Federal Register / Vol. 65, No. 233 / Monday, December 4, 2000 / Notices 75749

28 15 U.S.C. 78s(b). See supra note 17.

29 15 U.S.C. 78f(b)(5).

30 15 U.S.C. 78s(b)(2).

31 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.

3 DTC charges a fee of $2,700 in connection with

low volume tender offers processed through its

facilities. Securities Exchange Act Release No.

41032, (February 9, 1999) 64 FR 7931 (February 17,

1999) [File No. SR–DTC–99–01]. DTC will continue

to charge that fee, which is not affected by the

proposed rule change.

subject of a full comment period

pursuant to Section 19(b) of the Act.28

The Commission does not believe that

the proposal raises novel regulatory

issues that were not addressed in the

previous filings. Accordingly, the

Commission finds that there is good

cause, consistent with Section 6(b)(5) of

the Act,29 to approve the proposed rule

change and Amendment No. 1 on an

accelerated basis.

It is therefore ordered, pursuant to

Section 19(b)(2) of the Act,30 that the

proposed rule change (SR–CSE–00–05)

and Amendment No. 1 thereto are

hereby approved on an accelerated

basis.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.31

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 00–30770 Filed 12–1–00; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–43624; File No. SR–DTC–

00–13]

Self-Regulatory Organizations; The

Depository Trust Company; Notice of

Filing and Order Granting Accelerated

Approval of a Proposed Rule Change

Related to the Processing of Low

Volume Tender Offers

November 27, 2000.

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

Securities Exchange Act of 1934

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

September 29, 2000, The Depository

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

Securities and Exchange Commission

(‘‘Commission’’) the proposed rule

change as described in Items I and II

below, which items have been prepared

primarily by DTC. The Commission is

publishing this notice and order to

solicit comments from interested

persons and to grant accelerated

approval of the proposal.

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 clarify the policy of DTC

regarding low volume tender offers. A

low volume tender offer is an offer in

which the offeror is seeking to purchase

for cash up to 5% of the outstanding

shares of an equity issue or any amount

of a debt issue. Low volume tender

offers do not include an exchange offer

or an offer by the issuer of the target

security. The proposed rule change

clarifies that it is DTC’s policy (i) not to

make an offeror’s information about a

low volume tender offer available to

participants through DTC’s

Reorganization Inquiry for Participants

System (‘‘RIPS’’) unless the offeror uses

DTC’s Automated Tender Offer Program

(‘‘ATOP’’) to process the offer and (ii)

not to make securities available to the

offeror at the conclusion of a low

volume tender offer processed through

ATOP until DTC has received payment

for the securities from the offeror.

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

As DTC has gained experience in

processing low volume tender offers

during recent years, DTC has sought to

improve the manner in which it handles

such offers. In a small number of cases,

the offeror making a low volume tender

offer sent DTC information to be entered

into RIPS and paid DTC’s low volume

tender offer fee 3 but did not use ATOP

to process acceptances of the offer. In

such cases the offeror included in the

offering documents an instruction that

participants who wished to accept the

offer should do so by a free book-entry

delivery at DTC to the account of a

participant represented to be acting on

behalf of the offeror. Participants

accepting such an offer did not have all

the benefits of ATOP. Those benefits

include more detailed information in

the RIPS announcement, such as

information about the existence of any

withdrawal rights in the offer and

information about the offeror’s payment

arrangements, and an indication on

their daily participant statements while

the offer is open that a tendered position

is outstanding. In order to assure that its

participants receive the benefits of

ATOP, as a matter of policy DTC does

not announce a low volume tender offer

in RIPS unless the offer is processed

through ATOP.

When a low volume tender offer is not

processed through ATOP, payment for

any securities purchased in the offer

usually, if not always, are made to

participants outside of DTC’s facilities.

It can be difficult for participants to

assure themselves that securities

delivered to the offeror by a free bookentry delivery at DTC are promptly paid

for at the end of the offer. To give its

participants the efficiency and

safeguards of payment through DTC’s

facilities, DTC requires the offeror in a

low volume tender offer processed

through ATOP to send payment to DTC

for any securities purchased in the offer

before DTC makes the securities

available to the offeror.

The proposed rule change is

consistent with the requirements of the

Act and the rules and regulations

thereunder applicable to DTC since the

proposed rule change will facilitate the

processing of low volume tender offers

at DTC. The proposed rule change will

be implemented consistently with the

safeguarding of securities and funds in

DTC’s custody or control or for which

it is responsible since low volume

tender offers will be processed with the

safeguards of the ATOP procedures.

(B) Self-Regulatory Organization’s

Statement on Burden on Competition

DTC perceives no adverse impact on

competition by reason of the proposed

rule change.

(C) Self-Regulatory Organization’s

Statement on Comments on the

Proposed Rule Change Received From

Members, Participants, or Others

Written comments from DTC

participants or others have not been

solicited or received on the proposed

rule change. DTC will notify the

Commission of any written comments

received by DTC.

III. Date of Effectiveness of the

Proposed Rule Change and Timing for

Commission Action

The Commission finds that the

proposed rule change is consistent with

the requirements of the Act and the

rules and regulations thereunder and

particularly with the requirements of

75750 Federal Register / Vol. 65, No. 233 / Monday, December 4, 2000 / Notices

4 15 U.S.C. 78q–1(b)(3)(F).

5 15 U.S.C. 78s(b)(2).

6 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 GSCC.

3 In 1998, the Commission approved a rule

change that allowed GSCC to implement the GCF

Repo Service on an intrabank basis. Securities

Exchange Act Release No. 40623 (October 30, 1998),

63 FR 59831, (November 5, 1998) [File No. SR–

GSCC–98–02]. In 1999, the Commission approved

a rule change that allowed GSCC to implement the

second, interbank phase of the GCF Repo Service.

That enhancement has enabled participating dealers

to engage in GCF Repo trading with participating

dealers that use a different clearing bank. Securities

Exchange Act Release No. 41303 (April 16, 1999),

64 FR 20346 (April 26, 1999) [File No. SR–GSCC–

99–01].

4On March 20, 2000, GSCC activated the generic

CUSIP number representing Federal Home Loan

Mortgage Corporation and Federal National

Mortgage Association fixed-rate MBS.

Section 17A(b)(3)(F).4 Section

17A(b)(3)(A)(F) requires that the rules of

a clearing agency be designed, among

other things, to protect investors and the

public interest. DTC’s policy of

requiring low volume tender offers to be

processed through ATOP and of not

making securities available to an offeror

until payment for the shares tendered is

received should help to ensure that

those tendering shares will be paid for

their tendered shares. This should help

DTC and its participants to protect

investors and is in the public interest.

DTC has requested that the

Commission approve the proposed rule

change prior to the thirtieth day after

publication of the notice of the filing.

The Commission finds good cause for

approving the proposed rule change

prior to the thirtieth day after the

publication of notice because such

approval will allow DTC to immediately

apply the safeguards discussed above to

the processing of low volume tender

offers.

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 20549. Copies of such

filing will also be available for

inspection and copying at the principal

office of DTC. All submissions should

refer to the File No. SR–DTC–00–13 and

should be submitted by December 26,

2000.

It Is Therefore Ordered, pursuant to

Section 19(b)(2) of the Act,5 that the

proposed rule change (File No. SR–

DTC–00–13) be and hereby is approved.

For the Commission by the Division

of Market Regulation, pursuant to

delegated authority.6

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 00–30718 Filed 12–1–00; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–43626; File No. SR–GSCC–

00–05]

Self-Regulatory Organizations;

Government Securities Clearing

Corporation; Notice of Filing of

Proposed Rule Change Relating to

Enhancements to the Government

Collateral Finance Repo Service and

Clarifying Certain Risk Management

Practices of the Service

November 27, 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’’) and on

July 13, 2000, amended 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 change will allow

GCF Repo securities lenders to satisfy

their collateral allocation requirements

with ‘‘comparable securities,’’

benchmark U.S. Treasury securities, or

cash. Similarly, the proposed rule

change will allow GCF Repo securities

borrowers, under certain conditions, to

return ‘‘comparable securities,’’

benchmark U.S. Treasury securities, or

cash. The proposed rule change also

would allow GSCC to alter its risk

management procedures associated with

the GCF Repo service to conform to the

mortgage-backed securities (‘‘MBS’’)

market practice.

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

GSCC introduced its GCF Repo

Service in November 1998.3 The GCF

Repo Service allows GSCC’s non-interdealer broker netting members

(‘‘dealers’’) to trade general collateral

repos involving U.S. Government

securities throughout the day without

requiring trade for trade settlement on a

delivery versus payment basis.

GSCC has been activating the generic

CUSIP numbers representing the

securities that are eligible for GCF Repo

processing in stages. U.S. Treasury

securities with a maturity of ten years or

less and U.S. Treasury securities with a

maturity of thirty years or less were the

first products to be made eligible for

GCF Repo processing. At the beginning

of this year, GSCC also began accepting

non-mortgage-backed agency securities

for GCF Repo processing and more

recently began accepting mortgagebacked securities (‘‘MBS’’) for GCF Repo

processing.4

Having gained the experience of

operating the GCF Repo Service for

more than one year, GSCC is now

seeking to enhance the service in certain

ways in order to make it more

responsive to its members’ needs and to

clarify certain risk management

practices, each in a manner consistent

with market practice.

(i) Authority To Deliver Comparable or

U.S. Treasury Securities

The first change proposed by GSCC

applies to the collateral allocation