2554 Federal Register / Vol. 61, No. 18 / Friday, January 26, 1996 / Notices

14Letter from Leland W. Hutchinson, Jr.,

Freeborn & Peters, [counsel for Scattered

Corporation and Laura Bryant, members of CHX] to

Richard R. Lindsey, Director, Division of Market

Regulation, Commission (December 15, 1995).

15See, Securities Exchange Act Release No. 36684

(January 5, 1996), [File No. SR–MCC–95–04] (order

approving MCC’s proposal to withdraw from the

securities clearing business).

16 17 CFR 200.30–3(a)(12) (1994).

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

2MSTC’s filing refers to January 15, 1996, as the

date by which MSTC participants must have made

arrangements with alternate service providers. This

date was postponed to January 19, 1996. Telephone

conversation between J. Craig Long, Foley &

Lardner, [counsel to MSTC], and Jerry Carpenter,

Assistant Director, Peter Geraghty, Senior Counsel,

and Cheryl Tumlin, Staff Attorney, Division of

Market Regulation, Commission (January 18, 1996).

3The Commission has modified the text of the

summaries prepared by MSTC.

4For a description of the agreement, refer to

Securities Exchange Act Release No. 36684 (January

5, 1996), [File No. SR–MSTC–95–10] (order

approving proposed rule change).

5By an Important Notice dated November 17,

1996, MSTC informed its participants that it

designed to promote the prompt and

accurate clearance and settlement of

securities transactions and to assure the

safeguarding of securities and funds

which are in the custody or control of

the clearing agency or for which it is

responsible. The Commission believes

the proposal is consistent with MCC’s

obligations under Section 17A of the

Act because it should help ensure that

MCC participants will have access to

safe and efficient securities clearing

services and should protect against

disruption in their businesses upon

MCC’s withdrawal from the securities

clearing business. Furthermore, MCC’s

coordination with NSCC in establishing

clearing services for TSPs and SPs

through sponsored accounts and

temporary sponsored accounts and the

requirement of a sponsored account

fund to cover possible losses by MCC

incident to the operation of the

sponsored and temporary sponsored

accounts should help MCC safeguard

the securities and funds which are in its

custody or control or for which it is

responsible.

MCC has requested that the

Commission find good cause for

approving the proposed rule change

prior to the thirtieth day after the date

of publication of notice of the filing. The

Commission finds good cause for so

approving the proposed rule change

because the proposal is critical to MCC’s

orderly withdrawal from the securities

clearing business by its announced

deadline of January 19, 1996.

Furthermore, the Commission received

only one comment letter 14 during the

comment period of MCC’s proposal to

withdraw from the clearing business.15

Thus the Commission does not believe

it will receive negative comment letters

on this proposal.

IV. Solicitation of Comments

Interested persons are invited to

submit written data, views, and

arguments concerning the foregoing.

Persons making written submission

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

Room, 450 Fifth Street, NW.,

Washington, DC. Copies of such filing

also will be available for inspection and

copying at the principal office of MCC.

All submissions should refer to the file

number SR–MCC–95–05 and should be

submitted by February 16, 1996.

It is therefore ordered, pursuant to

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

proposed rule change (File No. SR–

MCC–95–05) be, and hereby is,

approved.

For the Commission by the Division of

Market Regulation, pursuant to delegated

authority.16

Margaret H. McFarland,

Deputy Secretary.

FR Doc. 96–1272 Filed 1–25–96; 8:45 am]

BILLING CODE 8010–01–M

[Release No. 34–36739; File No. SR–MSTC–

95–11]

Self-Regulatory Organizations;

Midwest Securities Trust Company;

Notice of Filing and Order Granting

Accelerated Approval of a Proposed

Rule Change Relating to a

Contingency Plan for Participants in

Connection With Midwest Securities

Trust Company’s Decision to Withdraw

From the Securities Depository

Business

January 19, 1996.

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

Securities Exchange Act of 1934

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

December 26, 1995, the Midwest

Securities Trust Company (‘‘MSTC’’)

filed with the Securities and Exchange

Commission (‘‘Commission’’) the

proposed rule change (File No. SR–

MSTC–95–11) as described in Items I

and II below, which items have been

prepared primarily by MSTC. The

Commission is publishing this notice

and order to solicit comments from

interested persons and to grant

accelerated approval of the proposed

rule change.

I. Self-Regulatory Organization’s

Statement of the Terms of Substance of

the Proposed Rule Change

MSTC proposes to add Article VIII to

its rules to provide for a contingency

plan, to be implemented in MSTC’s sole

discretion, in the event that certain

MSTC participants have not made

arrangements for alternate service

providers by January 19, 1996.2

II. Self-Regulatory Organization’s

Statement of the Purpose of, and

Statutory Basis for, the Proposed Rule

Change

In its filing with the Commission,

MSTC 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. MSTC has prepared

summaries, set forth in section (A), (B),

and (C) below, of the most significant

aspects of such statements.3

(A) Self-Regulatory Organization’s

Statement of the Purpose of, and

Statutory Basis for, the Proposed Rule

Change

On January 5, 1996, the Commission

approved a proposed rule change filed

by MSTC relating to its withdrawal from

the securities depository business in

conjunction with an agreement with

The Depository Trust Company

(‘‘DTC’’).4 This filing provides for a

contingency plan for current

participants of MSTC that are unable to

find alternative securities depository

services by January 19, 1996.

Pursuant to MSTC’s proposed

contingency plan, MSTC in its sole

discretion may become a member of

DTC for the limited purpose of

temporarily enabling Temporary

Sponsored Participants (‘‘TSPs’’) to

utilize the depository services of DTC. If

implemented, only entities that are

depository participants of MSTC as of

January 19, 1996 will be eligible to be

TSPs. The purpose of the TSP

membership category is to provide

existing MSTC depository participants

that are unable to find appropriate

alternative arrangements by the January

19, 1996 deadline, temporary securities

depository arrangements.5 This TSP
Federal Register / Vol. 61, No. 18 / Friday, January 26, 1996 / Notices 2555

intended to cease providing depository services on

January 15, 1996, and that participants should make

arrangements for alternate depository services by

that date. The date was postponed to January 19,

1996. Note 2, supra. 6 15 U.S.C. 78q–1(b)(3)(F) (1988).

7Letter from Leland W. Hutchinson, Jr., Freeborn

& Peters, [counsel for Scattered Corporation and

Laura Bryant, members of CHX] to Richard R.

Lindsey, Director, Division of Market Regulation,

Commission (December 15, 1995).

8See, Securities Exchange Act Release No. 36684

(January 5, 1996), [File No. SR–MSTC–95–10]

(order approving MSTC’s proposal to withdraw

from the securities depository business).

9 17 CFR 200.30–3(a)(12) (1994).

membership category will terminate on

or before March 31, 1996, at which time

MSTC will definitively cease to act for

all TSPs. The only services that MSTC

will provide to TSPs is to provide access

to the facilities of DTC.

Under the proposed arrangement,

MSTC will maintain subaccounts at

DTC for each TSP. DTC will transmit

the settlement obligations of TSPs to

MSTC. Based on DTC’s final settlement

figures, MSTC will use funds received

by MSTC from a TSP or will initiate

payments against a TSP’s bank account

to satisfy a TSP’s payment obligation. In

this regard, each TSP will be required to

maintain funds that are sufficient for

purposes of settlement and that are

accessible to MSTC. If a TSP has a credit

balance, DTC will forward the credit to

MSTC, and MSTC will make available

to the TSP the amount of the credit

balance. Alternatively, upon notice to

and authorization by MSTC, TSPs can

settle directly with DTC.

TSPs will be required to contribute to

a temporary sponsored account fund.

The required contribution will consist

of the greater of $15,000 or 110% of the

required contribution to the participants

fund of DTC. MSTC also may require a

TSP to deposit a supplemental

contribution not based on a TSP’s usage

of MSTC’s services. All contributions to

the temporary sponsored account fund

must be in cash. All temporary

sponsored account fund contributions

not forwarded by MSTC to DTC may be

invested by MSTC. The sponsored

account fund may be used to cover

losses in a manner similar to that

provided for in the current MSTC

participants fund rules.

While TSPs will not be obligated to

comply with all of MSTC’s current

rules, TSPs will be obligated to comply

with the MSTC rules designated in

Article VIII as being applicable to TSPs.

Among other things, Article VIII

provides that TSPs must comply with

MSTC’s rules relating to losses,

indemnification, and MSTC’s ceasing to

act. TSPs also must comply with the

rules of DTC.

MSTC believes the proposed rule

change is consistent with Section 17A of

the Act in that it is designed to promote

the accurate clearance and settlement of

securities transactions and to assure the

safeguarding of securities and funds

which are in MSTC’s custody or control

or for which MSTC is responsible.

(B) Self-Regulatory Organization’s

Statement on Burden on Competition

MSTC does not believe the proposed

rule change will 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

Written comments on the proposal

have not been solicited or received.

III. Date of Effectiveness of the

Proposed Rule Change and Timing for

Commission Action

Section 17A(b)(3)(F) 6 of the Act

requires the rules of a clearing agency be

designed to promote the prompt and

accurate clearance and settlement of

securities transactions and to assure the

safeguarding of securities and funds

which are in the custody or control of

the clearing agency or for which it is

responsible. The Commission believes

the proposal is consistent with MSTC’s

obligations under Section 17A of the

Act because it should help ensure that

MSTC participants unable to find

alternative securities depository services

by January 19, 1996, will have access to

safe and efficient securities depository

services for a period of time that should

be sufficient to enable such participants

to obtain permanent alternate services.

This should help protect against

disruption in these participants’

businesses upon MSTC’s withdrawal

from the securities depository business.

Furthermore, MSTC’s coordination with

DTC in establishing securities

depository services for TSPs through

temporary sponsored accounts and the

requirement of a temporary sponsored

account fund to cover losses that could

be suffered by MSTC incident to the

operation of the temporary sponsored

accounts should help MSTC safeguard

the securities and funds which are in its

custody or control or for which it is

responsible.

MSTC has requested that the

Commission find good cause for

approving the proposed rule change

prior to the thirtieth day after the date

of publication of notice of the filing. The

Commission finds good cause for so

approving the proposed rule change

because the proposal is critical to

MSTC’s orderly withdrawal from the

securities depository business with

minimal business disruption by its

announced deadline of January 19,

1996. Furthermore, because the

Commission received only one

comment letter 7 during the comment

period of MSTC’s proposal to withdraw

from the securities depository business,8

the Commission does not believe it will

receive negative comment letters on this

proposal.

IV. Solicitation of Comments

Interested persons are invited to

submit written data, views, and

arguments concerning the foregoing.

Persons making written submission

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

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. Copies of such filing

also will be available for inspection and

copying at the principal office of MSTC.

All submissions should refer to the file

number SR–MSTC–95–11 and should be

submitted by February 16, 1996.

It is therefore ordered, pursuant to

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

proposed rule change (File No. SR–

MSTC–95–11) be, and hereby is,

approved.

For the Commission by the Division of

Market Regulation, pursuant to delegated

authority.9

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 96–1271 Filed 1–25–96; 8:45 am]

BILLING CODE 8010–01–M