[Federal Register Volume 62, Number 45 (Friday, March 7, 1997)]
[Notices]
[Pages 10602-10603]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-5672]


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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-38352; File No. SR-NSCC-97-01]


Self-Regulatory Organizations; National Securities Clearing 
Corporation; Notice of Filing of a Proposed Rule Change To Eliminate 
NSCC's Securities Transfer Service

February 28, 1997.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on January 22, 1997, the 
National Securities Clearing Corporation (``NSCC'') filed with the 
Securities and Exchange Commission (``Commission'') the proposed rule 
change (File No. SR-NSCC-97-01) as described in Items I, II, and III 
below, which items have been prepared primarily by NSCC. The Commission 
is publishing this notice to solicit comments on the proposed rule 
change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
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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 permit NSCC to 
eliminate its Securities Transfer Service (``STS'').

[[Page 10603]]

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, NSCC 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. NSCC has prepared summaries, set forth in sections (A), 
(B), and (C) below, of the most significant aspects of such 
statements.\2\
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    \2\ The Commission has modified the text of the summaries 
submitted by NSCC.
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(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 permit NSCC to 
eliminate its STS.\3\ NSCC Rule 42, which established STS, will be 
deleted. STS was originally developed by NSCC in 1976 to provide 
assistance with the manual processing of items that were ineligible at 
The Depository Trust Company (``DTC''). It was established as an 
optional service to be used by full settling participants for the high 
volume transfer of DTC ineligible items and for the high volume 
transfer and reregistration of physical securities through various 
transfer agencies. STS was also designed to deliver book closing items, 
legal transfers, and accommodation transfers. Once STS is eliminated, 
participants will process items directly through the appropriate 
transfer agent.
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    \3\ STS is commonly referred to as the National Transfer 
Service.
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    The STS process is primarily manual. STS participants first 
physically send envelopes containing securities certificates to an NSCC 
office. Pursuant to the participant's transfer instructions, the 
envelopes are next forwarded by NSCC to the offices of the indicated 
transfer agents, which are located throughout the United States and 
Canada. Upon completion of the reregistration, the transfer agents 
return the certificates to NSCC's office for pick up.
    A review of STS' volume during the 1980s shows that STS processed 
approximately 670 securities certificates per day. As a high volume 
service, STS was able to take advantage of economies of scale for the 
broker-dealer community. However, after 1987 volume fell dramatically 
because DTC began increasing the number of DTC eligible securities and 
because the Group of 30 initiatives caused the brokerage industry to 
move towards a book-entry registration environment which decreased the 
movement of physical securities.\4\ By 1994, STS' volume fell 82% to 
120 securities certificates processed per day. The downward trend 
continues today. STS processed just over twenty-five items per day in 
October 1996 or about an 80% decrease from its 1994 volume and a 96% 
decrease from its 1980s volume.
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    \4\ The Group of Thirty, established in 1978, is an independent, 
non partisan organization composed of international financial 
leaders whose focus is on international economic and financial 
issues. In March 1989, the Group of Thirty issued a report 
containing nine recommendations to improve clearance and settlement 
systems.
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    NSCC expects to eliminate STS thirty business days after 
notification to participants that this proposed rule change is approved 
by the Commission. NSCC believes the proposed rule change is consistent 
with the requirements of Section 17A of the Act \5\ and the rules and 
regulations thereunder because the rule proposal will facilitate the 
prompt and accurate clearance and settlement of securities 
transactions.
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    \5\ 15 U.S.C. 78q-1.
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(B) Self-Regulatory Organization's Statement on Burden on Competition

    NSCC does not believe that the proposed rule change will have an 
impact on or impose a burden on competition.

(C) Self-Regulatory Organization's Statement on Comments on the 
Proposed Rule Change Received From Members, Participants, or Others

    No written comments have been solicited or received. NSCC will 
notify the Commission of any written comments received by NSCC.

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 NSCC 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, 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 NSCC. All submissions should 
refer to the file number SR-NSCC-97-01 and should be submitted by March 
28, 1997.

    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority.\6\
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    \6\ 17 CFR 200.20-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 97-5672 Filed 3-6-97; 8:45 am]
BILLING CODE 8010-01-M