10104 Federal Register / Vol. 62, No. 43 / Wednesday, March 5, 1997 / Notices

17Securities Exchange Act Release No. 37497

(November 13, 1996), 61 FR 59124.

18 15 U.S.C. 78f.

19 15 U.S.C. 78s(b)(2).

20 17 CFR 200.30–3(a)(12)

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

2A copy of the Policy marked to show the

specific changes to DTC’s procedures is attached as

Exhibit C to DTC’s proposed rule change which is

available for inspection and copying at the

Commission’s Public Reference Room or through

DTC.

3The Commission has modified the text of the

summaries prepared by DTC.

4For a complete description of the procedures

relating to the Policy, refer to Securities Exchange

Act Release Nos. 23219 (May 8, 1986), 51 FR 17845

[SR–DTC–03] (notice of filing and immediate

effectiveness on a temporary basis of a proposed

rule change); 23686 (October 7, 1986), 51 FR 37104

[SR–DTC–86–4] (order permanently approving

proposed rule change); 26070 (September 9, 1988)

53 FR 36142 [SR–DTC–88–17] (notice of filing and

immediate effectiveness of proposed rule change

clarifying that charge back proceedings apply to

DTC’s same-day funds settlement system and nextday funds settlement system); and 35452 (March 7,

1995), 60 FR 13743, [SR–DTC–95–03] (notice of

filing and immediate effectiveness of proposed rule

change excluding money market instrument

programs from DTC’s charge back and return of

funds procedures).

5The Policy also allows DTC to return previously

credited payments upon written request from a

paying agent within ten business days of the

payable date due to an error by the paying agent.

The proposed rule change does not alter this

position of the Policy.

6Under the proposed rule change, although the

time within which a paying agent can request a

reversal of allocated funds will be reduced from ten

business days to one business day following

payable date, the actual reversal may take up to two

or three business days after the payable date. For

example, if a paying agent requests a reversal from

DTC late in the day of the first business day after

the payable (‘‘P+1’’), DTC would likely notify its

participants’ on the morning of the following

business day (‘‘P+2’’). In the interest of fairness and

pursuant to DTC’s procedures, DTC must notify all

affected participants one business day prior to the

date on which DTC enters the reversal into its

participant’s daily settlement accounts.

Accordingly, the actual reversal will not occur until

P+3. Telephone conversation between Larry E.

Thompson, Deputy General Counsel and Senior

Vice President, DTC; Mark Steffensen, Special

Counsel, Division of Market Regulation

(‘‘Division’’), Commission; and Jeffrey Mooney,

Attorney, Division, Commission (December 18,

1996).

7Letter from Heather L. Ruth, President, PSA to

William F. Jaenike, Chairman of the Board and

Chief Executive Officer, DTC (August 16, 1996).

basis so that the Exchange can enable

public customers to receive the benefits

of Enhanced SuperMAX, as amended,

without the interruption that would

result if the pilot program were allowed

to expire on March 1, 1997 without

permanent approval of the program in

place. Moreover, both the Enhanced

SuperMAX and Timed Enhanced

SuperMAX have operated without any

significant problems as pilot programs

since July, 1995. Finally, the

Commission received no comments on

the Exchange’s earlier request for

permanent approval of the pilot, which

was published for comment on

November 20, 1996.17 The Commission,

therefore, believes that granting

accelerated approval of the proposed

rule change is appropriate and

consistent with Section 6(b)(5) of the

Act.18

IV. Solicitation of Comments

Interested persons are invited to

submit written data, views and

arguments concerning the foregoing.

Persons making written submission

should file six copies thereof with the

Secretary, Securities and Exchange

Commission, 450 Fifth Street, NW.,

Washington DC 20549. Copies of the

submissions, 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 also will be available for

inspection and copying at the Exchange.

All submissions should refer to File No.

SR–CHX–97–02 and should be

submitted by March 26, 1997.

It is therefore ordered, pursuant to

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

proposed rule change be, and hereby is,

approved on an accelerated basis.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.20

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 97–5369 Filed 3–4–97; 8:45 am]

BILLING CODE 8010–01–M

[Release No. 34–38340; File No. SR–DTC–

22]

Self-Regulatory Organization’s; The

Depository Trust Company; Notice of

Filing of a Proposed Rule Change To

Amend DTC’s Charge Back and Return

of Funds Procedures

February 26, 1997.

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

Securities Exchange Act of 1934

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

December 4, 1996, The Depository Trust

Company (‘‘DTC’’) filed with the

Securities and Exchange Commission

(‘‘Commission’’) the proposed rule

change (File No. SR–DTC–96–22) 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 on the proposed rule change

from interested persons.

I. Self-Regulatory Organization’s

Statement of the Terms of Substance of

the Proposed Rule Change

The proposed rule change amends

DTC’s charge back and return of funds

policies (‘‘Policy’’) 2 to shorten from ten

business days to one business day the

period within which a paying agent can

request that DTC return principal and

income (‘‘P&I’’) payments that have

been allocated to participants.

II. Self-Regulatory Organization’s

Statement of the Purpose of, and

Statutory Basis for, the Proposed Rule

Change

In its filings 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.3

(A) Self-Regulatory Organization’s

Statement of the Purpose of, and

Statutory Basis for, the Proposed Rule

Change

The Policy 4 currently authorizes DTC

to return P&I payments to paying agents

after the funds have been credited to the

accounts of DTC participants, which is

commonly referred to as a ‘‘clawback,’’

if the paying agent notifies DTC in

writing within ten business days of the

payable date that: (i) The issuer has

failed to provide the paying agent with

sufficient funds to cover the payments;

or (ii) the issuer has become bankrupt.5

The proposed rule change will reduce

the period within which a paying agent

can request DTC to return funds to such

paying agent from ten business days to

one business day.6 Furthermore, the

Policy provides that if an agent requests

the return of a P&I payment more than

ten business days after a payable date,

DTC will work with the agent and

participate to resolve the matter.

However, DTC will not return the

allocated payments without the

participant’s consent.

PSA The Bond Market Trade

Association (‘‘PSA’’) has expressed

concern with the current policy and the

associated risk of loss placed on DTC

participants in the event a payment is

returned to a paying agent.7 In response,

DTC convened a joint working group of
Federal Register / Vol. 62, No. 43 / Wednesday, March 5, 1997 / Notices 10105

8The working group is composed of

representatives from the Corporate Trust Advisory

Board of the American Bankers Association, the

Bank Depository User Group, the Corporate Trust

Advisory Committee of the Corporate Fiduciaries

Association of New York City, the New York

Clearing House—Securities Committee, PSA, the

Securities Industry Association, and DTC.

9 In September 1996, a paying agent requested the

return of a single payment $30,000 due to

nonpayment by an issuer.

10 DTC has notified its participants, paying

agents, trustees, and issuers of the proposed rule

change in DTC Important Notice B# 2068–96

(November 26, 1996) and DTC Important Notice B#

2069–96 (November 26, 1996), which are attached

as Exhibit B to DTC’s proposed rule change.

11 15 U.S.C. 78q–1. 12 17 CFR 200.30–3(a)(12). 1 15 U.S.C. 78s(b)(1).

paying agents, PSA representatives, and

other interested parties.8 In October

1996, the working group concluded that

DTC should reduce the period within

which DTC may return funds to paying

agent’s from ten business days to one

business day.

DTC concurs with the working

group’s recommendation and proposes

to amend the Policy accordingly.

Although the current Policy may

encourage paying agents to make more

timely payments to DTC by offering

them more flexibility with regard to the

return of funds if an issuer defaults,

DTC believes that it has received only

one default-related return of funds

request since the Policy was

promulgated in 1986.9 Due to the

Policy’s infrequent use, DTC proposes to

finalize P&I payments sooner and

minimize the uncertainty and risk of

loss that the Policy currently places on

DTC’s participants.10 DTC proposes to

implement the proposed rule change for

all P&I payments made after April 30,

1997.

DTC believes the proposed rule

change is consistent with the

requirements of Section 17A of the

Act 11 and the rules and regulations

thereunder because the proposal

promotes the prompt and accurate

clearance and settlement of transactions

in securities. In addition, DTC believes

that the proposed rule change will result

in increased protection to investors by

providing finality of payment within a

substantially shorter period of time.

(B) Self-Regulatory Organization’s

Statement on Burden on Competition

DTC perceives no 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

The proposed rule change has been

endorsed by the PSA and was

recommended by a special industry

working group comprised of PSA

representatives, paying agents, and

other interested parties.

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 DTC 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 DTC. All submissions should

refer to the file number SR–DTC–96–22

and should be submitted by March 26,

1997.

For the Commission by the Division of

Market Regulation, pursuant to delegated

authority.12

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 97–5370 Filed 3–4–97; 8:45 am]

BILLING CODE 8010–01–M

[Release No. 34–38341; File No. SR–Phlx–

97–01)

Self-Regulatory Organizations; Notice

of Filing and Immediate Effectiveness

of Proposed Rule Change by the

Philadelphia Stock Exchange, Inc.

Relating to the U–SAVE Program

February 26, 1997.

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

Securities Exchange Act of 1934

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

January 15, 1997 the Philadelphia Stock

Exchange, Inc. (‘‘Phlx’’ or ‘‘Exchange’’)

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 by the selfregulatory organization. The

Commission is publishing this notice to

solicit comments on the proposed rule

change from interested persons.

I. Self-Regulatory Organization’s

Statement of the Terms of Substance of

the Proposed Rule Change

The Phlx proposes to implement a

program that will calculate and then

display on the execution reports sent to

member firms the dollar amounts

realized as savings to their customers as

a result of price improvement in the

execution of their orders on the

Exchange.

II. Self-Regulatory Organization’s

Statement of the Purpose of, and

Statutory Basis for, the Proposed Rule

Change

In its filing with the Commission, the

self-regulatory organization 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.

The self-regulatory organization has

prepared summaries, set forth in

Sections A, B, and C below, of the most

significant aspects of such statements.

A. Self-Regulatory Organization’s

Statement of the Purpose of, and

Statutory Basis for, the Proposed Rule

Change

1. Purpose

The purpose of the proposed rule

change is to implement a program for

calculating and displaying, on a PACE

execution report sent to member firms

entering orders, the dollar value saved

by their customers as a result of price

improvement of orders executed on the

Exchange. This program does not in any