[Federal Register Volume 62, Number 5 (Wednesday, January 8, 1997)]
[Notices]
[Pages 1139-1140]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-385]
=======================================================================
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-38107; File Nos. SR-SCCP-96-11 and SR-Philadep-96-21]
Self-Regulatory Organizations; Stock Clearing Corporation of
Philadelphia; Philadelphia Depository Trust Company; Notice of Filing
and Order Granting Accelerated Approval of Proposed Rule Changes
Relating to Participants Fund Contributions for Inactive Account(s)
December 31, 1996.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ notice is hereby given that on November 15, 1996, the
Stock Clearing Corporation of Philadelphia (``SCCP'') and the
Philadelphia Depository Trust Company (``Philadep'') filed with the
Securities and Exchange Commission (``Commission'') the proposed rule
changes (File Nos. SR-SCCP-96-11 and SR-Philadep-96-21) as described in
Items I and II below, which items have been prepared primarily by SCCP
and Philadep. The Commission is publishing this notice and order to
solicit comments from interested persons and to grant accelerated
approval of the proposed rule change.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
---------------------------------------------------------------------------
I. Self-Regulatory Organizations' Statement of the Terms of Substance
of the Proposed Rule Changes
The proposed rule change seeks permanent approval of SCCP's and
Philadep's participants fund formulas with respect to inactive accounts
and the account monitoring procedures related to such inactive
accounts. The Commission previously approved these formulas and account
monitoring procedures on a temporary basis through December 31,
1996.\2\
---------------------------------------------------------------------------
\2\ Securities and Exchange Act Release No. 37554 (August 9,
1996), 61 FR 42929 [File Nos. SR-SCCP-96-03 and SR-Philadep-96-07]
(order granting temporary approval of proposed rule changes to
establish separate participant categories for inactive accounts).
---------------------------------------------------------------------------
II. Self-Regulatory Organizations' Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Changes
In its filing with the Commission, SCCP and Philadep included
statements concerning the purpose of and basis for the proposed rule
change and discussed any comments that it received on the proposed rule
change. The text of these statements may be examined at the places
specified in Item IV below. SCCP and Philadep have prepared summaries,
set forth in sections (A), (B), and (C) below, of the most significant
aspects of such statements.\3\
---------------------------------------------------------------------------
\3\ The Commission has modified the text of the summaries
submitted by SCCP and Philadep.
---------------------------------------------------------------------------
(A) Self-Regulatory Organizations' Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Changes
The proposed rule change seeks permanent approval of amendments to
both SCCP's and Philadep's Rule 1 and Rule 4 governing (i) the $5,000
minimum cash participants fund contribution for inactive accounts and
(ii) the inactive account monitoring procedures designed to detect and
collect additional participants fund contributions when an inactive
account
[[Page 1140]]
becomes active. The Commission previously approved these participants
fund formulas, the procedures monitoring levels of account activity,
and the procedures for collecting additional participants fund
contributions on a temporary basis through December 31, 1996.\4\
Throughout the temporary approval period, SCCP and Philadep have
provided monthly reports to the Commission detailing inactive account
activity. At this time, SCCP and Philadep are requesting that the
Commission grant permanent approval to the inactive account
participants fund contribution and the inactive account monitoring
procedures.
---------------------------------------------------------------------------
\4\ For a complete discussion of SCCP's and Philadep's inactive
account rules and procedures, refer to Securities and Exchange Act
Release No. 37554, supra note 2.
---------------------------------------------------------------------------
SCCP and Philadep believe the proposed rule change is consistent
with the requirements of Section 17A of the Act and the rules and
regulations thereunder because the rule proposal will promote the
prompt and accurate clearance and settlement of securities transactions
and will assure the safeguarding of securities and funds in the custody
or control of SCCP and Philadep or for which SCCP and Philadep are
responsible.
(B) Self-Regulatory Organizations' Statement on Burden on Competition
SCCP and Philadep do not believe that the proposed rule changes
will impact or impose a burden on competition.
(C) Self-Regulatory Organizations' Statement on Comments on the
Proposed Rule Changes Received From Members, Participants, or Others
No written comments have been solicited or received. SCCP and
Philadep will notify the Commission of any written comments received by
SCCP and Philadep.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Section 17A(b)(3)(F) 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.\5\ The Commission believes the proposed
rule changes are consistent with SCCP's and Philadep's obligations
under Section 17A(b)(3)(F) because in connection with establishing
separate participant categories designed for participants that conduct
limited activity, the proposals establish procedures to monitor the
level of activity in those participants accounts and procedures to
collect additional participants fund deposits if the activity in the
accounts increase above certain thresholds.
---------------------------------------------------------------------------
\5\ 15 U.S.C. 78q-1(b)(3)(F).
---------------------------------------------------------------------------
SCCP and Philadep have established new surveillance procedures to
monitor inactive participants' accounts to ensure that inactive
participants are not able to conduct levels of activity above the
inactive account thresholds without depositing additional funds.
Pursuant to the temporary approval order, SCCP and Philadep have
submitted on a monthly basis reports detailing the number of inactive
participants, the value of their participants fund deposits, and the
total activity in each inactive account for the prior month. After
review of the monthly reports, the Commission believes that it is
appropriate to grant permanent approval of the proposals. The inactive
accounts reflect a small volume of activity that the Commission
currently believes is adequately covered by the inactive account
minimum participants funds deposit. Additionally, SCCP's and Philadep's
procedures provide for the monitoring of activity in those participant
accounts and the prompt collection of additional funds as the level of
activity nears the maximum level of activity allowed in an inactive
participants account.
However, SCCP and Philadep are to continue to submit on a monthly
basis reports detailing the number of inactive participants, the value
of their participants fund deposits, the total activity in each
inactive account for the prior month, and the steps taken in the event
that an inactive participant exceeded the inactive thresholds or became
active. SCCP and Philadep must continue to submit such reports to the
Commission so that the Commission can continue to monitor SCCP's and
Philadep's administration of these new surveillance procedures
established under these proposed rule changes.
SCCP and Philadep have requested that the Commission find good
cause for approving the proposed rule changes prior to the thirtieth
day after the date of publication of notice of the filing. Because
accelerated approval will enable SCCP and Philadep to keep in place
without interruption their inactive participant procedures, the
Commission finds good cause for approving the proposed rule changes
prior to the thirtieth day after the date of publication of notice of
filing.\6\
---------------------------------------------------------------------------
\6\ The staff of the Board of Governors of the Federal Reserve
System has concurred with the Commission's granting of accelerated
approval of Philadep's proposed rule change. Telephone conversation
between John Rudolph, Board of Governors of the Federal Reserve
System, and Chris Concannon, Staff Attorney, Division of Market
Regulation, Commission (December 30, 1996).
---------------------------------------------------------------------------
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 the provisions
of 5 U.S.C. 552, will be available for inspection and copying in the
Commission's Public Reference Room, 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 SCCP and Philadep. All
submissions should refer to the file number SR-SCCP-96-11 and SR-
Philadep-96-21 and should be submitted by January 29, 1997.
It is therefore ordered, pursuant to Section 19(b)(2) of the Act,
that the proposed rule change (File No. SR-SCCP-96-11 and SR-Philadep-
96-21) be, and hereby are, approved.
For the Commission by the Division of Market Regulation,
pursuant to delegated authority.\7\
---------------------------------------------------------------------------
\7\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 97-385 Filed 1-7-97; 8:45 am]
BILLING CODE 8010-01-M
