[Federal Register Volume 59, Number 8 (Wednesday, January 12, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-741]


[[Page Unknown]]

[Federal Register: January 12, 1994]


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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-33414; File No. SR-MCC-92-06]

 

Self-Regulatory Organizations; Midwest Clearing Corp.; Order 
Approving Proposed Rule Change to Reduce the Time Frames for Processing 
Dividend Settlement Service Claims

January 4, 1994.
    On June 15, 1992, the Midwest Clearing Corporation (``MCC'') 
submitted a proposed rule change (File No. SR-MCC-92-06) to the 
Securities and Exchange Commission (``Commission'') pursuant to section 
19(b) of the Securities Exchange Act of 1934 (``Act'').\1\ Notice of 
the proposal appeared in the Federal Register on September 17, 1992, to 
solicit comment from interested persons.\2\ No comments were received 
by the Commission. This order approves the proposal.
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    \1\15 U.S.C. 78s(b) (1988).
    \2\Securities Exchange Act Release No. 31170 (September 10, 
1992), 57 FR 43040.
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I. Description of the Proposal

    The purpose of the rule change is to expedite the settlement of 
claims for dividends or for registered bond interest by shortening the 
time frames during which MCC requires delivery of Claim Forms by 
participants who are filing claims against other participants. Under 
MCC's Dividend Settlement Service (``DSS''), MCC processes 
participants' claims for dividends and registered bond interest. DDS 
procedures require that before a participant can submit a claim against 
another participant, it must deliver to MCC a Notice of Intent. The 
Notice of Intent must include either documents which establish the 
basis for the claim or a written explanation of the basis for the 
claim.
    MCC rules require the claiming participant to deliver two copies of 
a Claim Form to the participant against whom the claim is made. The 
Claim Form must now be delivered within five business days, previously 
within ten business days, after delivering the Notice of Intent to 
MCC.\3\ Where the Notice of Intent is delivered six months or more 
after the record date of the dividend or interest claimed, the Claim 
Form must now be delivered within ten business days, previously within 
twenty business days, after the delivery of the Notice of Intent to 
MCC.\4\ Both the Notice of Intent and Claim Form must be delivered 
through the facilities of MCC.\5\ Once MCC receives the Notice of 
Intent and Claim Form, MCC distributes them to the participant against 
whom the claim is made on the same day the Claim Form is received.
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    \3\MCC Rules, Art. V, R. 7, Section 4.
    \4\Id.
    \5\MCC Rules, Art. V, R. 7, Sections 3 and 4.
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    MCC's rules require the participant receiving the Claim Form to 
respond by the Charge Date, which appears on the Claim Form. A 
participant who receives a Claim Form may honor it, may file an Intent 
Rejection with MCC, or may take no action. If an Intent Rejection is 
filed, the participants may settle the matter themselves or may submit 
the matter to arbitration. If the participant receiving the Claim Form 
honors the claim or fails to respond, MCC will debit that participant's 
account and will credit the account of the claiming participant.

II. Discussion

    The Commission believes that the proposal is consistent with the 
Act and particularly with section 17A of the Act.\6\ Section 
17A(b)(3)(F) of the Act requires that the rules of clearing agencies be 
designed to promote the prompt and accurate clearance and settlement of 
securities transactions.\7\ Moreover, in section 17A(a)(1) of the 
Act,\8\ Congress encourages the use of efficient and effective safe 
procedures for securities clearance and settlement.
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    \6\15 U.S.C. 78q-1 (1988).
    \7\15 U.S.C. 78q-1(b)(3)(F) (1988).
    \8\15 U.S.C. 78q-1(a)(1) (1988).
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    The Commission believes that shortening the time frames for filing 
claim forms, from ten business days to five business days and from 
twenty business days to ten business days, should result in more 
efficient and effective claim processing at MCC. Shortening the time 
frames also should encourage participants to settle their claims and 
disputes involving dividends and interest in a more prompt manner.

III. Conclusion

    For the reasons discussed above, the Commission believes that the 
proposal is consistent with the requirements of the Act, particularly 
section 17A of the Act, and the rules and regulations thereunder.
    It is therefore ordered, Pursuant to section 19(b)(2) of the 
Act,\9\ that the above-mentioned proposed rule change (File No. SR-MCC-
92-06) be, and hereby is, approved.

    \9\15 U.S.C. 78s(b)(2) (1988).
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    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority.\10\
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    \10\17 CFR 200.30-3(a)(12) (1991).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 94-741 Filed 1-11-94; 8:45 am]
BILLING CODE 8010-01-M