[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