Document ID: SEC-2005-0060-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: Depository Trust Co.
Posted Date: 2005-10-03T04:00Z

[Federal Register: October 3, 2005 (Volume 70, Number 190)]
[Notices]               
[Page 57635-57636]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr03oc05-152]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-52509; File No. SR-DTC-2005-13]

 
Self-Regulatory Organizations; The Depository Trust Company; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Eliminate the Transfer Agent Drop Service

September 26, 2005.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on August 25, 2005, 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. The Commission is publishing this notice to solicit comments on 
the proposed rule change from interested parties.
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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 purpose of the proposed rule change is to eliminate DTC's 
transfer agent drop service (``Drop Service'').

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.\2\
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    \2\ The Commission has modified the text of the summaries 
prepared by the DTC.
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(A) Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    Since 1996, DTC has offered the Drop Service in order to provide 
transfer agents located outside of New York City, New York, with a 
central location within Manhattan for receipt of securities from banks, 
broker-dealers, depositories, and shareholders. This service enabled 
transfer agents to comply with the New York Stock Exchange (``NYSE'') 
Rule 496, which required, among other things, that transfer agents for 
NYSE listed companies maintain an office or obtain an agent located 
south of Chambers Street in the Borough of Manhattan, City of New York, 
where securities could be delivered in person for registration of 
transfer and could be picked up after completion of such registration 
(often referred to in the industry as a ``drop''). The drop requirement 
was implemented when most securities were held in certificated form and 
were settled with physical delivery. The transfer agents' presence in 
lower Manhattan, where the brokers were also concentrated, facilitated 
the speedy processing and settlement of securities transactions.
    Today most securities are held in ``street name'' at DTC with 
transfers of such securities occurring through automated book-entry 
systems at DTC without the need for the transfer of physical 
certificates, and very few transfers and facilitated by the drop in 
Manhattan. As a result, the NYSE

[[Page 57636]]

amended its Rule 196 to eliminate the drop requirement.\3\
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    \3\ Exchange Act Release No. 51973 (July 5, 2005), 70 FR 40094 
(July 12, 2005), File No. SR-NYSE-2004-62.
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    DTC believes that the elimination of the NYSE's drop requirement 
will result in a most transfer agents withdrawing from DTC's Drop 
Service. Also, in light of an industry-wide move to dematerialize 
securities holdings, DTC seeks to discourage the use of physical 
certificates by eliminating processing facilities that makes the use of 
certificates easier. Therefore, because the Drop Service no longer 
serves a need for DTC participants and termination of the Drop Service 
will assist in furthering industry initiatives to discontinue the use 
of physical certificates, DTC will no longer provide the Drop Service 
effective September 1, 2005.
    DTC believes that the proposed rule change is consistent with the 
requirements of Section 17A of the Act \4\ and the rules and 
regulations thereunder applicable to DTC because it will discourage the 
use of inefficient and outdated securities transfer methods and 
services and as such will promote the prompt and accurate clearance and 
settlement of securities transactions. Furthermore, the proposed rule 
change will not adversely affect the safeguarding of securities and 
funds in DTC's control or custody or for which it is responsible.
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    \4\ 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 impose 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

    No written comments relating to the proposed rule change have been 
solicited or received. DTC will notify the Commission of any written 
comments received by the DTC.

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

    The foregoing rule change has become effective upon filing pursuant 
to Section 19(b)(3)(A)(iii) of the Act \5\ and Rule 19b-4(f)(4) \6\ 
thereunder because it is effecting 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 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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    \5\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \6\ 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 
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-2005-13 on the subject line.

Paper Comments

     Send paper comments in triplicate to Jonathan G. Katz, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-9303.
    All submissions should refer to File Number SR-DTC-2005-13. 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 Section, 100 F Street, 
NE., Washington, DC 20549. Copies of such filings also will be 
available for inspection and copying at the principal office of DTC and 
on DTC's Web site, http://www.dtcc.com. 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-2005-13 and should be submitted on 
or before October 24, 2005.
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    \7\ 17 CFR 200.30-3(a)(12).

    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority.\7\
Jonathan G. Katz,
Secretary.
 [FR Doc. E5-5344 Filed 9-30-05; 8:45 am]

BILLING CODE 8010-01-P