[Federal Register Volume 60, Number 84 (Tuesday, May 2, 1995)]
[Notices]
[Pages 21577-21578]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-10788]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-35647; File No. SR-MSTC-94-12]
Self-Regulatory Organization; Midwest Securities Trust Company;
Order Granting Temporary Approval of Proposed Rule Change Enabling
Midwest Securities Trust Company To Enter Into Contracts With
Participants To Provide Custodial, Transactional, and Related Services
April 25, 1995.
On October 11, 1994, the Midwest Securities Trust Company
(``MSTC'') filed with the Securities and Exchange Commission
(``Commission'') a proposed rule change (File No. SR-MSTC-94-12)
pursuant to Section 19(b) of the Securities Exchange Act of 1934
(``Act'').\1\ Notice of the proposal appeared in the Federal Register
on October 19, 1994, to solicit comment from interested persons.\2\ For
the reasons discussed below, the Commission is approving the proposed
rule change through October 1, 1995.
\1\15 U.S.C. 78s(b) (1988).
\2\Securities Exchange Act Release No. 34835 (October 13, 1994),
59 FR 52851.
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I. Description of the Proposal
The purpose of the proposed rule change is to permit MSTC to enter
into contracts with any of its participants whereby MSTC will provide
certain [[Page 21578]] custodial and transactional processing services
for the participant with respect to the participant's certificated
securities. The proposed services will consist, among other things, of
processing and accepting physical deposits of certificates, processing
the physical withdrawal of certificates, and providing incidental
services in connection thereto. Book-entry movements of deposited
securities will not be permitted.\3\
\3\Letter from George T. Simon, Foley & Lardner, to Jonathan
Kallman, Associate Director, Division of Market Regulation,
Commission (January 23, 1995).
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Under the proposal, MSTC will provide all custodial and
transactional processing services on a negotiated basis with its
participants. MSTC will not be obligated to enter into such contracts
with any participant, and if it chooses to enter into such a contract
with any participant, it will not be obligated to enter into a contract
with similar terms with any other participant.
II. Discussion
The Commission finds that the proposed rule change is consistent
with the requirements of the Act and the rules and regulations
thereunder and more specifically with the requirements of Section
17A(b)(3)(F).\4\ Section 17A(b)(3)(F) requires that the rules of a
clearing agency be designed to remove impediments to and perfect the
mechanism of a national system for the prompt and accurate clearance
and settlement of securities transactions. The Commission believes that
MSTC's service is consistent with this obligation.
\4\15 U.S.C. 78q-1(b)(3)(F) (1988).
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MSTC's new service will provide custodian, transaction processing,
and related data-entry services with respect to participants'
certificated securities. Participants have been experiencing a
continual decline in their activity associated with the processing of
physical securities primarily due to the increase in book-entry
eligibility of securities at the clearing agency level. Many
participants no longer find it desirable to maintain their own
custodial operations. As a result, MSTC has been requested to provide
such custodial and processing services as part of MSTC's operations.
The Commission believes that MSTC's proposed rule change should
help to minimize inefficient procedures employed by individual
participants by concentrating these operations in one centralized
facility. As a result, the individual participants will be able to
eliminate their own custodial operations and the high fixed costs
associated with them while maintaining the required safeguarding of
these securities.
III. Conclusion
For the reasons stated above, the Commission finds that MSTC's
proposal is consistent with Section 17A of the Act\5\ and the rules and
regulations thereunder.
\5\15 U.S.C. 78q-1 (1988).
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It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\6\ that the proposed rule change (File No. SR-MSTC-94-12) be, and
hereby is, approved until October 1, 1995.
\6\15 U.S.C. 78s(b)(2) (1988).
For the Commission of the Division of Market Regulation,
pursuant to delegated authority.\7\
\7\17 CFR 200.30-3(a)(12) (1994).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 95-10788 Filed 5-1-95; 8:45 am]
BILLING CODE 8010-01-M
