[Federal Register Volume 66, Number 74 (Tuesday, April 17, 2001)]
[Notices]
[Pages 19821-19822]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-9505]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-44176; File No. SR-DTC-01-02]


Self-Regulatory Organizations; The Depository Trust Company; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change 
Relating to an Enhancement of the End-of-Day Settlement Process of the 
Depository Trust Company

April 11, 2001.
    Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on January 24, 2001, 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 parties.
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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 consists of an enhancement to the end-of-
day

[[Page 19822]]

settlement process of DTC. The enhancement will enable settling banks 
to use the Federal Reserve Bank's (``Fed'') National Net Settlement 
Service (``NSS'') as an alternative vehicle to satisfy their net-net 
debit balances at DTC.\2\ As described more fully below, NSS permits 
DTC to submit instructions to have the Fed accounts of participating 
settling banks charged for their DTC net-net debit balance. Utilization 
of NSS will serve to eliminate the need for a settling bank to initiate 
a wire to DTC's Fed Account in satisfaction of a net-net debit balance 
and therefore will reduce the risk a settling bank may incur a late 
payment fee due to a delay in wiring funds to DTC. Fees connected with 
DTC's end-of-day settlement process remain unchanged with respect to 
the NSS enhancements.
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    \2\ DTC implemented NSS on February 5, 2001. Thirteen settling 
banks currently use the service.
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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 these 
statements.\3\
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    \3\ 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 provide settling 
banks with additional flexibility in the end-of-day settlement process 
of DTC. Currently, settling banks settle their DTC end-of-day net-net 
balances over the Fedwire system. If, however, a settling bank chooses 
to utilize NSS, once the settling bank acknowledges its net-net debit 
balances, DTC will transmit a file to the Fed with instructions to 
charge the participating settling bank with a net-net debit.\4\ DTC 
will receive a message from the Fed when the file is successfully 
processed and balances updated. If a settling bank's Fed account does 
not have sufficient funds to complete the charge, DTC will be notified 
by the Fed, and DTC will contact the settling bank directly to obtain 
required funding.
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    \4\ Settling banks in a net-net credit situation will continue 
to be credited via the Fedwire system outside of NSS in accordance 
with DTC's current procedures.
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    DTC believes that the proposed rule change is consistent with the 
requirements of Section 17A of the Act \5\ and the rules and 
regulations thereunder applicable to DTC because the proposed rule 
change will give participants more efficient usage of DTC's settlement 
processes. The proposed rule change will be implemented consistently 
with the safeguarding of securities and funds in DTC's custody or 
control or for which it is responsible because the new operation of 
DTC's settlement processes, as modified by the proposed rule change, 
will enhance the current operation of the function.
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    \5\ 15 U.S.C. 78q-1.
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(B) Self-Regulatory Organization's Statement on Burden on Competition

    DTC perceives no adverse impact on competition by reason of the 
proposed rule change.

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

    The proposed rule change has been developed through discussions 
with several participants. Written comments from participants or others 
have not 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)(iii)\6\ of the Act and Rule 19b-4(f)(4) \7\ promulgated 
thereunder because the proposal effects a change in an existing service 
of a registered clearing agency that does not adversely affect the 
safeguarding of securities or funds in the custody or control of the 
clearing agency or for which it is responsible and does not 
significantly affect the respective rights or obligations of the 
clearing agency or persons using the service. At any time within sixty 
days of the filing of such proposed 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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    \6\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \7\ 17 CFR 240.19b-4(f)(4).
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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-01-02 and should be 
submitted by May 8, 2001.

    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority.\8\
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    \8\ 17 CFR 200.30-3(a)(12).
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Jonathan G. Katz,
Secretary.
[FR Doc. 01-9505 Filed 4-16-01; 8:45 am]
BILLING CODE 8010-01-M