[Federal Register Volume 61, Number 236 (Friday, December 6, 1996)]
[Notices]
[Pages 64776-64777]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-31080]


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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-38000; File No. SR-DTC-96-20]


Self-Regulatory Organizations; The Depository Trust Company; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change 
Relating to the Drop Window Service

December 2, 1996.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on November 5, 1996, The 
Depository Trust Company (``DTC'') filed with the Securities and 
Exchange Commission (``Commission'') the proposed rule change as 
described in Items I, II, and III below, which items have been prepared 
primarily by DTC. The Commission is publishing this notice to solicit 
comments from interested persons on the proposed rule change.
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    \1\ 15 U.S.C. 78s(b)(1).
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I. Self-Regulatory Organization's Statement of the Terms of 
Substance of the Proposed Rule Change

    The proposed rule change expands the services provided by DTC's 
Transfer Agent Drop Window Service (``Drop Service'').

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, DTC 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 in 
Item IV below. DTC has prepared summaries, set forth in sections (A), 
(B), and (C) below, of the most significant aspects of such 
statements.\2\
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    \2\ The Commission has modified the text of the summaries 
prepared by DTC.
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(A) Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    DTC's Drop Service provides transfer agents located outside of New 
York City with a central location within the Borough of Manhattan to 
receive and deliver securities.\3\ DTC proposes to

[[Page 64777]]

expand its Drop Service to provide transfer agents with enhanced 
services. First, DTC will accept the following items on behalf of 
transfer agents from individuals or financial institutions: (1) Checks 
or securities delivered as contributions to dividend reinvestment 
plans; (2) checks drawn on a transfer agent and payable to an 
individual or financial institution with wire instructions; (3) checks 
payable to a transfer agent in payment for certain fees charged by the 
transfer agent (e.g., rush transfer fees); and (4) envelopes \4\ to be 
delivered to a transfer agent. DTC also will issue a window-ticket to 
the individual or financial institution delivering such items, log the 
receipt of the items, and forward the items to the transfer agent.
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    \3\ DTC originally established the Drop Service to enable 
transfer agents to comply with New York Stock Exchange Rule 496 and 
American Stock Exchange Rule 891. These rules require transfer 
agents to maintain a facility to receive and deliver securities that 
is located south of Chambers Street in the Borough of Manhattan, 
City of New York. For a complete description of the Drop Service, 
refer to Securities Exchange Act Release No. 37562 (August 13, 
1996), 61 FR 43283 [File No. SR-DTC-96-09] (order approving proposed 
rule change).
    \4\ DTC will accept envelopes from financial institutions for 
delivery to a transfer agent without opening or inspecting the 
envelopes. Securities delivered to the drop window from financial 
institutions are generally delivered in clear envelopes.
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    Second, if a transfer agent is required to accept securities up to 
midnight in connection with a corporate action, DTC's drop location 
will remain open until that time.\5\ Finally, DTC will value securities 
received on behalf of a transfer agent in preparation for the shipment 
of such securities to the transfer agent by obtaining a daily market 
price for each issue received. DTC began providing these expanded 
services on November 18, 1996. The transfer agent Drop Service fee 
schedule is attached as Exhibit 1.
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    \5\ DTC's drop location will remain open for a late closing for 
the limited purpose of accepting items on behalf of a transfer agent 
and issuing a window-ticket to the party delivering the item. A 
transfer agent will be required to provide DTC with notice of the 
need for a late closing at least one week in advance thereof. 
Moreover, a transfer agent will be required to provide on-site 
personnel at DTC to answer questions, examine items received, and 
approve such items. During a late closing, a transfer agent will be 
deemed to have taken possession and control of an item when the 
transfer agent's on-site personnel approve an item for receipt.
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    DTC believes the proposed rule change is consistent with the 
requirements of Section 17A(b)(3)(F) of the Act \6\ and the rules and 
regulations promulgated thereunder because the proposal promotes 
efficiencies in the prompt and accurate clearance and settlement of 
securities transactions, specifically the transfer of record ownership. 
According to DTC, the expanded Drop Service also will reduce the 
expenses associated with the transfer of record ownership and foster 
cooperation and coordination between DTC and other entities engaged in 
the clearance and settlement of securities transactions.
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    \6\ U.S.C. 78q-1(b)(3)(F) (1988).
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(B) Self-Regulatory Organization's Statement on Burden on Competition

    DTC perceives no impact on competition by reason of the proposed 
rule change.

(C) Self-Regulatory Organization's Statement on Comments on the 
Proposed Rule Change Received From Members, Participants or Others

    DTC has not solicited or received comment on the proposed rule 
change.

III. Date of Effectiveness of the Proposed Rule Change and Timing 
for Commission Action

    The foregoing rule change has become effective pursuant to Section 
19(b)(3)(A)(iii) \7\ of the Act and pursuant to Rule 19b-4(e)(6) \8\ 
promulgated thereunder because the proposed rule is effecting a change 
that: (1) Does not significantly affect the protection of investors or 
the public interest; (2) does not impose any significant burden on 
competition; (3) does not become operative for thirty days from the 
date of its filing on November 5, 1996, or such shorter time as the 
Commission may designate if consistent with the protection of investors 
and the public interest; and (4) was provided to the Commission for its 
review at least five days prior to the filing date. The Commission 
finds good cause for accelerating the operative date of the proposed 
rule change from the thirtieth day following the date of its filing on 
November 5, 1996, to November 18, 1996, because the accelerated 
approval will permit DTC to more quickly provide the enhanced services 
to transfer agents located outside of New York City through the 
framework of an existing DTC service, which has been reviewed by the 
Commission. At any time within sixty days of the filing of such rule 
change, the Commission may summarily abrogate such rule change if it 
appears to the Commission that such action is necessary or appropriate 
in the public interest, for the protection of investors, or otherwise 
in furtherance of the purposes of the Act.
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    \7\ 15 U.S.C. 78s(b)(3)(A)(iii) (1988).
    \8\ 17 CFR 240.19b-4(e)(6) (1966).
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IV. Solicitation of Comments

    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 NW., Washington, DC 20549. Copies 
of the submission, 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 NW., Washington, 
DC 20549. Copies of such filing will also be available for inspection 
and copying at the principal office of DTC. All submissions should 
refer to File No. SR-DTC-96-20 and should be submitted by December 29, 
1996.

    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority.\9\
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    \9\ 17 CFR 200.30-3(a)(12)(1996).
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Margaret H. McFarland,
Deputy Secretary.

Exhibit 1.--1996 Transfer Agent Drop Fees

    1. Monthly Service Charge: $250.00.
    2. Micro-filming: $14.50 per hour and $15.75 per roll.
    3. Window Tickets Issued By DTC for the Receipt of Securities, 
Checks, and Envelopes on Behalf of the transfer agent: .75 per window 
ticket issued.
    4. Daily Valuation: Daily flat fee of $175.00.
    5. Midnight closings: $1,000.00 per occurrence.
    6. Pass-through Fees: Varying.
    For example, DTC uses various courier services to deliver 
securities to the transfer agent. DTC remits payment for such services 
to the carrier and, in turn, charges the appropriate transfer agent for 
the same amount.
    In addition, each transfer agent must provide DTC with window 
tickets to be used as receipts for items delivered. If requested by the 
transfer agent, DTC will arrange for the printing of such tickets. Any 
associated printing costs incurred by DTC are charged to the transfer 
agent.

[FR Doc. 96-31080 Filed 12-5-96; 8:45 am]
BILLING CODE 8010-01-M