[Federal Register Volume 59, Number 12 (Wednesday, January 19, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-1223]


[[Page Unknown]]

[Federal Register: January 19, 1994]


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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-33457; File No. SR-DTC-93-13]

 

Self-Regulatory Organizations; The Depository Trust Company; 
Filing of Proposed Rule Change Relating to an Increase in the Fixed Net 
Debit Cap Employed in The Depository Trust Company's Same-Day Funds 
Settlement System

January 11, 1994.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on December 1, 1993, The 
Depository Trust Company (``DTC'') filed with the Securities and 
Exchange Commission (``Commission'') the proposed rule change (File No. 
SR-DTC-93-13) as described in Items I, II, and III below, which Items 
have been prepared primarily by DTC. 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).
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I. Self-Regulatory Organization's Statement of the Terms of the 
Proposed Rule Change

    The proposed rule change filed by DTC consists of an increase of 
$187 million in the fixed net debit cap employed in DTC's Same-Day 
Funds Settlement (``SDFS'') system. Such increase will applicable only 
to the net debits of SDFS participants that elect to share DTC's costs 
of increasing its external committed line of credit.

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 that 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.

(A) Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    DTC employs a fixed net debit cap in its SDFS system in order to 
assure that DTC's liquidity resources are sufficient to complete 
settlement if due to insolvency or, more likely, a temporary 
operational problem, an SDFS participant were to fail to settle its net 
debit obligation.\2\ The fixed net debit cap is set at 75% of: (1) the 
aggregate cash deposits to the SDFS participants fund and (2) DTC's 
internal and external lines of credit. The cap is currently set at $387 
million.
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    \2\Each Participant's net debit is limited throughout the 
processing day by a net debit cap that is the lesser of: (1) the 
adjustable cap, that is a multiple of the participant's deposits to 
the SDFS participants fund, or (2) the fixed net debit cap.
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    DTC has on deposit approximately 72% of the commercial paper 
(``CP'') outstanding in the U.S. and expects that virtually all CP 
outstanding in the U.S., except CP that is in direct issuers' 
proprietary book-entry systems, will be included in DTC's CP program 
sometime in 1994. DTC plans to add other types of money market 
instruments (``MMI'') to its SDFS system within the next year beginning 
with a new program for institutional certificates of deposit.\3\
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    \3\Securities Exchange Act Release No. 33126 (November 1, 1993) 
58 FR 59283 [File No. SR-DTC-93-12] (notice of proposed rule change 
to implement a MMI program). Under the MMI program, DTC also 
proposes to make eligible municipal CP and bankers' acceptances.
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    DTC is concerned that with the anticipated increase in volume the 
fixed net debit cap at its current level could have the undesirable 
effect of temporarily blocking substantial numbers of book-entry 
deliveries. In order to ease the flow of transactions through the 
system, DTC has decided to increase its external committee line of 
credit by $250 million and thereby raise the fixed net debit cap that 
will be applied to the net debits of SDFS participants that elect to 
share DTC's cost of obtaining the increased line of credit. At this 
time for twenty-two SDFS participants, the fixed net debit cap is the 
operative cap limiting their net debits.
    DTC believes that the securities resources available to it to 
collateralize any borrowing it should have to make under the increased 
line of credit are more than adequate.\4\
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    \4\DTC's line of credit agreement provides that any borrowing 
may be collaterlized by collateral securities in the account of a 
failing participant as well as by securities that have been 
deposited by DTC participants to the SDFS participants fund. On 
November 15, 1993, deposits to the SDFS participants fund included 
securities having a market value of approximately $632 million.
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    DTC believes the proposed rule change is consistent with the 
requirements of Section 17A of the Act and the rules and regulations 
thereunder because it promotes the prompt and accurate clearance and 
settlement of securities transactions.

(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

    DTC has not solicited or received comments on the proposed rule 
change. Informally, a number of SDFS participants to which the 
increased fixed net debit cap will be available have expressed support 
for the proposal.

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 the self-regulatory organization 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.

V. 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. 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 DTC. All submissions 
should refer to the File No. SR-DTC-93-13 and should be submitted 
February 9, 1994.

    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority.\5\
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    \5\17 CFR 200.30-3(a)(12) (1992).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 94-1223 Filed 1-18-94; 8:45 am]
BILLING CODE 8010-01-7