[Federal Register Volume 75, Number 61 (Wednesday, March 31, 2010)]
[Notices]
[Pages 16216-16217]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-7203]
[[Page 16216]]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-61784; File No. SR-DTC-2010-05]
Self-Regulatory Organizations; the Depository Trust Company;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Update Its Settlement Service Guide as It Relates to the ID Net Service
March 25, 2010.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ notice is hereby given that on March 5, 2010, the
Depository Trust Company (``DTC'') filed with the Securities and
Exchange Commission (``Commission'') the proposed rule change described
in Items I, II, and III below, which items have been prepared primarily
by DTC. DTC filed the proposal pursuant to Section 19(b)(3)(A)(iii) of
the Act \2\ and Rule 19b-4(f)(4) \3\ thereunder so that the proposal
was effective upon filing with the Commission. The Commission is
publishing this notice to solicit comments on the rule change from
interested parties.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 15 U.S.C. 78s(b)(3)(A)(iii).
\3\ 17 CFR 240.19b-4(f)(4).
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The proposed rule change amends DTC's rules in order to update its
Settlement Service Guide as it relates to the ID Net Service (``ID
Net'').
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 FICC.
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(A) Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
On June 2, 2008, the Commission approved a rule change that
provided for the settlement of institutional transactions through a
service called ID Net. ID Net enables subscribers to the service to net
all eligible affirmed institutional transactions at DTC against
Continuous Net Settlement (``CNS'') transactions at the National
Securities Clearing Corporation (``NSCC''). ID Net accepts affirmed
institutional transactions from clearing agencies, entities exempt from
clearing agency registration with the Commission, and ``qualified
vendors,'' \5\ and nets the broker-dealer's affirmed institutional
transactions with the broker-dealer's CNS obligations.
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\5\ The term ``qualified vendor'' is defined in the rules of the
New York Stock Exchange, the National Association of Securities
Dealers, and other self-regulatory organizations.
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Participation in ID Net is voluntary. Eligibility for ID Net
requires that a broker-dealer be a DTC participant and an NSCC member
eligible for CNS processing. The custodian bank must be a DTC
participant. In addition, eligibility for ID Net processing is based on
the underlying security being processed, the type of transaction
submitted for processing, and the timing of affirmation. Most equity
securities that are eligible for CNS are eligible for ID Net
processing. However, DTC initially excluded the following securities
from ID Net: (1) Corporate and municipal bonds and unit investment
trust issues; (2) new issue securities; (3) securities that are IPO
tracked (because the use of omnibus accounts will bypass the tracking
system); (4) trades in issues that are currently undergoing a mandatory
or voluntary reorganization; (5) trades in CUSIPs with a CNS buy-in;
and (6) trades in securities appearing on the SEC's Regulation SHO
list. At its inception, DTC noted that because ID Net was a new
service, it was excluding certain securities that could potentially
have a relatively high rate of delivery failure or disrupt normal
processing of transactions in ID Net in order to ensure that the system
ran smoothly. DTC also noted that as its experience with ID Net grew,
it would revaluate the exclusion of certain issues.
Since the implementation of ID Net, the service has operated with
minimal disruption, thus allaying the concerns regarding the addition
of certain securities previously excluded from the service. In order to
enhance processing efficiency and at the request of its participants,
DTC is expanding ID Net to allow at DTC's discretion from time to time
to make eligible for ID Net any security that is eligible for CNS
processing.
DTC will notify its participants by ``Important Notice'' of the
effective date of this change.
The proposed rule change is consistent with Section 17A of the
Act,\6\ as amended, and the rules and regulations thereunder applicable
to DTC. The proposed rule change will promote the prompt and accurate
clearance and settlement of securities transactions by leveraging the
capabilities of the DTC system to provide for more streamlined
securities deliveries and to extend netting benefits and efficiencies
to more ID Net transactions.
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\6\ 15 U.S.C. 78q-1.
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(B) Self-Regulatory Organization's Statement on Burden on Competition
DTC does not believe that the proposed rule change will have any
impact or 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 were not and
are not intended to be 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
The foregoing proposed rule change has become effective upon filing
pursuant to Section 19(b)(3)(A)(iii) of the Act \7\ and Rule 19b-
4(f)(4) \8\ thereunder because the proposed rule change effects a
change in an existing service of DTC that: (i) Does not adversely
affect the safeguarding of securities or funds in the custody or
control of DTC or for which it is responsible and (ii) does not
significantly affect the respective rights or obligations of DTC or
persons using the service. At any time within sixty days of the filing
of the proposed 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.
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\7\ 15 U.S.C. 78s(b)(3)(A)(iii).
\8\ 17 CFR 240.19b-4(f)(4).
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IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
[[Page 16217]]
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-2010-05 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-2010-05. 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 inspection and
copying in the Commission's Public Reference Room, 100 F Street, NE.,
Washington, DC 20549, on official business days between the hours of 10
a.m. and 3 p.m. Copies of such filings also will 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/dtc/2010-05.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-
2010-05 and should be submitted on or before April 21, 2010.
For the Commission by the Division of Trading and Markets,
pursuant to delegated authority.\9\
Florence E. Harmon,
Deputy Secretary.
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\9\ 17 CFR 200.30-3(a)(12).
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[FR Doc. 2010-7203 Filed 3-30-10; 8:45 am]
BILLING CODE 8011-01-P