[Federal Register Volume 59, Number 183 (Thursday, September 22, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-23394]
[[Page Unknown]]
[Federal Register: September 22, 1994]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-34679; International Series Release No. 714; File No.
SR-ISCC-94-4]
Self-Regulatory Organizations; International Securities Clearing
Corporation; Notice of Filing of a Proposed Rule Change Relating to a
Data Transmission Link With Monte Titoli, S.P.A.
September 15, 1994.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ notice is hereby given that on August 9, 1994, the
International Securities Clearing Corporation (``ISCC'') filed with the
Securities and Exchange Commission (``Commission'') the proposed rule
change as described in Items I, II, and III below, which Items have
been prepared primarily by ISCC. 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 a data transmission link
agreement with Monte Titoli, S.p.A. (``MT'').
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, ISCC 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. ISCC 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
ISCC's Rule 40 provides that ISCC may establish links with foreign
financial institutions and may make available for the benefit or on
behalf of the foreign financial institution's participants and members
such services of ISCC which ISCC in its sole discretion shall determine
to provide. Pursuant to the authority granted by Rule 40, ISCC has
entered into a link with MT.\2\ This link is similar to the links ISCC
has previously established with the Japan Securities Clearing
Corporation and the Central Depository (Pte.) Ltd. of Singapore.
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\2\MT provides settlement and depository services for
securities, including securities of U.S. issuers, listed on Italian
stock exchanges.
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Under the link, MT will be able to hold securities in The
Depository Trust Company (``DTC'') through ISCC. Pursuant to the terms
of the service agreement dated June 1, 1992, between ISCC and MT, MT
will be bound by DTC rules applicable to the DTC services that MT will
utilize through ISCC. While monetary obligations under the link are
expected to be limited to payments for fees, MT will be required to
collateralize its obligations to ISCC. Such collateral will be
available to cover any assessments made by DTC to ISCC based on MT's
use of DTC's services. ISCC's auditors will be able to consult with
MT's auditors with regard to MT's financial condition and the activity
arising under the link, and MT will furnish ISCC with MT's financial
statements.
MT has agreed that before the link becomes operational, MT will
appoint a registered agent in the U.S. for service of process and will
provide ISCC with proof of such appointment. MT also has agreed that it
will be subject to jurisdiction in New York for the resolution of
disputes under or arising from the link.
Operationally, MT will be assigned one number for use on behalf of
its members. ISCC will apply to DTC on MT's behalf to establish MT as
an ISCC-sponsored DTC participant. ISCC on behalf of MT will initiate
book-entry deliveries for no value. ISCC on behalf of MT also will
accept receipts of securities by book-entry for no value. Both the
receive and deliver functions will be pursuant to instructions received
from MT, and such instructions will identify, among other items, the MT
member for whom the receipt or delivery is being effected. In special
circumstances and at ISCC's discretion, DTC's withdrawal-by-transfer
service also may be utilized. In such case, the securities will be
delivered as directed by MT. Relevant DTC notices and corporate action
data relating to the issues held in the MT/ISCC account at DTC will be
provided to MT.
To the extent that any money settlement is required, ISCC will
receive payment in the form of an official bank check or a wire
transfer through the MT designated correspondent bank. ISCC will
receive dividend and possibly interest payments from DTC with respect
to shares on deposit. Dividend and interest credited to MT's account at
DTC will be reflected in MT's ISCC settlement statement.\3\ The
settlement statement also will reflect a debit for the total dividends
and interest paid to MT's account at its withholding bank.\4\
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\3\On each business day, ISCC will transmit to MT a settlement
statement detailing the net amount due to ISCC from MT or from ISCC
to MT.
\4\A withholding bank is a bank approved by the Internal Revenue
Service that withholds and pays the tax applicable to dividends and
interest on U.S. issues paid to non-U.S. entities.
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The proposed rule change is consistent with the requirements of the
Act and the rules and regulations thereunder in that it will promote
the prompt and accurate clearance and settlement of securities
transactions. ISCC believes that the provision by ISCC to MT of the
services descibed above will further the purposes of Section 17A of the
Act. Specifically, it will promote the delivery and safekeeping of
certain U.S. issues through a book-entry environment thus avoiding the
need to move securities physically to settle trades. It also will
standardize in accordance with U.S. practices and procedures the
processing of U.S. securities traded on a foreign exchange. In
addition, the interests of the U.S. investing public and the U.S.
financial community will be served by the performance of such services
by ISCC, a registered clearing agency subject to Commission
supervision.
(B) Self-Regulatory Organization's Statement on Burden on Competition
ISCC does not believe that the proposed rule changes will have an
impact or impose a burden on competition.
(C) Self-Regulatory Organization's Statement on Comments on the
Proposed Rule Change Received From Members, Participants, or Others
ISCC has notified its members of the proposed changes to its
procedures and to date has received no written comments. ISCC will
notify the commission of any written comments received by ISCC.
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 reason for so
finding or (ii) as to which the self-regulatory organizations 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 approved.
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, N.W., Washington, D.C. 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 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 will also be available
for inspection and copying at the principal office of the above-
mentioned self-regulatory organization. All submissions should refer to
File No. SR-ISCC-94-04 and should be submitted by October 13, 1994.
For the Commission by the Division of Market Regulation,
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 94-23394 Filed 9-21-94; 8:45 am]
BILLING CODE 8010-01-M
