[Federal Register Volume 64, Number 151 (Friday, August 6, 1999)]
[Notices]
[Pages 43004-43005]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-20303]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-41678; File No. SR-DTC-99-15]
Self-Regulatory Organizations; The Depository Trust Company;
Notice of Filing of Proposed Rule Change Relating to Procedures When
Settling Banks Fail To Settle
July 30, 1999.
Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934
[[Page 43005]]
(``Act''),\1\ notice is hereby given that on June 11, 1999. The
Depository Trust Company (``DTC'') filed with the Securities and
Exchange Commission (``Commission'') the proposed rule change (File No.
SR-DTC-99-15) 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.
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\1\ 15 U.S.C. 78s(b)(1).
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I. Self-Regulatory Organizations' Statement of the Terms of
Substance of the Proposed Rule Change
Under the proposed rule change, DTC will restate and expand its
procedures for a settling bank's failure to settle.
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
Each DTC participant pays or receives the net debit or net credit
balance in its DTC money settlement account at the end of each day. A
settling bank employed by the participant sends or receives the net
payment over Fedwire to or from DTC's account at the Federal Reserve
Bank of New York. On a small number of occasions, a settling bank that
settles only for itself (and not for any other participants) has been
unable to settle with DTC due to an operational problem. On each of
those occasions when the settling bank has a net debit balance, DTC
completed money settlement by using deposits from its participants
fund, and the settling bank was able to settle with DTC on the next
day. On a few occasions, money settlement at DTC has been delayed with
respect to DTC's settlement schedule due to an operational problem at a
settling bank.
Although such incidents or failure to settle are infrequent, DTC
has reviewed its procedures for when a settling bank fails to settle
with DTC due to a financial or operational problem. Those procedures
are currently stated in memorandum dated July 29, 1994, which was
issued jointly with the National Securities Clearing Corporation and
which described the planned conversion of DTC's money settlement system
to an entirely same day funds settlement system. The purpose of the
proposed rule change is to restate in greater detail the procedures
that DTC will follow if a settling bank fails to settle with DTC.\3\
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\3\ For example, the proposed procedures will (1) state the
specific time by which settling banks must acknowledge settlement
balances each day, (2) provide for notice of a settling bank's
failure to settle to the participants that settle through the bank,
and (3) set forth the extent to which DTC will require a participant
to make settlement payment itself in the event of a settlement
bank's continued failure to settle. A copy of the proposed
procedures was attached as Exhibit 2 to DTC's filing, which is
available for inspection and copying in the Commission's Public
Reference Room and through 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 applicable to DTC because the proposed rule
chnge will facilitate completion of daily money settlement at DTC in
the event of a settling bank's failure to settle with DTC. DTC has
informed the Commission that the proposed rule change will be
implemented consistently with the safeguarding of securities and funds
in DTC's custody or control or for which it is responsible because the
settling bank failure to settle procedures supplement DTC's existing
risk management controls.
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\4\ 15 U.S.C. 78q-1(b)(3)(A).
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(B) Self-Regulatory Organization's Statement on Burden on Competition
DTC perceives no impact on competition by reason of the proposed
rule change.
(C) Self-Regulatory Organization's Statement on Comments on the
Proposed Rule Change Received From Members, Participants or Others
DTC discussed the proposed rule change with several of its largest
settling banks. Written comments from DTC participants or others have
not been solicited or received on the proposed rule change.
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 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. 552, will be available for inspection and copying in the
Commission's Public Reference Section, 450 Fifth Street, NW,
Washington, DC 20549-0609. Copies of such filing also will be available
for inspection and copying at the principal office of DTC submissions
should refer to File No. SR-DTC-99-15 and should be submitted by August
27, 1999.
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. 99-20303 Filed 8-5-99; 8:45 am]
BILLING CODE 8010-01-M