[Federal Register Volume 60, Number 57 (Friday, March 24, 1995)]
[Notices]
[Page 15620]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-7240]
[[Page 15620]]
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-35510; File No. SR-SCCP-94-07]
Self-Regulatory Organizations; Stock Clearing Corporation of
Philadelphia; Order Approving Proposed Rule Change Relating to
Implementation of a Three-Day Settlement Standard
March 17, 1995.
On November 14, 1994, the Stock Clearing Corporation of
Philadelphia filed a proposed rule change (File No. SR-SCCP-94-07) with
the Securities and Exchange Commission (``Commission'') pursuant to
Section 19(b) of the Securities Exchange Act of 1934 (``Act'').\1\ On
December 19, 1994, SCCP filed an amendment to the proposed rule
change.\2\ Notice of the proposal was published in the Federal Register
on January 4, 1995, to solicit comments from interested persons.\3\ As
discussed below, this order approves the proposed rule change.
\1\15 U.S.C. 78s(b) (1988).
\2\Letter from Sharon S. Metzker, SCCP, to Christine Sibille,
Senior Counsel, Division of Market Regulation, Commission (December
12, 1994).
\3\Securities Exchange Act Release No. 35154 (December 27,
1994), 60 FR 519.
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I. Description
In October 1993, the Commission adopted Rule 15c6-1 under the
Act\4\ which establishes three business days after the trade date
(``T+3''), instead of five business days (``T+5''), as the standard
settlement cycle for most securities transactions. The rule will become
effective June 7, 1995.\5\ Several of SCCP's rules are interrelated
with settlement time frames. The purpose of the proposed rule change is
to amend SCCP's rules to be consistent with a T+3 settlement standard
for securities transactions.
\4\17 CFR 240.15c6-1.
\5\Securities Exchange Act Release Nos. 33023 (October 6, 1993),
58 FR 52891 (order adopting Rule 15c6-1) and 34952 (November 9,
1994), 59 FR 59137 (changing effective date from June 1, 1995, to
June 7, 1995).
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The proposed rule change amends Rule 18 (``Insolvency''), Section 6
to provide that upon the insolvency of a participant, no contracts
pending settlement up to and including T+1 shall be settled by SCCP.
Rule 18, Section 7 is amended to provide that on or after T+2, SCCP
will buy in the securities due it from an insolvent participant and
will sell out the securities due to the participant from SCCP. The
proposed rule change also amends Rule 40 (``Instruments with Exercise
Privileges'') to state that a participant is advised of potential
liability based on its short value positions on its CNS projection
report starting on the second business day after the trade date.
SCCP has requested that the proposed rule change become effective
on the same date as Rule 15c6-1. Rule 15c6-1 becomes effective on June
7, 1995.\6\
\6\The transition from five day settlement to three day
settlement will occur over a four day period. Friday, June 2, will
be the last trading day with five business day settlement. Monday,
June 5, and Tuesday, June 6, will be trading days with four business
day settlement. Wednesday, June 7, will be the first trading day
with three business day settlement. As a result, trades from June 2
and June 5 will settle on Friday, June 9. Trades from June 6 and
June 7 will settle on Monday, June 12.
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II. Discussion
The Commission believes the proposal is consistent with the
requirements of Section 17A of the Act.\7\ Specifically, Section
17A(b)(3)(F)\8\ states that the rules of a clearing agency must be
designed to assure the safeguarding of securities and funds which are
in the clearing agency's custody or control or for which it is
responsible and must be designed to foster cooperation and coordination
with persons engaged in the clearance and settlement of securities
transactions. Several of SCCP rules are based on a five day time frame
for settlement of securities transactions. On June 7, 1995, the new
settlement cycle of T+3 will be established as mandated by the
Commission's Rule 15c6-1. As a result, SCCP's current rules will be
inconsistent with the Commission's rule. This proposal will amend
SCCP's rules to harmonize them with the Commission's Rule 15c6-1 and a
T+3 settlement cycle. Further, the proposal amends SCCP's procedures
for dealing with an insolvent participant to be consistent with a T+3
settlement cycle. Thus, the proposal enhances SCCP's ability to
safeguard securities and funds in its custody and control or for which
it is responsible.
\7\15 U.S.C. 78q-1 (1988).
\8\15 U.S.C. 78q-1(b)(3)(F) (1988).
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III. Conclusion
For reasons stated above, the Commission finds that SCCP's proposal
is consistent with Section 17A of the Act.\9\
\9\15 U.S.C. 78q-1 (1988).
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It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\10\ that the proposed rule change (File No. SR-SCCP-94-07) be and
hereby is approved and will become effective June 7, 1995.
\10\15 U.S.C. 78s(b)(2) (1988).
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For the Commission by the Division of Market Regulation,
pursuant to delegated authority.\11\
\11\17 CFR 200.30(a)(12) (1994).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 95-7240 Filed 3-23-95; 8:45 am]
BILLING CODE 8010-01-M
