[Federal Register Volume 61, Number 35 (Wednesday, February 21, 1996)]
[Notices]
[Pages 6672-6674]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-3837]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-36843; File No. SR-DTC-96-03]
Self-Regulatory Organizations; The Depository Trust Company;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change
Relating to Modifications to the Same-Day Funds Settlement System
February 14, 1996.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ notice is hereby given that on January 23, 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
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solicit comments on the proposed rule change from interested persons.
\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 purpose of the proposed rule change is to modify DTC's
procedures relating to receiver authorized delivery (``RAD'')
processing \2\ and to provide participants with the ability to block
deliveries of government securities to their DTC accounts. The proposed
rule change also amends DTC's processing schedules. The modifications
are part of the planned conversion of DTC's money settlement system to
an entirely same-day funds settlement (``SDFS'') system.
\2\ RAD allows a participant to review and either approve or
cancel incoming deliveries before they are processed in DTC's
system. For a further discussion of DTC's RAD procedures, refer to
Securities Exchange Act Release No. 25886 (July 6, 1988), [File No.
SR-DTC-88-07] (notice of filing and immediate effectiveness of a
proposed rule change implementing DTC's RAD procedures).
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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.\3\
\3\ The Commission has modified the text of the summaries
prepared by DTC.
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(A) Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
DTC plans to combine its next-day funds settlement (``NDFS'')
system and its SDFS system into a single SDFS system which will be
based on the design of the current SDFS system with some modifications.
The conversion was described in three memoranda issued jointly by the
National Securities Clearing Corporation and DTC \4\ and was discussed
in a DTC proposed rule change approved by the Commission on May 16,
1995.\5\ In order to assure an efficient conversion, some of the
modifications to the current SDFS system are being implemented at
various times prior to the conversion date, which is scheduled for
February 22, 1996. Most of the modifications to the processing schedule
for the SDFS system that are needed for the conversion were implemented
on January 25, 1996. A few of the modifications, such as the processing
periods applicable to continuous net settlement system activity, will
not be implemented until the conversion date because the related
activities are part of the current NDFS system, which will remain
unchanged until the conversion.
\4\ The Depository Trust Company and National Securities
Clearing Corporation, Memorandum (July 1, 1992; July 26, 1993; and
July 29, 1994).
\5\ For additional information regarding DTC's SDFS system,
refer to Securities Exchange Act Release No. 35720 (May 16, 1995),
60 FR 27360 [File No. SR-DTC-95-06] (order granting accelerated
approval of a proposed rule change modifying the SDFS system).
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Modifications to DTC's RAD procedures also became effective on
January 25, 1996, so that deliveries of new issues submitted during
DTC's day cycle will not be subject to the receiving participants' RAD
approvals. Because RAD processing delays submission of a delivery
instruction to DTC's main processing system, this modification will
give delivering participants greater control over the order in which
their deliveries are processed at DTC. The modification will help to
ensure, for example, that a participant's syndicate deliveries are
processed before its customer deliveries if the participant entered the
deliveries in that order.
On the conversion date, securities which are eligible for the
Federal Reserve's Book-Entry (``FBE'') system (i.e., government
securities) and which also are currently eligible for DTC's NDFS system
will become eligible for DTC's new SDFS system. DTC will offer
participants the option to block their DTC accounts for valued or free
deliveries and receipts of FBE eligible securities at DTC. This option
will enable a participant to prevent a delivery at DTC that the
participant is expecting to receive through the FBE system.\6\ Electing
to block deliveries and receives of FBE securities will not impact
participants' current ability to deposit and withdraw such securities
through DTC's link with the Federal Reserve Bank of New York. Pledges
and other activities will also not be affected by this election.
\6\ Some DTC participants have expressed to DTC a desire not to
have deliveries of FBE securities made to their DTC accounts so
participants can more efficiently manage their receipts of FBE
securities.
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DTC believes that the proposed rule change is consistent with
Section 17A of the Act and the rules and regulations thereunder because
the proposed rule change will facilitate the conversion to an entirely
SDFS system and therefore will promote the prompt and accurate
clearance and settlement of securities transactions.
(B) Self-Regulatory Organization's Statement on Burden on Competition
DTC perceives no adverse 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
Notice of the proposed rule change has been provided to DTC
participants in four DTC Important Notices \7\ as well as by the joint
memoranda referred to above.\8\ No written comments have been received.
DTC will notify the Commission of any written comments received by DTC.
\7\ DTC Important Notices (December 22, 1995; December 26, 1995;
January 2, 1996; and January 10, 1996).
\8\ Supar note 3.
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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) \9\ of the Act and pursuant to Rule 19b-4(e)(6) \10\
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 January 23, 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 because the modifications implemented by the rule change
will facilitate the planned conversion of DTC's entire money settlement
system to an SDFS system. The Commission believes that participants
should have the opportunity to become familiar with these modifications
to DTC's SDFS system prior to the complete conversion on February 22,
1996. At any time within sixty days of the filing of the proposed 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
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in furtherance of the purposes of the Act.
\9\ 15 U.S.C. Sec. 78s(b)(3)(A)(iii) (1988).
\10\ 17 CFR 240.19b-4(e)(6) (1994).
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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 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 DTC. All submissions should
refer to File No. SR-DTC-96-03 and should be submitted by March 13,
1996.
For the Commission by the Division of Market Regulation,
pursuant to delegated authority.\11\
\11\ 17 CFR 200.30-3(a)(12) (1995).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 96-3837 Filed 2-20-96; 8:45 am]
BILLING CODE 8010-01-M
