[Federal Register Volume 60, Number 211 (Wednesday, November 1, 1995)]
[Notices]
[Pages 55629-55630]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-27002]



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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-36405; File No. SR-PTC-95-07]


Self-Regulatory Organizations; Participants Trust Company; Notice 
of Filing and Order Granting Accelerated Approval of a Proposed Rule 
Change Establishing a Ninety Day Pilot Program for the Change of the 
Opening of Processing Activity for Security Transactions

October 20, 1995.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on October 11, 1995, the 
Participants Trust Company (``PTC'') filed with the Securities and 
Exchange Commission (``Commission'') the proposed rule change (File No. 
SR-PTC-95-07) 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 from interested persons and to 
grant accelerated approval of the proposed rule change for a ninety day 
period.

    \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 establishes a ninety day pilot program for 
the opening of security processing activity at 8:30 a.m. instead of at 
the present time of 7:00 a.m. The pilot program is scheduled to begin 
on October 23, 1995, and will continue through January 21, 1996.

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. Summaries of the most significant aspects of such 
statements are set forth in sections A, B, and C below.\2\

    \2\The Commission has modified the text of the summaries 
prepared by PTC.
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A. Self-Regulatory Organization's Statement of the Purpose of, and the 
Statutory Basis for, the Proposed Rule Change

    The purpose of the proposed rule change is to establish a ninety 
day pilot program for the opening of security processing activity at 
8:30 a.m. instead of at the present time of 7:00 a.m. The pilot program 
is scheduled to begin on October 23, 1995. The current end-of-day cut-
off times will remain unchanged. PTC's processing system will retain 
the 7:00 a.m. opening time for purposes of participant log-ons and 
intraparticipant movements of securities into or out of segregated 
accounts.
    The proposed rule change will conform the opening of processing 
activity at PTC to the opening time of the Federal Reserve System's 
fedwire. This will eliminate the hour and a half window during which 
time transactions failing PTC's credit checks cannot be processed 
because participants are unable to move funds to PTC (``prefunding'') 
until the 8:30 fedwire opening. The incidence of transactions that may 
require prefunding in order to pass credit checks during this period is 
expected to increase after the implementation of PTC/SPEED processing 
Release 5.6, which will eliminate the posting of securities to a 
participant's abeyance account while awaiting match by the receiving 
participant. Under SPEED Release 5.6, the abeyance account is being 
eliminated, and transactions will be immediately posted to the 
deliverer's and receiver's account.\3\

    \3\For further information on SPEED Release 5.6 and changes to 
PTC's processing system, refer to Securities Exchange Act Release 
No. 36377 (October 16, 1995) [File No. SR-PTC-95-06] (notice of 
filing of proposed rule change).
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    The pilot program is scheduled to begin on October 23, 1995, in 
order to permit its implementation sufficiently prior to November 6, 
1995, the earliest date on which SPEED Release 5.6 may be implemented. 
PTC anticipates that the later opening of processing activity will have 
no impact on the settlement process. PTC will monitor any effects of 
the change during the ninety day period and will file a proposed rule 
change with the Commission prior to implementing the later opening of 
processing activity beyond the ninety day period. Should PTC decide not 
to implement 8:30 a.m. as the opening of its security processing 
activity permanently at the end of the ninety day period, the opening 
of PTC's security processing activity will revert to 7:00 a.m. without 
further rule filings with the Commission. In such a 

[[Page 55630]]
situation, even though PTC will not be required to make a rule filing, 
PTC will notify the Commission of its intention to reinstitute the 7:00 
a.m. opening. Furthermore, PTC will notify its participants 
sufficiently in advance of a return to the 7:00 a.m. opening.
    PTC believes that the proposed rule change is consistent with 
Section 17A(b)(3)(F) of the Act\4\ and the rules and regulations 
thereunder because 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.

    \4\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 imposes any 
burden on competition.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received from Members, Participants, or Others

    PTC has not received written comments on the proposed rule change. 
PTC is formally soliciting participant response contemporaneous with 
this filing.

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

    Section 17A(b)(3)(F) of the Act\5\ requires that the rules of a 
clearing agency be designed to promote the prompt and accurate 
clearance and settlement of securities transactions and to assure the 
safeguarding of securities and funds in the custody or control of the 
clearing agency or for which it is responsible. The Commission believes 
that conforming the opening of processing activity at PTC to the 
opening time of the Federal Reserve's funds wire is consistent with 
these objections.

    \5\15 U.S.C. 78q-1(b)(3)(F) (1988).
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    The implementation of SPEED Release 5.6 into PTC's processing 
system will cause simultaneous debiting and crediting of participants' 
cash and securities accounts. This will require that the cash balance 
of a receiving participant's account in an account transfer versus 
payment be debited even though the delivery may not have been approved 
by the receiving participant. Match functionality no longer will 
operate to defer the debit to the cash balance of the receiving 
participant until the delivery is approved. Because unmatched 
deliveries of account transfers versus payment no longer will generate 
a credit to the cash balance of the delivering participant without the 
corresponding debit to the receiving participant, it is anticipated 
that the implementation of SPEED Release 5.6 may result in increased 
incidences of transactions that may require prefunding to pass credit 
checks. The change in the opening time of processing activity at PTC 
should reduce the number of transactions failing credit because 
participants will be able to move funds through the fedwire to PTC at 
the opening of PTC's processing.
    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. By granting accelerated approval, 
PTC will be able to allow its participants sufficient time to become 
accustomed to the new opening time of processing activity before the 
implementation of SPEED Release 5.6. Therefore, the Commission finds 
sufficient cause to grant accelerated approval of the proposal. The 
staff of the Board of Governors of the Federal Reserve System has 
concurred with the Commission's decision to grant accelerated 
approve.\6\

    \6\Telephone conversation between William R. Stanley, Board of 
Governors of the Federal Reserve System, and Ari Burstein, Division 
of Market Regulation, Commission (October 18, 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 at the 
Commission's Public Reference Section, 450 Fifth Street, N.W., 
Washington, D.C. 20549. Copies of such filing will also be available 
for inspection and copying in the principal office of PTC. All 
submissions should refer to file number SR-PTC-95-07 and should be 
submitted by November 22, 1995.
    It is therefore ordered, pursuant to Section 19(b)(2) of the Act, 
that the proposed rule change (File No. SR-PTC-95-07) be and hereby is 
approved on an accelerated basis through January 21, 1996.

    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority.\7\

    \7\17 CFR 200.30-3(a)(12) (1994).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 95-27002 Filed 10-31-95; 8:45 am]
BILLING CODE 8010-01-M