[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: 94-23394]


[[Page Unknown]]

[Federal Register: September 22, 1994]


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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-34679; International Series Release No. 714; File No. 
SR-ISCC-94-4]

 

Self-Regulatory Organizations; International Securities Clearing 
Corporation; Notice of Filing of a Proposed Rule Change Relating to a 
Data Transmission Link With Monte Titoli, S.P.A.

September 15, 1994.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on August 9, 1994, the 
International Securities Clearing Corporation (``ISCC'') 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 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 Monte Titoli, S.p.A. (``MT'').

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 places 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 MT.\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\MT provides settlement and depository services for 
securities, including securities of U.S. issuers, listed on Italian 
stock exchanges.
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    Under the link, MT will be able to hold securities in The 
Depository Trust Company (``DTC'') through ISCC. Pursuant to the terms 
of the service agreement dated June 1, 1992, between ISCC and MT, MT 
will be bound by DTC rules applicable to the DTC services that MT will 
utilize through ISCC. While monetary obligations under the link are 
expected to be limited to payments for fees, MT 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 MT's 
use of DTC's services. ISCC's auditors will be able to consult with 
MT's auditors with regard to MT's financial condition and the activity 
arising under the link, and MT will furnish ISCC with MT's financial 
statements.
    MT has agreed that before the link becomes operational, MT will 
appoint a registered agent in the U.S. for service of process and will 
provide ISCC with proof of such appointment. MT 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, MT will be assigned one number for use on behalf of 
its members. ISCC will apply to DTC on MT's behalf to establish MT as 
an ISCC-sponsored DTC participant. ISCC on behalf of MT will initiate 
book-entry deliveries for no value. ISCC on behalf of MT also will 
accept receipts of securities by book-entry for no value. Both the 
receive and deliver functions will be pursuant to instructions received 
from MT, and such instructions will identify, among other items, the MT 
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 MT. Relevant DTC notices and corporate action 
data relating to the issues held in the MT/ISCC account at DTC will be 
provided to MT.
    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 MT designated correspondent bank. ISCC will 
receive dividend and possibly interest payments from DTC with respect 
to shares on deposit. Dividend and interest credited to MT's account at 
DTC will be reflected in MT's ISCC settlement statement.\3\ The 
settlement statement also will reflect a debit for the total dividends 
and interest paid to MT's account at its withholding bank.\4\
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    \3\On each business day, ISCC will transmit to MT a settlement 
statement detailing the net amount due to ISCC from MT or from ISCC 
to MT.
    \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 MT of the 
services descibed 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 received 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 organizations 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, N.W., 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 above-
mentioned self-regulatory organization. All submissions should refer to 
File No. SR-ISCC-94-04 and should be submitted by October 13, 1994.

    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 94-23394 Filed 9-21-94; 8:45 am]
BILLING CODE 8010-01-M