Document ID: SEC-2009-1095-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; The Depository Trust Company; Notice of Filing of Proposed Rule Change Relating to Municipal Bonds Redemption Process
Posted Date: 2009-08-04T04:00Z

[Federal Register: August 4, 2009 (Volume 74, Number 148)]
[Notices]               
[Page 38677-38678]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr04au09-85]                         

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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-60394; File No. SR-DTC-2009-13]

 
Self-Regulatory Organizations; The Depository Trust Company; 
Notice of Filing of Proposed Rule Change Relating to Municipal Bonds 
Redemption Process

July 28, 2009.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on July 15, 2009, 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. The Commission is publishing this notice to solicit 
comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    DTC proposes to modify the timing when an issuer of certain 
municipal securities or its agent notifies DTC of a redemption or an 
advance refunding of such municipal securities.

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.

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

    In early 2008, the Association of Global Custodians (``AGC'') and 
DTC formed a working group to explore issues associated with redemption 
announcements. Several meetings were held in 2008 with participation 
from members of the AGC, The Securities Industry and Financial Markets 
Association, the agent community, DTC, and DTC's participants.
    Among other things, the working group reviewed redemption 
announcement data for a six month period and discovered that many 
conventional municipal bond \2\ issuers or their agents were notifying 
DTC of the redemption or refund later than the 30 day Publication Date 
period as required in DTC's rules. The working group then investigated 
the ramifications of this and concluded that if DTC were to amend the 
Publication Date from the current standard of ``no fewer than 30 
calendar days'' prior to the redemption or advance refund to ``no fewer 
than 20 calendar days'' prior to the redemption or advance refund for 
conventional municipal bonds, DTC would still have sufficient time to 
process the redemption announcement and issuers and their agents would 
have more time to notify DTC of a redemption thereby making the 
redemption notification process more efficient. The working group 
presented this proposal to the American Bankers Association and to the 
National Association of Bond Lawyers and both organizations approved 
this recommendation.
---------------------------------------------------------------------------

    \2\ A ``conventional municipal bond'' was 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.''
---------------------------------------------------------------------------

    Therefore, DTC proposes to amend Part V.A. of its Operational 
Arrangements to redefine the time frame for an issuer or its agent of a 
conventional municipal bond to notify DTC of a full or partial 
redemption or an advance refunding of part of such outstanding 
securities. Under the proposal, the issuer or agent will have to notify 
DTC at least two business days prior to the Publication Date, which 
will be redefined as ``no fewer than 20 calendar days nor 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 in escrow 
(and, in such cases, final notification must be received no later than 
20 calendar days prior to the refunding date.)'' DTC proposes that this 
new requirement would be effective October 1, 2009.
    DTC states that the proposed rule change is consistent with the 
requirements of Section 17A of the Act \3\ and the rules and 
regulations thereunder because it modifies an existing DTC service in 
order to make the redemption process for municipal bonds more 
efficient. As such it is a change to an existing service, which will 
not adversely affect the safeguarding of securities and funds in DTC's 
control or custody.
---------------------------------------------------------------------------

    \3\ 15 U.S.C. 78q-1.
---------------------------------------------------------------------------

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 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 No. SR-DTC-2009-13 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 No. SR-DTC-2009-13. This file 
number

[[Page 38678]]

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 a.m. and 3 
p.m. Copies of such filings also will be available for inspection and 
copying at DTC's principal office and 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 submissions 
should refer to File No. SR-DTC-2009-13 and should be submitted on or 
before August 25, 2009.

    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. E9-18558 Filed 8-3-09; 8:45 am]

BILLING CODE 8010-01-P