Document ID: SEC-2013-0960-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Depository Trust Co.
Posted Date: 2013-05-22T04:00Z

[Federal Register Volume 78, Number 99 (Wednesday, May 22, 2013)]
[Notices]
[Pages 30382-30384]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-12167]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-69597; File No. SR-DTC-2013-06]

Self-Regulatory Organizations; The Depository Trust Company; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Revise Its Fees Related to Certain Corporate Action Events

May 16, 2013.
    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 May 3, 2013, 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. DTC filed the proposed rule change pursuant 
to Section 19(b)(3)(A)(ii) \3\ of the Act and Rule 19b-4(f)(2) \4\ 
thereunder, so that the proposed rule

[[Page 30383]]

change was effective upon filing with the Commission. The Commission is 
publishing this notice to solicit comments on the proposed rule change 
from interested persons.
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    \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).
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I. Clearing Agency's Statement of the Terms of Substance of the 
Proposed Rule Change

    As more fully discussed below, the proposed rule change is to 
modify DTC's Fee Schedule, to include revising, consolidating, and 
adding certain fees associated with corporate action events.\5\
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    \5\ A schedule of the fee changes that are the subject of this 
notice is included in Exhibit 5 of the proposed rule change filing, 
available on the Commission's Web site under File No. SR-DTC-2013-
06, Additional Materials, at http://sec.gov/rules/sro/dtc.shtml.
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II. Clearing Agency'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.\6\
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    \6\ The Commission has modified the text of the summaries 
prepared by DTC.
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(A) Clearing Agency's Statement of the Purpose of, and Statutory Basis 
for, the Proposed Rule Change

1. Purpose
    The purpose of this proposed rule change is for DTC to revise its 
Fee Schedule \7\ related to certain services it provides associated 
with corporate action events, as discussed below.
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    \7\ See Guide to the 2013 DTC Fee Schedule, http://dtcc.com/products/documentation/dtcfeeguide.pdf.
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    Currently, DTC charges its Participants fees for different event 
types and processes associated with corporate actions. DTC's Fee 
Schedule includes 60 different fees related to corporate actions.\8\
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    \8\ Id.
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    Pursuant to the proposed rule change, DTC is reducing the number of 
fees associated with corporate actions and grouping such fees into five 
categories based on transaction type: Allocations, Elections, Voluntary 
Corporate Action Event Handling, Treasury Shares Adjustments, and 
Coupon Processing. As such, the total number of fees relating to 
corporate actions is reduced from 60 to16.
    Additionally, DTC states that it is modifying the fee structure 
associated with the processing of corporate action events to align the 
fee with the appropriate level of risk and operational cost associated 
with the event. For example, DTC is reducing fees related to events 
with more automation and less complexity, since such events present 
less risk in processing. Examples of such events include those that 
require payments for principal and interest, redemptions, and cash and 
stock dividends.
    Similarly, DTC is increasing fees for events that it believes 
present more risk and require manual intervention, such as mandatory 
and voluntary corporate events. DTC believes those events are 
considered riskier because they have greater complexity, and they 
require enhanced due diligence by DTC to ascertain exact event details, 
client entitlements, and payment calculations.
    DTC is also introducing a new fee related to consent-only 
processing of reorganization events.\9\ Currently, DTC Participants 
mail instructions on Consent-Only Events \10\ directly to the balloting 
agents, which are traditionally delivered via a hard-copy letter of 
transmittal. However, recently, balloting agents and Participants have 
requested that DTC provide Participants with the ability to submit 
their elections on Consent-Only Events through PTOP. In an effort to 
streamline the process associated with Consent-Only Events, DTC agreed 
to allow Participants to submit such elections through PTOP. 
Accordingly, DTC will now charge balloting agents a processing fee for 
such submissions.
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    \9\ DTC collects reorganization activity information through its 
Participant Tender Offer Program (``PTOP'') function. Examples of 
reorganization activity that DTC processes through PTOP include 
voluntary corporate actions, tenders and exchanges, and cash 
conversions. See Release No. 34-62119 (May 18, 2010), 75 FR 29374 
(May 25, 2010) (for more information regarding events that DTC 
processes through PTOP).
    \10\ Increasingly, there are reorganization events that only 
require DTC Participants to make an election with respect to the 
event without surrendering securities (``Consent-Only Events''). 
Examples of Consent-Only Events include changes in the board of 
directors of an issuer and interest rate modifications to 
indentures.
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    DTC is also implementing a new late notification of corporate 
events fee in the event that an agent does not comply with certain 
operational arrangements that require the agent to notify DTC no fewer 
than 10 days in advance of expiration of a corporate action event.\11\
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    \11\ A late notification shortens the window of time for DTC 
Participants to contact their clients to make an election on an 
event. A late notification also requires additional DTC resources to 
review and announce both the event at issue and the other events 
that must be reprioritized accordingly.
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    Additionally, DTC is eliminating announcement-related fees and 
introducing a voluntary event handling fee.\12\ Voluntary corporate 
actions will carry a handling fee because of the effort involved in DTC 
reviewing offering materials, confirming terms with issuers and agents, 
and then processing the event in DTC's system.
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    \12\ Under this revised corporate actions fee structure, DTC 
intends to charge a fee relating to the allocation required by the 
effectiveness of an event, rather than its announcement.
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    DTC is also increasing fees associated with the proxy record date 
meeting, in order to align the fees with the operational cost of 
handling those events.
    DTC believes that the fee revisions discussed above are consistent 
with DTC's overall service pricing philosophy--to align service fees 
with the underlying costs and to discourage manual and exception 
processing.
Implementation Timeframe
    The effective date for fee changes contained in the proposed rule 
change, as outlined above, is July 1, 2013.
2. Statutory Basis
    DTC believes that the proposed rule change is consistent with the 
requirements of the Act, as amended, specifically Section 
17A(b)(3)(D),\13\ and the rules and regulations thereunder applicable 
to DTC because the change clarifies and updates DTC's Fee Schedule to 
align fees with the costs of services provided, thus providing for the 
equitable allocation of reasonable fees among DTC's Members.
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    \13\ 15 U.S.C. 78q-1(b)(3)(D).
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(B) Clearing Agency'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) Clearing Agency'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 forgoing rule change has become effective pursuant to Section 
19(b)(3)(A)(ii) of the Act \14\ and Rule

[[Page 30384]]

19b-4(f)(2) \15\ thereunder. At any time within 60 days of the filing 
of the proposed rule change, the Commission summarily may temporarily 
suspend 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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    \14\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \15\ 17 CFR 240.19b-4(f)(2).
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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 
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 email to rule-comments@sec.gov. Please include 
File No. SR-DTC-2013-06 on the subject line.

Paper Comments

     Send 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 No. SR-DTC-2013-06. This file 
number should be included on the subject line if email 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 Web site viewing and 
printing in the Commission's Public Reference Room, 100 F Street NE., 
Washington, DC 20549 on official business days between the hours of 
10:00 a.m. and 3:00 p.m. Copies of such filings will also be available 
for inspection and copying at the principal office of DTC and on DTC's 
Web site at http://dtcc.com/legal/rule_filings/dtc/2013.php.
    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 No. SR-DTC-2013-06 and 
should be submitted on or before June 12, 2013.
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    \16\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\16\
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-12167 Filed 5-21-13; 8:45 am]
BILLING CODE 8011-01-P