Document ID: SEC-2008-0024-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: Depository Trust Co.
Posted Date: 2008-01-07T05:00Z

[Federal Register: January 7, 2008 (Volume 73, Number 4)]
[Notices]               
[Page 1239-1240]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr07ja08-60]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-57071; File No. SR-DTC-2007-15]

 
Self-Regulatory Organizations; The Depository Trust Company; 
Notice of Filing and Immediate Effectiveness of a Proposed Rule Change 
Relating to Stock Loan and Repurchase Processing

December 31, 2007.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on November 7, 2007, 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)(iii) of the Act \2\ and Rule 19b-4(f)(4) \3\ 
thereunder 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 persons.
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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

    Under the proposed rule change, DTC will provide participants using 
DTC's Stock Loan REPO Adjustment Menu (``SLRM'') system with new 
warning messages advising participants if any corrective action is 
needed to complete their stock loan or repurchase transaction.

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 such statements.

[[Page 1240]]

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

    Prior to this rule change, DTC's SLRM system did not validate the 
reason code used to reclaim a stock loan or repurchase (``repo'') 
transaction. DTC participants have stated that the majority of errors 
associated with this process arose when the wrong reason code was used 
by counterparties.
    To reduce the frequency of these errors and the associated burden 
of correcting them, DTC is modifying its system by providing warning 
messages that advise a participant that a transaction will be rejected 
due to an incorrect reason code for reclaiming these items. As a 
result, users will be prompted to correct the reason code. In addition, 
if a participant that is to return the stock of a loan or repo 
transaction does not have sufficient inventory in its DTC deliverer/
CUSIP/contra account to cover the return, it will receive a 
notification advising that an insufficient position exists so that it 
can take corrective action. Finally, if there is an open repo position 
for the same major/contra/CUSIP in DTC's system, a new warning message 
will be displayed stating that an open repo position for the contra/
CUSIP exists.
    A new help screen will be displayed in SLRM to guide users when 
they submit a stock loan or repo transaction. The screen will describe 
the impact that a given action will have on the originator's stock loan 
or repo account and the related dividend payment. Also, the SLRM 
summary screen will be modified to list outstanding adjustments for a 
period of twenty business days instead of the current five business 
days. This will give participants more time to react to open stock loan 
or repo items so that they may be reconciled in a more timely fashion.
    Proposed system changes will necessitate revisions to existing DTC 
Service Guides.\4\
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    \4\ The affected section of DTC's Guide is attached as Exhibit 5 
to DTC's rule filing.
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    DTC states that the proposed rule change is consistent with Section 
17A of the Act \5\ and the rules and regulations thereunder applicable 
to DTC as it allows for more efficient processing of certain 
transactions and will not adversely affect the safeguarding of funds or 
securities in DTC's custody and control or for which it is responsible.
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    \5\ 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

    DTC has not solicited or received written comments relating to the 
proposed rule change. DTC will notify the Commission of any written 
comments it receives.

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

    The foregoing rule change has become effective pursuant to Section 
19(b)(3)(A)(iii) \6\ of the Act and Rule 19b-4(f)(4) \7\ thereunder 
because it effects 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 
and does not significantly affect the respective rights or obligations 
of the clearing agency or persons using the service. At any time within 
60 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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    \6\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \7\ 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 No. SR-DTC-2007-15 on the subject line.

Paper Comments

     Send paper comments in triplicate to Nancy M. Morris, 
Secretary, Securities and Exchange Commission, Station Place, 100 F 
Street, NE., Washington, DC 20549-1090.

All submissions should refer to File No. SR-DTC-2007-15. 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 Room, 450 Fifth Street, 
NW., Washington DC 20549, on official business days between the hours 
of 10 a.m. and 3 p.m. Copies of such filing also will be available for 
inspection and copying at DTC's principal office and on DTC's Web site 
at http://www.dtc.org/impNtc/mor/index.html. 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 submission 
should refer to File No. SR-DTC-2007-15 and should be submitted on or 
before January 28, 2008.

    For the Commission by the Division of Trading and Markets 
pursuant to delegated authority.\8\
Nancy M. Morris,
Secretary.
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    \8\ 17 CFR 200.30-3(a)(12).
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 [FR Doc. E7-25655 Filed 1-4-08; 8:45 am]

BILLING CODE 8011-01-P