Document ID: SEC-2009-1554-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; the Depository Trust Company; Order Approving Proposed Rule Change Relating to Municipal Bonds Redemption Process
Posted Date: 2009-11-03T05:00Z

[Federal Register: November 3, 2009 (Volume 74, Number 211)]
[Notices]               
[Page 56907-56908]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr03no09-97]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-60889; File No. SR-DTC-2009-13]

 
Self-Regulatory Organizations; the Depository Trust Company; 
Order Approving Proposed Rule Change Relating to Municipal Bonds 
Redemption Process

October 27, 2009.

I. Introduction

    On July 15, 2009, The Depository Trust Company (``DTC'') filed with 
the Securities and Exchange Commission (``Commission'') a proposed rule 
change pursuant to Section 19(b)(1) of the Securities Exchange Act of 
1934 (``Act'').\1\ On August 4, 2009, the Commission published notice 
of the proposed rule change in the Federal Register to solicit comments 
from interested persons.\2\ The Commission received two comment letters 
in response to the proposed rule change.\3\ For the reasons discussed 
below, the Commission is approving the proposed rule change.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ Securities Exchange Act Release No. 60394 (July 28, 2009), 
74 FR 38677.
    \3\ Letters from Christeena G. Naser, American Bankers 
Association (Aug. 21, 2009) and Dan W. Schneider, Baker & McKenzie 
LLP on behalf of the Association of Global Custodians (Aug. 25, 
2009).
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II. Description

    Under this rule change, DTC will amend Part V.A. of its Operational 
Arrangements to redefine the time frame for an issuer or its agent of a 
conventional municipal bond \4\ to notify DTC of a full or partial 
redemption or of an advance refunding of part of such outstanding bond. 
An issuer or its agent must notify DTC at least two business days prior 
to the ``Publication Date.'' Pursuant to this rule filing, Publication 
Date is being redefined to be ``no fewer than 20 calendar days'' (as 
opposed to 30 days before this rule filing) and no ``more than 60 
calendar days prior to the redemption date or, in the case of an 
advance refunding, the date that the proceeds are deposited into escrow 
(and, in such cases, final notification must be received no later than 
20 calendar days prior to the refunding date.)'' This new requirement 
will be effective November 2, 2009.
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    \4\ A ``conventional municipal bond'' is defined as ``a bond 
without any derivatives attached to it and no inherent features that 
would prevent a redemption announcement from being provided in a 
timely manner.''
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III. Comment Letters

    The Commission received two comment letters in support of the 
proposed rule change.\5\ Specifically, the Schneider letter asserted 
that the rule change would improve ``the timeliness of receipt and 
transmission of notice information regarding redemptions and 
refundings'' and that the new notice filing time frame provides 
``issuers and their agents with adequate time to make filings that are 
accurate and timely as a routine matter.'' The Naser letter was 
similarly supportive.
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    \5\ Supra note 2.
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IV. Discussion

    The Commission finds that the proposed rule change is consistent 
with

[[Page 56908]]

the requirements of the Act and the rules and regulations thereunder 
applicable to DTC. In particular, the Commission believes the proposal 
is consistent with Section 17A(b)(3)(A) of the Act,\6\ which requires 
that a registered clearing agency is so organized and has the capacity 
to be able to facilitate the prompt and accurate clearance and 
settlement of securities transactions. As explained in the notice of 
the proposed rule filing,\7\ DTC reviewed late redemption announcement 
data as it related to conventional municipal bonds and concluded that 
it will still have a sufficient amount of time to react to and process 
the redemption announcement if it were to modify the Publication Date 
from ``no fewer than 30 calendar days'' to ``no fewer than 20 calendar 
days'' prior to the redemption or advance refunding. Therefore, this 
rule change should not adversely affect DTC's ability to facilitate the 
prompt and accurate clearance and settlement of securities transactions 
because DTC should continue to have sufficient time to communicate 
details of redemptions and refundings to other securities 
intermediaries.
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    \6\ 15 U.S.C. 78q-1(b)(3)(A).
    \7\ Supra note 3.
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V. Conclusion

    On the basis of the foregoing, the Commission finds that the 
proposed rule change is consistent with the requirements of the Act and 
in particular Section 17A of the Act \8\ and the rules and regulations 
thereunder.
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    \8\ 15 U.S.C. 78q-1.
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    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\9\ that the proposed rule change (File No. SR-DTC-2009-13) be and 
hereby is approved.\10\
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    \9\ 15 U.S.C. 78s(b)(2).
    \10\ In approving the proposed rule change, the Commission 
considered the proposal's impact on efficiency, competition and 
capital formation. 15 U.S.C. 78c(f).

    For the Commission by the Division of Trading and Markets, 
pursuant to delegated authority.\11\
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    \11\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-26360 Filed 11-2-09; 8:45 am]

BILLING CODE 8011-01-P