[Federal Register Volume 60, Number 71 (Thursday, April 13, 1995)]
[Notices]
[Pages 18866-18867]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-9076]



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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-35574; File No. SR-PTC-95-02]


Self-Regulatory Organizations; Participants Trust Company; Notice 
of Filing and Order Granting Accelerated Approval of Proposed Rule 
Change Modifying PTC's Program for the Early Distribution of Principal 
and Interest on Government National Mortgage Association I Securities

April 6, 1995.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on March 7, 1995, the 
Participants Trust Company (``PTC'') filed with the Securities and 
Exchange Commission (``Commission'') the proposed rule change (File No. 
SR-PTC-95-02) as described in Items I and II below, which Items have 
been prepared primarily by PTC. The Commission is publishing this 
notice and order to solicit comments on the proposed rule change from 
interested persons and to grant accelerated approval of 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

    The proposed rule change modifies PTC's program for the early 
distribution of principal and interest (``P&I'') on Government National 
Mortgage Association (``GNMA'') I securities.

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

    In its filing with the Commission, PTC 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. PTC 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 the 
Statutory Basis for, the Proposed Rule Change

 Background
    Before November 1993, PTC's rules and procedures provided that PTC 
disburse P&I by means of a credit to participants' cash balances. This 
resulted in participants receiving at the end of the day as part of the 
settlement process the amount of the P&I net of any account debits and/
or credits. In November 1993, PTC's rules were amended to eliminate the 
requirement that P&I be disbursed by means of a credit to participants' 
cash balances and to permit PTC to make intraday Fedwire distributions 
of collected and available GNMA I P&I.\2\

    \2\PTC Rules, Article III, Rule 2, Section 1, ``Principal and 
Interest Payments.'' For a complete description of PTC's amendments, 
refer to Securities Exchange Act Release Nos. 33132 (November 9, 
1993), 58 FR 59501 [File No. SR-PTC-93-02] (order approving proposed 
rule change) and 33856 (April 12, 1994), 59 FR 59501 [File No. SR-
PTC-93-05] (order approving proposed rule change).
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    PTC's present program for the early distribution of GNMA I P&I 
permits the distribution of up to fifty percent of collected and 
available P&I on GNMA I securities by intraday Fedwire transfer of 
funds on the distribution date, generally the sixteenth day of the 
month, with the balance distributed by credit to participant's cash 
balances payable at the end of the day settlement.\3\ Participants are 
permitted to elect to receive the intraday distribution or they may 
choose to receive the entire distribution at the end of the day 
settlement.\4\

    \3\In November 1994, the intraday distribution program was 
extended to permit early distribution of one hundred percent of 
collected and available GNMA II P&I. Securities Exchange Act Release 
No. 34988 (November 18, 1994), 59 FR 61016 [File No. SR-PTC-94-05] 
(order approving proposed rule change).
    \4\PTC disbursed a total of $103.9 billion in GNMA I P&I 
payments to its participants in 1994, of which $51.1 billion was 
distributed intraday. As of February 1, 1995, fifty participants 
elected to receive the intraday distribution.
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    Unlike the GNMA II program, there is no central paying agent for 
GNMA I securities and issuers make payment to PTC directly, sometimes 
by means of a check. Because of these inefficiencies in collecting and 
disbursing GNMA I P&I, PTC funds the total GNMA I P&I disbursement from 
several sources: (1) collected and available P&I payments that are 
timely received; (2) PTC's own funds; (3) the cash portion of the 
participants fund; and (4) borrowed funds secured by the P&I 
receivables or the securities portion of the participants fund.
GNMA I P&I Proposal
    PTC proposes to increase the percentage of collected and available 
GNMA I P&I that may be distributed intraday, from the current maximum 
of fifty percent to a maximum of sixty-five percent of the total 
distribution, commencing with the April 1995 GNMA I distribution. PTC 
believes that based on PTC's experience with the GNMA I collection 
process, an amount in excess of sixty-five percent may reasonably be 
anticipated to be available by noon on the distribution date for 
disbursement intraday.\5\ The balance would be distributed by means of 
a credit to the participants' credit balances payable at the end of the 
day settlement, as is currently the practice. In the event the amount 
of collected and available funds is insufficient to make the scheduled 
intraday distribution amount, whether it be the current fifty percent 
maximum or the proposed sixty-five percent maximum, the shortfall is 
allocated ratably among participants scheduled to receive intraday 
distribution according to the relative amounts of their scheduled 
distributions.

    \5\During 1994, an average of 72.5% of funds to be distributed 
were available by 12 noon on the distribution date.
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    PTC believes that the proposed rule change is consistent with 
Section 17A(b)(3)(F) of the Act\6\ and the rules and regulations 
thereunder in that it facilitates the prompt and accurate clearance and 
settlement of securities transactions and provides for the safeguarding 
of securities and funds in PTC's custody or control or for which PTC is 
responsible.

    \6\15 U.S.C. 78q-1(b)(3)(F) (1988).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    PTC does not believe that the proposed rule change will impose any 
burden on competition not necessary or 

[[Page 18867]]
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

    PTC has not solicited comments with respect to the proposed rule 
change, and none have been received.

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

    Section 17A(b)(3)(F) of the Act\7\ requires that the rules of a 
clearing agency be designed to promote the prompt and accurate 
clearance and settlement of securities transactions. The Commission 
believes that PTC's proposal to increase the percentage of collected 
and available GNMA I P&I that may be distributed to participants by 
intraday fedwire transfer should help promote prompt and accurate 
clearing and settlement. The proposal enables participants to have 
access to such funds earlier in the day, allowing them the use of the 
funds elsewhere, as needed, which increases liquidity in other markets.

    \7\15 U.S.C. 78q-1(b)(3)(F) (1988).
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    PTC 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. In order to assure that PTC can 
implement the proposal commencing with the April 1995 distribution, it 
is necessary that PTC receive the appropriate approval in advance of 
that date. The Commission, therefore, finds sufficient cause to 
accelerate approval of this proposal. In addition, the staff of the 
Board of Governors of the Federal Reserve System (``Board of 
Governors'') agrees with the accelerated approval.\8\

    \8\Telephone conversation between William R. Stanley, Board of 
Governors, and Ari Burstein, Division of Market Regulation, 
Commission (April 5, 1995).
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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, N.W., Washington, D.C. 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, 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 number SR-PTC-95-02 and should be 
submitted by May 4, 1995.
    It is therefore ordered, pursuant to Section 19(b)(2) of the Act, 
that the proposed rule change (File No. SR-PTC-95-02) be and hereby is 
approved on an accelerated basis.

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

    \9\17 CFR 100.30-3(a)(12) (1994).
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Jonathan G. Katz,
Secretary.
[FR Doc. 95-9076 Filed 4-12-95; 8:45 am]
BILLING CODE 8010-01-M