[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