Federal Register / Vol. 72, No. 36 / Friday, February 23, 2007 / Notices 8217 

1 15 U.S.C. 78s(b)(1). 

2 15 U.S.C. 78s(b)(3)(A)(ii). 

3 17 CFR 240.19b–4(f)(2). 

4The Commission has modified the text of the 

summaries prepared by DTC. 

5Securities Exchange Act Release No. 34–53970 

(June 12, 2006), 71 FR 34974 (June 16, 2006) [File 

No. SR–DTC–2006–08]. 

6Memorandum from Albert Howell, Chairman, 

Regulatory & Clearance Committee, Securities 

Operations Division, Securities Industry 

Association, to William Hodash, Managing Director, 

The Depository Trust and Clearing Company 

(March 7, 2006). 

7 15 U.S.C. 78q–1. 

8 15 U.S.C. 78s(b)(3)(A)(ii). 

9 17 CFR 240.19b–4(f)(2). 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–55306; File No. SR–DTC–

2006–21] 

Self-Regulatory Organizations; The 

Depository Trust Company; Notice of 

Filing and Immediate Effectiveness of 

Proposed Rule Change To Modify Fee 

in Connection With Its Offering of a 

Mechanism by Which It Collects and 

Passes-Through Fees Owed by 

Participants to American Depositary 

Receipt Agents for Certain Issues 

February 15, 2007. 

Pursuant to Section 19(b)(1) of the 

Securities Exchange Act of 1934 

(‘‘Act’’),1 notice is hereby given that on 

December 29, 2006, 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 

proposed rule change pursuant to 

Section 19(b)(3)(A)(ii) of the Act 2 and 

Rule 19b–4(f)(2) 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. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The purpose of the rule change is to 

modify DTC’s fee for offering the 

mechanism by which it collects and 

passes-through fees owed by 

participants to American Depositary 

Receipt (‘‘ADR’’) agents for certain 

issues. 

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

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

Typically, an ADR agent is authorized 

under its agreement with the issuer to 

impose a custody fee on holders of the 

issue. A common practice for collection 

of this fee is for the ADR agent to 

subtract the amount of the fee from the 

gross dividend payable to the ADR 

holders. This practice is effectuated by 

DTC announcing to participants both 

the gross dividend rate and the net 

dividend rate after deduction of the 

ADR custody fee, and the ADR agent 

paying DTC the net dividend and DTC 

allocating the net dividend to 

participants. However, a number of ADR 

issues do not pay periodic dividends, 

which prevents the associated fees from 

being collected through the abovedescribed mechanism. 

Pursuant to discussions with industry 

representatives and in order to facilitate 

a more efficient ADR fee collection 

process, DTC recently introduced a 

mechanism by which it collects from 

participants and passes through to ADR 

agents custody fees for issues that do 

not pay periodic dividends as such fees 

are reported to DTC by the ADR agents.5

DTC discussed that proposal with three 

divisions of the Securities Industry 

Association (‘‘SIA’’), the Corporate 

Actions Division, Dividends Division, 

and Securities Operations Divisions 

(‘‘SOD’’). The SOD Regulatory and 

Clearance Committee prepared and sent 

to DTC a memorandum on DTC’s 

proposal. The memorandum concluded 

that DTC should collect such fees 

through its normal monthly billing 

process.6

In order to cover costs incurred in 

collecting fees associated with ADR 

issues that do not pay periodic 

dividends, DTC currently retains a 

collection charge equal to three percent 

(3%) of the ADR agent fee amount 

collected from each participant up to a 

maximum of $4,000 per CUSIP per 

participant position. DTC does not 

retain a fee if the computed collection 

charge is less than $50. 

Due to recently implemented 

processing improvements, DTC has 

determined that the costs incurred in 

providing the collection function have 

decreased. DTC is modifying the fee it 

retains for this service by changing the 

frequency of the charge from one levied 

per CUSIP per participant position to 

one levied per CUSIP only. DTC is also 

changing the maximum amount 

collected from $4,000 per CUSIP per 

participant position to $10,000 per 

CUSIP. DTC projects that these changes 

will result in an overall reduction in the 

charges DTC retains for this service in 

an amount consistent with the overall 

reduction in the cost of offering the 

service. The modified fee became 

effective January 2, 2007. 

DTC believes the proposed rule 

change is consistent with Section 17A of 

the Act,7 as amended, because it 

updates its fee schedule. As such, it 

provides for the equitable allocation of 

fees among its participants and aligns 

fees for services with the associated cost 

to deliver the service. 

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 have not yet 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 

The foregoing proposed rule change 

has become effective upon filing 

pursuant to Section 19(b)(3)(A)(ii) of the 

Act 8 and Rule 19b–4(f)(2) 9 thereunder 

because the rule establishes a due, fee, 

or other charge. 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. 

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. 


cprice-sewell on PROD1PC61 with NOTICES
8218 Federal Register / Vol. 72, No. 36 / Friday, February 23, 2007 / Notices 

10 17 CFR 200.30–3(a)(12). 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

3 15 U.S.C. 78s(b)(3)(A)(ii). 

4 17 CFR 240.19b–4(f)(2). 5 15 U.S.C. 78f(b)(4). 

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 rulecomments@sec.gov. Please include File 

Number SR–DTC–2006–21 on the 

subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Nancy M. Morris, Secretary, 

Securities and Exchange Commission, 

100 F Street, NE., Washington, DC 

20549–1090. 

All submissions should refer to File 

Number SR–DTC–2006–21. 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 

Section, 100 F Street, NE., Washington, 

DC 20549. 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 https:// 

login.dtcc.com/dtcorg/. 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–

2006–21 and should be submitted on or 

before March 16, 2007. 

For the Commission by the Division of 

Market Regulation, pursuant to delegated 

authority.10

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E7–3072 Filed 2–22–07; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–55289; File No. SR–ISE–

2007–04] 

Self-Regulatory Organizations; 

International Securities Exchange, 

LLC; Notice of Filing and Immediate 

Effectiveness of Proposed Rule 

Change Relating to Network Fee 

Changes 

February 13, 2007. 

Pursuant to section 19(b)(1) of the 

Securities Exchange Act of 1934 (the 

‘‘Act’’),1 and Rule 19b–4 thereunder,2

notice is hereby given that on January 

17, 2007, the International Securities 

Exchange, LLC (‘‘ISE’’ or ‘‘Exchange’’) 

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 substantially prepared by the 

ISE. The ISE has designated this 

proposal as one establishing or changing 

a due, fee, or other charge applicable 

only to a member under section 

19(b)(3)(A)(ii) of the Act,3 and rule 19b–

4(f)(2) thereunder,4 which renders the 

proposal effective upon filing with the 

Commission. The Commission is 

publishing this notice to solicit 

comments on the proposed rule change 

from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The ISE is proposing to amend its 

Schedule of Fees to adopt a tiered 

structure for one of the Exchange’s 

network fees. The text of the proposed 

rule change is available at the Exchange, 

the Commission’s Public Reference 

Room, and at http:// 

www.iseoptions.com. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, the 

ISE 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. The ISE has prepared 

summaries, set forth in sections A, B, 

and C below, of the most significant 

aspects of such statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The purpose of this proposed rule 

change is to amend the Exchange’s 

Schedule of Fees to adopt a tiered 

structure for the Ethernet/Managed 

Service Provider fee charged to 

members. 

The Ethernet/Managed Service 

Provider fee is a fee charged to ISE 

members to access the ISE’s trading 

system via an Ethernet connection or a 

third-party managed service provider. 

The Ethernet/Managed Service Provider 

connection carries the same information 

(such as quotation and trade 

information) as other forms of 

connection (such as T–1 and T–3 pointto-point connections) and does not 

require any changes to the Exchange’s 

surveillance or communications rules. 

There is no change to, or impact on, the 

Exchange’s trading systems as a result of 

this method of connection. 

An Ethernet/Managed Service 

Provider connection enables users to 

acquire bandwidth in megabit 

increments. The ISE currently charges 

members $25.00 per Megabit (MB), and 

members may purchase up to 15MBs. 

The Exchange recently launched a new 

service whereby members will now be 

able to purchase up to 1000MBs. To 

bring this network fee in line with the 

new service, the ISE proposes to 

establish a new pricing structure for 

connection speeds. Specifically, the ISE 

proposes to charge members $100.00 per 

month for a member’s purchase of up to 

10MBs of connection speed, $250.00 per 

month for the purchase of 11 to 100MBs 

of connection speed, and $500.00 per 

month for the purchase of 101MBs to 

1GB (1000MBs) of connection speed. 

These fees will be charged on a per 

connection basis. As noted above, the 

Exchange previously limited any 

connection to a maximum of 15MBs. 

The Exchange notes that the fees 

proposed herein are intended to cover 

and reasonably relate to its costs in 

rolling out and supporting the new 

service. 

2. Statutory Basis 

The basis under the Act for this 

proposed rule change is the requirement 

under section 6(b)(4) 5 that an exchange 

have an equitable allocation of 

reasonable dues, fees and other charges 

among its members and other persons 

using its facilities. In particular, these 

fees will enable the Exchange to cover 


cprice-sewell on PROD1PC61 with NOTICES