Federal Register / Vol. 60, No. 57 / Friday, March 24, 1995 / Notices 15615

5Uncertificated MMIs are not evidenced by any

certificate whatsoever. Bills, notes, bonds, and other

securities have been issued in uncertificated form

by U.S. government and federal agencies for many

years.

6 15 U.S.C. 78q–1(b)(3)(A) (1988). 7 17 CFR 200.30–3(a)(12) (1994).

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

2Securities Exchange Act Release No. 35256

(January 20, 1995), 60 FR 5444.

3 17 CFR 240.15c6–1.

4Securities Exchange Act Release Nos. 33023

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

15c6–1) and 34952 (November 9, 1994), 59 FR

59137 (changing effective date from June 1, 1995,

to June 7, 1995).

automated operating procedures for

MMIs are virtually the same as those

followed by SDFS participants and by

Institutional Delivery system users for

basic depository services in other

eligible SDFS securities. The MMI

issues being made SDFS-eligible will be

distributed in book-entry-only form by

the issuer’s issuing agent that, as in the

commercial paper and medium-term

note MMI programs, will send MMI

issuance instructions to DTC

electronically. Settlement of an issue

will be on the same day as the issuance

or on a specified future day. The issuer’s

paying agent, that will also serve as

DTC’s custodian, will hold a master or

balance MMI certificate for DTC unless

the issuer and its issuing and paying

agent bank choose to distribute

uncertificated MMIs through DTC.5

Because SDFS-eligible MMIs will be

book-entry only, participant operating

procedures for deposits and

withdrawals will not apply to MMIs.

DTC believes the proposed rule

change is consistent with the

requirements of the Act, specifically

Section 17A(b)(3)(A) 6 of the Act, and

the rules and regulations thereunder

because the rule proposal will facilitate

the prompt and accurate clearance and

settlement of securities transactions in

MMIs.

(B) Self-Regulatory Organization’s

Statement on Burden on Competition

DTC does not believe that the

proposed rule change will impact or

impose a burden on competition that is

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

DTC has not solicited comments on

the proposed rule change. Discussions

with DTC participants, including those

on the Task Force established by the

Public Securities Association’s Money

Market Committee to advise DTC on the

operation of its MMI programs, indicate

wide support for the proposed

permanent expansion of the MMI

program.

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 DTC 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, D.C. 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 than 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, D.C. 20549. 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 number SR–DTC–95–05

and should be submitted by April 14,

1995.

For the Commission by the Division of

Market Regulation, pursuant to delegated

authority.7

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 95–7239 Filed 3–23–95; 8:45 am]

BILLING CODE 8010–01–M

Self-Regulatory Organizations;

Midwest Clearing Corporation; Order

Approving Proposed Rule Change

Relating to Implementation of a ThreeDay Settlement Standard

[Release No. 34–35514; File No. SR–MCC–

94–16]

March 17, 1995.

On December 28, 1994, the Midwest

Clearing Corporation (‘‘MCC’’) filed a

proposed rule change (File No. SR–

MCC–94–16) with the Securities and

Exchange Commission (‘‘Commission’’)

pursuant to section 19(b) of the

Securities Exchange Act of 1934

(‘‘Act’’).1 Notice of the proposal was

published in the Federal Register on

January 27, 1995, to solicit comments

from interested persons.2 As discussed

below, this order approves the proposed

rule change.

I. Description

In October 1993, the Commission

adopted Rule 15c6–1 under the Act 3

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. The rule will

become effective June 7, 1995.4 Several

of MCC’s rules are interrelated with

settlement time frames. The purpose of

the proposed rule change is to amend

MCC’s rules to be consistent with a T+3

settlement standard for securities

transactions.

The proposed rule change amends

Interpretations and Policies .01 of

Article II, Rule 2 of MCC’s rules to

shorten the time frame in which

contract data or comparison data must

be submitted to MCC to ensure that

MCC has sufficient time to review such

contracts and receive the necessary

protection to guarantee the performance

of such contract to the contra-broker in

a T+3 environment. Under such

interpretations, MCC reserves the right

to cause such contract to be settled

under the trade-by-trade system or to

reverse the trade in the continuous net

settlement system (1) if a regular way

contract is not recorded by MCC in a

participant’s account until T+2, (2) if a

regular way contract is not submitted by

another clearing corporation for

recordation in a participant’s account

until T+2, or (3) if the contract is to be

settled through the participant’s account

at another clearing corporation and the

contract is not recorded until T+1.

The proposed rule change also is

amending Article III, Rule 2, Section 9

to state that a participant will be

deemed to have requested delivery of a

security if the participant has entered

into contracts to be settled by MCC

which will result in net settling sales of

such security by the participant during

the next two business days. The

proposed rule change also amends the

definition of ‘‘as-of contract’’ in Article

I, Rule 1 to include contracts for which
15616 Federal Register / Vol. 60, No. 57 / Friday, March 24, 1995 / Notices

5The transition from five day settlement to three

day settlement will occur over a four day period.

Friday, June 2, will be the last trading day with five

business day settlement. Monday, June 5, and

Tuesday, June 6, will be trading days with four

business day settlement. Wednesday, June 7, will be

the first trading day with three business day

settlement. As a result, trades from June 2 and June

5 will settle on Friday, June 9. Trades from June 6

and June 7 will settle on Monday, June 12.

6 15 U.S.C. 78q–1 (1988).

7 15 U.S.C. 78q–1(b)(3)) (F) (1988).

8 15 U.S.C. 78q–1 (1988).

9 15 U.S.C. 78s(b)(2) (1988).

10 17 CFR 200.30(a)(12) (1994).

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

2Letter from Suzanne E. Rothwell, Associate

General Counsel, NASD, to Mark Barracca, Branch

Chief, Over-the-Counter Regulation, Division of

Market Regulation, Commission (November 8,

1994).

3Securities Exchange Act Release No. 34966

(November 10, 1994), 59 FR 59802.

4Securities Exchange Act Release No. 35031

(November 30, 1994), 59 FR 62761. The order

approved that portion of the proposed rule change

relating to the transfer of customer accounts

between broker-dealers.

5Letter from Suzanne E. Rothwell, Associate

General Counsel, NASD, to Mark Barracca, Branch

Chief, Over-the-Counter Regulation, Division of

market Regulation, Commission (December 7,

1994). Amendment No. 2 eliminated the proposed

amendment to Section 64(a)(3) which would have

shortened the time for confirmation of a customer

order from the day after trade date to the trade date.

Amendment No. 2 also lengthened by one day, from

the first day after trade date to the second day after

trade date, the time for a buying customer to

provide agent instructions under Section 64(a)(4).

6Letter from P. Howard Edelstein, President,

Electronic Settlements Group, Thomson Trading

Services, Inc. (A Thomson Financial Services

Company), to Jonathan G. Katz, Secretary,

Securities and Exchange Commission (December 2,

1994).

7With this order, the Commission has now

approved all of File No. SR–NASD–94–56.

8On October 6, 1993, the Commission adopted

Rule 15c6–1 under the Act (17 CFR 240.15c6–1),

which establishes T+3 instead of T+5 as the

standard settlement time frame for most brokerdealer transactions. Securities Exchange Act

Release No. 33023 (October 6, 1993), 58 FR 52891.

The rule becomes effective June 7, 1995. Securities

Exchange Act Release No. 34952 (November 9,

1994), 59 FR 59137.

9The transition from five day settlement to three

day settlement will occur over a four day period.

Friday, June 2, will be the last trading day with five

business day settlement. Monday, June 5, and

Tuesday, June 6, will be trading days with four

business day settlement. Wednesday, June 7, will be

the first trading day with three business day

settlement. As a result, trades from June 2 and June

5 will settle on Friday, June 9. Trades from June 6

and June 7 will settle on Monday, June 12.

the intended date of settlement is one to

two days after the recording of the

transaction by MCC.

MCC has requested that the proposed

rule change become effective on the

same date as Rule 15c6–1. Rule 15c6–

1 becomes effective on June 7, 1995.5

II. Discussion

The Commission believes the

proposal is consistent with the

requirements of Section 17A of the Act.6

Specifically, Section 17A(b)(3)(F) 7

states that the rules of a clearing agency

must be designed to assure the

safeguarding of securities and funds

which are in the MCC’s custody or

control or for which MCC is responsible

and must be designed to foster

cooperation and coordination with

persons engaged in the clearance and

settlement of securities transactions.

Several of MCC rules are based on a five

day time frame for settlement of

securities transactions. On June 7, 1995,

the new settlement cycle of T+3 will be

established as mandated by the

Commission’s Rule 15c6–1. As a result,

the MCC’s current rules will be

inconsistent with the Commission’s

rule. This proposal will amend the

MCC’s rules to harmonize them with

Commission’s Rule 15c6–1 and a T+3

settlement cycle.

III. Conclusion

For the reasons stated above, the

Commission finds that MCC’s proposal

is consistent with Section 17A of the

Act.8

It is therefore ordered, pursuant to

Section 19(b)(2) of the Act,9 that the

proposed rule change (File No. SR–

MCC–94–16) be and hereby is approved

and will become effective June 7, 1995.

For the Commission by the Division of

Market Regulation, pursuant to delegated

authority.10

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 95–7242 Filed 2–23–95; 8:45 am]

BILLING CODE 8010–01–M

[Release No. 34–35507; File No. SR–NASD–

94–56]

Self-Regulatory Organizations;

National Association of Securities

Dealers, Inc.; Order Granting Partial

Approval of Proposed Rule Change

Relating to the Three Business Day

Settlement of Securities Transactions

March 17, 1995.

On October 12, 1994, the National

Association of Securities Dealers, Inc.

(‘‘NASD’’) filed with the Securities and

Exchange Commission (‘‘Commission’’)

a proposed rule change pursuant to

Section 19(b)(1) of the Securities

Exchange Act of 1934 (‘‘Act’’).1 On

November 9, 1994, the NASD filed with

the Commission Amendment No. 1.2

The purpose of the proposed rule

change is to amend the NASD’s rules to

provide for three business day

settlement of securities transactions.

The Commission published notice of the

proposed rule change in the Federal

Register on November 18, 1994.3 The

commission granted partial, accelerated

approval of the proposed rule change on

November 30, 1994.4 On December 8,

1994, the NASD filed with the

Commission Amendment No. 2.5 The

amendments were techincal

amendments that did not require

republication of notice. One comment

was received on the notice.6 As

discussed below, the Commission is

approving that portion of the proposed

rule change relating to the three day

settlement of securities transactions.7

I. Description

On June 7, 1995, the standard

settlement time frame for most

securities transactions will be shortened

from five business days after the trade

date (‘‘T+5’’) to three business days after

the trade date (‘‘T+3’’).8 The proposal

amends certain provisions of the

NASD’s Uniform Practice Code (‘‘UPC’’)

and the rules of Fair Practice (‘‘RFP’’)

consistent with a T+3 settlement cycle.

These amendments will become

effective on the same date as

Commission Rule 15c6–1, which

establishes T+3 as the standard

settlement time frame.9

The proposed rule change will

shorten the time periods established

under the NASD’s rules for taking

certain actions related to settlement.

Currently, Section 12(b) of the UPC

states that for a regular way transaction

delivery must be made on, but not

before, the fifth business day following

the trade date. The proposal shortens

the delivery requirement to on, but not

before, the third business day following

the trade date. In addition, seller’s

option transaction deliveries may be

made by the seller on any business day

after the third business day, rather than

after the fifth business day, following

the trade date.

Similarly, Article III, Section 26(m)(1)

of the RFP is amended to require that

members transmit payments received

from customers for the purchase of

investment company shares within

three business days, rather than within

five business days, after receipt of such

customers’ purchase orders or one

business day following receipt of

customer payments, whichever is later.

Section 64(a)(4) of the UPC currently

requires that customers that use an

agent to pay for or to deliver securities

must agree to furnish instructions to the

agent no later than T+4 if buying on a

receipt versus payment ‘‘(RVP’’) basis or

no later than T+3 if the customer is

selling on a delivery versus payment

(‘‘DVP’’) basis. The proposed rule