99-15600. Self-Regulatory Organizations; The Depository Trust Company; Notice of Filing of a Proposed Rule Change Relating to the Establishment of an Automated Foreign Tax Reclaim Service  

  • [Federal Register Volume 64, Number 118 (Monday, June 21, 1999)]
    [Notices]
    [Pages 33124-33125]
    From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
    [FR Doc No: 99-15600]
    
    
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    SECURITIES AND EXCHANGE COMMISSION
    
    [Release No. 34-41525; File No. SR-DTC-99-14]
    
    
    Self-Regulatory Organizations; The Depository Trust Company; 
    Notice of Filing of a Proposed Rule Change Relating to the 
    Establishment of an Automated Foreign Tax Reclaim Service
    
    June 14, 1999.
        Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
    (``Act''),\1\ notice is hereby given that on May 27, 1999, The 
    Depository Trust Company (``DTC'') filed with the Securities and 
    Exchange Commission (``Commission'') the proposed rule change (File No. 
    SR-DTC-99-14) 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 from interested persons.
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        \1\ 15 U.S.C. 78s(b)(1).
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    I. Self-Regulatory Organization's Statement of the Terms of 
    Substance of the Proposed Rule Change
    
        Under the proposed rule change, DTC will establish an automated 
    foreign tax reclaim service called ``TaxReclaim.''
    
    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
    
        DTC currently offers two foreign tax withholding services. Under 
    DTC's Elective Dividend Service, participants can certify securities 
    positions that are entitled to reduced withholdings under international 
    tax treaties or source country law in order to obtain tax relief at 
    source or by accelerated tax refunds. DTC also provides a foreign tax 
    information database called ``TAXI'' which provides withholding tax 
    information on foreign securities.
        Under the proposed rule change, DTC will expand its international 
    tax services with the addition of TaxReclaim. TaxReclaim will be an 
    interactive tax reclaim preparation facility that will assist 
    participants in preparing foreign jurisdictions' tax reclaim forms that 
    are required to reclaim tax withheld on income payments on foreign 
    securities. Participants will access TaxReclaim through DTC's 
    participant terminal system. Participants will input data particular to 
    the beneficial owner, foreign security, and payment details as required 
    by the country of issuance. DTC will process the information in a 
    software application that includes the reclaim form and tax information 
    template and will transmit back to the participant using file transfer 
    protocol a print file containing the completed tax reclaim form, 
    reclaim calculation, and information on additional filing requirements 
    and filing instructions. In a subsequent phase, TaxReclaim may be 
    further automated and made accessible to participants over DTC's 
    computer to computer facility.
        DTC will initiate the TaxReclaim service as a pilot program with a 
    small group of participant users. It is anticipated that the initial 
    pilot program will begin in July 1999 with approximately 6 to 15 
    participants. No fees will be charged during the pilot phase. DTC 
    anticipates concluding the pilot program phase and introducing 
    TaxReclaim as a regular DTC service in August 1999. When TaxReclaim 
    becomes a regular DTC service, the fee
    
    [[Page 33125]]
    
    for each reclaim transaction on a printed reclaim form will be $10. A 
    reclaim transaction will consist of the reclaim calculation applicable 
    to one security, one beneficial owner, and one income payment date. For 
    reclaim transactions that are not completed because the reclaimable 
    amount falls below a threshold value established by the participant, 
    the fee will be $2 per reclaim transaction. DTC will post a disclaimer 
    of liability in connection with use of the TaxReclaim service.
        DTC believes that the proposed rule change is consistent with 
    section 17A of the Act \3\ and the rules and regulations thereunder 
    because it facilitates return of payments withheld by foreign 
    jurisdiction with respect to distributions made on foreign securities 
    and thereby protects investor entitlements to such payments.
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        \3\ 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 impose any 
    burden on competition.
    
    (C) Self-Regulatory Organization's Statement on Comments on the 
    Proposed Rule Change Received From Members, Participants or Others
    
        DTC has not solicited nor received written comments on the proposed 
    rule change. However, the introduction of a foreign tax reclaim service 
    was discussed with DTC's Participant Advisory Group on Foreign Tax 
    Services at meetings of the group held on September 28, 1998, February 
    15, 1999, and April 23, 1999. The Participant Advisory Group on Foreign 
    Tax Services consists of representatives of 19 participants. A 
    prototype of the TaxReclaim Service was demonstrated at the meeting of 
    the Participant Advisory Group on Foreign Tax Services held on April 
    23, 1999, and was favorably received.
    
    III. Date of Effectiveness of the Proposed Rule Change and Timing 
    for Commission Action
    
        Within thirty-five days of the date of publication of this notice 
    in the Federal 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 DTC consents, the Commission will:
        (A) By order approve such 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. Persons making written submissions 
    should file six copies thereof with the Secretary, Securities and 
    Exchange Commission, 450 Fifth Street, NW, Washington, DC 20549-0609. 
    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, NW, 
    Washington, DC 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-99-14 and should be submitted by July 
    12, 1999.
    
        For the Commission by the Division of Market Regulation, 
    pursuant to delegated authority.\4\
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        \4\ 17 CFR 200.30-3(a)(12).
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    Margaret H. McFarland,
    Deputy Secretary.
    [FR Doc. 99-15600 Filed 6-18-99; 8:45 am]
    BILLING CODE 8010-01-M
    
    
    

Document Information

Published:
06/21/1999
Department:
Securities and Exchange Commission
Entry Type:
Notice
Document Number:
99-15600
Pages:
33124-33125 (2 pages)
Docket Numbers:
Release No. 34-41525, File No. SR-DTC-99-14
PDF File:
99-15600.pdf