[Federal Register Volume 75, Number 217 (Wednesday, November 10, 2010)]
[Notices]
[Page 69150]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-28331]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-63245; File No. SR-DTC-2010-12]
Self-Regulatory Organizations; The Depository Trust Company;
Order Approving Proposed Rule Change To Automate the Approval Process
in Providing Trustee Access to the Security Position Report Service
November 4, 2010.
I. Introduction
On September 14, 2010, The Depository Trust Company (``DTC'') filed
with the Securities and Exchange Commission (``Commission'') proposed
rule change SR-DTC-2010-12 pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (``Act'').\1\ Notice of the proposal
was published in the Federal Register on September 29, 2010.\2\ The
Commission received no comment letters in response to the proposed rule
change. For the reasons discussed below, the Commission is approving
the proposed rule change.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ Securities Exchange Act Release No. 62990 (September 24,
2010), 75 FR 60158.
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II. Description
DTC's Security Position Report (``SPR'') service provides valuable
information on the record date holdings of an issuer's security in DTC
Participant accounts. An SPR provides information needed to contact
shareholders about corporate-related events such as annual meetings.
DTC currently provides SPRs to issuers, trustees, and authorized third
parties.
DTC's Proxy area receives requests for SPR services access and
reviews such requests to ensure that only appropriate parties receive
access. The current review process to approve a trustee's access to the
SPR service for a security is done manually, and the process is
therefore subject to error. Currently, the SPR system sends an e-mail
to the DTC Proxy mailbox notifying the Proxy staff that a trustee has
added a CUSIP to its eligible issues list. Any trustee can add a CUSIP
to its eligible issues list. The CUSIP will show ``unauthorized'' until
reviewed and approved by the DTC Proxy staff. DTC Proxy staff requires
that the trustee provide to it one of the following: Trust agreement,
Annual Report, 10K, 10Q, SEC filing, or any other document deemed
necessary and appropriate to prove that the trustee is in fact the
trustee for the CUSIP and therefore is entitled to access to SPRs for
the CUSIP. Generally, it takes two or more days for a decision on
access requests because of the manual process associated with the
review of trustee information.
To increase the efficiency by which DTC provides trustees with
access to the SPR service, DTC is seeking to collect trustee data at
the point of eligibility of the issue. This will allow DTC to store and
maintain trustee data on the Entity Master File and the Security Master
File (``Master Files''). DTC will then have the ability to automate the
validation using the information stored on the Master Files in response
to a trustee's request for SPR access.
Initially, DTC will populate and update the trustee field on the
Master Files through DTC's Participant Terminal System. Ultimately and
as set forth below this information will be supplied by underwriters at
the time of issue eligibility through DTC's UW (underwriting) Source
System. This change requires DTC to update the UW Source System to
designate trustee data as a mandatory field at the time of eligibility.
In order to provide the time it may take for underwriters to update
their systems to supply the information required by this new mandatory
field, DTC plans to implement the change to the UW Source System in the
fourth quarter of 2011. In the event of a change in trustee, DTC will
require that the new and the prior trustees both update the trustee
information using Form 17Ad-16, which is used today to update transfer
agent changes. By automating the trustee authorization process, DTC
will increase the efficiency of the SPR system and will reduce the risk
of error associated with the manual processing of trustee data.
III. Discussion
Section 19(b) of the Act directs the Commission to approve a
proposed rule change of a self-regulatory organization if it finds that
such proposed rule change is consistent with the requirements of the
Act and the rules and regulations thereunder applicable to such
organization. Section 17A(b)(3)(F) of the Act requires that the rules
of a clearing agency be designed to protect investors and the public
interest.\3\ The Commission believes that DTC's rule change is
consistent with this requirement because by replacing the current
manual process for approving a trustee's access to DTC's SPR service
for an issue with an automated approval process, DTC will be able to
reduce the number of errors associated with manual processing and
thereby better protect investors' confidential information.
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\3\ 15 U.S.C. 78q-1(b)(3)(F).
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IV. Conclusion
On the basis of the foregoing, the Commission finds that the
proposed rule change is consistent with the requirements of the Act and
in particular Section 17A of the Act and the rules and regulations
thereunder. In approving the proposed rule change, the Commission
considered the proposal's impact on efficiency, competition, and
capital formation.
IT IS THEREFORE ORDERED, pursuant to Section 19(b)(2) of the Act,
that the proposed rule change (File No. SR-DTC-2010-12) be and hereby
is approved.
For the Commission by the Division of Trading and Markets,
pursuant to delegated authority.\4\
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\4\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-28331 Filed 11-9-10; 8:45 am]
BILLING CODE 8011-01-P