53680 Federal Register / Vol. 62, No. 199 / Wednesday, October 15, 1997 / Notices

5 In approving this rule, the Commission notes

that it has considered the proposed rule’s impact on

efficiency, competition, and capital formation. 15

U.S.C. 78c(f).

6 15 U.S.C. 78f(b)(5).

7 15 U.S.C. 78s(b)(2).

8 15 U.S.C. 78s(b)(2).

9 17 CFR 200.30–3(a)(12)

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

2The closing date may be adjusted by the mutual

consent of the parties to the Agreement.

3The Commission has modified the text of the

summaries prepared by Philadep.

C. Self-Regulatory Organization’s

Statement on Comments on the

Proposed Rule Change Received From

Members, Participants or Others

The Exchange has neither solicited

nor received written comments on the

proposed rule change.

III. Solicitation of Comments

Interested persons are invited to

submit written data, views and

arguments concerning the foregoing.

Persons making written submissions

should file six copies thereof with the

Secretary, Securities and Exchange

Commission, 450 Fifth Street NW.,

Washington, DC 20549. 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 20549. Copies of such

filing will also be available for

inspection and copying at the principal

office of the NYSE. All submissions

should refer to File No. SR–NYSE–97–

27 and should be submitted by

November 5, 1997.

IV. Commission’s Findings and Order

Granting Accelerated Approval of

Proposed Rule Change

The Commission finds the proposed

rule change is consistent with the

requirements of the Act and the rules

and regulations thereunder applicable to

a national securities exchange.5

Specifically, the Commission believes

the Exchange’s proposal to extend the

effectiveness of the pilot program until

November 28, 1997 is consistent with

Section 6(b)(5) of the Act 6 because the

extension will permit the NYSE to

further study the impact of the revised

Allocation Policy and Procedures. The

Commission notes that the extension is

limited in duration. The Commission

believes that it is reasonable to extend

the pilot program for a short period of

time to allow the Exchange further time

to determine whether the revised

allocation procedures are fair to all

market participations, including listing

companies, specialist units and public

investors. The Commission expects the

NYSE to submit any supplemental

information it has on the pilot program,

along with any request to modify,

extend, or permanently approve the

pilot by October 17, 1997.

The Commission finds good cause for

approving the proposed rule change

prior to the 30th day after publication of

the proposed rule change in the Federal

Register. The Commission notes that

accelerated approval will enable the

Exchange to continue the Allocation

Policy and Procedures pilot program on

an uninterrupted basis. The

Commission further notes that it has

previously solicited comments on the

pilot program and no comments were

received. Further, the extension of the

existing pilot is of limited duration,

only until November 28, 1997. For the

foregoing reasons, the Commission

believes that good cause exists pursuant

to Section 19(b)(2) of the Act 7 to

approve the proposed rule change on an

accelerated basis.

It is therefore ordered, pursuant to

Section 19(b)(2) of the Act,8 that the

proposed rule change (SR–NYSE–97–

27) is hereby approved on an

accelerated basis until November 28,

1997.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.9

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 97–27283 Filed 10–14–97; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–39221; File No. SR–

Philadep–97–04]

Self-Regulatory Organizations;

Philadelphia Depository Trust

Company; Notice of Filing of Proposed

Rule Change Relating to Ceasing

Activity as a Securities Depository

October 8, 1997.

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

Securities Exchange Act of 1934

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

September 25, 1997, Philadelphia

Depository Trust Company (‘‘Philadep’’)

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

Philadep. 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

Under the proposed rule change,

Philadep will cease to engage in

securities depository services. Philadep,

Stock Clearing Corporation of

Philadelphia (‘‘SCCP’’), and their parent

organization, Philadelphia Stock

Exchange, Inc. (‘‘PHLX’’) entered into an

agreement dated as of June 18, 1997

with The Depository Trust Company

(‘‘DTC’’) and the National Securities

Clearing Corporation (‘‘NSCC’’)

(‘‘Agreement’’). Under the Agreement,

DTC and NSCC will assist PHLX in

winding down the operation of its full

clearing agency services by offering

SCCP participants and Philadep

participants an opportunity to become

members of NSCC or DTC, as the case

may be. In consideration for DTC’s and

NSCC’s assistance, PHLX, SCCP, and

Philadep have agreed not to engage in

the securities clearing and depository

business for five years, except as

otherwise specified in the Agreement.

The parties to the Agreement

tentatively have scheduled the closing

date for the Agreement to be November

14, 1997.2 SCCP and Philadep have

informed their participants of the

Agreement and are taking measures to

ensure the orderly transition of

participants to alternative clearing and

depository arrangements.

II. Self-Regulatory Organization’s

Statement of the Purpose of, and

Statutory Basis for, the Proposed Rule

Change

In its filing with the Commission,

Philadep 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.

Philadep has prepared summaries, set

forth in sections (A), (B) and (C) below,

of the most significant aspects of these

statements.3

(A) Self-Regulatory Organization’s

Statement of the Purpose of, and

Statutory Basis for, the Proposed Rule

Change

PHLX has decided to limit its

clearance and settlement business and
Federal Register / Vol. 62, No. 199 / Wednesday, October 15, 1997 / Notices 53681

4SCCP has submitted a rule filing [File No. SR–

SCCP–97–04] describing the revisions and

limitations of its clearing services.

5 15 U.S.C. 78f(b)(5).

6 15 U.S.C. 78q–1.

7 17 CFR 200.30–3(a)(12).

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

to close its securities depository

business offered through its wholly

owned subsidiaries, SCCP and Philadep,

respectively, in order to focus its

resources on the operations of the

exchange itself.4 The purpose of the

proposed arrangement is to enable

PHLX, SCCP, and Philadep to achieve

this objective while affording

participants of these clearing agencies

the opportunity to become participants

of NSCC or DTC, as the case may be, or

to utilize the services of other clearing

or depository service providers.

PHLX, SCCP, and Philadep will

cooperate with NSCC and DTC to assure

an orderly transition with respect to the

wind down of Philadep’s business. In

this regard, PHLX and Philadep will

assist DTC and sole Philadep

participants in having the participants

become DTC participants to the extent

that they meet DTC qualifications and

desire to become DTC participants. The

parties will cooperate to carry out the

orderly transfer of securities from the

custody of Philadep to the custody of

DTC for sole Philadep participants that

qualify and authorize such transfers.

Philadep believes that the proposed

rule change is consistent with Section

6(b)(5) 5 of the Act because it will enable

PHLX to concentrate its efforts on its

core business, the exchange itself. This

strategic initiative will, in turn, remove

impediments and perfect the

mechanism of a free and open market

and a national market system.

Philadelp also believes that the

proposal is consistent with Section 17A

of the Act 6 and the rules and regulations

thereunder because it (i) will remove

impediments to and perfect the

mechanism of a national system for the

prompt and accurate clearance and

settlement of securities transactions and

(ii) will reduce the fragmented nature of

the securities custody business to more

closely integrate the industry which

may thereby help in the safeguarding of

funds which are in the custody and

control of a clearing agency or for which

it is responsible. Specifically, the

proposed arrangements will help reduce

the risk associated with having

interfaces, will provide for more

efficient and less expensive clearing and

depository services, and thereby will

facilitate the prompt and accurate

clearance and settlement of such

transactions.

(B) Self-Regulatory Organization’s

Statement on Burden on Competition

Philadelp believes that the proposed

rule change will not impose any burden

on competition not necessary or

appropriate in furtherance of the

purposes of the Act. Securities

depositories registered under Section

17A of the Act are not conventional

businesses but utilities created to serve

members of the securities industry for

the purpose of providing certain

services that are ancillary to the

businesses in which industry members

compete with one another. Operating a

securities depository requires a

substantial and continuing investment

in infrastructure, including securities

vaults, telecommunications links with

users, data centers, and disaster

recovery facilities, in order to meet the

increasing needs of participants and to

respond to regulatory requirements. As

such, several exchanges, including the

Boston Stock Exchange, the Pacific

Exchange, and the Chicago Stock

Exchange have terminated the operation

of their securities depositories.

After consummation of the proposed

arrangements, securities industry

members will continue to have access to

high quality, low cost depository

services provided under the mandate of

the Act. The overall cost to the industry

of having such services available should

be reduced thereby permitting a more

efficient and productive allocation of

industry resources. Furthermore,

because most of a depository’s interface

costs must be mutualized, thereby

requiring some participants to subsidize

costs incurred by others, Philadep’s

withdrawal from maintaining

depository facilities should reduce costs

to participants and thereby should

remove impediments to competition.

Finally, PHLX’s ability to focus its

resources on the operations of the

Exchange should help enhance

competition among securities markets.

(C) Self-Regulatory Organization’s

Statement on Comments on the

Proposed Rule Change Received From

Members, Participants or Others

Written comments were neither

solicited nor received with respect to

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 Philadep 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.

Persons making written submissions

should file six copies thereof with the

Secretary, Securities and Exchange

Commission, 450 Fifth Street, N.W.,

Washington, D.C. 20549. 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, N.W.,

Washington, D.C. 20549. Copies of such

filing also will be available for

inspection and copying at the principal

office of Philadep. All submissions

should refer to File No. SR–Philadep–

97–94 and should be submitted by

November 5, 1997.

For the Commission by the Division of

Market Regulation, pursuant to delegated

authority.7

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 97–27279 Filed 10–14–97; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–39223; File No. SR–SCCP–

97–07]

Self-Regulatory Organizations; Stock

Clearing Corporation of Philadelphia;

Notice of Filing of Proposed Rule

Change Relating to Revision and

Limitation of Clearing Services

October 8, 1997.

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

Securities Exchange Act of 1934

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

September 25, 1997, Stock Clearing

Corporation of Philadelphia (‘‘SCCP’’)

filed with the Securities and Exchange