24950 Federal Register / Vol. 60, No. 90 / Wednesday, May 10, 1995 / Notices

12 17 CFR 200.30–3(a)(12) (1994).

1 15 U.S.C. 78s(b)(1) (1988).

2The Commission has modified the text of the

summaries prepared by MSRB.

3Securities Exchange Act Release No. 33023

(October 6, 1993), 58 FR 52891 (release adopting

Rule 15c6–1). On November 16, 1994, the

Commission changed the effective date of Rule

15c6–1 from June 1, 1995 to June 7, 1995. Securities

Exchange Act Release No. 34952 (November 9,

1994), 59 FR 59137.

4Securities Exchange Act Release No. 33023

(October 6, 1993), 58 FR 52891.

5Securities Exchange Act Release No. 35427

(February 28, 1995), 60 FR 12798 [File No. SR–

MSRB–94–10].

6The terms ‘‘DVP/RVP customer’’ and

‘‘institutional customer’’ both refer to transactions

between dealers and customers that are settled on

a delivery versus payment or receipt versus

payment basis.

7The automated clearance and settlement process

includes several steps. Initially, dealers submit

transaction information to an automated

confirmation/acknowledgement system followed by

the institutional customer receiving notification

requesting acknowledgement of the transaction

through the automated system. Once the

institutional customer acknowledges the

transaction, the transaction is then ready for

automated settlement to occur at the depository on

settlement date.

8Rule G–15(a) states that a confirmation

containing certain information must be given or

sent to each customer. Some dealers use the

automated confirmation/acknowledgement system

as the exclusive mechanism for confirming

transactions to DVP/RVP customers (i.e., no paper

confirmation is sent). The MSRB has stated that use

of the automated confirmation/acknowledgement

system to deliver a confirmation meeting the

information requirements of rule G–15(a) is

permissible as long as all information required by

rule G–15(a) is included on the electronic

confirmation generated by that system. The MSRB,

however, has not specified that the automated

confirmation/acknowledgement system is the

exclusive mechanism for sending confirmation

information required by rule G–15(a) to DVP/RVP

customers. Some dealers continue to use both the

automated confirmation/acknowledgement system

and also send paper confirmations.

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

Room, 450 Fifth Street NW.,

Washington, DC 20549. Copies of such

filing will also be available for

inspection and copying at the principal

office of the MSRB. All submissions

should refer to the file number SR–

MSRB–95–05 and should be submitted

by May 31, 1995.

For the Commission by the Division of

Market Regulation, pursuant to delegated

authority.12

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 95–11517 Filed 5–9–95; 8:45 am]

BILLING CODE 8010–01–M

[Release No. 34–35675; File No. SR–MSRB–

95–3]

Self-Regulatory Organizations;

Municipal Securities Rulemaking

Board; Notice of Filing of Proposed

Rule Change Relating to the

Submission of Transaction Information

for Confirmation, Clearance, and

Settlement of Transactions With

Customers

May 4, 1995.

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

Securities Exchange Act of 1934

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

March 23, 1995, the Municipal

Securities Rulemaking Board (‘‘MSRB’’)

file with the Securities and Exchange

Commission (‘‘Commission’’) the

proposed rule change as described in

Items I, II, and III below, which Items

have been prepared primarily by the

MSRB. The Commission is publishing

this notice to solicit comments on the

proposed rule change from interested

persons.

I. Self-Regulatory Organization’s

Statement of the Terms of Substance of

the Proposed Rule Change

The MSRB is filing proposed

amendments to MSRB rule G–15

regarding the confirmation, clearance,

and settlement of transactions with

customers. The amendments would

require dealers to submit delivery

versus payment and receipt versus

payment (‘‘DVP/RVP’’) customer

transactions to an automated

confirmation/acknowledgement system

no later than the end of trade date (‘‘T’’).

The MSRB requests that the

amendments be made effective thirty

days after approval by the Commission.

II. Self-Regulatory Organization’s

Statement of the Purpose of, and

Statutory Basis for, the Proposed Rule

Change

In its filing with the Commission, the

MSRB 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 texts of these

statements may be examined at the

places specified in Item IV below. The

MSRB has prepared summaries, set

forth in section (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

On October 5, 1993, the Commission

adopted Rule 15c6–1 under the Act,

which establishes three business days

after the trade date (‘‘T+3’’) instead of

five business days (‘‘T+5’’) as the

standard settlement time frame for most

broker-dealer transactions.3 Recognizing

the differences between the corporate

and municipal securities markets and

the unique role the MSRB has in

overseeing the municipal securities

market, the Commission did not include

municipal securities within the scope of

Rule 15C6–1.4 The Commission,

however, did formally request that the

MSRB undertake a commitment to T+3

settlement for municipal securities to

ensure consistency in settlement cycles

in the corporate and municipal markets.

On February 29, 1995, the

Commission approved amendments to

MSRB rules G–12 on uniform practice

and rule G–15 on confirmation,

clearance, and settlement of transactions

with customers. These amendments

established three business days as the

standard settlement time frame for

regular-way transactions in municipal

securities.5 The MSRB has been

reviewing its rules to determine whether

or not additional rule changes are

necessary to facilitate the movement to

T+3 settlement. The MSRB has

determined that amendment rule G–15

is necessary to facilitate T+3 settlement

for municipal securities transactions.

Currently, rule G–15(d) states that a

dealer shall give or send to a DVP/RVP

customer a confirmation with respect to

an execution of an order no later than

the close of business on the next

business day after execution (‘‘T+1’’).6

The rule currently does not specify the

timing for the submission of transaction

data to an automated confirmation/

acknowledgement system although the

rule does require nearly all municipal

securities transactions with institutional

customers to be process in such a

system.7 Under the proposed rule

change, giving or sending of the

confirmation and the submission of

transaction data to an automated

confirmation/acknowledgement system

would occur on the trade date rather

than T+1.8 In a T+3 environment, less

time will exist for the necessary

communications between dealers and

institutional customers to clear and

settle transactions. The proposed rule

change accordingly would require the
Federal Register / Vol. 60, No. 90 / Wednesday, May 10, 1995 / Notices 24951

9For a complete description of Phase II of the

MSRB’s Transaction Reporting Program, refer to

‘‘Transaction Reporting Program for Municipal

Securities: Phase II,’’ MSRB Reports, Vol. 15, No.

1 (April 1995).

10 15 U.S.C. 78o–3(b)(2)(C) (1988).

11 17 CFR 200.30–3(a)(12) (1994).

1 15 U.S.C. 78(b)(1) (1988).

2Securities Exchange Act Release No. 35470

(March 10, 1995), 60 FR 14477.

3For a complete description of PHILADEP’s

FASTRACS, refer to Securities Exchange Act

Release No. 34404 (July 19, 1994) 59 FR 38010 [File

No. SR–PHILADEP–90–03] (order approving

FASTRACS program on a temporary basis).

4Currently, PHILADEP has completed testing

with two transfer agents who are now fully

operational with FASTRACS. PHILADEP continues

to conduct testing with a third transfer agent. Upon

successful completion of testing with the third

transfer agent, PHILADEP will file a proposed rule

change under Section 19(b) of the Act to seek

permanent approval of the FASTRACS program.

Telephone conversation between Keith Kessel,

Compliance Officer, PHILADEP, and Margaret J.

Robb, Attorney, Division of Market Regulation,

Commission (December 22, 1994).

5Supra note 3.

communication between dealers and

institutional customers begin on trade

date. In addition, the success of the

proposed Phase II of the MSRB’s

Transaction Reporting Program will

depend on timely and accurate

submission of institutional customer

transaction data on trade date to the

automated confirmation/

acknowledgement system.9

Section 15B(b)(2)(C) of the Act

provides that the MSRB has the

authority to adopt rules:

To foster cooperation and coordination

with persons engaged in regulating, clearing,

settling, processing information with respect

to, and facilitating transactions in municipal

securities, to remove impediments to and

perfect the mechanism of a free and open

market in municipal securities, and, in

general, to protect investors and the public

interest * * *.10

The MSRB believes the proposed rule

change is consistent with Section

15B(b)(2)(C) of the Act because the

proposal will facilities clearance and

settlement of municipal securities in a

T+3 environmental by helping to ensure

a more timely confirmation and

acknowledgement of DVP/RVP

customer transactions.

B. Self-Regulatory Organization’s

Statement on Burden on Competition

the MSRB does not believe that the

proposed rule change will impose any

burden on competition 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

The MSRB has neither solicited nor

received comments 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 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.

People 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

submissions, 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. Copies of the filing will also be

available for inspection and copying at

the MSRB’s principal offices. All

submissions should refer to File No.

SR–MSRB–95–3 and should be

submitted by May 31, 1995.

For the Commission by the Division of

Market Regulation, pursuant to delegated

authority.11

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 95–11518 Filed 5–9–95; 8:45 am]

BILLING CODE 8010–01–M

[Release No. 34–35676; File No. SR–

PHILADEP–94–06]

Self-Regulatory Organizations; The

Philadelphia Depository Trust

Company; Order Granting Temporary

Approval of a Proposed Rule Change

Extending the Pilot Program for the

Fully Automated Securities Transfer

Reconciliation Accounting Control

System

May 4, 1995.

On December 14, 1994, the

Philadelphia Depository Trust Company

(‘‘PHILADEP’’) filed with the Securities

and Exchange Commission

(‘‘Commission’’) a proposed rule change

(File No. SR–PHILADEP–94–06) under

Section 19(b)(1) of the Securities

Exchange Act of 1934 (‘‘Act’’) 1 to

extend the pilot program governing the

Fully Automated Securities Transfer

Reconciliation Accounting Control

System (‘‘FASTRACS’’) through

December 29, 1995. Notice of the

proposal was published in the Federal

Register on March 17, 1995.2 No

comment letters were received. For the

reasons discussed below, the

Commission is approving the proposed

rule change and extending the

FASTRACS pilot program on a

temporary basis through December 29,

1995. The program will be limited to

three transfer agents for the duration of

the temporary approval period.

I. Description

On July 19, 1994, the Commission

approved a proposed rule change

establishing a pilot program for

FASTRACS for the transfer of certain

securities between PHILADEP and

certain transfer agents.3 FASTRACS is

an automated program by which

PHILADEP and the participating

transfer agents use a master balance

certificate to evidence the number of

securities of a particular issue that are

registered in PHILADEP’s nominee

name. The transfer agents have custody

of the securities in the form of balance

certificates. The transfer agents adjust

daily the balance certificates to reflect

PHILADEP’s withdrawal and deposit

activity.

According to PHILADEP, the pilot

program has operated successfully in

accordance with the operational and

technical specifications; however,

testing of the program is not complete.4

Therefore, PHILADEP has requested an

extension of the FASTRACS pilot

program on a temporary basis through

December 29, 1995.

II. Discussion

As discussed in detail in the order

initially approving PHILADEP’s

FASTRACS pilot program,5 one of the

primary reasons for approval of the

FASTRACS program is to enable

PHILADEP to provide for the safe and

efficient clearance and settlement of

securities transactions and to assure the