[Federal Register Volume 61, Number 41 (Thursday, February 29, 1996)]
[Notices]
[Pages 7841-7846]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-4576]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-36876; File Nos. SR-Philadep-95-08]
Self-Regulatory Organizations; Philadelphia Depository Trust
Company; Notice of Filing of Amendments and Order Granting Accelerated
Partial Permanent Approval and Accelerated Partial Temporary Approval
of a Proposed Rule Change to Convert the Settlement System for
Securities Transactions to a Same-Day Funds Settlement System
February 22, 1996.
On November 3, 1995, the Philadelphia Depository Trust Company
(``Philadep'') filed with the Securities and Exchange Commission
(``Commission'') a proposed rule change (File Nos. SR-Philadep-95-08)
pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'').\1\ On December 19, 1995, Philadep filed an amendment to the
proposed rule change.\2\ Notice of the proposal as amended was
published in the Federal Register on January 9, 1996.\3\ On January 8,
1996, Philadep filed an amendment to the proposed rule change to modify
its charge-back policy relating to principal and income payments from a
same-day reversal policy to a next-day reversal policy.\4\ On January
24, 1996, Philadep filed an amendment to the proposed rule change to
clarify which participants fund formulas were additive and which were
not additive and to make a technical correction to Rule 4, Section
8.\5\ On February 5, 1996, Philadep filed an amendment to the proposed
rule change to remove certain previously proposed amendments made to
Rule 4, Sections 1 and 2, regarding the maintenance and investment of
the participants fund and to remove previously proposed allocation
procedures between the Philadep participants fund and the Stock
Clearing Corporation of Philadelphia (``SCCP'') participants fund.\6\
On February 16, 1996, Philadep filed an amendment to the proposed rule
change to clarify its inter-
[[Page 7842]]
depository delivery procedures.\7\ No comment letters were received.
For the reasons discussed below, the Commission is granting accelerated
temporary approval through August 31, 1996, of the portion of the
proposed rule change relating to Philadep's participants fund formulas
and interdepository deliver procedures and is granting accelerated
permanent approval of the remainder of the proposed rule change.
\1\ 15 U.S.C. Sec. 78s(b)(1) (1988).
\2\ Letter from J. Keith Kessel, Compliance Officer, Philadep,
to Peter R. Geraghty, Esq., Division of Market Regulation
(``Division''), Commission (December 14, 1995).
\3\ Securities Exchange Act Release No. 36681 (January 4, 1996),
61 FR 745.
\4\ Letter from William W. Uchimoto, General Counsel, Philadep,
to Peter R. Geraghty, Esq., Division, Commission (January 11, 1996).
\5\ Letter from William W. Uchimoto, Philadep, to Jerry
Carpenter, Esq., Assistant Director, Division, Commission (January
24, 1996).
\6\ Letter from J. Keith Kessel, Compliance Officer, Philadep,
to Peter R. Geraghty, Esq., Division, Commission (February 5, 1996).
\7\ Letter from Keith Kessel, Compliance Officer, Philadep, to
Peter R. Geraghty, Esq., Division, Commission (February 16, 1996).
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I. Description of the Proposal
1. Introduction
The purpose of the proposed rule change is to amend Philadep's
rules and procedures to convert Philadep's money settlement system from
a next-day funds settlement (``NDFS'') system to a same-day funds
settlement (``SDFS'') system. Under the proposed rule change, Philadep
intends to provide SDFS depository services for all eligible
securities.
In accordance with the SDFS service, Philadep will accept deposits
of securities certificates for safekeeping and will provide the full
range of SDFS depository services which include, but are not limited
to, processing deposits, book-entry deliver and receive orders,
withdrawals, pledges, trade confirmations, affirmations, transfers, and
dividend and interest payments. Philadep's rules and procedures have
been amended to provide for, among other things, the pledging of
securities, failure to settle procedures, transaction processing, risk
management controls, and money settlement in an expanded SDFS
environment.
Pursuant to a joint agency agreement between SCCP and Philadep,
SCCP, among other things, effects daily money settlements on behalf of
Philadep participants for securities received into and delivered out of
participants' accounts at Philadep. On behalf of Philadep, SCCP also
processes continuous net settlement (``CNS'') movements from one
participant to another, processes all SCCP and Philadep dividend and
reorganization settlements, and prepares and renders bills and collects
fees from Philadep participants for depository services.
Philadep evaluated the impact of converting to an SDFS system with
respect to the operational requirements, liquidity requirements, and
overall risk on a joint SCCP/Philadep basis.\8\ Philadep estimates that
at the time of implementing the proposed modifications, SCCP and
Philadep will have combined liquidity resources of over $73 million,
consisting of $1.1 million in the Philadep participants fund, $7.3
million in the SCCP participants fund, $4.7 million in unrestricted
capital, and $60 million in lines of credit.\9\ Philadep will routinely
monitor these amounts and assess the need to increase them based on
SCCP and Philadep activity levels.
\8\ SCCP and Philadep are wholly-owned subsidiaries of the
Philadelphia Stock Exchange, Inc. SCCP and Philadep have a
substantial overlap of participants and strategic business
objectives.
\9\ As of the date of this order, SCCP and Philadep have secured
$20 million in uncommitted lines of credit and $40 million in
committed lines of credit.
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2. Risk Management Controls
Philadep's risk management controls are intended to protect
Philadep participants against the inability of a participant to pay for
its settlement obligations. Philadep's two primary risk management
controls for securities processing are the collateral monitor and the
net debit cap. Philadep's collateral monitor and net debit cap analysis
were structured to incorporate the netting of SCCP and Philadep
settlements. Certain transactions also are not subject to these risk
management controls.\10\
\10\ Under Philadep's proposed rule change, CNS and reclamation
activity will be exempt from risk management controls. SCCP and
Philadep will continue to process these activities; however, when a
participant exceeds its set debit cap as a result of its CNS
activity, Philadep may request settlement prepayments to reduce the
participant's daily debit. If Philadep does not receive such
prepayments, Philadep may reverse unsettled book-entry receives
previously accepted to produce a positive collateral position and
reduce the net debit to an amount under the net debit cap.
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A. Collateralization
Philadep will operate its SDFS system on a fully collateralized
basis. Philadep has designed its collateral monitor to assure that a
participant will have sufficient collateral in its account in the event
that the participant becomes insolvent and/or fails to pay its end-of-
day settlement obligation and Philadep must pledge the collateral to
draw on its lines of credit.
Philadep recognizes several sources of collateral. The primary
sources of collateral are: (1) participants' required and voluntary
deposits to the participants fund; (2) proprietary or firm positions
that the participant designates as collateral; (3) securities received
versus payment for which the participant has not yet paid (includes CNS
deliveries); and (4) securities added to a participant's account but
not received versus payment (e.g., deposits, free deliveries, free
pledge releases, and reclassification of non-collateral securities)
that the participant designates as collateral.
Securities designated as collateral by participants are valued
based on the security's closing price on the prior business day less an
applicable haircut. Philadep employs haircuts to protect itself and its
participants against price fluctuations in collateral in the event that
Philadep must liquidate the collateral of an insolvent participant.
Moreover, because Philadep may have to borrow against a participant's
collateral to finance overnight a participant's failure, Philadep's
haircut structure takes into consideration the haircuts imposed by its
lending institutions. Ordinarily, banks will not assign the full market
value to securities used to collateralize loans. Banks will generally
consider the relative price volatility of the collateral and impose a
haircut accordingly. Philadep's haircut levels configured by security
type are as follows: (1) 10% for equities; (2) 5% for corporate and
municipal debt, and (3) 2%, 5%, or up to 100% for money market
instruments (depending on their term and investment grade rating).
Philadep reserves the right to reprice and modify haircuts intraday if
it determines changes to be in the best interest of Philadep and its
participants.
Philadep will monitor the collateral in each of the participant's
accounts through the use of its collateral monitor. At the start of
each business day, Philadep credits each participant's collateral
monitor with its participants fund deposit. Philadep updates the
collateral monitor throughout the day for each transaction that adds or
removes collateral to or from the participant's collateral monitor. At
all times, the collateral monitor in a participant's account must be
equal to or exceed the participant's 'net settlement obligation.
Therefore, the market value of all the collateral less any applicable
haircuts in a participant's account must be equal to or exceed the
participant's net settlement obligation.
Throughout the day, Philadep will continually verify each
participant's collateral value to assure that the deliverer's and
receiver's collateral monitor will not become negative as a result of
Philadep processing a transaction. If a transaction will cause either
the deliverer or the receiver to be undercollateralized, Philadep will
prevent the transaction from completing until the participant with the
deficient collateral monitor has infused sufficient collateral into its
account for the transaction to complete. Transactions that continue to
recycle at the end of the processing day will be dropped from the
[[Page 7843]]
system and must be subsequently reentered by the participant that
initially entered the transaction.
B. Net Debit Caps
In addition to collateralization, Philadep's net debit cap
procedures will prevent the completion of transactions if completion
will cause a participant's individual net debit to exceed its net debit
cap. Net debit caps limit the net settlement debits that a participant
may incur at any point during the processing day and at the end of the
day. Net debit caps are designed to help assure that Philadep will have
sufficient liquidity to complete settlement if a participant fails to
settle. If a transaction will cause a participant's net settlement
debit to exceed its net debit cap, Philadep's SDFS system will not
allow the transaction to complete. The transaction will recycle until
there is sufficient credit in the account. Most credits result from
securities deliveries versus payment; securities pledges for value;
principal, dividend, or interest allocations; or settlement progress
payments (``SPPs'') wired from a participant to Philadep's account at
its designated settling bank. Transactions that continue to recycle at
the close of the processing day will be dropped from the system and
must be subsequently reentered by the participant who initially entered
the transaction.
Each participant's individual net debit cap is determine by a
participant's combined net debit history at Philadep and SCCP. Philadep
will periodically adjust a participant's net debit cap in relation to
the participant's ongoing activity. Philadep will calculate net debit
caps using participants' daily net settlement activities and may adjust
these figures monthly. A participant's net debit cap will be
specifically determined by: (1) an average of the participant's three
highest end-of-day net settlement debits over a rolling three-month
period to establish a base figure \11\ and (2) the participant's base
figure multiplied by a factor to determine the participant's individual
net debit cap.\12\ Individual participants' net debit caps are limited
by Philadep's established maximum net debit cap of $40 million.
Philadep's maximum net debit cap was set, as explained below, using
Philadep's total available liquidity.
\11\ For purpose of calculating a participant's net debit
settlement, Philadep includes net CNS settlements.
\12\ Factors are based on a sliding scale, ranging from 1 to 2,
where lower base figures are multiplied by larger factors and higher
base figures are multiplied by smaller factors.
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Philadep established a minimum net debit cap based on 50% of the
combined SCCP and Philadep participants funds. The minimum net debit
cap, which is currently estimated to be $3.5 million, will be
recalculated and adjusted semi-annually. Despite a participant's base
figure, Philadep reserves the right to make adjustments to a
participant's net debit cap. Philadep may effect such change for a
length of time deemed necessary and appropriate by Philadep's
management.
3. Failure to Settle Procedures
A. Rule 4(A)
New Rule 4(A) will clarify that Philadep is authorized to pledge,
repledge, hypothecate, transfer, create a security interest, and/or
assign (``pledge'') to lenders as collateral in the event a participant
fails to settle any or all property received by Philadep for Philadep
from its participants.\13\ This property includes (i) deposits in the
participants fund; (ii) the securities or repurchase agreements in
which the participants fund is invested overnight; (iii) certain
qualifying securities which secure the open account indebtedness of the
participant; (iv) securities which have been pledged to Philadep as a
voluntary deposit to the participants fund; and (v) any or all
securities designated as collateral (collectively, ``allowable
assets'').
\13\ The text of proposed New Rule 4(A) is attached as Exhibit
B(2) to File No. SR-Philadep-95-08. The file is available for review
in the Commission's Public Reference Room and at the principal
office of Philadep.
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If Philadep pledges these allowable assets, Philadep will make the
appropriate account entries reflecting the creation and transfer of the
respective security interest from the participant to Philadep and from
Philadep to the lender. Likewise, if a participant designates
additional securities as pledged collateral, Philadep will record the
security interest for such pledged collateral on its books which
reflects the decrease in the account of the pledging participant and
the increase in Philadep's account. Philadep will receive these journal
entries upon the release and return of any pledged assets, which will
reflect a decrease in the account of any pledgee and an increase in the
account of the pledgor as appropriate.
B. Settlement Failure
At the end of the processing day, Philadep will provide each
participant with a net settlement amount, which will be the aggregate
of the end-of-the-day net debits and credits in the participant's SCCP
and/or Philadep accounts. Money settlements will occur daily with
immediately available funds in the form of fed wire transfers into and
out of Philadep's account at its designated settling bank.
In the event a participant or its representative settling bank
fails to settle, Philadep will utilize its liquidity resources to
finance such participant's unsettled net debit. Philadep will
prioritize the order in which it will use the resources. Philadep first
will use cash from the participants fund and other immediately
available internal sources prior to drawing upon its external lines of
credit to secure an extension of credit in connection with the
defaulting participant, Philadep shall secure the participant's assets
as collateral pursuant to proposed Rule 4(A).
If the participant settles by 10 a.m., Eastern Standard Time, the
morning after the default occurs, Philadep will use the settlement
payment received to repay the principal and finance charges of the
lending bank. Philadep then will return the pledged collateral to the
participant. For example, if the defaulting participant is solvent and
pays its net debit balance and interest charge in same-day funds on the
day after the default, Philadep generally will reverse the procedures
followed on the day of the default. Philadep will repay lenders and
restore pledged securities.
However, if the defaulting participant remains in default the next
business day, Philadep may take the following steps in successive
order: (i) apply the defaulting participant's fund deposit to satisfy
the participant's obligation; (ii) apply collateral of the defaulting
participant which is the subject of incomplete transactions; (iii)
apply any collateral of the defaulting participant including collateral
which is not subject to incomplete transactions; (iv) if the
participant's collateral is exhausted, apply pro rata net credit
reductions to all participants that delivered securities to the
defaulting participant on the day of the default with such reductions
being limited to the amount of the net credit balance of each
participant resulting from transactions with the defaulting
participant; (v) in the alternative to such net credit reductions,
resell to the delivering participants securities that were sold to the
defaulting participant on the day of the default; and (vi) make pro
rata net credit reductions to all participants with net credit balances
including those participants that did not make deliveries to the
defaulting participant on that day.
[[Page 7844]]
4. Paying Agent Charge-Back Procedures
With respect to principal, dividend, interest, and corporate
reorganization payment obligations (``P&I payments''), Philadep will
pay participants in same-day funds upon receipt of payment in same-day
funds from paying agents for such P&I payments. In order to induce the
delivery of P&I payments in same-day funds to Philadep from paying
agents that would not otherwise receive such payments from issuers in
same-day funds on payable date, Philadep may agree to provide rebates
to such paying agents. Philadep will act as the conduit passing along
such rebate costs to those participants benefitting from receiving P&I
payments in same-day funds.
Under Philadep's SDFS proposal, Philadep will be authorized to
charge-back participants that were previously credited with P&I
payments if the payment was made in error by the paying agent, the
issuer failed to provide the paying agent with sufficient funds to
cover the payments, the issuer filed for bankruptcy on or prior to the
payable date, or other paying agent default. In order for Philadep to
charge-back participants, the paying agent must furnish Philadep a
written request within ten business days of the payable date. Philadep
also may charge-back participants for any errors made by Philadep
including errors as a result of erroneous announcements or payment
calculations credited to participants in anticipation of receiving
payments from paying agents which Philadep has not received.
Under Philadep's charge-back procedures, Philadep will notify
participants of charge-backs initiated by a paying agent one business
day prior to the date Philadep includes the charge-back in the
participant's daily settlement. Although Philadep usually verifies the
facts stated in the notice from the paying agent, Philadep does not
have any obligation to do so. If the paying agent notifies Philadep
more than ten business days after payment date, Philadep is not
required to charge-back the participant's account but will cooperate
with the paying agent and the participants to resolve the matter. For
Philadep initiated charge-backs, Philadep will give participants one
business day notice of the charge-back before Philadep includes the
charge-back in the participant's daily settlement. For either charge-
back, Philadep reserves the right to impute and recover interest from
the respective participants.
5. Inter-depository Delivery Procedures
When processing participants' deliveries to The Depository Trust
Company (``DTC''), Philadep will employ an immediate update technique
whereby a delivering participant's security position, collateral, and
settlement accounts are immediately updated if the delivering
participant has sufficient securities and collateral to complete the
delivery. The delivering participant's position is reduced by the
quantity of securities it is delivering, its settlement account is
credited for the settlement value of the transaction, and its
collateral monitor is increased by the settlement credit it will
receive and reduced by the collateral value of the securities it is
delivering (provided the securities being delivered are part of the
participant's collateral position).
Once a delivery satisfies Philadep's risk management controls and
completes at Philadep (e.g., the participant has sufficient securities
to make the delivery and the participant's collateral monitor will not
become negative because of the delivery), the delivery is sent to DTC
where it is subject to DTC's internal risk management controls. In
certain instances, DTC's internal risk management controls may prevent
a delivery from completing (i.e., the receiving participant may not
have sufficient collateral or the receipt will violate the
participant's net debit cap) and may cause those deliveries to recycle
in DTC's system. Deliver orders and payment orders that fail to
successfully complete in DTC's system at the end of each processing day
will be returned to Philadep, and Philadep will reverse the deliveries
to the original delivering participants. Such reversals will not be
subject to Receiver-Authorized Delivery (``RAD'') processing \14\ or
risk management controls.
\14\ RAD allows a participant to review and either approve or
cancel incoming deliveries before they are processed in Philadep's
system.
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6. Participants Fund
Rule 4, governing the participants fund, and the procedures
regarding the participants fund formulas are being amended to respond
to Philadep's increased liquidity needs. Rule 4 and the procedures are
being amended to provide for an all cash participants fund. The all
cash requirement applies to both the required deposit and any
additional or voluntary deposits that participants may make.
Participants that choose to make voluntary deposits, in most
situations, will be able to increase their level of activity at
Philadep. Participants will receive interest rebates from Philadep for
deposits in excess of $50,000.
Philadep also has modified the size of the participants fund by
amending the participants fund formulas. Rule 4 as amended requires all
Philadep participants to maintain a minimum cash deposit of $10,000 in
the Philadep participants fund. Philadep will calculate participants'
required cash deposit pursuant to the following formulas:
(a) Inactive Accounts: \15\ $10,000.00
\15\ Philadep's procedures define inactive account to mean an
account that has less than $100 of average monthly billings.
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(b) Specialized Services:
(Maximum $50,000 required with $100 or greater in average monthly
billings for either Deposit or Transfer activity)
--Deposit Activity--$25,000.00 plus
--Transfer Activity--$25,000.00
(c) Participants not doing Specialized Service activity with service
fees of $100 or greater in average monthly billings. The greater of
either:
(1) $25,000, or;
(2) 1% of the average of the three highest net debits over the past
three months (rounded to the next $5,000 increment).
Philadep will recalculate each participant's deposit requirement at
the end of each month based on a participant's activity over the
previous three months. Philadep will notify its participants of any
required deposit increases and the amount of such additional deposit
within ten business days of the end of the month. Participants whose
deposit requirements have decreased will be notified at least quarterly
although they may inquire and withdraw excess deposits monthly.
Participants may leave excess cash deposits in the participants fund.
II. Discussion
Section 17A(b)(3)(F) of the Act \16\ 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 which are in the custody or
control of the clearing agency or for which it is responsible. The
Commission believes that Philadep's proposed rule change is consistent
with Philadep's obligations under Section 17A(b)(3)(F) to promote the
prompt and accurate clearance and settlement of securities transactions
because the proposal converts Philadep's money
[[Page 7845]]
settlement system from an NDFS system to an SDFS system. Philadep's
conversion to an SDFS system should help reduce risk by, among other
things, eliminating overnight participant credit risk. The SDFS system
also should reduce risk by achieving closer conformity with the payment
methods used in the derivatives markets, government securities markets,
and other markets.
\16\ 15 U.S.C. Sec. 78q-1(b)(3)(F) (1988).
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The Commission also believes the proposal is consistent with
Philadep's obligations to assure the safeguarding of securities and
funds in its custody or control because Philadep's SDFS proposal
provides certain protections for Philadep and its participants from
financial loss associated with member defaults and insolvencies. The
rule change contains several risk management controls that are intended
to protect Philadep and its participants by limiting Philadep's
exposure from one or more participants' inability to fulfill its or
their settlement obligations to an account within Philadep's liquidity
resources. Those protections include an all cash SDFS participants
fund,\17\ individual net debit caps, a fixed maximum net debit cap of
$40 million, and the application of the collateral monitor. In
addition, Philadep has increased its liquidity resources by retaining
additional committed and uncommitted lines of credit totaling $60
million.
\17\ Pursuant to Philadep Rule 4, Philadep is restricted from
investing the cash in the participants fund in any investment other
than U.S. Government obligations or any other investments which
provide safety and liquidity of the principal invested. The
Commission has interpreted this rule to mean that Philadep is
prohibited from investing the Philadep participants fund directly or
through SCCP in the specialists financing program operated by SCCP.
Letter from Jerry W. Carpenter, Assistant Director, Division,
Commission, to William W. Uchimoto, General Counsel, Philadep
(February 15, 1996).
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However, the Commission continues to have concerns about the
adequacy of Philadep's participants fund formulas in providing a
sufficient source of cash liquidity and the formulas' conformity with
the standards set forth by the Division.\18\ The Commission believes
clearing agencies must establish an appropriate level of clearing fund
contributions based, among other things, on its assessment of the risks
to which it is subject.
\18\ Securities Exchange Act Release No. 16900 (June 17, 1980),
45 FR 41920 (order approving standards for clearing agency
registration).
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Althouth Philadep submitted its assessment of the risks presented
by its conversion to an SDFS system and the risks posed by its
participants and their type of depository activities, the Commission
desires a more thorough analysis. Furthermore, the Commission believes
Philadep's recent depository arrangement with the West Canada
Depository Trust Company presents additional risks that were not
present when Philadep conducted its original risk assessment. Under the
proposed rule change, Philadep's participants fund formulas do not take
into consideration a participants' level of depository activity.
Rather, the formulas are fixed based on the type of depository services
used by the participant. The Commission has concerns about whether the
size of the participants fund will be sufficient because the formulas
are not based on participants' levels of depository activities. For
these reasons, the Commission is temporarily approving the portion of
the proposed rule change relating to the participants fund formulas
through August 31, 1996.
During the period of temporary approval, the Commission will
monitor and analyze the adequacy of the participants fund formulas in
an SDFS environment. In this regard, the Commission requests that
Philadep submit prior to filing for permanent approval of the
participants fund formulas a detailed report including (1) a
description of the different types of participants at Philadep, the
types of depository activities the participants conduct, and the number
of each type of participant, and (2) a detailed discussion of the types
of risks these participants and their activities pose and the measure
Philadep will take to mitigate the risks.
In addition, the Commission is concerned about Philadep's proposed
inter-depository delivery procedures. Under Philadep's proposed inter-
depository delivery procedures, Philadep will immediately update a
participant's account for delivery orders and payment orders sent to
DTC participants through the interface. In the event a delivery fails
to complete at DTC by the end of the day, the procedures provide a
mechanism by which Philadep will reverse the transaction to the
delivering Philadep participant without subjecting the reversal to risk
management controls. Philadep has represented that the expected volume
of deliveries through the interface and the possibility of such
reversal procedures being employed are minimal. However, the Commission
is concerned that Philadep's proposed inter-depository delivery
procedures could create the situation where an inter-depository
reversal resulting from an uncompleted delivery to a DTC participant
forces Philadep participant to violate its net debit cap near the end
of the day. Therefore, the Commission is temporarily approving the
portion of the proposed rule change relating to the inter-depository
delivery procedures through August 31, 1996, so that the Commission and
Philadep can monitor the interface activity before the procedures
become permanent.
During the period of temporary approval, Philadep has agreed to
submit monthly reports to the Commission concerning the number of
inter-depository reversals performed pursuant to the proposed
procedures that caused participants to violate their net debit caps.
The Commission encourages Philadep to examine and consider future
enhancements to the interface to provide a mechanism through which
Philadep participants can receive real-time notification of
transactions pending at DTC.
Philadep 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 filing of amendments. The Commission
finds good cause for approving the proposed rule change prior to the
thirtieth day after the date of publication of notice of filing of
amendments because the proposed rule change modifies Philadep's rules
in anticipation of Philadep's conversion to an SDFS system on February
22, 1996. Accelerated approval of the proposal will allow Philadep to
effect the conversion and to implement the procedures provided under
the proposed rule change on that date.
III. 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. Sec. 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 Philadep. All
submissions should refer to the file number SR-
[[Page 7846]]
Philadep-95-08 and should be submitted by March 21, 1996.
It is therefore ordered, pursuant to Section 19(b)(2) of the Act,
that the proposed rule change (File Nos. SR-Philadep-95-08) be, and
hereby is, temporarily approved through August 31, 1996, for those
sections of the proposed rule change relating to Philadep's
participants fund formulas and inter-depository delivery procedures and
permanently approved for the remainder of the proposed rule change.
For the Commission by the Division of Market Regulation,
pursuant to delegated authority.\19\
\19\ 17 CFR 200.30-3(a)(12) (1995).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 96-4576 Filed 2-28-96; 8:45 am]
BILLING CODE 8010-01-M
