[Federal Register Volume 61, Number 236 (Friday, December 6, 1996)]
[Notices]
[Pages 64775-64776]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-31078]


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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-38006; File No. SR-DTC-96-19]


Self-Regulatory Organizations; The Depository Trust Company; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change 
Relating to the Establishment of a Surcharge

December 2, 1996.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on October 21, 1996, 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.
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    \1\ 15 U.S.C. 78s(b)(1) (1988).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The proposed rule change establishes a surcharge of $1.00 on all 
deposits submitted to DTC outside its Deposit Automated Management 
System (``DAM System''). The surcharge will go into effect on December 
1, 1996.

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.\2\
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    \2\ 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

    The purpose of the proposed rule change is to establish a surcharge 
of $1.00 on all deposits submitted to DTC outside its DAM System.\3\ 
The surcharge will go into effect on December 1, 1996. DTC participants 
benefit in many ways by depositing securities into DTC using the DAM 
System. For example, the automation features of the DAM System reduce 
DTC's costs in handing these deposits. Therefore, the fee that DTC 
charges its participants for a deposit submitted through the DAM System 
is less than the fee charged for a deposit submitted outside the DAM 
System. The DAM System also automatically verifies certain deposit-
related information thereby eliminating the need for participants to 
perform similar verifications.\4\ Finally, the DAM System

[[Page 64776]]

allows participants to consolidate deposits in the same issue (whether 
or not the advanced deposit data is transmitted to DTC at the same 
time) thereby saving deposit fees or the time necessary to manually 
compile deposits in the same issue.
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    \3\ The DAM System is an enhanced automated deposit service that 
enables DTC participants to send details of deposits to DTC in 
advance of forwarding physical certificates. For a more detailed 
description of the DAM System, see Securities Exchange Act Release 
No. 33412 (January 4, 1994), 59 FR 1769 [File No. SR-DTC-93-09] 
(order approving DAM Service).
    \4\ For example, in order to reduce the number of deposits 
rejected by DTC, participants will often refer to other functions 
available on DTC's Participant Terminal System (``PTS'') such as the 
Security Inquiry (CONI) function to verify whether a security is 
eligible for deposit at DTC or the Dividend Announcement Inquiry 
(DIVA) feature to verify whether a corporate action effects the 
deposit.
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    The DAM System also improves DTC's efficiency in handling deposits. 
Because each deposit submitted through the DAM System is assigned a 
unique identifying number, use of the system reduces the amount of time 
DTC spends researching a deposit and enables DTC to more efficiently 
track the deposit's location (e.g., whether it is at DTC, en route to a 
transfer agent, or delivered to a transfer agent). Moreover, when a 
participant submits a deposit outside of the DAM System, DTC must enter 
the deposit information into its systems by keystroke. However, when a 
deposit is submitted through the DAM System, deposit information 
transmitted by the participant is automatically written into DTC's 
systems.
    Although virtually all of DTC's participants are presently using 
the DAM System, some participants continue to submit deposits outside 
the DAM System.\5\ As explained above, such deposits create 
inefficiencies in the clearance and settlement of securities 
transactions. Therefore, DTC proposes to establish a surcharge to 
reduce the number of deposits submitted to DTC outside the DAM System.
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    \5\ During a recent five day period from October 8, 1996, 
through October 14, 1996, DTC participants submitted 93,140 
deposits. Of those deposits, only 1,566 (1.68%) were submitted 
outside the DAM System.
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    DTC believes that the proposed rule change is consistent with the 
requirements of Section 17A(b)(3)(D) of the Act \6\ and the rules and 
regulations thereunder because it provides for the equitable allocation 
of reasonable dues, fees, and other charges among DTC's participants.
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    \6\ 15 U.S.C. 78q-1(b)(3)(D) (1988).
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(B) Self-Regulatory Organization's Statement on Burden on Competition

    DTC does not believe that the proposed rule change will impose any 
burden on competition that is not necessary or appropriate in 
furtherance of the purposes of the Act.

(C) Self-Regulatory Organization's Statement on Comments on the 
Proposed Rule Change Received From Members, Participants or Others

    No comments on the proposed rule have been solicited or received.

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

    The foregoing rule change has become effective pursuant to Section 
19 (b)(3)(A)(ii) \7\ of the Act and pursuant to Rule 19b-4(e)(2) \8\ 
promulgated thereunder because the proposal establishes or changes a 
due, fee, or other charge imposed by DTC. At any time within sixty days 
of the filing of such rule change, the Commission may summarily 
abrogate such rule change if it appears to the Commission that such 
action is necessary or appropriate in the public interest, for the 
protection of investors, or otherwise in furtherance of the purposes of 
the Act.
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    \7\ 15 U.S.C. 78s(b)(3)(A)(ii) (1988).
    \8\ 17 CFR 240.19b-4(e)(2) (1996).
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IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing. Persons making written submissions 
should file six copies thereof with the Secretary, Securities and 
Exchange Commission, 450 Fifth Street, N.W., Washington, D.C. 20549. 
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, 450 Fifth Street, N.W., 
Washington, D.C. 20549. Copies of such filing also will be available 
for inspection and copying at the principal office of DTC.
    All submissions should refer to File No. SR-DTC-96-19 and should be 
submitted by December 27, 1996.

    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority.\9\
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    \9\ 17 CFR 200.30-3(a)(12) (1996).
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[FR Doc. 96-31078 Filed 12-5-96; 8:45 am]
BILLING CODE 8010-01-M