[Federal Register Volume 66, Number 197 (Thursday, October 11, 2001)]
[Notices]
[Pages 51987-51988]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-25537]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-44905; File No. SR-DTC-2001-11]


Self-Regulatory Organizations; The Depository Trust Company; 
Order Approving a Proposed Rule Change Authorizing DTC To Act Upon 
Instructions Provided by a Central Matching Service Provider

October 4, 2001.
    On June 27, 2001, The Depository Trust Company (``DTC'') filed with 
the Securities and Exchange Commission (``Commission'') a proposed rule 
change (File No. SR-DTC-2001-11) pursuant to section 19(b)(1) of the 
Securities Exchange Act of 1934 (``Act'').\1\ Notice of the proposal 
was published in the Federal Register on August 22, 2001.\2\ No comment 
letters were received. For the reasons discussed below, the Commission 
is approving the proposed rule change.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ Securities Exchange Act Release No. 44713 (August 16, 2001), 
66 FR 44191.
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I. Description

    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, Omego LLC (``Omego'').\3\ The Commission also granted 
an exemption from clearing agency registration to Global Joint Venture 
Matching Services--US, LLC, a wholly-owned subsidiary of Omego, with 
respect to Omego's provision of Central Matching Services.\4\ DTC 
expects that other entities will seek to become Central Matching 
Services Providers.\5\
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    \3\ Securities Exchange Act Release No. 44189 (April 17, 2001), 
66 FR 20502 [File No. DTC-00-10].
    \4\ Securities Exchange Act Release No. 44188 (April 17, 2001), 
66 FR 20494 [File No. 600-32].
    \5\ GSTP AG has filed with the Commission an application 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

[[Page 51988]]

communicates to its participants or others prior to settlement that a 
transaction has been matched. DTC assumes that the Central Matching 
Services Provider,\6\ Such as Global Joint Venture Matching Services--
US, LLC, 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 from the Central Matching 
Services Provider. This Order grants Commission approval of DTC's 
proposal whereby DTC will act upon delivery order instructions received 
from the Central Matching Services Provider and will collect service 
fees on behalf of the Central Matching Services Provider \7\ without 
the delay and inconvenience to both Central Matching Services Providers 
and DTC participants that would result if DTC were to require each 
participant to execute a written form of authorization. DTC will 
provide notice to participants of its intention to act upon the 
instructions of a Central Matching Services Provider, as described 
above, giving each participant the opportunity to advice DTC not to 
accept such instructions with respect to its account.
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    \6\ Central Matching Services Provider as such term is used in 
this proposed rule change refers to an entity that (i) provides a 
Central Matching Services 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.
    \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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II. Discussion

    Section 17A(b)(3)(F) of the Act requires that the rules of a 
clearing agency be designed to promote the prompt and accurate 
clearance and settlement of securities transactions.\8\ The Commission 
believes that the approval of DTC's rule change is consistent with this 
Section because it allows DTC to act upon deliver order instructions 
received from a Central Matching Services Provider. This will provide a 
means whereby DTC can help both Central Matching Services Providers and 
participants avoid the delay and inconvenience that would result were 
DTC to require each participant using a Central Matching Services 
Provider to independently submit deliver order instructions to DTC.
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    \8\ 15 U.S.C. 78q-1(b)(3)(F).
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III. Conclusion

    On the basis of the foregoing, the Commission finds that the 
proposal is consistent with the requirements of the Act and in 
particular with the requirements of section 17A of the Act and the 
rules and regulations thereunder.
    It is therefore ordered, pursuant to section 19(b)(2) of the Act, 
that the proposed rule change (Fine No. SR-DTC-2001-11) be and hereby 
is approved.

    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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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 01-25537 Filed 10-10-01; 8:45 am]
BILLING CODE 8010-01-M