[Federal Register Volume 59, Number 183 (Thursday, September 22, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-23393]


[[Page Unknown]]

[Federal Register: September 22, 1994]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-34678; International Series Release No. 713; File No. 
SR-ISCC-94-3]

 

Self-Regulatory Organizations; International Securities Clearing 
Corporation; Notice of Filing of a Proposed Rule Change Relating To a 
Data Transmission Link With Caja de Valores, S.A.

September 15, 1994.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 
1934,\1\ notice is hereby given that on August 9, 1994, the 
International Securities Clearing Corporation (``ISCC'') filed with the 
Securities and Exchange Commission (``Commission'') proposed rule 
change as described in Items I, II, and III below, which Items have 
been prepared primarily by ISCC. 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 proposed rule change consists of a data transmission link 
agreement with Caja de Valores, S.A. (``CVSA'').

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

    In its filing with the Commission, ISCC 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 place specified in Item 
IV below. ISCC 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

    ISCC's Rule 40 provides that ISCC may establish links with foreign 
financial institutions and may make available for the benefit or on 
behalf of the foreign financial institution's participants and members 
such services of ISCC which ISCC in its sole discretion shall determine 
to provide. Pursuant to the authority granted by Rule 40, ISCC has 
entered into a link with CVSA.\2\ This link is similar to the links 
ISCC has previously established with the Japan Securities Clearing 
Corporation and the Central Depository (Pte.) Ltd. of Singapore.
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    \2\CVSA is the sole central depository acting in Argentina.
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    Under the link, CVSA will be able to hold securities in The 
Depository Trust Company (``DTC'') through ISCC. Pursuant to the terms 
of the service agreement dated December 2, 1993, between ISCC and CVSA, 
CVSA will be bound by DTC rules applicable to the DTC services that 
CVSA will utilize through ISCC. While monetary obligations under the 
link are expected to be limited to payments for fees, CVSA will be 
required to collateralize its obligations to ISCC. Such collateral will 
be available to cover any assessments made by DTC to ISCC based on 
CVSA's use of DTC's services. ISCC's auditors will be able to consult 
with CVSA's auditors with regard to CVSA's financial condition and the 
activity arising under the link, and CVSA will furnish ISCC with CVSA's 
financial statements.
    CVSA has agreed that before the link becomes operational, CVSA will 
appoint a registered agent in the U.S. for service of process and will 
provide ISCC with proof of such appointment. CVSA also has agreed that 
it will be subject to jurisdiction in New York for the resolution of 
disputes under or arising from the link.
    Operationally, CVSA will be assigned one number for use on behalf 
of its members. ISCC will apply to DTC on CVSA's behalf to establish 
CVSA as an ISCC-sponsored DTC participant. ISCC on behalf of CVSA will 
initiate book-entry deliveries for no value. ISCC on behalf of CVSA 
also will accept receives of securities by book-entry for no value. 
Both the receive and deliver functions will be pursuant to instructions 
received from CVSA, and such instructions will identify, among other 
items, which CVSA member for whom the receipt or delivery is being 
effected. In special circumstances and at ISCC's discretion, DTC's 
withdrawal-by-transfer service also may be utilized. In such case, the 
securities will be delivered as directed by CVSA. Relevant DTC notices 
and corporate action data relating to the issues held in the CVSA/ISCC 
account at DTC will be provided to CVSA.
    To the extent that any money settlement is required, ISCC will 
receive payment in the form of an official bank check or a wire 
transfer through the CVSA designated correspondent bank. ISCC will 
receive dividend and possibly interest payments from DTC with respect 
to shares on deposit. Dividend and interest credited to CVSA's account 
at DTC will be reflected in CVSA's ISCC settlement statement.\3\ The 
settlement statement also will reflect a debit for the total dividends 
and interest paid to CVSA's account as its withholding bank.\4\
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    \3\On each Business day, ISCC will transmit to CVSA a settlement 
statement detailing the net amount due to ISCC from CVSA or from 
ISCC to CVSA.
    \4\A withholding bank is a bank approved by the Internal Revenue 
Service that withholds and pays the tax applicable to dividends and 
interest on U.S. issues paid to non-U.S. entities.
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    The proposed rule change is consistent with the requirements of the 
Act and the rules and regulations thereunder in that it will promote 
the prompt and accurate clearance and settlement of securities 
transactions. ISCC believes that the provision by ISCC to CVSA of the 
services described above will further the purposes of Section 17A of 
the Act. Specifically, it will promote the delivery and safekeeping of 
certain U.S. issues through a book-entry environment thus avoiding the 
need to move securities physically to settle trades. It also will 
standardize in accordance with U.S. practices and procedures the 
processing of U.S. securities traded on a foreign exchange. In 
addition, the interests of the U.S. investing public and the U.S. 
financial community will be served by the performance of such services 
by ISCC, a registered clearing agency subject to Commission 
supervision.

(B) Self-Regulatory Organization's Statement on Burden on Competition

    ISCC does not believe that the proposed rule changes will have an 
impact or impose a burden on competition.

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

    ISCC has notified its members of the proposed changes to its 
procedures and to date has receive no written comments. ISCC will 
notify the Commission of any written comments received by ISCC.

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 reason 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 approved.

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, D.C. 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 provisions of 5 
U.S.C. 552, will be available for inspection and copying in the 
Commission's Public Reference Section, 450 Fifth Street, N.W., 
Washington, D.C. 20549. Copies of such filing will also be available 
for inspection and copying at the principal office of the ISCC. All 
submissions should refer to File No. SR-ISCC-94-03 and should be 
submitted by October 13, 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).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 94-23393 Filed 9-21-94; 8:45 am]
BILLING CODE 8010-01-M