[Federal Register Volume 60, Number 8 (Thursday, January 12, 1995)]
[Notices]
[Pages 3015-3017]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-814]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-35193; File No. SR-PSE-94-27]
Self-Regulatory Organizations; Pacific Stock Exchange
Incorporated; Notice of Filing of Proposed Rule Change Relating to
Implementation of a Three-Day Settlement Standard
January 4, 1995.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ notice is hereby given that on December 19, 1994, the
Pacific Stock Exchange Incorporated (``PSE'') filed with the Securities
and Exchange [[Page 3016]] Commission (``Commission'') a proposed rule
change as described in Items I, II, and III below, which items have
been prepared primarily by PSE. The Commission is publishing this
notice to solicit comments on the proposed rule change from interested
persons.
\1\15 U.S.C. Sec. 78s(b)(1) (1988).
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
PSE proposed to modify its rules to implement a three business day
settlement standard for securities transactions.
II. Self-Regulatory Organization's Statement Regarding the Proposed
Rule Change
In its filing with the Commission, PSE 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. The PSE 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
On October 6, 1993, the Commission adopted Rule 15c6-1 under the
Act which establishes three business days after the trade date
(``T+3'') instead of five business days (``T+5'') as the standard
settlement cycle for most securities transactions.\2\ The rule will
become effective June 7, 1995.\3\ In the release adopting Rule 15c6-1,
the Commission concluded that a T+3 settlement cycle, as compared to
the current T+5 settlement cycle, will reduce credit and liquidity
risks and will increase efficiency in broker-dealer and clearing agency
operations. Accordingly, in order to accommodate the implementation of
the new settlement standard established by the Commission's Rule 15c6-
1, PSE will amend the following rules.
\2\Securities Exchange Act Release No. 33023 (October 6, 1993),
58 FR 52891.
\3\Securities Exchange Act Release No. 34952 (November 9, 1994),
59 FR 59137.
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Rule 5.7 currently provides that transactions in stocks traded
``regular'' shall be ``ex-dividend'' or ``ex-rights'' as the case may
be, on the fourth business day preceding the record date fixed by the
company or the date of the closing of transfer books, except when the
Board rules otherwise. PSE is proposing to replace the term ``fourth''
in this provision with the term ``second.'' Rule 5.7 also currently
provides that should such record date or such closing of transfer books
occur upon a day other than a business day this rule shall apply for
the fifth preceding business day. The PSE is proposing to replace the
term ``fifth'' in this provision with the term ``third.''
Rule 5.9(a)(2) currently provides that for transactions settling on
a ``regular way'' basis, bids and offers in securities admitted to
dealings on an ``issued'' basis shall be made for delivery on the fifth
business day following the day of the contract. The PSE proposes to
replace the term ``fifth'' with the term ``third.''
Rule 5.9(a)(3) currently provides that for transactions settling on
a ``seller's option'' basis, bids and offers in securities admitted to
dealings on an ``issued'' basis shall be made for delivery at the
option of the seller within the time specified in the option, which
time shall be not less than six business days nor more than sixty days
following the date of the contract, except that the PSE may provide
otherwise in specific issues of securities. The PSE proposes to replace
the term ``sixth'' in this rule with the term ``fourth.''
Rule 5.9(a)(4) currently provides that for transactions settling on
a ``next day'' basis, bids and offers in securities admitted to
dealings on an ``issued'' basis shall be made for delivery on the next
full business day following the day of the contract. For rights and
warrants this rule generally is applicable only during the five
business days preceding the final day for trading therein. The PSE
proposes to replace the term ``fifth'' in this rule with the term
``third.''
Rule 9.12(a)(4) currently provides that no member organization
shall grant delivery versus payment (``DVP'') or receipt versus payment
(``RVP'') privileges to a customer without obtaining an agreement from
the customer to provide instructions to its agent no later than the
fourth day after the trade date for RVP trades or no later than the
third business day after trade date for DVP trades. The PSE proposes to
shorten these time frames to the second day after trade date for RVP
trades and the first day after trade date for DVP trades.
Finally, the PSE has agreed to an implementation plan proposed by
the National Securities Clearing Corporation (``NSCC'') for transition
to a T+3 settlement cycle.\4\ The schedule is as follows.
\4\NSCC will use two double-settlement days for the conversion.
The first double-day settlement, scheduled for Friday, June 9, will
incorporate trades from Friday, June 2 (the last T+5 settlement day)
and from Monday, June 5 (a T+4 settlement day). The second double-
day settlement, scheduled for Monday, June 12, will include trades
from Tuesday, June 6 (a T+4 settlement day) and from Wednesday, June
7 (the first T+3 settlement day).
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Settlement
Trade date cycle Settlement date
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June 2 Friday......................... 5 day June 9 Fri.
June 5 Monday......................... 4 day June 9 Fri.
June 6 Tuesday........................ 4 day June 12 Mon.
June 7 Wednesday...................... 3 day June 12 Mon.
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If the Commission determines to alter the exemptions currently
provided in Rule 15c6-1, the PSE may be required to file additional
rule amendments.
The PSE believes that the proposal is consistent with Section 6(b)
of the Act in general and furthers the objectives of Section 6(b)(5) in
particular in that it is designed to foster cooperation and
coordination with persons engaged in regulating, clearing, settling,
processing information with respect to, and facilitating transactions
in securities.
B. Self-Regulatory Organization's Statement on Burden on Competition
PSE does not believe that the proposed rule change will impose any
burden on competition that is not necessary or appropriate in
furtherance of the purposes of the Act.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants or Others
No written comments were either solicited or received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Within thirty-five 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 ninety days of such date if it finds
such longer period to be appropriate and publishes its reasons for so
finding or (ii) as to which the PSE 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
[[Page 3017]] 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 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,
N.W., Washington, DC. 20549. Copies of such filing also will be
available for inspection and copying at the principal office of the
PSE. All submissions should refer to File No. SR-PSE-94-27 and should
be submitted by February 21, 1995.
For the Commission by the Division of Market Regulation,
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 95-814 Filed 1-11-95; 8:45 am]
BILLING CODE 8010-01-M
