[Federal Register Volume 67, Number 249 (Friday, December 27, 2002)]
[Notices]
[Pages 79172-79174]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-32641]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-47061; File No. 600-19]


Philadelphia Depository Trust Company; Notice of Request for 
Comment and Order Granting Request for Withdrawal from and Cancellation 
of Registration as Clearing Agency

December 20, 2002.
    On September 23, 1983, pursuant to Section 17A of the Securities 
Exchange Act of 1934 (Exchange Act) \1\ and Rule 17Ab2-1,\2\ the 
Securities and Exchange Commission (Commission) registered

[[Page 79173]]

the Philadelphia Depository Trust Company (Philadep) as a clearing 
agency.\3\ Philadep is a wholly-owned subsidiary of the Philadelphia 
Stock Exchange, Inc. (Phlx). As a regional depository facility and 
limited purpose trust company organized under the laws of Pennsylvania, 
it offered its participants, among other services, automated, book-
entry transfer of securities positions, vault facilities, and 
securities lending services.\4\
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    \1\ 15 U.S.C. 78q-1.
    \2\ 17 CFR 240.17Ab2-1.
    \3\ Securities Exchange Act Release No. 20221 (September 23, 
1983), 48 FR 45167 (October 3, 1983).
    \4\ Id. at 45173.
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    On June 18, 1997, Philadep, Phlx, the Stock Clearing Corporation of 
Philadelphia (SCCP),\5\ the National Securities Clearing Corporation 
(NSCC) and The Depository Trust Company (DTC) entered into an Agreement 
in connection with Philadep's withdrawal from the securities depository 
business and SCCP's restructured and limited clearance and settlement 
business. In the Agreement, Philadep and SCCP agreed to certain 
provisions, including that: (i) Philadep would cease providing 
securities depository services; (ii) SCCP would make available to its 
participants access to the facilities of one or more other 
organizations providing depository services; (iii) SCCP would make 
available to SCCP participants access to the facilities of one or more 
other organizations providing securities clearing services; and (iv) 
SCCP would transfer to the books of such other organizations the CNS 
system open positions of SCCP participants on the books of SCCP. On 
August 11, 1997, the Commission instituted public administrative and 
cease-and-desist proceedings pursuant to Sections 19(h) and 21C of the 
Exchange Act against Philadep and SCCP (Administrative Order).\6\ On 
December 11, 1997, the Commission approved a proposed rule change which 
gave effect to the Agreement and which reflected Philadep's withdrawal 
from the depository business and SCCP's restructured and limited 
clearance and settlement business.\7\
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    \5\ SCCP is also a wholly-owned subsidiary of the Phlx. It is 
also registered as a clearing agency with the Commission.
    \6\ Among other things, the Administrative Order required 
Philadep to file a Section 19(b) proposed rule change describing its 
withdrawal from the securities depository business and to file with 
the Commission a request to withdraw its clearing agency 
registration. Securities Exchange Act Release Nos. 38918 (August 11, 
1997), (Administrative Proceeding File No. 3-9360); 39644 (February 
11, 1998), (Administrative Proceeding File No. 3-9360) (Order 
modifying August 11, 1997, Order).
    \7\ Securities Exchange Act Release No. 39444 (December 11, 
1997), 62 FR 66703 (December 19, 1997).
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    In a letter dated October 1, 2002, Philadep requested that the 
Commission permit Philadep to withdraw its registration as a clearing 
agency.\8\ Philadep stated that its request for withdrawal of its 
clearing agency registration was being made pursuant to the remedial 
sanctions imposed in the Order Instituting Administrative Proceedings. 
Philadep requested that its withdrawal as a registered clearing agency 
be made effective as of December 31, 2002, in order to coincide with 
its dissolution as a trust company under the laws of the Commonwealth 
of Pennsylvania.
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    \8\ Letter from Meyer S. Frucher, Chairman, Philadep, and 
Chairman, Phlx, to Jerry Carpenter, Assistant Director, Division of 
Market Regulation, Commission. (October 1, 2002).
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    As a condition of Philadep's withdrawal as a registered clearing 
agency, Phlx represents that it will ``maintain all documents, books 
and records in Philadep's possession as required by Rule 17a-1 under 
the Exchange Act for a period of 5 years following the Effective Date 
[of the cancellation of Philadep's registration as a clearing 
agency].'' \9\ In addition, Phlx represents that all known outstanding 
claims against Philadep as of the effective date of its withdrawal will 
have been researched and, where appropriate, paid.\10\
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    \9\ Id.
    \10\ In connection with Philadep's voluntary plan of 
dissolution, Philadep and Phlx entered into an Assumption and 
Guarantee Agreement dated February 21, 2001, whereby Phlx assumes 
certain obligations and liabilities of Philadep. As part of 
Philadep's request for withdrawal as a registered clearing agency, 
Phlx has reaffirmed to the Commission its undertakings under the 
Assumption and Guarantee Agreement.
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    Philadep represents that it has been diligent and thorough in 
researching and where appropriate has paid, all known outstanding 
claims. Philadep has represented that it has sent letters to all former 
Philadep participants and known creditors giving notice of its 
dissolution and that notice of the dissolution was published in the 
Philadelphia Daily News and the Legal Intelligencer.\11\
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    \11\ E-mail from Murray L. Ross, Vice President and Secretary, 
Philadep, SCCP, and Phlx, to Jerry Carpenter, Assistant Director, 
Division of Market Regulation, Commission. (December 12, 2002).
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    Section 19(a)(3) of the Exchange Act provides in part that a self-
regulatory organization may ``withdraw from registration by filing a 
written notice of withdrawal with the Commission.'' Section 19(a)(3) 
also provides that in the event any self-regulatory organization is no 
longer in existence or has ceased to do business in the capacity 
specified in its application for registration, ``the Commission, by 
order, shall cancel its registration.'' Based upon representations made 
by Philadep to the Commission and based upon the undertakings discussed 
herein, the Commission has determined that granting Philadep's request 
for withdrawal from registration would be consistent with the 
requirements of the Act. Furthermore, because Philadep has ceased to do 
business in the capacity specified in their registration application, 
the Commission is canceling its registration effective December 31, 
2002.
    The Commission believes that it is appropriate as a part of this 
registration cancellation to require Phlx to comply in substance with 
the recordkeeping provisions of Rule 17a-1(a) with respect to the 
records of Philadep.\12\ Specifically, Phlx, as it has consented to do, 
will maintain all documents, books, and records (collectively records) 
which are required to be maintained under Rule 17a-1(a) and which are 
in Philadep's possession, will produce such records at the request of 
any representative of the Commission, and will maintain such records 
for a period of 5 years from the effective date of the cancellation of 
Philadep's registration as a clearing agency.
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    \12\ Exchange Act Rule 17a-1 requires a clearing agency to: (1) 
``Keep and preserve at least one copy of all documents, including 
all correspondence, memoranda, papers, books, notices, accounts, and 
other such records as shall be made or received by it in the course 
of its business as such and in the conduct of its self-regulatory 
activity;'' (2) ``keep all such documents for a period of not less 
than five years, the first two years in an easily accessible 
place;'' and (3) ``upon request of any representative of the 
Commission, promptly furnish to the possession of such 
representative copies of any documents required to be kept and 
preserved by it. * * *'' 17 CFR 240.17a-1.
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    The Commission believes that it would be appropriate and consistent 
with the policies expressed in Section 19 to notify interested persons 
about and to solicit public comment concerning the cancellation of 
Philadep's registration as a clearing agency. To assist the Commission 
in determining whether it should allow the cancellation to become 
effective as set forth in this order or whether it should modify this 
order, interested persons are invited to submit, until December 30, 
2002, written data, views, and arguments concerning this order and the 
undertakings discussed herein. Comments should be submitted in 
triplicate to Jonathan G. Katz, Secretary, Securities and Exchange 
Commission, 450 5th Street, NW, Washington, DC

[[Page 79174]]

20549-0609. Comments may also be submitted electronically at the 
following e-mail address: [email protected]. All comment letters 
should refer to File No. 600-19. This file number should be included on 
the subject line if e-mail is used. Comment letters will be available 
for public inspection and copying in the Commission's Public Reference 
Room, 450 5th Street, NW, Washington, DC. Electronically submitted 
comment letters also will be posted on the Commission's Web site 
(http://www.sec.gov).\13\
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    \13\ We do not edit personal, identifying information such as 
names, or e-mail addresses, from electronic submissions. Submit only 
information you wish to make publicly available.
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    It is therefore ordered that:
    (1) Effective December 31, 2002, Philadep's registration as a 
clearing agency under Section 17A of the Exchange Act and Rule 17Ab2-1 
thereunder is terminated and
    (2) Phlx for a period of 5 years from the effective date of the 
termination of Philadep's registration as a clearing agency will 
maintain all the records required to be maintained pursuant to Rule 
17a-1(a) which are in Philadep's possession and will produce such 
records upon the request of any representative of the Commission.

    By the Commission.
J. Lynn Taylor,
Assistant Secretary.
[FR Doc. 02-32641 Filed 12-26-02; 8:45 am]
BILLING CODE 8010-01-P