4088 Federal Register / Vol. 62, No. 18 / Tuesday, January 28, 1997 / Notices

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

2Securities Exchange Act Release No. 38007

(December 2, 1996), 61 FR 64774.

3The refusal to pay deadline was set at 3:00 p.m.

by the industry during the period when deliveries

of MMIs were made physically.

4Currently, throughout the processing day a

participant is allowed to use all payment credits it

has received that day in connection with MMI

programs, other than the single largest net payment,

in order to meet its net debit cap and collateral

monitor requirements.

using one or more intermediate special

purpose subsidiaries (collectively,

‘‘PSCo Subs’’). As special purpose

subsidiaries to be formed for the

primary purpose of acquiring an interest

in Foreign Utility, PSCo Subs will

derive no income from United States

operations and will not be public-utility

company operating in the United States.

PSCo Subs will not engage in any

business other than the acquisition of

Foreign Utility, supervision of PSCo’s

investments in Foreign Utility and the

participation in the management and

operations of Foreign Utility.

PSCo states that it will not seek

recovery through higher rates to its

customers or the customers of its publicutility subsidiary, Cheyenne Light, Fuel

and Power Company (‘‘CLF&P’’), to

compensate it for any possible loss that

it might sustain by reason of the

proposed Foreign Utility investment or

for any inadequate returns on such

investment. PSCo has further

undertaken to apply to the Colorado

Public Utilities Commission and CLF&P

has undertaken to apply to the

Wyoming Public Service Commission,

which have jurisdiction over the

respective companies’ retail electric and

gas rates, for certification that each

commission has the authority and

resources to protect ratepayers subject to

its jurisdiction and that it intends to

exercise its authority in connection with

the proposed Foreign Utility

investment. PSCo represents that its

domestic utility operations will be fully

separated from its foreign operations.

As a result of the proposed

acquisition, Foreign Utility will be a

public-utility subsidiary of PSCo within

the meaning of section 2(a)(8) of the Act.

PSCo requests an unqualified order

under section 3(b) of the Act exempting

Foreign Utility from all provisions of the

Act applicable to it as a subsidiary

company of PSCo. The application

states that, if an unqualified exemption

under section 3(b) is granted, the PSCo

Subs will rely upon the exemption

provided by rule 10(a)(1) under the Act

with respect to Foreign Utility, and

PSCo will rely upon rule 11(b)(1) to

provide an exemption from the approval

requirements of sections 9(a)(2) and 10

to which it would otherwise be subject.

For the Commission, by the Division of

Investment Management, pursuant to

delegated authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 97–1956 Filed 1–27–97; 8:45 am]

BILLING CODE 8010–01–M

Sunshine Act Meeting

Agency Meeting

Notice is hereby given, pursuant to

the provisions of the Government in the

Sunshine Act, Pub. L. 94–409, that the

Securities and Exchange Commission

will hold the following open meeting

during the week of January 27, 1997.

An open meeting will be held on

Tuesday, January 28, 1997, at 10:00

a.m., in Room 1C30. The closed

meeting, previously announced in 62 FR

3546, January 23, 1997, will follow the

open meeting.

The subject matter of the open

meeting scheduled for Tuesday, January

28, 1997, at 10:00 a.m., will be:

Consideration of whether to issue a release

adopting amendments to revise Rule 4–08 of

Regulation S–X to provide for specific

disclosures of accounting policies for certain

derivative instruments and to add Item 305

to Regulation S–K to provide for disclosure

of market risk information related to certain

derivative and other instruments. For further

information, please contact Russell Mallett in

the Office of the Chief Accountant at (202)

942–4400.

Commissioner Wallman, as duty

officer, determined that no earlier notice

thereof was possible.

At times, changes in Commission

priorities require alterations in the

scheduling of meeting items. For further

information and to ascertain what, if

any, matters have been added, deleted

or postponed, please contact: The Office

of the Secretary at (202) 942–7070.

Dated: January 24, 1997.

Jonathan G. Katz,

Secretary.

[FR Doc. 97–2202 Filed 1–24–97; 12:27 pm]

BILLING CODE 8010–01–M

[Release No. 34–38186; File No. SR–DTC–

96–21]

Self-Regulatory Organizations; The

Depository Trust Company; Order

Granting Approval of a Proposed Rule

Change Relating to the Reversal of

Reclamations by Issuing and Paying

Agents

January 21, 1997.

On November 5, 1996, The Depository

Trust Company (‘‘DTC’’) filed with the

Securities and Exchange Commission

(‘‘Commission’’) the proposed rule

change (File No. SR–DTC–96–21)

pursuant to Section 19(b)(1) of the

Securities Exchange Act of 1934

(‘‘Act’’).1 Notice of the proposal was

published in the Federal Register on

December 6, 1996.2 No comment letters

were received. For the reasons

discussed below, the Commission is

granting approval of the proposed rule

change.

I. Description

The rule change offers a new service

that will allow issuing and paying

agents (‘‘IPA’’) to direct DTC to reverse

all matched reclamations for a particular

program which are made after 3:00 p.m.

and which are attributable to issuer

failure. Under DTC’s money market

instruments (‘‘MMIs’’) program, IPAs act

as agents for MMI issuers. As such, IPAs

issue MMIs on the issuers’ behalf, and

DTC automatically processes income

and maturity payments to the IPAs’

accounts. Both the credits generated

from the issuances and the debits

generated from income and maturity

payments are netted into the IPA’s DTC

settlement obligation.

An IPA may issue MMIs and make

periodic payments of income,

redemption, or other proceeds on MMIs

upon presentment throughout the day.

An IPA is able to reverse issuances and

payments for a particular program in the

event of an issuer’s failure by giving

notice to DTC by 3:00 p.m. of the IPA’s

refusal to pay. This reversal mechanism

is designed to make the MMI market

more efficient by allowing IPAs to make

issuances and payments throughout the

day with respect to a particular MMI

program while providing the IPAs with

the protection of being able to reverse

until 3:00 p.m. these issuances and

payments in the event that it becomes

apparent that an issuer will be unable to

honor its obligation under a particular

MMI program.3 If this mechanism were

not in place, an IPA would have to wait

until it received funds from an issuer

before making any payments to avoid

taking the credit risk and being

potentially at risk for the funds it had

distributed throughout the day. This

process permits participants having

positions in the MMIs to use credits for

payments on the MMIs throughout the

day.4

To facilitate the conversion to the

same day funds settlement (‘‘SDFS’’),

DTC implemented a new processing

schedule. As part of the new processing

schedule, DTC introduced an extended
Federal Register / Vol. 62, No. 18 / Tuesday, January 28, 1997 / Notices 4089

5The end of the reclamation period is

approximately 3:30, but this deadline may vary

slightly depending upon the timing of the release

of other DTC controls.

6 DTC’s Rule 12 which governs insolvency

provides: ‘‘An issuer of MMI securities subject of

any transaction in the MMI Program shall be treated

by [DTC] in all respects as insolvent in the event

that the issuer is determined to be insolvent by any

agency which regulates such issuer or in the event

of the entry of a decree or order by a court having

jurisdiction in the premises adjudging the issuer a

bankrupt or insolvent, or approving as properly

filed a petition seeking reorganization, arrangement,

adjustment or composition of or in respect of the

issuer under the Federal Bankruptcy Code or any

other applicable Federal or State law or appointing

a receiver, liquidator, assignee, trustee, sequester (or

other similar official) of the issuer or of any

substantial part of its property, or ordering the

winding up or liquidation of its affairs or the

institution by the issuer of proceedings to be

adjudicated a bankrupt or insolvent or the consent

by it to the institution of bankruptcy or insolvency

proceedings against it, or the filing by it of a

petition or answer or consent seeking

reorganization or relief under the Federal

Bankruptcy Code or any other applicable Federal or

State law, or the consent by it to the filing of any

such petition or to the appointment of a receiver,

liquidator, assignee, trustee, sequester (or other

similar official) of the issuer or of any substantial

part of its property, or the admission by it in writing

of its inability to pay its debts generally as they

become due, or the taking of corporate action by the

issuer in furtherance of any such action and,

notwithstanding the foregoing, upon the filing by

the issuer of a petition seeking reorganization,

arrangement, adjustment or composition of or in

respect of the issuer under the Federal Bankruptcy

Code or any other applicable Federal or State law,

or the filing against it or any such petition, at any

time [DTC] receives notice thereof, either written or

oral and from whatsoever source and, without

awaiting any further adjudication, consent thereto,

acceptance or approval of such filing, determines to

its reasonable satisfaction that such has occurred.’’

7 15 U.S.C. 78q–1(b)(3)(F)

8 17 CFR 200.30–3(a)(12).

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

2The Commission has modified the text of the

summaries prepared by OCC.

reclamation period that allowed

participants to reclaim deliveries (i.e.,

return deliveries) until 3:30 p.m.5 The

reclamation procedure is designed to

provide the recipient of a delivery with

the opportunity to reject the delivery.

Prior to this amendment, a participant

could unwind through the reclamation

process issuances previously made by

the IPA between 3:00 p.m. and 3:30

p.m., but an IPA was not able to unwind

after 3:00 p.m. income and maturity

payments it had made. The rule change

extends the IPA’s refusal to pay

opportunity with respect to

reclamations made to its account

between 3:00 p.m. and the end of the

reclamation period. The rule change

allows IPAs to instruct DTC to reverse

those reclaims that are processed after

3:00 p.m. in the event that the IPA

believes the reclaims are associated with

the issuer’s insolvency. The IPA is able

to request the reversal of these

reclamations by giving DTC oral notice

within fifteen minutes after the end of

the reclamation period. Within thirty

minutes after the end of the reclamation

period, the IPA is required to provided

DTC with written notice of the basis for

which DTC could treat the issuer as

insolvent under its rules.6 A copy of the

IPA’s written notice would then be

provided to all participants.

II. Discussion

Section 17A(b)(3)(F) provides that the

rules of a clearing agency must be

designed to assure the safeguarding of

securities and funds which are in the

custody or control of the clearing

agency.7 The Commission believes that

the rule change is consistent with DTC’s

obligations under the Act because it

enables IPAs to make issuances and

payments with respect to a particular

MMI program throughout the day while

still affording the IPAs certain

protections in the event of an issuer

default. By extending IPA’s ability to

reverse payments in the event of issuer

default, the proposal should result at the

end of the day in a decrease in the

number of money transfers that have

been made to participants but to which

the participants are not entitled because

of issuer defaults while still providing

for credits to be made available to

participants during the day. As a result,

the proposal should help facilitate the

clearance and settlement of securities

transactions, while still providing for

the safeguarding of securities and funds

which are in the custody or control of

the clearing agency or for which it is

responsible.

III. Conclusion

On the basis of the foregoing, the

Commission finds that the proposed

rule change is consistent with the

requirements of the Act and in

particular Section 17A of the Act and

the rules and regulations thereunder.

It is therefore ordered, pursuant to

Section 19(b)(2) of the Act, that the

proposed rule change (File No. SR–

DTC–96–21) be and hereby is approved.

For the Commission by the Division of

Market Regulation, pursuant to delegated

authority.8

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 97–2011 Filed 1–27–97; 8:45 am]

BILLING CODE 8010–01–M

[Release No. 34–38188; File No. SR–OCC–

96–18]

Self-Regulatory Organizations; The

Options Clearing Corporation; Notice

of Filing of Proposed Rule Change To

Revise Rules To Include Limited

Cross-Guarantee Agreements

January 21, 1997.

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

Securities Exchange Act of 1934

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

December 9, 1996, The Options Clearing

Corporation (‘‘OCC’’) 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 OCC. The

Commission is publishing this notice to

solicit comments from interested

persons on the proposed rule change.

I. Self-Regulatory Organization’s

Statement of the Terms of Substance of

the Proposed Rule Change

The purpose of the proposed rule

change is to revise OCC’s by-laws and

rules to authorize OCC to execute

‘‘limited cross-guarantee agreements’’

with other clearing agencies.

II. Self-Regulatory Organization’s

Statement of the Purpose of, and

Statutory Basis for, the Proposed Rule

Change

In its filing with the Commission,

OCC 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. OCC 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

The purpose of the proposed rule

change is to revise OCC’s by-laws and

rules to authorize OCC to execute

‘‘limited cross-guarantee agreements’’

with other clearing agencies. A limited

cross-guarantee agreement is an

agreement between two or more clearing

agencies that provides that if the parties

to the agreement must liquidate the

assets of an entity that is a member of

two or more of the agencies (‘‘common

member’’) and at least one of the

clearing agencies liquidates the assets of