Document ID: SEC-2005-0084-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: Depository Trust Co.
Posted Date: 2005-10-07T04:00Z

[Federal Register: October 7, 2005 (Volume 70, Number 194)]
[Notices]               
[Page 58761-58762]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr07oc05-143]                         

[[Page 58761]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-52524; No. SR-DTC-2005-10]

 
Self-Regulatory Organizations; The Depository Trust Company; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change to 
Clarify Procedures Relating to the Destruction of Certain Non-
Transferable Securities Certificates That Are Held in DTC's Internal 
Removal Account Known as PREM

September 28, 2005.
    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 August 18, 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. DTC has filed the proposal pursuant to 
Section 19(b)(3)(A)(i) of the Act \3\ and Rule 19b-4(f)(1) 
thereunder,\4\ which renders the proposal 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\ 17 CFR 240.19b-4.
    \3\ 15 U.S.C. 78s(b)(3)(A)(i).
    \4\ 17 CFR 240.19b-4(f)(1).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The purpose of this rule filing is to clarify certain procedures 
with respect to an earlier filing submitted by DTC and approved by the 
Commission that allowed DTC to destroy certain non-transferable 
securities certificates.

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.

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

    The purpose of this rule filing is to clarify certain procedures 
pertaining to the previously approved File No. SR-DTC-2003-09.\5\ In 
File No. SR-DTC-2003-09, DTC proposed a new service designed to allow 
DTC to destroy certain certificates representing positions in 
securities for which transfer agent services are no longer available 
(``non-transferable certificates''). At the time of the original 
filing, DTC held 1.2 million such certificates, representing nearly 22% 
of DTC's entire certificate inventory. DTC instituted the Destruction 
of Non-Transferable Securities Certificates Program (``Program'') in 
order to eliminate the significant risks and costs associated with the 
ongoing maintenance of custody, control, and audit of these non-
transferable certificates.
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    \5\ Securities Exchange Act Release No. 49930 (June 28, 2004), 
69 FR 41003 (July 7, 2004).
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    Prior to instituting the Program, many participants used DTC's 
Position Removal (``PREM'') function to have positions in issues of 
non-transferable certificates moved from their participant accounts to 
a DTC internal PREM account. However, the certificates representing 
those positions were still held in DTC's vaults with all the risks and 
costs associated with storing such certificates, maintaining the 
related accounts, and monitoring the status of such issues. Under the 
Program, DTC extended the PREM process by indicating that using PREM to 
move a position constituted an acknowledgement by the participant that 
DTC could cease crediting the security to the participant's securities 
account and that DTC could at its optionand based upon its own criteria 
include the certificates underlying the position in a certificate 
destruction program.
    In File No. DTC-2003-09, DTC indicated that it would implement the 
Program ``beginning first with issues in which all participant 
positions have been put in PREM.'' However, the Commission's approval 
order of File No. DTC-2003-09 stated that ``DTC will implement this new 
program with issues in which all participant positions have been moved 
to PREM.'' DTC's intent in the original filing was to start the Program 
with fully PREMed issues but to thereafter continue with those issues 
which had not been fully PREMed. The purpose of the present filing is 
to clarify this point and to make clear that DTC did not in File No. 
DTC-2003-09 intend that in the future it would be a prerequisite for 
the destruction of a particular issue of non-transferable certificates 
that every participant must have moved their respective positions in 
that issue to a PREM account. DTC wishes to make clear that it may 
destroy any non-transferable certificates for which the positions have 
been PREMed even if all participants have not yet moved their positions 
into PREM. DTC will maintain a certificate or certificates representing 
those positions that have not yet been entered into PREM. DTC has no 
intention of clarifying or modifying any other part of File No. DTC-
2003-09 with this filing.
    DTC believes that the proposed rule change is consistent with the 
requirements of Section 17A of the Act and the rules and regulations 
thereunder applicable to DTC because the change is designed to 
facilitate the prompt and accurate clearance and settlement of 
securities transactions, including the transfer of record ownership, 
and the safeguarding of securities and funds.

(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, in the public interest, and for 
the protection of investors.

(C) Self-Regulatory Organization's Statement on Comments on the 
Proposed Rule Change Received From Members, Participants, or Others

    Written comments were not and are not intended to be solicited with 
respect to the proposed rule change, and none have been received.

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)(i) of the Act \6\ and Rule 19b-4(f)(1) 
\7\ thereunder because it constitutes a stated policy, practice, or 
interpretation with respect to the meaning, administration, or 
enforcement of an existing rule. 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

[[Page 58762]]

interest, the protection of investors, or otherwise in furtherance of 
the purposes of the Act.
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    \6\ 15 U.S.C. 78s(b)(3)(A)(i).
    \7\ 17 CFR 240.19b-4(f)(1).
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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-2005-10 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-2005-10. 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 at 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-2005-10 
and should be submitted on or before October 28, 2005.

    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority.\8\
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    \8\ 17 CFR 200.30-3(a)(12).
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Jonathan G. Katz,
Secretary.
 [FR Doc. E5-5524 Filed 10-6-05; 8:45 am]

BILLING CODE 8010-01-P