Self-Regulatory Organizations; International Securities Clearing Corporation; Notice of Filing of a Proposed Rule Change Relating To a Data Transmission Link With Caja de Valores, S.A.

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-34678; International Series Release No. 713; File No.

SR-ISCC-94-3]

Self-Regulatory Organizations; International Securities Clearing

Corporation; Notice of Filing of a Proposed Rule Change Relating To a

Data Transmission Link With Caja de Valores, S.A.

September 15, 1994.

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

1934,\1\ notice is hereby given that on August 9, 1994, the

International Securities Clearing Corporation (``ISCC'') filed with the

Securities and Exchange Commission (``Commission'') proposed rule

change as described in Items I, II, and III below, which Items have

been prepared primarily by ISCC. The Commission is publishing this

notice to solicit comments on the proposed rule change from interested

persons.

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\1\15 U.S.C. 78s(b)(1) (1988).

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

of the Proposed Rule Change

The proposed rule change consists of a data transmission link

agreement with Caja de Valores, S.A. (``CVSA'').

II. Self-Regulatory Organization's Statement of the Purpose of, and

Statutory Basis for, the Proposed Rule Change

In its filing with the Commission, ISCC 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 place specified in Item

IV below. ISCC 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

ISCC's Rule 40 provides that ISCC may establish links with foreign

financial institutions and may make available for the benefit or on

behalf of the foreign financial institution's participants and members

such services of ISCC which ISCC in its sole discretion shall determine

to provide. Pursuant to the authority granted by Rule 40, ISCC has

entered into a link with CVSA.\2\ This link is similar to the links

ISCC has previously established with the Japan Securities Clearing

Corporation and the Central Depository (Pte.) Ltd. of Singapore.

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\2\CVSA is the sole central depository acting in Argentina.

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Under the link, CVSA will be able to hold securities in The

Depository Trust Company (``DTC'') through ISCC. Pursuant to the terms

of the service agreement dated December 2, 1993, between ISCC and CVSA,

CVSA will be bound by DTC rules applicable to the DTC services that

CVSA will utilize through ISCC. While monetary obligations under the

link are expected to be limited to payments for fees, CVSA will be

required to collateralize its obligations to ISCC. Such collateral will

be available to cover any assessments made by DTC to ISCC based on

CVSA's use of DTC's services. ISCC's auditors will be able to consult

with CVSA's auditors with regard to CVSA's financial condition and the

activity arising under the link, and CVSA will furnish ISCC with CVSA's

financial statements.

CVSA has agreed that before the link becomes operational, CVSA will

appoint a registered agent in the U.S. for service of process and will

provide ISCC with proof of such appointment. CVSA also has agreed that

it will be subject to jurisdiction in New York for the resolution of

disputes under or arising from the link.

Operationally, CVSA will be assigned one number for use on behalf

of its members. ISCC will apply to DTC on CVSA's behalf to establish

CVSA as an ISCC-sponsored DTC participant. ISCC on behalf of CVSA will

initiate book-entry deliveries for no value. ISCC on behalf of CVSA

also will accept receives of securities by book-entry for no value.

Both the receive and deliver functions will be pursuant to instructions

received from CVSA, and such instructions will identify, among other

items, which CVSA member for whom the receipt or delivery is being

effected. In special circumstances and at ISCC's discretion, DTC's

withdrawal-by-transfer service also may be utilized. In such case, the

securities will be delivered as directed by CVSA. Relevant DTC notices

and corporate action data relating to the issues held in the CVSA/ISCC

account at DTC will be provided to CVSA.

To the extent that any money settlement is required, ISCC will

receive payment in the form of an official bank check or a wire

transfer through the CVSA designated correspondent bank. ISCC will

receive dividend and possibly interest payments from DTC with respect

to shares on deposit. Dividend and interest credited to CVSA's account

at DTC will be reflected in CVSA's ISCC settlement statement.\3\ The

settlement statement also will reflect a debit for the total dividends

and interest paid to CVSA's account as its withholding bank.\4\

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\3\On each Business day, ISCC will transmit to CVSA a settlement

statement detailing the net amount due to ISCC from CVSA or from

ISCC to CVSA.

\4\A withholding bank is a bank approved by the Internal Revenue

Service that withholds and pays the tax applicable to dividends and

interest on U.S. issues paid to non-U.S. entities.

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The proposed rule change is consistent with the requirements of the

Act and the rules and regulations thereunder in that it will promote

the prompt and accurate clearance and settlement of securities

transactions. ISCC believes that the provision by ISCC to CVSA of the

services described above will further the purposes of Section 17A of

the Act. Specifically, it will promote the delivery and safekeeping of

certain U.S. issues through a book-entry environment thus avoiding the

need to move securities physically to settle trades. It also will

standardize in accordance with U.S. practices and procedures the

processing of U.S. securities traded on a foreign exchange. In

addition, the interests of the U.S. investing public and the U.S.

financial community will be served by the performance of such services

by ISCC, a registered clearing agency subject to Commission

supervision.

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

ISCC does not believe that the proposed rule changes will have an

impact or impose a burden on competition.

(C) Self-Regulatory Organization's Statement on Comments on the

Proposed Rule Change Received From Members, Participants, or Others

ISCC has notified its members of the proposed changes to its

procedures and to date has receive no written comments. ISCC will

notify the Commission of any written comments received by ISCC.

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 reason 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 approved.

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, 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 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 will also be available

for inspection and copying at the principal office of the ISCC. All

submissions should refer to File No. SR-ISCC-94-03 and should be

submitted by October 13, 1994.

For the Commission by the Division of Market Regulation,

pursuant to delegated authority.\5\

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\5\17 CFR 200.30-3(a)(12).

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Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 94-23393 Filed 9-21-94; 8:45 am]

BILLING CODE 8010-01-M