[Federal Register Volume 59, Number 63 (Friday, April 1, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-7765]


[[Page Unknown]]

[Federal Register: April 1, 1994]


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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-33820; File No. SR-MSTC-94-04]

 

Self-Regulatory Organizations; the Midwest Securities Trust 
Company; Filing of a Proposed Rule Change Establishing a Limited 
Purpose Participant Program

March 25, 1994.
    Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on February 3, 1994, the 
Midwest Securities Trust Company (``MSTC'') 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 MSTC. 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

    MSTC submits the following proposed rule change to establish a new 
class of participant with limited access to MSTC's services (``limited 
purpose participant'').

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, MSTC included statements 
concerning the purpose of and basis for the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV below. MSTC 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

    The purpose of the proposed rule filing is to establish a Limited 
Purpose Participant Program. Recently, the Commodity Futures Trading 
Commission (``CFTC'') issued an order approving the Chicago Mercantile 
Exchange's (``CME'') proposal to revise its program for accepting stock 
as clearing house performance bond margin. As a condition of the CFTC 
order, the CME agreed that all stock pledged pursuant to that program 
would be maintained at MSTC. In order to carry out the CME program, the 
CME has become a pledgee participant at MSTC. As a result, clearing 
members of the CME that are also participants at MSTC have been able to 
take advantage of this program by utilizing MSTC's existing Automated 
Pledge Loan Program. Typically, these are firms that are registered 
both as broker-dealers and as futures commission merchants (``FCMS''). 
It has become readily apparent that clearing members of the CME that 
are not members of MSTC are at a disadvantage because they are not able 
to participate in the CME program. Therefore, MSTC is proposing to 
establsh a Limited Purpose Participant Program to accommodate those 
clearing members of the CME that do not meet MSTC's existing 
qualifications to be participants because of their registration solely 
as FCMs.
    Limited purpose participants will be limited to FCMs that are 
clearing members of a futures exchange. The activities at MSTC for 
which a limited purpose participant will be eligible will be limited to 
making or receiving free depository delivery instructions (``DDIs''), 
maintaining ``segregated positions'' for the purpose of effecting a 
free pledge of securities to a specified pledgee participant (i.e., the 
futures exchange of which the limited purpose participant is a clearing 
member), receiving a return of the securities from that pledgee 
participant, and receiving a credit from MSTC for any cash dividends 
received on those securities. Limited purpose participants will not be 
able to make physical deposits or physical withdrawals of securities. 
Limited purpose participants will not be eligible for any other service 
offered by MSTC.
    The proposed rule change is consistent with section 17(A) of the 
Act in that it will facilitate the prompt and accurate clearance and 
settlement of securities transactions.

B. Self-Regulatory Organization's Statement on Burden on Competition

    MSTC perceives no impact on competition by reason of the proposed 
rule change.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    Written comments from MSTC participants or others have not been 
solicited or received on the text of the proposed rule change.

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 the 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 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 the above-referenced 
self-regulatory organization.
    All submissions should refer to File No. SR-MSTC-94-04 and should 
be submitted by April 22, 1994.

    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 94-7765 Filed 3-31-94; 8:45 am]
BILLING CODE 8010-01-M