[Federal Register Volume 60, Number 100 (Wednesday, May 24, 1995)]
[Notices]
[Pages 27572-27573]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-12692]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-35735; File No. SR-BSE-95-09]
Self-Regulatory Organizations; Boston Stock Exchange,
Incorporated; Notice of Filing of Proposed Rule Change Regarding
Depository Eligibility Requirements
May 18, 1995.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ notice is hereby given that on May 18, 1995, the Boston
Stock Exchange, Incorporated (``BSE'') filed with the Securities and
Exchange Commission (``Commission'') the proposed rule change as
described in Items I, II, and III below, which items have been prepared
primarily by BSE. The Commission is publishing this notice to solicit
comments 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 adopt a rule which will set forth depository
eligibility requirements for issuers that apply to list their
securities on BSE.
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. The self-regulatory organization has prepared summaries,
set forth in sections (A), (B), and (C) below, of the most significant
aspects of such statements.\2\
\2\ The Commission has modified the language in these sections.
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(A) Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
Under the proposed rule change, BSE will adopt a uniform depository
eligibility rule for issuers that desire to list their securities on
BSE. The uniform rule has been developed by the Legal and Regulatory
Subgroup of the U.S. Working Committee of the Group of Thirty in
coordination with each of the national securities exchanges and the
National Association of Securities Dealers (``NASD''). It is
anticipated that each national securities exchange and the NASD will
file rule changes proposing adoption of depository eligibility
standards substantially similar to BSE's proposed rule and will seek to
make such changes effective contemporaneously with the effective date
of the transition from a five-day (``T+5'') to a three-day (``T+3'')
settlement cycle. The transition is set to occur June 7, 1995.\3\
\3\ Securities Exchange Act Release Nos. 33023 (October 6,
1993), 58 FR 52891 (adoption of Rule 15c6-1) and 34952 (November 9,
1994), 59 FR 59137 (change of effective date of Rule 15c6-1 from
June 1, 1995 to June 7, 1995).
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The proposed rule change will require issuers to ensure that
securities to be listed on BSE have been included in the file of
eligible issues maintained by a securities depository registered as a
clearing agency under Section 17A of the Act.\4\ This requirement will
not apply to a security if the terms of such security cannot be
reasonably modified to meet the criteria for depository eligibility at
all securities depositories.
\4\ 15 U.S.C. 78q-1 (1988).
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The proposed rule change sets forth additional requirements that
must be met before a security will be deemed to be ``depository
eligible,'' as such term is used in Chapter III, Section 7 of the BSE
rules (``uniform book-entry settlement rule'').\5\ The proposed rule
specifies different requirements for depository eligibility depending
upon whether a new issue is distributed by an
[[Page 27573]] underwriting syndicate before or after the date a
securities depository system is available for monitoring repurchases of
the distributed shares by syndicate members (``flipping tracking
system'').
\5\ Pursuant to BSE's uniform book-entry settlement rule, trades
by a member in depository eligible securities generally must be
settled by book-entry through a securities depository.
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Currently, a flipping tracking system is being developed that will
include a securities depository service that (i) can be activated upon
the request of the managing underwriter for a period of time that the
managing underwriter specifies, (ii) in certain circumstances, will
require the delivering participant to provide to the depository
information sufficient to identify the seller of such shares as a
precondition to the processing of book-entry delivery instructions for
distributed shares, and (iii) will report to the managing underwriter
the identity of any other syndicate member or selling group member
whose customer(s) sold distributed shares (but will not report to the
managing underwriter the identity of such customer[s]) and, in certain
circumstances, will report to such syndicate member or selling group
member the identity of such customer(s). Prior to the availability of a
flipping tracking system, the managing underwriter may delay the date a
security is deemed ``depository eligible'' for up to three months after
trading has commenced in the security. After the availability of a
flipping tracking system, a new issue will be deemed to be depository
eligible upon commencement of trading on BSE.
The proposed rule change is consistent with Section 6(b)(5) of the
Act \6\ in that it is designed to remove impediments to and perfect the
mechanism of a free and open market and a national market system, and
in general, to protect investors and the public interest. The proposed
rule is designed to reduce the number of transactions in depository
eligible securities for which settlement is effected by the physical
delivery of securities. By requiring that transactions between member
firms and transactions between member firms and clients that settle on
a delivery-versus-payment or receipt-versus-payment basis occur only
with rare exceptions in a book-entry environment, the efficiency of the
U.S. settlement system will be enhanced and the systemic risk of that
system will be reduced.
\6\ 15 U.S.C. 78f(b)(5) (1988).
(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
BSE has neither solicited nor received comments on the proposed
rule change.
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.
BSE has requested accelerated effectiveness of the proposed rule
change in order that the rule can become effective on June 7, 1995.\7\
\7\ Supra note 3 and accompanying text.
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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 submission
should file six copies thereof with the Secretary, Securities and
Exchange Commission, 450 Fifth Street, N.W., Washington, D.C. 20549.
Copies of the submissions, 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. Sec. 552, will be available for inspection and copying in
the Commission's Public Reference Section, 450 5th Street, N.W.,
Washington, D.C. 20549. Copies of such filings will also be available
for inspection and copying at the principal office of BSE. All
submissions should refer to file number SR-BSE-95-09 and should be
submitted by June 14, 1995.
For the Commission by the Division of Market Regulation,
pursuant to delegated authority.\8\
\8\ 17 CFR 200.30-3(a)(12) (1994).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 95-12692 Filed 5-23-95; 8:45 am]
BILLING CODE 8010-01-M
