Document ID: SEC-2010-0480-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Depository Trust Co.
Posted Date: 2010-03-31T04:00Z

[Federal Register: March 31, 2010 (Volume 75, Number 61)]
[Notices]               
[Page 16216-16217]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr31mr10-146]                         

[[Page 16216]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-61784; File No. SR-DTC-2010-05]

 
Self-Regulatory Organizations; the Depository Trust Company; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Update Its Settlement Service Guide as It Relates to the ID Net Service

March 25, 2010.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on March 5, 2010, 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 proposal pursuant to Section 19(b)(3)(A)(iii) of 
the Act \2\ and Rule 19b-4(f)(4) \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.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \3\ 17 CFR 240.19b-4(f)(4).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The proposed rule change amends DTC's rules in order to update its 
Settlement Service Guide as it relates to the ID Net Service (``ID 
Net'').

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\
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    \4\ The Commission has modified the text of the summaries 
prepared by FICC.
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(A) Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    On June 2, 2008, the Commission approved a rule change that 
provided for the settlement of institutional transactions through a 
service called ID Net. ID Net enables subscribers to the service to net 
all eligible affirmed institutional transactions at DTC against 
Continuous Net Settlement (``CNS'') transactions at the National 
Securities Clearing Corporation (``NSCC''). ID Net accepts affirmed 
institutional transactions from clearing agencies, entities exempt from 
clearing agency registration with the Commission, and ``qualified 
vendors,'' \5\ and nets the broker-dealer's affirmed institutional 
transactions with the broker-dealer's CNS obligations.
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    \5\ The term ``qualified vendor'' is defined in the rules of the 
New York Stock Exchange, the National Association of Securities 
Dealers, and other self-regulatory organizations.
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    Participation in ID Net is voluntary. Eligibility for ID Net 
requires that a broker-dealer be a DTC participant and an NSCC member 
eligible for CNS processing. The custodian bank must be a DTC 
participant. In addition, eligibility for ID Net processing is based on 
the underlying security being processed, the type of transaction 
submitted for processing, and the timing of affirmation. Most equity 
securities that are eligible for CNS are eligible for ID Net 
processing. However, DTC initially excluded the following securities 
from ID Net: (1) Corporate and municipal bonds and unit investment 
trust issues; (2) new issue securities; (3) securities that are IPO 
tracked (because the use of omnibus accounts will bypass the tracking 
system); (4) trades in issues that are currently undergoing a mandatory 
or voluntary reorganization; (5) trades in CUSIPs with a CNS buy-in; 
and (6) trades in securities appearing on the SEC's Regulation SHO 
list. At its inception, DTC noted that because ID Net was a new 
service, it was excluding certain securities that could potentially 
have a relatively high rate of delivery failure or disrupt normal 
processing of transactions in ID Net in order to ensure that the system 
ran smoothly. DTC also noted that as its experience with ID Net grew, 
it would revaluate the exclusion of certain issues.
    Since the implementation of ID Net, the service has operated with 
minimal disruption, thus allaying the concerns regarding the addition 
of certain securities previously excluded from the service. In order to 
enhance processing efficiency and at the request of its participants, 
DTC is expanding ID Net to allow at DTC's discretion from time to time 
to make eligible for ID Net any security that is eligible for CNS 
processing.
    DTC will notify its participants by ``Important Notice'' of the 
effective date of this change.
    The proposed rule change is consistent with Section 17A of the 
Act,\6\ as amended, and the rules and regulations thereunder applicable 
to DTC. The proposed rule change will promote the prompt and accurate 
clearance and settlement of securities transactions by leveraging the 
capabilities of the DTC system to provide for more streamlined 
securities deliveries and to extend netting benefits and efficiencies 
to more ID Net transactions.
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    \6\ 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 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 were not and 
are not intended to be 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)(iii) of the Act \7\ and Rule 19b-
4(f)(4) \8\ thereunder because the proposed rule change effects a 
change in an existing service of DTC that: (i) Does not adversely 
affect the safeguarding of securities or funds in the custody or 
control of DTC or for which it is responsible and (ii) does not 
significantly affect the respective rights or obligations of DTC or 
persons using the service. 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.
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    \7\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \8\ 17 CFR 240.19b-4(f)(4).
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IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule

[[Page 16217]]

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 rule-comments@sec.gov. Please include 
File Number SR-DTC-2010-05 on the subject line.

Paper Comments

     Send paper comments in triplicate to Elizabeth M. Murphy, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-DTC-2010-05. 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 Room, 100 F Street, NE., 
Washington, DC 20549, on official business days between the hours of 10 
a.m. and 3 p.m. 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 http://www.dtcc.com/downloads/legal/rule_filings/2010/dtc/
2010-05.pdf. 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-
2010-05 and should be submitted on or before April 21, 2010.

    For the Commission by the Division of Trading and Markets, 
pursuant to delegated authority.\9\
Florence E. Harmon,
Deputy Secretary.
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    \9\ 17 CFR 200.30-3(a)(12).
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[FR Doc. 2010-7203 Filed 3-30-10; 8:45 am]
BILLING CODE 8011-01-P