[Federal Register Volume 59, Number 243 (Tuesday, December 20, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-31168]


[[Page Unknown]]

[Federal Register: December 20, 1994]


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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-35096; File No. SR-MSTC-94-14]

 

Self-Regulatory Organizations; Midwest Securities Trust Company; 
Notice of Filing and Order Granting Accelerated Approval of Proposed 
Rule Change Implementing a Fixed Income Transaction System Automated 
Book Entry Feature for Municipal Bonds

December 13, 1994.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on October 21, 1994, the 
Midwest Securities Trust Company (``MSTC'') 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 MSTC. 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

    MSTC proposes to adopt a new automated book entry feature for 
municipal bonds.

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 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. MSTC has prepared summaries, set forth in section (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

    Under the proposed rule filing, MSTC proposes to adopt an automated 
book entry movement feature to work in conjunction with the Midwest 
Clearing Corporation's (``MCC'') interface\2\ with the National 
Securities Clearing Corporation's (``NSCC'') fixed income transaction 
system (``FITS'') for municipal securities.\3\ The book entry movement 
feature for municipal securities transactions compared through FITS 
will be similar in functionality and procedure to the current 
institutional delivery system where book entry delivery is set up in 
advance for automatic settlement on settlement date. A municipal bond 
trade entered for comparison into FITS will be set up for automatice 
book entry delivery once the trade achieves a compared status as long 
as the settlement date entered for the trade is a date in the future of 
the trade date. New issue or unusual trade types that compare without a 
settlement date or items that compare on or after settlement date will 
not be subject to automatice book entry delivery. These exception items 
must be submitted manually.
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    \2\For a complete description of the Midwest Clearing 
Corporation's and the Stock Clearing Corporation of Philadelphia's 
interface with NSCC's FITS for municipal securities, refer to 
Securities Exchange Act Release No. 33524 (January 26, 1994), 59 FR 
4958 [File Nos. SR-MCC-93-04 and SCCP-93-03] (order approving 
interfaces with NSCC's FITS).
    \3\For a detailed description of NSCC's FITS, refer to 
Securities Exchange Act Release Nos. 32747 (August 13, 1993), 58 FR 
44530 [File No. SR-NSCC-93-02] (order approving implementation of 
FITS for municipal securities) and 34867 (October 20, 1994), 59 FR 
54018 [File No. SR-NSCC-94-16] (order approving expansion of NSCC's 
FITS to include corporate bonds and unit investment trusts).
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    Participants will have the flexibility to specify the position from 
which an automatic book entry delivery should originate. MSTC expects 
that this decision often will be based on the most frequently used 
safekeeping position as identified on the participant's account 
profile. Participants will have the option of changing this standing 
origination location as necessary.

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

    MSTC does not believe that the proposed rule change will impose a 
burden on competition that is not necessary or appropriate in 
furtherance of the purposes of the Act.

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

    Comments were neither solicited nor received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Section 17A(b)(3)(F)\4\ of the Act requires the rules of a clearing 
agency be designed to promote the prompt and accurate clearance and 
settlement of securities transactions. The Commission believes that the 
automated book entry delivery feature should help promote prompt and 
accurate clearing and settlement by reducing errors by automatically 
generating book entry movements on behalf of the delivering MSTC 
participants for compared trades. Section 17A(a)(2)(A)(i)\5\ of the Act 
directs the Commission to facilitate the establishment of a national 
system for the prompt and accurate clearance and settlement of 
securities transactions. The Commission believes that the proposal 
furthers this goal by creating cooperation by automating the process of 
trades being cleared and settled at Midwest Clearing Corporation and 
MSTC.
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    \4\15 U.S.C. 78q-1(b)(3)(F) (1988).
    \5\15 U.S.C. 78q-1(a)(2)(A)(i) (1988).
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    MSTC has requested that the Commission find good cause for 
approving the proposed rule change prior to the thirtieth day after the 
date of publication of notice of the filing. The Commission finds good 
cause for so approving the proposed rule change because accelerated 
approval will allow MSTC participants to utilize and to take full 
advantage in a more timely fashion of the benefits of the automated 
book entry movement feature for municipal securities.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing. Persons making written submission 
should file six copies thereof with the Secretary, Securities and 
Exchange Commission, 450 Fifth Street, N.W., Washington D.C. 20549. 
Copies of the submissions, 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 at the 
Commission's Public Reference Section, 450 5th Street, N.W., 
Washington, D.C. 20549. Copies of such filings will also be available 
at the principal office MSTC. All submissions should refer to File No. 
SR-MSTC-94-14 and should be submitted by January 10, 1995.
    It is therefore ordered, pursuant to Section 19(b)(2) of the Act, 
that the proposed rule change (File No. SR-MSTC-94-14) be, and hereby 
is, approved.

    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority.\6\
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    \6\17 CFR 200.30-3(a)(12) (1994).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 94-31168 Filed 12-19-94; 8:45 am]
BILLING CODE 8010-01-M