Federal Register / Vol. 61, No. 4 / Friday, January 5, 1996 / Notices 431

3The Commission has modified parts of these

statements.

4Securities Exchange Act Release Nos. 29841

(October 18 1991) 56 FR 55960; 35392 (February 16,

1995), 60 FR 10415; and 36339 (October 5, 1995),

60 FR 53447.

5The Commission is currently reviewing ISCC’s

proposed link with Indeval, S.A. de C.V. Securities

Exchange Act Release No. 36605 (December 20,

1995), 60 FR 67004 [Notice of filing of proposed

rule change].

6The Equitor Group is not a separate legal entity.

7Letters from Julie Beyers, Associate Counsel,

ISCC, to Michele Bianco, Division of Market

Regulation, Commission (December 12, 1995 and

December 13, 1995). Pursuant to Rule 17f–5(c)(2),

an eligible foreign custodian includes a banking

institution or trust company, incorporated or

organized under the laws of a country other than

the United States, that is regulated as such by that

country’s government or an agency thereof and that

has shareholders’ equity in excess of $200 million.

17 CFR 270.17–5(c)(2) (1994). SCB has represented

that it has over $200 Million in shareholders’

equity.

8 Investment Company Act of 1940 Release No.

20019, International Series Release No. 628 (January

14, 1994).

9 ISCC is not responsible for fees not rendered by

participants.

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.

ISCC’s Rule 50 provides that ISCC

may establish a foreign clearance,

settlement, and custody service known

as the GCN in conjunction with banks,

trust companies, and other entities.

Presently, ISCC has established GCN

relationships with Citibank, N.S.,

Standard Bank of South Africa, Westpac

Custodian Nominees Limited of

Australia, Westpac Nominees-NZ

Limited,4 and S.C. Indeval, S.A. de C.V.5

The proposed rule change is to

accommodate SCB as an additional GCN

service provider.

SCB has been providing securities

clearance, settlement, and custody

services in the Asia Pacific Region for

over forty years and has had a banking

presence in this region for over one

hundred and forty years. The value of

overall assets under SCB’s

administration is approximately US $55

billion. It is presently anticipated that

ISCC members will be offered clearance,

settlement, and custody services in the

Philippines, South Korea, and Taiwan

through a division of SCB, Standard

Chartered Equitor Group (‘‘The Equitor

Group’’).6 The Equitor Group provides

clearance and custody services in fifteen

markets in the Asia-Pacific Region. The

Equitor Group established a branch

office in the Philippines in 1872, which

has provided local custody services

since 1935 and currently has US $1.12

billion in assets under custody. The

Equitor Group established a branch

office in South Korea in 1984, which

has provided local custody services

since 1991 and currently has US $1.47

billion in assets under custody. The

Equitor Group established a branch

office in Taiwan in 1985, which has

provided local custody services since

1992 and currently has US $810 million

in assets under custody. In the future,

ISCC may offer clearance, settlement,

and custody services through SCB in

other countries, including Bangladesh,

Hong Kong India, Indonesia, Japan,

Malaysia, Pakistan, Shanghai,

Shenzhen, Singapore, Sri Lanka, and

Thailand, SCB has represented that

acting through its branches it meets the

requirements under Rule 17f–5 under

the Investment Company Act of 1940 to

be an eligible foreign custodian.7 In

Malaysia, SCB operates through its

wholly-owned subsidiary, Standard

Charted Bank Malaysia Berhad

(‘‘SCBM’’). SCB has received a

exemptive order under Rule 17f–5 on

behalf of SCBM.8

SCB and ISCC will enter into an

agreement pursuant to which SCB will

provide access to clearance, settlement,

and custody services to GCN

participants that qualify to be customers

of SCB. SCB has agreed to provide the

services at reduced prices. ISCC will not

provide any volume guarantees to SCB.

ISCC will collect fees from the

participants on behalf of SCB.9 The

agreement will be terminable by mutual

agreement of the parties or on ninety

days prior notice.

The proposed change will facilitate

and centralize the processing of

international transactions at a beneficial

cost to members which ultimately will

be reflected in services to the investing

public. Accordingly, ISCC believes that

these changes are consistent with the

requirements of Section 17A of the Act

and the rules and regulation thereunder.

(B) Self-Regulatory Organization’s

Statement on Burden on Competition

ISCC does not believe that the

proposed rule change will have an

impact on or impose a burden on

competition.

(C) Self-Regulatory Organization’s

Statement on Comments on the

Proposed Rule Change Received From

Members, Participants, or Others

No written comments relating to the

proposed rule change have been

solicited or received. ISCC will notify

the Commission of any written

comments received by ISCC.

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

published its reason 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 approved.

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 provisions of

5 U.S.C. 552, will be available for

inspection and copying in the

Commission’s Public Reference Room in

Washington, DC 20549. Copies of such

filing will also be available for

inspection and copying at the principal

office of ISCC. All submissions should

refer to the file number SR–ISCC–95–06

and should be submitted by January 26,

1996.

For the Commission by the Division of

Market Regulation, pursuant to delegated

authority.

Jonathan G. Katz,

Secretary.

FR Doc. 96–167 Filed 1–4–96; 8:45 am]

BILLING CODE 8010–01–M
432 Federal Register / Vol. 61, No. 4 / Friday, January 5, 1996 / Notices

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

2Securities Exchange Act Release No. 36658

(December 29, 1995).

3 15 U.S.C. 78f(b)(4).

4 15 U.S.C. 78s(b)(3)(A).

5 17 CFR 240.19b–4.

[Release No. 34–36659; File No. SR–NYSE–

95–46]

Self-Regulatory Organizations; Notice

of Filing and Immediate Effectiveness

of Proposed Rule Change by the New

York Stock Exchange, Inc. Relating to

the Revision of Equity Transaction

Charges

December 29, 1995.

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

Securities Exchange Act of 1934

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

December 29, 1995 the New York Stock

Exchange, Inc. (‘‘NYSE’’ or ‘‘Exchange’’)

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 by the selfregulatory organization. The

Commission is publishing this notice to

solicit comments on the proposed rule

change from interested persons.

I. Self-Regulatory Organization’s

Statement of the Terms of Substance of

the Proposed Rule Change

The proposed revised fee schedule for

equity transaction charges to be effective

for January 1996 trading would

eliminate the exclusion currently in

place that precludes orders for

competing market makers from the no

charge provision for system orders

between 100 to 2099 shares. However,

member organizations must report such

activity to the Exchange and the

Exchange reserves the right to collect

fees due on such trading as of January

2, 1996 in the event that the

Commission approves the collection of

such fees pursuant to File No. SR–95–

47.2 The text of the proposed rule

change is set forth below [new text is

italicized; deleted text is bracketed]:

Equity transaction charges 1996

Per Share Charge—per transaction:

System Orders from 100—2,099 shares 1 ......................................................................................................................................... No

Charge.

Floor Executed Trades and System Trades greater than 2,099 shares:

First 5,000 shares ....................................................................................................................................................................... $0.00190.

5001 to 710,000 .......................................................................................................................................................................... 0.00010.

Subsequent shares ............................................................................................................................................................................. No

Charge.

Floor Brokerage:

Credit on Floor Brokerage Paid Out .................................................................................................................................................. 1.2%.

Fee Limitations:

Equity Commissions ........................................................................................................................................................................... 2%.

Monthly Fee 2 ...................................................................................................................................................................................... 400,000.

1 [Not inclusive of orders of a member or member organization trading as an agent for the account of a non-member competing market maker.]

Member organizations must report to the Exchange share volume of a member or member organization trading as an agent for the account of a

non-member competing market maker and the Exchange reserves the right to collect fees due on such trading as of January 2, 1996 in the

event that the SEC approves the collection of such fees pursuant to File No. SR–NYSE–95–47. Competing Market maker: A specialist or marketmaker registered as such on a registered stock exchange (other than the NYSE), or a market-maker bidding and offering over-the-counter, in a

New York Stock Exchange-traded security. 2 Monthly Fee Limitation will be removed January 1, 1999 and will be indexed annually to average daily volume.

II. Self-Regulatory Organization’s

Statement of the Purpose of, and

Statutory Basis for, the Proposed Rule

Change

In its filing with the Commission, the

self-regulatory organization 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.

The self-regulatory organization has

prepared summaries, set forth in

Sections A, B, and C below, of the most

significant aspects of such statements.

A. Self-Regulatory Organization’s

Statement of the Purpose of, and

Statutory Basis for, the Proposed Rule

Change

1. Purpose

The purpose of the change is to

respond to the needs of the Exchange’s

constituents with respect to overall

competitive market conditions and

customer satisfaction.

2. Statutory Basis

The basis under the Act for the

proposed rule change is the requirement

under Section 6(b)(4) 3 that the

Exchange have rules that provide for the

equitable allocation of reasonable dues,

fees, and other charges among its

members, issuers and other persons

using its services.

B. Self-Regulatory Organization’s

Statement on Burden on Competition

The Exchange believes the proposed

fee change will not impose any burden

on competition that is not necessary or

appropriate in the 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

The Exchange has not solicited, and

does not intend to solicit, comments

regarding the proposed rule change. The

Exchange has not received any

unsolicited written comments from

members or other interested parties.

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 4 and

subparagraph (e) of the Rule 19b–4

thereunder.5

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.
Federal Register / Vol. 61, No. 4 / Friday, January 5, 1996 / Notices 433

6 17 CFR 200.30–3(a)(12).

1 15 U.S.C. § 78s(b)(1).

2 17 CFR 240.19b–4.

3The proposal was originally filed with the

Commission on October 26, 1995. The NASD

subsequently submitted Amendment No. 1 to the

filing. Letter from Elliot R. Curzon, Assistant

General Counsel, NASD, to Karl J. Varner, Over-theCounter Regulation, Division of Market Regulation,

SEC, dated November 15, 1995.

4 15 U.S.C. § 78o–3.

5The NASD noted that with the advent of same

day funds settlement (SDFS) in early 1996 and the

new settlement time frames associated with the

Depository Trust Company’s SDFS System, the

appropriate buy-in execution time in subsection

59(b) should not be prior to 3:00 P.M. Eastern Time.

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, N.W.,

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 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, N.W.,

Washington, D.C. 20549. Copies of such

filing also will be available for

inspection and copying at the principal

office of the New York Stock Exchange.

All submissions should refer to File No.

SR–NYSE–95–46 and should be

submitted by January 26, 1996.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.6

Jonathan G. Katz,

Secretary.

[FR Doc. 96–171 Filed 1–4–96; 8:45 am]

BILLING CODE 8010–01–M

[Release No. 36649; File No. SR–NASD–95–

50]

Self-Regulatory Organizations; Order

Approving Proposed Rule Change by

National Association of Securities

Dealers, Inc. Amending the Buy-in

Procedures in Section 59 of the

Uniform Practice Code to Clarify the

Appropriate Delivery Deadlines for

Buy-in Notices

December 28, 1995.

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

Securities Exchange Act of 1934

(‘‘Act’’),1 and Rule 19b–4 thereunder,2

on November 15, 1995, the National

Association of Securities Dealers, Inc.

(‘‘NASD’’ or ‘‘Association’’) filed with

the Securities and Exchange

Commission (‘‘SEC’’ or ‘‘Commission’’)

a proposed rule change that amends

Section 59 of the Uniform Practice Code

(‘‘UPC’’ or ‘‘Code’’) to revise the buy-in

procedures to clarify the appropriate

delivery deadlines for buy-in notices.

Notice of the proposed rule change,

together with the substance of the

proposal, was issued by Commission

release (Securities Exchange Act Release

No. 36496, November 20, 1995) and by

publication in the Federal Register (60

FR 58695, November 28, 1995).3 No

comment letters were received. The

Commission is approving the proposed

rule change.

I. Background

Under Section 59 of the Code, when

the seller has not completed a contract

of sale of securities by delivering the

securities called for in the contract on

settlement day, the buyer may close the

contract by purchasing the subject

securities in the open market (‘‘buyingin’’). When securities are bought-in to

complete a contract, the seller is liable

for any difference between the contract

price and the buy-in price.

Pursuant to subsection 59(a) of the

Code, a buy-in is initiated by the buyer

delivering a notice of buy-in to the seller

at his office not later than 12 noon, the

seller’s time, two business days

preceding the execution of the proposed

buy-in. Subsection 59(b) provides that

the notice must include the terms of the

contract to be closed and must state that

unless delivery is effected at or before

a certain specified time not earlier than

11:30 a.m., the buyer’s local time, the

security may be bought-in for the

account of the seller (meaning the seller

assumes the liability for the market

price of the security bought-in).

Subsection 59(b) also provides that if

the originator of the buy-in notice is a

participant in a registered securities

depository and the security to be

bought-in is a depository eligible

security, the buy-in may not be executed

before 2:30 p.m., Eastern Time.

The NASD has identified an

inconsistency in subsection 59(b) in that

the provisions permit a buy-in notice to

specify the seller’s delivery deadline at

a time no earlier than 11:30 a.m., the

buyer’s local time, yet the buy-in may

not be executed before 2:30 p.m.,

Eastern Time. If the seller obtained

securities and tendered them for

delivery after the notice deadline but

before the buy-in was executed, the

provisions of the rule and the notice

could permit the buyer to refuse

delivery and subject the seller to the risk

of an execution at a price higher than

the original contract price. To resolve

this anomaly, the rule change amends

subsection 59(b) of the UPC to notify the

delivery times permitted to be specified

in the buy-in notice.

II. The Terms of Substance of the

Proposed Rule Change

The rule change amends Section 59 of

the UPC to modify the delivery times

permitted to be specified in the buy-in

notice. With respect to buy-in notices

for depository eligible securities where

the originator is a depository

participant, the notice may not specify

a delivery time earlier than 3:00 p.m.,

Eastern Time.

In addition, the rule change amends

UPC subsection 59(b)(2), which permits

the recipient of a buy-in notice to

retransmit the notice to another brokerdealer from whom the subject securities

are due. A retransmitted buy-in notice

must be delivered to the recipient not

later than 12 noon, the seller’s local

time, on the business day preceding the

buy-in date and the specified delivery

time in the original notice.

III. Discussion

The Commission believes that the rule

change is consistent with the provisions

of Section 15A(b)(6) of the Act 4 in that

the rule change will refine the buy-in

provisions of the code to recognize new

developments in the clearance and

settlement system.5 Furthermore, the

rule change will facilitate the clearance

and settlement of securities by

eliminating an inconsistency in

subsection 59(b) that permitted a buy-in

notice to specify the seller’s delivery

deadline at a time no earlier than 11:30

a.m., the buyer’s local time, yet the buyin could not be executed before 2:30

p.m., Eastern Time. For depository

eligible securities where the originator

is a depository participant, the rule

change precludes the buy-in notice from

requiring the seller to deliver the

securities before 3:00 p.m., the seller’s

time. The provision will reduce the risk

of the buyer exposing the seller to an

execution at a price higher than the

original contract price. However, the

rule change permits broker-to-broker

buy-ins in nondepository eligible

securities that specify an earlier delivery

time (no earlier than 11:30 a.m. local

time).

In addition, the rule change amends

UPC subsection 59(b)(2) to require the

recipient of a buy-in notice to retransmit