99-24603. Self-Regulatory Organizations; The Depository Trust Company; Order Approving a Proposed Rule Change Relating to Procedures When Settling Banks Fail To Settle

[Federal Register Volume 64, Number 183 (Wednesday, September 22, 1999)]
[Notices]
[Pages 51360-51361]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-24603]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-41879; File No. SR-DTC-99-15]


Self-Regulatory Organizations; The Depository Trust Company; 
Order Approving a Proposed Rule Change Relating to Procedures When 
Settling Banks Fail To Settle

September 15, 1999.
    On June 11, 1999, The Depository Trust Company (``DTC'') filed with 
the Securities and Exchange Commission (``Commission'') a proposed rule 
change (File No. SR-DTC-99-15) pursuant to Section 19(b)(1) of the 
Securities Exchange Act of 1934 (``Act'').\1\ Notice of the proposal 
was published in the Federal Register on August 6, 1999.\2\ No comment 
letters were received. For

[[Page 51361]]

the reasons discussed below, the Commission is approving the proposed 
rule change.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ Securities Exchange Act Release No. 41678 (July 30, 1999), 
64 FR 43004.
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I. Description

    Under the rule change, DTC is restating its procedures for a 
settling bank's failure to settle.\3\ DTC has revised its procedures 
for when a settling bank fails to settle with DTC due to a financial or 
operational problem to state in additional detail the procedures that 
DTC will follow if a settling bank fails to settle with DTC. For 
example, the restated procedures (1) state the specific time by which 
settling banks must acknowledge settlement balances each day, (2) 
provide for notice by DTC of a settling bank's failure to settle to the 
participants that settle through the bank, and (3) set forth DTC's 
rights with respect to payment of credit balances to and retention of 
collateral of each participant that settles through the bank.\4\
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    \3\ DTC's current procedures were established in 1994 in 
connection with DTC's conversion to a same-day settlement system. 
The procedures were set forth in a memorandum which was issued 
jointly with the National Securities Clearing Corporation and which 
described the planned conversion of DTC's money settlement system 
from an oversight funds system to a same-day funds system to an 
entirely same day funds settlement system (July 29, 1994).
    \4\ A copy of DTC's procedures is attached as Exhibit 2 to DTC's 
filing, which is available for inspection and copying in the 
Commission's Public Reference Room and through DTC.
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II. Discussion

    Section 17A(b)(3)(F) of the Act \5\ requires that the rules of a 
clearing agency be designed to assure the safeguarding of securities 
and funds which are in the custody and control of the clearing agency 
or for which it is responsible. The Commission believes that the 
proposed rule change is consistent with DTC's obligations under Section 
17A(b)(3)(C) because it should facilitate completion of the daily 
settlement process at DTC in the event that a settlement bank fails to 
settle with DTC.
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    \5\ 15 U.S.C. 78q-1(b)(3)(F).
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III. Conclusion

    On the basis of the foregoing, the Commission finds that DTC's 
proposal is consistent with the requirements of the Act and in 
particular with the requirements of Section 17A of the Act and the 
rules and regulations thereunder.
    It is therefore ordered, pursuant to Section 19(b)(2) of the Act, 
that the proposed rule change (File No. SR-DTC-99-15) be and hereby is 
approved.

    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority.\6\
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    \6\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 99-24603 Filed 9-21-99; 8:45 am]
BILLING CODE 8010-01-M