Federal Register / Vol. 63, No. 103 / Friday, May 29, 1998 /Rules and Regulations 29345

1See Custody of Investment Company Assets

Outside the United States, Investment Company Act

Release No. 22658 (May 12, 1997) [62 FR 26923

(May 16, 1997)].

2 Id., 62 FR at 26931.

3Letter to Dorothy M. Donohue, Associate

Counsel, Investment Company Institute, and Daniel

L. Goelzer, Baker & McKenzie, from Robert E. Plaze,

Associate Director, Division of Investment

Management (Feb. 19, 1998) (the 1997 Amendments

do not exclude compulsory depositories from rule

17f–5’s selection process, and do not preclude fund

boards from delegating to a foreign custody manager

the selection of a compulsory depository).

4See Letter to Barry P. Barbash, Director, Division

of Investment Management, from Dorothy M.

Donohue, Associate Counsel, Investment Company

Institute (Mar. 24, 1998) (placed in File No. S7–23–

95).

5 Id.

6See Custody of Investment Company Assets

Outside the United States, Investment Company Act

Release No. 21259 (July 27, 1995) [60 FR 39592

(Aug. 2, 1995)] at n.3 (a fund may incur significant

costs in maintaining securities outside the primary

market for the securities).

7See rule 17f–5(a)(1) [17 CFR 270.17f–5(a)(1)].

This provision of the amended rule generally

expands the class of eligible foreign custodians that

may hold custody of fund assets. The amended

definition of eligible foreign custodian also includes

the definitions of ‘‘qualified foreign bank’’ and

Continued

below the flight idle stop while the airplane

is in flight, accomplish the following:

(a) Within 30 days after the effective date

of this AD, revise the Limitations Section of

the FAA-approved Airplane Flight Manual

(AFM) to include the following statements.

This action may be accomplished by

inserting a copy of this AD into the AFM.

Positioning of power levers below the

flight idle stop while the airplane is in flight

is prohibited. Such positioning may lead to

loss of airplane control or may result in an

overspeed condition and consequent loss of

engine power.

(b) An alternative method of compliance or

adjustment of the compliance time that

provides an acceptable level of safety may be

used if approved by the Manager,

Standardization Branch, ANM–113, FAA,

Transport Airplane Directorate. Operators

shall submit their requests through an

appropriate FAA Principal Maintenance

Inspector, who may add comments and then

send it to the Manager, Standardization

Branch, ANM–113.

Note 2: Information concerning the

existence of approved alternative methods of

compliance with this AD, if any, may be

obtained from the Standardization Branch,

ANM–113.

(c) Special flight permits may be issued in

accordance with sections 21.197 and 21.199

of the Federal Aviation Regulations (14 CFR

21.197 and 21.199) to operate the airplane to

a location where the requirements of this AD

can be accomplished.

(d) This amendment becomes effective on

July 6, 1998.

Issued in Renton, Washington, on May 22,

1998.

Darrell M. Pederson,

Acting Manager, Transport Airplane

Directorate, Aircraft Certification Service.

[FR Doc. 98–14212 Filed 5–28–98; 8:45 am]

BILLING CODE 4910–13–U

SECURITIES AND EXCHANGE

COMMISSION

17 CFR Part 270

[Release Nos. IC–23201; IS–1136; File No.

S7–23–95]

RIN 3235–AE98

Custody of Investment Company

Assets Outside the United States

AGENCY: Securities and Exchange

Commission.

ACTION: Final rule; extension of

compliance date.

SUMMARY: The Commission is extending

the compliance date for certain

amendments to the rule that governs the

custody of investment company assets

outside the United States.

DATES: The effective date of the rule

amendments published on May 16, 1997

(62 FR 26923) remains June 16, 1997. As

of May 29, 1998, the compliance date

for the rule amendments, except for the

amended definition of an ‘‘eligible

foreign custodian,’’ is extended to

February 1, 1999. The compliance date

for the amended definition of an eligible

foreign custodian remains June 16,

1998.

FOR FURTHER INFORMATION CONTACT:

Thomas M. J. Kerwin, Senior Counsel,

or C. Hunter Jones, Assistant Director,

Office of Regulatory Policy, at (202)

942–0690, in the Division of Investment

Management, Mail Stop 5–6, Securities

and Exchange Commission, 450 5th

Street, NW, Washington, DC 20549.

SUPPLEMENTARY INFORMATION: The

Commission is extending the

compliance date for certain

amendments to rule 17f–5 [17 CFR

270.17f–5] under the Investment

Company Act of 1940 [15 U.S.C. 80a]

that the Commission adopted in 1997

(the ‘‘1997 Amendments’’).1 The release

that adopted the 1997 Amendments (the

‘‘1997 Release’’) provided that the

amendments would become effective on

June 16, 1997.2 The 1997 Release further

provided that registered management

investment companies (‘‘funds’’) must

bring their foreign custody arrangements

into compliance with the amended rule

by June 16, 1998 (i.e., the fund’s board

must make the findings required by the

amended rule or appoint a delegate to

do so by that date).

After the Commission adopted the

1997 Amendments, representatives of

mutual funds and ten U.S. bank

custodians asked the Commission’s

Division of Investment Management to

clarify whether the 1997 Amendments

permit a fund board to delegate

authority to a foreign custody manager

to select a securities depository that a

fund must use if it maintains assets in

a particular country (a ‘‘compulsory

depository’’). In a letter dated February

19, 1998, the Division of Investment

Management answered that, in its view,

under the rule, fund boards can delegate

this authority.3

In a letter dated March 24, 1998,

mutual fund representatives stated that

certain requirements of the 1997

Amendments may present

unanticipated problems when a foreign

custody arrangement involves the

selection of a compulsory depository.4

They asserted that, because most

depositories are governmental or quasigovernmental organizations, it may not

be possible for funds (or their foreign

custody managers) to obtain necessary

information to make the findings

contemplated by the rule, to negotiate

terms or conditions in custody

agreements, or to assure U.S.

jurisdiction over foreign custodians. The

fund representatives stated that they

and representatives of custodian banks

will soon submit to the Commission

proposed revisions to the 1997

Amendments that would address these

problems. In the interim, the fund

representatives requested that the

Commission suspend the compliance

date for the 1997 Amendments to

facilitate consideration of this

submission.

The fund representatives state that a

suspension is necessary because many

funds have been unable to establish new

custodial arrangements under the 1997

Amendments.5 Fund representatives

also state that funds did not become

fully aware of potential difficulties in

applying the 1997 Amendments to

compulsory depositories until recently,

when they began to revise their foreign

custody arrangements to attempt to

comply with the amendments. Because

of the difficulties in applying the rule,

the fund representatives assert that

many funds may not be prepared to

comply with the 1997 Amendments as

of June 16, 1998. Some fund groups

reportedly have considered

withdrawing their assets from foreign

custodians altogether, despite the

burdens of alternative holding

arrangements.6

The Commission is extending until

February 1, 1999, the compliance date

for the 1997 Amendments, except for

the amended definition of an ‘‘eligible

foreign custodian,’’ the compliance date

for which will remain June 16, 1998.7
29346 Federal Register / Vol. 63, No. 103 / Friday, May 29, 1998 /Rules and Regulations

‘‘U.S. bank,’’ which also will remain subject to the

June 16, 1998 compliance date. See rule 17f–5(a)(4)

and (7) [17 CFR 270.17f–5(a)(4) and (7)]. Retaining

the original compliance date for this definition will

enable funds to rely upon a provision of the 1997

Amendments that appears not to have presented

difficulties, and avoid the necessity of seeking

exemptive relief from the Commission to permit the

use of a custodian that would qualify as an eligible

foreign custodian under the amended definition.

8The extension of the compliance date is

effective upon publication of this release in the

Federal Register because the extension ‘‘grants or

recognizes an exemption or relieves a restriction.’’

5 U.S.C. 553(d)(1).

9A fund may not seek to comply with the rule

by meeting certain requirements of the old rule and

certain requirements of the amended rule (other

than the amended definition of eligible foreign

custodian).

10See section 553(b)(3)(B) of the Administrative

Procedure Act [5 U.S.C. 553(b)(3)(B)] (an agency

may dispense with prior notice and comment when

it finds, for good cause, that notice and comment

are ‘‘impracticable, unnecessary, or contrary to the

public interest’’).

11See supra note .

12The extension generally preserves the status

quo that has existed since the adoption of the 1997

Amendments. Funds have been permitted to

comply with either the old rule or the amended rule

since June 16, 1997, the effective date of the 1997

Amendments. Retaining the original compliance

date for the amended definition of eligible foreign

custodian will allow funds to rely on a provision

of the amended rule that appears not to have

presented difficulties.

The extension of the compliance date

for the other amendments will give the

Commission time to review the proposal

to be submitted by representatives of

funds and banks, and to evaluate

whether refinements to the 1997

Amendments are needed.8

Until February 1, 1999, a fund may

maintain its foreign custody

arrangements under either of two

regulatory frameworks. First, the fund

may continue to comply with rule 17f–

5 as it existed prior to the 1997

Amendments (‘‘old rule 17f–5’’).

Because the compliance date for the

amended definition of eligible foreign

custodian will remain June 16, 1998, a

fund may comply with old rule 17f–5

while also selecting a custodian that is

an eligible foreign custodian under the

amended definition. Second, in the

alternative, a fund may comply entirely

with rule 17f–5 as amended by the 1997

Amendments (the ‘‘amended rule’’).

The fund may apply either of these

alternative frameworks separately to

each foreign custodian it uses. The

fund’s arrangement with a particular

foreign custodian or subcustodian,

however, should comply in its entirety

either with old rule 17f–5 (subject to the

amended definition of eligible foreign

custodian), or with the amended rule.9

The Commission for good cause finds

that, based on the reasons cited above,

notice and solicitation of comment

regarding the extension of the

compliance date for certain of the 1997

Amendments is impracticable,

unnecessary, and contrary to the public

interest.10 The Commission notes that

the original compliance date is

imminent, that many funds reportedly

are not in a position to comply with the

1997 Amendments, that funds need

prompt guidance concerning the

regulatory requirements that will apply

to their foreign custody arrangements,

and that a limited extension will aid

funds, bank custodians, and the

Commission in considering whether

additional amendments are necessary.

Fund representatives have stated that,

without a suspension of the compliance

date, some funds may withdraw assets

from foreign custodians, which could

increase costs for investors or otherwise

harm investors.11 The Commission also

notes that the 1997 Amendments were

themselves submitted for public notice

and comment, and that any

amendments that may be considered in

the future will be submitted for notice

and comment.12

In analyzing the costs and benefits of

this action, the Commission believes

that the extension of the compliance

date for certain of the 1997

Amendments will not impose costs on

funds, but will enable funds to avoid the

costs of attempting to comply with

provisions of the rule that they assert

may be unworkable for some funds. The

Commission believes that the extension

will produce potential benefits for funds

by allowing funds the option to comply

with the amended rule or the old rule,

and by permitting funds and bank

custodians to present a proposal to

refine the 1997 Amendments.

Dated: May 21, 1998.

By the Commission.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 98–14187 Filed 5–28–98; 8:45 am]

BILLING CODE 8010–01–P

INTERNATIONAL TRADE

COMMISSION

19 CFR Parts 201 and 205

Revision of Public Notice, Freedom of

Information Act, Initiation of

Investigation, and Privacy Act

Regulations, and Implementation of

Electronic Freedom of Information Act

Amendments of 1996, and Technical

Corrections to Rules Concerning

Probable Economic Effect

Investigations

AGENCY: International Trade

Commission.

ACTION: Final rulemaking.

SUMMARY: The United States

International Trade Commission

(Commission) is amending its rules of

practice and procedure to make certain

changes to rules relating to public

notices, availability of information

under the Freedom of Information Act

(FOIA), initiation of investigations, and

safeguarding of individual privacy

under the Privacy Act of 1974 (Privacy

Act). The intended effect of the changes

is to implement the Electronic Freedom

of Information Act Amendments of 1996

and otherwise to bring the rules into

conformity with current Commission

practices and procedures, and with

current costs of providing services.

DATES: The final rules will become

effective June 29, 1998.

FOR FURTHER INFORMATION CONTACT:

William W. Gearhart, telephone 202–

205–3091. Hearing impaired individuals

are advised that information on this

matter can be obtained by contacting the

Commission’s TDD terminal at (202)

205–1810. General information

concerning the Commission may also be

obtained by accessing its internet server

(http://www.usitc.gov).

SUPPLEMENTARY INFORMATION: Section

335 of the Tariff Act of 1930 (19 U.S.C.

1335) authorizes the Commission to

adopt such reasonable procedures and

rules and regulations as it deems

necessary to carry out its functions and

duties.

The Commission published a notice

of proposed rulemaking at 62 FR 61252

(November 17, 1997), proposing to

amend the Commission’s Rules of

Practice and Procedure to make certain

changes to rules relating to public

notices, availability of information

under the Freedom of Information Act

(FOIA), and safeguarding of individual

privacy under the Privacy Act of 1974

(Privacy Act). The Commission

requested public comment on the

proposed rules, but no comments were

received. Accordingly, the Commission