[Federal Register Volume 60, Number 45 (Wednesday, March 8, 1995)]
[Notices]
[Pages 12793-12794]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-5585]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-35422; File No. SR-BSE-95-05]
Self-Regulatory Organizations; Boston Stock Exchange, Inc.;
Notice of Filing of Proposed Rule Change Relating to Implementation of
a Three-Day Settlement Standard
February 28, 1995.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ notice is hereby given that on February 21, 1995, the
Boston Stock Exchange, Incorporated (``BSE'') filed with the Securities
and Exchange Commission (``Commission'') a proposed rule change as
described in Items I, II, and III below, which items have been prepared
by BSE. 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
BSE proposes to modify its rules to implement a three business day
settlement standard for securities transactions. [[Page 12794]]
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, BSE 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. BSE 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
On October 6, 1993, the Commission adopted Rule 15c6-1 under the
Act 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.\2\ The rule will
become effective June 7, 1995.\3\
\2\Securities Exchange Act Release No. 33023 (October 6, 1993),
58 FR 52891.
\3\Securities Exchange Act Release No. 34952 (November 9, 1994),
59 FR 59137.
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The proposed rule change will amend BSE's definitions of
transactions nominated as ``Regular Way,'' ``Buyer's or Seller's
Option,'' and ``Next Day'' contained in Chapter II, Section 6 of BSE's
rules and will amend Chapter X, Section 1 of BSE rules regarding the
settlement of ``Cash and Ex-Dividend Transactions.'' Under the proposed
rule change, regular way settlement will occur on the third business
day after the trade, and buyer's or seller's option trades will settle
between four business days and 180 days following the contract date
except that BSE may provide otherwise in specific issues or classes of
securities. Next day trades will be able to settle on the first or
second business day following the date of the contract. Securities will
trade without (i.e., ``ex'') any dividend, right, or privilege on the
second full business day preceding the record date except that when the
record date is on a holiday the securities will trade ``ex'' on the
third preceding full business day.
The proposed rule change also amends Chapter XV, Section 14 of BSE
rules, ``Claims and Reports against Specialist.'' This proposed change
will shorten the time periods in which members can file claims of
erroneous or omitted transactions against specialists. Claims regarding
lack of a comparison of a reported transaction will have to be made
within three days of the original trade date of five days to comport
with the changes in the settlement cycle. Claims regarding the
omissions of reports and erroneous trade comparisons will have to be
made within five business days instead of ten business days. The latter
changes still will exceed the settlement cycle; however, they will
exceed the settlement cycle by only two days instead of five thus
reducing the risk associated with such claims. Finally, Chapter XXVIII,
subparagraph (4) requires that customers provide their agent
instructions within certain time frames for delivery versus payment and
receipt versus payment transactions. The time frames contained in
subparagraph (4)(i) and (ii) will be shortened by two business days.
The BSE's implementation of this proposed rule change will be
consistent with the ``T+3'' conversion schedule which the National
Securities Clearing Corporation has proposed for industry use. The
schedule is as follows:
------------------------------------------------------------------------
Settlement
Trade date cycle Settlement date
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June 2 Friday................ 5 day..... June 9 Friday.
June 5 Monday................ 4 day..... June 9 Friday.
June 6 Tuesday............... 4 day..... June 12 Monday.
June 7 Wednesday............. 3 day..... June 12 Monday.
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If the Commission determines to alter the exemptions currently
provided in Rule 15c6-1, BSE may need to undertake additional rule
amendments. It is intended that the proposed rule change will become
effective on the same date as Commission Rule 15c6-1.
The proposed rule change is consistent with Section 6(b)(5) of the
Act in that it is designed to promote just and equitable principles of
trade, to foster cooperation and coordination with persons engaged in
regulating, clearing, processing information with respect to, and
facilitating transactions in securities.
B. Self-Regulatory Organization's Statement on Burden on Competition
BSE does not believe that the proposed rule change will impose any
burden on competition that is 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
No written comments were either solicited or received.
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 BSE 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 Section, 450 Fifth Street NW.,
Washington, DC 20549. Copies of such filing also will be available for
inspection and copying at the principal office of BSE.
All submissions should refer to File No. SR-BSE-95-05 and should be
submitted by March 29, 1995.
For the Commission by the Division of Market Regulation,
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secrtary.
[FR Doc. 95-5585 Filed 3-7-95; 8:45 am]
BILLING CODE 8010-01-M
