Document ID: SEC-2008-1018-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: The Depository Trust Co.
Posted Date: 2008-07-22T04:00Z

[Federal Register: July 22, 2008 (Volume 73, Number 141)]
[Notices]               
[Page 42645-42646]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr22jy08-98]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-58165; File No. SR-DTC-2008-03]

 
Self-Regulatory Organizations; The Depository Trust Company; 
Notice of Filing of Proposed Rule Change To Establish a Fee Relating to 
DTC's Settlement Procedures for the Maturity of Money Market 
Instruments With Unknown Rates

July 15, 2008.
    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 May 30, 2008, 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 parties.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The proposed rule change seeks to establish a fee that relates to 
DTC's settlement procedures for the maturity of Money Market 
Instruments (``MMI'') with unknown rates (``Unknown Rate Maturities'').

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.\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 the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    DTC initiates MMI maturity processing automatically each morning by 
electronically sweeping all maturing positions of MMI CUSIPs from 
investors' custodian accounts and generating the appropriate maturity 
payments. The MMI then is delivered to the account of the appropriate 
Issuing Agent or Paying Agent (collectively, ``IPA''). On the day of 
delivery, DTC debits the IPA's account in the amount of the maturity 
proceeds for settlement and credits the same amount of the maturity 
proceeds to the investor's custodian account for payment to the 
investor.
    In order for DTC to process settlement for Unknown Rate Maturities 
the IPA currently is required to send notice to DTC by 6 p.m. (ET) on 
the day the amount of variable income or principal becomes known to the 
IPA, but in no event later than 3 p.m. (ET) on the day prior to 
maturity or periodic payment date. In certain circumstances, DTC may 
accept an IPA's notice after the applicable deadlines until 2:30 p.m. 
(ET) on the date of maturity. If no maturity rate is provided by 2:30 
p.m. (ET) on the date of maturity, then the maturity will roll-over to 
the next processing day. This rollover continues until a rate is 
provided. The process to monitor the resolution of payments on Unknown 
Rate Maturities is time-consuming because it involves, among other 
things, DTC verifying the IPA of the Unknown Rate Maturity, calling the 
IPA at minimum on a daily basis, and coordinating within DTC to get the 
issue resolved as quickly as possible.
    Accordingly, DTC is proposing to implement a disincentive fee to 
encourage timely receipt of the appropriate maturity rates. DTC submits 
that this is an appropriate fee to assess in order to compensate for 
the operational expenses associated with monitoring the resolution of 
payments on Unknown Rate Maturities and expects such fee to serve as a 
disincentive to IPAs' delayed notice of the maturity rate. Under the 
proposed rule change, if the maturity rate is not populated in DTC's 
system by 2:30 p.m. (ET) on the date of maturity, DTC will charge a fee 
of $5,000 on the maturity date and for each subsequent MMI business 
day, or part thereof, until the rate is submitted.\4\ DTC has met with 
various industry organizations, all of whom support the implementation 
of this fee.
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    \4\ DTC also will report any pattern of late submission of 
maturity rates to the Commission.
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    DTC believes that the proposed rule change is consistent with the 
requirements of Section 17A of the Act \5\ and the rules and 
regulations thereunder because the proposed change will deter late 
submission of maturity rates, thereby promoting prompt and accurate 
clearance and settlement of securities transactions.
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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

    Written comments relating to the proposed rule change have not been 
solicited or received. DTC will notify the Commission of any written 
comments received by DTC.

[[Page 42646]]

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

    Within thirty-five days of the date of publication of this notice 
in the Federal Register or within such longer period: (i) As the 
Commission may designate up to ninety days of such date 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 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 e-mail to rule-comments@sec.gov. Please include 
File Number SR-DTC-2008-03 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-DTC-2008-03. 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, on official business days between the hours 
of 10 am and 3 pm. 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/downloads/legal/rule_filings/2008/dtc/
2008-03.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-
2008-03 and should be submitted on or before August 12, 2008.

    For the Commission by the Division of Trading and Markets, 
pursuant to delegated authority.\6\
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    \6\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Acting Secretary.
[FR Doc. E8-16717 Filed 7-21-08; 8:45 am]

BILLING CODE 8010-01-P