[Federal Register Volume 62, Number 182 (Friday, September 19, 1997)]
[Notices]
[Page 49279]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-24859]



[[Page 49279]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-39071; File No. SR-DTC-97-09]


Self-Regulatory Organizations; the Depository Trust Company; 
Notice of Filing of Proposed Rule Change Regarding the Custody Service 
for Non-Depository Eligible Securities

September 12, 1997.
    Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on June 4, 1997, 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 from interested persons on the proposed rule change.
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    \1\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 will allow DTC to enter into contracts 
with individual participants to provide customized custodian, 
transaction, and related processing services under DTC's custody 
service for certain securities which are not depository eligible 
(``custody service'').

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

    DTC's custody service, which has been approved by the Commission, 
currently offers custodian, transaction, and related processing 
services to participants in connection with certain securities which 
are not depository eligible (i.e., securities with certain transfer 
restrictions).\3\ DTC has advised the Commission that some participants 
that have shown an interest in the custody service have requested 
customization of the custody service in order to meet their individual 
needs.\4\ The purpose of the proposed rule change is to permit DTC to 
enter into contracts with individual participants to provide such 
customized processing services under the custody service. However, 
under the proposed rule change DTC would not be obligated to enter into 
any such contracts with participants or to offer the same terms under 
any such contracts to all participants.\5\
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    \3\ For a more detailed description of DTC's custody service, 
refer to Securities Exchange Act Release Nos. 38561 (April 30, 
1997), 62 FR 25008 [File No. SR-DTC-97-01] (order approving proposed 
rule change implementing the dividend processing phase of DTC's 
custody service) and 37314 (June 14, 1996) 61 FR 31989 [File No. SR-
DTC-96-08] (order approving proposed rule change establishing DTC's 
custody service).
    \4\ For example, DTC has advised the Commission that one 
participant has requested that DTC develop a certain imaging 
functionality in connection with that participant's use of the 
custody service. However, that specific service would not be used by 
other participants that utilize the custody service.
    \5\ DTC has advised the Commission that it will charge fees for 
customization of custody service based on a consistently applied 
methodology
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    DTC believes that the proposed rule change is consistent with the 
requirements of section 17A(b)(3)(A) of the Act \6\ and the rules and 
regulations thereunder because it promotes efficiencies in the 
clearance and settlement of securities transactions.
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    \6\ 15 U.S.C. 78q-1(b)(3)(A).
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(B) Self-Regulatory Organization's Statement on Burden on Competition

    DTC believes that no burden will be placed on competition as a 
result of the proposed rule change.

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

    Comments were neither solicited nor received.

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 DTC 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. Persons making written submissions 
should file six copies thereof with the Secretary, Securities and 
Exchange Commission, 450 Fifth Street, NW., Washington, DC 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, NW., 
Washington, DC 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-97-09 and should be submitted by 
October 10, 1997.

    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority.\7\
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    \7\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 97-24859 Filed 9-18-97; 8:45 am]
BILLING CODE 8010-01-M