Document ID: SEC-2006-0656-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: Depository Trust Co.
Posted Date: 2006-05-23T04:00Z

[Federal Register: May 23, 2006 (Volume 71, Number 99)]
[Notices]               
[Page 29692-29694]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr23my06-91]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-53810; File No. SR-DTC-2006-06]

 
Self-Regulatory Organizations; The Depository Trust Company; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Relating 
to Changes to Its SMART/Track for Buy-Ins Service

May 16, 2006.
    Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on March 27, 2006, 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 proposed rule change pursuant to section 
19(b)(3)(A)(iii) of the Act \2\ and Rule 19b-4(f)(4) thereunder\3\ so 
that the proposal was effective upon filing with the Commission. 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).
    \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 consists of changes to the functionality 
of DTC's SMART/Track for Buy-Ins service.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
CAStatutory 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 DTC.

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[[Page 29693]]

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

    The proposed rule change relates to DTC's SMART/Track for Buy-Ins 
service as it pertains to the retransmittal of buy-ins in the National 
Securities Clearing Corporation (``NSCC'')'s Continuous Net Settlement 
(``CNS'') system.
    Since 2003, DTC has made several rule filings relating to a service 
that was originally known as Universal Hub and that is now known as 
SMART/Track.\5\ With its rule filing SR-DTC-2005-19,\6\ DTC implemented 
the fourth phase of SMART/Track, ``SMART/Track for Buy-Ins,'' that 
provides automated communication, warehousing and tracking of various 
types of buy-in related notices pertaining to buy-ins governed by the 
rules of either NSCC or other self-regulatory organizations.
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    \5\ Securities Exchange Act Release Nos. 50029 (July 15, 2004), 
69 FR 43870 (July 22, 2004) [SR-DTC-2003-10] (Universal Hub, Stock 
Loan notification service); 50887 (Dec. 20, 2004), 69 FR 77802 (Dec. 
28, 2004) [SR-DTC-2004-11] (Corporate Action Liability Notification 
Service); 52104 (July 21, 2005), 70 FR 43730 (July 28, 2004) [SR-
DTC-2005-06] (SMART/Track for Agency Lending Disclosure); and 53032 
(December 28, 2005), 71 FR 1457 (January 9, 2006) [SR-DTC-2005-19] 
(SMART/Track for Buy-Ins).
    \6\ Securities Exchange Act Release No. 53032 (December 28, 
2005), 71 FR 1457 (January 9, 2006). See also, DTC Important Notice 
B8796 (Nov. 23, 2005) available online at http://www.dtc.org/
.

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    The phase-in of SMART/Track for Buy-In functionality pertaining to 
NSCC CNS Buy-Ins was commenced on November 14, 2005, for CNS buy-in 
executions and completed on February 10, 2006, with the addition of CNS 
notices of intent to buy-in and CNS buy-in orders. The buy-in 
functionality of DTC's PEX platform relating to NSCC CNS buy-ins was 
discontinued on March 13, 2006.\7\
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    \7\ Securities Exchange Act Release No. 53503 (March 16, 2006), 
71 FR 15237 (March 27, 2006) [SR-DTC-2006-01].
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    In 2005, NSCC submitted rule filing SR-NSCC-2005-15 which modified 
NSCC's Rules with regard to CNS buy-ins, creating a new buy-in 
retransmittal procedure that may be utilized by NSCC members receiving 
buy-in notices initiated outside of the CNS system (a ``Buy-In 
Retransmittal Notice'').\8\
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    \8\ Securities Exchange Act Release No. 53528 (March 21, 2006), 
71 FR 15506 (March 28, 2006) [SR-NSCC-2005-15].
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    Pursuant to that rule change, the NSCC member originating a Buy-In 
Retransmittal Notice will be provided with five additional fields that 
will be used for identification of the entity (or entities, as 
appropriate) that initiated the buy-in against the member. At least one 
such entity other than the originating member must be identified or the 
Buy-In Retransmittal Notice will be rejected. NSCC members with short 
positions will be advised of their potential buy-in liability through 
DTC's SMART/Track for Buy-Ins. Concurrent with NSCC's implementation of 
the changes set forth in rule filing SR-NSCC-2005-15, DTC will make 
corresponding changes to SMART/Track for Buy-Ins to activate the CNS 
Retransmittal Buy-In functionality.\9\
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    \9\ This functionality includes notices of intent to buy-in, 
buy-in orders, buy-in executions, and short member buy-in liability.
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    As the NSCC CNS Retransmittal Buy-In functionality is an added 
feature to an existing DTC service that will conform the functionality 
of DTC's service to that which is required by NSCC's rules, DTC 
believes that 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 and (ii) does not 
significantly affect the respective rights or obligations of DTC or 
those participants using the service. The proposed rule change is 
therefore consistent with Section 17A of the Act \10\ and the rules and 
regulations thereunder applicable to DTC. Moreover, DTC has represented 
that the proposed rule change will be implemented consistently with the 
statutory obligation to safeguard securities and funds in its 
possession or control or for which it is responsible.
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    \10\ 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 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 foregoing rule change has become effective upon filing pursuant 
to section 19(b)(3)(A)(iii) of the Act \11\ and Rule 19b-4(f)(4) \12\ 
thereunder because the proposed rule 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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    \11\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \12\ 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-2006-06 on the subject line.

Paper Comments

     Send paper comments in triplicate to Nancy M. Morris, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-9303.
    All submissions should refer to File Number SR-DTC-2006-06. 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 filing also will be available 
for inspection and copying at the principal office of DTC and on DTC's 
Web site at http://www.dtc.org. All comments received will be posted

[[Page 29694]]

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-2006-06 and should be submitted on or before June 
13, 2006.
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    \13\ 17 CFR 200.30-3(a)(12).

For the Commission by the Division of Market Regulation, pursuant to 
delegated authority.\13\
Nancy M. Morris,
Secretary.
 [FR Doc. E6-7805 Filed 5-22-06; 8:45 am]

BILLING CODE 8010-01-P