[Federal Register Volume 60, Number 23 (Friday, February 3, 1995)]
[Notices]
[Pages 6741-6743]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-2694]



=======================================================================
-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-35293; File No. SR-MSTC-94-19]


Self-Regulatory Organizations; Midwest Securities Trust Company; 
Notice of Filing and Order Granting Accelerated Approval of Proposed 
Rule Change Implementing New Procedures Regarding the Distribution of 
Hardcopy Reorganization Offer Notices

January 30, 1995.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on December 8, 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. On December 15, 1994, MSTC amended the proposed rule 
change by requesting that the Commission consider the proposal as being 
filed under Section 19(b)(2)\2\ of the Act instead of Section 
19(b)(3)(A)\3\ of the Act.\4\ The Commission is publishing this notice 
and order to solicit comments from interested [[Page 6742]] persons and 
to grant accelerated approval of the proposed rule change.

    \1\15 U.S.C. 78s(b)(1) (1988).
    \2\15 U.S.C. 78s(b)(2) (1988).
    \3\15 U.S.C. 78s(b)(3) (1988).
    \4\Letter from David T. Rusoff, Foley & Lardner, to Peter R. 
Geraghty, Division of Market Regulation, Commission (December 15, 
1994).
---------------------------------------------------------------------------

I. Self-Regulatory Organizations Statement of the Terms and Substance 
of the Proposed Rule Change

    In light of the recent implementation of the Reorganization 
Processing System (``RPS''),\5\ MSTC proposes to introduce new 
procedures regarding distribution of the hardcopy (i.e., paper) 
reorganization offer notices to MSTC participants.

    \5\For a complete description of RPS, refer to Securities 
Exchange Act Release No. 34200 (June 10, 1994), 59 FR 31283 [File 
No. SR-MSTC-94-8] (notice of filing and immediate effectiveness of a 
proposed rule change relating to reorganization processing).
---------------------------------------------------------------------------

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. MSTS 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

    The primary purpose of MSTC's proposed rule change is to implement 
new procedures regarding the distribution of hardcopy reorganization 
notices to MSTC members. Rule 4 under Article IV of MSTC's rules 
describes MSTC's activities with respect to reorganization information 
disseminated by MSTC. Pursuant to these rules, MSTC provides daily to 
all MSTC participates detailed written notices, termed ``Goldenrod 
Notices,'' of each newly announced or updated corporate reorganization 
offer. MSTC recently implemented RPS, an on-line computer system 
available to participants for accessing reorganization information; 
therefore, MSTC proposes to discontinue providing detailed written 
notices to all participants. Under the proposal, MSTC will provide 
hardcopy notices only to those participants with a Midwest Clearing 
Corporation (``MCC'') or MSTC position\6\ in the security to which the 
notice relates on the date the RPS notice is produced by MSTC. Every 
participant will continue to have available information regarding every 
reorganization offer, but unless the participant has a position in the 
subject security, the information will be provided over RPS rather than 
in hardcopy reorganization notices. Consequently, MSTC participants 
that do not have a position in the affected security on the date MSTC 
produces the reorganization notices will have to use RPS to access the 
information.\7\

    \6\A MCC/MSTC position represents securities of a particular 
CUSIP of an individual participant at either the MCC or MSTC.
    \7\Currently, RPS inquiries can be designed by participants to 
provide offer information regarding any combination of the 
following: (1) Position only, (2) selected date or date ranges, (3) 
offer status, (4) specific offer groups or types, (5) CUSIP or CUSIP 
ranges, and (6) critical date types. Participants subsequently can 
create customized reports containing this information. RPS 
represents offers classified as either nonmandatory, mandatory, or 
redemption. These offer classifications will be expanded to include 
nonexpiring offers. Nonmandatory offers include tenders, exchanges, 
puts, rights, and warrants. Mandatory offers include mergers, 
reverse splits, liquidations, bankruptcies, and name and CUSIP 
changes. Currently redemptions include partial prefundings, and 
convertible partial calls. Full calls, partial calls, and maturities 
are not yet included in RPS. Notably, MSTC anticipates that in the 
future participants will be able to use RPS for processing 
reorganization offer instructions in a real-time environment.
---------------------------------------------------------------------------

    Following this rule change, two hardcopy reports that summarize 
offer information will be provided daily to all participants: the 
``Offer Information Report'' and the ``Active Offers with Position 
Report.'' The Offer Information Report will identify new, updated, and 
closed RPS offers, and indicate whether the participant has a position 
with MSTC in the relevant CUSIPs. The Active Offers with Position 
Report will list all active RPS offers in which the participant has a 
MCC/MSTC position.
    Sections 3 and 4 of rule 2 of Article IV set forth MSTC's 
responsibility with respect to reorganization information disseminated 
by MSTC. Consistent with MSTC's current policy, MSTC continues to 
disclaim any obligation, responsibility, or liability with respect to 
these written notices provided to participants.
    MSTC believes that the proposed rule change is consistent with the 
requirements of Section 17A of the Act and the rules and regulations 
thereunder applicable to MSTC because the proposal will further 
automate the processing of reorganization offers through the facilities 
of MSTC.

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

    MSTC believes that no burden will be placed on competition as a 
result of the proposed rule change.

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

    MSTC has not solicited or received any comments. MSTC will notify 
the Commission of any written comments it receives.

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

    Section 17A(b)(3)(F) of the Act requires that the rules of a 
clearing agency be designed to promote the prompt and accurate 
clearance and settlement of securities transactions.\8\ The Commission 
believes that the proposed rule change is consistent with MSTC's 
obligations under Section 17A(b)(3)(F) because the rule change should 
help to reduce the labor and expense associated with distributing 
reorganization notices to all MSTC participants and thereby increases 
the efficiency of reorganization processing and advances the prompt and 
accurate clearance and settlement of securities transactions.

    \8\15 U.S.C. 78q-1(b)(3)((F) (1988).
---------------------------------------------------------------------------

    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 the RPS system 
has been operational for more than six months and accelerated approval 
will allow MSTC to begin as soon as possible to reduce the amount of 
paper notices that it must produce.

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 DC 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 Fifth Street, NW., 
Washington, DC 20549. Copies of such [[Page 6743]] filing will also be 
available for inspection and copying at the principal office of MSTC. 
All submissions should refer to File No. SR-MSTC-94-19 and should be 
submitted by February 24, 1995.
    It is therefore ordered, pursuant to Section 19(b)(2) of the Act, 
that the proposed rule change (File No. SR-MSTC-94-19) be, and hereby 
is, approved.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\9\

    \9\17 CFR 200.30-3(a)(12) (1994).
---------------------------------------------------------------------------

Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 95-2694 Filed 2-2-95; 8:45 am]
BILLING CODE 8010-01-M