SECURITIES VALIDATION SYSTEM,

December 30, 1970.

Securities Validation System demonstrated to insurance community.—At a SVS demonstration to representatives of several major insurance carriers who provide missing securities insurance coverage to many NYSE, AMEX and NASD member firms, Federal Insurance Company disclosed contents of a letter the insurance company is sending to all firms the carrier insures which reads in part:

"We are sure you are aware of all the problems we are all facing, and the valuable contribution that the Securities Validation System can make. Therefore, we urge you to give this system your utmost consideration, and further recommend that you join right away. If you have not yet been contacted by SCITEK, Inc., please call Mr. Bilella (962-1270), and he will be most happy to provide you with all the information you need. In any case, kindly let us know if you have joined this system, or plan to do so.

FEDERAL INSURANCE COMPANY."

Over 150 member firms have now indicated intent to subscribe to SVS.-By the end of December, over 150 member firms in the New York area have indicated an intent to subscribe to SVS, many have submitted "input" material either on punched cards or hard copy (the ratio is running 50: 50). SCI-TEK, Inc. has also located sites in Chicago and Los Angeles, and plans to establish regional "dedicated" communications centers, fully staffed with SCI-TEK personnel, during the first half of 1971 to serve the midwest and western subscribers.

Insurance Advocate and Weekly Bond Buyer see demonstration of SVS at Shearson, Hammill & Co.-Reporters from Insurance Advocate and the Weekly Bond Buyer witnessed a live demonstration of SVS using the 60 Broadway branch offices of Shearson, Hammill & Co. together with a representative of the Canadian Stock Exchange and representatives of the insurance industry.

Rising rate of thefts in Government securities triggers insurance crisis.-Federal authorities, who have estimated losses of $30 million in unregistered or bearer Government securities during the past year, believe the structure of the Government securities market will change radically in 1971. According to Wall Street sources, bearer securities are readily negotiable, and apparently have attracted organized crime, an additional reason insurance companies like Federal Insurance are endorsing the SVS.

SCI-TEK, Inc. working with Standard Statistics, subsidiary of Standard & Poors, to develop SVS "CUSIP" format.-In a continuing effort to provide SVS subscribers with options of service, SCI-TEK and Standard Statistics are working jointly to study the feasibility of permitting SVS subscribers to enter the SVS with either a qualitative format developed by SCI-TEK, or the CUSIP quantitative format developed by Standard Statistics.

First operations seminar scheduled for early February.—SCI-TEK will hold the first Operations Seminar for financial community representatives the first week of February at a location to be announced. Designed for member firm "operations" people, the seminar will provide in-depth instruction so subscribers can maximize the efficiency of SVS as a management tool for internal operations. Data base inputs increasing-pilot study to begin about January 25.-Data base inputs by member firms and other potential subscribers indicate sufficient data base inputs will enable the Pilot Program to begin between January 25th and February 15th. There is no charge to subscribers who wish to input data either now or during the 90-day test program. There is also no charge to subscribers to participate during the 90-day pilot program. Call SCI-TEK's New York Communications Center at 55 Liberty Street (212-962-1270) so an industry representative can meet with you in your offices to discuss the system.

SECURITIES VALIDATION SYSTEM,
February 28, 1971.

SCI-TEK invests additional $5 million in acquisition of Univac New York data center... to serve as Wilmington computer facility SVS back-up.-As part of SCI-TEK's expansion program and its commitment to operate and serve the

financial community with optimum computer and technical facilities, W. Henry duPont, founder, president and chief executive officer, last week announced the acquisition from Sperry Rand of Univac's Information Systems Division metropolitan New York Data Center. The center, located in Mineola, Long Island, houses a Univac 1108 installation, and will eventually serve as computer back-up facilities for SCI-TEK's Wilmington-based 1108. The acquisition, valued in excess of $5 million, makes SCI-TEK the third largest 1108 service bureau in the United States, behind University Computing and Computer Sciences Corporation, and the Nation's largest privately owned 1108 computer facilities outside the Government.

NYSE and AMEX officials inspect SCI-TEK computer facilities, approve start of 90-day SVS pilot program.-Officials from both the NYSE and AMEX inspected SCI-TEK's Wilmington computer headquarters on Thursday, February 11th to evaluate technical capabilities prior to initiation of the 90-day "on-line" SVS pilot program. The evaluation consisted of a tour of the Data Center, a live demonstration of the system and analysis of systems and procedures. After receiving the evaluation committee's approval to begin operations, SCI-TEK initiated the 90-day pilot program on February 15th. Subscribers are reminded use of the system during the 90-day program test and debugging period is FREE. SCI-TEK to open expanded Wall Street operating facilities.-In response to increased demand and acceptance of the SVS concept, expanded facilities to house SCI-TEK Wall Street operations including facilities to provide seminars for operational people from the financial community including member firms, banks and insurance companies, are expected to be available by Spring.

Toronto Stock Exchange study feasibility of integrating SVS.-The Toronto Stock Exchange has asked SCI-TEK to pursue the possibility of offering SVS to Canadian firms and to include Canadian securities in the data base. One possible approach under analysis is for the Toronto clearing house operation to be the Toronto contact. Toronto Stock Exchange members would advise the clearing house of missing securities which in turn would be sent to SVS. Enquiries to the data base initially could be made through the clearing house until members develop a feel for the system or have sufficient enquiries to justify enquiring directly in SVS. A large percentage of members on both the Montreal and Vancouver Stock Exchanges are also members of the Toronto Exchange.

SCI-TEK introduces SVS 80-character punch card format to simplify offline initial input.-To facilitate development of the SCI-TEK SVS data base, a simplified format for 80-character punch cards has been introduced. Input data can also be presented in hard copy for equity type securities, debenture type securities and bond coupons. Forms and instructions to use the form including a personal visit to your offices from an SVS industry representative to answer questions may be had without obligation by calling SCI-TEK's 55 Liberty Street operations center on 962-1270. A reduced-size facsimile of the form is reproduced below:

Mr. Moss. Before I start asking questions, I would like to emphasize for the members of the panel the importance of the record we will be building during the next few days. This record is going to be in all probability the major basis for Congressional judgment for the guiding of the Congress in any action it might take regarding questions which were propounded in my letter of invitation.

You have had the opportunity of reading the statements of your fellow panelists. You have heard the rather intriguing suggestion of Mr. Peake. I would strongly urge that there be as much involvement of the panelists as possible in querying other members of the panel. So this will become a very rich and meaningful record for use of the committees in the Congress.

It will also be the basis for our findings, conclusions, and recommendations, so it is a most important part of the overall study we are now making.

I have a question for you Commissioner Needham. Has the statement which you have given the committee today been cleared with, or filed with, the Office of Management and Budget?

Mr. NEEDHAM. Mr. Chairman, as far as I have been able to determine, in consultation with Mr. Sporkin, the statement which I submitted as the Commission's testimony has not been submitted at all to the Bureau of the Budget.

Mr. Moss. Has the Commission cleared or filed testimony given on previous occasions before this subcommittee or any other Congressional committee or subcommittee with the Office of Management and Budget?

Mr. NEEDHAM. To put that in a recent time frame. Mr. Chairman. I would say in connection with your hearings which commenced a month or two ago, and with Senator Williams' hearings, in connection with those two hearings, we have not submitted anything to the Buerau of the Budget as far as I know.

Mr. Moss. Would you determine whether, within this calendar year, any of the testimony presented to any of the committees of the Congress has been cleared with the Office of Management and Budget? Mr. NEEDHAM. To any of the committees of Congress? Mr. Chairman, I will submit that subsequently.

Mr. Moss. Without objection, the record will be held at this point to receive it.

(The information referred to follows:)

1 Indicates clearance obtained by telephone with authorization for simultaneous submission to the Committee and to OMB.

2 Recent.

3 Indicates OMB advised that time did not permit advance clearance to meet committee's schedule, but it authorized transmission of report to the committee with such a statement included.

4 Not required but furnished because it arose from legislation.

Indicates the Commission made simultaneous submission of its comment to the committee and OMB without prior clearance from OMB under an exception in Budget Circular A-19 based on prior clearance of identical bill and comment.

Note: Report of the Securities and Exchange Commission prepared for the Subcommittee on Commerce and Finance,.. House of Representatives Committee on Interstate and Foreign Commerce regarding its comments on pending legislation as requested by congressional committees, which were submitted to the Office of Management and Budget for clearance under its Budget Circular A-19 (revised), during the 1st sess. of the 92d Cong. as of Nov. 12, 1971.

In addition to the above, at O.M.B.'s suggestion, the Commission resubmitted the draft bill to transfer its administrative functions under the Public Utility Holding Company Act of 1935 to the Federal Power Commission, which had been sent to the 91st Congress and there introduced in the House as H.R. 15515. The identical draft bill was sent to O.M.B, on October 4, 1971, but clearance has not yet been received.