Document ID: SEC-2010-1717-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Depository Trust Co.
Posted Date: 2010-11-10T05:00Z

[Federal Register Volume 75, Number 217 (Wednesday, November 10, 2010)]
[Notices]
[Page 69150]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-28331]

-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-63245; File No. SR-DTC-2010-12]

Self-Regulatory Organizations; The Depository Trust Company; 
Order Approving Proposed Rule Change To Automate the Approval Process 
in Providing Trustee Access to the Security Position Report Service

November 4, 2010.

I. Introduction

    On September 14, 2010, The Depository Trust Company (``DTC'') filed 
with the Securities and Exchange Commission (``Commission'') proposed 
rule change SR-DTC-2010-12 pursuant to Section 19(b)(1) of the 
Securities Exchange Act of 1934 (``Act'').\1\ Notice of the proposal 
was published in the Federal Register on September 29, 2010.\2\ The 
Commission received no comment letters in response to the proposed rule 
change. For the reasons discussed below, the Commission is approving 
the proposed rule change.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ Securities Exchange Act Release No. 62990 (September 24, 
2010), 75 FR 60158.
---------------------------------------------------------------------------

II. Description

    DTC's Security Position Report (``SPR'') service provides valuable 
information on the record date holdings of an issuer's security in DTC 
Participant accounts. An SPR provides information needed to contact 
shareholders about corporate-related events such as annual meetings. 
DTC currently provides SPRs to issuers, trustees, and authorized third 
parties.
    DTC's Proxy area receives requests for SPR services access and 
reviews such requests to ensure that only appropriate parties receive 
access. The current review process to approve a trustee's access to the 
SPR service for a security is done manually, and the process is 
therefore subject to error. Currently, the SPR system sends an e-mail 
to the DTC Proxy mailbox notifying the Proxy staff that a trustee has 
added a CUSIP to its eligible issues list. Any trustee can add a CUSIP 
to its eligible issues list. The CUSIP will show ``unauthorized'' until 
reviewed and approved by the DTC Proxy staff. DTC Proxy staff requires 
that the trustee provide to it one of the following: Trust agreement, 
Annual Report, 10K, 10Q, SEC filing, or any other document deemed 
necessary and appropriate to prove that the trustee is in fact the 
trustee for the CUSIP and therefore is entitled to access to SPRs for 
the CUSIP. Generally, it takes two or more days for a decision on 
access requests because of the manual process associated with the 
review of trustee information.
    To increase the efficiency by which DTC provides trustees with 
access to the SPR service, DTC is seeking to collect trustee data at 
the point of eligibility of the issue. This will allow DTC to store and 
maintain trustee data on the Entity Master File and the Security Master 
File (``Master Files''). DTC will then have the ability to automate the 
validation using the information stored on the Master Files in response 
to a trustee's request for SPR access.
    Initially, DTC will populate and update the trustee field on the 
Master Files through DTC's Participant Terminal System. Ultimately and 
as set forth below this information will be supplied by underwriters at 
the time of issue eligibility through DTC's UW (underwriting) Source 
System. This change requires DTC to update the UW Source System to 
designate trustee data as a mandatory field at the time of eligibility. 
In order to provide the time it may take for underwriters to update 
their systems to supply the information required by this new mandatory 
field, DTC plans to implement the change to the UW Source System in the 
fourth quarter of 2011. In the event of a change in trustee, DTC will 
require that the new and the prior trustees both update the trustee 
information using Form 17Ad-16, which is used today to update transfer 
agent changes. By automating the trustee authorization process, DTC 
will increase the efficiency of the SPR system and will reduce the risk 
of error associated with the manual processing of trustee data.

III. Discussion

    Section 19(b) of the Act directs the Commission to approve a 
proposed rule change of a self-regulatory organization if it finds that 
such proposed rule change is consistent with the requirements of the 
Act and the rules and regulations thereunder applicable to such 
organization. Section 17A(b)(3)(F) of the Act requires that the rules 
of a clearing agency be designed to protect investors and the public 
interest.\3\ The Commission believes that DTC's rule change is 
consistent with this requirement because by replacing the current 
manual process for approving a trustee's access to DTC's SPR service 
for an issue with an automated approval process, DTC will be able to 
reduce the number of errors associated with manual processing and 
thereby better protect investors' confidential information.
---------------------------------------------------------------------------

    \3\ 15 U.S.C. 78q-1(b)(3)(F).
---------------------------------------------------------------------------

IV. 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 and the rules and regulations 
thereunder. In approving the proposed rule change, the Commission 
considered the proposal's impact on efficiency, competition, and 
capital formation.
    IT IS THEREFORE ORDERED, pursuant to Section 19(b)(2) of the Act, 
that the proposed rule change (File No. SR-DTC-2010-12) be and hereby 
is approved.

    For the Commission by the Division of Trading and Markets, 
pursuant to delegated authority.\4\
---------------------------------------------------------------------------

    \4\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-28331 Filed 11-9-10; 8:45 am]
BILLING CODE 8011-01-P