[Federal Register Volume 59, Number 49 (Monday, March 14, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-5836]
[[Page Unknown]]
[Federal Register: March 14, 1994]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 33734/March 8, 1994; File No. 600-25]
The Registration as a Clearing Agency of the Participants Trust
Co., Order Granting Approval of Registration Until March 31, 1995
On January 26, 1994, the Participants Trust Company (``PTC'') filed
with the Securities and Exchange Commission (``Commission''), pursuant
to section 19(a) of the Securities Exchange Act of 1934 (``Act''),\1\
an amendment to its Form CA-1\2\ requesting that the Commission extend
PTC's registration as a clearing agency until March 31, 1995. Notice of
PTC's amended application and request for extension of temporary
registration appeared in the Federal Register on February 15, 1994.\3\
No comments were received. This order approves PTC's amendment by
extending PTC's registration as a clearing agency until March 31, 1995.
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\1\15 U.S.C. 78s(a).
\2\Letter from John J. Sceppa, President and Chief Executive
Officer, PTC, to Judith Poppalardo, Assistant Director, Division of
Market Regulation, Commission, dated January 25, 1994.
\3\Securities Exchange Act Release No. 33604 (February 8, 1994),
59 FR 7285.
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On March 28, 1989, the Commission granted PTC temporary
registration as a clearing agency pursuant to sections 17A and 19(a) of
the Act, and rule 17Ab2-1 thereunder for a period of twelve months.\4\
Subsequently, the Commission issued orders that extended PTC's
temporary registration as a clearing agency, the last of which extended
PTC's registration until March 31, 1994.\5\
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\4\Securities Exchange Act Release No. 26671 (March 28, 1989),
54 FR 13266.
\5\Securities Exchange Act Release Nos. 27858 (March 28, 1990),
55 FR 12614; 29024 (March 28, 1991), 56 FR 13848; 30537 (April 9,
1992), 57 FR 12351; and 32040 (March 23, 1993), 58 FR 16902.
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As discussed in detail in the initial order granting PTC's
temporary registration,\6\ one of the primary reasons for PTC's
registration was to develop depository facilities for mortgage-backed
securities, particularly securities guaranteed by the Government
National Mortgage Association (``GNMA''). PTC services include
certificate safekeeping, book entry deliveries, an automated facility
for the pledge or segregation of securities, and other services related
to the immobilization of securities certificates.
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\6\Supra note 4.
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PTC continues to make significant progress in the areas of
financial performance, regulatory commitments, and operational
capabilities. The par value of GNMA securities on deposit grew from
$706 billion on December 31, 1992 to $850 billion on December 31,
1993.\7\ The par value of VA REMICs on deposit at PTC grew from $1.608
billion on December 31, 1992 to $4.634 billion on December 31, 1993.\8\
The average transaction volume grew from 250,000 in 1992 to 309,000 in
1993.\9\
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\7\Supra note 2.
\8\Id.
\9\Id.
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PTC continued its efforts over the past year to implement
operational and procedural changes in connection with PTC's temporary
registration.\10\ For example, PTC acquired rights to the SPEED source
code, thereby facilitating the process of enhancing the SPEED system to
suit PTC's needs. PTC also initiated a program to distribute to
participants a portion of GNMA I principal and interest (``P&I'')
earlier in the day,\11\ and in December 1993, introduced a new P&I
processing system, PRISM, that further automates P&I data processing.
PTC was able to reduce its fees to participants further, effective
January 1, 1994,\12\ and declared a dividend of $.525 per share to
stockholders of record on December 31, 1993.\13\
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\10\In connection with PTC's original temporary registration,
PTC committed to the Commission and the Federal Reserve Bank of New
York to make a number of operational and procedural changes, which
include:
(1) Eliminating trade reversals from PTC's procedures to cover a
participant default;
(2) Phasing out the aggregate excess net debit limitation for
extensions under the net debit monitoring level procedures;
(3) Making principal and interest advances, now mandatory,
optional;
(4) Allowing participants to retrieve securities in the abeyance
account and not allowing participants to reverse a transfer because
its customer may not be able to fulfill its financial obligations to
the participant.
(5) Eliminating the deliverer's security interest and replacing
it with a substitute;
(6) Reexamining PTC's account structure rules to make them
consistent with PTC's lien procedures;
(7) Expanding and diversifying PTC's lines of credit;
(8) Assuring operational integrity by developing and
constructing a back-up facility; and
(9) Reviewing PTC rules and procedures for consistency with
current operations.
Supra note 4.
\11\Securities Exchange Act Release No. 33132 (November 2,
1993), 58 FR 59501.
\12\Securities Exchange Act Release No. 33362 (December 21,
1993), 58 FR 69433.
\13\Securities Exchange Act Release No. 33487 (January 18,
1994), 59 FR 3900.
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Although PTC has made considerable progress toward complying with
the undertakings set out above, PTC needs more time to implement fully
the changes necessary for compliance. Accordingly, PTC has requested
that the Commission extend PTC's registration as a clearing agency
until March 31, 1995, to permit PTC to gain experience and stability as
a fully operative depository and to comply fully with the undertakings
made in connection with PTC's registration.\14\
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\14\Supra note 2.
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The Commission believes that PTC continues to meet the
determinations enumerated in section 17A(b)(3). PTC has facilitated the
prompt and accurate clearance and settlement of mortgage-backed
securities. PTC has functioned as a clearing agency for the past four
years in compliance with the Act.
It is therefore ordered, that PTC's temporary registration as a
clearing agency be, and hereby is, extended until March 31, 1995,
subject to the terms, undertakings, and conditions specified in
Securities Exchange Act Release No. 26671.\15\
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\15\Supra note 4.
For the Commission, by the Division of Market Regulation
pursuant to delegated authority.\16\
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\16\17 CFR 200.30-3(a)(50) (1992).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 94-5836 Filed 3-11-94; 8:45 am]
BILLING CODE 8010-01-M