[Federal Register: February 25, 1999 (Volume 64, Number 37)]
[Notices]               
[Page 9368-9369]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr25fe99-115]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-41067; File No. SR-DTC-98-13]

 
Self-Regulatory Organizations; The Depository Trust Company; 
Order Approving a Proposed Rule Change Relating to the Frequency of 
Collection of the Difference Between a Participant's Required Fund 
Deposit and Its Actual Fund Deposit

February 18, 1999.
    On June 11, 1998, The Depository Trust Company (``DTC'') filed with 
the Securities and Exchange Commission (``Commission'') a proposed rule 
change (File No. SR-DTC-98-13) pursuant to Section 19(b)(1) of the 
Securities Exchange Act of 1934 (``Act'').\1\ Notice of the proposal 
was published in the Federal Register on October 28, 1998.\2\ No 
comment letters were received. For the reasons discussed below, the 
Commission is approving the proposed rule change.
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    \1\ 15 U.S.C. 78s(b) (1).
    \2\ Securities Exchange Act Release No. 40588 (October 22, 
1998), 63 FR 57716.
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I. Description

    DTC requires each of its participants to make a deposit to the 
participants fund. Currently, DTC calculates daily the amount a 
participant is required to deposit to the participant's fund 
(``required fund deposit''). If a participant's required fund deposit 
exceeds the amount a participant has deposited in the participants fund 
(``actual fund deposit''), DTC requires the participant to deposit the 
difference into the participants fund on a monthly basis.
    The rule change amends this practice to enable DTC to require a 
participant to deposit the difference into the participants fund within 
two business days of the day on which the difference is calculated when 
two conditions are met. First, the amount of the difference must equal 
or exceed $500,000. Second,

[[Page 9369]]

the difference must represent twenty-five percent or more of the newly 
calculated required fund deposit. DTC will continue to calculate each 
participant's required fund deposit each day and will collect any 
deficiency between the required fund deposit and the actual fund 
deposit that does not satisfy both of these conditions on a monthly 
basis.

II. Discussion

    Section 17A(b) (3) (F) of the Act \3\ requires that the rules of a 
clearing agency be designed to assure the safeguarding of securities 
and funds that are in the custody and control of the clearing agency or 
for which it is responsible. The Commission believes that the rule 
change is consistent with DTC's obligations under Section 17A(b)(3)(F) 
because it allows DTC to correct significant differences between a 
participant's required fund deposit and actual fund deposit sooner. As 
a result, DTC's potential exposure to a defaulting participant should 
be reduced.
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    \3\ 15 U.S.C. 78q-1 (b)(3)(F).
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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 \4\ and the 
rules and regulations thereunder.
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    \4\ 15 U.S.C. 78q-1.
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    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\5\ that the proposed rule change (File No. SR-DTC-98-13) be, and 
hereby is, approved.

    \5\ 15 U.S.C. 78s(b) (2).
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    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority.\6\
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    \6\ 17 CFR 200.30-3(a)(12).
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Jonathan G. Katz,
Secretary.
[FR Doc. 99-4632 Filed 2-24-99; 8:45 am]
BILLING CODE 8010-01-M