[Federal Register Volume 61, Number 163 (Wednesday, August 21, 1996)]
[Notices]
[Pages 43283-43284]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-21329]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-37562; File No. SR-DTC-96-09]
Self-Regulatory Organizations; The Depository Trust Company;
Order Approving a Proposed Rule Change Establishing Procedures to
Establish a Drop Window Service
August 13, 1996.
On April 25, 1996, the Depository Trust Company (``DTC'') filed
with the Securities and Exchange Commission (``Commission'') a proposed
rule change (File No. SR-DTC-96-09) pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (``Act''),\1\ to establish procedures
for a transfer agent drop service (``Drop Service'') that will provide
transfer agents located outside of New York City with a central
location within the Borough of Manhattan to receive and deliver
securities. Notice of the proposal was published in the Federal
Register on June 18, 1996.\2\ No comments letters were received. For
the reasons discussed below, the Commission is approving the proposed
rule change.
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\1\ 15 U.S.C. Sec. 78s(b)(1) (1988).
\2\ Securities Exchange Act Release No. 37303 (June 11, 1996),
61 FR 30931.
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I. Description
DTC proposes to offer a Drop Service in order to provide transfer
agents located outside of New York City with a central location within
Manhattan for the receipt of securities from banks, broker-dealers,
depositories, and shareholders. DTC's Drop Service will enable transfer
agents to comply with New York Stock Exchange (``NYSE'') Rule 496 and
American Stock Exchange (``Amex'') Rule 891. Each of these rules
require a transfer agent seeking qualification as a transfer agent for
securities listed on the respective exchanges to maintain an office
acceptable to the exchange and the issuer located south of Chambers
Street in the Borough of Manhattan, City of New York to receive and
deliver securities.
In the past, some transfer agents located outside of New York City
complied with these rules by using a drop service offered by the New
York office of the Midwest Clearing Corporation (``MCC''). However, in
1996 MCC withdrew from the clearing business and no longer offers a
drop service.\3\ DTC will offer the DTC Drop Service to replace the
drop facility offered by MCC and to ensure continuity of service to
transfer agents. In connection with the Drop Service, DTC will provide
ancillary services to transfer agents such as the inspection of
securities, maintenance of records regarding the receipt and delivery
of securities, facilitation of rush transfers, cancellation of
certificates, and advice regarding legal and regular transfer
requirements.\4\ In order to use DTC's Drop Service, all transfer
agents will be required to execute the Drop Service
[[Page 43284]]
Agreement setting forth DTC's and the transfer agents'
responsibilities.
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\3\ For a complete discussion of MCC's and Midwest Securities
Trust Company's (``MSTC'') withdrawal from the clearing and
depository business, refer to Securities Exchange Act Release No.
36684 (January 5, 1996), 61 FR 1195 [File Nos. SR-CHX-95-27, SR-DTC-
95-22, SR-MCC-95-04, SR-MSTC-95-10, SR-NSCC-95-15] (order approving
MCC's and MSTC's withdrawal from the clearance and settlement,
securities depository, and branch receive businesses).
\4\ A more detailed description of these services is set forth
in Section II of DTC's Drop Service Agreement which sets forth the
terms under which DTC's service will be provided. The Drop Service
Agreement is attached as Exhibit 2 to DTC's proposed rule change and
is available through DTC or through the Commission's Public
Reference Room.
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II. Discussion
Section 17A(b)(3)(F) of the Act \5\ requires that the rules of a
clearing agency be designed to assure the safeguarding of securities
and funds which are in the custody of the clearing agency or for which
it is responsible and to foster cooperation and coordination with
persons engaged in the clearance and settlement of securities
transactions. The Commission believes that DTC's proposal is consistent
with Section 17A(b)(3)(F) of the Act because DTC has taken steps to
safeguard the securities which are in its custody or control or for
which it is responsible by requiring each transfer agent to execute an
agreement that sets forth DTC's and the Transfer agents' respective
responsibilities. Moreover, the Drop Service will foster cooperation
and coordination between DTC and other entities engaged in the
clearance and settlement of securities transactions by providing a
facility that will enable transfer agents to comply with certain NYSE
and Amex rules.
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\5\ 15 U.S.C. Sec. 78q-1(b)(3)(F) (1988).
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III. Conclusion
On the basis of the foregoing, the Commission finds that DTC's
proposed rule change is consistent with the requirements of the Act and
in particular with Section 17A of the Act and the rules and regulations
thereunder.
It is therefore ordered, pursuant to Section 19(b)(2) of the Act,
that the proposed rule change (File No. SR-DTC-96-09) be, and hereby is
approved.
For the Commission by the Division of Market Regulation,
pursuant to delegated authority.\6\
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\6\ 17 CFR 200.30-3(a)(12) (1995).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 96-21329 Filed 8-20-96; 8:45 am]
BILLING CODE 8010-01-M