[Federal Register Volume 60, Number 235 (Thursday, December 7, 1995)]
[Notices]
[Pages 62920-62921]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-29783]



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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-36533; File Nos. SR-PHILADEP-95-09; SR-MSTC-95-09]


Self-Regulatory Organizations; Philadelphia Depository Trust 
Company and Midwest Securities Trust Company; Notice of Filing and 
Immediate Effectiveness of Proposed Rule Changes Modifying Procedures 
to Enable Compliance With Confirmation Disclosure Requirements Through 
the Use of the Institutional Delivery System

November 30, 1995.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act),\1\ notice is hereby given that on October 24, 1995, and on 
October 27, 1995, respectively, the Philadelphia Depository Trust 
Company (``PHILADEP'') and the Midwest Securities Trust Company 
(``MSTC'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule changes as described in Items I, II, 
and III below, which Items have been prepared primarily by PHILADEP and 
MSTC. The Commission is publishing this notice to solicit comments on 
the proposed rule changes from interested parties.

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

    PHILADEP and MSTC propose to make additions to their respective 
procedures\2\ to enable their participants using the Institutional 
Delivery (``ID'') system for generating confirmations for customer 
transactions to comply with certain disclosure requirements of Rule 
10b-10 under the Act.\3\

    \2\While MSTC does not have specific written ID procedures, the 
MST System Flash newsletter is sent to MSTC participants to update 
them on, among other things, ID system changes. The newsletter is 
kept on record at MSTC and is used by MSTC as its participant 
procedures.
    \3\27 CFR 240.10b-10 (1994).
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II. Self-Regulatory Organizations' Statements of the Purpose of, and 
Statutory Basis for, the Proposed Rule Changes

    In their filings with the Commission, PHILADEP and MSTC included 
statements concerning the purpose of and the basis for the proposed 
rule changes and discussed any comments they received on the proposed 
rule changes. The text of these statements may be examined at the 
places specified in Item IV below. PHILADEP and MSTC have prepared 
summaries, set forth in section (A), (B), and (C) below, of the most 
significant aspects of such statements.\4\

    \4\The Commission has modified the text of the summaries 
prepared by PHILADEP and MSTC.
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A. Self-Regulatory Organizations' Statements of the Purpose of, and the 
Statutory Basis for, the Proposed Rule Changes

    In 1994, the Commission adopted amendments to Rule 10b-10.\5\ 
Subsequently, the Division of Market Regulation issued a no-action 
letter to the Public Securities Association (``PSA'') on behalf of its 
members and all other brokers and dealers temporarily exempting them 
from certain disclosure requirements of paragraphs (a)(7), (a)(8), and 
(a)(9) of Rule 20b-10 until November 1, 1995.\6\

    \5\For a complete discussion of the amendments, refer to 
Securities Exchange Act Release No. 34962 (November 10, 1994), 59 FR 
59612.
    \6\Letter from Catherine McGuire, Chief Counsel, Division of 
Market Regulation, Commission, to George P. Miller, Esq., Vice 
President and Associate General Counsel, PSA (September 29, 1995).
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    The purpose of these proposed rule changes is to enable PHILADEP 
and MSTC participants using the ID system for generating confirmations 
for customer transactions to comply with the following three disclosure 
requirements upon the expiration of the temporary exemption on November 
1, 1995.

[[Page 62921]]

    (1) The amended rule reburies broker-dealers to disclose that they 
are not members of the Securities Investor Protection Corporation 
(``SIPC'') if, in fact, they are not so affiliated. These broker-
dealers may make such disclosures by noting ``[Name of broker-dealer] 
is not a member of SIPC'' in the Special Instructions field of trade 
data submitted to the ID system. PHILADEP's and MSTC's proposed rule 
changes add to their respective procedures the method by which broker-
dealers indicate that they are not SIPC members.
    (2) In the case of a private debt security, the amended rule 
requires broker-dealers to disclose if the security is not rated by a 
nationally recognized statistical rating organization. A broker-dealer 
using the ID system can disclose that fact by entering ``Not Rated'' or
``N/R'' in the Special Instructions field. PHILADEP's and MSTC's 
proposed rule changes add to their respective procedures a statement of 
the meaning of the codes ``Not Rated`` or ``N/R.''
    (3) The amended rule requires broker-dealers to disclose that the 
yield for asset-backed securities that are continuously subject to 
prepayment may vary depending upon the rate of prepayments. Upon 
written request from their customers, broker-dealers will provide 
certain information concerning the factors that affect these 
securities' yield. A broker-dealer using the ID System can enter one of 
several acronyms in the Security Type field identifying the security as 
one of several types of securities that meet the rule's definition of 
asset-backed security. PHILADEP's and MSTC's proposed rule changes add 
to their respective procedures a provision designating several acronyms 
that when placed in the Security Type field will denote that the 
security meets the Rule 10b-10 definition of an asset-backed security.
    PHILADEP and MSTC believe the proposed rule changes are consistent 
with the requirements of Section 17A(B)(3)(F)\7\ of the Act and the 
rules and regulations thereunder applicable to PHILADEP and MSTC 
because the proposed rule changes will facilitate the confirmation of 
transactions through the use of the ID system in compliance with the 
additional requirements of Rule 10b-10 and in conjunction with the 
expiration date of the temporary exemption on November 1, 1995.

    \7\15 U.S.C. 78q-1(b)(3)(F) (1988).
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B. Self-Regulatory Organizations' Statements on Burden on Competition

    PHILADEP and MSTC believe these procedural modifications will not 
impose a burden on competition.

Self-Regulatory Organizations' Statements on Comments on the Proposed 
Rule Changes Received From Members, Participants or Others

    PHILADEP and MSTC have neither solicited nor received comments on 
the proposed rule changes.

III. Date of Effectiveness of the Proposed Rule Changes and Timing for 
Commission Action

    The foregoing rule changes have become effective pursuant to 
Section 19(b)(3)(A)(i)\8\ of the Act and pursuant to Rule 19b-
4(e)(4)\9\ promulgated thereunder because the proposals constitute 
changes in existing services of registered clearing agencies that do 
not adversely affect the safeguarding of securities or funds in the 
custody or control of those clearing agencies or for which they are 
responsible and do not significantly affect the respective rights or 
obligations of the clearing agencies or persons using the service. At 
any time within sixty days of the filing of such rule changes, the 
Commission may summarily abrogate such rule changes 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.

    \8\15 U.S.C. 78s(b)(3)(A)(i) (1988).
    \9\17 CFR 240.19b-4(e)(4) (1994).
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IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing. Persons making such submissions 
should file six copies thereof with the Secretary, Securities and 
Exchange Commission, 450 Fifth Street, N.W., Washington, DC 20549. 
Copies of the submission, all subsequent amendments, all written 
statements respecting the proposed rule changes that are filed with the 
Commission, and all written communications concerning the proposed rule 
changes between the Commission and any person, other than those that 
may be withheld from the public pursuant to 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, N.W., Washington, DC 20549. 
Copies of the respective filings will also be available for inspection 
and copying at the principal offices of PHILADEP and MSTC. All 
submissions should refer to File Nos. SR-PHILADEP-95-09 and SR-MSTC-95-
09 and should be submitted by December 28, 1995.
    For the Commission by the Division of Market Regulation, pursuant 
to delegated authority.\10\

    \10\17 CFR 200.30-3(a)(12) (1994).
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Jonathan G. Katz,
Secretary.
[FR Doc. 95-29783 Filed 12-6-95; 8:45 am]
BILLING CODE 8010-01-M