2852 Federal Register / Vol. 61, No. 19 / Monday, January 29, 1996 / Notices

5The language contained in the Exchange’s

current fee schedule refers to a ‘‘per trade’’ cap, but

the Exchange’s practice has been to interpret this

as a ‘‘per side’’ cap. Therefore, the practical effect

of this filing would be to align the language

contained in the CHX’s fee schedule with its

current interpretation. Telephone conversation

between David T. Rusoff, Attorney, Foley &

Lardner, and Glen Barrentine, Senior Counsel/Team

Leader, SEC (Jan. 18, 1996).

6See supra note 2.

7The Consolidated Tape, operated by the

Consolidated Tape Association (‘‘CTA’’), compiles

current last sale reports in certain listed securities

and disseminates these reports to vendors on a

consolidated basis. The CTA is comprised of the

New York, American, Boston, Cincinnati, Chicago,

Pacific, and Philadelphia Stock Exchanges, as well

as the Chicago Board Options Exchange and the

National Association of Securities Dealers, Inc.

Transactions in American Stock Exchange listed

stocks and qualifying regional listed stocks are

reported on CTA Tape B. See Securities Exchange

Act Release No. 35239, (Jan. 19, 1995), 60 FR 4935

(extending the waiver transaction fees for Tape B

eligible issues that are executed through MAX).

8 15 U.S.C. 78f(b).

9 15 U.S.C. 78f(b)(4).

10 15 U.S.C. 78s(b)(3)(A).

11 17 CFR 240.19b–4.

12 17 CFR 200.30–3(a)(12).

1 15 U.S.C. § 78s(b)(1) (1988).

2Letter from Piku K. Thakkar, Assistant Counsel,

DTC, to Mark Steffensen, Esq., Division of Market

Regulation (‘‘Division’’), Commission (October 26,

1995).

3Securities Exchange Act Release No. 36545

(December 1, 1995), 60 FR 63554.

transaction fees. All other orders (except

orders of specialists, orders in

NASDAQ/NMS Securities, and orders of

a floor broker acting in the capacity as

a principal) will be charged a

transaction fee on a sliding scale. There

will be no charge for the first 500 shares;

a $.0075 per share charge for the next

2000 shares; a $.005 per share charge for

the next 7500 shares; and a $.004 per

share charge for the remaining shares of

an order. This transaction fee will be

capped at a maximum of $100.00 per

side. This cap is similar to the cap on

round lot trades today 5 except that it

will not include applicable trade

recording fees.6 The Exchange will

impose a maximum cap of $7,000 per

month for transaction fees on orders

sent via MAX that are executed. Also,

for these fees, the Exchange will impose

maximum monthly transaction fees of

$45,000 for firms with a floor broker or

market maker presence on the floor of

the Exchange and $65,000 for orders of

all-floor members. The Exchange will

continue to waive transaction fees for

orders in Tape B eligible issues that are

executed through MAX.7 In addition, all

transaction fees for orders in NASDAQ/

NMS Securities will be waived.

Fees for specialists will remain

unchanged.

Floor brokers acting in the capacity as

a principal will be charged a transaction

fee for each such order on a sliding

scale. There will be no charge for the

first 500 shares; a $.0015 per share

charge for the next 2000 shares; a $.001

per share charge for the next 7500

shares; and a $.0008 per share charge for

the remaining shares of an order. The

transaction fee will be capped at a

maximum of $20.00 per side. However,

there will be no monthly cap on these

transaction fees.

2. Statutory Basis

The proposed rule change is

consistent with Section 6(b) of the Act 8

in general and furthers the objectives of

Section 6(b)(4) 9 in particular in that it

provides for the equitable allocation of

reasonable dues, fees, and other charges

among the Exchange’s members and

other persons using its facilities.

B. Self-Regulatory Organization’s

Statement on Burden on Competition

The Exchange believes the proposed

rule change does not impose any burden

on competition.

C. Self-Regulatory Organization’s

Statement on Comments on the

Proposed Rule Change Received From

Members, Participants, or Others

The Exchange has neither solicited

nor received written comments on the

proposed rule change.

III. Date of Effectiveness of the

Proposed Rule Change and Timing for

Commission Action

The foregoing rule change constitutes

or changes a due, fee, or other charge

imposed by the Exchange and, therefore,

has become effective pursuant to

Section 19(b)(3)(A) of the Act 10 and

subparagraph (e) of Rule 19b–4

thereunder. 11

At any time within sixty days of the

filing of such 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

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 also will be available for

inspection and copying at the principal

office of the CHX. All submissions

should refer to File No. SR–CHX–95–30

and should be submitted by February

20, 1996.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.12

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 96–1473 Filed 1–26–96; 8:45 am]

BILLING CODE 8010–01–M

[Release No. 34–35750; File No. SR–DTC–

95–18]

Self-Regulatory Organizations; The

Depository Trust Company; Order

Approving a Proposed Rule Change

Seeking to Establish a Coupon

Collection Service for Municipal Bearer

Bonds

January 22, 1996.

On September 18, 1995, The

Depository Trust Company (‘‘DTC’’)

filed with the Securities and Exchange

Commission (‘‘Commission’’) a

proposed rule change (File No. SR–

DTC–95–18) pursuant to Section

19(b)(1) of the Securities Exchange Act

of 1934 (‘‘Act’’).1 On October 30, 1995,

DTC filed an amendment to the

proposed rule change.2 Notice of the

proposal was published in the Federal

Register on December 11, 1995.3 No

comment letters were received. For the

reasons discussed below, the

Commission is approving the proposed

rule change.

I. Description

The proposed rule change establishes

a service for the collection of interest

relating to the coupons from municipal

bearer bonds. This service includes

collection of coupons which are due in

the future as well as past-due coupons

for DTC eligible and ineligible

municipal issues payable in the United

States. Past-due coupons will be

accepted for up to three years after the

payable date.

DTC participants using this service

must deposit coupons in a standard
Federal Register / Vol. 61, No. 19 / Monday, January 29, 1996 / Notices 2853

4Only coupons for the same CUSIP number,

series, and payable date can be enclosed in any one

shell.

5The depositing participant will guarantee the

validity of the coupon number, bond number,

payable date, and payable amount of the mutilated

coupon by a stamp affixed to the coupon executed

by an authorized officer of such participant. In

cases of a badly mutilated coupon, DTC may require

a letter of indemnity. In the event a paying agent

rejects a mutilated coupon, DTC will reverse any

credit made to the depositing participant’s account

with respect to such coupon. Telephone

conversation between Piku K. Thakkar, Assistant

Counsel, DTC; Ann Reich, DTC; and Mark

Steffensen, Attorney, Division, Commission

(October 17, 1995).

6When payments on the coupons are due in the

future, each deposit ticket can have up to 50 shells

attached to it, but all of the coupons in each of the

attached shells must have the same payable date.

For past-due coupons, shells with different payable

dates may be listed on the same deposit ticket.

Letter from Piku K. Thakkar, Assistant Counsel,

DTC, to Mark Steffensen, Esq., Division,

Commission (October 26, 1995).

7A stopped certificate is a certificate for which

a stop transfer instruction has been requested. A

stop transfer instruction typically is initiated as the

result of a lost or stolen stock certificate. Telephone

conversation between Piku K. Thakkar, Assistant

Counsel, DTC, and Mark Steffensen, Attorney,

Division, Commission (September 26, 1995).

8 DTC will accept past-due coupons into the

coupon selection service program for up to three

years after the original coupon payment date.

9According to DTC, payments due DTC from

issuers and paying agents are received on or before

the payable date between 97 and 98 percent of the

time. Typically, late payments are the result of

transmission problems or equipment failure which

is unrelated to the ability of the issuer or paying

agent to actually make such payments. Telephone

conversation between Piku K. Thakkar, Assistant

Counsel, DTC; Ann Reich, DTC; and Mark

Steffensen, Attorney, Division, Commission

(October 17, 1995).

10 15 U.S.C. § 78q–1(b)(3)(F) (1988).

11 17 CFR 200.30–3(a)(12) (1994).

sealed envelope or ‘‘shell’’ with no more

than 200 coupons contained in any one

shell.4 Mutilated coupons must be

guaranteed by the depositing participant

and placed into separate shells.5 DTC

requires that each shell contain the

following information on its face: (i)

CUSIP number; (ii) a description of the

issue including municipality, state,

purpose, series, date of issue, and

maturity date; (iii) payable date; (iv)

quantity of coupons enclosed; (v) dollar

value of individual coupons; (vi) total

shell value; (vii) participant number;

and (viii) contact name and telephone

number of the depositing participant.

All shells must be accompanied by a

completed deposit ticket that includes:

(i) DTC participant number; (ii) shell

quantity; (iii) total dollar value; (iv)

CUSIP number per shell; (v) coupon

quantity per shall; (vi) dollar value per

shell; and (vii) whether the coupons are

payable on a future date or are pastdue.6

DTC will verify the number of shells

listed on the deposit ticket and will give

the depositing participant a timestamped copy of the ticket. If the

number of shells listed on the deposit

ticket does not agree with the physical

number of shells, DTC will immediately

reject the entire deposit and will return

it to the participant. DTC will neither

inspect nor verify shells’ contents prior

to presentation to paying agents. The

depositing participant is responsible for

the integrity of the shells’ contents. In

the event of a coupon shell loss, the

participant must provide DTC with a

full description (including certificate

numbers) of the coupons contained in

the shell.

The paying agent may reject and

return coupons to DTC for a variety of

reasons. The most common reasons for

rejection are likely to include: (i) mixed

shell contents including mixed payable

dates, mixed series or purposes, or

mixed maturity years; (ii) incorrect

count of shell contents; (iii) called

certificate; (iv) mutilated coupon; (v)

stopped certificate; 7 or (vi) issue in

default.

DTC will pass rejected shells to its

participants in the form received from

the paying agent together with any

paying agent documentation. DTC will

not inspect or verify the contents of

rejected shells. For shells rejected after

the payable date, DTC will debit

appropriate funds from the depositing

participant’s account on the day the

rejected coupons are returned to the

participant.

DTC will credit interest to its

participants on the payable date for

coupons that are deposited (i) at least

eight business days prior to payable date

if the paying agent for the coupons is

located outside of New York City or (ii)

at least five business days prior to the

payable date if the paying agent is

located in New York City. Coupons not

deposited within the time frames

described above and past-due coupons

will be credited to participants (i) ten

business days following the date of

deposit if the paying agent is located

outside New York City or (ii) seven

business days following the date of

deposit if the paying agent is located in

New York City.8

DTC will credit the accounts of its

depositing participants on the foregoing

payable dates without regard to whether

DTC actually has received payment

from the issuer or paying agent as of

such date.9 All coupons deposited after

11 a.m. will be considered to be

received the following business day. In

addition, during the first quarter of

1996, DTC will make available a new

Participant Terminal System (‘‘PTS’’)

function which will enable DTC

participants to view the status of their

coupon deposits.

DTC will charge its participants the

following fees for this service:

Shells deposited a minimum of 15

days before payable date ............. $4.50

Shells deposited less than 15 days

before payable date (including

past-due coupons) ........................ 5.25

Rejected shells ................................. 15.00

II. Discussion

Section 17A(b)(3)(F) 10 of the Act

requires that the rules of a clearing

agency be designed to remove

impediments to and to perfect the

mechanism of a national system for the

prompt and accurate clearance and

settlement of securities transactions and

to promote the prompt and accurate

clearance and settlement of securities

transactions. The Commission believes

that DTC’s proposed rule change is

consistent with DTC’s obligations under

the Act because the new service

presents a more efficient method of

settling the payment of bearer bond

coupons and should allow DTC

participants to reduce the labor needed

to deal with may different issuers or

paying agents in connection with the

collection of coupons and the receipt of

interest payments. Furthermore, DTC

participants should be better able to

track the status of the coupon receipt

and interest payment process because

these activities will be reported directly

to them through the new PTS function.

III. Conclusion

On the basis of the foregoing, the

Commission finds that the proposal is

consistent with the requirements of the

Act and in particular with the

requirements of section 17A of the Act

and the rules and regulations

thereunder.

It is therefore ordered, pursuant to

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

proposed rule change (File No. SR–

DTC–95–18) be and hereby is approved.

For the Commission by the Division of

Market Regulation, pursuant to delegated

authority.11

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 96–1474 Filed 1–26–96; 8:45 am]

BILLING CODE 8010–01–M