon your receipt following our transmission of it to you via Approved Means (as defined in the Letter of Credit).

Very truly yours,

By: [Signature]

As its: [Title]

Accepted:

By: [Signature]

As Its: [Title]

Date:

To : [Name of Beneficiary] Date: _________________________

 

Please take note that our Irrevocable Standby Letter of Credit No. ____________, issued _____________ (the "Letter of Credit"), is hereby amended to amend the Expiry Date as follows:

The new Expiry Date is: .

This amendment is effective when, and only when, accepted by you as provided in the Letter of Credit unless the only effect of this amendment is to extend the Letter of Credit by specifying an Expiry Date which is later than the current Expiry Date, in which case it is effective upon your receipt following our transmission of it to you via Approved Means (as defined in the Letter of Credit).

Very truly yours,

By: [Signature]

As its: [Title]

Accepted:

By: [Signature]

As its: [Title]

Date:

Exhibit F-2

To: [Name of Issuing Bank] Date:______________________

The undersigned Transferee hereby transfers to:

[Name of Original Beneficiary]
[Address]
[Telephone Number]

all of the rights of the undersigned Transferee to draw under the Irrevocable Standby Letter of Credit No. _____________, issued _______________, ("Letter of Credit") in their entirety.

By this transfer, all rights of the Transferee are transferred to the above named Original Beneficiary, who shall hereafter be the Beneficiary for all purposes, and the Transferee shall have no further rights as Transferee thereof, including rights relating to any amendments, and whether now existing or hereafter made.

The Cover Page of the Letter of Credit is returned herewith, and Transferee asks the Issuing Bank to endorse the transfer on the reverse thereof and forward it directly to the Original Beneficiary with the Issuing Bank's customary notice of transfer. The Issuing Bank's endorsement of such transfer shall constitute its representation to the Original Beneficiary that neither of the conditions referred to in paragraph 5(e) of the Letter of Credit exists.

Very truly yours,

By: [Signature]

As its: Title

The undersigned, [name of certifying officer of Transferee], does hereby certify:

1. That the undersigned is the presently serving and duly elected [title of certifying officer] of Transferee; and

2. That the person whose name and signature appear above is personally known to the undersigned as the presently serving and duly elected [title of individual signing above on behalf of Original Beneficiary] of Transferee.

[Name of certifying officer]

Date: __________________

Exhibit B

UNIFIED CLEARING GROUP

UNIFORM FORM OF IRREVOCABLE STANDBY LETTER OF CREDIT

Instructions for issuance of a Letter of Credit ("LC") on UCG Uniform Letter of Credit Form (dated 4/16/99):

1. Applicability: The UCG Uniform Letter of Credit Form (4/16/99) was developed by the Unified Clearing Group, in consultation with the U.S. Committee on International Banking, in order to provide a uniform form for the issuance of credits to the U.S. securities and futures clearing organizations that are members of the group and that accept letters of credit to support the obligations of their members. Except to supply the information required on the Cover Page of the form, the text of the form LC shall not be altered in any way by the Issuing Bank without express notice to and consent of the Beneficiary. These instructions do not form a part of an LC issued on the form.

2. Cover Page: The Bank shall complete the information on the Cover Page of the LC in accordance with these General Instructions and in accordance with any "Supplemental Instructions" provided by the clearing organization to which the LC is being issued (the "Original Beneficiary"). Material set forth in brackets and bold italics should be omitted and replaced with the information requested. Information should be supplied under the following items as follows:

3. UCG Uniform Letter of Credit Terms: The terms of the LC are set forth in the UCG Uniform Letter of Credit Terms dated 4/16/99, including paragraphs 1 through 8 thereof and Exhibits A through F-2 thereto. The pre-printed UCG Uniform Letter of Credit Terms dated 4/16/99 must be attached to the Cover Page of each Letter of Credit unless the Beneficiary Clearing Organization specifies otherwise in its Supplemental Instructions.

4. Exhibits: Alternative language in, and supplemental information required by, the form of Demand and forms of various amendments that are set forth as Exhibits to the Uniform Letter of Credit Terms are to be selected or supplied at the time the Exhibits are used.

Exhibit C

NSCC Supplemental Instructions Insert

NSCC Supplemental Instructions Insert

Exhibit D

SECURITIES AND EXCHANGE COMMISSION

(Release No. 34- ; File No. SR-NSCC-99-5)

Proposed Rule Change by NATIONAL SECURITIES CLEARING CORPORATION ("NSCC"). Comments requested within days after the date of this publication.

___________________________________

Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934, 15 U.S.C. 78s(b)(1), notice is hereby given that on , NSCC filed with the Securities and Exchange Commission ("Commission") the proposed rule change as described in Items I, II, and III below, which Items have been prepared by NSCC. 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 consists of a revised letter of credit form as modified from time to time by the Unified Clearing Group¹ ("UCG").

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 such statements.

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

(a) NSCC’s Rule 4 Section 1 permits NSCC to accept letters of credit in addition to cash and government securities for clearing fund purposes (originally approved as SR-NSCC-80-15). The proposed rule change would require that letters of credit delivered to NSCC on or after September 1, 1999 be the same as the uniform form of letter of credit (the "Uniform Letter of Credit") adopted by the UCG.

The Uniform Letter of Credit was developed to (i) foster uniformity among the various United States securities and futures clearing organizations with respect to the acceptable terms of letters of credit that are deposited as margin, and (ii) reduce operational burdens for industry participants and their letter of credit issuers.

In developing the Uniform Letter of Credit, the UCG consulted with several letter of credit issuing banks and the National Standby Letter of Credit Committee of the International Financial Services Association (formerly known as the US. Council on International Banking). In addition, various regulatory agencies, including the staffs of the Securities and Exchange Commission, the Commodity Futures Trading Commission and Board of Governors of the Federal Reserve System participated in the UCG meetings where the Uniform Letter of Credit was discussed.

The Uniform Letter of Credit consists of a covering page plus the uniform terms. All variable terms of the Uniform Letter of Credit - such as the name of the clearing member, beneficiary clearing corporation, issuing bank, the amount of the credit, the expiration date, etc. - are set forth on the cover page. To assist Members in completing the Uniform Letter of Credit, Members will be provided with general instructions which were also drafted by the UCG and supplemental instructions relating specifically to letters of credit furnished to NSCC. It is expected that form time to time modifications will be made to the Uniform Letter of Credit. If and when that occurs, NSCC will require its Members to use the revised form.

NSCC will accept letters of credit in the form of the Uniform Letter of Credit immediately, and as stated above will require that all letters of credit on deposit with NSCC as of September 1, 1999 must be in the form of the Uniform Letter of Credit.

(b) The proposed rule change is consistent with the requirements of the Securities Exchange Act of 1934, as amended (the "Act"), and the rules and regulations thereunder, since it will facilitate the prompt and accurate processing of transactions and fosters cooperation within the financial community.

B. Self-Regulatory Organization's Statement on Burden on Competition.

NSCC 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. 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.

Within 35 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 90 days of such date if it finds such longer period to be appropriate and publishes its reason 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. Persons making written submissions should file six copies thereof with the Secretary, Securities and Exchange Commission, 450 Fifth Street N.W., Washington, D.C. 20549. 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 provisions of 5. U.S.C. 552, will be available for inspection and copying in the Commission's Public Reference Section, 450 Fifth Street N.W., Washington, D.C. 20549. 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 the file number in the caption above and should be submitted within days after the date of this publication.

For the Commission by the Division of Market Regulation, pursuant to delegated authority.

Dated: