[Federal Register Volume 66, Number 163 (Wednesday, August 22, 2001)]
[Notices]
[Pages 44191-44192]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-21160]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-44713; File No. SR-DTC-2001-11]


Self-Regulatory Organizations; The Depository Trust Company; 
Notice of Filing of Proposed Rule Change Authorizing DTC to Act Upon 
Instructions Provided by a Central Matching Service Provider

August 16, 2001.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on June 27, 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 would authorize DTC to act upon 
instructions provided by a Central Matching Service Provider \2\ to (1) 
accept deliver order instructions to settle transactions between DTC 
participants and (2) collect service fees on behalf of a Central 
Matching Service Provider from DTC participants. Under the proposed 
rule change, DTC would notify its participants of its intention to act 
upon the instructions of the Central Matching Service Provider except 
with respect to the account of a participant that advises DTC to the 
contrary.
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    \2\ Central Matching Service Provider as such term is used in 
this proposed rule change refers to an entity that (i) provides a 
Central Matching Service and (ii) has registered with the Commission 
as a clearing agency or has been granted an exemption by the 
Commission from clearing agency registration. Central Matching 
Service means an electronic service to centrally match information 
between a broker-dealer and its institutional customer (so long as 
one or both such parties is a U.S. person) relating to transactions 
in securities issued by a U.S. issuer regardless of where the 
transactions are settled.
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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 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

    On April 17, 2001, the Commission approved DTC's proposal to 
combine its TradeSuite business with institutional trade processing 
services offered by Thomson Financial ESG in a newly-formed joint 
venture company, Omgeo LLC (``Omgeo'').\4\ The Commission also granted 
an exemption from clearing agency registration to Global Joint Venture 
Matching Services-US, LCC, a wholly-owned subsidiary of Omgeo, with 
respect to Omgeo's provision of Central Matching Services.\5\ DTC 
expects that other entities will seek to become Central Matching 
Service Providers.\6\
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    \4\ Securities Exchange Act Release No. 44189 (April 17, 2001), 
66 FR 20502 [File No. DTC-00-10].
    \5\ Securities Exchange Act Release No. 44188 (April 17, 2001), 
66 FR 20494 [File No. 600-32].
    \6\ GSTP AG has filed an application with the Commission for an 
exemption from registration as a clearing agency. If such exemption 
is granted, under the proposed rule change, DTC would accept and act 
upon instructions submitted by GSTP AG.
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    DTC neither engages in matching institutional trade information nor 
communicates to its participants or others prior to settlement that a 
transaction has been matched. DTC assumes that the Central Matching 
Service Provider will make arrangements for the communication of this 
information to the DTC participants expected to settle matched 
transactions by book-entry delivery at DTC. DTC is prepared to accept 
from a Central Matching Service Provider a file of deliver order 
instructions to settle transactions between DTC participants that have 
authorized DTC to accept such instructions. The purpose of the proposed 
rule change is to obtain Commission approval of DTC's proposal whereby 
DTC will act upon deliver order instructions received from the Central 
Matching Service Provider and will collect service fees on behalf of 
the Central Matching Service Provider\7\ without the delay and 
inconvenience to both Central Matching Service Providers and DTC 
participants that would result if DTC were to require each participant 
to execute a written form of authorization. Under the proposed rule 
change, DTC would provide notice to participants of its intention to 
act upon the instructions of a Central Matching Service Provider, as 
described above, giving each participant the opportunity to advise DTC 
not to accept such instructions with respect to its account.
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    \7\ While DTC will include such fees as debits in the 
participant's settlement account, DTC's collection of such amounts 
shall be on a ``best efforts'' basis.
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    DTC believes that the proposed rule change is consistent with the 
requirements of Section 17A of the Act \8\ and the rules and 
regulations thereunder applicable to DTC because it will allow DTC to 
act upon deliver order instructions received from a Central Matching 
Service Provider and to collect service fees on behalf of the Central 
Matching Service Provider without the delay and inconveniece to both 
Central Matching Service Providers and participants that would result 
were DTC to require each articipant to execute a written form of 
authorization.
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    \8\ 15 U.S.C. 78q-1.

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[[Page 44192]]

(B) Self-Regulatory Organization's Statement on Burden on Competition

    DTC perceives no impact on competition by reason of the proposed 
rule change since it will apply to any Central Matching Service 
Provider.

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

    Written comments relating to the proposed rule change have not yet 
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

    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 the self-regulatory organization consents, 
the Commission will:
    (A) by order approve such proposed rule change or
    (B) institute roceedings 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 consisent 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 
communications relating to the proposed rule change between the 
Commission and any person, other than those that may be witheld 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-2001-11 and should 
be submitted by September 12, 2001.

    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).
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Jonathan G. Katz,
Secretary.
[FR Doc. 01-21160 Filed 8-21-01; 8:45 am]
BILLING CODE 8010-01-M