Document ID: SEC-2013-0667-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Depository Trust Co.
Posted Date: 2013-04-08T04:00Z

[Federal Register Volume 78, Number 67 (Monday, April 8, 2013)]
[Notices]
[Pages 20999-21000]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-08097]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-69276; File No. SR-DTC-2013-01]

Self-Regulatory Organizations; The Depository Trust Company; 
Notice of Filing of Proposed Rule Change to Modify Its Practice 
Regarding the Collection of Participants' Required Participants Fund 
Deposits

April 2, 2013.
    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 March 20, 2013, 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 proposed rule change from interested 
persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Clearing Agency's Statement of the Terms of Substance of the 
Proposed Rule Change

    The proposed rule change is to modify DTC's Settlement Services 
Guide, as described below.

II. Clearing Agency's Statement of 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.\3\
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    \3\ The Commission has modified the text of the summaries 
prepared by DTC.
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(A) Self-Regulatory Organization's Statement of Purpose of, and 
Statutory Basis for, the Proposed Rule Change

Participants Fund
    Pursuant to Rule 4 of its Rules, By-laws, Organization Certificate 
(``DTC Rules''), DTC maintains a fund funded by its Participants, which 
in addition to being a liquidity resource, is available to satisfy any 
uninsured loss incurred by DTC, including a loss resulting from a 
Participant's failure to settle its transactions (``Participants 
Fund'').\4\ Each Participant's required deposit to the Participant's 
Fund (``Required Participants Fund Deposit'') is calculated daily 
pursuant to an established formula.\5\ While the minimum deposit is 
$10,000, each Participant is required to make a deposit to the 
Participants Fund based upon a formula that takes into account the 
Participant's six largest intraday net debit peaks over a rolling sixty 
business-day period.\6\ If the Participant's newly calculated Required 
Participants Fund Deposit is greater than its prior day's Required 
Participants Fund Deposit, and the difference thereof (i) equals or 
exceeds $500,000, and (ii) represents 25 percent or more of the newly 
calculated required fund deposit (``Threshold Amount and Percentage''), 
the Participant must deposit the difference in the Participants Fund 
within two business days,\7\ to the extent any excess amount of the 
Participant's Actual Participants Fund Deposit does not already satisfy 
the new requirement.\8\
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    \4\ See DTC Rules (http://dtcc.com/legal/rules_proc/dtc_rules.pdf).
    \5\ Id., Rule 4(a).
    \6\ See DTC Settlement Service Guide (http://dtcc.com/downloads/products/learning/Settlement.pdf). DTC may also require an 
additional deposit to the Participants Fund in the event that DTC 
becomes concerned with a Participant's financial soundness. See DTC 
Rules, supra note 4, Rule 9(A). Separately, a Participant may make a 
voluntary deposit to the Participants Fund (``Voluntary Participants 
Fund Deposit'') in excess of the amount required. See id., Rule 
4(c). These provisions are not impacted by the proposed rule change.
    \7\ See DTC Settlement Service Guide, supra note 6.
    \8\ See DTC Rules, supra note 4, Rule 4(b). ``Actual 
Participants Fund Deposit'' means the actual amount the Participant 
has deposited to the Participants Fund, including both its Required 
Participants Fund Deposit and any Voluntary Participants Fund 
Deposit. Id., Rule 1.
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    Under current procedures, as set forth in DTC's Settlement Services 
Guide, Participants must deposit any increased requirement to the 
Required Participants Fund Deposit that meets the Threshold Amount and 
Percentage within two business days.\9\ Increases in amounts less than 
the Threshold Amount and Percentage are collected once per month for 
all Participants.\10\
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    \9\ See DTC Settlement Service Guide, supra note 6.
    \10\ See id. (After settlement on the last business day of each 
month, DTC calculates each Participant's requirement. Each 
participant is notified of their new requirement on the first 
business day of the month. If a Participant's requirement has 
increased beyond the value they currently have on deposit at DTC, 
this deficit must be deposited with DTC within two business days.).
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    In order to enhance its liquidity and risk coverage, DTC is 
proposing to accelerate the collection of Participants' Required 
Participants Fund Deposits from two business days to the same day the 
Participant is notified of the requirement. Under the proposal, for 
both the daily and monthly calculations that trigger collections, as 
described above, increased deposit requirements will be collected by 
DTC on a same-day basis, instead of within two business days.
Proposed Changes to Rule Text
    If approved, DTC will revise the text of its Settlement Services 
Guide to provide that where a Participant's calculated Required 
Participants Fund Deposit meets the Threshold Amount and Percentage, 
the increased amount must (to the extent any excess amount of the 
Participant's Actual Participants Fund Deposit does not already satisfy 
the new requirement) be deposited with DTC on the same business day as 
(i) the calculation of the increase, and (ii) a report or other 
notification of the change is made available to the Participant.
    As mentioned above, in order to harmonize the Participants Fund 
collection processes, monthly increases will also be collected on a 
same-day basis and language will be added to the Settlement Service 
Guide in this regard. In addition, language will be added to the 
Settlement Service Guide to clarify that the relevant Guide provisions 
shall apply only to the calculation and collection of DTC Participants 
Fund deposits, as described in the Guide, and do not supersede or limit 
any provisions of the DTC Rules or any rights of DTC in accordance with 
applicable law and DTC's Rules and Procedures, including but not 
limited to transactions in securities and money payments.
    Finally, DTC will make certain clarifying and technical changes to 
the language as set forth in the ``Participants Fund'' section of its 
Settlement Service Guide. Changes include, but are not limited to: (i) 
Updating the description of the purpose of the Participants Fund, (ii) 
updating the use of defined terms, such as ``Participant,'' and (iii) 
updating and adding subject headings.

[[Page 21000]]

Statutory Basis
    DTC believes the proposed rule change, as described above, is 
consistent with the requirements of the Act, specifically Section 
17A(b)(3)(F),\11\ and the rules and regulations thereunder applicable 
to DTC, because the change supports DTC's ability to collect increases 
to Participants' Required Participants Fund Deposits that meet the 
Threshold Amount and Percentage on a same-day basis, instead of within 
two business days, and therefore facilitates DTC's ability to safeguard 
securities and funds in its custody or control or for which it is 
responsible.
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    \11\ 15 U.S.C. 78q-1(b)(3)(F).
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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 45 days of the date of publication of this notice in the 
Federal Register or within such longer period up to 90 days (i) as the 
Commission may designate 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 or disapprove 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
     Send an email to rule-comments@sec.gov. Please include 
File Number SR-DTC-2013-01 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-2013-01. This file 
number should be included on the subject line if email 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 Web site viewing and 
printing in the Commission's Public Reference Room, 100 F Street NE., 
Washington, DC 20549, on official business days between the hours of 
10:00 a.m. and 3:00 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/2013/dtc/SR-DTC-2013-01.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-
2013-01 and should be submitted on or before April 29, 2013.
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    \12\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\12\
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-08097 Filed 4-5-13; 8:45 am]
BILLING CODE 8011-01-P