[Federal Register Volume 64, Number 118 (Monday, June 21, 1999)]
[Notices]
[Pages 33124-33125]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-15600]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-41525; File No. SR-DTC-99-14]
Self-Regulatory Organizations; The Depository Trust Company;
Notice of Filing of a Proposed Rule Change Relating to the
Establishment of an Automated Foreign Tax Reclaim Service
June 14, 1999.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ notice is hereby given that on May 27, 1999, The
Depository Trust Company (``DTC'') filed with the Securities and
Exchange Commission (``Commission'') the proposed rule change (File No.
SR-DTC-99-14) 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.
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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
Under the proposed rule change, DTC will establish an automated
foreign tax reclaim service called ``TaxReclaim.''
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 currently offers two foreign tax withholding services. Under
DTC's Elective Dividend Service, participants can certify securities
positions that are entitled to reduced withholdings under international
tax treaties or source country law in order to obtain tax relief at
source or by accelerated tax refunds. DTC also provides a foreign tax
information database called ``TAXI'' which provides withholding tax
information on foreign securities.
Under the proposed rule change, DTC will expand its international
tax services with the addition of TaxReclaim. TaxReclaim will be an
interactive tax reclaim preparation facility that will assist
participants in preparing foreign jurisdictions' tax reclaim forms that
are required to reclaim tax withheld on income payments on foreign
securities. Participants will access TaxReclaim through DTC's
participant terminal system. Participants will input data particular to
the beneficial owner, foreign security, and payment details as required
by the country of issuance. DTC will process the information in a
software application that includes the reclaim form and tax information
template and will transmit back to the participant using file transfer
protocol a print file containing the completed tax reclaim form,
reclaim calculation, and information on additional filing requirements
and filing instructions. In a subsequent phase, TaxReclaim may be
further automated and made accessible to participants over DTC's
computer to computer facility.
DTC will initiate the TaxReclaim service as a pilot program with a
small group of participant users. It is anticipated that the initial
pilot program will begin in July 1999 with approximately 6 to 15
participants. No fees will be charged during the pilot phase. DTC
anticipates concluding the pilot program phase and introducing
TaxReclaim as a regular DTC service in August 1999. When TaxReclaim
becomes a regular DTC service, the fee
[[Page 33125]]
for each reclaim transaction on a printed reclaim form will be $10. A
reclaim transaction will consist of the reclaim calculation applicable
to one security, one beneficial owner, and one income payment date. For
reclaim transactions that are not completed because the reclaimable
amount falls below a threshold value established by the participant,
the fee will be $2 per reclaim transaction. DTC will post a disclaimer
of liability in connection with use of the TaxReclaim service.
DTC believes that the proposed rule change is consistent with
section 17A of the Act \3\ and the rules and regulations thereunder
because it facilitates return of payments withheld by foreign
jurisdiction with respect to distributions made on foreign securities
and thereby protects investor entitlements to such payments.
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\3\ 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 impose any
burden on competition.
(C) Self-Regulatory Organization's Statement on Comments on the
Proposed Rule Change Received From Members, Participants or Others
DTC has not solicited nor received written comments on the proposed
rule change. However, the introduction of a foreign tax reclaim service
was discussed with DTC's Participant Advisory Group on Foreign Tax
Services at meetings of the group held on September 28, 1998, February
15, 1999, and April 23, 1999. The Participant Advisory Group on Foreign
Tax Services consists of representatives of 19 participants. A
prototype of the TaxReclaim Service was demonstrated at the meeting of
the Participant Advisory Group on Foreign Tax Services held on April
23, 1999, and was favorably 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, including whether the proposed rule
change is consistent with the Act. Persons making written submissions
should file six copies thereof with the Secretary, Securities and
Exchange Commission, 450 Fifth Street, NW, Washington, DC 20549-0609.
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-99-14 and should be submitted by July
12, 1999.
For the Commission by the Division of Market Regulation,
pursuant to delegated authority.\4\
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\4\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 99-15600 Filed 6-18-99; 8:45 am]
BILLING CODE 8010-01-M