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Noyes, Clifford H.

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O'Connor, Bernard, to include an article; illustrations; a speech by

Fred R. Esty, Chairman of the Board, United States Banknote
Corporation; and releases__

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Peake, Junius W.

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Reinisch, Hans Randolph, to include article and attachments with illustrations___

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American Stock Exchange:

List of all members and top staff, including their places of residence
and business addresses__

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Banking and Securities Industry Committee (BASIC):

List of all members and top staff, including their places of residence
and business addresses_

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Notes submitted by Herman W. Bevis on his study of the German, French, and of Morgan Guaranty's Euro-Clear depository ---Calvert, Gordon L., Investment Bankers Association of America: Letter dated October 6, 1971, urging prompt enactment of legislation abolishing stock certificate for use in interstate commerce-Celler, Hon! Emanuel: Letter dated November 12, 1971, to Richard W. McLaren, re concern of antitrust implications of the New York Stock Exchange_

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Ernst, Martin L., Vice President, Arthur D. Little, Inc.: Letter dated October 15, 1971, elaborating on industry's automation problems. 1577 Federal Bar Journal: Article entitled "The Status of Regulatory Independence," by A. Everette MacIntyre...

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McLaren, Richard W.: Letter dated November 19, 1971, in reply
to letter of November 12, 1971, from Hon. Emanuel Celler
McNeill, Charles R.: Letter dated November 16, 1971, clarifying
misunderstanding of testimony of October 18, 19, and 20.
National Association of Securities Dealers, Inc. (NASD):

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Letter dated July 22, 1971, from Gordon S. Macklin, in reply
to the NYSE letter of July 8, 1971..

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List of all members and top staff including their places of residence
and business addresses.

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Letter dated November 18, 1971, submitting views in planning a
clearing facility in New York.

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National Clearing Corporation: List of all members and top staff,
including their places of residence and business addresses__
New York Stock Exchange:

Letter dated July 8, 1971, setting forth NYSE thoughts on the
forthcoming introduction of a continuous net settlement system
in New York...

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Letter dated October 22, 1971, setting forth a listing of the names,
business addresses, home addresses of the governors, president,
etc. of the exchange--

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Material relating to the incorporation of the New York Stock
Exchange--

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Nicholson, Clayton M., Vice President of the Stock Transfer Associa-
tion, Inc.: Letter dated November 19, 1971, explaining action taken
by his organization in the problems of the securities industry.
O'Connor, Bernard, article entitled "Optical Speed Reading
Peat, Marwick, Mitchell & Co.: Letter dated June 21, 1971, re material
submitted pertaining to various proposals for dealing with security
certificate..

Perkins, John H., Chairman of the National Coordinating Group for
Comprehensive Depositories: Letter dated December 23, 1971, to
Chairman Moss advising him of their interest in the subject of
immobilizing_certificate in depositories..

Securities and Exchange Commission:

Letter dated December 15, 1971, setting forth SEC opinion re-
garding statutory authority of SEC to compel NASD to adopt
uniform rules for clearance and settlement procedures by all
NASD members for both O-T-C and listed stocks, with
attachment_

Material relating to the incorporation of the New York Stock
Exchange

Reply to letter of October 4, 1971, to Hon. John E. Moss, with
attachments.

Report of the SEC regarding comments on pending legislation,
submitted to the Office of Management and Budget for clearance.
Securities Exchange Act of 1934, Release No. 9426...
SEC data showing number of firms which went out of business
from late 1968 to 1970, where data processing was a significant
factor in failure, with attachments.

Securities Exchange Act release 8543 and other sundry releases.
Steadman, John M., The Law School, University of Pennsylvania:
Letter dated April 5, 1971, to Commissioner Smith, SEC, regarding
views to eliminate all stock certificates..
Subcommittee on Commerce and Finance:

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Article entitled "Securities Struggle Battle for Influence Over
Stock Trading Looms on Wall Street".
Correspondence between staff of Subcommittee on Commerce and
Finance and the SEC, re policy of placing rule 17a–8 proposals
in a public file___

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Letter dated October 4, 1971, from Hon. John E. Moss to Hon.
William J. Casey, to inform him as to the statutory basis for
clearing its budgetary requests with the Office of Management
and Budget.. -

Letter dated October 20, 1971, from Hon. John E. Moss, to George
P. Shultz, Director, Office of Management and Budget, re-
questing to be informed why SEC has to submit to the OMB
proposed legislation, legislative comments, etc., prior to or
simultaneously with submitting such material to Congress_ _ _ _
Letter dated October 20, 1971, from Hon. John E. Moss to the
Chief Justice of the United States, asking his views re what
effect there would be if SEC were empowered to conduct its
Supreme Court litigation independently of the Solicitor Gen-
eral's Office.__

Shultz, George P.: Letter dated November 10, 1971, in reply to
letter from Hon. John E. Moss, dated October 20, 1971.
Supreme Court of the United States: Letter dated November 9,
1971, replying to letter of October 20, 1971, from Hon. John E.

Moss...
Van Dam, Henry, Corporate Transfer Agents Association: Letter
dated October 19, 1971, submitting position papers to Subcommittee
on Commerce and Finance...

Weinberg, Eli, article from Bank Administration, May 1971, en-
titled "A System of Certificateless Stock Transfers".

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PARTS 4 AND 5

APPENDIXES

R. Four Proposed Uniform Forms-Transfer Instruction Delivery Ticket
Comparison Reclamation Form_.

M. Answers to Questions, by Herman W. Bevis, Executor Director,
BASIC..

N. Comprehensive Securities Depository System-Study of Canceled
Stock Certificates, with statistical tables, exhibits, and charts_____-
O. Making the Certificate Machine-Readable (Discussion Paper, Sep-
tember 9, 1970)_ _

P. Research Report on Making the Certificate Machine-Readable _ _
Q. The Machine-Readable Certificate Project_

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S. The Billion-Share Automated Securities Depository (Central Certificate
Service)..

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T. Memorandum of Understanding on a Comprehensive Securities Depository System..

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U. Chronology of the New York Stock Exchange, Stock Clearing Corporation__.

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V. Operating Rules of the National Clearing Corporation

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X. OCR Equipment for Reading Stock Certificates (Report to BASIC-
July 1970), with charts, tables, and exhibits__.

W. Report and Recommendations of the Security Imprinting and Processing Task Force of the Committee on Uniform Security Identification Procedures_

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1971

Y. Letter from Chairman Casey of SEC to Mr. Moss regarding fails, with charts, tables, and exhibits..

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Z. Suggest approach to the National Clearing Problem, with charts and exhibits

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AA. Securities Industry Overview Study.

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BB. Paper Crisis in the Securities Industry: Causes and Cures
CC. The Role of Banking in Elimination of the Stock Certificate.
DD. Seminar-Is the Stock Certificate Necessary?.

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EE. The Multiple Causes of Fails in Stock Clearing in the United States (Volumes I and II)__

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FF. A Securities Handling System for the 1975 Era-Report to New
York Stock Exchange-

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GG. Reducing Costs of Stock Transactions: A Study of Alternative Trade
Completion Systems-Vol. I: Summary of Results-
HH. Reducing Costs of Stock Transactions: A Study of Alternative Trade
Completion Systems-Vol. II: Evaluation of Selected Alternatives_
II. Reducing Costs of Stock Transactions: A Study of Alternative Trade
Completion Systems-Vol. III: The Trade Completion Simulation
Model___

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267

JJ.

KK. A Presentation for the Elimination of the Stock Certificate, by
Compute-O-Gram Systems, Inc..

Reducing Costs of Stock Transactions: A Study of Alternative Trade
Completion Systems-Supplement to Vol. III: The Computer
Program

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MONDAY, OCTOBER 18, 1971

HOUSE OF REPRESENTATIVES,

SUBCOMMITTEE ON COMMERCE AND FINANCE,

COMMITTEE ON INTERSTATE AND FOREIGN COMMERCE,

Washington, D.C. The subcommittee met at 10:15 a.m., pursuant to notice, in room 2321, Rayburn House Office Building, Hon. John E. Moss (chairman) presiding.

Mr. Moss. The subcommittee will be in order.

This morning the Subcommittee on Commerce and Finance of the House Committee on Interstate and Foreign Commerce opens the fourth in its series of hearings in its study of the securities industry.

In our last hearing we focused on problems of accounting, specifically the need for uniform accounting procedures and uniform and more extensive disclosure to customers of broker-dealers' financial condition, as well as the adequacy of audit procedures.

Now we shall turn to another important problem, namely, the pervasive effect of the stock certificate as a primary factor in back office difficulties and an obstacle to the rapid and efficient processing of transactions both on the exchanges and over the counter.

These hearings will focus on the feasibility and desirability of one or more depositories to immobilize stock certificates, the development of a machine-readable certificate and accompanying documents, and the development of a more efficient system for clearance, settlement, delivery, and transfer of securities.

A later hearing, scheduled for October 26 and 27, will consider the possibility of totally eliminating the stock certificate.

As in our prior hearings, we have determined that this hearing will take the form of a panel discussion rather than the usual formal presentation of statements. In this way, the subcommittee hopes, it will be possible to achieve an interchange of views, both between this subcommittee and the panelists and between the panelists themselves. At the outset, each panelist has been asked to present a brief summary of his views. The written statements will, of course, be made a part of the record and the Chair, at this point, requests unanimous consent to include such statements in the record as they are presented.

Is there objection? Hearing none, that will be the order of the committee.

I appreciate the difficulties inherent in the next request, but I ask that you keep your summaries as brief as possible. I hope that 10 minutes will suffice. If there are points left uncovered, you may pick them up at a later stage in our discussion.

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