[Federal Register Volume 63, Number 208 (Wednesday, October 28, 1998)]
[Notices]
[Pages 57716-57717]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-28847]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-40588; File No. SR-DTC-98-13]


Self-Regulatory Organizations; The Depository Trust Company; 
Notice of Filing of Proposed Rule Change Relating to Establishing a 
Practice of Collecting the Difference Between a Participant's Required 
Fund Deposit and its Actual Fund Deposit More Frequently

    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (``Act''), notice is hereby given that on June 11, 1998, The 
Depository Trust Company (``DTC'') filed with the Securities and 
Exchange Commission (``Commission'') the proposed rule change as 
described in Items I, II, and III below, which items have been prepared 
primarily by DTC. DTC amended the proposed rule change on July 29, 
1998. 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 establishes a practice of collecting the 
difference between a participant's required fund deposit \2\ and its 
actual fund deposit \3\ more frequently than monthly.
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    \2\ Required fund deposit is defined in DTC's Rule 1 as the 
amount a participant is required to deposit to the participant's 
fund.
    \3\ Actual fund deposit is defined in DTC's Rule 1 as the amount 
a participant has deposited to DTC's participant fund, including 
both its required fund deposit and any voluntary fund deposit.
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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.\4\
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    \4\ 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

    Currently, DTC calculates each participant's required fund deposit 
daily. If a participant's required fund deposit exceeds its actual fund 
deposit, DTC requires the participant to deposit the difference into 
DTC's participant fund on a monthly basis. The proposed rule change 
will further minimize DTC's exposure by providing for the collection of 
the difference between a participant's required fund deposit and actual 
fund deposit on a daily basis under certain circumstances.
    Under the proposal, DTC will calculate a participant's actual and 
required fund deposit daily and require a participant to deposit the 
difference if two conditions are met. First, the amount of the 
difference between the funds must be equal to or exceed $500,000, and 
second, the difference must represent 25% or more of the newly 
calculated required fund deposit. Under such circumstances, the 
participant will be required to deposit the difference into DTC's 
participant fund within two business days of the day the difference was 
calculated. This new standard will ensure that DTC's resources are 
sufficient to complete

[[Page 57717]]

settlement if a participant fails to settle its net debit obligation.
    DTC believes that the proposed rule change is consistent with the 
requirements of Section 17A of the Act \5\ and the rules and 
regulations thereunder because it assures the safeguarding of 
securities and funds which are in its custody or control.
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    \5\ 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 not necessary or appropriate in furtherance of 
the purpose of the Act.

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

    Written comments on the proposal from DTC participants or others 
have not been solicited or received. The staff of the Commission 
recommended that DTC establish a practice of collecting the difference 
between a participant's required fund deposit and actual fund deposit 
more often than monthly.

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, including whether the proposed rule 
change is consistent with the Act. 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-98-13 and should be 
submitted by November 18, 1998.

    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)(13).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 98-28847 Filed 10-27-98; 8:45 am]
BILLING CODE 8010-01-M