[Federal Register Volume 61, Number 213 (Friday, November 1, 1996)]
[Proposed Rules]
[Pages 56485-56486]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-28007]


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SECURITIES AND EXCHANGE COMMISSION

17 CFR Part 300

[Release No. SIPA-160; File No. SIPC-96-1]


Rules of the Securities Investor Protection Corporation

AGENCY: Securities and Exchange Commission.

ACTION: Proposed rule change.

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SUMMARY: The Securities Investor Protection Corporation (``SIPC'') 
filed a proposed rule change with the Securities and Exchange 
Commission (``Commission''). The proposed rule change amends SIPC Rules 
300 \1\ and 301,\2\ which relate to the closeout and completion of 
contracts for the purchase or sale of securities made by debtors in 
liquidation under the Securities Investor Protection Act of 1970 
(``SIPA''). The Commission is publishing the proposed rule change for 
public comment. Within thirty-five days of publication of notice, the 
Commission must (absent an extension) by order approve the proposed 
rule change or institute disapproval proceedings. Because SIPC rules 
have the force and effect as if promulgated by the Commission, those 
rules are published in Title 17 of the Code of Federal Regulations.\3\

    \1\ 17 CFR 300.300 (1996). Rule 300 sets out the definitions of 
certain terms used in SIPC's rules.
    \2\ 17 CFR 300.301 (1996). Rule 301 governs contracts to be 
closed out or completed in a liquidation.
    \3\ 17 CFR 300.100-300.503 (1996).
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DATES: Comments are to be received on or before November 22, 1996.

ADDRESSES: Interested persons are invited to submit written data, 
views, and arguments concerning the foregoing. Persons making written 
submissions should file six copies thereof with the Secretary, 
Securities and Exchange Commission, 450 Fifth Street, N.W., Washington 
D.C. 20549. Copies of the submissions, all subsequent amendments, all 
written statements with respect to the proposed rule change that are 
filed with the Commission, and all written communications relating to 
the proposed rule change between the Commission and any person, other 
than those that may be withheld from the public in accordance with the 
provisions of 5 U.S.C. 552, will be available for inspection and 
copying in the Commission's Public Reference Room, 450 Fifth Street, 
N.W., Washington, D.C. 20549. Copies of such filings will also be 
available for inspection and copying at the principal

[[Page 56486]]

office of SIPC. All submissions should refer to file number SIPC-96-1. 
Comments also may be submitted electronically at the following E-Mail 
address: [email protected]. All comment letters should refer to 
file number SIPC-96-1. This rule number should be included on the 
subject line if E-mail is used. Electronically submitted comment 
letters will be posted on the Commission's Internet web site (http://
www.sec.gov).

FOR FURTHER INFORMATION CONTACT:
Michael A. Macchiaroli, Associate Director, 202/942-0131, Peter R. 
Geraghty, Assistant Director, 202/942-0177, or Louis A. Randazzo, 
Special Counsel, 202/942-0191, Division of Market Regulation, 
Securities and Exchange Commission, 450 Fifth Street, NW, Washington, 
DC 20549.

SUPPLEMENTARY INFORMATION: Pursuant to Section 3(e)(2)(A) of SIPA,\4\ 
notice is hereby given that SIPC filed with the Securities and Exchange 
Commission on October 10, 1996, the proposed rule change as described 
in Item I below, which item has been prepared primarily by SIPC. The 
Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons.
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    \4\ 15 U.S.C. 78ccc(e)(2)(A) (1995).
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I. SIPC's Statement of the Purpose of, and Statutory Basis for, the 
Proposed Rule Change

    In its filing with the Commission, SIPC included statements 
concerning the purpose of and basis for the proposed rule change and 
discussed any comments it received on the proposed rule change. The 
text of these statements may be examined at the places specified above. 
SIPC has prepared the following summary of the purpose of and statutory 
basis for the proposed rule change.\5\
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    \5\ The Commission has modified the language in this section.
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    Section 8(e) of SIPA requires SIPC to adopt rules with respect to 
the closeout of contracts with a debtor for the purchase or sale of 
securities in the ordinary course of its business.\6\ The purpose of 
the proposed rule change is to amend SIPC's Series 300 Rules, which 
address the closeout or completion of contracts for the purchase or 
sale of securities made by debtors in a liquidation under SIPA with 
other brokers or dealers, to be consistent with Commission Rule 15c6-
1.\7\ Rule 15c6-1, which became effective in June of 1995,\8\ 
establishes three business days as the standard settlement timeframe 
for most securities transactions.\9\ The adoption of a three business 
day settlement timeframe affected SIPC Rules 300 and 301, which 
currently refer to a five business day settlement timeframe.\10\ 
Because Rule 15c6-1 does not affect SIPC Rules 302 through 307, SIPC 
does not propose to amend these rules. The proposed rule change also 
makes a technical correction to conform a statutory citation in Rule 
300 to the correct section SIPA.\11\
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    \6\ 15 U.S.C. 78ccc(8)(e) (1995).
    \7\ 17 CFR 240.15c6-1 (1996).
    \8\ See Securities Exchange Act Release No. 33023 (October 6, 
1993), 58 FR 52891 (October 13, 1993).
    \9\ Specifically, Rule 15c6-1 provides, among other things, that 
a broker-dealer shall not effect or enter into a contract for the 
purchase or sale of a security that provides for payment of funds 
and delivery of securities later than the third business day after 
the date of the contract unless otherwise expressly agreed to by the 
parties at the time of the transaction. Prior to the effective date 
of Rule 15c6-1, the settlement cycle for securities transactions was 
five business days. See Release No. 33023, supra note 8.
    \10\ In order to remain consistent with the Commission's three 
business day settlement timeframe, SIPC proposes to amend the term 
``open contractual commitment'' in Rule 300(c) by replacing the 
reference to five business days with three business days. 
Specifically, Rule 300(c) is proposed to be amended, in part, to 
provide that the term ``open contractual commitment'' means a failed 
to receive or a failed to deliver which had a settlement date prior 
to the filing date and the respective obligations of the parties 
remained outstanding on the filing date or had a settlement date 
which occurs on or within three business days subsequent to the 
filing date. In addition, SIPC proposes to amend Rule 301 by 
replacing the references to five business days with three business 
days.
    \11\ SIPC proposes to amend Rule 300(a) by replacing the 
reference to section 16(8) of SIPA with section 16(7) of SIPA.
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II. Date of Effectiveness of the Proposed Rule Change and Timing 
for Commission Action

    Within thirty-five days of the date of publication of this notice 
in the Federal Register, or within such longer period (i) as the 
Commission may designate up to ninety days of such date if it finds 
such longer period to be appropriate and publishes its reasons for so 
finding or (ii) as to which SIPC consents, the Commission will:
    (A) By order approve such proposed rule change or
    (B) Institute proceedings to determine whether the proposed rule 
change should be disapproved.
    To allow public access to SIPC's rules, SIPC rules that are 
approved by the Commission are published under Part 300 of 17 CFR 
Chapter II.

III. Statutory Analysis

    Pursuant to SIPA and particularly Section 3(e),\12\ SIPC proposes 
to amend 300.300 and 300.301 of Title 17 of the Code of Federal 
Regulations in the manner set forth below.
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    \12\ U.S.C. 78ccc(3)(e) (1995).
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IV. List of Subjects in 17 CFR Part 300

    Brokers, Securities, Securities Investor Protection Corporation.
    In accordance with the foregoing, Title 17, Chapter II of the Code 
of Federal Regulations is proposed to be amended as follows:

PART 300--RULES OF THE SECURITIES INVESTOR PROTECTION CORPORATION

    1. The authority citation for part 300 continues to read as 
follows:

    Authority: Section 3, 84 Stat. 1636, as amended; 15 U.S.C. 
78ccc.


Sec. 300.300  [Amended]

    2. Section 300.300 is proposed to be amended by removing the 
reference to ``section 16(8)'' and adding ``section 16(7)'' in 
paragraph (a), and removing the reference to ``five business days'' and 
adding ``three business days'' in paragraph (c).


Sec. 300.301  [Amended]

    3. Section 300.301 is proposed to be amended by removing the 
references to ``five business days'' and adding ``three business days'' 
in paragraphs (a)(2)(i) and (a)(2)(ii).

    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority.\13\

    \13\ 17 CFR 200.30-3(f)(3) (1996).
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    Dated: October 25, 1996.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 96-28007 Filed 10-31-96; 8:45 am]
BILLING CODE 8010-01-M