[Federal Register Volume 59, Number 60 (Tuesday, March 29, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-7276]
[[Page Unknown]]
[Federal Register: March 29, 1994]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-33797; File No. SR-DTC-93-11]
Self-Regulatory Organizations; the Depository Trust Company;
Order Approving a Proposed Rule Change Relating to Enhancements to the
Automated Tender Offer Program
March 22, 1994.
On October 15, 1993, The Depository Trust Company (``DTC'') filed
with the Securities and Exchange Commission (``Commission'') a proposed
rule change (File No. SR-DTC-93-11) pursuant to section 19(b)(1) of the
Securities Exchange Act of 1934 (``Act'').\1\ Notice of the proposal
was published on December 17, 1993, in the Federal Register to solicit
comments on the proposed rule change.\2\ No comments were received. For
the reasons discussed below, the Commission is approving the proposed
rule change.
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\1\15 U.S.C. 78s(b)(1) (1988).
\2\Securities Exchange Act Release No. 33322 (December 10,
1993), 58 FR 66043 (File No. SR-DTC-93-11).
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I. Description of the Proposal
DTC is enhancing its Automated Tender Offer Program (``ATOP'') in
order to improve the processing of tender and exchange offers at
DTC.\3\ At present, a participant who wishes to submit a notice of
guaranteed delivery\4\ in a tender offer being processed in ATOP must
deliver outside of DTC a hard copy notice of guaranteed delivery to the
tender or exchange agent. Under the proposed rule change, participants
will be able to use ATOP to submit notices of guaranteed delivery in
the same way that they can now use ATOP to submit letters of
transmittal.\5\ When a participant utilizes ATOP to submit through
DTC's Participants Terminal System (``PTS'') a notice of guaranteed
delivery in a tender offer, the electronic instructions received by DTC
from the participant and retransmitted to the tender or exchange agent
will include a single character by which the participant acknowledges
its receipt of and agreement to be bound by the notice of guaranteed
delivery used in that offer.
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\3\For a description of ATOP, refer to Securities Exchange Act
Release Nos. 27139 (August 14, 1989), 54 FR 34841 (File No. SR-DTC-
88-19) (order approving the ATOP program); 29168 (May 7, 1991), 56
FR 22742 (File No. SR-DTC-91-04) (order granting accelerated
approval on a temporary basis to modifications of ATOP); 30678 (May
7, 1992), 57 FR 20541 (File No. SR-DTC-91-11) (order approving
modifications of ATOP); and 32645 (July 16, 1993), 58 FR 39585 (File
No. SR-DTC-92-12) (order approving mandatory use of ATOP).
\4\Notices of guaranteed delivery, sometimes called protect
letters, are documents submitted to the tender agent prior to the
expiration of the tender offer whereby the offeror submitting the
notice guarantees delivery of securities after the expiration of the
tender offer but before the expiration of the protection period.
(The protection period usually lasts eight days after the expiration
of the tender offer.)
\5\For a description of submission of letters of transmittal
under ATOP, refer to Securities Exchange Act Release No. 32645 (July
16, 1993), 58 FR 39585 (File No. SR-DTC-92-12) (order approving
mandatory use of ATOP).
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DTC also is modifying its DTC/Agent Letter of Agreement. Currently,
each time DTC handles a tender offer with a tender or exchange agent,
DTC and the agent sign a hardcopy DTC/Agent Letter of Agreement which
makes DTC's Voluntary Offerings Program Agents Procedures, including
the ATOP procedures, applicable to the tender offer. DTC then adds
attachments to the DTC/Agent Letter of Agreement to cover special
procedures to be followed in the offer. Under the proposed rule change,
DTC is eliminating the hardcopy DTC/Agent Letter of Agreement for each
tender offer and will use PTS to communicate with a tender or exchange
agent regarding each tender offer. The current form of the DTC/Agent
Letter of Agreement will be replaced with a hardcopy Master Agreement
which a tender or exchange agent will sign once. The Master Agreement
will provide that the Master Agreement and DTC's Voluntary Offerings
Program Agents Procedures will apply to all tender offers done
thereafter through ATOP for which the tender or exchange agent acts.
After a tender or exchange agent has entered into the Master Agreement
with DTC, PTS will be used to confirm the agreement between the agent
and DTC for each new tender offer in ATOP and to confirm any special
procedures for that tender offer.
II. Discussion
The Commission believes that the proposal is consistent with the
Act and particularly with section 17A of the Act.\6\ Sections 17A(b)(3)
(A) and (F) require that a clearing agency be organized and its rules
be designed to facilitate and promote the prompt and accurate clearance
and settlement of securities transactions.\7\ The proposed rule change
further automates the processing of tender offers involving securities
on deposit at DTC by eliminating the processing of hardcopy notices of
guaranteed delivery, and thereby, further alleviates problems such as
the risk of loss, delays during shipment, and the expense and labor
involved in the handling of physical documents. Furthermore, the
proposed rule change, which is an extension of DTC's existing,
Commission-approved ATOP program,\8\ will be implemented consistently
with the safekeeping requirements of sections 17A(b)(3) (A) and (F).\9\
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\6\15 U.S.C. 78q-1 (1988).
\7\15 U.S.C. 78q-1(b)(3) (A) and (F) (1988).
\8\Supra note 3.
\9\15 U.S.C. 78q-1(b)(3) (A) and (F) (1988). Sections 17A(b)(3)
(A) and (F) require that a clearing agency be organized and its
rules be designed to assure the safeguarding of securities and funds
in the clearing agency's custody or control or for which it is
responsible.
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III. Conclusion
The Commission finds that the proposal is consistent with the
requirements of the Act and particularly with section 17A of the Act
and the rules and regulations thereunder.
It is therefore ordered, pursuant to section 19(b)(2) of the Act,
that the proposed rule change (File No. SR-DTC-93-11) be, and hereby
is, approved.
For the Commission by the Division of Market Regulation,
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 94-7276 Filed 3-28-94; 8:45 am]
BILLING CODE 8010-01-M
