[Federal Register Volume 60, Number 235 (Thursday, December 7, 1995)]
[Notices]
[Pages 62920-62921]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-29783]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-36533; File Nos. SR-PHILADEP-95-09; SR-MSTC-95-09]
Self-Regulatory Organizations; Philadelphia Depository Trust
Company and Midwest Securities Trust Company; Notice of Filing and
Immediate Effectiveness of Proposed Rule Changes Modifying Procedures
to Enable Compliance With Confirmation Disclosure Requirements Through
the Use of the Institutional Delivery System
November 30, 1995.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act),\1\ notice is hereby given that on October 24, 1995, and on
October 27, 1995, respectively, the Philadelphia Depository Trust
Company (``PHILADEP'') and the Midwest Securities Trust Company
(``MSTC'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule changes as described in Items I, II,
and III below, which Items have been prepared primarily by PHILADEP and
MSTC. The Commission is publishing this notice to solicit comments on
the proposed rule changes from interested parties.
\1\15 U.S.C. 78s(b)(1) (1988).
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I. Self-Regulatory Organizations' Statements of the Terms of Substance
of the Proposed Rule Changes
PHILADEP and MSTC propose to make additions to their respective
procedures\2\ to enable their participants using the Institutional
Delivery (``ID'') system for generating confirmations for customer
transactions to comply with certain disclosure requirements of Rule
10b-10 under the Act.\3\
\2\While MSTC does not have specific written ID procedures, the
MST System Flash newsletter is sent to MSTC participants to update
them on, among other things, ID system changes. The newsletter is
kept on record at MSTC and is used by MSTC as its participant
procedures.
\3\27 CFR 240.10b-10 (1994).
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II. Self-Regulatory Organizations' Statements of the Purpose of, and
Statutory Basis for, the Proposed Rule Changes
In their filings with the Commission, PHILADEP and MSTC included
statements concerning the purpose of and the basis for the proposed
rule changes and discussed any comments they received on the proposed
rule changes. The text of these statements may be examined at the
places specified in Item IV below. PHILADEP and MSTC have prepared
summaries, set forth in section (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 PHILADEP and MSTC.
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A. Self-Regulatory Organizations' Statements of the Purpose of, and the
Statutory Basis for, the Proposed Rule Changes
In 1994, the Commission adopted amendments to Rule 10b-10.\5\
Subsequently, the Division of Market Regulation issued a no-action
letter to the Public Securities Association (``PSA'') on behalf of its
members and all other brokers and dealers temporarily exempting them
from certain disclosure requirements of paragraphs (a)(7), (a)(8), and
(a)(9) of Rule 20b-10 until November 1, 1995.\6\
\5\For a complete discussion of the amendments, refer to
Securities Exchange Act Release No. 34962 (November 10, 1994), 59 FR
59612.
\6\Letter from Catherine McGuire, Chief Counsel, Division of
Market Regulation, Commission, to George P. Miller, Esq., Vice
President and Associate General Counsel, PSA (September 29, 1995).
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The purpose of these proposed rule changes is to enable PHILADEP
and MSTC participants using the ID system for generating confirmations
for customer transactions to comply with the following three disclosure
requirements upon the expiration of the temporary exemption on November
1, 1995.
[[Page 62921]]
(1) The amended rule reburies broker-dealers to disclose that they
are not members of the Securities Investor Protection Corporation
(``SIPC'') if, in fact, they are not so affiliated. These broker-
dealers may make such disclosures by noting ``[Name of broker-dealer]
is not a member of SIPC'' in the Special Instructions field of trade
data submitted to the ID system. PHILADEP's and MSTC's proposed rule
changes add to their respective procedures the method by which broker-
dealers indicate that they are not SIPC members.
(2) In the case of a private debt security, the amended rule
requires broker-dealers to disclose if the security is not rated by a
nationally recognized statistical rating organization. A broker-dealer
using the ID system can disclose that fact by entering ``Not Rated'' or
``N/R'' in the Special Instructions field. PHILADEP's and MSTC's
proposed rule changes add to their respective procedures a statement of
the meaning of the codes ``Not Rated`` or ``N/R.''
(3) The amended rule requires broker-dealers to disclose that the
yield for asset-backed securities that are continuously subject to
prepayment may vary depending upon the rate of prepayments. Upon
written request from their customers, broker-dealers will provide
certain information concerning the factors that affect these
securities' yield. A broker-dealer using the ID System can enter one of
several acronyms in the Security Type field identifying the security as
one of several types of securities that meet the rule's definition of
asset-backed security. PHILADEP's and MSTC's proposed rule changes add
to their respective procedures a provision designating several acronyms
that when placed in the Security Type field will denote that the
security meets the Rule 10b-10 definition of an asset-backed security.
PHILADEP and MSTC believe the proposed rule changes are consistent
with the requirements of Section 17A(B)(3)(F)\7\ of the Act and the
rules and regulations thereunder applicable to PHILADEP and MSTC
because the proposed rule changes will facilitate the confirmation of
transactions through the use of the ID system in compliance with the
additional requirements of Rule 10b-10 and in conjunction with the
expiration date of the temporary exemption on November 1, 1995.
\7\15 U.S.C. 78q-1(b)(3)(F) (1988).
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B. Self-Regulatory Organizations' Statements on Burden on Competition
PHILADEP and MSTC believe these procedural modifications will not
impose a burden on competition.
Self-Regulatory Organizations' Statements on Comments on the Proposed
Rule Changes Received From Members, Participants or Others
PHILADEP and MSTC have neither solicited nor received comments on
the proposed rule changes.
III. Date of Effectiveness of the Proposed Rule Changes and Timing for
Commission Action
The foregoing rule changes have become effective pursuant to
Section 19(b)(3)(A)(i)\8\ of the Act and pursuant to Rule 19b-
4(e)(4)\9\ promulgated thereunder because the proposals constitute
changes in existing services of registered clearing agencies that do
not adversely affect the safeguarding of securities or funds in the
custody or control of those clearing agencies or for which they are
responsible and do not significantly affect the respective rights or
obligations of the clearing agencies or persons using the service. At
any time within sixty days of the filing of such rule changes, the
Commission may summarily abrogate such rule changes if it appears to
the Commission that such action is necessary or appropriate in the
public interest, for the protection of investors, or otherwise in
furtherance of the purposes of the Act.
\8\15 U.S.C. 78s(b)(3)(A)(i) (1988).
\9\17 CFR 240.19b-4(e)(4) (1994).
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IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing. Persons making such submissions
should file six copies thereof with the Secretary, Securities and
Exchange Commission, 450 Fifth Street, N.W., Washington, DC 20549.
Copies of the submission, all subsequent amendments, all written
statements respecting the proposed rule changes that are filed with the
Commission, and all written communications concerning the proposed rule
changes between the Commission and any person, other than those that
may be withheld from the public pursuant to 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, DC 20549.
Copies of the respective filings will also be available for inspection
and copying at the principal offices of PHILADEP and MSTC. All
submissions should refer to File Nos. SR-PHILADEP-95-09 and SR-MSTC-95-
09 and should be submitted by December 28, 1995.
For the Commission by the Division of Market Regulation, pursuant
to delegated authority.\10\
\10\17 CFR 200.30-3(a)(12) (1994).
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Jonathan G. Katz,
Secretary.
[FR Doc. 95-29783 Filed 12-6-95; 8:45 am]
BILLING CODE 8010-01-M