[Federal Register Volume 60, Number 180 (Monday, September 18, 1995)]
[Notices]
[Pages 48181-48182]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-23089]



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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-36219; File No. SR-DTC-95-09]


Self-Regulatory Organizations; The Depository Trust Company; 
Notice of Filing of a Proposed Rule Change Seeking to Establish a Legal 
Guidance System

September 12, 1995.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on April 27, 1995, The 
Depository Trust Company (``DTC'') filed with the Securities and 
Exchange Commission (``Commission'') the proposed rule change (File No. 
SR-DTC-95-09) as described in Items I, II, and III below, which items 
have been prepared primarily by DTC. On July 25, 1995, DTC filed an 
amendment to the proposed rule change.\2\ On August 22, 1995, DTC filed 
a second amendment to the proposed rule change.\3\ 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).
    \2\ DTC amended its proposal to allow organizations that are not 
DTC participants, such as transfer agents, to subscribe to the Legal 
Guidance System. Letter from Piku K. Thakkar, Assistant Counsel, 
DTC, to Mark Steffensen, Esq., Division of Market Regulation 
(``Division''), Commission (July 21, 1995).
    \3\ As proposed in the original filing, once a user logged onto 
the Legal Guidance System a disclaimer of liability message appeared 
on the terminal screen. DTC has amended its proposal to eliminate 
this message from the Legal Guidance System terminal screen. 
Instead, the disclaimer will appear in a user guide. Letter from 
Piku K. Thakkar, Assistant Counsel, DTC, to Peter Geraghty, 
Division, Commission (August 17, 1995).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    DTC is filing the proposed rule change to establish a service 
whereby DTC participants and nonparticipants (e.g., transfer agents) 
can obtain information and documentation necessary to effect a legal 
transfer of a deposit.

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

    In its filing with the Commission, DTC 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. DTC has prepared summaries, set forth in sections (A), 
(B), and (C) below, of the most significant aspects of such 
statements.\4\

    \4\ The Commission has modified the text of the summaries 
prepared by DTC.
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(A) Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    The purpose of the proposed rule change is to establish an inquiry-
only Legal Guidance System (``LGS''), which is a menu-driven, user-
friendly system designed to provide DTC participants and 
nonparticipants (e.g., transfer agents)\5\ with information regarding 
the documents necessary to effect a legal deposit.\6\ Lgs will be 
accessible by DTC participants and nonparticipants through DTC's 
Participant Terminal System (``PTS''). LGS contains industry 
requirements, individual state and province requirements, and transfer 
agent requirements for processing legal deposits. DTC will post a 
disclaimer in the LGS user guide notifying users that DTC shall not be 
liable to the user for any liability for damages resulting from 
mistakes or omissions in LGS.\7\

    \5\ Presently, DTC envisions that LGS will be utilized only by 
nonparticipant transfer agents. However, the availability of LGS 
will not be limited to nonparticipants who are transfer agents. 
Telephone conversation between Piku K. Thakkar, Assistant Counsel, 
DTC, and Mark Steffensen, Attorney, Division, Commission (September 
11, 1995).
    \6\ A ``legal deposit'' consists of a registered security and 
any legal documentation required to effect the legal transfer and 
registration of the security from the registered holder's name into 
DTC's nominee name.
    \7\ Specifically, the disclaimer will state that ``DTC does not 
represent the accuracy, adequacy, or fitness for a particular 
purpose of the following information, which is provided as is. DTC 
shall not be liable for: 1) any loss resulting directly or 
indirectly from mistakes, omissions, interruptions, delays, errors, 
or defects arising from or related to this service; and 2) any 
special, consequential, exemplary, incidental, or punitive 
damages.''
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    The LGS menu approach will guide users through a step-by-step 
process to ascertain the relevant requirements for transferring legal 
deposits. LGS also will have a ``fast forward'' navigation option that 
will allow an experienced user to quickly access the requisite 
information. Users also will be able to request through LGS that 
certain transfer documents be sent to their offices via facsimile 
transmission. In the near future, DTC plans to interface LGS with its 
Pending Legal Deposit System to track and monitor document expiration. 
The fee charged to DTC participants and nonparticipants for the LGS 
service will be DTC's standard fee for PTS inquires.
    DTC believes the proposed rule change is consistent with the 
requirements of Section 17A of the Act\8\ and the rules and regulations 
thereunder because the rule proposal will facilitate the prompt and 
accurate clearance and settlement of securities transactions.

    \8\ 15 U.S.C. 78q-1 (1988).
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(B) Self-Regulatory Organization's Statement on Burden on Competition

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

    Written comments from DTC participants or others have not been 
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 DTC 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 

[[Page 48182]]
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 Room, 450 Fifth Street, NW., Washington, DC 20549. Copies of 
such filing will also be available for inspection and copying at the 
principal office of DTC. All submissions should refer to the file 
number SR-DTC-95-09 and should be submitted by October 10, 1995.

    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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Jonathan G. Katz,
Secretary.
[FR Doc. 95-23089 Filed 9-15-95; 8:45 am]
BILLING CODE 8010-01-M