[Federal Register Volume 63, Number 85 (Monday, May 4, 1998)]
[Notices]
[Pages 24584-24585]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-11745]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-39924; File No. SR-DTC-98-01]
Self-Regulatory Organizations; The Depository Trust Company;
Order Granting Accelerated Approval of Proposed Rule Change to Conform
DTC's Rules to Revised Article 8 of the Uniform Commercial Code of the
State of New York
April 27, 1998.
On January 14, 1998, The Depository Trust Company (``DTC'') filed
with the Securities and Exchange Commission (``Commission'') a proposed
rule change (File No. SR-DTC-97-14) pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (``Act'').\1\ Notice of the proposal
was published in the Federal Register on April 14, 1998.\2\ The
Commission received no comment letters in response to the filing. For
the reasons discussed below, the Commission is granting accelerated
approval of the proposed rule change.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ Securities Exchange Act Release No. 39836 (April 7, 1998),
63 FR 18239.
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I. Description
The rule change amends DTC's rules to make them consistent with
revised Article 8 of the Uniform Commercial Code (``UCC'') as adopted
by the State of New York. Generally, the revisions to Article 8, which
governs the transfer of securities, reflect that the transfer of
ownership of securities and other investment vehicles are no longer
effected by the delivery and holding of certificates. Instead,
securities are transferred by debits and credits to securities accounts
maintained by securities intermediaries. The rule change adds new
terminology to DTC's rules,\3\ revises certain definitions,\4\ and
deletes section references based on the prior version of Article 8. The
amendments do not change the substance or meaning of DTC's current
rules.
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\3\ The proposed rule change will add the following terms to
DTC's rules: (1) Certificated security; (2) control; (3) deposit;
(4) entitlement holder; (5) entitlement order; (6) free pledge; (7)
free release; (8) NYUCC; (9) person; (10) pledge; (11) pledge versus
payment; (12) release; (13) release versus payment; (14) security
entitlement; (15) security certificate; (16) uncertificated
security; and (17) withdrawal.
\4\ The proposed rule change will make technical revisions to
the following terms: (1) Clearing agency agreement; (2) deliverer;
(3) delivery; (4) deposited security; (5) incomplete transaction;
(6) instructor; (7) minimum amount securities; (8) net addition
securities; (9) participant; (10) payee; (11) payor; (12) pledge
security; (13) pledgee; (14) pledgor; (15) receiver; (16) securities
account; (17) security; (18) segregated account; and (19) settlement
amount.
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The rule change also amends DTC Rule 20 to specifically state that
DTC's board of directors may be resolution delegate to the chairman of
the board the power to approve fees and charges.
II. Discussion
Section 17A(b)(3)(F) \5\ of the Act requires that the rules of a
clearing agency be designed to assure the safeguarding of securities
and funds which are in the custody or control of the clearing agency or
for which it is responsible. The Commission believes that the proposed
rule changes are consistent with this requirement because by conforming
its rules to the revised Article 8 of the UCC, DTC should help maintain
certainty with respect to the substantive rights and obligations under
New York State's version of the UCC that are applicable to DTC and its
participants.
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\5\ 15 U.S.C. 78q-1(b)(3)(F).
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The Commission also believes that providing DTC's board of
directors with the authority to delegate to the chairman of the board
the power to approve fees and charges is consistent with this
requirement because it allows DTC's board to act more expeditiously.
DTC has requested that the Commission find good cause for approving
the proposed rule change prior to the thirtieth day after the date of
publication of notice of the filing. The Commission finds good cause
for approving the proposed rule change prior to the thirtieth day after
publication in order to enable DTC to revise its rules to be consistent
with New York State's version of Article 8 of the UCC as soon as
possible.\6\
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\6\ The staff of the Board of Governors of the Federal Reserve
System has concurred with the Commission's granting of accelerated
approval. Telephone conversation between Kristen Wells, Senior
Analyst, Division of Reserve Bank Operations, Board of Governors of
the Federal Reserve System, and Jeffrey Mooney, Special Counsel,
Division of Market Regulation, Commission (April 24, 1998).
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III. Conclusion
On the basis of the foregoing, the Commission finds that the
proposal is consistent with the requirements of the Act and in
particular with the requirements of Section 17A of the Act and the
rules and regulations thereunder.
It is therefore ordered, pursuant to Section 19(b)(2) of the Act,
that the proposed rule change (File No. SR-DTC-98-01) be, and hereby
is, approved on an accelerated basis.
[[Page 24585]]
For the Commission by the Division of Market Regulation, pursuant
to delegated authority.\7\
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\7\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 98-11745 Filed 5-1-98; 8:45 am]
BILLING CODE 8010-01-M
