[Federal Register Volume 59, Number 247 (Tuesday, December 27, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-31659]


[[Page Unknown]]

[Federal Register: December 27, 1994]


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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-35118; File No. SR-PHILADEP-94-01, and SR-SCCP-94-03]

 

Self-Regulatory Organizations; Philadelphia Depository Trust 
Company and Stock Clearing Corporation of Philadelphia; Order Approving 
Proposed Rule Changes to Amend By-Laws Regarding the Composition of the 
Respective Boards of Directors and Nominating Committees

December 19, 1994.
    On July 12, 1994, the Philadelphia Depository Trust Company 
(``PHILADEP'') and the Stock Clearing Corporation of Philadelphia 
(``SCCP'') filed with the Securities and Exchange Commission 
(``Commission'') proposed rule changes (File Nos. SR-PHILADEP-94-01 and 
SR-SCCP-94-03) under Section 19(b)(1) of the Securities Exchange Act of 
1934 (``Act'')\1\ to amend their By-Laws governing the composition of 
their boards of directors and their nominating committees. On July 14, 
1994, PHILADEP and SCCP amended their respective rule filings.\2\ 
Notice of the proposals was published in the Federal Register on August 
4, 1994.\3\ No comment letters were received regarding the proposed 
rule changes. For the reasons discussed below, the Commission is 
approving the proposed rule changes.
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    \1\15 U.S.C. 78s(b)(1) (1988).
    \2\Letter from J. Keith Kessel, Compliance Officer, PHILADEP and 
SCCP, to Jerry W. Carpenter, Branch Chief, Division of Market 
Regulation, Commission (July 8, 1994).
    \3\Securities Exchange Act Release No. 34446 (July 27, 1994), 59 
FR 39801.
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I. Description

    PHILADEP and SCCP are amending Article IV, Section 2 of their 
respective By-Laws to remove the requirement that the two vice chairmen 
of the board of governors of the Philadelphia Stock Exchange, Inc. 
(``PHLX'') serve as ex-officio members of their boards of directors. 
The amendments install the chief operating officer of the PHLX both as 
an ex-officio member of both of the boards of directors and also as the 
vice chairman of the boards. The amendments reduce the requisite number 
of PHLX governors who must serve on the PHILADEP and SCCP boards of 
directors from a majority of the fifteen to seventeen directors to six 
of the directors. The amendments also change the term of office for the 
boards of directors to synchronize the term of office for the chairman 
of the PHLX's board of governors with his terms of office on the 
PHILADEP and SCCP boards.
    PHILADEP and SCCP also are amending Article III, Section 4(a) of 
their By-Laws which currently require that each nominating committee 
consist of five ex-officio members of the board of directors and two 
other persons appointed by the chairman of the board. Under the amended 
rules, each nominating committee will consist of four ex-officio 
members of the board of directors and three other persons appointed by 
the chairman of the boards.
    The PHILADEP and SCCP Boards of Directors will continue to provide 
the PHLX, as the sole shareholder of both PHILADEP and SCCP, with 
adequate representation. The PHLX will be represented by both senior 
exchange staff personnel and by members of the PHLX board of governors, 
who typically also represent PHILADEP and SCCP participant firms. In 
accordance with PHILADEP's and SCCP's amendment processes delineated in 
By-Law Article XI, the Chairman of the PHLX board of governors, as 
agent for the sole shareholder and parent corporation, has signed a 
unanimous consent in lieu of a special meeting to effectuate the 
foregoing changes.

II. Discussion

    The Commission believes that the proposed rule changes are 
consistent with Section 17A of the Act and specifically with Section 
17A(b)(3)(C).\4\ Section 17A(b)(3)(C) requires that a clearing agency 
assure fair representation of its shareholders or members and 
participants in the selection of its directors and administration of 
its affairs. As stated above, the proposed rule changes provide the 
PHLX with continued fair and adequate representation in its capacity as 
the sole shareholder of both PHILADEP and SCCP. The proposed rule 
changes also afford fair representation to the participants by 
continuing to require their representation on the boards of directors 
and nominating committees of both PHILADEP and SCCP.
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    \4\15 U.S.C. 78q(b)(3)(C)(1988).
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III. Conclusion

    On the basis of the foregoing, the Commission finds that the 
proposed rule changes are consistent with the requirements of the Act, 
and in particular with the requirements of Section 17A of the Act, and 
the rules and regulations thereunder.
    It is therefore ordered, pursuant to Section 19(b)(2) of the Act, 
that the proposed rule changes (File Nos. SR-PHILADEP-94-01 and SCCP-
94-03) be, and hereby are, approved.

    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) (1994).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 94-31659 Filed 12-23-94; 8:45 am]
BILLING CODE 8010-01-M