[Federal Register Volume 60, Number 35 (Wednesday, February 22, 1995)]
[Notices]
[Pages 9875-9877]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-4277]



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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-35378; File No. SR-DTC-95-02]


Self-Regulatory Organizations; The Depository Trust Company; 
Notice of Filing and Order Granting Accelerated Approval of Proposed 
Rule Change Concerning Procedures Relating to Rule 17Ad-16 and Order 
Designating The Depository Trust Company as the Approved Qualified 
Registered Securities Depository

February 15, 1995.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on January 13, 1995, The 
Depository Trust Company (``DTC'') 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 DTC. The Commission is [[Page 9876]] publishing this 
notice and order to solicit comments from interested persons and to 
grant accelerated approval to the proposed rule change.

    \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

    DTC, seeks designation as the ``appropriate qualified registered 
securities depository'' to receive notices of transfer agent changes 
pursuant to the recently adopted Rule 17Ad-16\2\ of the Act. This 
proposed rule change also seeks approval of procedures that DTC has 
established to receive and transmit such notices to other registered 
securities depositories, participants, and others.

    \2\Securities Exchange Act Release No. 35039 (December 1, 1994), 
59 FR 63656.
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II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, DTC 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. DTC 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

    The Commission recently adopted Rule 17Ad-16. That rule is designed 
to address the current and continuing problem of transfer delays due to 
unannounced transfer agent changes, including the change of a transfer 
agent for a particular issue and the change of the name or address of a 
transfer agent. The rule requires a registered transfer agent to send a 
notice to the ``appropriate qualified registered securities 
depository''\3\ when the assuming or terminating transfer agent 
services on behalf of an issuer or when changing its name or address.

    \3\An ``appropriate qualified registered securities depository'' 
is defined by Rule 17Ad-16 to mean the qualified registered 
securities depository that the Commission so designates by order or, 
in the absence of such designation, the qualified registered 
securities depository that is the largest holder of record of all 
qualified registered securities depositories as of the most recent 
record date. A ``qualified registered securities depository'' is 
defined by Rule 17Ad-16 to mean a clearing agency registered under 
Section 17A of the Act that performs clearing agency functions and 
that has rules and procedures concerning its responsibility for 
maintaining, updating, and providing appropriate access to the 
information it receives.
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    In order to eliminate uncertainty about where registered transfer 
agents should direct notices required by Rule 17Ad-16 and to reduce 
unnecessary costs and administrative burdens for transfer agents and 
registered securities depositories, DTC hereby respectfully requests 
designation as the ``appropriate qualified registered securities 
depository'' in order to be the sole recipient for all such notices 
sent by transfer agents pursuant to the rule.\4\

    \4\DTC has consulted with both the Philadelphia Depository Trust 
Company (``Philadep'') and the Midwest Securities Trust Company 
(``MSTC'') regarding DTC's designation as the appropriate qualified 
registered securities depository. Both Philadep and MSTC have 
agreed, either orally or in writing, that DTC should be designated 
as the appropriate qualified registered securities depository. 
Letter from J. Keith Kessel, Compliance Officer, Philadep, to Walter 
Harris, Manager, DTC (December 19, 1994). Both of these depositories 
have filed with the Commission procedures for disseminating to their 
participants information on transfer agent changes received from 
DTC. File Nos. SR-MSTC-95-02 and SR-Philadep-95-01.
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    DTC has established procedures for providing copies of each such 
notice received to the other registered securities depositories and to 
participants and others. Generally, DTC will forward such notices to 
the Midwest Securities Depository Trust Company (``MSTC'') and the 
Philadelphia Depository Trust Company (``Philadep'') by facsimile 
transmission no later than the business day following DTC's receipt of 
such notice from the transfer agent. DTC will notify its participants 
and other interested parties through DTC's Legal Notice System 
(``LENS'')\5\ no later than the business day following DTC's receipt of 
such notice from the transfer agent.

    \5\LENS enables DTC Participants to choose from a menu on their 
Participant Terminal System screen certain notices received by DTC 
which they wish to order. The Securities and Exchange Commission 
issued an order approving DTC's LENS on June 12, 1991 (Securities 
Exchange Act Release No. 29291 (June 12, 1991), 56 FR 28190 [File 
No. SR-DTC-91-08]).
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    The proposed rule change is consistent with the requirements of 
Section 17A of the Act in that it promotes the prompt and accurate 
clearance and settlement of securities transactions as well as the 
timely transfer of securities certificates resulting in greater number 
of securities being immobilized promptly.

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

    DTC does not believe that the proposed rule change will impose any 
burden on competition 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

    Written comments from DTC participants or others have not been 
solicited or received.

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

    The Commission believes DTC's proposed rule change is consistent 
with the requirements of the Act, particularly Section 17A of the Act, 
and the rules and regulations thereunder applicable to registered 
securities depositories. The proposed rule change will allow DTC to 
comply with Commission Rule 17Ad-16 which requires registered 
securities depository to provide their participants with notices 
received from a transfer agent, directly or through the appropriate 
qualified registered securities depository, when the transfer agent is 
terminating or assuming transfer agent services on behalf of an issuer 
or when changing its name or address. Rule 17Ad-16 became effective on 
February 6, 1995. DTC also has requested that the Commission find good 
cause for approving the proposed rule change prior to the thirtieth day 
after the day of publication of notice of the filing in the Federal 
Register because accelerated approval will permit DTC to comply with 
the requirements of Rule 17Ad-16. The Commission finds good cause for 
so approving the proposed rule change on an accelerated basis.
    With this order, the Commission also is designating DTC as the 
appropriate qualified registered securities depository.\6\ DTC is the 
largest holder of record among qualified registered securities 
depositories for the most issues.\7\ Also, as previously stated, both 
MSTC and Philadep have agreed that DTC should be designated as the 
appropriate qualified registered securities depository.

    \6\The Commission delegated to the Director of the Division of 
Market Regulation authority to designate by order the appropriate 
qualified registered securities depository. Securities Exchange Act 
Release No. 35039 (December 1, 1994), 59 FR 63565; 17 CFR 200.30-
3(a)(56) (1994).
    \7\DTC held securities on behalf of participants that equaled 
$7.5 trillion and 98.8% of the total market value of securities held 
in total by the three registered securities depositories that handle 
corporate securities. DTC 1993 Annual Report at 5.
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IV. Solicitation of Comments

    Interested persons are invited to submit written date, views, and 
arguments concerning the foregoing. Persons making written submissions 
[[Page 9877]] should file six copies thereof with the Secretary, 
Securities and Exchange Commission, 450 Fifth Avenue, NW., Washington, 
DC 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 the 
provisions of 5 U.S.C. 552, will be available for inspection and 
copying in the Commission's Public Reference Room, 450 Fifth Avenue, 
NW., Washington, DC. Copies of such filing will also be available for 
inspection and copying at the principle office of DTC. All submissions 
should refer to the File No. SR-DTC-95-02 and should be submitted by 
March 15, 1995.
    It is hereby ordered, Pursuant to Section 19(b)(2) that the 
proposed rule change (File No. SR-DTC-95-02) be, and hereby is 
approved. It is further ordered, pursuant to delegated authority that 
DTC is designated the appropriate qualified registered securities 
depository.\8\

    \8\17 CFR 200.30-3(a)(56) (1994).

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

    \9\17 CFR 200.30-3(a)(12) (1994).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 95-4277 Filed 2-21-95; 8:45 am]
BILLING CODE 8010-01-M