[Federal Register Volume 62, Number 45 (Friday, March 7, 1997)]
[Notices]
[Pages 10602-10603]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-5672]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-38352; File No. SR-NSCC-97-01]
Self-Regulatory Organizations; National Securities Clearing
Corporation; Notice of Filing of a Proposed Rule Change To Eliminate
NSCC's Securities Transfer Service
February 28, 1997.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ notice is hereby given that on January 22, 1997, the
National Securities Clearing Corporation (``NSCC'') filed with the
Securities and Exchange Commission (``Commission'') the proposed rule
change (File No. SR-NSCC-97-01) 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.
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\1\ 15 U.S.C. 78s(b)(1).
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The purpose of the proposed rule change is to permit NSCC to
eliminate its Securities Transfer Service (``STS'').
[[Page 10603]]
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 that 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.\2\
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\2\ The Commission has modified the text of the summaries
submitted by NSCC.
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(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 permit NSCC to
eliminate its STS.\3\ NSCC Rule 42, which established STS, will be
deleted. STS was originally developed by NSCC in 1976 to provide
assistance with the manual processing of items that were ineligible at
The Depository Trust Company (``DTC''). It was established as an
optional service to be used by full settling participants for the high
volume transfer of DTC ineligible items and for the high volume
transfer and reregistration of physical securities through various
transfer agencies. STS was also designed to deliver book closing items,
legal transfers, and accommodation transfers. Once STS is eliminated,
participants will process items directly through the appropriate
transfer agent.
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\3\ STS is commonly referred to as the National Transfer
Service.
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The STS process is primarily manual. STS participants first
physically send envelopes containing securities certificates to an NSCC
office. Pursuant to the participant's transfer instructions, the
envelopes are next forwarded by NSCC to the offices of the indicated
transfer agents, which are located throughout the United States and
Canada. Upon completion of the reregistration, the transfer agents
return the certificates to NSCC's office for pick up.
A review of STS' volume during the 1980s shows that STS processed
approximately 670 securities certificates per day. As a high volume
service, STS was able to take advantage of economies of scale for the
broker-dealer community. However, after 1987 volume fell dramatically
because DTC began increasing the number of DTC eligible securities and
because the Group of 30 initiatives caused the brokerage industry to
move towards a book-entry registration environment which decreased the
movement of physical securities.\4\ By 1994, STS' volume fell 82% to
120 securities certificates processed per day. The downward trend
continues today. STS processed just over twenty-five items per day in
October 1996 or about an 80% decrease from its 1994 volume and a 96%
decrease from its 1980s volume.
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\4\ The Group of Thirty, established in 1978, is an independent,
non partisan organization composed of international financial
leaders whose focus is on international economic and financial
issues. In March 1989, the Group of Thirty issued a report
containing nine recommendations to improve clearance and settlement
systems.
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NSCC expects to eliminate STS thirty business days after
notification to participants that this proposed rule change is approved
by the Commission. NSCC believes the proposed rule change is consistent
with the requirements of Section 17A of the Act \5\ and the rules and
regulations thereunder because the rule proposal will facilitate the
prompt and accurate clearance and settlement of securities
transactions.
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\5\ 15 U.S.C. 78q-1.
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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 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 NSCC 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.
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 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 Room, 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 the file number SR-NSCC-97-01 and should be submitted by March
28, 1997.
For the Commission by the Division of Market Regulation,
pursuant to delegated authority.\6\
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\6\ 17 CFR 200.20-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 97-5672 Filed 3-6-97; 8:45 am]
BILLING CODE 8010-01-M
