Federal Register / Vol. 65, No. 116 / Thursday, June 15, 2000 / Notices 37585

1 15 U.S.C. 78s(b)(1).

2The Commission has modified the text of the

summaries prepared by DTC.

3For the majority of maturing debt securities, the

transfer agent is also the redemption agent.

Sometimes the issuer itself will serve as the

redemption agent or will appoint a third party other

than the transfer agent to serve as the redemption

agent.

4At this time, DTC will offer this service only for

non-engraved BEO certificates.

5A copy of the ‘‘matured BEO certificate

destruction request’’ is set forth as Exhibit B of

DTC’s proposed rule change, which is available

through the Commission’s Public Reference Branch

or through DTC.

6A copy of the ‘‘notice of destruction’’ is set forth

as Exhibit C of DTC’s proposed rule change, which

is available through the Commission’s Public

Reference Branch or through DTC.

7 DTC has informed the Commission’s staff that

for the time period that such microfilm records

must be maintained, whether by DTC or by a third

party on behalf of DTC, such records will: (1) Be

available at all times for examination by the

Commission and the appropriate regulatory agency

for immediate, easily readable projection/

enlargement of the microfilm; (2) be arranged and

indexed in a manner that permits immediate

location of any particular record; (3) be

immediat4ely provided upon request by the

Commission or appropriate regulatory agency; and

(4) be copied and stored separately from the original

microfilm records.

meeting on June 21, 2000, 9 a.m., at the

Board’s meeting room on the 8th floor

of its headquarters building, 844 North

Rush Street, Chicago, Illinois, 60611.

The agenda for this meeting follows:

(1) Report on the Quality Audit of the

Railroad Retirement Board

Occupational Disability Process

(2) Medicare Transition

The entire meeting will be open to the

public. The person to contact for more

information is Beatrice Ezerski,

Secretary to the Board, Phone No. 312–

751–4920.

Dated: June 12, 2000.

Beatrice Ezerski,

Secretary to the Board.

[FR Doc. 00–15244 Filed 6–13–00; 10:25 am]

BILLING CODE 7905–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–42912; File No. SR–DTC–

99–6]

Self-Regulatory Organizations; The

Depository Trust Company; Notice of

Filing of Proposed Rule Change

Relating to the Establishment of a

Matured Book-Entry Only Certificate

Destruction Service

June 8, 2000.

Pursuant to section 19(b)(1) of the

Securities Exchange Act of 1934

(‘‘Act’’),1 notice is hereby given that on

October 25, 1999, The Depository Trust

Company (‘‘DTC’’) filed with the

Securities and Exchange Commission

(‘‘Commission’’) the proposed rule

change (File No. SR–DTC–99–6) 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.

I. Self-Regulatory Organization’s

Statement of the Term of Substance of

the Proposed Rule Change

DTC proposes to establish a matured

book-entry-only (‘‘BEO’’) certificate

destruction service.

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 that 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

A. Self-Regulatory Organization’s

Statement of the Purpose of, and

Statutory Basis for, the Proposed Rule

Change

Under DTC’s current practices,

shortly before a debt security held by

DTC matures DTC sends to the

redemption agent: 3 (i) A DTC ‘‘letter of

transmittal;’’ (ii) a DTC ‘‘redemption

payment summary form;’’ and (iii) the

certificate(s) that represent the maturing

issue. This procedure is in place for

issues that are evidenced both by nonengraved certificates (typically, BEO

securities) and by engraved certificates.

In 1998, DTC shipped to redemption

agents certificates representing over

$100 billion in almost 40,000 maturing

BEO debt issues.

Under its current process, DTC

removes the securities certificate(s) from

its vault and delivers the certificate(s) to

a commercial courier service that in

turn delivers the certificates to the

redemption agent. There, the certificates

are processed in accordance with the

redemption agent’s individual policies

and practices. Historically, some agents

have contracted with commercial

vendors for the physical destruction of

such certificates.

Under DTC’s proposed rule change,

DTC will offer a new optional service to

redemption agents under which DTC

will destroy the BEO certificates in lieu

of shipping the certificates to the

redemption agent.4 Redemption agents

that wish to use this new service will

delivery to DTC an executed ‘‘matured

BEO certificate destruction request.’’ 5

DTC will continue to present the DTC

‘‘letter of transmittal’’ and the DTC

‘‘redemption payment summary form’’

but not the BEO certificate(s) to the

redemption agent in advance of the

issue’s maturity. In addition, DTC will

present to the agent a ‘‘notice of

destruction’’ 6 stating that DTC intends

to destroy the BEO certificate(s) in

accordance with the procedures set

forth in this rule filing as they may be

amended from time to time. If the

redemption agent requests in writing in

a timely manner that DTC not destroy

the certificates, DTC will honor the

agent’s request.

The matured BEO securities

certificates will be physically destroyed

on DTC’s premises only after: (i) DTC

has received the redemption proceeds in

full and (ii) an additional thirty days has

expired subsequent to DTC’s receipt of

such proceeds. Authorized DTC

personnel will oversee and witness the

destruction of the canceled certificates.

DTC will maintain detailed ledger

control over the BEO certificates

through the point of destruction. An

accurate record of all canceled

certificates will be maintained,

searchable by date of cancellation. Prior

to destruction, the maturing securities

certificates will be microfilmed or

imaged by DTC. DTC will retain the

microfilm or computer images of these

BEO certificates for ten years following

destruction of the certificates, and for

the first six months DTC will maintain

the microfilm or computer images in a

place that is easily accessible by

authorized DTC personnel.7 Copies of

the microfilm (at no fee) or eventually

images (at a fee) will be available to the

redemption agent during the ten years

following destruction. DTC will be

liable for gross negligence and willful

misconduct.

As a result of this new service, once

deposited in DTC, such BEO securities

certificates will never have to be

physically removed from DTC’s vault.

They would, therefore, be maintained in

a secure location that does not allow

access to the public or unauthorized

personnel. Additionally, by centralizing

the destruction of matured BEO debt

securities certificates, DTC will provide

uniform and consistent controls and

procedures (as well as physical

safeguards) for all such certificates in

the U.S. capital market.

DTC believes that this new service

will also reduce expenses and risks to

37586 Federal Register / Vol. 65, No. 116 / Thursday, June 15, 2000 / Notices

1 15 U.S.C. 78s(b)(1).

2The Commission has modified the text of the

summaries prepared by GSCC.

DTC and to the industry. DTC will

eliminate the shipping cost, insurance

cost, and risk associated with shipping

these certificates via commercial

couriers from DTC to the redemption

agent. In addition, DTC’s destruction of

the matured BEO certificates will

provide the industry with economies of

scale for destruction and recordkeeping

related to matured BEO certificates.

DTC believes that the proposed rule

change is consistent with the

requirements of Section 17A(b)(3)(A) of

the Act and the rules and regulations

thereunder applicable to DTC in that it

promotes the safeguarding of securities

and funds in DTC’s custody or control

or for which it is responsible.

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 that is not

necessary or appropriate in furtherance

of the purposes of the Act, in the public

interest, and for the protection of

investors.

C. Self-Regulatory Organization’s

Statement on Comments on the

Proposed Rule Change Received From

Members, Participants, or Others

DTC has discussed this rule change

proposal in its current form orally with

various DTC participants and transfer

agents. A number of those consulted

have expressed interest in the proposed

service.

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, 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

Room, 450 Fifth Street, NW,

Washington, DC. Copies of such filing

will also be available for inspection and

copying at the principal office of the

above-mentioned self-regulatory

organization. All submissions should

refer to the File No. SR–DTC–99–6 and

should be submitted by July 6, 2000.

For the Commission, by the Division of

Market Regulation pursuant to delegated

authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 00–15126 Filed 6–14–00; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–42911; File No. SR–GSCC–

00–06]

Self-Regulatory Organizations;

Government Securities Clearing

Corporation; Notice of Filing and

Immediate Effectiveness of Proposed

Rule Change Relating to Suspension

of the Discount in Fee Structure

June 8, 2000.

Pursuant to section 19(b)(1) of the

Securities Exchange Act of 1934

(‘‘Act’’),1 notice is hereby given that on

June 5, 2000, the Government Securities

Clearing Corporation (‘‘GSCC’’) 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 GSCC.

The Commission is publishing this

notice to solicit comments on the

proposed rule change from interested

parties.

I. Self-Regulatory Organization’s

Statement of the Terms of Substance of

the Proposed Rule Change

The proposed rule filing suspends

GSCC’s discount for comparison and

netting fees for buy-sell transactions.

II. Self-Regulatory Organization’s

Statement of the Purpose of, and

Statutory Basis for the Proposed Rule

Change

In its filing with the Commission,

GSCC 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. GSCC has prepared

summaries, set forth in sections (A), (B),

and (C) below, of the most significant

aspects of these statements.2

(A) Self-Regulatory Organization’s

Statement of the Purpose of, and

Statutory Basis for, the Proposed Rule

Change

Recently, GSCC’s Board and

Management reviewed the results of a

study of GSCC’s fee structure, the

fundamental part of which has

remained unchanged since the

inception of netting in 1989. In response

to this review, GSCC has determined it

appropriate to temporarily suspend its

discount for comparison and netting

fees for buy-sell transactions, effective

as of July 3, 2000.

The current discount was

implemented in 1995 and resulted in a

10 percent reduction in the fees charged

to members for comparison and netting

of their buy-sell transactions. At that

time, GSCC was focusing its

management and technological

resources on the imminent introduction

of comparison and netting services for

repo transactions. Because those

services are income-earning and selffunding, GSCC was in a position to

effectively return to its members the

surplus generated by its core services for

buy-sell transactions. The Board of

Directors had approved the discount in

1995 based on GSCC’s financial strength

and continued projections for

profitability with the intent that the

discount appropriateness be monitored

and reassessed periodically.

Since 1995, GSCC has continued to

steadily expand both the variety and

scope of the services it provides to

members. This trend will accelerate in

2000 and beyond as GSCC gradually

moves to a real-time messaging, risk

management, and settlement

environment and achieves other

important initiatives such as

establishing cross-margining

arrangements with multiple clearing

organizations.

The determination to temporarily

suspend the discount allows GSCC to