[Federal Register Volume 59, Number 114 (Wednesday, June 15, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-14528]
[[Page Unknown]]
[Federal Register: June 15, 1994]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-34189; File No. SR-DTC-94-06]
Self-Regulatory Organizations; The Depository Trust Company;
Filing and Immediate Effectiveness of a Proposed Rule Change Relating
to Enhancements to the Reorganization and Deposit Services
June 9, 1994.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ notice is hereby given that on April 25, 1994, The
Depository Trust Company (``DTC'') filed with the Securities and
Exchange Commission (``Commission'') the proposed rule change (File No.
SR-DTC-94-06) as described in Items I, II, and III below, which items
have been prepared primarily by DTC. The Commission is publishing this
notice to solicit comments on the proposed rule change from interested
persons.
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\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 consists of enhancements to the
reorganization and deposit services of DTC.
II. Self-Regulatory Organization's Statement of the Propose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, DTC 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. DTC 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
The purpose of the proposed rule change is to permit DTC to enhance
its reorganization and deposit services. DTC-eligible securities may
become the subject of reorganization activities including maturities,
full and partial calls, and mandatory actions such as mergers and
reverse splits. When a security becomes the subject of a
reorganization, DTC presents the certificates for that security on
deposit at DTC to the issuer's agent and collects the proceeds of the
reorganization activity (either cash or new securities) for credit
participants' accounts.
Under its current procedures, DTC ceases to accept deposits of a
security when it becomes the subject of a reorganization activity. For
example, deposit services terminate upon DTC's receipt of a notice of a
full call or thirty business days prior to the maturity date of a debt
issue. After DTC's deposit services terminate for a security which is
the subject of a reorganization activity, participants sometimes
receive certificates for the security from their customers. The
participants must then bear the operational burden of presenting the
certificates to the issuer's agent and collecting the proceeds.
DTC is enhancing its reorganization and depository services in
order to offer its participants the Reorg Deposits Service. The Reorg
Deposits Service will enable participants to deposit at DTC
certificates for securities for up to two years after the
reorganization activity and to have DTC collect the proceeds on their
behalf. Cash proceeds will be credited to participants upon DTC's
receipt of the funds. Proceeds which are a DTC-eligible security
usually will be credited to participants at the time of deposit.
The Reorg Deposits Service will be implemented first for full calls
and maturing securities and later for partial calls and mandatory
actions. A separate fee for the Reorg Deposits Service may be
established in the future.
The proposed rule change is consistent with the requirements of
Section 17A of the Act and the rules and regulations thereunder
applicable to DTC because the proposed rule change will contribute to
efficiencies in the handling of securities which are the subject of
reorganization activities. The proposed rule change is consistent with
DTC's obligation to safeguard securities and funds in its custody or
control or for which it is responsible because the proposed rule change
will be implemented consistently with DTC's other safeguarding
procedures.
B. Self-Regulatory Organization's Statement on Burden on Competition
DTC does not believe that the proposed rule change will impose any
burden on competition.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants or Others
DTC has discussed and tested the proposed rule change with a small
number of participants. Written comments from DTC participants or
others have not been solicited or received on the proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become effective on filing pursuant
to Section 19(b)(3)(A)(iii)\2\ of the Act and pursuant to Rule 19b-
4(e)(4)\3\ promulgated thereunder because the proposed rule change
effects a change in an existing service at DTC that does not adversely
affect DTC's obligation to safeguard securities and funds and does not
significantly affect the rights or obligations of DTC or persons using
the service. At any time within sixty days of the filing of such
proposed rule change, the Commission may summarily abrogate such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purpose of the Act.
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\2\15 U.S.C. 78s(b)(3)(A)(iii) (1988).
\3\17 CFR 240.19b-4(e)(4) (1993).
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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, 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 will also be available for
inspection and copying at the principal office of DTC. All submissions
should refer to File No. SR-DTC-94-06 and should be submitted by July
6, 1994.
For the Commission by the Division of Market Regulation,
pursuant to delegated authority.\4\
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\4\17 CFR 200.30-3(a)(12) (1993).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 94-14528 Filed 6-14-94; 8:45 am]
BILLING CODE 8010-01-M
