[Federal Register Volume 60, Number 45 (Wednesday, March 8, 1995)]
[Notices]
[Pages 12793-12794]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-5585]



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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-35422; File No. SR-BSE-95-05]


Self-Regulatory Organizations; Boston Stock Exchange, Inc.; 
Notice of Filing of Proposed Rule Change Relating to Implementation of 
a Three-Day Settlement Standard

February 28, 1995.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on February 21, 1995, the 
Boston Stock Exchange, Incorporated (``BSE'') filed with the Securities 
and Exchange Commission (``Commission'') a proposed rule change as 
described in Items I, II, and III below, which items have been prepared 
by BSE. The Commission is publishing this notice to solicit comments on 
the proposed rule change from interested persons.

    \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

    BSE proposes to modify its rules to implement a three business day 
settlement standard for securities transactions. [[Page 12794]] 

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, BSE 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. BSE 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

    On October 6, 1993, the Commission adopted Rule 15c6-1 under the 
Act which establishes three business days after the trade date 
(``T+3'') instead of five business days (``T+5'') as the standard 
settlement cycle for most securities transactions.\2\ The rule will 
become effective June 7, 1995.\3\

    \2\Securities Exchange Act Release No. 33023 (October 6, 1993), 
58 FR 52891.
    \3\Securities Exchange Act Release No. 34952 (November 9, 1994), 
59 FR 59137.
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    The proposed rule change will amend BSE's definitions of 
transactions nominated as ``Regular Way,'' ``Buyer's or Seller's 
Option,'' and ``Next Day'' contained in Chapter II, Section 6 of BSE's 
rules and will amend Chapter X, Section 1 of BSE rules regarding the 
settlement of ``Cash and Ex-Dividend Transactions.'' Under the proposed 
rule change, regular way settlement will occur on the third business 
day after the trade, and buyer's or seller's option trades will settle 
between four business days and 180 days following the contract date 
except that BSE may provide otherwise in specific issues or classes of 
securities. Next day trades will be able to settle on the first or 
second business day following the date of the contract. Securities will 
trade without (i.e., ``ex'') any dividend, right, or privilege on the 
second full business day preceding the record date except that when the 
record date is on a holiday the securities will trade ``ex'' on the 
third preceding full business day.
    The proposed rule change also amends Chapter XV, Section 14 of BSE 
rules, ``Claims and Reports against Specialist.'' This proposed change 
will shorten the time periods in which members can file claims of 
erroneous or omitted transactions against specialists. Claims regarding 
lack of a comparison of a reported transaction will have to be made 
within three days of the original trade date of five days to comport 
with the changes in the settlement cycle. Claims regarding the 
omissions of reports and erroneous trade comparisons will have to be 
made within five business days instead of ten business days. The latter 
changes still will exceed the settlement cycle; however, they will 
exceed the settlement cycle by only two days instead of five thus 
reducing the risk associated with such claims. Finally, Chapter XXVIII, 
subparagraph (4) requires that customers provide their agent 
instructions within certain time frames for delivery versus payment and 
receipt versus payment transactions. The time frames contained in 
subparagraph (4)(i) and (ii) will be shortened by two business days.
    The BSE's implementation of this proposed rule change will be 
consistent with the ``T+3'' conversion schedule which the National 
Securities Clearing Corporation has proposed for industry use. The 
schedule is as follows:

------------------------------------------------------------------------
                               Settlement                               
          Trade date              cycle           Settlement date       
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June 2 Friday................  5 day.....  June 9 Friday.               
June 5 Monday................  4 day.....  June 9 Friday.               
June 6 Tuesday...............  4 day.....  June 12 Monday.              
June 7 Wednesday.............  3 day.....  June 12 Monday.              
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    If the Commission determines to alter the exemptions currently 
provided in Rule 15c6-1, BSE may need to undertake additional rule 
amendments. It is intended that the proposed rule change will become 
effective on the same date as Commission Rule 15c6-1.
    The proposed rule change is consistent with Section 6(b)(5) of the 
Act in that it is designed to promote just and equitable principles of 
trade, to foster cooperation and coordination with persons engaged in 
regulating, clearing, processing information with respect to, and 
facilitating transactions in securities.

B. Self-Regulatory Organization's Statement on Burden on Competition

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

    No written comments were either solicited or received.

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

    Within thirty-five days of the date of publication of this notice 
in the Federal Register or within such longer period (i) as the 
Commission may designate up to ninety days of such date if it finds 
such longer period to be appropriate and publishes its reasons for so 
finding or (ii) as to which BSE consents, the Commission will:
    (A) By order approve such proposed rule change or
    (B) Institute proceedings to determine whether the proposed rule 
change should be disapproved.

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 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 Section, 450 Fifth Street NW., 
Washington, DC 20549. Copies of such filing also will be available for 
inspection and copying at the principal office of BSE.
    All submissions should refer to File No. SR-BSE-95-05 and should be 
submitted by March 29, 1995.

    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secrtary.
[FR Doc. 95-5585 Filed 3-7-95; 8:45 am]
BILLING CODE 8010-01-M