[Federal Register Volume 62, Number 5 (Wednesday, January 8, 1997)]
[Notices]
[Pages 1139-1140]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-385]


=======================================================================
-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-38107; File Nos. SR-SCCP-96-11 and SR-Philadep-96-21]


Self-Regulatory Organizations; Stock Clearing Corporation of 
Philadelphia; Philadelphia Depository Trust Company; Notice of Filing 
and Order Granting Accelerated Approval of Proposed Rule Changes 
Relating to Participants Fund Contributions for Inactive Account(s)

December 31, 1996.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on November 15, 1996, the 
Stock Clearing Corporation of Philadelphia (``SCCP'') and the 
Philadelphia Depository Trust Company (``Philadep'') filed with the 
Securities and Exchange Commission (``Commission'') the proposed rule 
changes (File Nos. SR-SCCP-96-11 and SR-Philadep-96-21) as described in 
Items I and II below, which items have been prepared primarily by SCCP 
and Philadep. The Commission is publishing this notice and order to 
solicit comments from interested persons and to grant accelerated 
approval of the proposed rule change.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
---------------------------------------------------------------------------

I. Self-Regulatory Organizations' Statement of the Terms of Substance 
of the Proposed Rule Changes

    The proposed rule change seeks permanent approval of SCCP's and 
Philadep's participants fund formulas with respect to inactive accounts 
and the account monitoring procedures related to such inactive 
accounts. The Commission previously approved these formulas and account 
monitoring procedures on a temporary basis through December 31, 
1996.\2\
---------------------------------------------------------------------------

    \2\ Securities and Exchange Act Release No. 37554 (August 9, 
1996), 61 FR 42929 [File Nos. SR-SCCP-96-03 and SR-Philadep-96-07] 
(order granting temporary approval of proposed rule changes to 
establish separate participant categories for inactive accounts).
---------------------------------------------------------------------------

II. Self-Regulatory Organizations' Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Changes

    In its filing with the Commission, SCCP and Philadep included 
statements concerning the purpose of and basis for the proposed rule 
change and discussed any comments that it received on the proposed rule 
change. The text of these statements may be examined at the places 
specified in Item IV below. SCCP and Philadep have prepared summaries, 
set forth in sections (A), (B), and (C) below, of the most significant 
aspects of such statements.\3\
---------------------------------------------------------------------------

    \3\ The Commission has modified the text of the summaries 
submitted by SCCP and Philadep.
---------------------------------------------------------------------------

(A) Self-Regulatory Organizations' Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Changes

    The proposed rule change seeks permanent approval of amendments to 
both SCCP's and Philadep's Rule 1 and Rule 4 governing (i) the $5,000 
minimum cash participants fund contribution for inactive accounts and 
(ii) the inactive account monitoring procedures designed to detect and 
collect additional participants fund contributions when an inactive 
account

[[Page 1140]]

becomes active. The Commission previously approved these participants 
fund formulas, the procedures monitoring levels of account activity, 
and the procedures for collecting additional participants fund 
contributions on a temporary basis through December 31, 1996.\4\ 
Throughout the temporary approval period, SCCP and Philadep have 
provided monthly reports to the Commission detailing inactive account 
activity. At this time, SCCP and Philadep are requesting that the 
Commission grant permanent approval to the inactive account 
participants fund contribution and the inactive account monitoring 
procedures.
---------------------------------------------------------------------------

    \4\ For a complete discussion of SCCP's and Philadep's inactive 
account rules and procedures, refer to Securities and Exchange Act 
Release No. 37554, supra note 2.
---------------------------------------------------------------------------

    SCCP and Philadep believe the proposed rule change is consistent 
with the requirements of Section 17A of the Act and the rules and 
regulations thereunder because the rule proposal will promote the 
prompt and accurate clearance and settlement of securities transactions 
and will assure the safeguarding of securities and funds in the custody 
or control of SCCP and Philadep or for which SCCP and Philadep are 
responsible.

(B) Self-Regulatory Organizations' Statement on Burden on Competition

    SCCP and Philadep do not believe that the proposed rule changes 
will impact or impose a burden on competition.

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

    No written comments have been solicited or received. SCCP and 
Philadep will notify the Commission of any written comments received by 
SCCP and Philadep.

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

    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.\5\ The Commission believes the proposed 
rule changes are consistent with SCCP's and Philadep's obligations 
under Section 17A(b)(3)(F) because in connection with establishing 
separate participant categories designed for participants that conduct 
limited activity, the proposals establish procedures to monitor the 
level of activity in those participants accounts and procedures to 
collect additional participants fund deposits if the activity in the 
accounts increase above certain thresholds.
---------------------------------------------------------------------------

    \5\ 15 U.S.C. 78q-1(b)(3)(F).
---------------------------------------------------------------------------

    SCCP and Philadep have established new surveillance procedures to 
monitor inactive participants' accounts to ensure that inactive 
participants are not able to conduct levels of activity above the 
inactive account thresholds without depositing additional funds. 
Pursuant to the temporary approval order, SCCP and Philadep have 
submitted on a monthly basis reports detailing the number of inactive 
participants, the value of their participants fund deposits, and the 
total activity in each inactive account for the prior month. After 
review of the monthly reports, the Commission believes that it is 
appropriate to grant permanent approval of the proposals. The inactive 
accounts reflect a small volume of activity that the Commission 
currently believes is adequately covered by the inactive account 
minimum participants funds deposit. Additionally, SCCP's and Philadep's 
procedures provide for the monitoring of activity in those participant 
accounts and the prompt collection of additional funds as the level of 
activity nears the maximum level of activity allowed in an inactive 
participants account.
    However, SCCP and Philadep are to continue to submit on a monthly 
basis reports detailing the number of inactive participants, the value 
of their participants fund deposits, the total activity in each 
inactive account for the prior month, and the steps taken in the event 
that an inactive participant exceeded the inactive thresholds or became 
active. SCCP and Philadep must continue to submit such reports to the 
Commission so that the Commission can continue to monitor SCCP's and 
Philadep's administration of these new surveillance procedures 
established under these proposed rule changes.
    SCCP and Philadep have requested that the Commission find good 
cause for approving the proposed rule changes prior to the thirtieth 
day after the date of publication of notice of the filing. Because 
accelerated approval will enable SCCP and Philadep to keep in place 
without interruption their inactive participant procedures, the 
Commission finds good cause for approving the proposed rule changes 
prior to the thirtieth day after the date of publication of notice of 
filing.\6\
---------------------------------------------------------------------------

    \6\ The staff of the Board of Governors of the Federal Reserve 
System has concurred with the Commission's granting of accelerated 
approval of Philadep's proposed rule change. Telephone conversation 
between John Rudolph, Board of Governors of the Federal Reserve 
System, and Chris Concannon, Staff Attorney, Division of Market 
Regulation, Commission (December 30, 1996).
---------------------------------------------------------------------------

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, N.W., Washington, D.C. 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, N.W., Washington, 
D.C. 20549. Copies of such filing will also be available for inspection 
and copying at the principal office of SCCP and Philadep. All 
submissions should refer to the file number SR-SCCP-96-11 and SR-
Philadep-96-21 and should be submitted by January 29, 1997.
    It is therefore ordered, pursuant to Section 19(b)(2) of the Act, 
that the proposed rule change (File No. SR-SCCP-96-11 and SR-Philadep-
96-21) be, and hereby are, approved.

    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority.\7\
---------------------------------------------------------------------------

    \7\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 97-385 Filed 1-7-97; 8:45 am]
BILLING CODE 8010-01-M