[Federal Register Volume 63, Number 168 (Monday, August 31, 1998)]
[Notices]
[Page 46261]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-23278]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-40357; File Nos. SR-DTC-98-12, SR-PTC-98-02]


The Depository Trust Company; Participants Trust Company; Order 
Approving a Proposed Rule Change Relating to a Merger Between the 
Depository Trust Company and Participants Trust Company

August 24, 1998.
    On May 29, 1998, The Depository Trust Company (``DTC'') filed with 
the Securities and Exchange Commission (``Commission'') and on June 2, 
1998, Participants Trust Company (``PTC'') filed with the Commission 
proposed rule changes (File Nos. SR-DTC-98-12 and SR-PTC-98-02) 
pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'').\1\ Notice of the proposals was published in the Federal 
Register on June 30, 1998.\2\ No comment letters were received. For the 
reasons discussed below, the Commission is approving the proposed rule 
changes.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ Securities Exchange Act Release No. 40121 (June 24, 1998), 
63 FR 30543.
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I. Description

    The rule changes relate to the arrangements for a merger between 
DTC and PTC. Under the arrangements for the proposed merger, PTC will 
merge with and into DTC, and DTC will make certain payments to PTC's 
shareholders. For at least two years after the effective date of the 
merger, DTC will provide the services currently offered by PTC in a 
separate division of DTC, called the MBS Division. The current rules 
and procedures of PTC with respect to dispository services, the 
processing of transactions in PTC-eligible securities, and the PTC 
participants fund will become part of the rules and procedures of DTC 
and will be applied to the business of the MBS Division.\3\
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    \3\ On July 13, 1998, DTC submitted a rule filing to the 
Commission [File No. SR-DTC-98-15] to amend its rules and procedures 
to provide for the MBS Division and to accommodate the application 
of PTC's current rules and procedures to the MBS Division's 
business.
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    PTC's participants, most of which are also DTC participants, will 
continue to have access to the depository services now being offered 
through DTC's MBS Division.\4\ In addition, DTC will offer PTC 
participants that are not DTC participants an opportunity to become 
participants of the MBS Division.
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    \4\ The Commission understands that the only PTC participants 
that are not DTC participants are Federal Home Loan Mortgage 
Corporation, Federal National Mortgage Association, and The Federal 
Reserve Bank of Cleveland.
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II. Discussion

    Section 17A(b)(3)(F) of the Act \5\ requires that the rules of a 
clearing agency be designed to promote the prompt and accurate 
clearance and settlement of securities transactions and to assure the 
safeguarding of securities and funds which are in the custody or 
control of the clearing agency of for which it is responsible. The 
Commission believes that the proposed rule changes are consistent with 
DTC's and PTC's obligations under Section 17A(b)(3)(F). Because the 
rules and procedures of PTC, which previously have been approved by the 
Commission, will become the rules and procedures of DTC's MBS Division, 
the Commission believes that the arrangements for the merger between 
DTC and PTC should ensure that securities transactions that are 
currently processed through PTC will continue to be processed 
efficiently through DTC's MBS Division. In addition, the Commission 
believes that the arrangements for the merger provide for the orderly 
transfer or PTC's operations to DTC and therefore should assure the 
safeguarding of securities and funds which are in PTC's custody or 
control or for which it is responsible.
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    \5\ 15 U.S.C. 78q-1(b)(3)(F).
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III. Conclusion

    On the basis of the foregoing, the Commission finds that the 
proposals are consistent with the requirements of the Act and in 
particular with the requirements of Section 17A of the Act and the 
rules and regulations thereunder.
    It is therefore ordered, pursuant to Section 19(b)(2) of the Act, 
that the proposed rule changes (File Nos. SR-DTC-98-12 and SR-PTC-98-
02) be and hereby are approved.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\6\
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    \6\ 17 CFR 200.30-3(a)(12).
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Jonathan G. Katz,
Secretary.
[FR Doc. 98-23278 Filed 8-28-98; 8:45 am]
BILLING CODE 8010-01-M