35292 Federal Register / Vol. 61, No. 130 / Friday, July 5, 1996 / Notices

3 15 U.S.C. § 78q–1(b)(3)(F) (1988).

4Telephone conversation between John Rudolph,

Board of Governors of the Federal Reserve System,

and Chris Concannon, Staff Attorney, Division of

Market Regulation, Commission (June 28, 1996).

5 17 CFR 200.30–3(a)(12) (1995).

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

provisions governing their extensive

dealings with Philadep and SCCP, their

participants, and pledgees in this area as

the former New York based groups

already are subject to New York law.

Philadep and SCCP believe the

proposed rule changes are consistent

with Section 17A of the Act and the

rules and regulations thereunder

because the rules are designed to

promote the prompt and accurate

clearance and settlement of securities

transactions, 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, to foster

cooperation and coordination with

persons engaged in the clearance and

settlement of securities, to remove

impediments to and perfect the

mechanism of a national market system

for the prompt and accurate clearance

and settlement of securities

transactions, and, in general, to protect

investors and the public interest.

B. Self-Regulatory Organizations’

Statements on Burden on Competition

Philadep and SCCP do not believe

that the proposed rule changes will

impact or impose a burden on

competition.

C. Self-Regulatory Organizations’

Statements on Comments on the

Proposed Rule Changes Received From

Members, Participants or Others

No written comments have been

solicited or received.

III. Date of Effectiveness of the

Proposed Rule Changes and Timing for

Commission Action

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

requires the rules of a clearing agency be

designed to foster cooperation and

coordination with persons engaged in

the clearance and settlement of

securities. The Commission believes the

proposed rule changes are consistent

with these requirements because

adoption of Article 8 of the New York

UCC should help provide certainty with

respect to the substantive rights and

obligations under UCC Article 8 that are

applicable to Philadep and SCCP and

their participants particularly with

respect to transactions with brokerdealers, banks, and other institutions

that are participants of other foreign or

domestic clearing entities.

Philadep and SCCP have 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 accelerated approval will

enable Philadep and SCCP to continue

to choose Article 8 of the New York

UCC as the governing law for certain

transactions, thus enabling Philadep

and SCCP to continue to settle without

any disruption securities transactions

between U.S. broker-dealers and

Canadian broker-dealers. Currently, the

West Canada Depository Trust Company

(‘‘WCDTC’’) and the West Canada

Clearing Corporation (‘‘WCCC’’) act as a

corresponding depository for and

conduct clearance and settlement with

Philadep and SCCP, respectively. With

WCDTC and WCCC as participants of

SCCP and Philadep, transactions in

certain Canadian and U.S. securities

between Canadian and American

brokers will continue to be cleared and

settled through the facilities of Philadep

and SCCP. The staff of the Board of

Governors of the Federal Reserve

System has concurred with the

Commission’s granting of accelerated

approval.4

The Commission is granting

temporary approval of the proposed rule

changes because the Commission

believes the adoption of Article 8 of the

New York UCC should continue to be

examined before the selection of such

governing law is permanently approved.

The Commission will continue to

analyze the developments and the

application of Article 8 of the New York

UCC including the effect of the choice

of law provisions upon third parties. For

these reasons, the Commission is

temporarily approving the proposed

rule changes through December 31,

1996.

IV. Solicitation of Comments

Interested persons are invited to

submit written data, views, and

arguments concerning the foregoing.

Persons making such submissions

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, N.W.,

Washington, DC 20549. Copies of such

filings will also be available for

inspection and copying at the principal

offices of Philadep and SCCP. All

submissions should refer to File Nos.

SR–Philadep–96–08–SR–SCCP–96–04

and should be submitted by July 26,

1996.

It is therefore ordered, pursuant to

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

proposed rule changes (File Nos. SR–

Philadep–96–08 and SR–SCCP–96–04)

be, and hereby are, approved through

December 31, 1996.

For the Commission by the Division of

Market Regulation pursuant to delegated

authority.5

Jonathan G. Katz,

Secretary.

[FR Doc. 96–17147 Filed 7–3–96; 8:45 am]

BILLING CODE 8010–01–M

[Release No. 34–37383; International Series

Release No. 998; File No. SR–Philadep–96–

09]

Self-Regulatory Organizations;

Philadelphia Depository Trust

Company; Notice of Filing and Order

Granting Accelerated Approval on a

Temporary Basis of a Proposed Rule

Change Seeking Permanent Approval

of the Designation of the West Canada

Depository Trust Company as a

Correspondent Depository

June 28, 1996.

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

Securities Exchange Act of 1934

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

May 30, 1996, the Philadelphia

Depository Trust Company (‘‘Philadep’’)

filed with the Securities and Exchange

Commission (‘‘Commission’’) the

proposed rule change (File No. SR–

Philadep–96–09) as described in Items I

and II below, which items have been

prepared primarily by Philadep. The

Commission is publishing this notice to

solicit comments from interested

persons and to grant accelerated

approval of the proposed rule change on

a temporary basis through December 31,

1996.

I. Self-Regulatory Organization’s

Statement of the Terms of Substance of

the Proposed Rule Change

The purpose of the proposed rule

change is to seek permanent approval of

the designation of the West Canada

Depository Trust Company (‘‘WCDTC’’)

as Philadep’s nonexclusive agent and
Federal Register / Vol. 61, No. 130 / Friday, July 5, 1996 / Notices 35293

2Securities Exchange Act Release No. 36782;

International Series Release No. 923 (January 26,

1996), 61 FR 3956 [File No. SR–Philadep–96–01]

(order granting accelerated approval on a temporary

basis of a proposed rule change to appoint the West

Canada Depository Trust Company as a

Correspondent Depository). 3 15 U.S.C. 78q–1(b)(3)(F) (1988)

custodian in receiving securities

deposited by WCDTC participants for

delivery to Philadep. This custodial

arrangement was temporarily approved

through June 30, 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,

Philadep included statements

concerning the purpose of and basis for

the proposed rule change and discussed

any comments that it received on the

proposed rule change. The text of these

statements may be examined at the

places specified in Item IV below.

Philadep 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

The purpose of the proposed rule

change is to seek permanent approval of

the designation of WCDTC to act as a

nonexclusive agent and custodian for

Philadep in receiving securities

deposited by certain WCDTC sponsored

participants for credit to their respective

subaccounts in WCDTC’s omnibus

account at Philadep. The custodial

arrangement was effectuated by a

contract executed between Philadep and

WCDTC. WCDTC’s rights and

obligations as a participant will be

governed by Philadep’s rules and

procedures.

At or before 12:45 p.m. (Philadelphia

time) on any business day Philadep is

open, WCDTC will notify Philadep via

facsimile transmission or through

Philadep’s Automated Deposit System

of initiated and pending instructions to

Canadian transfer agents to transfer

various Canadian securities held by

WCDTC into Philadep’s nominee name.

Philadep will credit WCDTC’s

account(s) for Canadian issues at the

time of this notification. At the time of

physical receipt of the securities by

Philadep, Philadep will credit WCDTC’s

account for incoming deposits of U.S.

issues which were received by WCDTC

and designated for physical delivery

and deposit to its Philadep account.

With regard to Canadian issues,

WCDTC will cause the Canadian

transfer agent to reregister the shares in

Philadep’s nominee name and to deliver

them to WCDTC as agent and custodian

of Philadep. With respect to acting as

Philadep’s agent for interfacing with

Canadian transfer agents, WCDTC has

more direct knowledge of and

familiarity with Canadian transfer

agents. WCDTC has a Canadian address

and is expected to obtain receipt of

certificates faster than Philadep would

obtain receipt through the international

postal system. Earlier receipt of

certificates means earlier certainty with

respect to the value and validity of

deposited certificates. This is a benefit

to Philadep because the earlier Philadep

receives notice of defects in a certificate

the sooner it can reverse the credit to

the WCDTC’s account and the better it

can limit the risk that the securities will

have been transferred out of the account

before the reversal of the credit can take

place.

For Canadian issues returning to

WCDTC from the Canadian transfer

agent, WCDTC will safeguard the

deposited securities and will hold them

with deposit tickets attached and

segregated from other securities held by

WCDTC until forwarded to Philadep via

licensed air courier or other carrier

agreed upon by the parties. Securities

held overnight will be deposited in

WCDTC’s vault. If WCDTC fails to

deliver these securities to Philadep,

Philadep will apply a short charge to

WCDTC’s account for the full value of

the fails. For fails to deliver resulting

from settled CNS transactions, Philadep

will short the participant’s CNS account

with the Stock Clearing Corporation of

Philadelphia (‘‘SCCP’’), Philadep’s

affiliated clearing corporation. SCCP

will mark to market all short positions

and collect marks daily.

If the deposited securities are U.S.

securities, WCDTC will forward the

securities directly to Philadep on the

day the securities are reported to

Philadep. Securities will be shipped to

Philadep via licensed air courier or

other carrier agreed upon by the parties.

WCDTC and Philadep have agreed

that securities placed within the

custody and control of WCDTC on

behalf of Philadep will not be subject to

any right, charge, security interest, lien

or claim of any kind in favor of WCDTC

or any person claiming through

WCDTC. WCDTC and Philadep have

further agreed that WCDTC will have no

legal or equitable right, title, or interest

in or to such securities including but

not limited to any right, title, or interest

in or to any principal or interest

coupons, redemption proceeds,

payments or payable amounts relating to

any securities. In addition, WCDTC will

maintain adequate insurance coverage

with respect to any securities which are

in its custody on behalf of Philadep.

Furthermore, WCDTC has made a

participants fund contribution of

$1,000,000, which is in excess of the

minimum amount required under the

applicable formula, and WCDTC’s

parent organization, the Vancouver

Stock Exchange, has executed an

irrevocable standby letter of credit in

the amount of $5 million (Canadian

Dollars) to be issued to Philadep

securing its obligations.

Philadep believes the proposed rule

change is consistent with Section 17A of

the Act and the rules and regulations

thereunder because the rule proposal

fosters cooperation and coordination

with persons engaged in the clearance

and settlement of securities transactions

and further assures the safeguarding of

securities and funds in its custody or

control or for which Philadep is

responsible.

(B) Self-Regulatory Organization’s

Statement on Burden on Competition

Philadep does not believe that the

proposed rule change will impact 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 have been

solicited or received.

III. Date of Effectiveness of the Proposed

Rule Change and Timing for

Commission Action

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

requires that the rules of a clearing

agency be designed to foster cooperation

and coordination with persons engaged

in the clearance and settlement of

securities transactions.3 The

Commission believes that Philadep’s

designation of WCDTC as a

correspondent depository is consistent

with Philadep’s obligations under

Section 17A(b)(3)(F) because the

proposed rule change should help foster

cooperation and coordination between

the U.S. and Canadian clearance and

settlement systems by facilitating a link

between Philadep and WCDTC.

Philadep has requested that the

Commission find good cause for proving

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 accelerated approval will allow

Philadep to continue its custodial
35294 Federal Register / Vol. 61, No. 130 / Friday, July 5, 1996 / Notices

4Telephone conversation between John Rudolph,

Board of Governors of the Federal Reserve Board,

and Chris Concannon, Division of Market

Regulation, Commission (June 28, 1996).

5 17 CFR 200.30 3(a)(12) (1995).

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

2 17 CFR 240.19b–4.

3The Commission notes that, according to PHLX,

equity trading between 1:00 and 1:15 p.m. will be

pursuant to PHLX Rule 101.02 which facilitates

‘‘PPS’’ and ‘‘GTX’’ designated orders. Telephone

Conversation between Murray L. Ross, Secretary,

PHLX, and Elizabeth Prout Lefler, SEC, on June 26,

1996.

4The Commission notes that, according to the

PHLX, the New York Stock Exchange will conduct

its normal after-hours session between 1:00 and

1:30 P.M. Id.

arrangement with WCDTC thus allowing

WCDTC to continue to settle without

any disruption securities transactions

between U.S. broker-dealers and

Canadian broker-dealers.

The Commission is granting

temporary approval of the proposed rule

change through December 31, 1996, so

that Philadep and the Commission can

continue to monitor and analyze the

development of WCDTC as a

correspondent depository before

granting permanent approval. During

this period, the Commission will

continue to monitor and correspondent

depository arrangement between

Philadep and WCDTC to ensure that

proper risk management procedures are

in place. Furthermore, Philadep will

continue to be required to file monthly

reports analyzing activity in WCDTC’s

omnibus account and subaccounts. For

these reasons, the Commission is

temporarily approving the proposed

rule change through December 31, 1996.

The staff of the Board of Governors of

the Federal Reserve System have

concurred with the Commission’s

granting of accelerated approval.4

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

Room, 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 Philadep. All submissions

should refer to the file number SR–

Philadep–96–09 and should be

submitted by July 26, 1996.

It is therefore ordered, pursuant to

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

proposed rule change (File No. SR–

Philadep–96–09) be, and hereby is,

approved through December 31, 1996.

For the Commission by the Division of

Market Regulation, pursuant to delegated

authority.5

Jonathan G. Katz,

Secretary.

[FR Doc. 96–17148 Filed 7–3–96; 8:45 am]

BILLING CODE 8010–01–M

[Release No. 34–37378; File No. SR–PHLX–

96–24]

Self-Regulatory Organizations; Notice

of Filing and Order Granting

Accelerated Approval of Proposed

Rule Change by the Philadelphia Stock

Exchange, Inc. To Amend Its Holiday

Schedule Respecting the Early Closure

of Its Equity Trading Floor at 1:15 p.m.,

Equity and Index Options Trading

Floor at 1:10 and 1:15 p.m.

Respectively, and its Currency Options

at 1:00 p.m. on Friday July 5, 1996

June 27, 1996.

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

Securities Exchange Act of 1934

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

notice is hereby given that on June 24,

1996, the Philadelphia Stock Exchange,

Inc. (‘‘PHLX’’ or ‘‘Exchange’’) filed with

the Securities and Exchange

Commission (‘‘SEC’’ or ‘‘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 approving this proposal

on an accelerated basis.

I. Self-Regulatory Organization’s

Statement of the Terms of Substance of

the Proposed Rule Change

The PHLX, pursuant to Rule 19b–4 of

the Act, proposes to amend its holiday

schedule respecting the early closure of

the PHLX equity trading floor at 1:15

p.m.,3 equity and index options trading

floor at 1:10 and 1:15 p.m. respectively,

and PHLX currency options at 1:00 p.m.

on Friday July 5, 1996.

II. Self-Regulatory Organization’s

Statement Regarding 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 III below.

The self-regulatory organization has

prepared summaries, set forth in Section

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 PHLX, under its previously

adopted holiday schedule, had planned

to be open for a full day of trading on

Friday, July 5, 1996. However, the

registered national securities exchanges

are planning an early closure of equity

trading at 1:00 P.M.4 on Friday, July 5,

1996, in part due to fact that the

exchanges do not anticipate that there

will be significant trading volume on

the day after the Fourth of July,

Independence Day, our national

holiday. Therefore, the PHLX proposes

the early closure of its equity trading

floor at 1:15, the equity and index

options trading floor at 1:10 P.M. and

1:15 P.M. respectively, and PHLX

currency options at 1:00 P.M. on Friday,

July 5, 1996.

The PHLX requests accelerated

effectiveness of this proposed rule

change pursuant to Section 19(b)(2) in

order to provide member firms and

customers with sufficient notice and

lead time to prepare for closing on July

5, 1996.

2. Statutory Basis

The basis under the Act for the

proposed rule change is the requirement

under Section 6(b)(5) that an exchange

have rules that are designed to promote

just and equitable principles of trade, to

foster cooperation and coordination

with persons engaged in regulating,

clearing, settling, processing

information with respect to, and

facilitating transactions in securities, to

remove impediments to protect and

perfect the mechanism of a free and

open market and a national market

system, and in general, to protect

investors and the public interest.

B. Self-Regulatory Organization’s

Statement on Burden on Competition

The PHLX does not believe that the

proposed rule change will impose any

inappropriate burden on competition.