Self-Regulatory Organizations; Stock Clearing Corporation of Philadelphia; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to the Automated Customer Account Transfer Service and the ACAT-Fund/SERV Interface

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-35264; File No. SR-SCCP-94-9]

Self-Regulatory Organizations; Stock Clearing Corporation of

Philadelphia; Notice of Filing and Immediate Effectiveness of Proposed

Rule Change Relating to the Automated Customer Account Transfer Service

and the ACAT-Fund/SERV Interface

January 23, 1995.

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

[[Page 6334]] (``Act''),\1\ notice is hereby given that on December 8,

1994, the Stock Clearing Corporation of Philadelphia (``SCCP'') 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 SCCP. On December 27, 1994, and

on January 4, 1995, SCCP amended the filing.\2\ 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).

\2\Letters from J. Keith Kessel, Compliance Officer, SCCP, to

Margaret Robb, Staff Attorney, Division of Market Regulation

(``Division''), Commission (December 23, 1994, and December 27,

1994).

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

of the Proposed Rule Change

SCCP proposes to amend its procedures to comply with New York Stock

Exchange (``NYSE'') rule 412, which sets forth the time for

transferring customer accounts,\3\ and with National Securities

Clearing Corporation (``NSCC'') Rule 50, Section 9,\4\ which governs

NSCC's Automated Customer Account Transfer (``ACAT'') Service.\5\ SCCP

also proposes to begin using the ACAT-Fund/SERV link\6\ on March 3,

1995, in compliance with the NYSE requirement that all mutual fund

account transfers be accomplished by use of an automated system where

the NYSE member organizations are participants in a registered clearing

agency which has such a facility.

\3\For a complete description of the recent amendments to NYSE

Rule 412, refer to Securities Exchange Act Release No. 34633

(September 2, 1994), 59 FR 467872 [File No. SR-NYSE-94-21] (order

approving amendments to NYSE Rule 412).

\4\For a complete description of the recent amendments to NSCC's

Rule 50, Section 9, refer to Securities Exchange Act Release No.

34879 (October 21, 1994), 59 FR 44229 [File No. SR-NSCC-94-13]

(other approving modifications to NSCC's ACAT Service to accelerate

the time in which customer accounts are transferred).

\5\For a complete description of NSCC's ACAT system, refer to

Securities Exchange Act Release No. 22481 (September 30, 1985), 50

FR 41274 [File No. SR-NSCC-85-7] (order approving proposed rule

change establishing ACAT Service).

\6\SCCP is not a member of NSCC's Fund/SERV; however, membership

in Fund/SERV is not necessary to use the ACAT-Fund/SERV link.

Telephone conversation between Karen L. Saperstein, Association

General Counsel and Vice President/Director of Legal, NSCC, and

Peter R. Geraghty, Senior Counsel, Division, Commission, and

Margaret J. Robb, Staff Attorney, Division, Commission (January 6,

1995).

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

Statutory Basis for, the Proposed Rule Change

In its filing with the Commission, SCCP 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. SCCP 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

NSCC's ACAT Service is an input, comparison, and settlement service

for customer account transfers from one brokerage firm to another.

SCCP's proposal is consistent with NSCC's recent amendments to NSCC

Rule 50, Section 9 which shortened the period in which a participant

that is to receive a transferred account has to review the transfer

instructions and reply thereto. The completed transfer cycle will be

reduced to allow a three day validation period and a four day delivery

period for all accounts including cash margin, retirement, and

qualified accounts. The entire account transfer cycle is thus recuced

from ten business days to seven business days for transferring cash or

margin accounts and from fifteen business days to seven business days

for transferring qualified or retirement accounts. The portion of

SCCP's filing containing these procedures is consistent with the NYSE

and NSCC proposals; therefore, SCCP's procedures also take effect on

December 2, 1994.

SCCP's proposed rule change also proposes to modify its ACAT-SERV

interface\7\ with NSCC to comply with the NYSE requirement that

generally all mutual fund account transfers must be accomplished by

using the automated by using the automated systems of a registered

clearing agency where both the receiving broker-dealer and the

delivering broker-dealer are participants in a registered clearing

agency which has such a facility. In accordance with NYSE Rule 412,

this change will be effective March 3, 1995.\8\

\7\For a detailed description of NSCC's ACAT-Fund/SERV

interface, refer to Securities Exchange Act Release No. 27454

(November 20, 1989), 54 FR 48962 [File No. SR-NSCC-89-12] (order

approving modification of NSCC's ACAT Service rules to provide for

the automated transfer of eligible book share mutual fund assets).

\8\Supra note 2.

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SCCP believes the proposed rule change is consistent with Section

17A of the Act is that it promotes the prompt and accurate clearance

and settlement of securities transactions. SCCP's believes that its

proposed rule change setting forth the shortened time period for

transferring accounts is appropriate because it properly reflects the

changes set forth by the NYSE and NSCC in their efforts to enhance

automation of the transfer process. In addition, the rule change is

consistent with the Commission's effort to reduce the settlement cycle

as required by Rule 15c6-1 which mandates a three business day

settlement cycle for most broker-dealer transactions effective June 7,

1995.\9\

\9\For a complete description of Rule 15c6-1, refer to

Securities Exchange Act Release Nos. 33023 (October 6, 1993), 58 FR

52891 [File No. S7-5-93] (order adopting Commission Rule 15c6-1) and

34952 (November 9, 1994), 59 FR 59137 [File No. S7-5-93] (change of

effective date of Rule 15c6-1).

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

SCCP does not believe that the proposed rule change 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

SCPP has not solicited or received comments on the proposed rule

change.

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

Commission Action.

The foregoing rule change has become effective pursuant to Section

19(b)(3)(A)(iii)\10\ of the Act and pursuant to Rule 19b-4(e)(4)\11\

promulgated thereunder because the proposal effects a change in an

existing service of SCCP that does not adversely affect the

safeguarding of securities or funds in the custody or control of SCCP

and does not significantly affect the respective rights of obligations

of SCCP or persons using the service. At any time within sixty days of

the filing of such rule change, the Commission may summarily abrogate

such rule change if it appears to the Commission that such action is

necessary or appropriate in the public interest, for the protection of

investors, or otherwise in furtherance of the purposes of the Act.

\10\15 U.S.C. 78s(b)(3)(A)(iii) (1988).

\11\17 CFR 240.19b-4(e)(4) (1994).

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IV. Solicitation of Comments

Interested persons are invited to submit written data, views, and

arguments concerning the foregoing. 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 [[Page 6335]] 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 SCCP. All submissions

should refer to File No. SR-SCCP-94-9 and should be submitted by

February 22, 1995.

For the Commission by the Division of Market Regulation,

pursuant to delegated authority.\12\

\12\17 CFR 200.30-3(a)(12) (1994).

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Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 95-2427 Filed 1-31-95; 8:45 am]

BILLING CODE 8010-01-M