[Federal Register Volume 60, Number 105 (Thursday, June 1, 1995)]
[Notices]
[Pages 28636-28638]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-13327]



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[[Page 28637]]

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-35758; File No. SR-DTC-95-10]


Self-Regulatory Organizations; The Depository Trust Company; 
Notice of Proposed Rule Change Seeking To Implement the Advice of 
Confirm Correction/Cancellation Feature and To Modify the 
Authorization/Exception Processing Feature of the Institutional 
Delivery System

May 24, 1995.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 
1934,\1\ notice is hereby given that on April 27, 1995, The Depository 
Trust Company (``DTC'') filed 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 
DTC. The Commission is publishing this notice to solicit comments on 
the proposed rule change from interested persons.

    \1\ 15 U.S.C. 78s(b)(1) (1988).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The proposed rule change involves the Advice of Confirm Correction/
Cancellation feature and a modification of Authorization/Exception 
processing in the Institutional Delivery (``ID'') system of DTC.\2\

    \2\ The modifications are set forth in the procedures attached 
as Exhibit 2 to File No. SR-DTC-95-10. The procedures are an 
addition to Section M of the ID System of DTC's Participant 
Operating Procedures. The file is available for review in the 
Commission's Public Reference Room and at the principal office of 
DTC.
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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.\3\

    \3\ The Commission has modified the text of the summaries 
prepared by DTC.
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(A) Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In a previous filing with the Commission, DTC described several 
enhancements to the ID system that it planned to implement, including 
the Advice of Confirm Correction/Cancellation feature and the 
modification of Authorization/Exception processing.\4\ These are the 
subject of this proposed rule change.

    \4\ Securities Exchange Act Release No. 33466 (January 12, 
1994), 59 FR 3139 [File No. SR-DTC-93-07] (order approving proposed 
rule change relating to the enhanced ID system) (``Enhanced ID 
Filing'').
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    The Advice of Confirm Correction/Cancellation feature is one of 
three electronic mail features described in the Enhanced ID Filing. The 
other two electronic mail features are the Notice of Order Execution 
and Institution Instructions, which were the subjects of another DTC 
filing.\5\ The Advice of Confirm Correction/Cancellation feature will 
enable an institution or its agent which has received a confirmation 
through the ID system to notify the broker-dealer of the reason(s) why 
the institution disagrees with the confirmation. This communication 
from the institution, which is sometimes called a ``DK'' (i.e., don't 
know) of the trade, will enable the broker-dealer to take steps to 
resolve the discrepancy between its records of the trade and the 
institution's records. The Advice of Confirm Correction/Cancellation 
was described in another DTC filing as a feature which will enable a 
prime broker to DK a trade when it receives an ID confirmation from an 
executing broker.\6\

    \5\ Securities Exchange Act Release No. 34199 (June 10, 1994), 
59 FR 31660 [File No. SR-DTC-94-04] (order granting accelerated 
approval of a proposed rule change to implement the interactive 
capabilities and the electronic mail features of the enhanced ID 
system).
    \6\ Securities Exchange Act Release No. 34779 (October 3, 1994), 
59 FR 34779 [File No. SR-DTC-94-13] (order granting accelerated 
approval on a temporary basis through May 31, 1995, of the prime 
broker option in the ID system).
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    The Enhanced ID Filing also described a planned modification of 
Authorization/Exception processing to extend the period during which 
delivering parties are allowed to authorize settlement of trades or to 
except trades from settlement. Prior to the modification, only ID 
trades which settled on the third day following the trade date 
(``T+3'') or later could be authorized or excepted from settlement 
through an instruction submitted in Authorization/Exception processing 
on settlement date minus one (``S-1''). The modification allows 
authorization or exception of trades settling on T+1 and later through 
an instruction submitted on any of the twenty-three business days from 
S-1 through S+21.
    DTC believes the proposed rule change is consistent with the 
requirements of Section 17A(b)(3) (A) and (F) \7\ of the Act since the 
proposed rule change will promote efficiencies in the clearance and 
settlement of transactions in securities. The proposed rule change will 
be implemented consistently with the safeguarding of securities and 
funds in DTC's custody or control or for which it is responsible since 
the proposed rule change will be implemented as enhancements to DTC's 
existing ID system.

    \7\ 15 U.S.C. 78q-1(b)(3) (A) and (F) (1988).
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(B) Self-Regulatory Organization's Statement on Burden on Competition

    DTC perceives no impact on competition by reason of the proposed 
rule change.

(C) Self-Regulatory Organization's Statement on Comments on the 
Proposed Rule Change Received From Members, Participants or Others

    The proposed rule change has been developed through widespread 
consultations with securities industry members, as described in the 
Enhanced ID Filing.\8\ Written comments from DTC participants or others 
have not been solicited or received on the proposed rule change.

    \8\ Supra note 3.
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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, [[Page 28638]] 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. Sec. 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 DTC. All submissions 
should refer to File No. SR-DTC-95-10 and should be submitted within 
June 22, 1995.

    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority.\9\

    \9\ 17 CFR 200.30-3(a)(12) (1994).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 95-13327 Filed 5-31-95; 8:45 am]
BILLING CODE 8010-01-M