75986 Federal Register / Vol. 65, No. 234 / Tuesday, December 5, 2000 / Notices

2The Commission has modified the text of the

summaries prepared by DTC.

3For a description of DTAX, refer to Securities

Exchange Act Release No. 41105 (February 25,

1999), 64 FR 10523 (March 4, 1999) [File No. DTC–

99–02].

4Before expanding access to non-participants,

DTC will file a proposed rule change under Section

19(b) of the Act.

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

2The Commission has modified the text of the

summaries prepared by DTC.

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.2

(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 revise current fees for

DTAX 3 in connection with providing

Internet access to the DTAX information

database.

DTAX is a data service containing tax

information on distributions received

with respect to domestic securities. It is

available through DTC’s PTS and CCF

facilities and effective on or about

December 1, 2000, will also be

accessible over the Internet through

DTC’s website.

Annual subscription fees for DTAX

accessed over the Internet will be as

follows:

$4,999 Unlimited interactive

inquiries and master file download of

all available CUSIPs.

$999 Unlimited interactive

inquiries.

Initially, DTAX will be available only

to participants although usage may be

expanded to include non-participant

customers at a later date.4

The proposed rule change is

consistent with the requirements

Section 17A of the Act and the rules and

regulations thereunder applicable to

DTC because fees will be equitably

allocated among users of DTC services.

(B) Self-Regulatory Organization’s

Statement on Burden on Competition

DTC perceives no impact on

competition by reason of the proposed

rule change.

(C) Self-Regulatory Organization’s

Statement on Comments on the

Proposed Rule Change Received From

Members, Participants or Others

Written comments from DTC

participants or others have not been

solicited or received on the proposed

rule change.

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) of the Act and Rule 19b–

4(f)(2) thereunder, because the proposed

rule change is changing a due, fee or

other charge. At any time within 60

days of the filing of such 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.

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–00–15 and

should be submitted by December 26,

2000.

For the Commission by the Division of

Market Regulations, pursuant to delegated

authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 00–30878 Filed 12–04–00; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–43631; File No. SR–DTC–

00–14]

Self-Regulatory Organizations; The

Depository Trust Company; Notice of

Filing and Immediate Effectiveness of

Proposed Rule Change Relating to

Creating a United States Withholding

Tax Service Available Through The

Depository Trust Company’s Elective

Dividend Service

November 28, 2000.

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

Securities Exchange Act of 1934

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

October 31, 2000, 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 parties.

I. Self-Regulatory Organization’s

Statement of the Terms of Substance of

the Proposed Rule Change

The proposed rule change would

allow DTC to institute a U.S.

withholding tax service available to

foreign participants beginning January

1, 2001, in which DTC will act as

withholding agent to deduct and

withhold U.S. tax on U.S.-source

income paid to foreign participants.

II. Self-Regulatory Organization’s

Statement of 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. 2

(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 institute a U.S. withholding

tax service available to foreign

participants beginning January 1, 2001,

in which DTC will act as withholding

Federal Register / Vol. 65, No. 234 / Tuesday, December 5, 2000 / Notices 75987

3See Sections 1441, 1442 and 1443 of the Internal

Revenue Code and the regulations promulgated

thereunder.

4The seven foreign participants referenced herein

are The Canadian Depository for Securities; Cavali

ICLC S.A.; Clearstream Banking AG; Crest

International Nominees Limited; Donaldson Luftkin

& Jenrette International; Hong Kong Securities

Clearing Limited; and Transatlantic Securities

Company.

5Securities Exchange Act Release Nos. 34–42192

(December 1, 1999), 64 FR 69054 [File No. SR–

DTC–99–23] (describing DTC’s TaxRelief service)

and 32171 (April 19, 1993), 58 FR 22003 [File No.

SR–DTC–92–17] (approving the extension of DTC’s

EDS service to include all foreign securities).

6 15 U.S.C. 78q–1.

7 15 U.S.C. 78s(b)(3)(A)(i).

agent to deduct and withhold U.S. tax

on U.S.-source income paid to foreign

participants.

The U.S. Internal Revenue Code

(‘‘Code’’) generally requires U.S. payors

such as DTC to deduct and withhold

thirty percent from most payments of

U.S.-source income paid to a foreign

payee unless lower U.S. withholding tax

rates or exemptions apply under

provisions of the Code, the regulations,

or applicable tax treaties.3 In the past,

DTC has complied with its withholding

obligations with respect to securities

dividends and other payments made by

a U.S. entity to foreign participants by

generally requiring each foreign

participant to appoint a U.S. bank or

broker/dealer to act as its withholding

agent or to otherwise obtain an

exemption from the IRS thereby

relieving DTC of the withholding

responsibility. DTC currently has seven

foreign participants.4

Foreign central securities in obtaining

U.S. tax withholding services from U.S.

financial institutions and have

requested that DTC undertake the U.S.

tax withholding responsibility.

In its role as U.S. tax withholding

agent under the proposed rule change,

DTC will accept relevant instructions

from the foreign participant to

determine the withholding tax rates; pay

dividends, interest, and other securities

distributions to the participant net of

appropriate taxes, if any, based on the

applicable withholding rates; remit the

taxes to the IRS; and report the

payments on Form 1042–S. Initially,

DTC will use its Elective Dividend

Service to solicit and receive the

instructions from foreign participants,

similar to the procedures currently in

place with respect to instructions

received from U.S. participants that use

DTC’s TaxRelief service to obtain relief

from foreign taxes imposed on U.S.

holders of foreign securities.5

DTC proposes to charge the following

fees for the U.S. tax withholding service:

Monthly Fee ....... $150 Monthly service

charge assessed on

each account

using the service.

Transaction Fee $1.50 The fee for each

tax adjustment

instruction to

withhold taxes

at a specific

rate pool.

Foreign participants that elect not to

use DTC’s U.S. tax withholding service

may continue the current practice of

appointing a third party U.S. bank or

broker-dealer to receive gross payments

on their behalf and act as U.S. tax

withholding agent for such payments, or

otherwise obtain an exemption from the

IRS that relieves DTC of the withholding

obligation.

The proposed rule change is

consistent with the requirements of

section 17A of the Act 6 and the rules

and regulations thereunder applicable to

DTC because it promotes the prompt

and accurate clearance and settlement of

securities transactions by facilitating

international investment in U.S.

securities. The proposed rule change

will be implemented consistently with

the safeguarding of securities and funds

in DTC’s custody or control or for which

it is responsible.

(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 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

DTC has not solicited nor received

written comments on the proposed rule

change.

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)(iii) 7 of the Act and Rule

19b–4(f)(4) promulgated thereunder

because the proposal effects a change in

an existing service of a registered

clearing agency that does not adversely

affect the safeguarding of securities or

funds in the custody or control of the

clearing agency or for which it is

responsible, and does not significantly

affect the respective rights or obligations

of the clearing agency or persons using

the service. At any time within sixty

days of the filing of such 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.

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–00–14 and

should be submitted by December 26,

2000.

For the Commission by the Division of

Market Regulation, pursuant to delegated

authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 00–30883 Filed 12–4–00; 8:45 am]

BILLING CODE 8010–01–M