[Federal Register Volume 64, Number 145 (Thursday, July 29, 1999)]
[Notices]
[Pages 41171-41173]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-19416]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-41643; SR-DTC-99-16]
Self-Regulatory Organizations; The Depository Trust Company;
Notice of Filing of Amendment to Proposed Rule Change Relating to
Profile Modification Feature of the Direct Registration System
July 22, 1999.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ notice is hereby given that on July 22, 1999, The
Depository Trust Company (``DTC'') filed with the Securities and
Exchange Commission (``Commission'') an amendment as described in
Items, I, II, and III below, which items have been prepared primarily
by DTC, to its proposed rule change SR-DTC-99-16.\2\ Notice of the
proposed rule change as originally filed was published in the Federal
Register on June 23, 1999.\3\ The Commission is publishing this notice
of the amendment to solicit comments from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ DTC filed SR-DTC-99-16 on June 17, 1999.
\3\ Securities Exchange Act Release No. 41535 (June 17, 1999),
64 FR 33539 [File No. SR-DTC-99-16] (notice relating to the profile
modification feature of the DRS).
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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 amendment is to add a fourth option on how to
resolve the impasse in the implementation of the Profile Modification
System (``Profile'') feature of the Direct Registration System
(``DRS``) and to clarify DTC's description of the Profile.
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.\4\
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\4\ The Commission has modified the text of the summaries
prepared by DTC.
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[[Page 41172]]
(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 amend DTC's proposed rule change
regarding the implementation of the Profile feature \5\ of DRS. \6\ The
amendment adds a fourth option to the three options initially proposed
as ways to resolve the impasse in implementing the Profile feature. The
amendment also provides technical clarification of DTC's description of
the Profile feature.
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\5\ 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.
\6\ Securities Exchange Act Release No. 35038 (December 1,
1994), 59 FR 643652 (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).
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In its proposed rule change, DTC has requested the guidance of the
Commission staff in resolving the impasse between members of the
Securities Transfer Association (``STA'') and the Securities Industry
Association (``SIA'') relating to the implementation of the Profile
feature of DRS. Because there is no industry consensus on whether DRS
should continue to operate as it does today or whether use of DRS
should be restricted in some manner until the Profile feature is
implemented, DTC initially proposed three options on making additional
securities issues eligible for inclusion in DRS.\7\
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\7\ DTC's original three options included:
(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 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 or 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.
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Since publication of the proposed rule change, several ``DRS
limited participants'' have indicated that they may be operationally
able to implement the Profile feature by the proposed deadline of
August 31, 1999, or shortly thereafter. In addition, the SIA has
submitted a comment letter supporting the concept of permitting any
``DRS limited participant'' capable of using the Profile Feature by the
August 31, 1999, deadline to be able to do so and to allow that ``DRS
limited participant'' to make additional issues eligible.\8\
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\8\ Letter from Jerome Clair, Chair, SIA Operations Committee,
and John Cirrito, Chair, Subcommittee on DRS, to Jonathan Katz,
Secretary, Commission (July 14, 1999).
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As a result of these developments, DTC is adding the following
additional option on making new issues eligible for DRS:
(4) If a ``DRS limited participant'' is able to implement Profile
by September 13, 1999, either through DTC's Participant Terminal System
(``PTS'') or its Computer-to-Computer Facility (``CCF''), that ``DRS
limited participant'' will be allowed to continue to make securities
eligible for inclusion in DRS. Any ``DRS limited participant'' unable
to implement Profile either through PTS or CCF by September 13, 1999,
will not be allowed to make additional securities eligible for DRS
until such time as it is able to implement Profile after January 15,
2000.
Due to the delay caused by the filing of this amendment, DTC is
concerned about the shortened amount of time ``DRS limited
participants'' will have to become operationally prepared to meet the
August 31, 1999, deadline initially imposed in option (1) of the
proposed rule change. Therefore, DTC is amending its proposed rule
change so that the deadline in option (1) is September 13, 1999, and
not August 31, 1999.\9\
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\9\ DTC established a September 13, 1999, cutoff for all DTC
systems changes due to Year 2000 concerns.
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DTC is also amending the proposed rule change to clarify its
description of Profile. DTC is adding the following sentence to
footnote 4 of Exhibit 1 (``completed notice of the proposed rule change
for publication in the Federal Register'') to its proposed rule change:
``Profile was developed to incorporate the use of an electronic
medallion guarantee.'' \10\
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\10\ See footnote 4 of Securities Exchange Act Release No. 41535
(June 7, 1999); 64 FR 33539 (File No. SR-DTC-99-16) (notice relating
to the profile modification feature of the DRS).
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DTC believes that the proposed rule change is consistent with
Section 17A(b)(3)(F) \11\ 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.
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\11\ 15 U.S.C. 78q-1(b)(3)(F).
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(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 amendment to the proposed rule change were
solicited by DTC. 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 organization consents,
the Commission will:
(a) by order approve 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, N.W., Washington, D.C. 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. 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 DTC. All
submissions should refer to File No. SR-DTC-99-16 and should be
submitted by August 19, 1999.
[[Page 41173]]
For the Commission by the Division of Market Regulation,
pursuant to delegated authority.\12\
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\12\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 99-19416 Filed 7-28-99; 8:45 am]
BILLING CODE 8070-01-M
