[Federal Register Volume 59, Number 120 (Thursday, June 23, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-15230]


[[Page Unknown]]

[Federal Register: June 23, 1994]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-34224; File No. SR-DTC-94-5]

 

Self-Regulatory Organizations; The Depository Trust Company; 
Notice of Filing of a Proposed Rule Change Establishing a Service for 
the Routing of Securities Certificates and Related Documentation to DTC

June 16, 1994.
    Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on June 2, 1994, The 
Depository Trust Company (``DTC'') 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 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) (1988).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The primary purpose of the proposed rule change is to establish 
procedures for a new service, the branch receive processing service, 
that will allow participants to route securities certificates and 
related documentation from their branches and other satellite offices 
directly to DTC.

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

    The purpose of the proposed rule change is to establish the branch 
receive processing service. That service will allow participants to 
route securities certificates and related documentation from 
participants' branch offices directly to DTC rather than to the 
participants' own central locations for processing before being 
deposited at DTC. The branch receive processing system will benefit 
participants in the securities industry by eliminating most of the 
certificate handling responsibilities of those participants electing to 
use it and by reducing the movement of physical securities 
certificates. The system will also provide a controlled environment for 
handling exception items and more risky items such as reorganization-
related items.
    A participant using the service will transmit on a daily basis to 
DTC through CCF, CCF II, or MDH the details of incoming branch receive 
items. These transmissions will include the specific identification of 
the courier packages coming from the branches and certain basic 
information about the contents of each package. These transmissions can 
be matched by DTC against DTC's own databases of eligible securities to 
identify special processing items (e.g., securities deposited on the 
record date for dividend or interest payment, securities that are the 
subject of reorganization activities, etc.).
    Upon receipt of each package, DTC will verify its contents and will 
advise the participant of any discrepancies discovered. Using optical 
disk technology, DTC will record the contents of the packages and the 
details of each received item (e.g., certificate numbers, document 
types, etc.). Updates on the status of branch receive processing can 
then be transmitted to the participant throughout the day, providing 
specific information on the status of particular items. Images of items 
received can also be made available to the participant on a terminal, 
by transmission, or by other means. If transmission is chosen, images 
of a problem item can be transmitted intraday to help resolve the 
problem while images of completed items can be transmitted overnight 
for recordkeeping purposes.
    Once processed, branch receive items will be routed as directed by 
the participant. Routing instructions may be for routine deposit to the 
participant's DTC account, for return to the participant, or for 
transfer to another location for further processing. End-of-day 
balancing procedures will permit the participant to separate these 
positions as required by it for its own internal purposes.
    The branch receive service will also provide for the processing of 
various exception items. For example, if desired by the participant, 
DTC will be able to handle all inquiries to the Securities Information 
Center on branch receive items and then to report the results to the 
participant. DTC will be ale to process for collection next-payable 
interest coupons attached to incoming bearer bonds, as well as incoming 
reorganization items, including past-due items. Incoming items which 
are missing documentation necessary for transfer purposes will be held 
at DTC in a pending status until the necessary documentation is 
received.
    The proposed rule change is consistent with the requirements of 
Section 17A of the Act\2\ and the rules and regulations thereunder 
applicable to DTC because the proposed rule change will promote 
efficiencies in the clearance and settlement of securities 
transactions.
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    \2\15 U.S.C. 78q-1 (1988).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    DTC 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 DTC participants or others have not been 
solicited 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-DTC-94-5 and should be submitted by July 14, 1994.

    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 94-15230 Filed 6-22-94; 8:45 am]
BILLING CODE 8010-01-M