[Federal Register: December 11, 1998 (Volume 63, Number 238)] [Notices] [Page 68494] From the Federal Register Online via GPO Access [wais.access.gpo.gov] [DOCID:fr11de98-80] [[Page 68494]] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-40753; File No. SR-DTC-98-24] Self-Regulatory Organizations; the Depository Trust Company; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to PTS Pending Transaction Inquiry Function December 7, 1998. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (``Act''),\1\ notice is hereby given that on November 19, 1998, The Depository Trust Company (``DTC'') 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 primarily by DTC. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. --------------------------------------------------------------------------- \1\ 15 U.S.C. 78s(b)(1). --------------------------------------------------------------------------- I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The proposed rule change will modify DTC's PTS Pending Transaction Inquiry (``PEND'') function to allow DTC participants to temporarily and selectively ``hold'' (exclude from processing) and ``uphold'' (release) deliver orders and pledge transactions that are recycled for insufficient position.\2\ --------------------------------------------------------------------------- \2\ An Important Notice to DTC participants which provides a detailed description of the modification to the PEND function is attached as an exhibit to DTC's filing, which is available for inspection and copying at the Commission's public reference room and through DTC. --------------------------------------------------------------------------- II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, DTC included statements concerning the purpose of an basis for the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. DTC has prepared summaries, set forth in sections (A), (B), and (C) below, of the most significant aspects of such statements.\3\ --------------------------------------------------------------------------- \3\ The Commission has modified the text of the summaries prepared by DTC. --------------------------------------------------------------------------- (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 provide DTC participants with additional flexibility in their use of the PEND function. Under the proposal, DTC participants will be permitted to hold pending deliver orders and pledge transactions. Held transactions will not be processed by DTC until the hold is released by the holding participant. Only the initiator (i.e., the deliverer or pledgor) of a transaction will be permitted to hold or release a pending transaction. Furthermore, only transactions that pend for insufficient position may be held. DTC will charge forty-five cents ($.45) for each hold and hold release transaction processed, which is the same fee that DTC currently charges for the cancellation of pending deliver orders. DTC believes that the proposed rule change is consistent with the requirements of Section 17A of the Act \4\ and the rules and regulations thereunder since the proposed rule change will give DTC participants greater flexibility in handling transactions that pend for insufficient position. According to DTC, the proposed rule change will be implemented consistently with the safeguarding of securities and funds in DTC's custody or control or for which it is responsible since the operation of the PEND function, as modified by the proposed rule change, will be similar to the current operation of the function. --------------------------------------------------------------------------- \4\ 15 U.S.C. 78q-1. --------------------------------------------------------------------------- (B) Self-Regulatory Organization's Statement on Burden on Competition DTC perceives no adverse impact on competition by reason of the proposed rule change. (C) Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants or Others The proposed rule change was developed through discussions with several DTC participants. Written comments from DTC participants or others have not been solicited or received on the proposed rule change. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The foregoing rule change has become effective pursuant to Section 19(b)(3)(A)(iii) of the Act \5\ and pursuant to Rule 19b-4(e)(4) \6\ thereunder because the proposal effects a change in an existing service of DTC that does not adversely affect the safeguarding of securities or funds in the custody or control of DTC or for which it is responsible and does not significantly affect the respective rights or obligations of the clearing agency or persons using the service. At any time within sixty days of the filing of the 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. --------------------------------------------------------------------------- \5\ 15 U.S.C. 78s(b)(3)(A)(iii). \6\ 17 CFR 240.19b-4(e)(4). --------------------------------------------------------------------------- IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. 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 also will be available for inspection and copying at the principal office of DTC. All submissions should refer to File No. SR-DTC-98-24 and should be submitted by January 4, 1999. For the Commission by the Division of Market Regulation, pursuant to delegated authority.\7\ --------------------------------------------------------------------------- \7\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Margaret H. McFarland, Deputy Secretary. [FR Doc. 98-32960 Filed 12-10-98; 8:45 am] BILLING CODE 8010-01-M