26236 Federal Register / Vol. 63, No. 91 /Tuesday, May 12, 1998 / Notices

2The Commission has modified the text of the

summaries prepared by DTC.

3The revised fee schedule is attached to DTC’s

rule filing and is available for copying at the

Commission’s public reference room.

4The last full scale revision of DTC’s fees

occurred in 1995 although several revenue

adjustments were made by DTC in early 1996.

5 15 U.S.C. 78q–1.

6 15 U.S.C. 78s(b)(3)(A)(ii)

7 17 CFR 240.19b–4(e)(2).

8 17 CFR 200.30–3(a)(12).

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

2Securities Exchange Act Release No. 39561

(January 20, 1998), 63 FR 3941.

3 Due to the additional processing and tracking of

corporate bearer coupon deposits, DTC intends to

file a proposed rule change with the Commission

in the future to institute a surcharge for the

handling of these deposits.

4For a complete description of CCS, refer to

Securities Exchange Act Release No. 35750 (January

22, 1996), 61 FR 2852 [File No. SR–DTC–95–18]

(order approving proposed rule change).

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

The purpose of the proposed rule

change is to adjust the fees charged for

various services in order to align them

with DTC’s projected service costs for

1998.3 The adjusted fees are based upon

a review of service costs conducted by

DTC’s Board of Directors. This fee

change will be effective for services

provided on and after April 1, 1998.4

DTC believes the 1998 fee schedule

will yield $5.0 million more in

operating revenue annually than the

present fee schedule would have

yielded. DTC believes that the new fees

will result in an average fee increase of

1.0% for participants based on their

monthly bills from DTC for October,

November, and December of 1997.

DTC believes that the proposed rule

change is consistent with the

requirements of Section 17A of the Act 5

and the rules and regulations

thereunder because it provides for the

equitable allocation of dues, fees, and

other charges among DTC’s participants

and other parties that use DTC’s

services.

(B) Self-Regulatory Organization’s

Statement on Burden on Competition

DTC 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

Written comments from DTC

participants or others have not been

received on the proposed rule change.

Participants and other users of DTC’s

services were informed that DTC’s

annual fees would likely increase by

$5.0 million or approximately 1.5% in

a July 2, 1997, memorandum entitled

‘‘Preliminary Projections for 1997 Yearend General Refund and Anticipated

1998 Service Fees.’’ DTC informed

participants and other users of its

services of the proposed fee revisions by

a memorandum dated February 5, 1998,

entitled ‘‘1998 Revisions of DTC Service

Fees.’’ Because participants have

supported cost based fees in the past

and because the subject fee changes

overall are modest, DTC did not

consider necessary a formal period for

participant comment this year.

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) 6 of the Act and pursuant

to Rule 19b–4(e)(2) 7 promulgated

thereunder because the proposal

establishes or changes a due, fee, or

other charge imposed by DTC. At any

time within sixty days of the filing of

such proposed 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, 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 DTC. All submissions should

refer to File No. SR–DTC–98–03 and

should be submitted by June 2, 1998.

For the Commission by the Division of

Market Regulation, pursuant to delegated

authority.8

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 98–12457 Filed 5–11–98; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–39960; File No. SR–DTC–

97–17]

Self-Regulatory Organizations; The

Depository Trust Company; Order

Approving a Proposed Rule Change

Relating to a Modification of the

Coupon Collection Service

May 5, 1998.

On August 7, 1997, The Depository

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

Securities and Exchange Commission

(‘‘Commission’’) and on December 22,

1997, amended a proposed rule change

(File No. SR–DTC–97–17) 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 January 27, 1998.2

No comment letters were received. For

the reasons discussed below, the

Commission is approving the proposed

rule change.

I. Description

DTC currently operates a coupon

collection service (‘‘CCS’’), which

provides DTC participants with a

method for collecting interest payable

on coupons from municipal bearer

bonds. The rule change modifies CCS to

include the collection of interest

payable on coupons from corporate

bearer bonds.3

Currently, participants using CCS are

required to deposit coupons in a

standard sealed envelope or ‘‘shell,’’

each of which may contain no more

than 200 coupons for the same CUSIP

number, series, and payable date. DTC

submits the contents of the shells to the

appropriate issuer or paying agent and

credits the interest to the participant’s

account.4 With certain exceptions, DTC

will process corporate bearer bond

coupons through CCS the same way that

it currently processes municipal bearer

bond coupons.
Federal Register / Vol. 63, No. 91 /Tuesday, May 12, 1998 / Notices 26237

5When processing municipal bearer coupons

through CCS, DTC credits participants’ accounts on

the payable date of the coupons regardless of

whether it actually has received the interest

payment.

6 15 U.S.C. 78q–1(b)(3)(F).

7 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.

3Currently, the ID system enables broker-dealers

to exchange conformation and affirmation messages

with investment managers and custodian banks. For

a complete description of the services provided by

the ID system refer to Securities Exchange Act

Release Nos. 33466 (January 12, 1994), 59 FR 3139

[File No. SR–DTC–93–07] (order approving

proposed rule change relating to the enhanced ID

system); 34166 (June 6, 1994), 59 FR 31660 [File No.

SR–DTC–94–01] (order approving proposed rule

change to add a standing instruction database to the

ID system); 34199 (June 10, 1994), 59 FR 31660 [File

No. SR–DTC–94–04] (order granting accelerated

approval of a proposed rule change to implement

the interactive capabilities and the electric mail

features of the enhanced institutional delivery

system); 36050 (August 2, 1995), 60 FR 41139 [File

No. SR–DTC–95–10] (order approving proposed

rule change to implementing advice of confirm

correction/cancellation feature and modifying the

authorization/exception processing feature of the

institutional delivery system); and 39832 (April 6,

1998), 63 FR 18062 [File No. SR–DTC–95–23] (order

approving proposed rule change implementing the

ID system).

4 Initially, broker-dealers will not have access to

the HUB Mailbox.

5 DTC anticipates that the HUB Mailbox will be

used primarily for exchanging messages regarding

securities that are not eligible for settlement at DTC.

Telephone conversation among Jack Wiener, Vice

Continued

First, DTC will contact the corporate

paying agent before submitting the

coupons for payment to determine

whether the coupon proceeds are

payable in U.S. dollars. Only corporate

bearer bonds payable in either U.S.

dollars or Canadian funds are eligible

for CCS. Where the corporate bearer

bonds are payable in Canadian funds,

DTC will request the paying agent to

convert the funds to U.S. dollars in

accordance with the prevailing

exchange rate. DTC will not process

corporate bearer bonds through CCS

unless the paying agent is able to and

will convert Canadian funds to U.S.

dollars.

Second, DTC will suppress for

corporate bearer coupons the automatic

payment function that it applies to

municipal bearer coupons.5 By delaying

crediting participants’ accounts until it

has received the interest payments from

paying agents, DTC will avoid having to

adjust such accounts due to fluctuations

in exchange rates.

DTC requires that each shell

containing corporate bearer bond

coupons state the following information

on its face: the CUSIP number; a

description of issue including purpose,

series, date of issue, and maturity date;

the payable date; the quantity of

coupons enclosed; the dollar value of

individual coupons; the total shell value

unless payable in Canadian dollars; the

participant number; and the contact

number and telephone number of the

depositing participant. In addition, each

shell must be accompanied by a

completed deposit ticket, each of which

can cover up to twenty-five shells,

which provides the participant number,

the shell quantity, the total dollar value,

the CUSIP number per shell, the coupon

quantity per shell, the dollar value per

shell unless payable in Canadian

dollars, and whether the coupons are

future-due or past-due.

DTC will verify the number of shells

listed on the deposit ticket and give the

participant a time-stamped copy of the

ticket. If the number of shells listed on

the deposit ticket does not agree with

the physical number of shells, the entire

deposit will be rejected and sent back to

the participant.

II. Discussion

Section 17A(b)(3)(F) of the Act 6

requires that the rules of a clearing

agency be designed to remove

impediments to and to perfect the

mechanism of a national system for

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 provide a

more efficient method of settling the

payment of corporate bearer bond

coupons and should allow DTC

participants to centralize the processing

of the collection of coupons and the

receipt of interest payments.

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–97–17) be and hereby is approved.

For the Commission by the Division of

Market Regulation, pursuant to delegated

authority.7

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 98–12459 Filed 5–11–98; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–39955; File No. SR–DTC–

98–2]

Self-Regulatory Organizations; The

Depository Trust Company; Notice of

Filing of Proposed Rule Change

Adding the HUB Mailbox Service to the

Institution Delivery System

May 4, 1998.

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

Securities Exchange Act of 1934

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

February 10, 1998, the Depository Trust

Company (‘‘DTC’’) filed with the

Securities and Exchange Commission

(‘‘Commission’’) the proposed rule

change (File No. SR–DTC–98–2) 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 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 will add

the HUB Mailbox Service (‘‘HUB

Mailbox’’) to DTC’s Institutional

Delivery (‘‘ID’’) system.

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

The purpose of the proposed rule

change is to add the HUB Mailbox to the

services provided by the ID system.3

The HUB Mailbox will allow investment

managers and custodian banks 4 to

exchange messages regarding; (1)

securities purchases; (2) securities sales;

(3) reconciliation data relating to

securities positions and cash

movements; and (4) other securityrelated transactions as agreed to by two

or more HUB users.5 Occasionally, HUB