[Federal Register Volume 66, Number 113 (Tuesday, June 12, 2001)]
[Notices]
[Pages 31727-31728]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-14736]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-44393; File No. SR-DTC-2001-08]


Self-Regulatory Organizations; Notice of Filing and Order 
Granting Accelerated Approval of Proposed Rule Change by The Depository 
Trust Company Relating to DTC Settling Trades Executed on Nasdaq Europe

June 6, 2001.
    Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on, May 25, 2001, The 
Depository Trust Company (``DTC'') filed with the Securities and 
Exchange Commission (``Commission'') the proposed rule change as 
described in Items I and II below, which items have been prepared 
primarily by DTC. The Commission is publishing this notice and order to 
solicit comments on the proposed rule change from interested parties 
and to grant accelerated approval of the proposed rule change.
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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

    The proposed rule change provides that participants who settle 
trades executed on Nasdaq Europe through book-entry deliveries at DTC 
(i) are required to effect the settlement of such trades in the manner 
prescribed by DTC so that such trades can be separately identified and 
(ii) authorize DTC to provide to Nasdaq Europe information relating to 
the settlement of such trades.

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.

(A) Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    It is expected that on or about June 8, 2001, Nasdaq Europe, an 
exchange established under Belgian law, will begin listing securities 
on its European Trading System. In order to facilitate the settlement 
of these securities, Nasdaq Europe plans to approve DTC as a settlement 
location for Nasdaq Europe trades in DTC-eligible securities. To allow 
Nasdaq Europe to designate DTC as an approved settlement location under 
Belgian law, DTC must agree to provide Nasdaq Europe upon request with 
information that DTC has pertaining to the settlement of Nasdaq Europe 
trades at DTC. In order for DTC to be able to provide this information, 
DTC must require its participants (1) to effect the settlement of such 
transactions in a manner that separately identifies them from the 
participants' other settlement activities \2\ and (2) to authorize DTC 
to provide information related to such trades to Nasdaq Europe.
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    \2\ Nasdaq Europe plans to issue a compliance notice requiring 
its members to ensure that settlement at DTC of Nasdaq Europe trades 
are done in accordance with the procedures prescribed by DTC.
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    Under the proposed rule change, DTC will require that the 
settlement of Nasdaq Europe trades be effected in a separate subaccount 
that will be established by the participant solely for the settlement 
of Nasdaq Europe trades. If it is determined that a more automated 
solution should be developed in the future, DTC will make the necessary 
systems changes to allow participants to designate settlement activity 
relating to Nasdaq Europe trades by entering a special activity code in 
their deliver order instructions. If such systems changes are made, 
participants will be required to use the activity code to identify 
Nasdaq Europe trades. Participants will be kept informed by Important 
Notices if DTC determines that it will further automate the 
identification of settlement activity related to Nasdaq Europe trades.
    The proposed rule change is consistent with the requirements of 
section 17A of the Act and the rules and regulations thereunder because 
the proposed rule change will increase operational efficiencies for 
participants by allowing for the settlement at DTC of Nasdaq Europe 
trades in DTC-eligible 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 because all 
of DTC's risk management controls will continue in effect.

(B) Self-Regulatory Organization's Statement on Burden on Competition

    DTC perceives no impact on competition by reason of the proposed 
rule change.

[[Page 31728]]

(C) Self-Regulatory Organization's Statement on Comments on the 
Proposed Rule Change Received from Members, Participants or Others

    Written comments from participants or others have not been 
solicited or received on the proposed rule change. All participants 
will be informed of the proposed rule change by an Important Notice.

III. Date of Effectiveness of Proposed Rule Change and Timing for 
Commission Action

    The Commission finds that allowing DTC to require participants to 
set up separate subaccounts solely for the settlement of Nasdaq Europe 
trades and to authorize DTC to provide settlement information to Nasdaq 
Europe is consistent with the requirements of section 17A of the Act 
and the rules and regulations thereunder applicable to clearing 
agencies. Specifically, the Commission believes that the proposal is 
consistent with section 17A(b)(3)(F) because it will facilitate the 
prompt and accurate clearance and settlement of securities transactions 
by allowing for the settlement at DTC of Nasdaq Europe trades in DTC-
eligible securities.
    The Commission finds good cause for approving the proposed rule 
change prior to the thirtieth day after the date of publication of 
notice thereof in the Federal Register because approval prior to the 
thirtieth day of the publication will allow DTC to settle trades in 
DTC-eligible securities executed on the Nasdaq Europe when Nasdaq 
Europe begins trading such securities, which it is scheduled to do on 
Friday, June 8, 2001.

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 Room, 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-2001-08 and should be submitted by July 3, 
2001.
    It Is Therefore Ordered, pursuant to Section 19(b)(2) of the 
Act,\3\ that the proposed rule change is hereby approved on an 
accelerated basis.
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    \3\ 15 U.S.C. 78s(b)(2).

    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. 01-14736 Filed 6-11-01; 8:45 am]
BILLING CODE 8010-01-M