Document ID: SEC-2009-1003-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; the Depository Trust Company; Notice of Filing of Proposed Rule Change To Eliminate One of the Indemnity Surety Programs in the Profile Modification System
Posted Date: 2009-07-20T04:00Z

[Federal Register: July 20, 2009 (Volume 74, Number 137)]
[Notices]               
[Page 35221-35223]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr20jy09-89]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-60304; File No. SR-DTC-2009-11]

 
Self-Regulatory Organizations; the Depository Trust Company; 
Notice of Filing of Proposed Rule Change To Eliminate One of the 
Indemnity Surety Programs in the Profile Modification System

July 14, 2009.
    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 June 11, 2009, 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

[[Page 35222]]

proposed rule change from interested parties.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-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 seeks to eliminate one of the Indemnity 
Surety Programs (``PSP II'') of DTC's Profile Modification System 
(``Profile'').\3\
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    \3\ DTC has created a Profile Indemnity Insurance Program (``PIP 
II'') to replace the PSP II. Securities Exchange Act Release No. 
60036 (Jun. 3, 2009), 74 FR 28085 (Jun. 12, 2009) [File No. SR-DTC-
2009-09].
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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 DTC.
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A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

Current MMI Maturity Payment Procedure
    On April 19, 2000, the Commission approved a DTC rule filing to 
establish Profile,\5\ an electronic communication medium between 
transfer agents that are DRS Limited Participants (``Limited 
Participants'') and brokers that are DRS Participants 
(``Participants''). In May 2000, DTC implemented Profile. Profile 
allows Participants to submit electronically an investor's instruction 
to move a share position from the investor's Limited Participant 
account to the investor's Participant account at DTC (``Electronic 
Participant Instruction''). Profile also allows Limited Participants to 
submit an investor's instruction for the movement of its share 
positions from the investor's Participant account at DTC to an account 
maintained by the Limited Participant (``Electronic Limited Participant 
Instruction'' and, together with Electronic Participant Instruction, 
``Electronic Instruction''). A user submitting an Electronic 
Instruction through Profile is required to agree to a Participant 
Terminal System (``PTS'') screen indemnity (``Screen Indemnity'').
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    \5\ Securities Exchange Act Release No. 42704 (Apr. 19, 2000), 
65 FR 24242 (Apr. 25, 2000) [File No. SR-DTC-2000-04].
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    On November 17, 2000, the Commission approved a DTC rule filing to 
establish the Profile Indemnity Surety Program (``PSP'').\6\ Under PSP, 
all users of Profile who agree to the Screen Indemnity as part of their 
use of Profile must procure a surety bond (``Surety Bond'') to back the 
representations under the Screen Indemnity. Participation in PSP 
requires the payment of an annual premium of $3,150 to a surety 
provider and an administration fee of $250 to DTC. The PSP surety 
provider provides for a coverage limit of $3 million per transaction 
with an annual aggregate limit of $6 million.
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    \6\ Securities Exchange Act Release No. 43586 (Nov. 17, 2000), 
65 FR 70745 (Nov. 27, 2000) [File No. SR-DTC-2000-09].
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    On September 14, 2005, the Commission approved a DTC rule filing to 
establish the Profile Indemnity Insurance Program (``PIP''),\7\ which 
serves as an alternative to PSP. PIP allows users of Profile who agree 
to the Screen Indemnity to have the option to procure insurance 
relating to a particular securities transaction according to the value 
of the securities transaction. PIP provides a coverage limit of $25 
million per transaction with an annual aggregate limit of $100 million. 
In addition to any pass-through fee from the insurer, DTC charges users 
participating in PIP an annual administration fee of $250 and a per 
transaction fee of $27.50.
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    \7\ Securities Exchange Act Release No. 52422 (Sep. 14, 2005), 
70 FR 55196 (Sep. 20, 2005) [File No. SR-DTC-2005-11].
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    On June 26, 2008, the Commission approved a DTC rule filing to 
establish PSP II,\8\ which provides for a coverage limit of $7.5 
million per transaction with an annual aggregate limit of $15 million. 
Users of PSP II are required to pay an annual premium of $6,000 to a 
surety provider and a DTC administration fee of $250.
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    \8\ Securities Exchange Act Release No. 58042 (Jun. 26, 2008), 
73 FR 39067 (July 8, 2008) [File No. SR-DTC-2008-04].
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    On June 3, 2009, the Commission approved a DTC rule filing to 
establish a new Profile Indemnity Insurance Program (``PIP II'').\9\ 
The intent of PIP II is to account for the additional, larger value 
Profile transactions that DRS currently handles and to serve as a 
replacement for PSP II. PIP II provides the same coverage limits as PSP 
II, a coverage limit of $7.5 million per transaction with an annual 
aggregate limit of $15 million, and requires payment of the same fees, 
an annual premium of $6,000 to an insurance provider and a DTC 
administration fee of $250. PIP II does not require users of Profile to 
procure a surety bond.
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    \9\ Securities Exchange Act Release No. 60036 (Jun. 3, 2009) 74 
FR 28085 (Jun. 12, 2009) [File No. DTC-2009-09.
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    DTC believes that the proposed rule change is consistent with the 
requirements of Section 17A of the Act \10\ and the rules and 
regulations thereunder because the proposed change will modify an 
existing DTC service in order to provide a more suitable choice of 
insurance and surety policies. As such, it is a change to an existing 
service that does not adversely affect the safeguarding of securities 
and funds in DTC's custody or control.
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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

    Within thirty-five days of the date of publication of this notice 
in the Federal Register or within such longer period: (i) As the 
Commission may designate up to ninety days of such date if it finds 
such longer period to be appropriate and publishes its reasons for so 
finding or (ii) as to which the self-regulatory organization consents, 
the Commission will:
    (A) By order approve such proposed rule change or
    (B) Institute proceedings to determine whether the proposed rule 
change should be disapproved.

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

[[Page 35223]]

     Send an e-mail to rule-comments@sec.gov. Please include 
File Number SR-DTC-2009-11 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-2009-11. 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, 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://dtcc.com/downloads/legal/rule_filings/2009/dtc/2009-
11.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-
2009-11 and should be submitted on or before August 10, 2009.

    For the Commission by the Division of Trading and Markets, 
pursuant to delegated authority.\11\
Florence E. Harmon,
Deputy Secretary.
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    \11\ 17 CFR 200.30-3(a)(12).
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[FR Doc. E9-17138 Filed 7-17-09; 8:45 am]

BILLING CODE 8010-01-P