24948 Federal Register / Vol. 60, No. 90 / Wednesday, May 10, 1995 / Notices

respective rules, whenever a registered employee is

terminated.

3 15 U.S.C. 78c(a)(39) (1988).

4 17 CFR 240.19h–1 (1994).

5 17 CFR 240.17f–2 (1994)

6See 17 CFR 240.17f–2(a)(1)(i).

7See, e.g., NYSE Rule 35.60 (requiring

fingerprinting of all floor employees of members

and member organizations and all employees of

members and member organizations who have

submitted registration applications for admission to

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

of such notice to the person who has

been terminated.

Requiring each Floor employee to

submit the Form U–4 will enable the

Exchange to fulfill its regulatory

responsibilities better by identifying

those individuals who are subject to a

statutory disqualification under Section

3(a)(39) of the Act.3 The Exchange is

required to make a determination in

each case where an individual who is

subject to a statutory disqualification

(e.g., is suspended or barred by an SRO,

or has been convicted of any felony or

certain enumerated misdemeanors)

seeks admission to or continuance in

membership, participation in, or

association with a member or member

organization. In addition, Rule 19h–1 4

under the Act requires that the

Exchange provide detailed information

to the Commission whenever it

determines to admit or continue in

membership or participation or

association with a member or member

organization, any person who is subject

to a statutory disqualification.

Additional provisions of the proposal

will require all Floor Employees of

members and member organizations and

all Exchange members to be

fingerprinted and to submit such

fingerprints to the Exchange for

identification, background checking,

and appropriate processing. The

proposed amendments to require

fingerprinting of all Exchange members

and floor clerks also will help in

identifying persons who are subject to a

statutory disqualification as well as

enhance overall security on the

Exchange Floor.

Fingerprinting currently is required

for each partner, director, officer or

employee of broker-dealers pursuant to

Rule 17f–2 5 under the Act, with certain

exceptions. Floor clerks are not required

by Rule 17f–2 to submit fingerprints

because they do not physically handle

monies or securities.6 The Exchange,

however, now has determined that all

floor members and floor employees

should be fingerprinted to help to

ensure the security of the CHX staff,

members, and the Exchange facility. The

requirement to fingerprint members and

floor employees is consistent with the

requirements of other exchanges.7

The requirements of the amended

rules to submit Form U–4 and

fingerprints will apply to all current and

prospective Floor employees and

members.

Finally, the proposed rule change

imposes an initial registration fee on

clerks of $50.

2. Statutory Basis

The CHX believes that the proposed

rule change is consistent with Section

17(f)(2) of the Act, which requires (with

certain exceptions) fingerprinting of

each partner, director, officer or

employee of broker-dealers.

The rule change also is consistent

with Section 6(c)(2) of the Act because

having more comprehensive background

information submitted on Form U–4

will enable the Exchange to identify

individuals who are subject to statutory

disqualification under Section 3(a)(39)

of the Act.

The rule change advances the

objectives of Rule 19h–1 under the Act,

which requires detailed reporting to the

Commission of the Exchange’s

determination to admit to, or continue

in, membership or participation or

association with a member, persons

subject to statutory disqualification.

Finally, the proposed rule change is

consistent with Section 6(b)(5) of the

Act, which provides, in pertinent part,

that the rules of the Exchange be

designed to prevent fraudulent and

manipulative acts, to promote just and

equitable principles of trade and to

protect the investing public.

(B) Self-Regulatory Organization’s

Statement on Burden on Competition

The Exchange does not believe that

the proposed rule change will impose a

burden on competition.

(C) Self-Regulatory Organization’s

Statement on Comments on the

Proposed Rule Change Received From

Members, Participants or Others

No comments were solicited or

received.

III. Date of Effectiveness of the

Proposed Rule Change and Timing for

Commission Action

Within 35 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

90 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 at

the Commission’s Public Reference

Section, 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 CHX. All submissions

should refer to File No. SR–CHX–95–06

and should be submitted by May 31,

1995.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 95–11516 Filed 5–9–95; 8:45 am]

BILLING CODE 8010–01–M

[Release No. 34–35674; File No. SR–MSRB–

95–05]

Self-Regulatory Organizations;

Municipal Securities Rulemaking

Board; Notice of Filing and Immediate

Effectiveness of a Proposed Rule

Change Modifying The Applicable Time

Frames for Customer Account

Transfers

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 31, 1995, the Municipal

Securities Rulemaking Board (‘‘MSRB’’)

filed with the Securities and Exchange

Commission (‘‘Commission’’) the

proposed rule change (File No. SR–

MSRB–95–5) 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
Federal Register / Vol. 60, No. 90 / Wednesday, May 10, 1995 / Notices 24949

2For a description of the NYSE’s amendments to

its customer account transfer rules, refer to

Securities Exchange Act Release No. 34633

(September 2, 1994), 59 FR 46872 [File No. SR–

NYSE–94–21] (approving proposed rule change).

3For a description of the NASD’s amendments to

its customer account transfer rules, refer to

Securities Exchange Act Release No. 35031

(November 30, 1994), 59 FR 62761 [File No. SR–

NASD–94–56] (granting partial accelerated approval

of proposed rule change).

4For a description of the NSCC’s enhancements

to its customer account transfer system, refer to

Securities Exchange Act Release No. 34879 (October

21, 1994), 59 FR 54229 [File No. SR–NSCC–94–13]

(approving proposed rule change).

5The Commission has modified the text of the

summaries prepared by MSRB.

6 17 CFR 240.15c6–1.

7Securities Exchange Act Release No. 33023

(October 6, 1993), 58 FR 52891 (adoption of Rule

15c6–1).

8Securities Exchange Act Release No. 34952

(November 9, 1994, 59 FR 59137 (changing effective

date from June 1, 1995 to June 7, 1995).

9Securities Exchange Act Release No. 33023

(October 6, 1993), 58 FR 52891 (adoption of Rule

15c6–1).

10Securities Exchange Act Release No. 35427

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

MSRB–94–10] (approving proposed rule change).

11 15 U.S.C. 78o–4(b)(2)(C).

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 purpose of the proposed rule is

to modify MSRB Rule G–26 regarding

customer account transfers to require

that a dealer carrying a customer

account in municipal securities validate

and return customer account transfer

instructions to the dealer designated to

receive the account within three

business days and that the dealer

carrying the account complete the

transfer of the account within four

business days after validation of the

transfer instructions.

The proposed rule change supports

the movement of the securities industry

to three-day settlement in June 1995 and

parallels recent amendments to the

customer account transfer rules of the

New York Stock Exchange (‘‘NYSE’’) 2

and the National Association of

Securities Dealers (‘‘NASD’’).3 Recent

enhancements also were made to the

Automated Customer Account Transfer

System operated by National Securities

Clearing Corporation (‘‘NSCC’’)

accelerating the time in which an

account can be transferred.4 The

proposed rule change is consistent with

those enhancements. The MSRB

requests that the Commission set the

effective date for thirty days after filing.

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 that it received on the

proposed rule change. The text of these

statements may be examined at the

places specified in Item IV below. The

MSRB has prepared summaries, set

forth in sections (A), (B), and (C) below,

of the most significant aspects of such

statements.5

(A) Self-Regulatory Organization’s

Statement of the Purpose of, and

Statutory Basis for, the Proposed Rule

Change

In October 1993, the Commission

adopted Rule 15c6–1 6 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 cycle for most

securities transactions.7 The rule will

become effective June 7, 1995.8

Although municipal securities were not

included within the scope of Rule 15c6–

1, the Commission asked the Board to

undertake a commitment to T+3

settlement for the municipal securities

industry.9

On February 28, 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 redefining regular-way

settlement as three business days.10 In

addition, the MSRB has been reviewing

its rules to determine if there are other

appropriate changes to its rules that

need to be made to facilitate the

movement to T+3 settlement. The

current proposed amendment to rule G–

26 has been identified as such a

necessary change.

The proposed rule change would

require that a dealer carrying a customer

account in municipal securities validate

and return customer account transfer

instructions to the dealer designated to

receive the account within three

business days following receipt of the

transfer instructions. The rule currently

allows five business days for this to

occur. In addition, the dealer carrying

the account would be required to

complete the transfer of the account

within four business days following

validation of the transfer instructions in

lieu of five business days as is currently

stated in the rule.

As set forth in Section 15B(b)(2)(C)11

of the Act, the MSRB has the authority

to adopt rules to foster cooperation with

persons engaged in regulating, clearing,

settling, processing information with

respect to, and facilitating transactions

in municipal securities. The MSRB

believes the proposed rule change is

consistent with Section 15B(b)(2)(C)

because the proposal promotes

uniformity with the customer account

transfer procedures of the other selfregulatory organizations thereby

providing greater efficiency in the

transfer of customer accounts.

(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

Because the foregoing proposed rule

change: (1) Does not significantly affect

the protection of investors or the public

interest; (2) does not impose any

significant burden on competition; (3)

was provided to the Commission for its

review at least five days prior to the

filing date; and (4) does not become

operative for thirty days from the date

of its filing on March 31, 1995, the

proposed rule change has become

effective pursuant to Section 19(b)(3)(A)

of the Act and Rule 19b–4(e)(6)

thereunder. In particular, the

Commission believes the proposal

would qualify as a ‘‘non-controversial

filing’’ in that the proposed standards

do not significantly affect the protection

of investors or the public interest and do

not impose any significant burden on

competition. At any time within sixty

days of the filing of the 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.

Persons making written submissions

should file six copies thereof with the
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