Federal Register / Vol. 63, No. 126 /Wednesday, July 1, 1998 / Notices 36007

years in an easily accessible place, a

written record of each loan setting forth

the number of shares loaned, the face

amount of the securities lent, the fee

received (or the rebate rate remitted),

the identity of the Borrower, the terms

of the loan, and any other information

or materials upon which the finding was

made that each loan made to Affiliated

Broker-Dealers was fair and reasonable,

and that the procedures followed in

making such loan were in accordance

with the other undertakings set forth in

the application.

6. The total value of securities loaned

to any one broker-dealer on the

approved list will be in accordance with

a schedule to be approved by the Board

of each Affiliated Fund, but in no event

will the total value of securities lent to

any one Affiliated Broker-Dealer exceed

10% of the net assets of the Affiliated

Fund, computed at market.

Investment of Uninvested Cash and

Cash Collateral

7. The Affiliated Funds, New Fund,

and any future Affiliated Fund that

relies on the order will be advised by

PaineWebber, Mitchell Hutchins, or any

entity controlling, controlled by, or

under common control with,

PaineWebber or Mitchell Hutchins.

8. A majority of the Board of an

Affiliated Fund (including a majority of

the Disinterested Directors), will

initially and at least annually thereafter

determine that investing Uninvested

Cash and Cash Collateral in Shares of

New Fund is in the best interests of the

shareholders of the Affiliated Fund.

9. With respect to any Affiliated Fund

that invests in Shares of New Fund,

PaineWebber or Mitchell Hutchins will

reduce its advisory fee charged to the

Affiliated Fund in an amount (the

‘‘Reduction Amount’’) equal to the net

asset value of the Affiliated Fund’s

holdings in New Fund multiplied by the

rate at which advisory fees are charged

by Mitchell Hutchins to New Fund. Any

fees remitted or waived pursuant to this

condition will not be subject to

recoupment by PaineWebber or Mitchell

Hutchins or their affiliates at a later

date.

10. Investment in Shares of New Fund

by an Affiliated or Other Fund will be

consistent with the Affiliated or Other

Fund’s investment objectives and

policies.

11. An Affiliated or Other Fund’s

Uninvested Cash and Cash Collateral

will be invested in a particular

investment series of the New Fund only

if that investment series invests in the

types of instruments that the Affiliated

or Other Fund has authorized for the

investment of its Uninvested Cash and

Cash Collateral.

12. Each investment series of the New

Fund that uses the amortized cost

method of valuation as defined in rule

2a–7 under the Act will comply with

rule 2a–7. With respect to such series,

Mitchell Hutchins will adopt and

monitor the procedures described in

rule 2a–7(c)(6) under the Act and will

take such other actions as are required

to be taken pursuant to such procedures.

An Affiliated or Other Fund may only

purchase Shares of an investment series

of the New Fund using the amortized

cost method of valuation if Mitchell

Hutchins determines on an ongoing

basis that the investment series is in

compliance with rule 2a–7. Mitchell

Hutchins will preserve for a period not

less than six years from the date of

determination, the first two years in an

easily accessible place, a record of such

determination and the basis upon which

the determination was made. This

record will be subject to examination by

the Commission and the staff.

13. An Affiliated or Other Fund that

complies with rule 2a–7 under the Act

will not invest its Cash Collateral or

Uninvested Cash in an investment series

of the New Fund that does not comply

with the requirements of rule 2a–7.

14. The securities lending program of

each Affiliated and Other Fund will

comply with all present and future

applicable Commission staff positions

regarding securities lending

arrangements.

15. Each Affiliated or Other Fund will

invest Uninvested Cash in, and hold

Shares of, the New Fund only to the

extent that the Affiliated or Other

Fund’s aggregate investment of

Uninvested Cash in Shares of the New

Fund does not exceed 25% of the

Affiliated or Other Fund’s total assets.

Operation of the New Fund

16. The New Fund will comply as to

each investment series with the

requirements of sections 17 (a), (d), and

(e), and 18 of the Act as if the New Fund

were a registered open-end investment

company. With respect to all

redemption requests made by an

Affiliated or Other Fund, the New Fund

will comply with section 22(e) of the

Act. Mitchell Hutchins will, subject to

approval by the Trustee, adopt

procedures designed to ensure that the

New Fund complies with sections 17

(a), (d), and (e), 18, and 22(e) of the Act.

Mitchell Hutchins will also periodically

review and periodically update as

appropriate the procedures and will

maintain books and records describing

the procedures, and maintain the

records required by rules 31a–1(b)(1),

31a–1(b)(2)(ii), and 31a–1(b)(9) under

the Act. All books and records required

to be made pursuant to this condition

will be maintained and preserved for a

period of not less than six years from

the end of the fiscal year in which any

transaction occurred, the first two years

in an easily accessible place, and will be

subject to examination by the

Commission and the staff.

17. The net asset value per share with

respect to Shares of the New Fund will

be determined separately for each

investment series by dividing the value

of the assets belonging to that

investment series, less the liabilities of

that investment series, by the number of

Shares outstanding with respect to that

investment series.

18. The Shares of the New Fund will

not be subject to a sales load,

redemption fee, asset-based sales

charge, or service fee (as defined in rule

2830(b)(9) of the Conduct Rules of the

National Association of Securities

Dealers).

19. Each Affiliated or Other Fund will

purchase and redeem Shares of the New

Fund as of the same time and at the

same price, and will receive dividends

and bear its proportionate share of

expenses on the same basis, as other

shareholders of the New Fund. A

separate account will be established in

the shareholder records of the New

Fund for the account of each Affiliated

or Other Fund.

20. The New Fund will not acquire

securities of any investment company in

excess of the limits contained in section

12(d)(1)(A) of the Act.

For the Commission, by the Division of

Investment Management, under delegated

authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 98–17473 Filed 6–30–98; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

Sunshine Act Meeting

FEDERAL REGISTER CITATION OF PREVIOUS

ANNOUNCEMENT: [63 FR 34949, June 26,

1998].

STATUS: Closed Meeting.

PLACE: 450 Fifth Street, N.W.,

Washington, D.C.

DATE PREVIOUSLY ANNOUNCED: June 26,

1998.

CHANGE IN THE MEETING: Time Change.

The time for the closed meeting

scheduled for Wednesday, July 1, 1998,

at 2:30 p.m., has been changed to 11:00

a.m.
36008 Federal Register / Vol. 63, No. 126 /Wednesday, July 1, 1998 / Notices

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

2The Commission has modified the text of the

summaries prepared by DTC.

At times, changes in Commission

priorities require alterations in the

scheduling of meeting items. For further

information and to ascertain what, if

any, matters have been added, deleted

or postponed, please contact:

The Office of the Secretary (202) 942–

7070.

Dated: June 29, 1998.

Jonathan G. Katz,

Secretary.

[FR Doc. 98–17711 Filed 6–29–98; 3:56 pm]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–40119; File No. SR–DTC–

98–7]

June 24, 1998.

Self-Regulatory Organizations; The

Depository Trust Company; Notice of

Filing of Proposed Rule Change

Adding a New Service Providing PreIssuance Messaging of Money Market

Instruments Trade Details to Issuing

and Paying Agents and Dealers

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

Securities Exchange Act of 1934

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

April 22, 1998. The Depository Trust

Company (‘‘DTC’’) filed with the

Securities and Exchange Commission

(‘‘Commission’’) the proposed rule

change (File No. SR–DTC–98–7) 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

approve DTC’s providing Pre-Issuance

Messaging (‘‘PIM’’) of money market

instruments (‘‘MMIs’’) trade details to

issuing and paying agents (‘‘IPAs’’) and

dealers.

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

DTC’s proposed rule change seeks to

provide a less expensive and more

efficient mechanism for IPAs and

dealers to communicate securities

information, specifically PIM

instructions, related to the issuance of

MMI. Although the PIM service is being

designed to accommodate all types of

MMIs, it is anticipated that initially the

PIM service will be utilized only for

commercial paper (‘‘CP’’).

According to DTC, the service will

enable dealers and IPAs to communicate

issuance instructions to one another

prior to the IPAs’ issuing CP by bookentry through DTC or through physical

certificates outside DTC.

Background

DTC begin operation of its CP

program in October 1990 and handles

almost all CP issuances done in the

United States today. The CP program is

designed to allow for the electronic

issuance done in the United States

today. The CP program is designed for

the electronic issuance of CP in bookentry-only form. The transmission of

issuance instructions for IPAs to DTC

for dealer-placed CP is central to the CP

program. Typically, between four and

five messages are transmitted among

IPAs and dealers prior to each issuance

of CP. Currently, these messages are

transmitted via dedicated links between

a dealer and individual IPA. Thus,

dealers interacting with more than one

IPA must create and maintain multiple

communications links. Typically,

dealers maintain seven or more separate

links with IPAs.

As a result of the recommendation by

dealer participant that DTC investigate

offering a pre-issuance messaging

service, a working group of dealers and

IPA was formed in June of 1996 under

the auspices of the The Bond Market

Association’s Money Market Task Force.

DTC has worked closely with the Task

Force on the development of the CP

program and again drew on its expertise

for the PIM project.

Proposed Rule Change

Under the proposed rule change, IPAs

and dealers could send PIM instructions

to each other by using DTC as a conduit

or central switch for the messages. PIM

instructions would be sent

electronically to DTC. DTC would not

perform any processing on the

instructions but would instead

automatically route them to the

recipient indicated in the sender’s

instructions.

PIM employs several levels of system

security in addition to allowing IPAs

and dealers to utilize their own

password security per message if they

wish. As each message sent requires an

acknowledgment from the receiving

party, it is unlikely that messages will

be lost. Should a message be

undeliverable for some reason, DTC will

issue a notice to the message originator

indicating the message could not be

delivered. The originator will then have

to reissue a new message. DTC will

charge the sending party $.04 per

message. There will be no charge to the

message receiver. Each user of the PIM

Service will enter into a PIM agreement

with DTC.

DTC believes that the proposed rule

change is consistent with the

requirements of Sections 17A(b)(3)(A) of

the Act and the rules and regulations

thereunder because it encourages an

efficient means of communicating

among dealers and IPAs in connection

with the issuance of MMIs.

(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 purposes of the Act, in the public

interest, and for the protection of

investors.

C. Self-Regulatory Organization’s

Statement on Comments on the

Proposed Rule Change Received From

Members, Participants or Others

Written comments on the proposed

rule change have not been solicited or

received on the proposed rule change.

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 Fedeal

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 approved such proposed

rule change or

(B) Institute proceedings to determine

whether the proposed rule change

should be disapproved.