... ''l
 

UNITED STATES 

SECURITIES AND EXCHANGE COMMISSION 

WASHINGTON. D.C. 20549 

DIVISION OF
 

INVESTMENT MANAGEMENT
 

Apri 24, 1996 "
 

-, .... 

VIA FACSIMLE AN AI MAI
 

Mr. GE Anderson
 

'MJ-'~~C4 L Lf 1!. i

Executive Officer BU /1 -- 5

Financial Services Board 

446 Rigal Avenue :BIL YMlf6 

South Erasmusrand 0181 

P.O. Box 35655
 

Menlopark Pretoria RSA 0102 

SOUT AFCA 

"-

Dea Mr. Anderson:
 "- i- Tl letter is in response to your facsimile of Apri 
 16, 1996 and letter dated Februar 

12, 1996. You reuest inormation on Rule 17f-5 under the Investment Company Act of
 

1940 ("1940 Act"), as well as other relevant provisions concerng the reuirments to 

beome an eligible foreign custod for U.S. investment companes.
 

Section 17(f) of the 1940 Act sets forth the custod reuirments for U.S.-registered 

management investment companes ("funds"). Rule 17f-5 thereunder permits funds to 

maitain their assets with cert categories of "eligible foreign custodians. 
 II These include 

foreign ban that have more than $200 milon shareholders' equity; majority-owned 

subsidiares of U.S. ban that have more than $100 millon shareholders' equity;
 

trasnational foreign securities depositories and clearing agencies; and certin centralized
 

securities depositories and cleag agencies. 

Based on the nature of the activities of the Centra Depository Limited ("CD"), 

subpargraphs (c)(2)(il) and (c)(2)(iv) of Rule 17f-5 seem most relevant to your inquiry. i 

i Your letter states that the Centr Depository Limited ("CDIt) is the only central 

securities depository registered under South Africa's Safe Deposit of Securities Act, 1992. 

The CD currently holds only debt securities, but negotiations are under way to detennine 
, r1. .... 

Mr. GE Anderson
 

April 24, 1996
 

Page 2
 

Rule 17f-5(c)(2)(iü) defines the term "eligible foreign custodian" to include a "securities 

depository or clearing agency, incorporated or organized under the laws of a country other 

than the United States, which operates the central system for handling of securities or 

equivalent book-entries in that country. ,,2 Rule 17f-5(c)(2)(iv) defines an eligible foreign 

custodian as a "securities depository or cleag agency, incorporated or organized under the 

laws of a country other than the United~States which operates a trsnational system for the
 

centr handlig of securities or equivalent book-entres. " -,
 

Rule 17f-'s is self-operative and does not require a foreign institution that satisfies the

defIntion of "eligible foreign custodia 
 it to obta the approval of the U.S. Securities and

Exchange Commssion to serve as an eligible foreign custodi for U.S.-registered 

investment companes. If the CD is the only centr depsitory for handlg securities or 

equivalent book-entries in South Africa, it fals withi the definition of eligible foreign 

custodian and does not nee the approval of the Commssion to provide custodial services to 

U.S. funds.
 

Foreign custody argements with foreign securities depositories or cleang agencies 

that do not operate the centra system for handlig securities or equivalent book-entries in a 

"­ "­

.........-... . .,.,.,
 .;:?:~~\~ 

whether it wil accept equity certcates for custodial purposes.
 

2 Section 3 


(a) (23) (A) of the Securities Exchange Act of 1934 defmes "cleag agency" generay as an intermedar that makes-payments or deliveries in connection with 

trsactions I. securities. The term includes any entity, such as a securities depsitory, that
 

(1) acts as a custodi.of securities in connection with a system for the centr handlg of 

securities whereby al sécuiiûeS 'of a parcular class or series of an issuer depsited withi 

the system ar trted as fungible and may be trsferr, loaned, or pledged by
 

bookkeeping without physica delivery of securities certcates, or (2) otherwise permts or 

faciltates the settement of securities without physica delivery of securities certcates. 

"';. Rule 17f-4 defmes a "securities depository" as a "system for the centr handlg of
 

seCurities where al securities of any paricular class or series of any issuer deposited withi 

the system are treated as fungible and may be trsferred or pledged by bookkeeping entry 

without physical delivery of securities. " 

Rule 17f-5(c)(2)(ii) refers to both securities depositories and clearing agencies
 

because a foreign secunties depository may be known as a "clearing agency"; in certin 

countries. See Investment Company Act ReI. No. 13724 at n. 31 
 (Jan. I7, 1984) (reproposing Rule 17f-5). 
\. ~
 ,. 

Mr. GE Anderson
 

April 24, 1996
 

Page 3
 

given country are evaluated on a case-by-case basis.3 If the CD does not satisfy the 

"eligible foreign custodian" requirements under Rule 17f- 5, we suggest that you consult an 

attorney familar with the U.S. federa securities laws. 

On July 27, 1995, the Commiss-ton proposed for public comment amendments to Rule 

17f-5 that would, among other thigs~àmend the defmition of "eligible foreign custodia." I 

am sending via ai mai a copy of the release proposing these amendmeiÌts, a copy of Rule
 

17f-4 and Section 3 
 (a) (23) (A) of the SeCurities Exchange Act of 1934, and two no-action letters, Jardine Fleming Chia Region Fund, Inc. and Camar de Liquidacao e Custodia Sf A. 

Trasmitted with this fax is a copy of Section 17(t) and the current Rule 17f-5 for your 

inormation. 

I hope that you fmd this inormation helpfuL. If you have any further questions, 

please contact this offce at (202) 942-0660 or (FAX) (202) 942-9659. 

Sincerely, 

~r&0l~ "­ . ;l"....,":..... . .~".. ..- .'G~ i'. .' Tl....e.:L~~,.1IÆcMian ,.., .:.. '; . "::. f.'.J.:~il:;~~;;¡f;~~
 00-. .&~~~ ". ~Y~"1'. .~" 

Specia Counsel . 

Attchments 

cc: Mr. Michael D. Mann
 

Director, Offce of International Affais 

3 See, ~,Ma1aysian Centr Depository Sdn. Bhd. (pub. avai. May 19, 1993); 

Jardine Fleming Chia Regìon Fund, Inc. and Custody of B Shares Tradig on the Shenzhen 

and Shanghai Securities 
 Exchanges (both pub. avai. Apr. 26, 1993); Camar de Liquidacao 

e Custodia S/A and Bolsa de Valores de Sao Paulo (both pub. avai~ Oct. 28, 1992). 
, '-" 'j(


16/04 '96 14:37 ß' RF¡ FSn I4 001
 

T 

--\.' Ó I I L
 ... -1 r¡i '

To 

Aiin Mr Peter Gera FAX 

Compay

Malappy SECUTI AND EXCHGE COMMSSON. USA 

from'
 

Van Mr GE Anderson
 TI 

tyd 14b20 

Date 

Datm 16 ri 1996 

Fu No. 091 - 202 - 942 9524 FINANCIAL SERVICES BOARD

Pae¡ RAAD OP..FINANSI~LE DIENSTE

Blld&ye TEL(Oi2) 347-0660 FAX (O~) a47.D221
 

Dear Sir 

The telephone converson between yourelf an Mr Gerr Anerson of th Office. with 

regar to a no acton lettr for a Cen Secties Depository, refers.
 

It wi be highly appreciate if you co urently send us either by fa or ema a copy of 

Rule 17f~S as promugated uner th Inves1ent Company Act, 1940, as well as copies of 

any other related Rues or Provisions which ~ referredtó''!With the roiint of tte said 

Rue 17f-5. :..

.. . .' :-~; ;.:; Th fax nuber an e-má addss':äi ~ follows: ;., 

In Fax: +27-12-347-u21
 '"~.

: ~.;.
 

Em: fs~so10.pipex.co_za ",' 

Your assisce in th rega is hiy appriate.
 

Your faithly
 

¡l~ 

."" 

R~Qno/ ll"o' 
1l 

12/02 . 96 14: 12 '6453964 RFD ~OOl 

flDÇ FINANCIAL SERVICES BOARD
 

446 Rigel Avanue South EræmUlrand 01B1 PO 60)35655 MCl1lopir1Pretoria RSA 0102 t\~ T$\ (012) 347-0660 Int +27-120370660 Ñlx (0121 347.01 

Enqliries: GE Anderson 

Our ref: 23/1/17/31 

Date: 12 February 1996 

ATTNTION MR MICHAL D. MAN 

The Director 

Ofce of International Affirs 

United States SecuriIes and Exchange Commission 

Washington DC 

UNITED STATES OF AME~CA 

PER FACSIMILE 091 202 942 9524 

Dear Mr Mann 

NO ACTION LEITR FOR CENTR SECURIES DEPOSITORY 

MDJI/1 i

~2t 

r~ 

X~I/

(? f P­i 

The Central Depository Limited ("e CD") is the only centrl securiies deposry regIstered 

in temis of the Saf Deposit af Señt Act 1992, which came Into operation In 1993 and
 

is regula by this Ofce. Alough currnt ony bond (debt secries) are lodgéd wIth
 

the CD, negotations are under way for the lodging of equit certcates for custodial 

purposes. As par of the fntemationalsation dnve it has become necssar that the CD be 

regnised. where applicale, by foreign regulators and In vIew of this it will be appreciated 

if you would forwrd the details of 
 the pmædure to be followed In oreer to obtain a uno acton 

letter" issued by the Securiie and Exange CommIssion. 

It is understood that similar"no acton lett" have already been granted to both Frech and 

Gennan depositones and in order to faaTJtte th CO.s appli~tion in this regard a copy of i 

such a document will also be apprecated. Any furter advice that you may deem necesary I 

in this regard to enable the application to be prOceed wi speedily wil be welcomed. 

I 

J 

Yours faitlly
 

~I 

i

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