[Federal Register Volume 60, Number 211 (Wednesday, November 1, 1995)]
[Notices]
[Pages 55629-55630]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-27002]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-36405; File No. SR-PTC-95-07]
Self-Regulatory Organizations; Participants Trust Company; Notice
of Filing and Order Granting Accelerated Approval of a Proposed Rule
Change Establishing a Ninety Day Pilot Program for the Change of the
Opening of Processing Activity for Security Transactions
October 20, 1995.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ notice is hereby given that on October 11, 1995, the
Participants Trust Company (``PTC'') filed with the Securities and
Exchange Commission (``Commission'') the proposed rule change (File No.
SR-PTC-95-07) as described in Items I and II below, which Items have
been prepared primarily by PTC. The Commission is publishing this
notice and order to solicit comments from interested persons and to
grant accelerated approval of the proposed rule change for a ninety day
period.
\1\15 U.S.C. 78s(b)(1) (1988).
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The proposed rule change establishes a ninety day pilot program for
the opening of security processing activity at 8:30 a.m. instead of at
the present time of 7:00 a.m. The pilot program is scheduled to begin
on October 23, 1995, and will continue through January 21, 1996.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, PTC 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. Summaries of the most significant aspects of such
statements are set forth in sections A, B, and C below.\2\
\2\The Commission has modified the text of the summaries
prepared by PTC.
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A. Self-Regulatory Organization's Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule Change
The purpose of the proposed rule change is to establish a ninety
day pilot program for the opening of security processing activity at
8:30 a.m. instead of at the present time of 7:00 a.m. The pilot program
is scheduled to begin on October 23, 1995. The current end-of-day cut-
off times will remain unchanged. PTC's processing system will retain
the 7:00 a.m. opening time for purposes of participant log-ons and
intraparticipant movements of securities into or out of segregated
accounts.
The proposed rule change will conform the opening of processing
activity at PTC to the opening time of the Federal Reserve System's
fedwire. This will eliminate the hour and a half window during which
time transactions failing PTC's credit checks cannot be processed
because participants are unable to move funds to PTC (``prefunding'')
until the 8:30 fedwire opening. The incidence of transactions that may
require prefunding in order to pass credit checks during this period is
expected to increase after the implementation of PTC/SPEED processing
Release 5.6, which will eliminate the posting of securities to a
participant's abeyance account while awaiting match by the receiving
participant. Under SPEED Release 5.6, the abeyance account is being
eliminated, and transactions will be immediately posted to the
deliverer's and receiver's account.\3\
\3\For further information on SPEED Release 5.6 and changes to
PTC's processing system, refer to Securities Exchange Act Release
No. 36377 (October 16, 1995) [File No. SR-PTC-95-06] (notice of
filing of proposed rule change).
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The pilot program is scheduled to begin on October 23, 1995, in
order to permit its implementation sufficiently prior to November 6,
1995, the earliest date on which SPEED Release 5.6 may be implemented.
PTC anticipates that the later opening of processing activity will have
no impact on the settlement process. PTC will monitor any effects of
the change during the ninety day period and will file a proposed rule
change with the Commission prior to implementing the later opening of
processing activity beyond the ninety day period. Should PTC decide not
to implement 8:30 a.m. as the opening of its security processing
activity permanently at the end of the ninety day period, the opening
of PTC's security processing activity will revert to 7:00 a.m. without
further rule filings with the Commission. In such a
[[Page 55630]]
situation, even though PTC will not be required to make a rule filing,
PTC will notify the Commission of its intention to reinstitute the 7:00
a.m. opening. Furthermore, PTC will notify its participants
sufficiently in advance of a return to the 7:00 a.m. opening.
PTC believes that the proposed rule change is consistent with
Section 17A(b)(3)(F) of the Act\4\ and the rules and regulations
thereunder because it facilitates the prompt and accurate clearance and
settlement of securities transactions and provides for the safeguarding
of securities and funds in PTC's custody or control or for which PTC is
responsible.
\4\15 U.S.C. 78q-1(b)(3)(F) (1988).
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B. Self-Regulatory Organization's Statement on Burden on Competition
PTC does not believe that the proposed rule change imposes any
burden on competition.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received from Members, Participants, or Others
PTC has not received written comments on the proposed rule change.
PTC is formally soliciting participant response contemporaneous with
this filing.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Section 17A(b)(3)(F) of the Act\5\ requires that the rules of a
clearing agency be designed to promote the prompt and accurate
clearance and settlement of securities transactions and to assure the
safeguarding of securities and funds in the custody or control of the
clearing agency or for which it is responsible. The Commission believes
that conforming the opening of processing activity at PTC to the
opening time of the Federal Reserve's funds wire is consistent with
these objections.
\5\15 U.S.C. 78q-1(b)(3)(F) (1988).
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The implementation of SPEED Release 5.6 into PTC's processing
system will cause simultaneous debiting and crediting of participants'
cash and securities accounts. This will require that the cash balance
of a receiving participant's account in an account transfer versus
payment be debited even though the delivery may not have been approved
by the receiving participant. Match functionality no longer will
operate to defer the debit to the cash balance of the receiving
participant until the delivery is approved. Because unmatched
deliveries of account transfers versus payment no longer will generate
a credit to the cash balance of the delivering participant without the
corresponding debit to the receiving participant, it is anticipated
that the implementation of SPEED Release 5.6 may result in increased
incidences of transactions that may require prefunding to pass credit
checks. The change in the opening time of processing activity at PTC
should reduce the number of transactions failing credit because
participants will be able to move funds through the fedwire to PTC at
the opening of PTC's processing.
PTC 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. By granting accelerated approval,
PTC will be able to allow its participants sufficient time to become
accustomed to the new opening time of processing activity before the
implementation of SPEED Release 5.6. Therefore, the Commission finds
sufficient cause to grant accelerated approval of the proposal. The
staff of the Board of Governors of the Federal Reserve System has
concurred with the Commission's decision to grant accelerated
approve.\6\
\6\Telephone conversation between William R. Stanley, Board of
Governors of the Federal Reserve System, and Ari Burstein, Division
of Market Regulation, Commission (October 18, 1995).
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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 at 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 in the principal office of PTC. All
submissions should refer to file number SR-PTC-95-07 and should be
submitted by November 22, 1995.
It is therefore ordered, pursuant to Section 19(b)(2) of the Act,
that the proposed rule change (File No. SR-PTC-95-07) be and hereby is
approved on an accelerated basis through January 21, 1996.
For the Commission by the Division of Market Regulation,
pursuant to delegated authority.\7\
\7\17 CFR 200.30-3(a)(12) (1994).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 95-27002 Filed 10-31-95; 8:45 am]
BILLING CODE 8010-01-M
