[Federal Register Volume 60, Number 229 (Wednesday, November 29, 1995)]
[Notices]
[Pages 61276-61277]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-29150]



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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-36503; File No. SR-PHILADEP-95-07]


Self-Regulatory Organizations; The Philadelphia Depository Trust 
Company; Order Granting Approval of a Proposed Rule Change Implementing 
the Fully Automated Securities Transfer Reconciliation Accounting 
Control System

November 22, 1995.
    On July 14, 1995, the Philadelphia Depository Trust Company 
(``PHILADEP'') filed with the Securities and Exchange Commission 
(``Commission'') a proposed rule change (File No. SR-PHILADEP-95-07) 
under section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'')\1\ seeking permanent approval for the Fully Automated 
Securities Transfer Reconciliation Accounting Control System 
(``FASTRACS'').\2\ Notice of the proposal was published in the Federal 
Register on September 28, 1995.\3\ No comment letters were received. 
For the reasons discussed below, the Commission is approving the 
proposed rule change.

    \1\15 U.S.C. 78(b)(1) (1988).
    \2\On July 19, 1994, the Commission approved a proposed rule 
change establishing a pilot program for FASTRACS for the transfer of 
certain securities between PHILADEP and certain transfer agents. 
Securities Exchange Act Release No. 34404 (July 19, 1994), 59 FR 
38010 [File No. SR-PHILADEP-90-03] (order approving FASTRACS program 
on a temporary basis). On May 4, 1995, the Commission extended its 
approval of the pilot program through December 29, 1995. Securities 
Exchange Act Release No. 35676 (May 4, 1995), 60 FR 24951 [File No. 
SR-PHILADEP-94-06] (order granting temporary approval of a proposed 
rule change extending the pilot program for FASTRACS until December 
29, 1995). The Commission extended the temporary approval of the 
FASTRACS program so that PHILADEP could complete adequate testing. 
The program was limited to three transfer agents for the duration of 
the temporary approval period.
    \3\Securities Exchange Act Release No. 36264 (September 21, 
1995), 60 FR 50232.
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I. Description

    FASTRACS is an automated program by which PHILADEP and 
participating transfer agents use master balance certificates to 
evidence the number of securities of a particular issue that are 
registered in PHILADEP's nominee name.\4\ The transfer agents maintain 
custody of the securities in the form of balance certificates and 
adjust daily the balance certificates to reflect PHILADEP's withdrawal 
and deposit activity.

    \4\For a complete description of FASTRACS, refer to Securities 
Exchange Act Release No. 34404, supra note 2.
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    PHILADEP has provided the Commission with copies of the test 
results of FASTRACS activity during the temporary approval period of 
the three designated transfer agents. PHILADEP states that FASTRACS has 
enhanced PHILADEP's operational efficiency, has substantially reduced 
its burdens in reconciling its positions, and has saved costs 
associated with these functions. PHILADEP represents that it has 
encountered no significant operational problems and believes the system 
operated effectively during the testing phase. Furthermore, PHILADEP 
believes the current filing is consistent with the Commission's Direct 
Registration System (``DRS'') initiative insofar as DRS, among other 
things, will compel PHILADEP and other participating clearing agencies 
to establish fully operational automated programs for the transfer of 
certain securities between participating clearing agencies and their 
transfer agents.\5\

    \5\For a complete description of DRS, refer to Securities 
Exchange Act Release No. 35038 (December 1, 1994), 59 FR 63652 
[Filed No. S7-34-94] (concept release soliciting comment on proposed 
transfer agent operated direct registration system).
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II. Discussion

    Sections 17A(b)(3) (A) and (F)\6\ of the Act require that a 
clearing agency be organized and its rules be designed to facilitate 
and promote the prompt and accurate clearance and settlement of 
securities transactions and to assure the safeguarding of securities 
and funds in its custody or control or for which it is responsible. The 
Commission believes PHILADEP's proposal is consistent with sections 
17A(b)(3)(A) and (F) of the Act because it should alleviate some of the 
inefficiencies associated with the physical transfer of securities and 
should reduce PHILADEP's burdens in reconciling its positions. The 
transfer of securities should be faster and more efficient with the 
likely effect of reducing costs related to the preparation of written 
instructions and physical delivery of the securities. FASTRACS also 
should help PHILADEP fulfill its safekeeping obligations by allowing 
PHILADEP to maintain securities in a form that should reduce the 
chances of loss and theft. Furthermore, the current filing is 
consistent with the Commission's Direct Registration System (``DRS'') 
initiative.

    \6\15 U.S.C. 78q-1(b)(3)(A) and (F) (1988).
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III. Conclusion

    On the basis of the foregoing, the Commission finds that PHILADEP's 
proposed rule change is consistent with the requirements of the Act and 
particularly with section 17A of the Act and the rules and regulations 
thereunder.

[[Page 61277]]

    It is therefore ordered, pursuant to section 19(b)(2) of the Act, 
that the proposed rule change (File No. SR-PHILADEP-95-07) be, and 
hereby is approved.

    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. 95-29150 Filed 11-28-95; 8:45 am]
BILLING CODE 8010-01-M