[Federal Register Volume 63, Number 111 (Wednesday, June 10, 1998)]
[Notices]
[Pages 31818-31819]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-15417]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-40064; International Release No. 1138; File No. SR-DTC-
98-11]
Self-Regulatory Organizations; The Depository Trust Company;
Notice of Filing and Order Granting Accelerated Temporary Approval of a
Proposed Rule Change Relating to the Admission of Non-U.S. Entities as
Direct Depository Participants
June 3, 1998.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ notice is hereby given that on May 29, 1998, The
Depository Trust Company (``DTC'') filed with the Securities and
Exchange Commission (``Commission'') the proposed rule change as
described in Items I and II below, which Items have been prepared
primarily by DTC. The Commission is publishing this notice and order to
solicit comments from interested persons and to grant accelerated
temporary approval of the proposed rule change through May 31, 1999.
---------------------------------------------------------------------------
\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 purpose of the proposed rule change is to extend the
Commission's temporary approval of DTC's criteria for entities that are
organized in a country other than the United States (``non-U.S.
entity'') to become direct DTC participants.
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 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. DTC has prepared summaries, set forth in sections (A),
(B), and (C) below, of the most significant aspects of such
statements.\2\
---------------------------------------------------------------------------
\2\ 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 extend the
Commission's temporary approval of DTC's admission criteria for non-
U.S. entities as direct DTC participants. The Commission originally
granted temporary approval on May 9, 1997.\3\ The admission criteria
would permit well-qualified, non-U.S. entities to obtain direct access
to DTC's services without requiring the non-U.S. entities to obtain
financial guarantees.
---------------------------------------------------------------------------
\3\ For a complete discussion of the admission criteria, refer
to Securities Exchange Act Release No. 38600, International Release
No. 1078 (May 9, 1997), 62 FR 27086-01 [File No. SR-DTC-96-13]
(order temporarily approving a proposed rule change relating to the
admission of non-U.S. entities as direct depository participants).
---------------------------------------------------------------------------
According to DTC, as of May 8, 1998, it has not admitted any non-
U.S. entities under the non-U.S. entities participation standards. DTC
is currently reviewing an application from one non-U.S. entity, has
sent an application to another non-U.S. entity, and has received
numerous inquiries from other non-U.S. entities. DTC expects to admit
in 1998 several non-U.S. entities under these standards.
DTC is seeking an extension of the temporary approval so it can
admit these non-U.S. entities and can gain experience with the new
admission standards and with the unique risks posed by the activities
of non-U.S. entities as direct DTC participants.
DTC believes that the proposed rule change is consistent with the
requirements of Section 17A(b)(3)(F) of the Act and the rules and
regulations promulgated because the admissions criteria takes into
account the unique risks to DTC raised by the admission of non-U.S.
entities while not unfairly discriminating against foreign entities
seeking admission as participants.
B. Self-Regulatory Organization's Statement on Burden on Competition
DTC acknowledges that the additional admissions criteria applicable
to non-U.S. entities may impose some additional burden. DTC believes
that any such burden is necessary and appropriate in furtherance of the
purposes of the Act.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants or Others
Written comments were not and are not intended to be solicited with
respect to the proposed rule change, and none were 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 assure the safeguarding of securities
and funds which are in the custody or control of
[[Page 31819]]
the clearing agency or for which it is responsible.\4\ The Commission
believes that the rule change is consistent with this obligation
because the admission criteria should bind non-U.S. entities to DTC's
rules and procedures in a manner similar to U.S. domestic participant
and should lesson or eliminate the negative effects that jurisdictional
issues could have on DTC's exercise of its rights and remedies against
a non-U.S. entity. Therefore, the Commission believes that the
admissions criteria will assist DTC in assuring the safeguarding of
securities and funds which are in its custody, control, or for which it
is responsible.
---------------------------------------------------------------------------
\4\ 15 U.S.C. 78q-1(b)(3)(F).
---------------------------------------------------------------------------
DTC has requested that the Commission find good cause for approving
the proposed rule change prior to the thirtieth day after publication
of the notice of the filing. The Commission finds good cause for
approving the proposed rule change prior to the thirtieth day after
publication of the notice of the filing because accelerated approval
will permit DTC to continue to use its admission criteria without
interruption.\5\
---------------------------------------------------------------------------
\5\ The staff of the Board of Governors of the Federal Reserve
System has concurred with the Commission's granting of accelerated
approval. Telephone conversation between Kirsten Wells, Senior
Analyst, Division of Reserve Bank Operations, Board of Governors of
the Federal Reserve System, and Jeffrey Mooney, Special Counsel,
Division of Market Regulation, Commission (June 3, 1998).
---------------------------------------------------------------------------
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 submission
should file six copies thereof with the Secretary, Securities and
Exchange Commission, 450 Fifth Street, NW., Washington, DC 20549.
Copies of the submissions, 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, NW., Washington,
DC 20549. Copies of such filings will also be available for inspection
and copying at the principal office of DTC. All submissions should
refer to the file number SR-DTC-98-11 and should be submitted by July
1, 1998.
It is therefore ordered, pursuant to Section 19(b)(2) of the Act,
that the proposed rule change (File No. SR-DTC-98-11) be, and hereby
is, temporarily approved through May 31, 1999, on an accelerated basis.
For the Commission by the Division of Market Regulation,
pursuant to delegated authority.\6\
---------------------------------------------------------------------------
\6\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 98-15417 Filed 6-9-98; 8:45 am]
BILLING CODE 8010-01-M