[Federal Register Volume 59, Number 248 (Wednesday, December 28, 1994)]
[Unknown Section]
[Page ]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-31886]


[Federal Register: December 28, 1994]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
[Release No 34-35125; File No. SR-PHILADEP-94-04]


Self-Regulatory Organizations; The Philadelphia Depository Trust 
Company; Order Approving Proposed Rule Change to Amend Rules to Require 
Execution of a Participant's Agreement by Participants and Pledgees

December 20, 1994.
    On August 8, 1994, the Philadelphia Depository Trust Company 
(``PHILADEP'') filed with the Securities and Exchange Commission 
(``Commission'') a proposed rule change (File No. SR-PHILADEP-94-04) 
under Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'')\1\ to amend PHILADEP Rule 2, Section 1. Notice of the 
proposal was published in the Federal Register on August 24, 1994.\2\ 
No comment letters were received regarding the proposed rule change. On 
September 27, 1994, PHILADEP amended the proposed rule filing by adding 
language whereby PHILADEP participants agree to be bound by certain 
provisions set forth under Rule 2.\3\ The amendment was technical in 
nature and did not require republication of notice of filing. For the 
reasons discussed below, the Commission is approving the proposed rule 
changes.
---------------------------------------------------------------------------

    \1\15 U.S.C. Sec. 78s(b)(1) (1988).
    \2\Securities Exchange Act Release No. 34540 (August 17, 1994), 
59 FR 43607.
    \3\Letter from Sharon Metzker, Staff Counsel, PHILADEP, to Peggy 
Robb, Staff Attorney, Division of Market Regulation, Commission 
(September 27, 1994). For the complete text of those provisions, 
refer to PHILADEP Rule 2, Section 1 (a)-(n) (1993).
---------------------------------------------------------------------------

I. Description

    PHILADEP is amending Rule 2, Section 1 with respect to its 
participants' and pledgees' obligations to PHILADEP. The amended Rule 2 
adds language codifying PHILADEP's existing but unwritten policy and 
practice of requiring participants to execute a Participant's Agreement 
and language stating that PHILADEP's by-laws, rules, and procedures 
shall supersede any conflicting provision of the Participant's 
Agreement. The proposed rule change deletes language requiring 
participants to execute and deliver a written instrument specifying 
their adherence to certain obligations set forth in PHILADEP Rule 2. 
Such a second written agreement is unnecessary because once a 
Participant's Agreement is signed, the participant has agreed to abide 
by all of the rules and obligations of PHILADEP, including those set 
forth in PHILADEP Rule 2. Accordingly, all provisions of Rule 2 will be 
directly enforceable against participants without the necessity of 
executing a separate written agreement specifying selected provisions 
of PHILADEP's Rule 2.

II. Discussion

    The Commission believes that the proposed rule change is consistent 
with Section 17A of the Act and specifically with Section 
17A(b)(3)(F).\4\ Section 17A(b)(3)(F) requires that a clearing agency's 
rules assure the safe guarding of securities and funds which are in the 
custody or control of the clearing agency or for which it is 
responsible. Amended PHILADEP Rule 2 complies with the requirements of 
Section 17A(b)(3)(F) in that it requires all participants of PHILADEP 
to sign a Participant's Agreement setting forth their rights and 
obligations. Requiring a signed Participant's Agreement should help 
assure the safekeeping of securities and funds which are in the custody 
or control of PHILADEP by creating a contract which binds participants 
to the provisions of PHILADEP's By-Laws and Rules.
---------------------------------------------------------------------------

    \4\15 U.S.C. Sec. 78q-1(b)(3)(F) (1988).
---------------------------------------------------------------------------

III. Conclusion

    On the basis of the foregoing, the Commission finds that the 
proposed rule change is 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 change (File Nos. SR-PHILADEP-94-04) be, and 
hereby is, approved.

    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority.\5\
---------------------------------------------------------------------------

    \5\17 CFR 200.30-3(a)(12) (1994).
---------------------------------------------------------------------------

Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 94-31886 Filed 12-27-94; 8:45 am]
BILLING CODE 8010-01-M