[Federal Register Volume 61, Number 63 (Monday, April 1, 1996)]
[Notices]
[Pages 14357-14358]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-7843]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-37024; File No. 600-25]
Self-Regulatory Organizations; Participants Trust Company; Order
Granting Approval of Application for Extension of Temporary
Registration as a Clearing Agency
March 26, 1996.
On February 22, 1996, the Participants Trust Company (``PTC'')
filed with the Securities and Exchange Commission (``Commission''),
pursuant to Section 19(a) of the Securities Exchange Act of 1934
(``Act''),\1\ a request for extension of its temporary registration as
a clearing agency under Section 17A of the Act for a period of one
year.\2\ Notice of PTC's request for extension of temporary
registration appeared in the Federal Register on March 13, 1996.\3\
This order approves PTC's request for extension of its temporary
registration as a clearing agency through March 31, 1997.
\1\ 15 U.S.C. Sec. 78s(a) (1988).
\2\ Letter from John J. Sceppa, President and Chief Executive
Officer, PTC, to Jerry Carpenter, Assistant Director, Division of
Market Regulation, Commission (February 21, 1996).
\3\ Securities Exchange Act Release No. 36938 (March 7, 1996),
61 FR 10409.
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On March 28, 1989, the Commission granted PTC's application for
registration as a clearing agency pursuant to Sections 17A(b)(2) and
19(a) of the Act \4\ on a temporary basis for a period of one year.\5\
Subsequently, the Commission issued orders that extended PTC's
temporary registration as a clearing agency.\6\ PTC's current temporary
registration extends through March 31, 1996.
\4\ 15 U.S.C. Secs. 78q-1(b)(2) and 78s(a) (1988).
\5\ Securities Exchange Act Release No. 26671 (March 28, 1989),
54 FR 13266.
\6\ Securities Exchange Act Release Nos. 27858 (March 28, 1990),
55 FR 12614; 29024 (March 28, 1991), 56 FR 13848; 30537 (April 9,
1992), 57 FR 12351; 32040 (March 23, 1993), 58 FR 16902; 33734
(March 8, 1994), 59 FR 11815; and 35482 (March 13, 1995), 60 FR
14806.
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As discussed in detail in the initial order granting PTC's
temporary registration,\7\ one of the primary reasons for PTC's
registration was to develop depository facilities for mortgage-backed
securities, particularly securities guaranteed by the Government
National Mortgage Association (``GNMA''). PTC services include
certificate safekeeping, book-entry deliveries, and other services
related to the immobilization of securities certificates.
\7\ Supra note 5.
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PTC continues to make significant progress in the areas of
financial performance, regulatory commitments, and operational
capabilities. For example, the original face value of securities on
deposit at PTC as of December 31, 1995, totalled $1.1 trillion, which
was an increase of approximately $1.26 billion over the amount on
deposit as of December 31, 1994. Total pools on deposit, which were
held at PTC in a total of 1.1 million participant positions, rose from
279,000 as of December 31, 1994, to more than 302,000 as of December
31, 1995.\8\ In addition, PTC declared a dividend of $.98 per share to
stockholders of record as of the close of business on December 21,
1995.\9\ Four new participants and four new shareholders also were
added in 1995 bringing the total participation in PTC to twenty-nine
banks, twenty-three broker/dealers, and two government-sponsored
enterprises.
\8\ Supra note 2.
\9\ Securities Exchange Act Release No. 36790 (January 30,
1996), 61 FR 4507.
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In support of the securities industry's effort to move security
payments to same-day funds, PTC also saw continued improvement in its
GNMA I principal and interest (``P&I'') collection and disbursement
efforts. For example, PTC modified its program for the intraday
distribution of GNMA I P&I by increasing the maximum amount of
collected and available GNMA I P&I that may be distributed intraday
from fifty percent to sixty-five percent.\10\ An overall reduction in
mortgage prepayment trends throughout 1995 had a noticeable impact on
the volume of P&I disbursed, which was $86 billion in 1995 compared to
$116 billion in 1994.
\10\ Securities Exchange Act Release No. 35574 (April 16, 1995),
60 FR 18866.
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PTC also continued its efforts over the past year to implement the
operational and procedural changes that PTC committed to make in an
agreement with the Commission and with the Federal Reserve Bank of New
York in connection with PTC's original temporary registration.\11\ For
example, PTC implemented improvements to its SPEED securities
processing system on January 8, 1996.\12\ These improvements cause
transaction credits and debits to be posted simultaneously on the
deliver and receive sides of a transaction. PTC believes that this
change to its processing system satisfies Commitment No. 3 of PTC's
nine commitments. Of PTC's nine commitments, only Commitment No. 6
remains to be fulfilled by PTC.\13\
\11\ The nine operational and procedural changes PTC committed
to make included:
(1) eliminating trade reversals from PTC's procedures to cover a
participant default;
(2) phasing out the aggregate excess net debit limitation for
extensions under the net debit monitoring level procedures;
(3) allowing participants to retrieve securities in the abeyance
account and not allowing participants to reverse transfers because
customers may not be able to fulfill financial obligations to the
participants;
(4) eliminating the deliverer's security interest and replacing
it with a substitute;
(5) reexamining PTC's account structure rules to make them
consistent with PTC's lien procedures;
(6) making principal and interest advances, now mandatory,
optional;
(7) expanding and diversifying PTC's lines of credit;
(8) assuring operational integrity by developing and
constructing a back-up facility; and
(9) reviewing PTC rules and procedures for consistency with
current operations.
\12\ Securities Exchange Act Release No. 36711 (January 11,
1996), 61 FR 1809.
\13\ Supra note 11.
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The Commission believes that PTC has functioned effectively as a
registered clearing agency for the past seven years and has
demonstrated that it has the operational and procedural capacities to
comply with the statutory obligations set forth under Section 17A(b)(3)
of the Act,\14\ which sets forth the prerequisites for registration as
a clearing agency. Therefore, the Commission is extending PTC's
temporary registration as a clearing agency through March 31, 1997.
Comments received during PTC's temporary registration will be
considered in determining whether PTC should receive permanent
registration as a clearing agency under Section 17A(b) of the Act.\15\
\14\ 15 U.S.C. Sec. 78q-1(b)(3) (1988).
\15\ 15 U.S.C. Sec. 78q-1(b) (1988).
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It is therefore ordered, that PTC's registration as a clearing
agency be and hereby is approved on a temporary basis through March 31,
1997.
For the Commission by the Division of Market Regulation,
pursuant to delegated authority.\16\
\16\ 17 CFR 200.30-3(a)(50) (1995).
[[Page 14358]]
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Jonathan G. Katz,
Secretary.
[FR Doc. 96-7843 Filed 3-29-96; 8:45 am]
BILLING CODE 8010-01-M
