[Federal Register Volume 75, Number 218 (Friday, November 12, 2010)]
[Notices]
[Pages 69514-69515]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-28442]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-63254; File No. SR-DTC-2010-14]
Self-Regulatory Organizations; The Depository Trust Company;
Notice of Filing of Proposed Rule Change To Amend the Certificate of
Organization To Authorize Additional Shares of Preferred Stock and
Designate Shares as Series A Preferred Stock
November 5, 2010.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'') \1\ and Rule 19b-4 thereunder \2\ notice is hereby given that
on October 22, 2010, The Depository Trust Company (``DTC'') filed with
the Securities and Exchange Commission (``Commission'') the proposed
rule change as described in Items I and II below, which Items have been
prepared primarily by DTC.\3\ 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).
\2\ 17 CFR 240.19b-4.
\3\ The text of the proposed rule change is attached as Exhibit
5 to DTC's filing, which is available at http://www.dtcc.com/downloads/legal/rule_filings/2010/dtc/2010-14.pdf.
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I. Self-Regulatory Organization's Statement of the Terms of the
Substance of the Proposed Rule Change
The purpose of this proposed rule change is to amend DTC's
Certificate of Organization to authorize an additional 1,750,000 shares
of preferred stock and to designate such shares as Series A preferred
stock.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, DTC 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. DTC has prepared summaries, set forth in sections (A),
(B), and (C) below, of the most significant aspects of these
statements.\4\
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\4\ The Commission has modified the text of the summaries
prepared by NSCC.
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(A) Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In 1999, DTC's Certificate of Organization was amended (``1999
Amendment'') to provide for the authorization and issuance of 1,500,000
shares of preferred stock, par value $100 per share.\5\ The 1999
Amendment also provided that the preferred stock could be issued in one
or more classes having such designations, relative rights, preferences,
or limitation as fixed by the Board of Directors of DTC at the time of
issuance of any such preferred stock. DTC's Certificate of Organization
has been amended three times thereafter to provide for the issuance of
variable rate, noncumulative, nonvoting shares of Series A preferred
stock, par value $100 per share, which are preferred over DTC's common
stock as to dividends and in the event of liquidation (``Series A
Preferred Stock''). The first such amendment (filed in 2000) provided
for the issuance of 750,000 shares of the Series A Preferred Stock. The
second amendment (filed in 2006) provided for the issuance of an
additional 500,000 shares of Series A Preferred Stock. The third
amendment (filed in 2009) provided for the issuance of an additional
250,000 shares of Series A Preferred Stock.\6\
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\5\ The amendment was the subject of a DTC proposed rule change
approved by the Commission. Securities Exchange Act No. 34-41529
(June 15, 1999), 64 FR 33333 (June 22, 1999) [File No. SR-DTC-1999-
08]. The amendment was also approved by the New York State
Superintendent of Banks.
\6\ Securities Exchange Release Nos. 34-43197 (August 23, 2000),
65 FR 52459 (August 29, 2000) [File No. SR-DTC-2000-02]; 34-54775
(November 17, 2006), 71 FR 68662 (November 27, 2006) [SR-DTC-2006-
14]; 34-59612 (March 20, 2009), 74 FR 13488 (March 27, 2009) [File
No. SR-DTC-2009-06].
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DTC participants are required to purchase and own shares of the
Series A Preferred Stock in proportion to their use of DTC services.
DTC treats the Series A Preferred Stock held by participants
substantially the same as it treats the mandatory cash deposits made by
participants to the Participants Fund for purposes of collateralizing
securities transactions, limiting net debit positions, implementing
default procedures, and allocating unrecovered losses.
In order that DTC may further increase its capital,\7\ DTC is
proposing to amend its Certificate of Organization \8\ to authorize an
additional 1,750,000 shares of preferred stock at the par value of $100
per share and to designate such shares as Series A Preferred Stock with
such rights, preferences, and limitations as provided in its
Certificate of Organization.\9\
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\7\ DTC, as a member institution of the Federal Reserve System,
is subject to capital guidelines issued by the Board of Governors of
the Federal Reserve System. To be considered ``well-capitalized''
under these guidelines, DTC must, among other things, maintain a
Total Risk-Based Capital Ratio of at least 10%, a Leverage Ratio of
at least 5%, and a Tier 1 Risk-Based Capital Ratio of at least 6%.
The issuance of the additional Series A preferred stock will enable
DTC to continue to meet these requirements.
\8\ In order to amend its Certificate of Organization to
increase the authorized preferred stock, DTC is also required to
seek approval from the New York State Banking Department. DTC has
sought such approval concurrently with this rule filing. On October
20, 2010, DTC's sole stockholder, The Depository Trust & Clearing
Corporation, authorized DTC to make this amendment, as required by
Section 8003 of the Banking Law of the State of New York.
\9\ The authorization of an additional 1,750,000 shares will
increase the number of authorized shares of Preferred Stock and of
Series A Preferred stock to a total of 3,250,000 shares with a par
value of $100 per share and a total value of $325 million.
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The proposed rule change is consistent with the requirements of the
Securities Exchange Act of 1934, as amended, (``Act'') and the rules
and regulations thereunder applicable to DTC, as well as CPSS/IOSCO
Recommendations for Securities Settlement Systems applicable to DTC
because the proposed rule change will not affect the safeguarding of
securities and funds in DTC's custody or control or for which it is
responsible.
(B) Self-Regulatory Organization's Statement on Burden on Competition
DTC does not believe that the proposed rule change would impose any
burden on competition.
(C) Self-Regulatory Organization's Statement on Comments on the
Proposed Rule Change Received From Members, Participants or Others
Written comments relating to the proposed rule change have not been
solicited or received. DTC will notify the Commission of any written
comments received by DTC.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Within forty-five days of the date of publication of this notice in
the Federal
[[Page 69515]]
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 reasons for so finding or (ii) as
to which the self-regulatory organization consents, the Commission
will:
(A) By order approve or disapprove the proposed rule change; or
(B) institute proceedings to determine whether the proposed rule
change should be disapproved.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
Send an e-mail to [email protected]. Please include
File Number SR-DTC-2010-14 on the subject line.
Paper Comments
Send paper comments in triplicate to Elizabeth M. Murphy,
Secretary, Securities and Exchange Commission, 100 F Street, NE.,
Washington, DC 20549-1090.
All submissions should refer to File Number SR-DTC-2010-14. This file
number should be included on the subject line if e-mail is used. To
help the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). 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 the
provisions of 5 U.S.C. 552, will be available for Web site viewing and
printing in the Commission's Public Reference Section, 100 F Street,
NE., Washington, DC 20549-1090, on official business days between the
hours of 10 a.m. and 3 p.m. Copies of such filings will also be
available for inspection and copying at the principal office of DTC and
on DTC's Web site at http://www.dtcc.com/downloads/legal/rule_filings/2010/nscc/2010-11.pdf. All comments received will be posted without
change; the Commission does not edit personal identifying information
from submissions. You should submit only information that you wish to
make available publicly. All submissions should refer to File Number
SR-DTC-2010-14 and should be submitted on or before December 3, 2010.
For the Commission by the Division of Trading and Markets,
pursuant to delegated authority.\10\
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\10\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-28442 Filed 11-10-10; 8:45 am]
BILLING CODE 8011-01-P