[Federal Register Volume 61, Number 213 (Friday, November 1, 1996)]
[Proposed Rules]
[Pages 56485-56486]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-28007]
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SECURITIES AND EXCHANGE COMMISSION
17 CFR Part 300
[Release No. SIPA-160; File No. SIPC-96-1]
Rules of the Securities Investor Protection Corporation
AGENCY: Securities and Exchange Commission.
ACTION: Proposed rule change.
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SUMMARY: The Securities Investor Protection Corporation (``SIPC'')
filed a proposed rule change with the Securities and Exchange
Commission (``Commission''). The proposed rule change amends SIPC Rules
300 \1\ and 301,\2\ which relate to the closeout and completion of
contracts for the purchase or sale of securities made by debtors in
liquidation under the Securities Investor Protection Act of 1970
(``SIPA''). The Commission is publishing the proposed rule change for
public comment. Within thirty-five days of publication of notice, the
Commission must (absent an extension) by order approve the proposed
rule change or institute disapproval proceedings. Because SIPC rules
have the force and effect as if promulgated by the Commission, those
rules are published in Title 17 of the Code of Federal Regulations.\3\
\1\ 17 CFR 300.300 (1996). Rule 300 sets out the definitions of
certain terms used in SIPC's rules.
\2\ 17 CFR 300.301 (1996). Rule 301 governs contracts to be
closed out or completed in a liquidation.
\3\ 17 CFR 300.100-300.503 (1996).
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DATES: Comments are to be received on or before November 22, 1996.
ADDRESSES: 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 submissions, 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 filings will also be
available for inspection and copying at the principal
[[Page 56486]]
office of SIPC. All submissions should refer to file number SIPC-96-1.
Comments also may be submitted electronically at the following E-Mail
address: rule-comments@sec.gov. All comment letters should refer to
file number SIPC-96-1. This rule number should be included on the
subject line if E-mail is used. Electronically submitted comment
letters will be posted on the Commission's Internet web site (http://
www.sec.gov).
FOR FURTHER INFORMATION CONTACT:
Michael A. Macchiaroli, Associate Director, 202/942-0131, Peter R.
Geraghty, Assistant Director, 202/942-0177, or Louis A. Randazzo,
Special Counsel, 202/942-0191, Division of Market Regulation,
Securities and Exchange Commission, 450 Fifth Street, NW, Washington,
DC 20549.
SUPPLEMENTARY INFORMATION: Pursuant to Section 3(e)(2)(A) of SIPA,\4\
notice is hereby given that SIPC filed with the Securities and Exchange
Commission on October 10, 1996, the proposed rule change as described
in Item I below, which item has been prepared primarily by SIPC. The
Commission is publishing this notice to solicit comments on the
proposed rule change from interested persons.
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\4\ 15 U.S.C. 78ccc(e)(2)(A) (1995).
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I. SIPC's Statement of the Purpose of, and Statutory Basis for, the
Proposed Rule Change
In its filing with the Commission, SIPC 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 above.
SIPC has prepared the following summary of the purpose of and statutory
basis for the proposed rule change.\5\
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\5\ The Commission has modified the language in this section.
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Section 8(e) of SIPA requires SIPC to adopt rules with respect to
the closeout of contracts with a debtor for the purchase or sale of
securities in the ordinary course of its business.\6\ The purpose of
the proposed rule change is to amend SIPC's Series 300 Rules, which
address the closeout or completion of contracts for the purchase or
sale of securities made by debtors in a liquidation under SIPA with
other brokers or dealers, to be consistent with Commission Rule 15c6-
1.\7\ Rule 15c6-1, which became effective in June of 1995,\8\
establishes three business days as the standard settlement timeframe
for most securities transactions.\9\ The adoption of a three business
day settlement timeframe affected SIPC Rules 300 and 301, which
currently refer to a five business day settlement timeframe.\10\
Because Rule 15c6-1 does not affect SIPC Rules 302 through 307, SIPC
does not propose to amend these rules. The proposed rule change also
makes a technical correction to conform a statutory citation in Rule
300 to the correct section SIPA.\11\
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\6\ 15 U.S.C. 78ccc(8)(e) (1995).
\7\ 17 CFR 240.15c6-1 (1996).
\8\ See Securities Exchange Act Release No. 33023 (October 6,
1993), 58 FR 52891 (October 13, 1993).
\9\ Specifically, Rule 15c6-1 provides, among other things, that
a broker-dealer shall not effect or enter into a contract for the
purchase or sale of a security that provides for payment of funds
and delivery of securities later than the third business day after
the date of the contract unless otherwise expressly agreed to by the
parties at the time of the transaction. Prior to the effective date
of Rule 15c6-1, the settlement cycle for securities transactions was
five business days. See Release No. 33023, supra note 8.
\10\ In order to remain consistent with the Commission's three
business day settlement timeframe, SIPC proposes to amend the term
``open contractual commitment'' in Rule 300(c) by replacing the
reference to five business days with three business days.
Specifically, Rule 300(c) is proposed to be amended, in part, to
provide that the term ``open contractual commitment'' means a failed
to receive or a failed to deliver which had a settlement date prior
to the filing date and the respective obligations of the parties
remained outstanding on the filing date or had a settlement date
which occurs on or within three business days subsequent to the
filing date. In addition, SIPC proposes to amend Rule 301 by
replacing the references to five business days with three business
days.
\11\ SIPC proposes to amend Rule 300(a) by replacing the
reference to section 16(8) of SIPA with section 16(7) of SIPA.
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II. 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 SIPC 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.
To allow public access to SIPC's rules, SIPC rules that are
approved by the Commission are published under Part 300 of 17 CFR
Chapter II.
III. Statutory Analysis
Pursuant to SIPA and particularly Section 3(e),\12\ SIPC proposes
to amend 300.300 and 300.301 of Title 17 of the Code of Federal
Regulations in the manner set forth below.
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\12\ U.S.C. 78ccc(3)(e) (1995).
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IV. List of Subjects in 17 CFR Part 300
Brokers, Securities, Securities Investor Protection Corporation.
In accordance with the foregoing, Title 17, Chapter II of the Code
of Federal Regulations is proposed to be amended as follows:
PART 300--RULES OF THE SECURITIES INVESTOR PROTECTION CORPORATION
1. The authority citation for part 300 continues to read as
follows:
Authority: Section 3, 84 Stat. 1636, as amended; 15 U.S.C.
78ccc.
Sec. 300.300 [Amended]
2. Section 300.300 is proposed to be amended by removing the
reference to ``section 16(8)'' and adding ``section 16(7)'' in
paragraph (a), and removing the reference to ``five business days'' and
adding ``three business days'' in paragraph (c).
Sec. 300.301 [Amended]
3. Section 300.301 is proposed to be amended by removing the
references to ``five business days'' and adding ``three business days''
in paragraphs (a)(2)(i) and (a)(2)(ii).
For the Commission by the Division of Market Regulation,
pursuant to delegated authority.\13\
\13\ 17 CFR 200.30-3(f)(3) (1996).
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Dated: October 25, 1996.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 96-28007 Filed 10-31-96; 8:45 am]
BILLING CODE 8010-01-M
