54666 Federal Register / Vol. 62, No. 203 / Tuesday, October 21, 1997 / Notices

16 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 DTC.

3For a complete description of PEX, refer to

Securities Exchange Act Release No. 28123 (June

13, 1990), 55 FR 25188 [File No. SR–DTC–89–21]

(order approving proposed rule change establishing

PEX).

4 DTC attached a detailed description of the

method by which LOFFs will be added to PEX as

Exhibit B to its filing, which is available for review

and copying at the Commission’s Public Reference

Room and through DTC.

5 12 CFR 220.

6 DTC has informed the Commission that

participants initially will be able to exchange

LOFFs through PEX only by way of PTS. At some

later point, participants will be able to exchange

LOFFs by way of mainframe dual host or computerto-computer facility.

7Although LOFF notices will not generate tickets,

receiving brokers will be able to view LOFF notices

through PTS.

change pursuant to Section 19(b)(2) of

the Act. The proposed rule change may

request either an increase in the volume

limitation or removal of all volume

limitations.

III. Conclusion

On the basis of the foregoing, the

Commission finds that the proposal is

consistent with the requirements of the

Act and in particular with the

requirements of 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–

DCC–97–06) be and hereby is approved.

For the Commission by the Division of

Market Regulation, pursuant to delegated

authority.16

Margaret H. McFarland,

Deputy Secretary.

Exhibit A—Schedule A to Delta

Clearing Corp; Procedures for the

Clearing of Securities and Financial

Instrument Transactions

Excluded Classes of Mortgage

Securities

Notional—A class having no principal

balance and bearing interest on the

related notional principal balance.

Interest Only—A class that receives

some or all of the interest payments

made on the underlying mortgage or

other assets of a series trust and little or

no principal. Interest only classes have

either a nominal or a notional principal

balance.

Principal Only—A class that does not

bear interest and is entitled to receive

only payments of principal.

Accrual—A class that accretes the

amount of accrued interest otherwise

distributable on such class, which

amount will be added as principal to the

principal balance of such class on each

applicable distribution date. Such

accretion may continue until some

specified event has occurred or until

such accrual class is retired.

Partial Accrual—A class that accretes

a portion of the amount of accrued

interest thereon, which amount will be

added to the principal balance of such

class on each applicable distribution

date, with the remainder of such

accrued interest to be distributed

currently as interest on such class. Such

accretion may continue until a specified

event has occurred or until such partial

accrual class is retired.

Floater—A class other than an

adjustable rate mortgage security with

an interest rate that resets periodically

based upon a designated index and that

varies directly with changes in such

index.

Inverse Floater—A class other than an

adjustable rate mortgage security with

an interest rate that resets periodically

based upon a designated index and that

varies inversely with changes in such

index.

[FR Doc. 97–27818 Filed 10–20–97; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–3932; File No. SR–DTC–

97–18]

Self-Regulatory Organizations; The

Depository Trust Company; Notice of

Filing and Immediate Effectiveness of

Proposed Rule Change Regarding the

Participant Exchange Service

October 10, 1997.

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

Securities Exchange Act of 1934

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

August 15, 1997, The Depository Trust

Company (‘‘DTC’’) 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 DTC. 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 proposed rule change will

expand DTC’s participant exchange

service system (‘‘PEX’’) to add an

additional notice, letters of free funds

(‘‘LOFFs’’), to the menu of notices

currently available.

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 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

PEX is an on-line system that enables

DTC participants to use DTC’s

automated network to send and to

respond to various notices required by

other self-regulatory organizations.3 The

purpose of the proposed rule change is

to automate the exchange of LOFFs by

adding LOFFs to the menu of notices

that can be transmitted through PEX.4

LOFFs are notices exchanged between

the receiving and delivering brokers of

two party customer trades. Currently,

LOFFs are sent in hardcopy (i.e., on

paper), usually through the mail or by

facsimile. The delivering broker sends a

LOFF to the receiving broker requesting

the receiving broker to verify that the

customer has sufficient funds to settle

the trade pursuant to Regulation T

under the Act.5 The receiving broker

confirms the existence of the funds and

returns the LOFF to the delivering

broker.

Under the proposed rule change, a

delivering broker will be able to send

LOFF notices by entering the notice

information into DTC’s participant

terminal system (‘‘PTS’’).6 LOFF notices

that do not contain any errors will be

stored in a DTC database in open status

pending a response from the receiving

broker. Each LOFF sent using PEX will

be assigned a unique control number.

Open notices will be available for

browsing and reply through PTS.

Receiving brokers will be able to use

PEX to respond to each LOFF notice by

its control number.7 Upon receiving a

response, DTC will match its control

number to that of an open LOFF notice

and mark that notice as either (i) having

sufficient funds, (ii) not having

sufficient funds, (iii) being rejected, or

(iv) having a prime broker relationship

with the delivery broker.

All open LOFF notices will be kept on

a DTC database for ninety days from the
Federal Register / Vol. 62, No. 203 / Tuesday, October 21, 1997 / Notices 54667

8 15 U.S.C. 78q–1(b)(3)(A).

9 15 U.S.C. 78s(b)(3)(A)(iii).

1017 CFR 240.19b–4(e)(4).

11 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 MBSCC.

3 ‘‘Class’’ is defined in MBSCC’s rules as a

particular type of eligible securities issues or

guaranteed by the same agency and having the same

coupon rate and date of maturity.

4At such time, MBSCC will submit a rule filing

with the Commission under Section 19(b)(3)(A) of

the Act to eliminate all references to class codes.

notice’s initial send date. LOFF notices

that have been accepted (i.e., for which

funds are available) will remain on the

database for two days. LOFF notices that

have been declined (i.e., for which

funds are available) will remain on the

database for five days. All other LOFF

notices that receive replies (i.e., prime

broker or rejected) will be removed from

the database thirty days after the initial

send date of the notice.

The proposed rule change is designed

to eliminate the physical delivery and

confirmation of LOFFs thereby

providing DTC participants with a more

timely and accurate messaging vehicle

for these documents. In addition, by

incorporating LOFFs into the PEX

System, DTC will offer its participants

an efficient means of tracking notices of

LOFFs.

DTC believes that the proposed rule

change is consistent with the

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

the Act 8 and the rules and regulations

thereunder because it promotes

efficiencies in the clearance and

settlement of securities transactions.

(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 not solicited participant

comments on the proposed rule change.

A working group of participants has

requested that DTC incorporate LOFFs

into the PEX system and has committed

to using such a service.

III. Date of Effectiveness of the

Proposed Rule Change and Timing for

Commission Action

The foregoing rule change has been

effective pursuant to Section

19(b)(3)(A)(iii) of the Act 9 and Rule

19b–4(e)(4) thereunder 10 because it

effects a change in an existing service of

DTC that (i) does not adversely affect

the safeguarding of securities or funds

in the custody or control of DTC or for

which it is responsible and (ii) does not

significantly affect the respective rights

or obligations of DTC or persons using

the service. At any time within sixty

days of the filing of such rule change,

the Commission may summarily

abrogate such rule change if it appears

to the Commission that such action is

necessary or appropriate in the public

interest, for the protection of investors,

or otherwise in furtherance of the

purposes of the Act.

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 DTC. All submissions should

refer to File No. SR–DTC–97–18 and

should be submitted by November 12,

1997.

For the Commission by the Division of

Market Regulation, pursuant to delegated

authority.11

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 97–27758 Filed 10–20–97; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–39234; File No. SR–

MBSCC–97–7]

Self-Regulatory Organizations; MBS

Clearing Corporation; Notice of Filing

and Immediate Effectiveness of

Proposed Rule Change Relating to Use

of CUSIP Numbers in Processing

Eligible Securities

October 10, 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, the MBS Clearing

Corporation (‘‘MBSCC’’) 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 MBSCC. 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 proposed rule change amends

MBSCC’s rules to allow MBSCC to use

CUSIP numbers to process eligible

securities in addition to the current

practice of using class codes.

II. Self-Regulatory Organization’s

Statement of the Purpose of, and

Statutory Basis for, the Proposed Rule

Change

In its filing with the Commission,

MBSCC 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. MBSCC 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

Currently, MBSCC processes

transactions relating to eligible

securities based on a ten character class

code identifying the class of such

securities.3 To accommodate the March

1998 industry-wide conversion to a

system based on a nine character CUSIP

number, MBSCC will permit

participants to submit transactions with

either the appropriate class code or

CUSIP number. MBSCC anticipates that

as of January 1, 1999, it will accept only

CUSIP numbers.4 Other than this

technical change from a class system to

a CUSIP system, the processing of

eligible securities will not change.

With respect to MBSCC’s electronic

pool notification (‘‘EPN’’) system, there

is no similar period of time during

which EPN users can submit either the

class code or CUSIP number. Beginning

March 31, 1998, EPN will operate on a

CUSIP number basis.