[Federal Register Volume 63, Number 17 (Tuesday, January 27, 1998)]
[Notices]
[Pages 3941-3942]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-1857]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-39561; File No. SR-DTC-97-17]
Self-Regulatory Organizations; the Depository Trust Company;
Notice of a Proposed Rule Change Relating to a Modification of the
Coupon Collection Service
January 20, 1998.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ notice is hereby given that on August 7, 1997. The
Depository Trust Company (``DTC'') filed with the Securities and
Exchange Commission (``Commission'') and on December 22, 1997, amended
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 will expand DTC's coupon collection
service (``CCS'') to include the collection of interest relating to
coupons from corporate bearer bonds.
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
CCS currently provides DTC participants with a method for the
collection of interest relating to coupons from municipal bearer
bonds.\3\ Participants using CCS are required to deposit coupons in a
standard sealed envelop or ``shell,'' each of which may contain no more
than 200 coupons for the same CUSIP number, series, and payable date.
DTC submits the contents of the shells to the appropriate issuer or
paying agent and then credits the interest to the participant's
account.
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\3\ For a complete description of CCS, refer to Securities
Exchange Act Release No. 35750 (January 22, 1996), 61 FR 2852 [File
No. SR-DTC-95-18] (order approving proposed rule change).
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Under the proposed rule change, CCS will be modified to process
corporate bearer bonds in addition to municipal bearer bonds. With
certain exceptions, DTC will handle shells containing corporate bearer
bonds in the same manner in which it currently handles municipal bearer
bonds.
First, DTC will contact the corporate paying agent before
submitting the coupons for payment to determine whether the coupon
proceeds are payable in U.S. dollars. To be eligible for CCS, corporate
bearer bonds must be payable in either U.S. dollars or Canadian funds.
Where the corporate bearer bonds are payable in Canadian funds, DTC
will request the paying agent to convert the funds to U.S. dollars in
accordance with the
[[Page 3942]]
prevailing exchange rate. DTC will not process corporate bearer bonds
through CCS unless the paying agent is able to convert the funds to
U.S. dollars.
Second, DTC will suppress for corporate bearer coupons the
automatic payment function that it applies to municipal bearer coupons.
Under the current operation of CCS, DTC credits participants' accounts
on the payable date of the municipal bearer coupons regardless of
whether it has received the money. With corporate bearer bonds, DTC
will need to receive the interest payment before paying the participant
in order to avoid having to adjust participants' accounts due to
fluctuations in exchange rates. DTC has informed the Commission that
due to the additional processing and tracking of corporate bearer
coupon deposits, a surcharge will be added in the future for the
handling of these deposits.
DTC will require that each shell contain the following information
on its face:
1. CUSIP number;
2. description of issue including purpose, series, date of issue,
and maturity date;
3. payable date;
4. quantity of coupons enclosed;
5. dollar value of individual coupons;
6. total shell value unless payable in Canadian dollars;
7. participant number; and
8. contact number and telephone number of the depositing
participant.
The shells will need to be accompanied by one completed deposit
ticket for up to twenty-five shells which provides the following
information:
1. participant number;
2. shell quantity;
3. total dollar value;
4. CUSIP number per shell;
5. coupon quantity per shell;
6. dollar value per shell unless payable in Canadian dollars; and
7. whether the coupons are future-due or past-due.
DTC will verify the number of shells listed on the deposit ticket
and give the participant a time-stamped copy of the ticket. If the
number of shells listed on the deposit ticket does not agree with the
physical number of shells, the entire deposit will be rejected and sent
back to the participant.
DTC believes that the proposed rule change is consistent with the
requirements of Section 17A of the Act\4\ and the rules and regulations
thereunder because it promotes 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
Written comments from DTC participants and others have not been
solicited or received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Within thirty-five days of the date of publication of this notice
in the Federal Register or within such longer period (i) as the
Commission may designate up to ninety days of such date if it finds
such longer period to be appropriate and publishes its reasons for so
finding or (ii) as to which DTC consents, the Commission will:
(A) by order approve such proposed rule change or
(B) institute proceedings to determine whether the proposed rule
change should be disapproved.
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 Section, 450 Fifth Street, N.W.,
Washington, D.C. 20549. Copies of such filing also will be available
for inspection and copying at the principal office of DTC. All
submissions should refer to File No. SR-DTC-97-17 and should be
submitted by February 17, 1998.
For the Commission by the Division of Market Regulation,
pursuant to delegated authority.\5\
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\5\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 98-1857 Filed 1-26-98; 8:45 am]
BILLING CODE 8010-01-M