[Federal Register Volume 62, Number 141 (Wednesday, July 23, 1997)]
[Notices]
[Pages 39561-39562]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-19347]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-38848; File No. SR-DTC-97-06]
Self-Regulatory Organizations; the Depository Trust Company;
Notice of Filing and Immediate Effectiveness of a Proposed Rule Change
Relating to the Processing of Cent-Denominated Securities
July 17, 1997.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ notice is hereby given that on May 16, 1997, The
Depository Trust Company (``DTC'') filed with the
[[Page 39562]]
Securities and Exchange Commission (``Commission'') the proposed rule
change (File No. SR-DTC-97-06) 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 on the proposed rule
change from interested persons.
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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 purpose of the proposed rule change is to modify the way DTC
processes cent-denominated securities.
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 that 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
submitted 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 began processing cent-denominated securities in January,
1997.\3\ Participants depositing cent-denominated securities received
credit for the whole dollar amount of the deposit. But the cents
portion of the aggregate dollar figure for the deposited securities was
truncated. The truncated amounts were collected in an internal DTC
account and along with any income derived therefrom became part of
DTC's general revenues. DTC now has developed the capability to credit
the cents positions resulting from deposits or principal and income
payments to a participant's account. These cents positions will be
maintained in a contra-CUSIP account and will be eligible for various
DTC services including deposit, withdrawal, and rush withdrawal
services. DTC proposes to track cent-denominated securities in the
manner described above so that its records may more accurately reflect
the true ownership of cent-denominated positions.
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\3\ Securities Exchange Act Release No. 36798 (January 31,
1996), 61 FR 4692 [File No. SR-DTC-95-14] (order approving proposed
rule change which made fractional shares and cent-denominated
securities depository eligible at DTC).
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DTC believes that the proposed rule change is consistent with the
requirements of section 17A(b)(3)(A) of the Act \4\ and the rules and
regulations thereunder because it will promote efficiencies in the
clearance and settlement of securities transactions.
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\4\ 15 U.S.C. 78q-1.
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(B) Self-Regulatory Organization's Statement on Burden on Competition
DTC does not believe that the proposed rule change will impose any
burden on competition that is not necessary or appropriate in
furtherance of the purposes of the Act, in the public interest, and for
the protection of investors.
(C) Self-Regulatory Organization's Statement on Comments on the
Proposed Rule Change Received From Members, Participants, or Others
While most DTC participants recognize the benefits of tracking
cents in a contra-CUSIP account, some participants have expressed
concern with the new tracking method because participants will be
required to make programming changes in order to use the new system. As
a result, DTC has made participation in the cent-denominated program
voluntary so that participants that must make systems changes to use
the new program may have sufficient time to do so.
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)(3) \5\ of the Act and Rule 19b-4(e)(4) \6\ promulgated
thereunder because the proposal effects a change in an existing service
of DTC that does not adversely affect the safeguarding of securities or
funds in the custody or control of DTC or for which it is responsible
and does not significantly affect the respective rights or obligations
of DTC or persons using the service. At any time within 60 days of the
filing of such proposed 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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\5\ 15 U.S.C. 78s(b)(3)(A)(3).
\6\ 17 CFR 240.19b-4(e)(4).
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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, 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 DTC. All submissions should
refer to the file number SR-DTC-97-06 and should be submitted by August
13, 1997.
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).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 97-19347 Filed 7-22-97; 8:45 am]
BILLING CODE 8010-01-M