[Federal Register Volume 62, Number 35 (Friday, February 21, 1997)]
[Notices]
[Pages 8067-8068]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-4236]


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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-38272; File No. SR-DTC-96-24]


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

February 11, 1997.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on December 31, 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).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The proposed rule change amends DTC's schedule of fees to establish 
a 3.5 percent surcharge on all service fees DTC charges to 
participants, pledge banks, limited participants, and other DTC users 
(``participants and users'').

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 3.5 percent on all service fees DTC charges to its participants and 
users beginning on January 1, 1997. According to DTC, the surcharge is 
necessary to recover the costs of upgrading its systems to recognize 
data fields containing dates incorporating the year 2000 and the years 
thereafter (``Year 2000 Project''). DTC estimates that the total cost 
of its compliance initiatives will range from $25 million to $35 
million over the duration of the Year 2000 Projects. These costs 
reflect new staff to be hired for year 2000 conversion efforts, the 
cost associated with diverting present DTC staff from service-related 
development, other staff related costs, and the cost of consulting 
assistance. The cost of the Year 2000 Project for 1996 has been charged 
against DTC's excess revenues for the year.
    DTC will list the surcharge as a separate line item on its monthly 
bill to its participants and users and will continue the surcharge 
indefinitely until all compliance costs have been

[[Page 8068]]

recovered. Pass-through charges to participants, such as the cost of 
Participant Terminal System terminals and lines and transfer agent 
fees, will be excluded from the surcharge. DTC anticipates that the 
surcharge will raise $11 million in 1997. DTC will evaluate the 
surcharge at least annually and will modify the rate if necessary.
    DTC believes that the proposed rule change is consistent with 
Section 17A(b)(3)(D) of the Act \3\ 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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    \3\ 15 U.S.C. 78q-1(b)(3)(D).
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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 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 written comments have 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

    The foregoing rule change has become effective pursuant to Section 
19(b)(3)(A)(ii) of the Act \4\ and pursuant to Rule 19b-4(e)(2) \5\ 
promulgated thereunder because the proposal 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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    \4\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \5\ 17 CFR 240.19b-4(e)(2).
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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 respected 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. Sec. 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-96-24 and should be 
submitted by March 14, 1997.

    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority.\6\
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    \6\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 97-4236 Filed 2-20-97; 8:45 am]
BILLING CODE 8010-01-M