[Federal Register Volume 59, Number 125 (Thursday, June 30, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-15847]
[[Page Unknown]]
[Federal Register: June 30, 1994]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-34250; File No. SR-PHILADEP-93-02]
Self-Regulatory Organizations; Philadelphia Depository Trust
Company; Notice of Filing and Order Granting Accelerated Approval of a
Proposed Rule Change Concerning the PHILANET Terminal Communication
System, the Voluntary Offer Instruction Service, and the Defender
Security System
June 23, 1994.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of
1934,\1\ (``Act'') notice is hereby given that on August 17, 1993 the
Philadelphia Depository Trust Company (``PHILADEP'') filed with the
Securities and Exchange Commission (``Commission'') the proposed rule
change as described in Items I and II below, which Items have been
prepared primarily by PHILADEP. The Commission is publishing this
notice and order to solicit comments from interested persons and to
grant accelerated approval of the proposed rule change.
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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 purpose of the proposed rule change is to obtain permanent
approval for PHILADEP's PHILANET Terminal Communication System
(``PHILANET'') and for PHILADEP's Voluntary Offer Instruction (``VOI'')
service. PHILANET is an electronic communication system linking
PHILADEP to its participants. The VOI service allows participants to
electronically submit to PHILADEP's Reorganization Department through
PHILANET instructions relating to voluntary corporate actions. PHILANET
and the VOI service currently are being operated as temporarily
approved pilot programs. The proposal also seeks approval of the
installation of the Defender security system to PHILANET.
II. Self-Regulatory Organization's Statement of the Purpose of and
Statutory Basis for the Proposed Rule Change
In its filing with the Commission, PHILADEP included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. PHILADEP 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 Statements of the Purpose of and
Statutory Basis for the Proposed Rule Change
On December 30, 1983, the Commission approved File No. SR-PHILADEP-
83-03 which approved PHILANET on a pilot basis.\2\ The Commission has
extended its approval of the pilot program several times.\3\ On March
8, 1993, the VOI service was approved on a pilot basis as part of the
PHILANET System.\4\
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\2\Securities Exchange Act Release No. 20519 (December 30,
1983), 49 FR 966. (order granting temporary approval).
\3\Securities Exchange Act Release Nos. 27491 (November 30,
1989), 54 FR 50556, [SR-PHILADEP-89-02] (order granting temporary
approval until March 31, 1990); 27863 (April 29, 1990), 55 FR 12762,
[SR-PHILADEP-89-02] (order granting temporary approval until June
30, 1990); 28172 (July 3, 1990), 55 FR 28493, [SR-PHILADEP-89-02]
(order granting temporary approval until July 31, 1990); 30362
(February 10, 1992), 57 FR 5921, [SR-PHILADEP-90-04] (order granting
temporary approval until February 28, 1993); and 31959 (March 8,
1993), 58 FR 13658, [SR-PHILADEP-93-01] (order granting temporary
approval until February 28, 1994).
\4\Securities Exchange Act Release No. 31959 (March 8, 1993), 58
FR 13658 [SR-PHILADEP-93-01] (order granting temporary approval
until February 28, 1994).
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PHILADEP states it has operated PHILANET for ten years without
experiencing any instances of unauthorized system access. PHILADEP
continues to monitor the adequacy of current safeguards and to
implement additional safeguards as necessary to minimize the risk of
unauthorized access. PHILADEP has recently installed the Defender
access management system, a dial-back data communications security
program. Defender protects against unauthorized dial-up access to
PHILANET and the VOI service by verifying that only authorized users
from authorized locations have access. To access PHILANET, a
participant must dial the Defender system and enter an assigned
identification number. Defender then verifies the identification number
and the time-of-day restrictions and dials the authorized location for
that participant. Defender secures all dial-up lines (synchronous and
asynchronous) of the PHILANET system. Audit records are generated for
all accesses and configuration changes, and Defender incorporates the
audit information into reports and graphs which assist in operating and
maintaining proper security.
B. Self-Regulatory Organization's Statement on Burden on Competition
PHILADEP does not believe that PHILANET, the VOI service, or
Defender will impose any inappropriate burden on competition.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received from Members, Participants or Others
No comments on the proposal have been solicited or received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Sections 17A(b)(3) (A) and (F) of the Act require that a clearing
agency be organized and its rules designed to promote the prompt and
accurate clearance and settlement of securities transactions and to
assure the safeguarding of securities and funds which are in the
custody or control of the clearing agency or for which it is
responsible.\5\ The proposal enhances PHILADEP's capacity to facilitate
the prompt and accurate clearance and settlement of securities
transactions by providing participants with the ability to
electronically communicate with PHILADEP. PHILANET along with the VOI
service has enhanced securities processing, has reduced paper
processing, and has reduced the use of tape transmissions. As a result,
PHILADEP has been able to reduce the risk of data loss and delays in
receiving and transmitting data. The Defender security system program
should help prevent unauthorized access to PHILANET and VOI.
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\5\15 U.S.C. 78q-1(b)(3) (A) and (F) (1988).
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PHILADEP has requested and the Commission finds good cause for
approving the proposed rule change prior to the thirtieth day after the
date of publication of notice of the filing. PHILADEP has informed the
Commission that PHILANET and the VOI service have been operating
satisfactorily during the pilot phase.\6\ The Defender system, which
has been implemented and is already operating, appears to be an
appropriate security measure for PHILADEP's data communication systems.
In light of the above reasons for approving the proposal, the fact that
PHILANET, VOI, and the Defender system have been operating
satisfactorily for some time, and the fact that the Commission does not
expect any adverse comments, the Commission believes it is appropriate
to grant accelerated approval.
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\6\Supra note 4.
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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 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 PHILADEP. All submissions should refer to File No.
SR-PHILADEP-93-02 and should be submitted by July 21, 1994.
V. Conclusion
On the basis of the foregoing, the Commission finds that PHILADEP's
proposed rule change is consistent with the Act and in particular with
Section 17A of the Act.
It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\7\ that the proposed rule change (File No. SR-PHILADEP-93-02) be,
and hereby is, approved.
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\7\15 U.S.C. 78s(b)(2) (1988).
For the Commission by the Division of Market Regulation,
pursuant to delegated authority.\8\
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\8\17 CFR 200.30-3(a)(12) (1993).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 94-15847 Filed 6-29-94; 8:45 am]
BILLING CODE 8010-01-M