[Federal Register Volume 60, Number 49 (Tuesday, March 14, 1995)]
[Notices]
[Pages 13743-13744]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-6214]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-35452; File No. SR-DTC-95-03]
Self-Regulatory Organizations; The Depository Trust Company;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change
Clarifying Exclusion of Money Market Instrument Programs From DTC's
Charge Back and Return of Funds Procedures for Erroneous or Improper
Payments of Dividends and Interest and Redemption Proceeds
March 7, 1995.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ notice is hereby given that on January 31, 1995, 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 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 proposed rule change clarifies that DTC's procedures for
charging back from participants' accounts erroneous or improper
payments of dividends and interest and redemption proceeds, as well as
DTC's procedures for the subsequent return of such funds to payors,\2\
do not apply to such payments made for instruments in DTC's Money
Market Instrument (``MMI'') programs.\3\
\2\For a complete description of these procedures, refer to
Securities Exchange Act Release Nos. 23219 (May 8, 1986), 51 FR
17845 [SR-DTC-86-03] (notice of filing and immediate effectiveness
on a temporary basis of a proposed rule change implementing
procedures for charging back erroneous dividend and interest
payments from participants' accounts), 23686 (October 7, 1986), 51
FR 37104 [SR-DTC-86-04] (order approving proposed rule change
implementing charge back procedures), and 26070 (September 9, 1988)
53 FR 36142 [SR-DTC-88-17] (notice of filing and immediate
effectiveness of proposed rule change clarifying that charge back
procedures apply to DTC's same-day funds settlement system as well
as its next-day funds settlement system).
\3\For a complete description of DTC's MMI programs, refer to
Securities Exchange Act Release No. 33958 (April 22, 1994), 59 FR
22878 [SR-DTC-93-12] (notice of order temporarily approving a
proposed rule change expanding the Money Market Instrument
Settlement Program).
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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.
(A) Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
The purpose of the proposed rule change is to clarify that DTC's
procedures for charging back from participants' accounts erroneous or
improper payments of dividends and interest and redemption proceeds, as
well as DTC's procedures for the subsequent return of funds to payors,
do not apply to payments made for instruments in DTC's MMI programs.
DTC's charge back and return of funds procedures do not apply to those
instruments that are included in DTC's [[Page 13744]] MMI programs
because MMIs are processed differently as discussed more fully below.
DTC sweeps maturing MMIs from the accounts of ``presenting
participants'' and initiates book-entry deliveries versus payment to
paying agents' accounts on maturity date for inclusion in that day's
same-day settlement system net settlement. Paying agents can refuse to
accept maturity presentments of an issuer's MMIs so long as the paying
agents notify DTC of their intention by 3:00 p.m. Eastern Standard Time
on the day the MMI matures. If a paying agent refuses to accept
maturity presentments, DTC will communicate this to all DTC
participants and will reverse the maturity presentments by recrediting
the participants' accounts with the maturing MMI, thus offsetting
settlement credits in those accounts. DTC also will unwind any other
maturity presentments, valued issuance, periodic income payments (e.g.,
interest or dividend), principal presentments, and reorganization
presentments that it may have processed earlier that day in the same
and other MMIs of a ``defaulting issuer.''
DTC 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 DTC because the proposal will improve the
timeliness of dividend and redemption payments to DTC participants and
will improve the processing and recordkeeping in the Dividends and
Reorganization Departments of DTC and its participants. The proposed
rule change also will improve the procedures for safeguarding funds in
DTC's custody or control of for which it is responsible.
(B) Self-Regulatory Organization's Statement on Burden on Competition
DTC does not believe that the proposed rule change will impose any
burden on competition not necessary or appropriate in furtherance of
the purposes of the Act.
(C) Self-Regulatory Organization's Statement on Comments on the
Proposed Rule Change Received from Members, Participants or Others
Written comments from DTC participants or others have not been
solicited or received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The foregone rule change has become effective pursuant to Section
19(b)(3)(A)(i)\4\ of the Act and Rule 19b-4(e)(1)\5\ promulgated
thereunder because it constitutes a state policy, practice, or
interpretation with respect to the meaning, administration, or
enforcement of DTC's existing procedures for the payment of dividends,
interest, and redemption proceeds. At any time within sixty days of the
filing of this proposed rule change, the Commission summarily may
abrogate the rule change if it appears to the Commission that such
action is necessary or appropriate in the public interests, for the
protection of investors, or otherwise in furtherance of the proposed of
the Act.
\4\15 U.S.C. 78s(b)(3)(A)(i) (1988).
\5\17 CFR 240.19b-4(e)(1) (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 submission
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 Section, 450 Fifth Street, N.W.,
Washington, D.C. 20549. Copies of such filing will also be available
for inspection at DTC. All submissions should refer to File No. SR-DTC-
95-03 and should be submitted by April 13, 1995.
For the Commission by the Division of Market Regulation,
pursuant to the delegated authority.\6\
\6\17 CFR 200.30-3(a)(12) (1994).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 95-6214 Filed 3-13-95; 8:45 am]
BILLING CODE 8010-01-M
