[Federal Register Volume 64, Number 120 (Wednesday, June 23, 1999)]
[Notices]
[Pages 33539-33540]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-15968]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-41535; SR-DTC-99-16]
Self-Regulatory Organizations; The Depository Trust Corporation;
Notice of Filing of Proposed Rule Change Relating to Profile
Modification Feature of the Direct Registration System
June 17, 1999.
Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ notice is hereby given that on June 17, 1999, The
Depository Trust Corporation (``DTC'') filed with the Securities and
Exchange Commission (``Commission'') the prosed rule change 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 from interested persons on the proposed rule change.
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\1\ 15 U.S.C. 78s(b)(1).
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I. Self-Regulatory Organization's Statement of the Terms of
Substance of the Proposed Rule Change
The purpose of DTC's filing is to resolve an impasse among members
of the securities industry relating to the implementation of the
Profile Modification System feature of the Direct Registration System.
II. Self-Regulatory Organization's Statement of the Purpose 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.\2\
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\2\ The Commission has modified the text of the summaries
prepared by DTC.
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(A) Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
The purpose of this filing is to resolve an impasse among members
of the Securities Transfer Association (``STA'') and the Securities
Industry Association (``SIA'') \3\ relating to the delay in
implementing the Profile Modification System feature (``Profile'') \4\
of the Direct Registration System (``DRS'').\5\ Profile will allow a
participant upon instructions from the participant's customer to
electronically request a ``DRS limited participant'' \6\ to move the
customer's DRS share positions to the participant's acount at DTC.\7\
Profile will be available over both DTC's Participant Terminal System
(``PTS'') and DTC's Computer-to-Computer Facility (``CCF'').
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\3\ The STA and the SIA are two member groups on the DRS
Committee, which is an industry responsible for designing DRS. The
other members include Corporate Transfer Association and DTC.
\4\ Profile is an electronic communication system through DTC
which allows participants and DRS Limited Participants to send
instructions to each other regarding the movement of DRS shares.
\5\ See Securities Exchange Act Release No. 35038 (December 1,
1994), 59 FR 63652 (concept release relating to the direct
registration system); Securities Exchange Act Release No. 37931
(November 7, 1996), 61 FR 58600 [File No. SR-DTC-96-15] (order
relating to the establishment of DRS).
\6\ For a description of ``DRS limited participants,'' refer to
Securities Exchange Act Release No. 37931 (November 7, 1996), 61 FR
58600 [File No. SR-DTC-96-15].
\7\ Profile will also allow a ``DRS limited participant'' upon
instructions from a customer to electronically request a participant
to move the customer's share positions to a ``DRS limited
participant's'' account.
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Representative member of the STA have reported that some of their
members may not be able to implement Profile until some time in
calendar year 2000. Members of the SIA had envisioned that Profile
would be implemented during the third quarter of 1999. Becuase of
differing views on the implementation schedule for Profile, there is no
industry consensus on whether DRS should continue to operate as it does
today \8\ or whether use of DRS should be restricted in some manner
until Profile is fully implemented.
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\8\ Because ``DRS limited participants'' are currently not using
Profile to receive instructions, brokers or their customers must
submit requests to move DRS shares by sending a medallion guaranteed
transaction advice to the ``DRS limited participants.''
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If DRS is to continue to operate as it does today, there are
several ways to handle making additional securities issued eligible for
inclusion in DRS. The options include:
(1) If all ``DRS limited participants'' are not able to implement
Profile by August 31, 1999, no additional securities issues would be
made eligible after August 31, 1999, for inclusion in DRS until
sometime in the first quarter of 2000 when all ``DRS'' limited
participants'' are able to implement Profile using either PTS or CCF;
(2) securities issues would continue to be made eligible for
inclusion in DRS in the manner in manner in which they are currently
made eligible for inclusion; or
(3) securities would continue to be made eligible for inclusion in
DRS provided that each ``DRS limited participant'' could be the ``DRS
limited participant'' for no more than two new issues per month. If all
``DRS limited participants'' are not able to implement Profile by using
PTS and CCF by March 31, 2000, no additional securities issues would be
made eligible for inclusion in DRS until such time as all ``DRS limited
participants'' are ready to use Profile.
DTC requests that the Commission staff provide guidance on the
above options or any other option not described in this filing.
DTC believes that the proposed rule change is consistent with the
requirements of the Act and the rules and regulations thereunder
applicable to DTC because the proposed rule change is designed to
further the perfection of the mechanism for the national system for the
prompt and accurate clearance and settlement of securities
transactions.
[[Page 33540]]
(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
No comments on the proposed rule change were solicited or received.
DTC will notify the Commission of any written comments it receives.
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 the self-regulatory organizations consents,
the Commission will:
(a) by order approved the proposed rule change or
(b) institute proceedings to determine whether the proposed rule
change should be disapproved.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Persons making written submissions
should file six copies thereof with the Secretary, Securities and
Exchange Commission, 450 Fifth Street, NW, Washington, DC 20549-0609.
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. Sec. 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 also will be available for
inspection and copying at the principal office of DTC. All submissions
should refer to File No. SR-DTC-99-16 and should be submitted by July
14, 1999.
For the Commission by the Division of Market Regulation,
pursuant to delegated authority.\9\
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\9\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 99-15968 Filed 6-22-99; 8:45 am]
BILLING CODE 8010-01-M
