[Federal Register Volume 60, Number 53 (Monday, March 20, 1995)]
[Notices]
[Pages 14806-14807]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-6698]



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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-35482; File No. 600-25]


Self-Regulatory Organizations; Participants Trust Company; Notice 
of Filing of Request and Order Approving Application for Extension of 
Temporary Registration as a Clearing Agency

March 13, 1995.
    On February 28, 1995, the Participants Trust Company (``PTC'') 
files with the Securities and Exchange Commission (``Commission'') a 
request pursuant to section 19(a)\1\ of the Securities Exchange Act of 
1934 (``Act'') for extension of its registration as a clearing agency 
under Section 17A\2\ of the Act for a period of one year.\3\ The 
Commission is publishing this notice of filing of request and order to 
solicit comments from interested persons and to grant PTC's request for 
an extension of its temporary registration as a clearing agency through 
March 31, 1996.

    \1\15 U.S.C. 78s(a)(1) (1988).
    \2\15 U.S.C. 78q-1 (1988).
    \3\Letter from John J. Sceppa, President and Chief Executive 
Officer, PTC, to Jerry Carpenter, Assistant Director, Division of 
Market Regulation, Commission (February 28, 1995).
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    On March 28, 1989, the Commission granted PTC's application for 
registration as a clearing agency pursuant to Sections 17A(b)(2) and 
19(a)\4\ of the Act on a temporary basis for a period of one year.\5\ 
Subsequently, the Commission issued orders that extended PTC's 
temporary registration as a clearing agency, the last of which extended 
PTC's registration until March 31, 1995.\6\

    \4\15 U.S.C. 78q-1(b)(2) and 78s(a) (1988).
    \5\Securities Exchange Act Release No. 26671 (March 28, 1989), 
54 FR 13266.
    \6\Securities Exchange Act Release Nos. 27858 (March 28, 1990), 
55 FR 12614; 29024 (March 28, 1991), 56 FR 13848; 30537 (April 9, 
1992), 57 FR 12351; 32040 (March 23, 1993), 58 FR 16902; and 33734 
(March 8, 1994), 59 FR 11815.
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    As discussed in detail in the initial order granting PTC's 
temporary registration,\7\ one of the primary reasons for PTC's 
registration was to develop depository facilities for mortgage-backed 
securities, particularly securities guaranteed by the Government 
National Mortgage Association (``GNMA''). PTC services include 
certificate safekeeping, book entry deliveries, an automated facility 
for the pledge or segregation of securities, and other services related 
to the immobilization of securities certificates.

    \7\Supra note 5.
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    PTC continues to make significant progress in the areas of 
financial performance, regulatory commitments, and operational 
capabilities. For example, the par value of GNMA securities on deposit 
at PTC has grown from $850 billion on December 31, 1993, to $967 
billion on December 31, 1994, with average monthly GNMA I principal and 
interest distributions processed by PTC increasing from $13.5 billion 
in 1993 to $103.9 billion in 1994. The par value of VA REMICs on 
deposit at PTC has grown from $4.634 billion on December 31, 1993, to 
$7.256 billion on December 31, 1994. The average monthly transaction 
volume processed by PTC has grown from 309,000 in 1993 to 353,225 in 
1994.\8\ PTC also has expanded its product base with the designation of 
GNMA REMICs,\9\ GNMA Platinum securities,\10\ and certain Freddie Mac 
REMICs backed by GNMA securities\11\ as depository eligible securities. 
In addition, PTC declared a dividend of $1.00 per share to stockholders 
of record on December 31, 1994.\12\

    \8\Supra note 3.
    \9\Securities Exchange Act Release No. 34154 (June 3, 1994), 59 
FR 30073.
    \10\Securities Exchange Act Release No. 35044 (December 2, 
1994), 59 FR 63847.
    \11\Securities Exchange Act Release No. 34472 (August 1, 1994), 
59 FR 40397.
    \12\Securities Exchange Act Release No. 35205 (January 9, 1995), 
60 FR 3444.
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    PTC also continued its efforts over the past year to implement 
operational and procedural changes in connection with PTC's temporary 
registration.\13\ For [[Page 14807]] example, PTC eliminated the 
Deliverer's Security Interest from its rules in response to its 
commitment made to the Commission and the Federal Reserve Bank of New 
York.\14\

    \13\In connection with PTC's original temporary registration, 
PTC committed to the Commission and to the Federal Reserve Bank of 
New York to make a number of operational and procedural changes 
which include:
    (1) Eliminating trade reversals from PTC's procedures to cover a 
participant default;
    (2) Phasing out the aggregate excess net debit limitation for 
extensions under the net debit monitoring level procedures;
    (3) Making principal and interest advances, now mandatory, 
optional;
    (4) Allowing participants to retrieve securities in the abeyance 
account and not allowing participants to reverse transfers because 
customers may not be able to fulfill financial obligations to the 
participants;
    (5) Eliminating the deliverer's security interest and replacing 
it with a substitute;
    (6) Reexamining PTC's account structure rules to make them 
consistent with PTC's lien procedures;
    (7) Expanding and diversifying PTC's lines of credit;
    (8) Assuring operational integrity by developing and 
constructing a back-up facility; and
    (9) Reviewing PTC rules and procedures for consistency with 
current operations.
    \14\Securities Exchange Act Release No. 34701 (September 22, 
1994), 59 FR 49730.
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    PTC has functioned effectively as a registered clearing agency for 
the past six years. In light of PTC's past performance, the Commission 
believes that PTC has the capacity to comply with the statutory 
obligations set forth under Section 17A(b)(3) of the Act\15\ as the 
prerequisites for registration as a clearing agency. Comments received 
during PTC's temporary registration will be considered in determining 
whether PTC should receive permanent registration as a clearing agency 
under Section 17A(b) of the Act.\16\

    \15\15 U.S.C. 78q-1(b)(3) (1988).
    \16\15 U.S.C. 78q-1(b) (1988).
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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, N.W., Washington, D.C. 20549. 
Copies of the submission, all subsequent amendments, all written 
statements with respect to the request for extension of temporary 
registration as a clearing agency that are filed with the Commission, 
and all written communications relating to the requested extension 
between the Commission and any person, other than those that may be 
withheld from the public in accordance with provisions of 5 U.S.C. 552, 
will be available for inspection and copying in the Commission's Public 
Reference Section, 450 Fifth Street, N.W., Washington, D.C. 20549. 
Copies of such filing also will be available for inspection and copying 
at the principal office of PTC. All submissions should refer to File 
No. 600-25.

Conclusion

    On the basis of the foregoing, the Commission finds that PTC's 
request for extension of temporary registration as a clearing agency is 
consistent with the Act and in particular with Section 17A of the Act.
    It is therefore ordered, That PTC's temporary registration as a 
clearing agency (File No. 600-25) be, and hereby is, extended through 
March 31, 1996.

    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority.\17\

    \17\17 CFR 200.30-3(a)(50)(i) (1994).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 95-6698 Filed 3-17-95; 8:45 am]
BILLING CODE 8010-01-M