[Federal Register Volume 66, Number 194 (Friday, October 5, 2001)]
[Notices]
[Pages 51081-51083]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-24992]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-44884; File No. SR-DTC-2001-12]


Self-Regulatory Organizations; The Depository Trust Company; 
Notice of Filing and Order Granting Accelerated Approval of a Proposed 
Rule Change Relating to the Distribution of Notices of Participants and 
Pledges

September 28, 2001.
    Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on July 2, 2001, The 
Depository Trust Company (``DTC'') filed with the Securities and 
Exchange Commission (``Commission'') the proposed rule change as 
described in Items I and II below, which items have been prepared 
primarily by DTC. The Commission is publishing this notice and order to 
solicit comments from interested persons and to grant accelerated 
approval of the proposal.
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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 permits DTC to serve notices on 
participants and pledgees electronically and states service is deemed 
given at the time the notices are made available or transmitted to such 
participants and pledgees. In addition, the proposed rule change 
discontinues the practice of hard-copy distribution of notices to 
participant boxes maintained by DTC on its premises. Subject to 
regulatory approval, these changes will be effective October 1, 2001.

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

[[Page 51082]]

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

    Historically, DTC provided its participants and pledgees 
(hereinafter, collectively referred to as ``participants'') with 
notices in hard-copy format only. Beginning in 1997, DTC also made such 
notices, most typically known as Important Notices, available 
electronically on its internet website, www.DTC.org. This site 
maintains all DTC Important Notices issued over the most recent two 
complete with scanned forms and attachments.
    In addition to the website, Important Notices issued over the most 
recent thirty day period have also been available electronically in the 
IMPP function on DTC's participant terminal system (``PTS'') although 
forms and attachments to these notices are viewable only on DTC's 
website.
    DTC and its participants have now gained three years of experience 
with the electronic delivery of Important Notices over the internet, a 
delivery system that has helped DTC provide for the prompt, efficient, 
and time distribution of important information. According, to further 
automate its services and reduce the inefficiencies and costs 
associated with the manual production of physical documents, on October 
1, 2001, DTC will discontinue the practice of hard-copy distribution of 
notices to participant boxes maintained by DTC on its premises.\3\
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    \3\ In calendar year 2000 alone, DTC delivered approximately 
3,000 Important Notices in hard-copy format to participants, 
printing a total of approximately 17,525,400 pages.
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    DTC will continue to provide participants with Important Notices 
electronically, at this time via the DTC's internet website and PTS. 
DTC's internet website will also include a no fee Important notice 
subscription servcie, to be initiated prior to the implementation of 
the proposed rule change. This new service wil send all registered 
participants and non-participants an e-mail alert when DTC Important 
Notices are posted to the website. The proposed rule change will still 
permit DTC to alternatively serve notices on participants via direct 
delivery or U.S. mail delivery.
    Specifically, the proposed rule change will now provide that any 
notice from DTC to a participant shall be sufficiently served if the 
notice is in writing and is electronically made available or 
transmitted to a participant by any means normally employed by DTC for 
the delivery of electronic communications to such participant. 
Alternatively, any non-electronic notice shall be sufficiently served 
on a participant if it is in writing and is delivered or mailed to the 
participant's office address. Any notice, if made available or 
transmitted electronically shall be deemed to have been given, 
respectively, at the time of availability or transmission. Any notice, 
if delivered or mailed shall be deemed to have been given, 
respectively, at the time of delivery or when deposited in the United 
States Postal Service with postage thereon prepaid.
    DTC belives that the proposed rule change is consistent with the 
requirements of Section 17A of the Act \4\ and the rules and 
regulations thereunder applicable to DTC since the proposed rule change 
will provide participants with more immediate access to DTC notices and 
alleviates current operational distribution inefficiencies. In 
addition, DTC states that 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 all of DTC's 
risk management controls will remain in effect.
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    \4\ 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 was developed in response to an ongoing 
effort by DTC to automate processing services that are now handled 
manually. The proposed rule change was developed through discussions 
with participants. Written comments from DTC participants or others 
have not been solicited or received on the proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing 
for Commission Action

    The Commission finds that the proposed rule change is consistent 
with the requirements of the Act and the rules and regulations 
thereunder and particularly with the requirements of Section 
17A(b)(3)(F).\5\ Section 17A(b)(3)(F) requires that the rules of a 
clearing agency be designed to remove impediments to and perfect the 
mechanism of a national system for the prompt and accurate clearance 
and settlement of securities transactions. By replacing the practice of 
hard-copy distribution of notices to participants with electronic 
distribution, DTC is further automating its operations which should 
help to perfect the national clearance and settlement system.
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    \5\ 15 U.S.C. 78q-1(b)(3)(F).
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    DTC has requested that the Commission approve the proposed rule 
change prior to the thirtieth day after publication of the notice of 
the filing. The Commission finds good cause for approving the proposed 
rule change prior to the thirtieth day of the publication of the notice 
of filing because accelerated approval will permit DTC to begin 
distributing electronic notices to its participants on the planned 
implementation date of October 1, 2001.

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 copes 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 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 Room, 450 Fifth Street, NW, Washington, DC 20549. 
Copies of such filing will also be available for inspection and copying 
at the principal office of DTC. All submissions should refer to File 
No. SR-DTC-2001-12 and should be submitted by October 26, 2001.
    It is Therefore Ordered, pursuant to Section 19(b)(2) of the 
Act,\6\ that the proposed rule change (File No. SR-

[[Page 51083]]

DTC-2001-12) be and hereby is approved.
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    \6\ 15 U.S.C. 78s(b)(2).

    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. 01-24992 Filed 10-4-01; 8:45 am]
BILLING CODE 8010-01-M