[Federal Register Volume 60, Number 71 (Thursday, April 13, 1995)]
[Notices]
[Pages 18866-18867]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-9076]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-35574; File No. SR-PTC-95-02]
Self-Regulatory Organizations; Participants Trust Company; Notice
of Filing and Order Granting Accelerated Approval of Proposed Rule
Change Modifying PTC's Program for the Early Distribution of Principal
and Interest on Government National Mortgage Association I Securities
April 6, 1995.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ notice is hereby given that on March 7, 1995, the
Participants Trust Company (``PTC'') filed with the Securities and
Exchange Commission (``Commission'') the proposed rule change (File No.
SR-PTC-95-02) as described in Items I and II below, which Items have
been prepared primarily by PTC. The Commission is publishing this
notice and order to solicit comments on the proposed rule change from
interested persons and to grant accelerated approval of the proposed
rule change.
\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
The proposed rule change modifies PTC's program for the early
distribution of principal and interest (``P&I'') on Government National
Mortgage Association (``GNMA'') I securities.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, PTC 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. PTC 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 the
Statutory Basis for, the Proposed Rule Change
Background
Before November 1993, PTC's rules and procedures provided that PTC
disburse P&I by means of a credit to participants' cash balances. This
resulted in participants receiving at the end of the day as part of the
settlement process the amount of the P&I net of any account debits and/
or credits. In November 1993, PTC's rules were amended to eliminate the
requirement that P&I be disbursed by means of a credit to participants'
cash balances and to permit PTC to make intraday Fedwire distributions
of collected and available GNMA I P&I.\2\
\2\PTC Rules, Article III, Rule 2, Section 1, ``Principal and
Interest Payments.'' For a complete description of PTC's amendments,
refer to Securities Exchange Act Release Nos. 33132 (November 9,
1993), 58 FR 59501 [File No. SR-PTC-93-02] (order approving proposed
rule change) and 33856 (April 12, 1994), 59 FR 59501 [File No. SR-
PTC-93-05] (order approving proposed rule change).
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PTC's present program for the early distribution of GNMA I P&I
permits the distribution of up to fifty percent of collected and
available P&I on GNMA I securities by intraday Fedwire transfer of
funds on the distribution date, generally the sixteenth day of the
month, with the balance distributed by credit to participant's cash
balances payable at the end of the day settlement.\3\ Participants are
permitted to elect to receive the intraday distribution or they may
choose to receive the entire distribution at the end of the day
settlement.\4\
\3\In November 1994, the intraday distribution program was
extended to permit early distribution of one hundred percent of
collected and available GNMA II P&I. Securities Exchange Act Release
No. 34988 (November 18, 1994), 59 FR 61016 [File No. SR-PTC-94-05]
(order approving proposed rule change).
\4\PTC disbursed a total of $103.9 billion in GNMA I P&I
payments to its participants in 1994, of which $51.1 billion was
distributed intraday. As of February 1, 1995, fifty participants
elected to receive the intraday distribution.
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Unlike the GNMA II program, there is no central paying agent for
GNMA I securities and issuers make payment to PTC directly, sometimes
by means of a check. Because of these inefficiencies in collecting and
disbursing GNMA I P&I, PTC funds the total GNMA I P&I disbursement from
several sources: (1) collected and available P&I payments that are
timely received; (2) PTC's own funds; (3) the cash portion of the
participants fund; and (4) borrowed funds secured by the P&I
receivables or the securities portion of the participants fund.
GNMA I P&I Proposal
PTC proposes to increase the percentage of collected and available
GNMA I P&I that may be distributed intraday, from the current maximum
of fifty percent to a maximum of sixty-five percent of the total
distribution, commencing with the April 1995 GNMA I distribution. PTC
believes that based on PTC's experience with the GNMA I collection
process, an amount in excess of sixty-five percent may reasonably be
anticipated to be available by noon on the distribution date for
disbursement intraday.\5\ The balance would be distributed by means of
a credit to the participants' credit balances payable at the end of the
day settlement, as is currently the practice. In the event the amount
of collected and available funds is insufficient to make the scheduled
intraday distribution amount, whether it be the current fifty percent
maximum or the proposed sixty-five percent maximum, the shortfall is
allocated ratably among participants scheduled to receive intraday
distribution according to the relative amounts of their scheduled
distributions.
\5\During 1994, an average of 72.5% of funds to be distributed
were available by 12 noon on the distribution date.
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PTC believes that the proposed rule change is consistent with
Section 17A(b)(3)(F) of the Act\6\ and the rules and regulations
thereunder in that it facilitates the prompt and accurate clearance and
settlement of securities transactions and provides for the safeguarding
of securities and funds in PTC's custody or control or for which PTC is
responsible.
\6\15 U.S.C. 78q-1(b)(3)(F) (1988).
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B. Self-Regulatory Organization's Statement on Burden on Competition
PTC does not believe that the proposed rule change will impose any
burden on competition not necessary or
[[Page 18867]]
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
PTC has not solicited comments with respect to the proposed rule
change, and none have been received.
III. Date of Effectiveness of the Proposed Rule Change and Timing
for Commission Action
Section 17A(b)(3)(F) of the Act\7\ requires that the rules of a
clearing agency be designed to promote the prompt and accurate
clearance and settlement of securities transactions. The Commission
believes that PTC's proposal to increase the percentage of collected
and available GNMA I P&I that may be distributed to participants by
intraday fedwire transfer should help promote prompt and accurate
clearing and settlement. The proposal enables participants to have
access to such funds earlier in the day, allowing them the use of the
funds elsewhere, as needed, which increases liquidity in other markets.
\7\15 U.S.C. 78q-1(b)(3)(F) (1988).
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PTC has requested that the Commission find good cause for approving
the proposed rule change prior to the thirtieth day after the date of
publication of notice of the filing. In order to assure that PTC can
implement the proposal commencing with the April 1995 distribution, it
is necessary that PTC receive the appropriate approval in advance of
that date. The Commission, therefore, finds sufficient cause to
accelerate approval of this proposal. In addition, the staff of the
Board of Governors of the Federal Reserve System (``Board of
Governors'') agrees with the accelerated approval.\8\
\8\Telephone conversation between William R. Stanley, Board of
Governors, and Ari Burstein, Division of Market Regulation,
Commission (April 5, 1995).
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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, N.W., Washington, D.C. 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, N.W.,
Washington, D.C. 20549. Copies of such filing also will be available
for inspection and copying at the principal office of PTC. All
submissions should refer to file number SR-PTC-95-02 and should be
submitted by May 4, 1995.
It is therefore ordered, pursuant to Section 19(b)(2) of the Act,
that the proposed rule change (File No. SR-PTC-95-02) be and hereby is
approved on an accelerated basis.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\9\
\9\17 CFR 100.30-3(a)(12) (1994).
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Jonathan G. Katz,
Secretary.
[FR Doc. 95-9076 Filed 4-12-95; 8:45 am]
BILLING CODE 8010-01-M
