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
Federal Register / Vol. 63, No. 75 / Monday, April 20, 1998 / Notices 19547

4 15 U.S.C. 78q–1.

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

6 17 CFR 240.19b–4(e)(2). 7 17 CFR 200.30–3(a)(12).

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

2 17 CFR 240.19b–4.

3A buy stop order is an order to buy which

becomes a market order when a transaction takes

place at or above the stop price. Conversely, a sell

stop order is an order to sell which becomes a

market order when a transaction takes place at or

below the stop price. See NASD Rule 6440(i)(1).

4Under NASD Rule 6410(d), ‘‘eligible securities’’

means all common stocks, preferred stocks, longterm warrants, and rights entitling the holder to

acquire an eligible security, listed or admitted to

unlisted trading privileges on the American Stock

Exchange (‘‘Amex’’) or the New York Stock

Exchange (‘‘NYSE’’), and securities listed on the

regional stock exchanges which substantially meet

the original listing requirements of the Amex or the

NYSE.

5A buy stop limit order is an order to buy that

becomes a limit order at the limit price when a

transaction occurs at the stop price. Conversely, a

sell stop limit order is an order to sell that becomes

a limit order at the limit price when a transaction

occurs at the stop price.

6See Securities Exchange Act Release No. 38429

(March 21, 1997) 62 FR 14953.

7See Letter from Robert E. Aber, Vice President

and General Counsel, NASD, to Katherine England,

Assistant Director, National Market System and

Continued

Calculation of charges for late

payment obligations in excess of

$5,000,000 will be based on the ratio of

the actual late obligation (rounded to

the next highest million) to $5,000,000,

multiplied by the late fee for obligations

of $5,000,000.

Participants failing to timely satisfy

payment obligations on more than four

occasions within a rolling ninety day

period will be subject to additional late

fees for each occurrence. This amount

will be determined at MBSCC’s

discretion depending on the magnitude

and history of the participant’s late

payments, but any additional late fees

can be no more than twice the fourth

occurrence fee. MBSCC also reserves the

discretion to waive or reduce late fees

when a particular occurrence is not

deemed to be the participant’s fault or

the participant has provided MBSCC

with evidence that it is taking

appropriate corrective action to prevent

recurrence.

Late fees will accrue on the date on

which a late payment is made, and

participants will receive a letter

notifying them of the late fee. The late

fee will be reflected on the participant’s

bill for the month during which such fee

was incurred and is payable at such

time.

MBSCC 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 provides for the

equitable allocation of dues, fees, and

other charges among MBSCC’s

participants.

(B) Self-Regulatory Organization’s

Statement on Burden on Competition

MBSCC 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.

(C) Self-Regulatory Organization’s

Statement on Comments on the

Proposed Rule Change Received From

Members, Participants or Others

No comments on the proposed rule

change were solicited or 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)(ii) 5 of the Act and pursuant

to Rule 19b–4(e)(2) 6 promulgated

thereunder because the proposal

establishes or changes a due, fee, or

other charge imposed by MBSCC. 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 MBSCC. All submissions

should refer to File No. SR–MBSCC–97–

09 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. 98–10341 Filed 4–17–98; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–39857; File No. SR–NASD–

97–20]

Self-Regulatory Organizations; Order

Approving Proposed Rule Change and

Notice of Filing and Order Granting

Accelerated Approval to Amendment

No. 1 to the Proposed Rule Change by

the National Association of Securities

Dealers, Inc. Relating to the

Elimination of the Prohibitions Against

NASD Members Accepting Stop Orders

and Stop Limit Orders in ExchangeListed Securities

April 14, 1998.

I. Introduction

On March 10, 1997, the National

Association of Securities Dealers, Inc.

(‘‘NASD’’ or ‘‘Association’’) submitted

to the Securities and Exchange

Commission (‘‘SEC’’ or ‘‘Commission’’),

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

Securities Exchange Act of 1934

(‘‘Act’’),1 and Rule 19b–4 thereunder,2 a

proposal to amend paragraph (i) of

NASD Rule 6440, ‘‘Trading Practices,’’

to (1) allow members to accept stop

orders 3 in eligible securities; 4 and (2)

eliminate the requirement that the stop

price equal the limit price in order for

a member to accept a stop limit order 5

in an eligible security.

Notice of the proposed rule change

was published for comment and

appeared in the Federal Register on

March 28, 1997.6 No comment letters

were received on the proposal. On April

1, 1997, the NASD filed Amendment

No. 1 to the proposed rule change.7 In