[Federal Register Volume 60, Number 144 (Thursday, July 27, 1995)]
[Notices]
[Pages 38602-38603]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-18423]



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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-36002; File No. SR-Philadep-95-01]


Self-Regulatory Organizations; The Philadelphia Depository Trust 
Company; Notice of Filing and Order Granting Temporary Accelerated 
Approval of Proposed Rule Change Relating to the Modification of 
Procedures To Implement Rule 17Ad-16

July 20, 1995.
    Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''), \1\ notice is hereby given that on January 17, 1995, the 
Philadelphia Depository Trust Company ( ``Philadep'' ) 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 Philadep. Philadep filed amendments to the 
proposed rule change on March 7, 1995, and on April 11, 1995.\2\ The 
Commission is publishing this notice and order to solicit comments from 
interested persons and to grant accelerated approval to the proposed 
rule change through February 6, 1996.

    \1\ 15 U.S.C. 78s(b)(1) (1988).
    \2\ Letters from Sharon S. Metzker, Staff Counsel, Philadep, to 
Ester Saverson, Special Counsel, Division of Market Regulation, 
Commission (March 7, 1995, and April 11, 1995).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    Philadep proposes to modify its procedures to implement the 
requirements of Commission Rule 17Ad-16.

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

    In its filing with the Commission, Philadep 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. Philadep has prepared summaries, set forth in sections 
(A), (B), and (C) below, of the most significant aspects of such 
statements.\3\

    \3\ The Commission has modified the texts of the statement 
submitted by Philadep.
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A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    On December 1, 1994, the Commission adopted Rule 17Ad-16 \4\ which 
requires a registered transfer agent to provide written notice to the 
``appropriate qualified registered securities depository.'' \5\ when 
terminating or assuming transfer agent services on behalf of an issuer 
or when changing its name or address.\6\ The rule also requires the 
appropriate qualified registered securities depository that receives 
such a notice from a transfer agent to deliver within twenty-four hours 
a copy of such notice to all ``qualified registered securities 
depositories'' and each qualified registered securities depository that 
receives such a notice to notify its participants of such transfer 
agent change within twenty-four hours.

    \4\ 17 CFR 240.17Ad-16. Rule 17Ad-16 took effect on February 6, 
1995.
    \5\ Rule 17Ad-16 defines ``appropriate qualified registered 
securities depository'' to mean the qualified registered securities 
depository that the Commission so designates by order or in the 
absence of such designation the qualified securities depository that 
is the largest holder of record of all qualified registered 
securities depositories as of the most recent record date. Rule 
17Ad-16 defines ``qualified registered securities depository'' 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 pursuant 
to Rule 17Ad-16. Philadep, The Depository Trust Company (``DTC''), 
and the Midwest Securities Trust Company (``MSTC'') and the three 
qualified registered securities depositories.
    \6\ Securities Exchange Act Release No. 35039 (December 1, 
1994), 59 FR 63656 (December 8, 1994) (order adopting Rule 17Ad-16).
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    To foster a timely and efficient means of disseminating such 
notices, Philadep has requested that the Commission designate DTC as 
the appropriate qualified registered securities depository to receive 
such transfer agent notices on behalf of Philadep.\7\ Philadep and DTC 
have agreed that such transfer agent notices will be forwarded by DTC 
to Philadep using facsimile transmissions on a daily basis. To assure 
complete and accurate records of such transmissions, Philadep upon 
receipt of the notice by DTC will verify a common control number used 
for record-keeping purposes. Philadep will forward notice of such 
transfer agent changes to its participants by hand delivery, facsimile 
transmission, electronic means, or as Philadep and its participants may 
mutually agree.

    \7\ Securities Exchange Act Release No. 35378 (February 15, 
1995), 60 FR 9875.
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    Philadep's computer system currently is not able to process 
information, including notices of transfer agent changes, concerning 
issues which are not eligible for deposit at Philadep. Therefore, in 
order to comply with Rule 17Ad-16 during the temporary approval period, 
Philadep participants which are members only of Philadep and not of any 
other securities depository \8\ will be contacted by Philadep in order 
that they may elect to either accept or to waive receiving such 
transfer agent notices.\9\ As Philadep performs its daily updating of 
its security masterfile to reflect transfer agent changes for issues 
that are depository eligible at Philadep, it will make transfer agent 
information for issues that are not depository eligible at Philadep 
available to participants that have elected to receive transfer agent 
notices from Philadep.

    \8\ A majority of Philadep participants are also members of DTC 
and/or MSTC and will receive notices of transfer agent changes from 
DTC and/or MSTC. Approximately twenty of Philadep's participants are 
members only of Philadep. Letter from Sharon Metzker, Esq., 
Philadep, to Ester Saverson, Special Counsel, Division of Market 
Regulation, Commission (March 7, 1995).
    \9\ Philadep has informed the Commission that all of its 
participants that are not members of any other securities depository 
have been contacted in writing and have made their election of 
whether to receive or to waive receipt of notices of transfer agent 
changes. Letter from Sharon Metzker, Staff Counsel, Philadep, to 
Ester Saverson, Special Counsel, Division of Market Regulation, 
Commission (April 11, 1995).

[[Page 38603]]

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    In accordance with the record retention requirements of Rule 17Ad-
16(d)(3), Philadep will maintain the notices sent to it by DTC for a 
period of not less than two years with the first six months in an 
easily accessible place on Philadep's premises.

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

    Philadep does not believe that the proposed rule change will impose 
an inappropriate burden on competition.
C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants or Others

    Written comments were neither solicited nor received with respect 
to the proposed rule change.

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

    The Commission believes Philadep's proposed rule change is 
consistent with the requirements of the Act, especially section 17A of 
the Act,\10\ and the rules and regulations thereunder. Among other 
things, section 17A(b)(3)(A) requires that a clearing agency be 
organized and have the capacity to comply with the provisions of the 
Act and the rules and regulations thereunder. In its letter amendment 
dated April 11, 1995, Philadep requested that the Commission grant 
temporary approval of the proposed rule change. Between the February 6, 
1995, implementation of Rule 17Ad-16 and August 6, 1995, Philadep will 
review the automation requirements and what system changes it must make 
in order for Philadep to fully comply with Rule 17Ad-16 with respect to 
transfer agent notices regarding issues which are not depository 
eligible at Philadep. After its review, Philadep will report to the 
Commission the results of its review and how it plans to fully comply 
with Rule 17Ad-16 on a permanent basis. Therefore, because the proposed 
rule change will allow Philadep to comply within the limits of its 
computer system with Commission Rules 17Ad-16, the Commission believes 
that the proposal is consistent with Philadep's obligation under 
section 17A.

    \10\ 15 U.S.C. 78q-1 (1988).
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    Philadep also 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 the Federal Register. 
Because accelerated approval will permit Philadep to implement 
procedures enabling it to comply to the extent its computer system 
permits with requirements of Rule 17Ad-16 as soon as possible, the 
Commission finds good cause for approving the proposed rule change on 
an accelerated basis.\11\

    \11\ Telephone conversation between Don Vinnedge, Manager of the 
Trust Activity Program, Board of Governors of the Federal Reserve 
System, and Ester Saverson, Special Counsel, and Michele Bianco, 
Staff Attorney, Division, Commission (July 20, 1995). The Federal 
Reserve concurred with the Division's decision to accelerate 
approval.
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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 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 will also be available for 
inspection and copying at the principal office of Philadep. All 
submissions should refer to the File No. SR-Philadep-95-01 and should 
be submitted by August 17, 1995.
    It is Therefore Ordered, pursuant to Section 19(b)(2) of the Act 
that the proposed rule change (File No. SR-Philadep-95-01) is hereby 
approved on a temporary basis through February 6, 1996.

    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority.\12\

    \12\ 17 CFR 200.30-3(a)(12) (1994).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 95-18423 Filed 7-26-95; 8:45 am]
BILLING CODE 8010-01-M