Self-Regulatory Organizations; International Securities Clearing Corporation; Notice of Filing of a Proposed Rule Change Relating to a Data Transmission Link With Monte Titoli, S.P.A.

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-34679; International Series Release No. 714; File No.

SR-ISCC-94-4]

Self-Regulatory Organizations; International Securities Clearing

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

Data Transmission Link With Monte Titoli, S.P.A.

September 15, 1994.

Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934

(``Act''),\1\ notice is hereby given that on August 9, 1994, the

International Securities Clearing Corporation (``ISCC'') 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 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 Monte Titoli, S.p.A. (``MT'').

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 places 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 MT.\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\MT provides settlement and depository services for

securities, including securities of U.S. issuers, listed on Italian

stock exchanges.

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

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

of the service agreement dated June 1, 1992, between ISCC and MT, MT

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

utilize through ISCC. While monetary obligations under the link are

expected to be limited to payments for fees, MT 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 MT's

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

MT's auditors with regard to MT's financial condition and the activity

arising under the link, and MT will furnish ISCC with MT's financial

statements.

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

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

provide ISCC with proof of such appointment. MT 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, MT will be assigned one number for use on behalf of

its members. ISCC will apply to DTC on MT's behalf to establish MT as

an ISCC-sponsored DTC participant. ISCC on behalf of MT will initiate

book-entry deliveries for no value. ISCC on behalf of MT also will

accept receipts of securities by book-entry for no value. Both the

receive and deliver functions will be pursuant to instructions received

from MT, and such instructions will identify, among other items, the MT

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 MT. Relevant DTC notices and corporate action

data relating to the issues held in the MT/ISCC account at DTC will be

provided to MT.

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 MT designated correspondent bank. ISCC will

receive dividend and possibly interest payments from DTC with respect

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

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

settlement statement also will reflect a debit for the total dividends

and interest paid to MT's account at its withholding bank.\4\

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\3\On each business day, ISCC will transmit to MT a settlement

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

to MT.

\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 MT of the

services descibed 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 received 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 organizations 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, N.W., 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 above-

mentioned self-regulatory organization. All submissions should refer to

File No. SR-ISCC-94-04 and should be submitted by October 13, 1994.

For the Commission by the Division of Market Regulation,

pursuant to delegated authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 94-23394 Filed 9-21-94; 8:45 am]

BILLING CODE 8010-01-M