Federal Register / Vol. 60, No. 30 / Tuesday, February 14, 1995 / Notices 8435

6The MSRB has, however, raised questions about

how these guidelines would be enforced.

7 17 CFR 200.30–3(a)(12) (1994).

for Principal and Income Payments

Guidelines’’ established by the U.S.

Working Committee of the Group of

Thirty. These principles will become a

part of DTC’s income and

reorganization/redemption payments

standards.

First, DTC proposes that all new

issues be required to meet depositoryeligibility requirements and must be

structured so that all payments to

depositories of principal and income are

made in same-day funds on payment

date by 2:30 p.m. Eastern Standard time.

Second, for all depository-eligible

issues already outstanding, paying

agents must remit to DTC all principal

and income payments in same-day

funds on payment date by 2:30 p.m.

Eastern Standard time according to

existing arrangements between the

paying agent and DTC. Recognizing that

paying agents for certain issues may

need to modify their current business

arrangements to account for this change,

DTC will continue to pay through July

31, 1996, the same rebates as paid now

to paying agents that result from paying

agents municipal interest and municipal

and corporate redemptions to DTC in

same-day funds on payment date.

However, once DTC converts to sameday funds settlement for all security

transactions, DTC will not have

investment funds available to rebate to

paying agents because DTC intends to

make all payments to its participants on

payment date in same-day funds.

Recognizing that participants will

benefit by receiving all their expected

payments in same-day funds on

payment date, from the date of the

conversion to same-day funds

settlement for all security transactions

until July 31, 1996, DTC will charge

participants in proportion to their

holdings in each issue for which a

rebate applies the funds needed to pay

the rebate. With respect to payments

made on or after August 1, 1996, these

charges to participants will no longer be

required. The rebate will not be applied

to payments of corporate interest,

dividends, and reorganizations in which

the paying agent already pays DTC in

same-day funds on payment date. These

payments currently are not subject to

interest earnings rebates. However, DTC

will require that 100% of corporate

interest, dividend, and reorganization

payments be paid to DTC in same-day

funds on payment date by 2:30 p.m.

Eastern Standard time.

Third, DTC will require paying agents

to provide DTC with the CUSIP

numbers for each issue for which

payment is being sent as well as the

dollar amount of the payment for each

issue no later than noon Eastern

Standard time on the payment date.

Notification of payment details should

be made using automated

communications.

Finally, if an issuer or agent

continually fails to make payment as

called for in the guidelines, DTC may

decide to systematically prevent the

allocation of such payments to

participants on the payable date.

Eventually, DTC may also elect to deny

depository eligibility to issues brought

to market by non-complying issuers or

agents.

The proposal also seeks to amend the

operational arrangements memorandum

to introduce the use of a ‘‘Blanket Letter

of Representations.’’ This document will

be submitted by an issuer to DTC only

once for all issues thus eliminating the

need for individual letters of

representations for book-entry-only

issues under certain circumstances.

DTC believes that the proposed rule

change is consistent with the

requirements of Section 17A of the Act

and the rules and regulations

thereunder applicable to DTC because

the proposal will facilitate the prompt

and accurate clearance and settlement of

securities transactions by promoting the

immobilization of securities.

(B) Self-Regulatory Organization’s

Statement on Burden on Competition

DTC indicated that it did not believe

that the proposed rule change would

impose any burden on competition not

necessary or appropriate in the

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

DTC’s operational arrangements were

developed in close consultation with

many bond trustees, issuers’ agents,

participants, and industry groups

throughout the country in order to

assure that these processing standards

can be met. DTC has disseminated these

memoranda widely to corporate and

public finance professionals,

underwriters, bond counsel, and issuers

so that they may consider whether

documentation relating to issues sought

to be made depository-eligible

adequately accommodates these

requirements.

In addition, both industry

organizations and self-regulatory

organizations have endorsed the four

principles discussed above. These

organizations include the American

Bankers Association, the Bank

Depository User Group, the Government

Finance Officers Association, the

Municipal Securities Rulemaking Board

(‘‘MSRB’’),6 the Public Securities

Association, and the Reorganization

Division, Dividend Division, Securities

Operations Division, and the Operations

Committee of the Securities Industry

Association.

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 Federal

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 the self-regulatory

organization consents, the Commission

will:

(A) By order approve such proposed

rule change or

(B) Institute proceedings to determine

whether the proposed rule change

should be disapproved.

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, NW.,

Washington, DC 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, NW.,

Washington, DC. Copies of such filing

will also be available for inspection and

copying at the principal office of DTC.

All submissions should refer to the File

No. SR–DTC–94–19 and should be

submitted by March 7, 1995.

For the Commission, by the Division of

Market Regulation, pursuant to the delegated

authority.7

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 95–3566 Filed 2–13–95; 8:45 am]

BILLING CODE 8010–01–M