[Federal Register Volume 61, Number 171 (Tuesday, September 3, 1996)]
[Notices]
[Pages 46498-46499]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-22357]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-37608; File No. SR-DTC-96-11]
Self-Regulatory Organizations; The Depository Trust Company;
Order Approving a Proposed Rule Change Seeking Authority To Release
Clearing Data Relating to Participants
August 26, 1996.
On May 28, 1996, The Depository Trust Company (``DTC'') filed with
the Securities and Exchange Commission (``Commission'') a proposed rule
change (File No. SR-DTC-96-11) pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (``Act'').\1\ Notice of the proposal
was published in the Federal Register on July 19, 1996.\2\ No
[[Page 46499]]
comment 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. 37433 (July 12, 1996),
61 FR 37783.
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I. Description of the Proposal
The rule change establishes Rule 2, Section 6, of DTC's rules to
govern the release of certain participant information which DTC
obtained during its ordinary course of business. The new rule
authorizes DTC to release information relating to a participant's
participants fund deposit, collateral, net credit balance, and net
debit balance (referred to herein as ``clearing information'') to
authorized parties. Such authorized parties include other clearing
agencies registered with the Commission at which the participant is a
member; any clearing organization that is affiliated with or has been
designated by a futures contract market under the oversight of the
Commodities Futures Trading Commission of which the participant is a
member; and upon the request of the participant, to such other entities
as the participant may designate.
The rule change will permit DTC to release clearing information to
the National Securities Clearing Corporation (``NSCC'') for use in its
Collateral Management Service (``CMS'').\3\ CMS provides collateral
information regarding a participant to the participant and to other
clearing agencies at which the participant is a member.
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\3\ For a complete description of the CMS, refer to Securities
Exchange Act Release No. 36091 (August 5, 1995), 60 FR 30912 [File
No. SR-NSCC-95-06] (order approving the CMS).
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II. Discussion
Section 17A(b)(3)(F) of the Act requires that the rules of a
clearing agency be designed to assure the safeguarding of securities
and funds which are in the custody or control of the clearing agency or
for which it is responsible.\4\ The Commission believes the proposed
rule change is consistent with DTC's obligation under Section
17A(b)(3)(F) because the proposal sets forth DTC's responsibilities and
obligations with regard to releasing participants' clearing data and
facilitates DTC's participation in NSCC's CMS by enabling DTC to
provide participant information to NSCC for use in its CMS. DTC's and
its participants' participation in NSCC's CMS should help DTC and other
clearing agencies to better monitor their members' clearing fund,
margin, and other similar by required deposits that protect the
clearing agencies against loss should a member default on its
obligations. Furthermore, NSCC's CMS will be especially beneficial to
those participating clearing entities that have executed cross-guaranty
agreements or other similar cross-guarantee arrangements.\5\
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\4\ 15 U.S.C. Sec. 78q-1(b)(3)(F) (1988).
\5\ Currently, DTC and NSCC operate pursuant to a netting and
limited cross-guaranty agreement. The agreement provides that in the
event of a default of a common member, any resources remaining after
the failed common member's obligations to the guaranteeing clearing
agency have been satisfied will be made available to the other
clearing agency. The guaranty is not absolute but rather is limited
to the extent of the resources relative to the failed member
remaining at the guaranteeing clearing agency. The principal
resources will be the failed member's settlement net credit balances
and deposits to the clearing agencies' clearing funds. For a
complete description of DTC's and NSCC's agreement, refer to
Securities Exchange Act Release No. 33548 (January 31, 1994), 59 FR
5638 [File Nos. SR-DTC-93-08 and SR-NSCC-93-07].
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III. Conclusion
On the basis of the foregoing, the Commission finds that the
proposal is consistent with the requirements of Section 17A(b)(3)(F) 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-96-11) 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) (1996).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 96-22357 Filed 8-30-96; 8:45 am]
BILLING CODE 8010-01-M