[Federal Register Volume 61, Number 49 (Tuesday, March 12, 1996)]
[Notices]
[Pages 10050-10051]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-5843]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-36931; File No. SR-NSCC-96-05]
Self Regulatory Organizations; National Securities Clearing
Corporation; Notice of Filing of Proposed Rule Change Modifying the
Automated Customer Account Transfer Service to Facilitate the Transfer
of Shares Being Tracked in the Initial Public Offering Tracking System
March 6, 1996.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ notice is hereby given that on February 27, 1996, the
National Securities Clearing Corporation (``NSCC'') 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 NSCC. The Commission is publishing this
notice to solicit comments on the proposed rule change from interested
persons.
\1\ 15 U.S.C. Sec. 78S(b)(1) (1988).
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
NSCC proposes to modify its rules and procedures relating to its
Automated Customer Account Transfer Service (``ACATS'') to facilitate
the transfer of shares which are purchased in an initial public
offering (``IPO shares'') and which are being tracked in The Depository
Trust Company's (``DTC'') IPO tracking system.\2\
\2\ This filing is made in conjunction with DTC's proposed rule
change seeking to implement the IPO tracking system. The IPO
tracking system will allow lead managers and syndicate members of
equity underwritings to monitor flipping of new issues in an
automated bookentry environment. For a complete description of the
IPO tracking system, refer to Securities Exchange Act Releaser No.
36897 (February 27, 1996), [SR-DTC-95-27] (notice of filing of
proposed rule change seeking to implement the IPO tracking system).
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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, NSCC 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. NSCC 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 these statements.
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A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
The proposed rule change will notify NSCC's Rule 50 (ACATS) so that
Rule 50 states that shares to be transferred through ACATS that are
being tracked through DTC's IPO tracking system will not be entered
into NSCC's Continuous Net Settlement (``CNS'') accounting operation
even if such shares are CNS eligible.\4\ Rule 50 also will state that
NSCC will prepare ACATS receive and deliver orders for such shares.
\4\ CNS eligible securities are those securities that are
eligible for transfer on the books of a securities depository
registered with the Commission under Section 17A of the Act and that
are contained in a list maintained by NSCC as subject to clearance
and settlement in its CNS system.
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Under DTC's proposed IPO tracking system, broker-dealers will have
an IPO control account at DTC for IPO shares and a free account for
shares purchased in the secondary market. The seg regated accounts aid
in tracking the movement of IPO shares.
In the CNS system, deliver obligations must be made from the free
account. If IPO shares for which there is an ACATS deliver obligation
were to settle in CNS, the shares would have to be moved out of the
segregated IPO control account and into the member's free account. The
IPO tracking system would register the movement from the IPO control
account into the free account as a flip \5\ and would no longer be able
to track the shares.
\5\ Flipping occurs during an IPO when a syndicate's lead
manager is supporting the IPO with a stabilization bid, which is
intended to keep the price of the issue from dropping below its
initial offering price, and securities that had been distributed to
investors are resold by those investors back to the syndicate.
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NSCC's proposed rule change will require IPO shares transferred
through ACATS to be delivered ex-CNS (i.e., outside of the CNS system).
The shares will be delivered pursuant to DTS's new IPO customer account
transfer function. The shares will continue to be tracked and will not
register as flipped even though they are subject to an ACATS deliver
obligation.
NSCC believes the proposed rule change is consistent with the
requirements of Section 17A of the Act \6\ because the change will
facilitate efficiency and safety in the clearance and settlement of
securities transactions. Furthermore, NSCC believes the proposed rule
change will permit DTC's IPO tracking system to achieve its maximum
potential and expects to implement these changes concurrently with the
implementation of DTC's IPO tracking system.
\6\ 15 U.S.C. 78q-1 (1988)
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B. Self-Regulatory Organization's Statement on Burden on Competition
NSCC does not believe that the proposed rule change will have an
impact on or impose a burden on competition.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments relating to the proposed rule change have been
solicited or received. NSCC will notify the Commission of any written
comments received by NSCC.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Within thirty-five days of the date of publication of this notice
in the Federal Register or within such longer period (i) As the
Commission may designate up to ninety days of such date if it finds
such longer period to be appropriate and publishes its reasons for so
finding or (ii) as to which the self-regulatory organization consents,
the Commission will:
(A) by order approve such proposed rule change or
(B) institute proceedings to determine whether the proposed rule
change should be disapproved.
[[Page 10051]]
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 with held from the public in accordance with provisions of
5 U.S.C. 552, will be available for inspection and copying in the
Commission's Public Reference Section 450 Fifth Street NW., Washington,
DC 20549. Copies of such filing will also be available for inspection
and copying at the principal office of NSCC. All submissions should
refer to File No. SR-NSCC-96-05 and should be submitted by April 2,
1996.
For the Commission by the Division of Market Regulation,
pursuant to delegated authority.\7\
\7\ 17 CFR 200.30-3(a)(12) (1995).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 96-5843 Filed 3-11-96; 8:45 am]
BILLING CODE 8010-01-M
