[Federal Register Volume 61, Number 214 (Monday, November 4, 1996)]
[Notices]
[Page 56730]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-28231]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-37883; File No. SR-PHILADEP-96-11]
Self-Regulatory Organizations; Philadelphia Depository Trust
Company; Order Granting Approval of a Proposed Rule Change Regarding
the Destruction of Certain Expired Securities Certificates
October 28, 1996.
On June 28, 1996, the Philadelphia Depository Trust Company
(``Philadep'') filed with the Securities and Exchange Commission
(``Commission'') a proposed rule change (File No. SR-PHILADEP-96-11)
pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'') \1\ regarding the destruction of certain expired securities
certificates. Notice of the proposal was published in the Federal
Register on August 21, 1996.\2\ No 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. 37570 (August 14, 1996),
61 FR 43287.
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I. Description
The rule change will amend Philadep Rule 31 which governs the
orderly destruction of securities certificates relating to expired
warrants and rights to permit the destruction of such securities
certificates to be carried out under the supervision of Philadep's
internal audit department.\3\ Section (c) of Rule 31 previously
required that all securities to be destroyed pursuant to the rule had
to be forwarded to Philadep's internal audit department for
destruction.\4\ Under the rule change, Philadep is permitted to destroy
the certificates in a designated area of Philadep under the supervision
of the internal audit department instead of being required to destroy
such certificates in the internal audit department itself.
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\3\ The procedures for the destruction of expired securities set
forth in Rule 31 require Philadep to (i) contact the transfer agent
or the issuer of the expired securities to verify that the
respective warrants or rights have expired, (ii) obtain written
confirmation from such transfer agent or issuer that the
certificates representing such warrants or rights have expired (if
there is no transfer agent, Philadep personnel must exercise all
reasonable due diligence to confirm the expired nature of the
respective certificates including consulting with the Philadep's
legal department, internal audit department and senior management),
(iii) notify its participants that in the judgment of the transfer
agent, or other appropriate parties if a transfer agent does not
exist, the securities certificates have expired, (iv) delete such
securities positions from its participants' account on or after the
thirtieth day following the date of such notice, and (v)
appropriately mark the securities certificates and forward them to
its internal audit department for destruction.
\4\ Securities Exchange Act Release No. 35426 (February 28,
1995) [File No. SR-PHILADEP-94-05] (order approving proposed rule
change authorizing Philadep to implement a program for the
destruction of securities certificates relating to expired warrants
and rights).
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II. Discussion
Section 17A(b)(3)(F) \5\ 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. The Commission believes Philadep's
proposed rule change is consistent with Philadep's obligations under
Section 17A of the Act because the rule change does not significantly
alter the procedures previously approved by the Commission by which
expired rights and warrants certificates are to be destroyed and
thereby should not negatively affect Philadep's ability to safeguard
securities or funds.\6\
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\5\ 15 U.S.C. Sec. 78q-1(b)(3)(F) (1988).
\6\ The Commission previously stated upon establishment of
Philadep's expired certificate destruction program for warrants and
rights that such program is consistent with Section 17A of the Act
because the program should reduce the administrative expenses
associated with safekeeping and storage of worthless certificates
and that Philadep's procedures were reasonably designed to prevent
inadvertent destruction of warrants and rights certificates that
have not expired. Supra note 4.
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III. Conclusion
On the basis of the foregoing, the Commission finds that the
proposed rule change is consistent with the requirements of the Act and
in particular 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-PHILADEP-96-11) be and
hereby is approved.
For the Commission by the Division of Market Regulation,
pursuant to delegated authority.\7\
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\7\ 17 CFR 200.30-3(a)(12) (1996).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 96-28231 Filed 11-1-96; 8:45 am]
BILLING CODE 8010-01-M