[Federal Register Volume 61, Number 236 (Friday, December 6, 1996)]
[Notices]
[Pages 64776-64777]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-31080]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-38000; File No. SR-DTC-96-20]
Self-Regulatory Organizations; The Depository Trust Company;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change
Relating to the Drop Window Service
December 2, 1996.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ notice is hereby given that on November 5, 1996, The
Depository Trust Company (``DTC'') filed with the Securities and
Exchange Commission (``Commission'') the proposed rule change as
described in Items I, II, and III below, which items have been prepared
primarily by DTC. The Commission is publishing this notice to solicit
comments from interested persons on the proposed rule change.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of
Substance of the Proposed Rule Change
The proposed rule change expands the services provided by DTC's
Transfer Agent Drop Window Service (``Drop Service'').
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, DTC 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. DTC has prepared summaries, set forth in sections (A),
(B), and (C) below, of the most significant aspects of such
statements.\2\
---------------------------------------------------------------------------
\2\ The Commission has modified the text of the summaries
prepared by DTC.
---------------------------------------------------------------------------
(A) Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
DTC's Drop Service provides transfer agents located outside of New
York City with a central location within the Borough of Manhattan to
receive and deliver securities.\3\ DTC proposes to
[[Page 64777]]
expand its Drop Service to provide transfer agents with enhanced
services. First, DTC will accept the following items on behalf of
transfer agents from individuals or financial institutions: (1) Checks
or securities delivered as contributions to dividend reinvestment
plans; (2) checks drawn on a transfer agent and payable to an
individual or financial institution with wire instructions; (3) checks
payable to a transfer agent in payment for certain fees charged by the
transfer agent (e.g., rush transfer fees); and (4) envelopes \4\ to be
delivered to a transfer agent. DTC also will issue a window-ticket to
the individual or financial institution delivering such items, log the
receipt of the items, and forward the items to the transfer agent.
---------------------------------------------------------------------------
\3\ DTC originally established the Drop Service to enable
transfer agents to comply with New York Stock Exchange Rule 496 and
American Stock Exchange Rule 891. These rules require transfer
agents to maintain a facility to receive and deliver securities that
is located south of Chambers Street in the Borough of Manhattan,
City of New York. For a complete description of the Drop Service,
refer to Securities Exchange Act Release No. 37562 (August 13,
1996), 61 FR 43283 [File No. SR-DTC-96-09] (order approving proposed
rule change).
\4\ DTC will accept envelopes from financial institutions for
delivery to a transfer agent without opening or inspecting the
envelopes. Securities delivered to the drop window from financial
institutions are generally delivered in clear envelopes.
---------------------------------------------------------------------------
Second, if a transfer agent is required to accept securities up to
midnight in connection with a corporate action, DTC's drop location
will remain open until that time.\5\ Finally, DTC will value securities
received on behalf of a transfer agent in preparation for the shipment
of such securities to the transfer agent by obtaining a daily market
price for each issue received. DTC began providing these expanded
services on November 18, 1996. The transfer agent Drop Service fee
schedule is attached as Exhibit 1.
---------------------------------------------------------------------------
\5\ DTC's drop location will remain open for a late closing for
the limited purpose of accepting items on behalf of a transfer agent
and issuing a window-ticket to the party delivering the item. A
transfer agent will be required to provide DTC with notice of the
need for a late closing at least one week in advance thereof.
Moreover, a transfer agent will be required to provide on-site
personnel at DTC to answer questions, examine items received, and
approve such items. During a late closing, a transfer agent will be
deemed to have taken possession and control of an item when the
transfer agent's on-site personnel approve an item for receipt.
---------------------------------------------------------------------------
DTC believes the proposed rule change is consistent with the
requirements of Section 17A(b)(3)(F) of the Act \6\ and the rules and
regulations promulgated thereunder because the proposal promotes
efficiencies in the prompt and accurate clearance and settlement of
securities transactions, specifically the transfer of record ownership.
According to DTC, the expanded Drop Service also will reduce the
expenses associated with the transfer of record ownership and foster
cooperation and coordination between DTC and other entities engaged in
the clearance and settlement of securities transactions.
---------------------------------------------------------------------------
\6\ U.S.C. 78q-1(b)(3)(F) (1988).
---------------------------------------------------------------------------
(B) Self-Regulatory Organization's Statement on Burden on Competition
DTC perceives no impact on competition by reason of the proposed
rule change.
(C) Self-Regulatory Organization's Statement on Comments on the
Proposed Rule Change Received From Members, Participants or Others
DTC has not solicited or received comment on the proposed rule
change.
III. Date of Effectiveness of the Proposed Rule Change and Timing
for Commission Action
The foregoing rule change has become effective pursuant to Section
19(b)(3)(A)(iii) \7\ of the Act and pursuant to Rule 19b-4(e)(6) \8\
promulgated thereunder because the proposed rule is effecting a change
that: (1) Does not significantly affect the protection of investors or
the public interest; (2) does not impose any significant burden on
competition; (3) does not become operative for thirty days from the
date of its filing on November 5, 1996, or such shorter time as the
Commission may designate if consistent with the protection of investors
and the public interest; and (4) was provided to the Commission for its
review at least five days prior to the filing date. The Commission
finds good cause for accelerating the operative date of the proposed
rule change from the thirtieth day following the date of its filing on
November 5, 1996, to November 18, 1996, because the accelerated
approval will permit DTC to more quickly provide the enhanced services
to transfer agents located outside of New York City through the
framework of an existing DTC service, which has been reviewed by the
Commission. At any time within sixty days of the filing of such rule
change, the Commission may summarily abrogate such rule change if it
appears to the Commission that such action is necessary or appropriate
in the public interest, for the protection of investors, or otherwise
in furtherance of the purposes of the Act.
---------------------------------------------------------------------------
\7\ 15 U.S.C. 78s(b)(3)(A)(iii) (1988).
\8\ 17 CFR 240.19b-4(e)(6) (1966).
---------------------------------------------------------------------------
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 NW., Washington, DC 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 NW., Washington,
DC 20549. Copies of such filing will also be available for inspection
and copying at the principal office of DTC. All submissions should
refer to File No. SR-DTC-96-20 and should be submitted by December 29,
1996.
For the Commission by the Division of Market Regulation,
pursuant to delegated authority.\9\
---------------------------------------------------------------------------
\9\ 17 CFR 200.30-3(a)(12)(1996).
---------------------------------------------------------------------------
Margaret H. McFarland,
Deputy Secretary.
Exhibit 1.--1996 Transfer Agent Drop Fees
1. Monthly Service Charge: $250.00.
2. Micro-filming: $14.50 per hour and $15.75 per roll.
3. Window Tickets Issued By DTC for the Receipt of Securities,
Checks, and Envelopes on Behalf of the transfer agent: .75 per window
ticket issued.
4. Daily Valuation: Daily flat fee of $175.00.
5. Midnight closings: $1,000.00 per occurrence.
6. Pass-through Fees: Varying.
For example, DTC uses various courier services to deliver
securities to the transfer agent. DTC remits payment for such services
to the carrier and, in turn, charges the appropriate transfer agent for
the same amount.
In addition, each transfer agent must provide DTC with window
tickets to be used as receipts for items delivered. If requested by the
transfer agent, DTC will arrange for the printing of such tickets. Any
associated printing costs incurred by DTC are charged to the transfer
agent.
[FR Doc. 96-31080 Filed 12-5-96; 8:45 am]
BILLING CODE 8010-01-M
