[Federal Register Volume 64, Number 120 (Wednesday, June 23, 1999)]
[Notices]
[Pages 33539-33540]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-15968]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-41535; SR-DTC-99-16]


Self-Regulatory Organizations; The Depository Trust Corporation; 
Notice of Filing of Proposed Rule Change Relating to Profile 
Modification Feature of the Direct Registration System

June 17, 1999.
    Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on June 17, 1999, The 
Depository Trust Corporation (``DTC'') filed with the Securities and 
Exchange Commission (``Commission'') the prosed 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 purpose of DTC's filing is to resolve an impasse among members 
of the securities industry relating to the implementation of the 
Profile Modification System feature of the Direct Registration System.

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

    The purpose of this filing is to resolve an impasse among members 
of the Securities Transfer Association (``STA'') and the Securities 
Industry Association (``SIA'') \3\ relating to the delay in 
implementing the Profile Modification System feature (``Profile'') \4\ 
of the Direct Registration System (``DRS'').\5\ Profile will allow a 
participant upon instructions from the participant's customer to 
electronically request a ``DRS limited participant'' \6\ to move the 
customer's DRS share positions to the participant's acount at DTC.\7\ 
Profile will be available over both DTC's Participant Terminal System 
(``PTS'') and DTC's Computer-to-Computer Facility (``CCF'').
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    \3\ The STA and the SIA are two member groups on the DRS 
Committee, which is an industry responsible for designing DRS. The 
other members include Corporate Transfer Association and DTC.
    \4\ Profile is an electronic communication system through DTC 
which allows participants and DRS Limited Participants to send 
instructions to each other regarding the movement of DRS shares.
    \5\ See Securities Exchange Act Release No. 35038 (December 1, 
1994), 59 FR 63652 (concept release relating to the direct 
registration system); Securities Exchange Act Release No. 37931 
(November 7, 1996), 61 FR 58600 [File No. SR-DTC-96-15] (order 
relating to the establishment of DRS).
    \6\ For a description of ``DRS limited participants,'' refer to 
Securities Exchange Act Release No. 37931 (November 7, 1996), 61 FR 
58600 [File No. SR-DTC-96-15].
    \7\ Profile will also allow a ``DRS limited participant'' upon 
instructions from a customer to electronically request a participant 
to move the customer's share positions to a ``DRS limited 
participant's'' account.
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    Representative member of the STA have reported that some of their 
members may not be able to implement Profile until some time in 
calendar year 2000. Members of the SIA had envisioned that Profile 
would be implemented during the third quarter of 1999. Becuase of 
differing views on the implementation schedule for Profile, there is no 
industry consensus on whether DRS should continue to operate as it does 
today \8\ or whether use of DRS should be restricted in some manner 
until Profile is fully implemented.
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    \8\ Because ``DRS limited participants'' are currently not using 
Profile to receive instructions, brokers or their customers must 
submit requests to move DRS shares by sending a medallion guaranteed 
transaction advice to the ``DRS limited participants.''
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    If DRS is to continue to operate as it does today, there are 
several ways to handle making additional securities issued eligible for 
inclusion in DRS. The options include:
    (1) If all ``DRS limited participants'' are not able to implement 
Profile by August 31, 1999, no additional securities issues would be 
made eligible after August 31, 1999, for inclusion in DRS until 
sometime in the first quarter of 2000 when all ``DRS'' limited 
participants'' are able to implement Profile using either PTS or CCF;
    (2) securities issues would continue to be made eligible for 
inclusion in DRS in the manner in manner in which they are currently 
made eligible for inclusion; or
    (3) securities would continue to be made eligible for inclusion in 
DRS provided that each ``DRS limited participant'' could be the ``DRS 
limited participant'' for no more than two new issues per month. If all 
``DRS limited participants'' are not able to implement Profile by using 
PTS and CCF by March 31, 2000, no additional securities issues would be 
made eligible for inclusion in DRS until such time as all ``DRS limited 
participants'' are ready to use Profile.
    DTC requests that the Commission staff provide guidance on the 
above options or any other option not described in this filing.
    DTC believes that the proposed rule change is consistent with the 
requirements of the Act and the rules and regulations thereunder 
applicable to DTC because the proposed rule change is designed to 
further the perfection of the mechanism for the national system for the 
prompt and accurate clearance and settlement of securities 
transactions.

[[Page 33540]]

(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.

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

    No comments on the proposed rule change were solicited or received. 
DTC will notify the Commission of any written comments it receives.

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 the self-regulatory organizations consents, 
the Commission will:
    (a) by order approved the 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, NW, Washington, DC 20549-0609. 
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. 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 DTC. All submissions 
should refer to File No. SR-DTC-99-16 and should be submitted by July 
14, 1999.

    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority.\9\
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    \9\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 99-15968 Filed 6-22-99; 8:45 am]
BILLING CODE 8010-01-M