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

10 15 U.S.C. 78q–1(b)(3)(F) (1988).

11Securities Exchange Act Release No. 26896

(June 5, 1989), 54 FR 25185 [File No. SR–DTC–89–

07] (order approving a proposed rule change

concerning invitations to tender to cover short

positions).

12 15 U.S.C. 78q–1(b)(3)(F) (1988).

13The Commission was concerned with the

proposal’s impact on broker-dealers’ compliance

with Rule 15c3–3 under the Act [17 CFR 240.15c3–

3]. This rule requires broker-dealers to obtain and

thereafter to maintain physical possession or

control of fully-paid securities and excess margin

securities carried by a broker-dealer for the account

of a customer [17 CFR 240.15c3–3(b)(1)]. If as a

result of a recall procedure, DTC reverses the

delivery of a security that is a fully-paid or excess

margin security at the receiving broker-dealer

participant, the participant could incur a deficit in

the number of securities that should be under its

physical possession or control.

14 17 CFR 200.30–3(a)(12) (1994).

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

2Letters from Julie Beyers, Associate Counsel,

ISCC, to Michele Bianco, Division of Market

Regulation, Commission (December 12, 1995, and

December 13, 1995).

(C) Self-Regulatory Organization’s

Statement on Comments on the

Proposed Rule Change Received From

Members, Participants, or Others

No written comments have been

solicited or received. DTC will notify

the Commission of any written

comments received by DTC.

III. Date of Effectiveness of the

Proposed Rule Change and Timing for

Commission Action

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

requires that the rules of a clearing

agency be designed 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

that DTC’s short position reclamation

procedures are consistent with DTC’s

obligations under Section 17A(b)(3)(F)

because the proposed procedures

should help DTC assure the

safeguarding of securities and funds by

reducing the number of outstanding

short positions at DTC created either by

call lotteries or by rejected deposits.

Under the DTC’s procedures,

participants are obligated to cover their

short positions immediately. As an

incentive to cover a short position as

soon as possible and as a cushion to

protect DTC in the event of a sharp rise

in the market price of the security, DTC

participants are assessed a daily charge

of 130% of the market value of each

security for which the participant has a

short position at DTC.11 With this rule

change, DTC should further reduce its

risk of loss by allowing DTC

participants to recall certain deliveries

which have resulted in short positions

which should further reduce the total

number of outstanding short positions.

Thus, the proposal is consistent with

Section 17A(b)(3)(F) 12 of the Act in that

it should help DTC to reduce its risk of

loss and thereby should enhance DTC’s

ability to safeguard securities and funds

under its control.

Because the Commission was

concerned that the proposed

reclamation procedures could

inadvertently cause broker-dealers to

create possession or control deficits,13

the Commission previously approved

the proposed rule change on a

temporary basis in order that the

reclamation procedures could be

carefully monitored before they were

approved permanently. The

Commission is now permanently

approving the reclamation procedures

because during the temporary approval

period the Commission has not received

any reports of possession or control

deficit problems caused by the

procedures.

DTC 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 filing. The

Commission finds good cause for so

approving the proposed rule change

because the Commission has noticed the

procedures on several separate

occasions without receiving any

comment letters and because

accelerated approval will allow DTC

participants to continue to utilize the

procedures without any disruption

when the current temporary approval

expires.

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 in

the Commission’s Public Reference

Section, 450 Fifth Street, N.W.,

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–95–21

and should be submitted by January 26,

1996.

It is therefore ordered, pursuant to

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

proposed rule change (File No. SR–

DTC–95–21) be, and hereby is,

permanently approved.

For the Commission by the Division of

Market Regulation, pursuant to delegated

authority.14

Jonathan G. Katz,

Secretary.

[FR Doc. 96–166 Filed 1–4–96; 8:45 am]

BILLING CODE 8010–01–M

[Release No. 34–36656; International Series

Release No. 912; File No. SR–ISCC–95–06]

Self-Regulatory Organizations;

International Securities Clearing

Corporation; Notice of Filing of

Proposed Rule Change Relating to

Global Clearance Network Service

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 2, 1995, the International

Securities Clearing Corporation

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

Exchange Commission (‘‘Commission’’)

the proposed rule change as described

in Items I, II, and III below, which items

have prepared primarily by ISCC. On

December 12, 1995, and on December

13, 1995, ISCC filed amendments to its

proposed rule change.2 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 rule changed is to

accommodate an additional service

provider, Standard Chartered Bank

(‘‘SCB’’) in ISCC’s Global Clearance

Network (‘‘GCN’’) service.

II. Self-Regulatory Organization’s

Statement of the Purpose of, and

Statutory Basis for, the Proposed Rule

Change.

In its filing with the Commission,

ISCC 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. ISCC has prepared

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