[Federal Register Volume 61, Number 236 (Friday, December 6, 1996)]
[Notices]
[Pages 64775-64776]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-31078]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-38006; File No. SR-DTC-96-19]
Self-Regulatory Organizations; The Depository Trust Company;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change
Relating to the Establishment of a Surcharge
December 2, 1996.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ notice is hereby given that on October 21, 1996, The
Depository Trust Company (``DTC'') filed with the Securities and
Exchange Commission (``Commission'') the proposed rule change as
described in Items I, II, and III below, which items have been prepared
primarily by DTC. 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) (1988).
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The proposed rule change establishes a surcharge of $1.00 on all
deposits submitted to DTC outside its Deposit Automated Management
System (``DAM System''). The surcharge will go into effect on December
1, 1996.
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 such
statements.\2\
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\2\ The Commission has modified the text of the summaries
prepared by DTC.
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(A) Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
The purpose of the proposed rule change is to establish a surcharge
of $1.00 on all deposits submitted to DTC outside its DAM System.\3\
The surcharge will go into effect on December 1, 1996. DTC participants
benefit in many ways by depositing securities into DTC using the DAM
System. For example, the automation features of the DAM System reduce
DTC's costs in handing these deposits. Therefore, the fee that DTC
charges its participants for a deposit submitted through the DAM System
is less than the fee charged for a deposit submitted outside the DAM
System. The DAM System also automatically verifies certain deposit-
related information thereby eliminating the need for participants to
perform similar verifications.\4\ Finally, the DAM System
[[Page 64776]]
allows participants to consolidate deposits in the same issue (whether
or not the advanced deposit data is transmitted to DTC at the same
time) thereby saving deposit fees or the time necessary to manually
compile deposits in the same issue.
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\3\ The DAM System is an enhanced automated deposit service that
enables DTC participants to send details of deposits to DTC in
advance of forwarding physical certificates. For a more detailed
description of the DAM System, see Securities Exchange Act Release
No. 33412 (January 4, 1994), 59 FR 1769 [File No. SR-DTC-93-09]
(order approving DAM Service).
\4\ For example, in order to reduce the number of deposits
rejected by DTC, participants will often refer to other functions
available on DTC's Participant Terminal System (``PTS'') such as the
Security Inquiry (CONI) function to verify whether a security is
eligible for deposit at DTC or the Dividend Announcement Inquiry
(DIVA) feature to verify whether a corporate action effects the
deposit.
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The DAM System also improves DTC's efficiency in handling deposits.
Because each deposit submitted through the DAM System is assigned a
unique identifying number, use of the system reduces the amount of time
DTC spends researching a deposit and enables DTC to more efficiently
track the deposit's location (e.g., whether it is at DTC, en route to a
transfer agent, or delivered to a transfer agent). Moreover, when a
participant submits a deposit outside of the DAM System, DTC must enter
the deposit information into its systems by keystroke. However, when a
deposit is submitted through the DAM System, deposit information
transmitted by the participant is automatically written into DTC's
systems.
Although virtually all of DTC's participants are presently using
the DAM System, some participants continue to submit deposits outside
the DAM System.\5\ As explained above, such deposits create
inefficiencies in the clearance and settlement of securities
transactions. Therefore, DTC proposes to establish a surcharge to
reduce the number of deposits submitted to DTC outside the DAM System.
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\5\ During a recent five day period from October 8, 1996,
through October 14, 1996, DTC participants submitted 93,140
deposits. Of those deposits, only 1,566 (1.68%) were submitted
outside the DAM System.
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DTC believes that the proposed rule change is consistent with the
requirements of Section 17A(b)(3)(D) of the Act \6\ and the rules and
regulations thereunder because it provides for the equitable allocation
of reasonable dues, fees, and other charges among DTC's participants.
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\6\ 15 U.S.C. 78q-1(b)(3)(D) (1988).
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(B) Self-Regulatory Organization's Statement on Burden on Competition
DTC does not believe that the proposed rule change will impose any
burden on competition that is not necessary or appropriate in
furtherance of the purposes of the Act.
(C) Self-Regulatory Organization's Statement on Comments on the
Proposed Rule Change Received From Members, Participants or Others
No comments on the proposed rule have been solicited or received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become effective pursuant to Section
19 (b)(3)(A)(ii) \7\ of the Act and pursuant to Rule 19b-4(e)(2) \8\
promulgated thereunder because the proposal establishes or changes a
due, fee, or other charge imposed by DTC. At any time within sixty days
of the filing of such 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)(ii) (1988).
\8\ 17 CFR 240.19b-4(e)(2) (1996).
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IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing. Persons making written submissions
should file six copies thereof with the Secretary, Securities and
Exchange Commission, 450 Fifth Street, N.W., Washington, D.C. 20549.
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 section, 450 Fifth Street, N.W.,
Washington, D.C. 20549. Copies of such filing also will be available
for inspection and copying at the principal office of DTC.
All submissions should refer to File No. SR-DTC-96-19 and should be
submitted by December 27, 1996.
For the Commission by the Division of Market Regulation,
pursuant to delegated authority.\9\
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\9\ 17 CFR 200.30-3(a)(12) (1996).
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[FR Doc. 96-31078 Filed 12-5-96; 8:45 am]
BILLING CODE 8010-01-M
