[Federal Register Volume 60, Number 44 (Tuesday, March 7, 1995)]
[Notices]
[Pages 12585-12586]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-5464]



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SECURITIES AND EXCHANGE COMMISSION
February 28, 1995.


Self-Regulatory Organization; Philadelphia Depository Trust 
Company; Order Approving Proposed Rule Change Concerning Disposal of 
Expired Securities Certificates of Warrants and Rights

[Release No. 34-35426; File No. SR-Philadep-94-05]
    On October 6, 1994, the Philadelphia Depository Trust Company 
(``Philadep'') filed a proposed rule change (File No. SR-Philadep-94-
05) with the Securities and Exchange Commission (``Commission'') 
pursuant to Section 19(b) of the Securities Exchange Act of 1934 
(``Act'').\1\ Notice of the proposal appeared in the Federal Register 
on January 3, 1995, to solicit comment from interested persons.\2\ No 
comments were received by the Commission. This order approves the 
proposal.

    \1\15 U.S.C. 78s(b) (1988).
    \2\Securities Exchange Act Release No. 35153 (December 27, 
1994), 60 FR 161.
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I. Description of the Proposal

    The proposal authorizes Philadep to implement a program which 
allows it to destroy certain expired securities certificates, 
specifically expired warrants and rights. This destruction policy will 
enable Philadep to reduce the administrative and safekeeping expenses 
associated with keeping expired warrants and rights related 
certificates in its vault.
    In implementing this program, Philadep will adhere to several 
procedures to help assure that Philadep destroys only certificates for 
which the warrant or rights have expired. First, Philadep will contact 
the transfer agent or the issuer of the securities after the securities 
have reached their expiration dates to verify that the respective 
warrants or rights have expired. Second, Philadep will obtain written 
confirmation from the transfer agent that the certificates representing 
the warrants or rights have expired. If there is no transfer agent, 
Philadep will obtain such written confirmation from the issuer. 
Philadep also will exercise such other reasonable due diligence, as it 
may deem necessary under the circumstances, to confirm the expired 
nature of the respective certificates including consulting with 
Philadep's legal department, its internal audit department, and its 
senior management. Third, Philadep: (1) Will notify its participants 
that the certificates have expired in the judgment of the transfer 
agent or of other appropriate parties where there is no transfer agent; 
(2) will delete such securities positions from its participants' 
account on or after the thirtieth day following the date of the notice 
to the participants; and (3) will mark the securities certificates and 
send them to its internal audit department for destruction. 
Additionally, Philadep has agreed to retain copies of all such 
destroyed certificates on microfilm or on other mediums for not less 
than one year.\3\

    \3\Telephone conversation between J. Keith Kessel, Compliance 
Officer, Philadep, and Thomas C. Etter, Jr., Senior Counsel, 
Division of Market Regulation, Commission (February 27, 1995).
[[Page 12586]]

II. Discussion

    The Commission believes that the proposal is consistent with the 
Act and particularly with Section 17A of the Act.\4\ Section 
17A(b)(3)(F) of the Act\5\ requires that the rules of a clearing agency 
be designed to safeguard the funds and securities which are in the 
custody or control of a clearing agency or for which it is responsible. 
Additionally, Section 17A(a)(1) of the Act\6\ directs the Commission to 
encourage the reduction of unnecessary costs by persons facilitating 
transactions on behalf of investors.

    \4\15 U.S.C. 78q-1 (1988)
    \5\15 U.S.C. 78q-1(b)(3)(F) (1988)
    \6\15 U.S.C. 78q-1(a)(1) (1988)
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    These new procedures provide for the implementation of a 
destruction policy that will permit Philadep to eliminate certain 
expired and worthless securities certificates rather than maintain them 
in its vault. As a result, Philadep expects to reduce its 
administrative expenses that are associated with storing such 
certificates. The proposal also contains numerous safeguards concerning 
the selection of the securities certificates to be destroyed, and the 
Commission believes that the safeguards in question are reasonably 
designed to reduce the risk that Philadep will select for destruction 
certificates for which the warrants or rights have not expired.\7\

    \7\The Commission is expressing no opinion here on the means 
that Philadep will use for the actual physical destruction of any 
certificate or on the related standards that may apply. These are 
separate matters and are not part of this rule proposal.
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III. Conclusion

    For the reasons discussed above, the Commission believes that the 
proposal is consistent with the requirements of the Act, particularly 
those 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,\8\ that the above-mentioned proposed rule change (File No. SR-
Philadep-94-05) be, and hereby is, approved.

    \8\15 U.S.C. 78s(b)(2) (1988).
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    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority.\9\

    \9\17 CFR 200.30-3(a)(12) (1994).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 95-5464 Filed 3-6-95; 8:45 am]
BILLING CODE 8010-01-M