[Federal Register Volume 59, Number 243 (Tuesday, December 20, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-31168]
[[Page Unknown]]
[Federal Register: December 20, 1994]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-35096; File No. SR-MSTC-94-14]
Self-Regulatory Organizations; Midwest Securities Trust Company;
Notice of Filing and Order Granting Accelerated Approval of Proposed
Rule Change Implementing a Fixed Income Transaction System Automated
Book Entry Feature for Municipal Bonds
December 13, 1994.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ notice is hereby given that on October 21, 1994, the
Midwest Securities Trust Company (``MSTC'') filed with the Securities
and exchange Commission (``Commission'') the proposed rule change as
described in Items I and II below, which Items have been prepared
primarily by MSTC. The Commission is publishing this notice and order
to solicit comments from interested persons and to grant accelerated
approval of the proposed rule change.
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\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
MSTC proposes to adopt a new automated book entry feature for
municipal bonds.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, MSTC 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. MSTC has prepared summaries, set forth in section (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
Under the proposed rule filing, MSTC proposes to adopt an automated
book entry movement feature to work in conjunction with the Midwest
Clearing Corporation's (``MCC'') interface\2\ with the National
Securities Clearing Corporation's (``NSCC'') fixed income transaction
system (``FITS'') for municipal securities.\3\ The book entry movement
feature for municipal securities transactions compared through FITS
will be similar in functionality and procedure to the current
institutional delivery system where book entry delivery is set up in
advance for automatic settlement on settlement date. A municipal bond
trade entered for comparison into FITS will be set up for automatice
book entry delivery once the trade achieves a compared status as long
as the settlement date entered for the trade is a date in the future of
the trade date. New issue or unusual trade types that compare without a
settlement date or items that compare on or after settlement date will
not be subject to automatice book entry delivery. These exception items
must be submitted manually.
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\2\For a complete description of the Midwest Clearing
Corporation's and the Stock Clearing Corporation of Philadelphia's
interface with NSCC's FITS for municipal securities, refer to
Securities Exchange Act Release No. 33524 (January 26, 1994), 59 FR
4958 [File Nos. SR-MCC-93-04 and SCCP-93-03] (order approving
interfaces with NSCC's FITS).
\3\For a detailed description of NSCC's FITS, refer to
Securities Exchange Act Release Nos. 32747 (August 13, 1993), 58 FR
44530 [File No. SR-NSCC-93-02] (order approving implementation of
FITS for municipal securities) and 34867 (October 20, 1994), 59 FR
54018 [File No. SR-NSCC-94-16] (order approving expansion of NSCC's
FITS to include corporate bonds and unit investment trusts).
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Participants will have the flexibility to specify the position from
which an automatic book entry delivery should originate. MSTC expects
that this decision often will be based on the most frequently used
safekeeping position as identified on the participant's account
profile. Participants will have the option of changing this standing
origination location as necessary.
(B) Self-Regulatory Organization's Statement on Burden on Competition
MSTC does not believe that the proposed rule change will impose a
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
Comments were neither solicited nor received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Section 17A(b)(3)(F)\4\ of the Act requires the rules of a clearing
agency be designed to promote the prompt and accurate clearance and
settlement of securities transactions. The Commission believes that the
automated book entry delivery feature should help promote prompt and
accurate clearing and settlement by reducing errors by automatically
generating book entry movements on behalf of the delivering MSTC
participants for compared trades. Section 17A(a)(2)(A)(i)\5\ of the Act
directs the Commission to facilitate the establishment of a national
system for the prompt and accurate clearance and settlement of
securities transactions. The Commission believes that the proposal
furthers this goal by creating cooperation by automating the process of
trades being cleared and settled at Midwest Clearing Corporation and
MSTC.
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\4\15 U.S.C. 78q-1(b)(3)(F) (1988).
\5\15 U.S.C. 78q-1(a)(2)(A)(i) (1988).
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MSTC 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 so approving the proposed rule change because accelerated
approval will allow MSTC participants to utilize and to take full
advantage in a more timely fashion of the benefits of the automated
book entry movement feature for municipal securities.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing. Persons making written submission
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 at the
Commission's Public Reference Section, 450 5th Street, N.W.,
Washington, D.C. 20549. Copies of such filings will also be available
at the principal office MSTC. All submissions should refer to File No.
SR-MSTC-94-14 and should be submitted by January 10, 1995.
It is therefore ordered, pursuant to Section 19(b)(2) of the Act,
that the proposed rule change (File No. SR-MSTC-94-14) be, and hereby
is, approved.
For the Commission by the Division of Market Regulation,
pursuant to delegated authority.\6\
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\6\17 CFR 200.30-3(a)(12) (1994).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 94-31168 Filed 12-19-94; 8:45 am]
BILLING CODE 8010-01-M
