[Federal Register Volume 60, Number 157 (Tuesday, August 15, 1995)]
[Notices]
[Pages 42202-42203]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-20153]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-36075; File No. SR-PTC-95-05]
Self-Regulatory Organizations; Participants Trust Company; Notice
of Filing and Order Granting Accelerated Approval of Proposed Rule
Change Establishing a New Category for Participant Eligibility
August 9, 1995.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ notice is hereby given that on August 1, 1995, the
Participants Trust Company (``PTC'') filed with the Securities and
Exchange Commission (``Commission'') the proposed rule change (File No.
SR-PTC-95-05) as described in Items I and II below, which Items have
been prepared primarily by PTC. The Commission is publishing this
notice and order to solicit comments from interested persons and to
grant accelerated approval of the proposed rule change.
\1\ 15 U.S.C. Sec. 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 establishes a new category for participant
eligibility for federally chartered corporations engaged in the
purchase and/or securitization of mortgage-related assets.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, PTC 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. Summaries of the most significant aspects of such
statements are set forth in sections A, B, and C below.\2\
\2\ The Commission has modified the text of the summaries
prepared by PTC.
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A. Self-Regulatory Organization's Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule Change
Background
PTC was established as a depository to facilitate the prompt and
accurate clearance and settlement of transactions in mortgage-backed
securities. Participation criteria was established in accordance with
the requirements of the Act and to allow appropriate eligible
institutions to become participants. Article IV, Rule 1, Section 1 of
PTC's rules lists the entities that are eligible to become participants
and includes ``firms in such other categories as the Corporation [PTC]
from time to time may determine.'' These entities must satisfy the
financial criteria set forth in Article IV, Rule 1, Section 3 which
states that entities in categories established by PTC ``shall maintain
equity capital or regulatory capital in at least equivalent amounts * *
*'' as other established categories of participants.
Proposed Category of Eligibility
The Federal National Mortgage Association (``FNMA'') is currently a
limited purpose participant and holds a face amount of $100 billion of
securities in its limited purpose account at PTC. A limited purpose
participant, however, cannot receive deliveries against payment through
PTC. FNMA therefore has sought to become a full purpose participant in
PTC.
To facilitate the addition of FNMA and similar entities, such as
the Federal Home Loan Mortgage Corporation (``FHLMC'') and the Federal
Agricultural Mortgage Corporation (``Farmer Mac''), as full purpose
participants, PTC is seeking to establish a new category of
participants.\3\ The new category designation would be ``federally
chartered corporations engaged in the purchase and/or securitization of
mortgage-related assets.''
\3\ FHLMC and Farmer Mac are not currently seeking to become
full purpose participants in PTC.
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PTC proposes that applicants in the new category be required to
have equity capital of at least $100 million. This amount is equivalent
to the most stringent equity and regulatory capital standards required
by PTC in other established participant categories.\4\
\4\ Article IV, Rule 1, Section 3 of PTC's rules requires that
bank applicants for full purpose participation shall maintain equity
capital, determined in accordance with generally acceptable
accounting principles, of at least $100 million.
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PTC believes that the proposed rule change is consistent with
Section 17A(b)(3)(F) of the Act \5\ and the rules and regulations
thereunder in that it facilitates the prompt and accurate clearance and
settlement of securities transactions and provides for the safeguarding
of securities and funds in PTC's custody or control or for which PTC is
responsible.
\5\ 15 U.S.C. Sec. 78q-1(b)(3)(F) (1988).
B. Self-Regulatory Organization's Statement on Burden on Competition
PTC does not believe that the proposed rule change imposes any
burden on competition.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received from Members, Participants, or Others
PTC has neither solicited nor received comments on this proposed
rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Section 17A(b)(3)(F) of the Act \6\ requires that the rules of a
clearing agency be designed to promote the prompt and accurate
clearance and settlement of securities transactions and to assure the
safeguarding of securities and funds in the custody or control of the
clearing agency or for which it is responsible. The Commission believes
that the addition of FNMA and similar entities as full purpose
participants is consistent with these obligations. As full purpose
participants these entities will be able to receive deliveries against
payment through PTC, which as limited purpose participants they cannot
do. This should allow entities such as FNMA and other federally
chartered corporations whose transactions represent a substantial
portion of the mortgage-backed securities market to conduct their
purchase and
[[Page 42203]]
securitization processes more efficiently.
\6\ 15 U.S.C. Sec. 78q-1(b)(3)(F) (1988).
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In addition, applicants in the new category must satisfy financial
criteria equivalent to the most stringent equity and regulatory capital
standards required by PTC in other established participant categories.
By requiring substantial capitalization, PTC protects itself and other
participants from additional risk.
PTC has requested that the Commission find good cause for approving
the proposed rule change prior to the thirtieth day after the date of
publication of notice of the filing. The Commission finds such good
cause because FNMA and other similar entities are substantially similar
to other PTC full purpose participants. They are financial institutions
engaged in activities which are similar or comparable to the activities
of other participants. Because FNMA and similar entities are
institutions whose transactions represent a substantial portion of the
mortgage-backed securities market, it is in the public interest to
provide the most efficient method of processing for these products as
expediently as possible. The staff of the Board of Governors of the
Federal Reserve System has concurred with the Commission's granting of
accelerated approval.\7\
\7\ Telephone conversation between William R. Stanley, Board of
Governors of the Federal Reserve System, and Ari Burstein, Division
of market Regulation, Commission (August 7, 1995).
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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. 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 will also be available for
inspection and copying at the principal office of PTC. All submissions
should refer to file number SR-PTC-95-05 and should be submitted by
September 5, 1995.
It is therefore ordered, pursuant to Section 19(b)(2) of the Act,
that the proposed rule change (File No. SR-PTC-95-05) be and hereby is
approved on an accelerated basis.
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. 95-20153 Filed 8-14-95; 8:45 am]
BILLING CODE 8010-01-M
