[Federal Register Volume 62, Number 66 (Monday, April 7, 1997)]
[Notices]
[Pages 16638-16639]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-8794]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-38452; File No. 600-25]
Self-Regulatory Organizations; Participants Trust Company; Notice
of Filing of Request and Order Approving Application for Extension of
Temporary Registration as a Clearing Agency
March 28, 1997.
On February 14, 1997, the Participants Trust Company (``PTC'')
filed with the Securities and Exchange Commission (``Commission'') a
request pursuant to Section 19(a) of the Securities Exchange Act of
1934 (``Act'') \1\ for extension of its registration as a clearing
agency under Section 17A of the Act \2\ for a period of one year.\3\
The Commission is publishing this notice and order to solicit comments
from interested persons and to grant PTC's request for an extension of
its temporary registration as a clearing agency through March 31, 1998.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(a).
\2\ 15 U.S.C. 78q-1.
\3\ Letter from John J. Sceppa, President and Chief Executive
Officer, PTC (February 13, 1997).
---------------------------------------------------------------------------
On March 28, 1989, the Commission granted PTC's application for
registration as a clearing agency pursuant to Sections 17A(b)(2) and
19(a) of the Act \4\ on a temporary basis for a period of one year.\5\
Subsequently, the Commission issued orders that extended PTC's
temporary registration as a clearing agency, the last of which extended
PTC's registration through March 31, 1997.\6\
---------------------------------------------------------------------------
\4\ 15 U.S.C. 78q-1(b)(2) and 78s(a).
\5\ Securities Exchange Act Release No. 26671 (March 28, 1989),
54 FR 13266.
\6\ Securities Exchange Act Release Nos. 27858 (March 28, 1990),
55 FR 12614; 29024 (March 28, 1991), 56 FR 13848; 30537 (April 9,
1992), 57 FR 12351; 32040 (March 23, 1993), 58 FR 16902; 33734
(March 8, 1994), 59 FR 11815; 35482 (March 13, 1995), 60 FR 14806;
and 37024 (March 26, 1996), 61 FR 14357.
---------------------------------------------------------------------------
As discussed in detail in the initial order granting PTC's
temporary registration,\7\ one of the primary reasons for PTC's
registration was to allow it to develop depository facilities for
mortgage-backed securities, particularly securities guaranteed by the
Government National Mortgage Association. PTC services include
certificate safekeeping, book-entry deliveries, and other services
related to the immobilization of securities certificates.
---------------------------------------------------------------------------
\7\ Supra note 5.
---------------------------------------------------------------------------
PTC continues to make significant progress in the areas of
financial performance, regulatory commitments, and operational
capabilities. For example, the original face value of securities on
deposit at PTC as of December 31, 1996, totaled $1.2 trillion, an
increase of approximately $125 billion over the amount on deposit as of
December 31, 1995. Total pools on deposit, which were held at PTC in a
total of 1.3 million participant positions, rose from 302,000 as of
December 31, 1995, to more than 350,000 as of December 31, 1996.\8\
---------------------------------------------------------------------------
\8\ Supra note 3.
---------------------------------------------------------------------------
During its most recent temporary approval period, PTC established a
new category of participant for Federal Reserve Banks.\9\ The Federal
Reserve Bank of New York became a Federal Reserve participant on
December 31, 1996. On December 31, 1996, PTC's
[[Page 16639]]
participants included twenty-seven banks, twenty-three broker-dealers,
two government-sponsored enterprises, and the Federal Reserve Bank of
New York. In addition, PTC declared a dividend of $.98 per share to
stockholders of record on December 31, 1996.\10\
---------------------------------------------------------------------------
\9\ Securities Exchange Act Release No. 37813 (October 11,
1996), 61 FR 54483.
\10\ Securities Exchange Act Release No. 38280 (February 12,
1997), 62 FR 8072.
---------------------------------------------------------------------------
In connection with PTC's original temporary registration, PTC
committed to the Commission and to the Federal Reserve Bank of New York
to make a number of operational and procedural changes.\11\ Over the
past year, PTC has continued its efforts to implement these operational
and procedural changes. Currently, only one of PTC's original nine
commitments, the commitment to make principal and interest advances
optional, remains outstanding. In connection with this commitment, PTC
has made significant progress in improving the collection process for
principal and interest payments and is discussing with the Commission
and the Federal Reserve Bank of New York means by which PTC can satisfy
the commitment.\12\
---------------------------------------------------------------------------
\11\ The operational and procedural changes PTC committed to
make were: (1) Eliminating trade reversals from PTC's procedures to
cover a participant default; (2) phasing out the aggregate excess
net debit limitation for extensions under the net debit monitoring
level procedures; (3) making principal and interest advances, now
mandatory, optional; (4) allowing participants to retrieve
securities in the abeyance account and not allowing participants to
reverse transfers because customers may not be able to fulfill
financial obligations to the participants; (5) eliminating the
deliverer's security interest and replacing it with a substitute;
(6) reexamining PTC's account structure rules to make them
consistent with PTC's lien procedures; (7) expanding and
diversifying PTC's lines of credit; (8) assuring operational
integrity by developing and constructing a back-up facility; and (9)
reviewing PTC rules and procedures for consistency with current
operations.
\12\ On February 7, 1997, PTC filed an amended Form CA-1 with
the Commission requesting permanent registration as a clearing
agency under Section 17A of the Act. PTC's request is currently
under review by the Commission.
---------------------------------------------------------------------------
PTC has functioned effectively as a registered clearing agency for
the past eight years. In light of PTC's past performance, the
Commission believes that PTC has the operational and procedural
capacity to comply with the statutory obligations set forth under
Section 17A(b)(3) of the Act \13\ as prerequisites for registration as
a clearing agency. Comments received during PTC's temporary
registration will be considered in determining whether PTC should
receive permanent registration as a clearing agency under Section
17A(b) of the Act.\14\
---------------------------------------------------------------------------
\13\ 15 U.S.C. 78q-1(b)(3).
\14\ 15 U.S.C. 78q-1(b)(3).
---------------------------------------------------------------------------
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 request for extension of temporary
registration as a clearing agency that are filed with the Commission,
and all written communications relating to the requested extension
between the Commission and any person, other than those that may be
withheld from the public in accordance with provisions of 5 U.S.C.
Sec. 552, will be available for inspection and copying in the
Commission's Public Reference Section, 450 Fifth Street, NW.,
Washington, DC 20549. Copies of such filing also will be available for
inspection and copying at the principal office of PTC. All submissions
should refer to File No. 600-25.
On the basis of the foregoing, the Commission finds that PTC's
request for extension of temporary registration as a clearing agency is
consistent with the Act and in particular with Section 17A of the Act.
It is therefore ordered, that PTC's registration as a clearing
agency be and hereby is approved on a temporary basis through March 31,
1998.
For the Commission by the Division of Market Regulation,
pursuant to delegated authority.\15\
---------------------------------------------------------------------------
\15\ 17 CFR 200.30-3(a)(50).
---------------------------------------------------------------------------
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 97-8794 Filed 4-4-97; 8:45 am]
BILLING CODE 8010-01-M