Self-Regulatory Organizations; The Depository Trust Company; Notice of Filing of Proposed Rule Change Relating to the Implementation of the Interactive Capabilities and of the Electronic Mail Features of the Enhanced Institutional Delivery System

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-34018; File No. SR-DTC-94-04]

Self-Regulatory Organizations; The Depository Trust Company;

Notice of Filing of Proposed Rule Change Relating to the Implementation

of the Interactive Capabilities and of the Electronic Mail Features of

the Enhanced Institutional Delivery System

May 5, 1994.

Pursuant to section 19(b)(1) of the Securities Exchange Act of

1934,\1\ notice is hereby given that on April 13, 1994, 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

the self-regulatory organization. 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) (1988).

---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance

of the Proposed Rule Change

The proposed rule change consists of procedures for electronic mail

features and for the interactive use of DTC's enhanced Institutional

Delivery (``ID'') system.\2\

---------------------------------------------------------------------------

\2\The enhanced ID system concept was approved in an earlier

Commission order. The order specified that each individual feature

of the enhanced ID system would be the subject of a separate filing

under section 19(b)(1) of the Act. Securities Exchange Act Release

No. 33466 (January 12, 1994), 59 FR 3139 [File No. SR-DTC-93-07]

(order approving concept of enhanced ID system).

---------------------------------------------------------------------------

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.

(A) Self-Regulatory Organization's Statement of the Purpose of, and

Statutory Basis for, the Proposed Rule Change

The proposed rule change will enable ID system users to use the ID

system interactively with the capability of accomplishing all ID system

processing within a single business day. ID system users will have the

option to continue to use the ID system in a batch mode.

The proposal also seeks to implement two electronic mail features.

These features will enable ID system users to send and receive

``notification of order execution'' and ``institution instruction''

messages. A notification of order execution can be sent by a broker-

dealer to communicate the details of an order execution to an

institution. If the institution accepts the notification of order

execution, the institution can send the broker-dealer an institution

instruction containing information, such as the allocation of block

trades, which is needed by the broker-dealer to enter trade data into

the ID system for the preparation of confirmations. Currently, broker-

dealers and institutions make telephone calls or send facsimile

transmissions to communicate this information.

The proposed rule change is consistent with the requirements of

section 17A of the Act and the rules and regulations thereunder because

the proposed rule change will further automate the process by which

securities transactions are cleared and settle and thereby will

facilitate the prompt and accurate clearance and settlement of

securities transactions. The proposal also is consistent with section

17A in that because the proposed rule change enhances DTC's existing ID

system it will be implemented consistently with the safeguarding of

securities and funds in DTC's custody or control or for which DTC is

responsible.

(B) Self-Regulatory Organization's Statement on Burden on Competition

DTC perceives no 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 interactive capability and electronic mail features have been

developed through widespread consultations with securities industry

members. Written comments from DTC participants or others have not been

solicited on the proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing

for Commission Action

Within thirty-five days of the date of publication of this notice

in the Federal Register or within such longer period (i) as the

Commission may designate up to ninety days of such date if it finds

such longer period to be appropriate and publishes its reasons for so

finding or (ii) as to which the self-regulatory organization consents,

the Commission will:

(a) By order approve such proposed rule change or

(b) Institute proceedings to determine whether the proposed rule

change should be disapproved.

DTC requests accelerated effectiveness for the proposed rule change

pursuant to section 19(b)(2) of the Act so that the proposed rule

change can be implemented as soon as possible. Recently, the Commission

adopted Rule 15c6-1 under the Act which, effective June 1, 1995,

establishes three business days as the standard settlement timeframe

for broker-dealers.\3\ The proposed rule change, particularly the

interactive capability of the ID system, will facilitate three business

day settlement. Accelerated effectiveness of the proposed rule change

will enable ID system users to become accustomed to the ID system well

in advance of conversion to a three business day settlement cycle.

---------------------------------------------------------------------------

\3\For a detailed description and discussion of the conversion

to a three business day settlement cycle, refer to Securities and

Exchange Commission Release Nos. 33-7022, 34-33023, and IC-19768

(October 13, 1993), 58 FR 52891 [File No. S7-5-93] (order adopting

Commission Rule 15c6-1).

---------------------------------------------------------------------------

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, NW., 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 Section, 450 Fifth Street, NW.,

Washington, DC 20549. Copies of such filing will also be available for

inspection and copying at the principal office of DTC. All submissions

should refer to File No. SR-DTC-94-04 and should be submitted by June

3, 1994.

For the Commission by the Division of Market Regulation,

pursuant to delegated authority.\4\

---------------------------------------------------------------------------

\4\17 CFR 200.30-3(a)(12) (1992).

---------------------------------------------------------------------------

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 94-11698 Filed 5-12-94; 8:45 am]

BILLING CODE 8010-01-M