Federal Register / Vol. 72, No. 56 / Friday, March 23, 2007 / Notices 13839 

8 In approving this proposal, the Commission has 

considered its impact on efficiency, competition, 

and capital formation. 15 U.S.C. 78c(f). 

9 15 U.S.C. 78f(b)(4). 

10According to the Exchange, other information 

included on the BSE Purchase & Sale Blotter in PDF 

format is provided to members free of charge. 

11See note 3, supra. 

12See note 4, supra. 

13 15 U.S.C. 78s(b)(2). 

14 15 U.S.C. 78s(b)(2). 

15 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)(iii). 

4 17 CFR 240.19b–4(f)(6). 

5See Rule 24.2(d)(4) (for initial inclusion, 

requiring average daily trading of at least 45,500 

shares in each of the preceding six months); Rule 

24.2(e)(4) (for continued inclusion, requiring 

average daily trading of at least 22,750 shares in 

each of the preceding six months); and Rule 

24.2(e)(11) (for continued inclusion, requiring 

monthly trading volume of least 500,000 shares in 

each of the last six months). 

6See Telephone conference among Richard 

Holley III and Kristie Diemer, Special Counsels, 

Division of Market Regulation, Commission, and 

Jennifer Klebes, Senior Attorney, CBOE, on March 

15, 2007 (in which CBOE clarified, among other 

things, that the exception it seeks for the 

maintenance trading volume requirements applies 

Continued 

IV. Commission Findings and Order 

Granting Accelerated Approval of 

Proposed Rule Change 

The Commission finds that the 

proposed rule change is consistent with 

the requirements of the Act and the 

rules and regulations thereunder 

applicable to a national securities 

exchange.8 In particular, the 

Commission finds that proposed rule 

change is consistent with Section 6(b)(4) 

of the Act, which requires that the rules 

of the Exchange be designed to provide 

for the equitable allocation of reasonable 

dues, fees, and other charges among its 

members and issuers and other persons 

using its facilities.9 The Commission 

believes that allowing the Exchange to 

charge the Non-BeX executed trade fee 

retroactively for the time period 

February 1, 2007 through March 2, 

2007, is appropriate because this fee 

would be charged only to those 

members who affirmatively request that 

the Exchange include information on 

the BSE Purchase & Sale Blotter with 

respect to those executions resulting 

from a portion of an order sent to BeX 

being routed to an away Trading 

Center.10 Further, the Commission notes 

that the same fee for substantively the 

same service had been charged to BSE 

members prior to the changes made to 

the fee schedule in SR–BSE–2006–44,11

and the fee was reinstated pursuant to 

SR–BSE–2007–11, beginning March 2, 

2007.12

Accordingly, the Commission finds 

good cause pursuant to Section 19(b)(2) 

of the Act 13 for approving the proposed 

rule change prior to the thirtieth day 

after publication of the proposed rule 

change in the Federal Register. As 

noted above, the Commission believes 

that the Non-BeX executed trade fee is 

substantively similar to the Floor 

Brokered Execution fee, which was 

previously charged to BSE members for 

providing substantially the same service 

for which the Non-BeX executed trade 

fee would be charged to BSE members, 

and therefore no novel regulatory issues 

related to this fee are present. 

V. Conclusion 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act,14 that the 

proposed rule change (SR–BSE–2007–

12), is hereby approved on an 

accelerated basis. 

For the Commission, by the Division of 

Market Regulation, pursuant to delegated 

authority.15

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E7–5309 Filed 3–22–07; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–55485; File No. SR–CBOE–

2007–28] 

Self-Regulatory Organizations; 

Chicago Board Options Exchange, 

Incorporated; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change for Early Inclusion of 

NYMEX Holdings, Inc. to the CBOE 

Exchange Index 

March 16, 2007. 

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 March 13, 

2007, the Chicago Board Options 

Exchange, Incorporated (‘‘CBOE’’ or 

‘‘Exchange’’) filed with the Securities 

and Exchange Commission 

(‘‘Commission’’) the proposed rule 

change as described in Items I and II 

below, which Items have been 

substantially prepared by CBOE. The 

Exchange filed the proposal as a ‘‘noncontroversial’’ proposed rule change 

pursuant to Section 19(b)(3)(A)(iii) of 

the Act 3 and Rule 19b–4(f)(6) 

thereunder,4 which renders the proposal 

effective upon receipt of this filing by 

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 Exchange is requesting approval 

to add NYMEX Holdings, Inc. (‘‘NMX’’) 

to the CBOE Exchange Index (‘‘EXQ’’) 

on March 19, 2007. The text of the rule 

proposal is available on the Exchange’s 

Web site (http://www.cboe.org/legal), at 

the Exchange’s Office of the Secretary, 

and at the Commission’s Public 

Reference Room. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, 

CBOE 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. CBOE 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 rule proposal is 

to obtain the Commission’s approval to 

add NMX to the EXQ, which is a Micro 

Narrow-Based security index. Under 

CBOE’s initial and maintenance 

standards for Micro Narrow-Based 

security indexes, a security must have 

achieved certain daily and monthly 

trading volume levels in each of the 

preceding six months before it is eligible 

for initial and/or continued inclusion in 

an index.5 Therefore, under the current 

Exchange rules, NMX must trade for at 

least six months before the Exchange 

may add it to the EXQ. 

As of the date of this filing, NMX has 

not been trading for the past six months. 

The Exchange, however, is requesting 

Commission approval to add NMX to 

the EXQ at this time. Specifically, the 

Exchange would like to add NMX to the 

EXQ on March 19, 2007, which is after 

the March expiration (March 17, 2007). 

The Exchange believes that this is an 

ideal time to add NMX to the EXQ, 

since the EXQ will be rebalanced at that 

time. In addition, the Exchange requests 

that the Commission permit NMX to 

meet the maintenance trading volume 

requirements in the aggregate during the 

first six months after trading in order to 

qualify for its inclusion in the EXQ.6


sroberts on PROD1PC70 with NOTICES
13840 Federal Register / Vol. 72, No. 56 / Friday, March 23, 2007 / Notices 

for the first six months of trading of NMX) (‘‘March 

15 Telephone Conference’’). After six months of 

trading, NMX then would be required to meet the 

maintenance trading volume levels contained in 

Rules 24.2(e)(4) and 24.2(e)(11). 

7The Exchange began trading EXQ options on 

September 29, 2006. The EXQ is currently made up 

of six component securities. The six component 

securities are: CBOT Holdings, Inc. (‘‘BOT’’), 

Chicago Mercantile Exchange Holdings, Inc. 

(‘‘CME’’), InterContinental Exchange, Inc. (‘‘ICE’’), 

International Securities Exchange, Inc. (‘‘ISE’’), The 

NASDAQ Stock Market LLC (‘‘NDAQ’’) and NYSE 

Group, Inc. (‘‘NYX’’). Additional information 

regarding pricing, shares, market value and weight 

can be accessed at: http://www.cboe.com/Products/ 

IndexComponentsAuto.aspx?PRODUCT=EXQ. 

8The initial trading volume level in NMX 

exceeded the 2.4 million shares required for initial 

listing under Rule 5.3. Also, the Exchange was able 

to list options on NMX on the earliest day possible 

under Exchange Rules. Specifically, Rule 5.3, 

Interpretation and Policy .01 requires that a security 

must have a closing price over $3 per share for each 

of the five business days prior to listing. The lowest 

closing price for NMX during this time period was 

$126.50 per share. 

9The Exchange represents that NMX meets all of 

the other initial listing standards for Micro NarrowBased security indexes as set forth in Rule 24.2. 

In support of this request, the 

Exchange states that it believes that 

good cause exists to permit the early 

inclusion of NMX to the EXQ. The 

Exchange believes that the addition of 

NMX to the EXQ will further diversify 

the EXQ, which is a relatively 

concentrated index, and will ensure that 

this emergent index continues to be 

representative of the exchange market. 

The Exchange also notes that options 

are already listed and trading on NMX. 

Additionally, NMX readily meets the 

trading volume levels, in the aggregate, 

required for initial inclusion in a Micro 

Narrow-Based security index, such as 

the EXQ. 

The EXQ was created to track the 

performance of stock prices of publicly 

traded exchanges and is a very small, 

equal-dollar weighted index currently 

composed of six security and futures 

exchanges.7 Currently, the EXQ is the 

only Micro Narrow-Based security index 

on which options are traded on the 

Exchange. Additionally, the Exchange 

believes that the early inclusion of NMX 

to the EXQ will ensure that the EXQ 

more closely reflects the rapidly 

evolving exchange environment by 

including all publicly traded exchanges. 

NMX recently became a publicly 

traded company. On November 16, 

2006, NMX priced its initial public 

offering and its shares began trading on 

the New York Stock Exchange on 

November 17, 2006. On that day alone, 

NMX trading volume exceeded 19.5 

million shares and, on November 27, 

2006, the Exchange certified that NMX 

met the initial listing criteria for options 

under CBOE Rules. The following day, 

on November 28, 2006, the Exchange 

began trading options on NMX.8

Although the Exchange is able to list 

and trade options on NMX, the 

Exchange is currently unable to add 

NMX to the EXQ under its current rules 

and must wait until at least May 2007 

to do so.9

Because there are only six 

components in the EXQ, and to ensure 

that the EXQ is representative of the 

rapidly evolving exchange environment 

and includes all currently publicly 

traded exchanges, the Exchange seeks 

the Commission’s approval to permit 

the early inclusion of NMX to the EXQ. 

Specifically, the Exchange requests that 

the Commission allow the Exchange to 

add NMX to the EXQ on March 19, 2007 

because (as will be demonstrated 

below), NMX has already met and 

exceeded the initial trading volume 

levels set forth in Rule 24.2(d) in the 

aggregate. The Exchange also requests 

that the Commission permit NMX to 

meet the maintenance trading volume 

levels set forth in Rules 24.2(e)(4) and 

(e)(11) in the aggregate during the first 

six months after trading of the NMX. 

In the aggregate, NMX currently meets 

the initial trading volume levels 

required for securities to be added to a 

Micro Narrow-Based security index. 

Specifically, Rule 24.2(d)(4), which sets 

forth initial listing standards, requires: 

The average daily trading volume in each 

of the preceding six months for each 

component security in the index is at least 

45,500 shares, except that each of the lowest 

weighted component securities in the index 

that in the aggregate account for no more 

than 10% of the weight of the index may 

have an average daily trading volume of only 

22,750 shares for each of the last six months. 

In the aggregate, the 45,500 average 

daily trading volume amount is 

comparable to an average monthly 

trading requirement of 1 million shares, 

based on a calendar month having 22 

trading days, and the 22,750 average 

daily trading volume amount is 

comparable to an average monthly 

trading requirement of 500,000 shares. 

These average monthly trading volume 

requirements multiplied over six 

months would equal 6 million shares 

and 3 million shares respectively. 

Through March 6, 2007, NMX has 

traded a total of almost 90 million 

shares, averaging over 1.2 million shares 

per day. The following table provides 

total monthly (or in the case of March, 

partial monthly) trading volume since 

initial listing: 

Month 

Total Volume 

(in millions 

of shares) 

March 1–6, 2007 .................. 4.8 

Month 

Total Volume 

(in millions 

of shares) 

February 2007 ...................... 17.5 

January 2007 ........................ 19.9 

December 2006 .................... 13.2 

November 2006 .................... 34.3 

In the aggregate, NMX also currently 

meets the maintenance trading levels 

required for securities to be added to a 

Micro Narrow-Based security index. 

Specifically, Rule 24.2(e)(4), which sets 

forth maintenance listing standards 

relating to average daily trading volume, 

requires: 

The average daily trading volume in each 

of the preceding six months for each 

component security in the index is at least 

22,750 shares, except that each of the lowest 

weighted component securities in the index 

that in the aggregate account for no more 

than 10% of the weight of the index may 

have an average daily trading volume of only 

18,200 shares for each of the last six months. 

Also, Rule 24.2(e)(11), which sets 

forth maintenance listing standards 

relating to monthly trading volume, 

requires: 

Trading volume of each component 

security in the index must be at least 500,000 

shares for each of the last six months, except 

that for each of the lowest weighted 

component securities in the index that in the 

aggregate account for no more than 10% of 

the weight of the index, trading volume must 

be at let 400,000 shares for each of the last 

six months. 

In the aggregate, the 22,750 average 

daily trading volume amount set forth in 

Rule 24.2(e)(4) is comparable to an 

average monthly trading requirement of 

500,000, based on a calendar month 

having 22 trading days, and the 18,200 

average daily trading volume amount is 

comparable to an average monthly 

trading requirement of 400,000 shares. 

The Exchange notes that these amounts 

are equivalent to the average monthly 

trading requirements of Rule 24.2(e)(11), 

and these average monthly trading 

volume requirements multiplied over 

six months would equal 3 million 

shares and 2.4 million shares 

respectively. 

As demonstrated above, the total 

trading volume through March 6, 2007 

in NMX has approached 90 million 

shares, averaging over 1.2 million shares 

per day. Because the Exchange is 

requesting early inclusion of NMX to 

the EXQ, there will not be six months’

worth of trading volume data to 

determine if NMX meets the 

maintenance trading volume levels set 

forth in Rules 24.2(e)(4) and (e)(11). As 

a result, the Exchange requests that the 

Commission permit NMX to meet the 

maintenance trading volume levels set 


sroberts on PROD1PC70 with NOTICES
Federal Register / Vol. 72, No. 56 / Friday, March 23, 2007 / Notices 13841 

10See March 15 Telephone Conference, supra 

note 6. 

11See March 15 Telephone Conference, supra 

note 6 (adding ‘‘and continued inclusion’’ in the 

text above). 

12 15 U.S.C. 78f(b). 

13 15 U.S.C. 78f(b)(5). 

14 15 U.S.C. 78s(b)(3)(A). 

15 17 CFR 240.19b–4(f)(6). In addition, Rule 19b–

4(f)(6)(iii) requires that a self-regulatory 

organization submit to the Commission written 

notice of its intent to file the proposed rule change, 

along with a brief description and text of the 

proposed rule change, at least five business days 

prior to the date of filing of the proposed rule 

change, or such shorter time as designated by the 

Commission. The Commission notes that CBOE has 

satisfied the five-day pre-filing notice requirement. 

16 17 CFR 240.19b–4(f)(6)(iii). 

17For the purposes only of waiving the 30-day 

operative delay, the Commission has considered the 

proposed rule’s impact on efficiency, competition, 

and capital formation. See 15 U.S.C. 78c(f). 

forth in Rules 24.2(e)(4) and (e)(11) in 

the aggregate during the first six months 

of trading of the NMX.10 After it has 

been trading for a full six months, NMX 

then would be required to meet the 

maintenance trading volume levels 

contained in Rules 24.2(e)(4) and 

24.2(e)(11). 

The Exchange further states that NMX 

must satisfy all other requirements for 

Micro Narrow-Based security indexes 

set forth in Rule 24.2 in order to qualify 

for inclusion and continued inclusion in 

the EXQ.11

The Exchange represents that it has an 

adequate surveillance program in place 

to monitor the component securities in 

the EXQ, including NMX. The Exchange 

may obtain trading information upon 

request via the Intermarket Surveillance 

Group (‘‘ISG’’) from other exchanges 

who are members or affiliates of the ISG 

and which list the security components 

contained in the EXQ. Specifically, 

CBOE can obtain such information from 

the New York Stock Exchange in 

connection with the trading of NMX 

shares. 

Given the high liquidity of NMX and 

the other component securities in the 

EXQ, the Exchange believes that the 

EXQ is not readily susceptible to 

manipulation, despite the concentration 

level of the component securities. 

2. Statutory Basis 

The Exchange believes the proposed 

rule change is consistent with Section 

6(b) of the Act 12 in general and furthers 

the objectives of Section 6(b)(5) of the 

Act 13 in particular in that it should 

promote just and equitable principles of 

trade, serve to remove impediments to 

and perfect the mechanism of a free and 

open market and a national market 

system, and protect investors and the 

public interest. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

CBOE does not believe that the 

proposed rule change will result in 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 

The Exchange neither solicited nor 

received comments on the proposal. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

Because the foregoing proposed rule 

change does not: (i) Significantly affect 

the protection of investors or the public 

interest; (ii) impose any significant 

burden on competition; and (iii) become 

operative for 30 days from the date on 

which it was filed, or such shorter time 

as the Commission may designate, if 

consistent with the protection of 

investors and the public interest, it has 

become effective pursuant to Section 

19(b)(3)(A) of the Act 14 and Rule 19b–

4(f)(6) thereunder.15

Normally, a proposed rule change 

filed under 19b–4(f)(6) may not become 

operative prior to 30 days after the date 

of filing. However, Rule 19b–

4(f)(6)(iii) 16 permits the Commission to 

designate a shorter time if such action 

is consistent with the protection of 

investors and the public interest. The 

Exchange has requested that the 

Commission waive the 30-day operative 

delay. In its filing, the Exchange noted 

that waiver of the 30-day operative 

delay, and early addition of the NMX, 

would diversify the EXQ, a relatively 

concentrated index and would help 

ensure that the EXQ continues to be 

representative of the exchange market. 

In further support of its waiver request, 

the Exchange also noted that it would 

like to add NMX to the EXQ on March 

19, 2007, which is after the March 

expiration (March 17, 2007), and 

believes that March 17, 2007, is an ideal 

time to add NMX to the EXQ, since the 

EXQ will be rebalanced at that time. 

The Commission believes that 

waiving the 30-day operative delay is 

consistent with the protection of 

investors and the public interest 

because the proposed rule change will 

allow the Exchange to add NMX to the 

EXQ in connection with the upcoming 

rebalancing of the EXQ on March 17, 

2007 even though NMX has not been 

trading for the six months specified in 

CBOE Rule 24.2. The Commission notes 

that the CBOE has been trading singlestock options on NMX since November 

28, 2006. Further, the Commission notes 

that NMX has exceeded, by a wide 

margin, the initial trading volume levels 

in the aggregate contained in CBOE Rule 

24.2(d), as well as the maintenance 

trading volume levels, in the aggregate, 

contained in CBOE Rule 24.2(e)(4) and 

(e)(11). Finally, inclusion of the NMX in 

the EXQ, given that it has met, in the 

aggregate and by a wide margin, the 

volume thresholds contained in CBOE 

Rule 24.2, will diversify the EXQ and 

should not increase any concerns about 

the EXQ’s susceptibility to 

manipulation given the large depth and 

liquidity of trading in NMX. 

Accordingly, consistent with the 

protection of investors and the public 

interest, the Commission designates the 

proposed rule change to be effective and 

operative upon filing with the 

Commission.17

At any time within 60 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. 

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–CBOE–2007–28 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–CBOE–2007–28. 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 


sroberts on PROD1PC70 with NOTICES
13842 Federal Register / Vol. 72, No. 56 / Friday, March 23, 2007 / Notices 

18 17 CFR 200.30–3(a)(12). 

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

2The National Securities Clearing Corporation 

(‘‘NSCC’’) has submitted a similar proposed rule 

change (File No. SR–NSCC–2007–02). 

3The Commission has modified parts of these 

statements. 

4For purposes of this rule filing, the term ‘‘CDS 

Omnibus Accounts’’ shall not include CDS’s 

additional accounts established pursuant to the 

Multiple Account Number Agreement, dated 

October 27, 2006 between CDS and NSCC and the 

Additional Account Agreement, dated October 27, 

2006 between DTC and CDS. 

5Securities Exchange Act Release No. 40523 

(October 6, 1998), 63 FR 54739 (October 13, 1998) 

(File No. SR–DTC–97–22). 

6Securities Exchange Act Release No. 52784 

(November 16, 2005), 70 FR 70902 (November 23, 

2005) [File No. SR–DTC–2005–08]. 

7 ‘‘Covered Services’’ includes such services as: 

(a) Messaging and conversion of messages, (b) 

clearing, (c) monthly account charges, (d) 

deliveries/receives, (e) deposits and withdrawals, (f) 

custody, (g) asset servicing (dividends, 

reorganizations), (h) tax services, including U.S. 

and Canadian tax withholding, as applicable, and 

non-U.S. Tax Relief and Foreign Currency Payments 

via the Elective Dividend Service (EDS), (i) 

communications/networking, (j) money settlement 

(and roll-up), (k) reconciliation, and (l) any other 

services agreed to between DTC, NSCC and CDS in 

writing. 

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. Copies of such filing also will be 

available for inspection and copying at 

the principal office of CBOE. 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–CBOE–2007–28 and should 

be submitted on or before April 13, 

2007. 

For the Commission, by the Division of 

Market Regulation, pursuant to delegated 

authority.18

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E7–5308 Filed 3–22–07; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–55488; File No. SR–DTC–

2007–02] 

Self-Regulatory Organizations; The 

Depository Trust Company; Notice of 

Filing and Immediate Effectiveness of 

a Proposed Rule Change Related to 

Fees Charged to the CDS Clearing and 

Depository Services, Inc. 

March 19, 2007. 

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

Securities Exchange Act of 1934 

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

January 26, 2007, 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. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The proposed rule change would 

permit DTC, effective February 1, 2007, 

to cease to charge fees for ‘‘Covered 

Services’’ in ‘‘Omnibus Accounts’’ (as 

each term is defined below) to the CDS 

Clearing and Depository Services, Inc. 

(‘‘CDS’’), formerly, the Canadian 

Depository for Securities Ltd., in 

exchange for CDS agreeing not to charge 

DTC for such services.2

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.3

(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 facilitate the efficient 

processing of cross-border securities 

transactions between the U.S. and 

Canada. CDS is a participant in both 

DTC and NSCC. CDS holds securities in 

the name of Cede & Co., DTC’s nominee 

name, in one or more omnibus accounts 

at DTC and also has a clearance account 

at NSCC (collectively the ‘‘CDS 

Omnibus Accounts’’).4

In 1998, the SEC approved a proposed 

rule change to allow DTC to open an 

omnibus account at CDS thereby 

creating a two-way DTC–CDS interface.5

DTC is a participant in CDS and holds 

securities in the nominee name of CDS 

& Co., CDS’s nominee name, in one or 

more omnibus accounts in the 

depository and the settlement service 

operated by CDS (‘‘CDSX’’) (‘‘DTC 

Omnibus Accounts’’). The two-way 

interface allows but does not require 

DTC positions in CDS-eligible issues to 

be held in DTC’s account at CDS. The 

CDS Omnibus Accounts and the DTC 

Omnibus Accounts shall be collectively 

referred to as the ‘‘Omnibus Accounts.’’

In 2005, the Commission approved a 

proposed rule change to allow DTC to 

operate the Canadian-Link Service, 

which enables DTC Participants to clear 

and settle transactions with CDS 

Participants through an omnibus 

account maintained by DTC at CDS.6

In order to more efficiently facilitate 

cross-border clearance and settlement 

DTC, NSCC and CDS have agreed not to 

charge each other for Covered Services 7

in Omnibus Accounts. 

Currently, DTC, NSCC, and CDS 

charge fees in accordance with their 

respective standard fee schedules for 

securities clearing, settlement, and asset 

servicing in their respective Omnibus 

Accounts in exchange for CDS no longer 

charging DTC and NSCC for similar 

services. The proposed rule change 

would provide that instead of invoicing 

each other each month for services in 

the Omnibus Accounts, DTC and NSCC 

will no longer charge CDS for Covered 

Services in Omnibus Accounts. As most 

of the activity processed in each of the 

Omnibus Accounts relates to reciprocal 

services which are charged to DTC, 

NSCC and CDS respectively at different 

rates (e.g., DTC would be charged in 

accordance with the standard CDS fee 

schedule and vice versa), not charging 

each other for Covered Services will 

ensure that the fees of DTC and CDS are 

more equitably aligned. 

DTC, NSCC, and CDS will continue to 

charge their respective participants for 

activity in the Omnibus Accounts. 

This proposed rule change is 

consistent with the requirements 

Section 17A of the Act and the rules and 

regulations thereunder because it 

recognizes that most of the activity in 

the Omnibus Accounts represents the 

processing of reciprocal activity in 

similar services used by each of the 

entities which are charged to DTC, 

NSCC, and CDS at different rates. As 

such, it provides for a more equitable 

allocation of fees charged by DTC and 

NSCC. 


sroberts on PROD1PC70 with NOTICES