[Federal Register Volume 60, Number 23 (Friday, February 3, 1995)]
[Notices]
[Pages 6741-6743]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-2694]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-35293; File No. SR-MSTC-94-19]
Self-Regulatory Organizations; Midwest Securities Trust Company;
Notice of Filing and Order Granting Accelerated Approval of Proposed
Rule Change Implementing New Procedures Regarding the Distribution of
Hardcopy Reorganization Offer Notices
January 30, 1995.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ notice is hereby given that on December 8, 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. On December 15, 1994, MSTC amended the proposed rule
change by requesting that the Commission consider the proposal as being
filed under Section 19(b)(2)\2\ of the Act instead of Section
19(b)(3)(A)\3\ of the Act.\4\ The Commission is publishing this notice
and order to solicit comments from interested [[Page 6742]] persons and
to grant accelerated approval of the proposed rule change.
\1\15 U.S.C. 78s(b)(1) (1988).
\2\15 U.S.C. 78s(b)(2) (1988).
\3\15 U.S.C. 78s(b)(3) (1988).
\4\Letter from David T. Rusoff, Foley & Lardner, to Peter R.
Geraghty, Division of Market Regulation, Commission (December 15,
1994).
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I. Self-Regulatory Organizations Statement of the Terms and Substance
of the Proposed Rule Change
In light of the recent implementation of the Reorganization
Processing System (``RPS''),\5\ MSTC proposes to introduce new
procedures regarding distribution of the hardcopy (i.e., paper)
reorganization offer notices to MSTC participants.
\5\For a complete description of RPS, refer to Securities
Exchange Act Release No. 34200 (June 10, 1994), 59 FR 31283 [File
No. SR-MSTC-94-8] (notice of filing and immediate effectiveness of a
proposed rule change relating to reorganization processing).
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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, 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. MSTS 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
The primary purpose of MSTC's proposed rule change is to implement
new procedures regarding the distribution of hardcopy reorganization
notices to MSTC members. Rule 4 under Article IV of MSTC's rules
describes MSTC's activities with respect to reorganization information
disseminated by MSTC. Pursuant to these rules, MSTC provides daily to
all MSTC participates detailed written notices, termed ``Goldenrod
Notices,'' of each newly announced or updated corporate reorganization
offer. MSTC recently implemented RPS, an on-line computer system
available to participants for accessing reorganization information;
therefore, MSTC proposes to discontinue providing detailed written
notices to all participants. Under the proposal, MSTC will provide
hardcopy notices only to those participants with a Midwest Clearing
Corporation (``MCC'') or MSTC position\6\ in the security to which the
notice relates on the date the RPS notice is produced by MSTC. Every
participant will continue to have available information regarding every
reorganization offer, but unless the participant has a position in the
subject security, the information will be provided over RPS rather than
in hardcopy reorganization notices. Consequently, MSTC participants
that do not have a position in the affected security on the date MSTC
produces the reorganization notices will have to use RPS to access the
information.\7\
\6\A MCC/MSTC position represents securities of a particular
CUSIP of an individual participant at either the MCC or MSTC.
\7\Currently, RPS inquiries can be designed by participants to
provide offer information regarding any combination of the
following: (1) Position only, (2) selected date or date ranges, (3)
offer status, (4) specific offer groups or types, (5) CUSIP or CUSIP
ranges, and (6) critical date types. Participants subsequently can
create customized reports containing this information. RPS
represents offers classified as either nonmandatory, mandatory, or
redemption. These offer classifications will be expanded to include
nonexpiring offers. Nonmandatory offers include tenders, exchanges,
puts, rights, and warrants. Mandatory offers include mergers,
reverse splits, liquidations, bankruptcies, and name and CUSIP
changes. Currently redemptions include partial prefundings, and
convertible partial calls. Full calls, partial calls, and maturities
are not yet included in RPS. Notably, MSTC anticipates that in the
future participants will be able to use RPS for processing
reorganization offer instructions in a real-time environment.
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Following this rule change, two hardcopy reports that summarize
offer information will be provided daily to all participants: the
``Offer Information Report'' and the ``Active Offers with Position
Report.'' The Offer Information Report will identify new, updated, and
closed RPS offers, and indicate whether the participant has a position
with MSTC in the relevant CUSIPs. The Active Offers with Position
Report will list all active RPS offers in which the participant has a
MCC/MSTC position.
Sections 3 and 4 of rule 2 of Article IV set forth MSTC's
responsibility with respect to reorganization information disseminated
by MSTC. Consistent with MSTC's current policy, MSTC continues to
disclaim any obligation, responsibility, or liability with respect to
these written notices provided to participants.
MSTC believes that the proposed rule change is consistent with the
requirements of Section 17A of the Act and the rules and regulations
thereunder applicable to MSTC because the proposal will further
automate the processing of reorganization offers through the facilities
of MSTC.
(B) Self-Regulatory Organization's Statement on Burden on Competition
MSTC believes that no burden will be placed on competition as a
result of the proposed rule change.
(C) Self-Regulatory Organization's Statement on Comments on the
Proposed Rule Change Received from Members, Participants or Others
MSTC has not solicited or received any comments. MSTC will notify
the Commission of any written comments it receives.
III. Date of Effectiveness of the Proposed Rule Change and Timing
for Commission Action
Section 17A(b)(3)(F) of the Act requires that the rules of a
clearing agency be designed to promote the prompt and accurate
clearance and settlement of securities transactions.\8\ The Commission
believes that the proposed rule change is consistent with MSTC's
obligations under Section 17A(b)(3)(F) because the rule change should
help to reduce the labor and expense associated with distributing
reorganization notices to all MSTC participants and thereby increases
the efficiency of reorganization processing and advances the prompt and
accurate clearance and settlement of securities transactions.
\8\15 U.S.C. 78q-1(b)(3)((F) (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 the RPS system
has been operational for more than six months and accelerated approval
will allow MSTC to begin as soon as possible to reduce the amount of
paper notices that it must produce.
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 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 Fifth Street, NW.,
Washington, DC 20549. Copies of such [[Page 6743]] filing will also be
available for inspection and copying at the principal office of MSTC.
All submissions should refer to File No. SR-MSTC-94-19 and should be
submitted by February 24, 1995.
It is therefore ordered, pursuant to Section 19(b)(2) of the Act,
that the proposed rule change (File No. SR-MSTC-94-19) be, and hereby
is, approved.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\9\
\9\17 CFR 200.30-3(a)(12) (1994).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 95-2694 Filed 2-2-95; 8:45 am]
BILLING CODE 8010-01-M
