[Federal Register Volume 60, Number 180 (Monday, September 18, 1995)]
[Notices]
[Pages 48181-48182]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-23089]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-36219; File No. SR-DTC-95-09]
Self-Regulatory Organizations; The Depository Trust Company;
Notice of Filing of a Proposed Rule Change Seeking to Establish a Legal
Guidance System
September 12, 1995.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ notice is hereby given that on April 27, 1995, The
Depository Trust Company (``DTC'') filed with the Securities and
Exchange Commission (``Commission'') the proposed rule change (File No.
SR-DTC-95-09) as described in Items I, II, and III below, which items
have been prepared primarily by DTC. On July 25, 1995, DTC filed an
amendment to the proposed rule change.\2\ On August 22, 1995, DTC filed
a second amendment to the proposed rule change.\3\ The Commission is
publishing this notice to solicit comments on the proposed rule change
from interested persons.
\1\ 15 U.S.C. 78s(b)(1) (1988).
\2\ DTC amended its proposal to allow organizations that are not
DTC participants, such as transfer agents, to subscribe to the Legal
Guidance System. Letter from Piku K. Thakkar, Assistant Counsel,
DTC, to Mark Steffensen, Esq., Division of Market Regulation
(``Division''), Commission (July 21, 1995).
\3\ As proposed in the original filing, once a user logged onto
the Legal Guidance System a disclaimer of liability message appeared
on the terminal screen. DTC has amended its proposal to eliminate
this message from the Legal Guidance System terminal screen.
Instead, the disclaimer will appear in a user guide. Letter from
Piku K. Thakkar, Assistant Counsel, DTC, to Peter Geraghty,
Division, Commission (August 17, 1995).
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
DTC is filing the proposed rule change to establish a service
whereby DTC participants and nonparticipants (e.g., transfer agents)
can obtain information and documentation necessary to effect a legal
transfer of a deposit.
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\
\4\ The Commission has modified the text of the summaries
prepared by DTC.
---------------------------------------------------------------------------
(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 establish an inquiry-
only Legal Guidance System (``LGS''), which is a menu-driven, user-
friendly system designed to provide DTC participants and
nonparticipants (e.g., transfer agents)\5\ with information regarding
the documents necessary to effect a legal deposit.\6\ Lgs will be
accessible by DTC participants and nonparticipants through DTC's
Participant Terminal System (``PTS''). LGS contains industry
requirements, individual state and province requirements, and transfer
agent requirements for processing legal deposits. DTC will post a
disclaimer in the LGS user guide notifying users that DTC shall not be
liable to the user for any liability for damages resulting from
mistakes or omissions in LGS.\7\
\5\ Presently, DTC envisions that LGS will be utilized only by
nonparticipant transfer agents. However, the availability of LGS
will not be limited to nonparticipants who are transfer agents.
Telephone conversation between Piku K. Thakkar, Assistant Counsel,
DTC, and Mark Steffensen, Attorney, Division, Commission (September
11, 1995).
\6\ A ``legal deposit'' consists of a registered security and
any legal documentation required to effect the legal transfer and
registration of the security from the registered holder's name into
DTC's nominee name.
\7\ Specifically, the disclaimer will state that ``DTC does not
represent the accuracy, adequacy, or fitness for a particular
purpose of the following information, which is provided as is. DTC
shall not be liable for: 1) any loss resulting directly or
indirectly from mistakes, omissions, interruptions, delays, errors,
or defects arising from or related to this service; and 2) any
special, consequential, exemplary, incidental, or punitive
damages.''
---------------------------------------------------------------------------
The LGS menu approach will guide users through a step-by-step
process to ascertain the relevant requirements for transferring legal
deposits. LGS also will have a ``fast forward'' navigation option that
will allow an experienced user to quickly access the requisite
information. Users also will be able to request through LGS that
certain transfer documents be sent to their offices via facsimile
transmission. In the near future, DTC plans to interface LGS with its
Pending Legal Deposit System to track and monitor document expiration.
The fee charged to DTC participants and nonparticipants for the LGS
service will be DTC's standard fee for PTS inquires.
DTC believes the proposed rule change is consistent with the
requirements of Section 17A of the Act\8\ and the rules and regulations
thereunder because the rule proposal will facilitate the prompt and
accurate clearance and settlement of securities transactions.
\8\ 15 U.S.C. 78q-1 (1988).
---------------------------------------------------------------------------
(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 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
Written comments from DTC participants or others have not been
solicited or received.
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 DTC 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.
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
[[Page 48182]]
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 Room, 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 the file
number SR-DTC-95-09 and should be submitted by October 10, 1995.
For the Commission by the Division of Market Regulation,
pursuant to delegated authority.\9\
\9\ 17 CFR 200.30-3(a)(12) (1994).
---------------------------------------------------------------------------
Jonathan G. Katz,
Secretary.
[FR Doc. 95-23089 Filed 9-15-95; 8:45 am]
BILLING CODE 8010-01-M
