Federal Register / Vol. 63, No. 75 / Monday, April 20, 1998 / Notices 19545

2The Commission has modified the text of the

summaries prepared by DCC.

3Securities Exchange Act Release No. 39236

(October 14, 1997) 62 FR 54661 [File No. SR–DCC–

97–04] (order approving the Combined Procedures).

4 15 U.S.C. 78q–1.

5 15 U.S.C. 78s(b)(3)(A)(iii).

6 17 CFR 240.19b–4(e)(5). 7 17 CFR 200.30–3(a)(12).

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

2Securities Exchange Act Release No. 39647

(February 11, 1998), 63 FR 8508.

3 DTC has informed the Commission that DTCeligible UIT units usually are held in the FAST

system.

and (C) below, of the most significant

aspect of such statements.2

(A) Self-Regulatory Organization’s

Statement of the Purpose of, and

Statutory Basis for, the Proposed Rule

Change

Pursuant to the Procedures for

Clearing of Securities and Financial

Instrument Transactions (‘‘Combined

Procedures’’),3 multiple brokers may

participate in the system operated by

DCC and new brokers may be

authorized by DCC to participate in the

system. DCC has authorized Tullet,

which is currently an authorized broker

in the system for repurchase agreement

(‘‘repo’’) and reverse repo trades, to

participate as a broker in the system

operated for options on U.S. treasury

securities.

DCC believes that the proposed rule

change is consistent with the

requirements of Section 17A of the Act 4

and the rules and regulations

thereunder because it facilitates the

prompt and accurate clearance and

settlement of securities transactions.

(B) Self-Regulatory Organization’s

Statement on Burden on Competition

DCC does not believe that the

proposed rule change will impose any

burden on competition that is not

necessary or appropriate in furtherance

of the purpose of the Act.

(C) Self-Regulatory Organization’s

Statement on Comments on the

Proposed Rule Change Received From

Members, Participants or Others

Comments were neither solicited nor

received.

III. Date of Effectiveness of the

Proposed Rule Change and Timing for

Commission Action

The foregoing rule change has become

effective pursuant to Section

19(b)(3)(A)(iii) 5 of the Act and pursuant

to Rule 19b–4(e)(4) 6 promulgated

thereunder because the proposal effects

a change in an existing service of a

registered clearing agency that does not

adversely affect the safeguarding of

securities or funds in the custody or

control of the clearing agency or for

which it is responsible and does not

significantly affect the respective rights

or obligations of the filing of the

clearing agency 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,

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, 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, 350 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 DCC. All submissions should

refer to File No. SR–DCC–98–02 and

should be submitted by May 11, 1998.

For the Commission by the Division of

Market Regulation, pursuant to delegated

authority.7

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 98–10342 Filed 4–17–98; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–39852; File No. SR–DTC–

97–12]

Self-Regulatory Organizations; The

Depository Trust Company; Order

Approving a Proposed Rule Change To

Establish a Voluntary Redemption and

Sales Service for Depository Eligible

Units of Unit Investment Trust

April 10, 1998.

On June 27, 1997, The Depository

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

Securities and Exchange Commission

(‘‘Commission’’) and on January 22,

1998, amended as proposed rule change

(File No. SR–DTC–97–12) pursuant to

Section 19(b)(1) of the Securities

Exchange Act of 1934 (‘‘Act’’).1 Notice

of the proposal was published in the

Federal Register on February 19, 1998.2

No comment letters were received. For

the reasons discussed below, the

Commission is approving the proposed

rule change.

I. Description

Under the rule change, DTC will

establish the investor’s voluntary

redemptions and sales service

(‘‘IVORS’’), a redemption and sales

service for depository eligible units of

unit investment trusts (‘‘UITs’’). IVORS

will offer two basic UIT services: (1)

redemption of units with the UIT

transfer agent for cash payment and (2)

sales of units to the UIT sponsor for

cash payment. IVORS initially will be

available to eligible DTC participants by

way of DTC’s participant terminal

system (‘‘PTS’’).

IVORS will be available only if: (1)

the UIT units are DTC-eligible and are

held in DTC’s fast automated securities

transfer (‘‘FAST’’) system; 3 (2) the

FAST transfer agent currently is or

agrees to become a full service DTC

participant; and (3) the UIT’s lead

sponsor or its clearing agent agrees to

participant in IVORS as a DTC

participant.

When a UIT becomes eligible for

IVORS, its FAST transfer agent will

submit initial standing instructions for

the UIT to an IVORS database on PTS

regarding participants’ ability to redeem

or to sell units through IVORS. The UIT

sponsor will be able to make daily

changes to those standing instructions

by way of PTS. When a participant

holding UIT units in its DTC account

submits a request through IVORS to

surrender the units for their value,

IVORS will determine which of the two

basic services (i.e., redemption or sale)

is available for the units based on the

standing instructions for the UIT in the

IVORS database. The participant

submitting the UIT units will have the

choice of accepting the determination of

which of the two services is available or

canceling its request to surrender its

units.

On the date of the participant’s

request to surrender the units (‘‘T’’),

IVORS will move the surrendered units

from the participant’s free position to its

‘‘IVORS pending surrender segregation
19546 Federal Register / Vol. 63, No. 75 / Monday, April 20, 1998 / Notices

4 15 U.S.C. 78q–1(b)(3)(F).

5 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.

3These payment obligations result from

settlement balance order market differential

obligations, cash adjustment obligations, broker

commissions, miscellaneous cash obligations, and

MBSCC clearing and electronic pool notification

bills.

account.’’ Before the end of the day on

T+2, either the FAST transfer agent or

the UIT sponsor will enter into IVORS

the redemption price (if the units are to

be redeemed) or the purchase price (if

the units are to be sold) plus the accrued

dividend per unit. Both redemptions

and sales of units through IVORS will

be settled on T+3.

IVORS automatically will calculate

the settlement value of the redemption

or sale and will generate a deliver order

(‘‘DO’’) to move the units versus

payment of the settlement value from

the redeeming participant’s IVORS

pending surrender segregation account

either to the FAST transfer agent’s DTC

participant account (in the case of a

redemption) or to the UIT sponsor’s

DTC participant account (in the case of

a sale). If the units are being redeemed,

IVORS automatically will generate a

second DO to remove the units from the

FAST transfer agent’s DTC participant

account. If the units are being sold, the

units will remain in the UIT sponsor’s

DTC account until the UIT sponsor later

delivers them to a secondary-market

purchaser or redeems them by way of

IVORS.

II. Discussion

Section 17A(b)(3)(F) of the Act 4

requires that the rules of a clearing

agency be designed to promote the

prompt and accurate clearance and

settlement of securities transactions.

The Commission believes that the

proposed rule change is consistent with

DTC’s obligations under Section

17A(b)(3)(F) because it should improve

efficiency in the processing of UIT

transactions by eliminating the

certificate processing responsibilities of

participants electing to use IVORS and

by reducing the movement of physical

securities certificates. This in turn

should reduce the instances of

erroneous processing and loss that

sometimes occur with the movement of

physical securities certificates.

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–

DTC–97–12) be and hereby is approved.

For the Commission by the Division of

Market Regulation, pursuant to delegated

authority.5

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 98–10274 Filed 4–17–98; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–39849; File No. SR–

MBSCC–97–09]

Self-Regulatory Organizations; MBS

Clearing Corporation; Notice of Filing

and Immediate Effectiveness of

Proposed Rule Change Relating to

Fees and Charges

April 10, 1998.

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

Securities Exchange Act of 1934

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

November 5, 1997, MBS Clearing

Corporation (‘‘MBSCC’’) filed with the

Securities and Exchange Commission

(‘‘Commission’’) and on November 13,

1997, and February 27, 1998, amended

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 revises

MBSCC’s fee schedule to add fees for

the late payment of participant’s

payment obligations.

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

MBSCC’s rules and procedures

require participants to satisfy all

payment obligations by 12:00 p.m.

Eastern Standard Time (‘‘EST’’) on the

day that they are due.3 This noon

deadline provides MBSCC with

sufficient time to use such funds to pay

participants in a credit position or to

liquidate a participant’s collateral to

cover a default so that funds are

available to pay such participant’s

obligations.

Currently, participants that fail to

satisfy a payment obligation by the noon

deadline are subject to a $50.00 charge.

Although the majority of payment

obligations due to MBSCC are paid on

the day on which they are due, many

are paid after the noon deadline. Failure

by a participant to timely satisfy its

payment obligations could jeopardize

MBSCC’s ability to fulfill its obligations

to participants with a credit position.

The purpose of the proposed rule

change is to revise fees for late payment

of obligations by adding a late payment

fee schedule. The purpose of these new

fees is to both motivate participants to

pay their obligations prior to the noon

deadline and to compensate MBSCC for

the costs associated with monitoring

such late payments. The late payment

fee schedule is based both on the size

of the cash obligation payment that is

not timely made and the frequency of

such participant’s late payments over a

rolling ninety day period. MBSCC’s late

payment fine schedule is set forth

below.

Payable cash obligation First occurrence

Second occurrenceThird occurrenceFourth occurrence

$50.00.00–100,000.00 ...................................................................................... $50.00 $100.00 $250.00 $500.00

100,000.01–1,000,000.00 ................................................................................. 100.00 200.00 500.00 1,000.00

1,000,000.01–1,500,000.00 .............................................................................. 200.00 400.00 1,000.00 2,000.00

1,500.000.01–3,000,000.00 .............................................................................. 500.00 1,000.00 2,500.00 5,000.00

3,000,000.01–5,000,000.00 .............................................................................. 1,000.00 2,000.00 5,000.00 10,000.00