[Federal Register Volume 67, Number 160 (Monday, August 19, 2002)]
[Notices]
[Pages 53820-53821]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-20980]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-46338; File No. SR-DTC-2002-09]


Self-Regulatory Organizations; The Depository Trust Company; 
Notice of Filing and Immediate Effectiveness of a Proposed Rule Change 
Revising the Fee Schedule

August 12, 2002.
    Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on July 1, 2002, 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 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

    The proposed rule change consists of revisions to the fee schedule 
of DTC for certain of its existing services.

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 parts of these statements.
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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 this rule filing is to revise the fee schedules for 
some of DTC's services. DTC expects to implement the fee changes 
described in (1) and (2) below as of July 1, 2002, and the fee changes 
described in (3) below as of November 1, 2002. Services affected and 
changes in fees are as follows:
    (1) DTC Custody Service: This service enables participants of DTC 
to outsource the safekeeping and processing physical securities not 
eligible for regular depository services due to transfer restrictions 
or other factors.
    DTC is reducing the Custody Reorganization/Redemption deposit fee 
from a current fee of $101.50 to $65.00. The Custody Reorganization 
research fee, used when DTC staff is reviewing the reorganization 
activity for the first time, is also being lowered from $125.61 to 
$85.00. Custody Reorganization/Redemption Deposits that are rejected by 
DTC staff prior to their submission to the transfer agent will now be 
assessed the standard reject fee of $37.93. Previously, no fee had been 
assessed.
    (2) Draft Shipment Control List (``SCL'') Payments: These payments 
represent the fees paid to transfer agents to effect the reregistration 
of a select number of securities (generally referred to as fee-bearing 
issues). Historically, participants have paid fixed ``blended'' rates 
based upon an actual fee threshold for standard deposit or withdrawal-
by-transfer.\3\
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    \3\ For deposits, when a transfer agent fee was $20.00 or less, 
DTC would bill participants $13.00; if the fee was greater than 
$20.00, DTC would charge the participant $22.00. For withdrawals, 
when a transfer agent fee was $20.00 or less, DTC would bill $22.00; 
if the fee was greater than $22.00, DTC would charge the participant 
$33.00.
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    DTC is replacing the ``blended'' rate algorithm with a direct 
charge back for the actual expense as incurred for standard deposit and 
withdrawal activity. DTC will also be instituting a new $1.00 
transaction fee to fully recover the expense associated with the draft 
processing, bank charges, and handling costs for all reregistration 
activities in these securities.
    (3) Government Securities: This process has been redesigned to 
accommodate the changes directed by the Federal Reserve Bank of New 
York (``FRBNY'') for fail tracking, repo tracking, and interim 
accounting. DTC maintains a free-of-payment interface with the Federal 
Reserve's book-entry system that enables participants to hold 
securities positions of U.S. government securities in their DTC 
accounts. Recently DTC has replaced the manual deposit and withdrawal 
process with an automated securities link with FRBNY via a new Fed 
Book-Entry Deliver Order process.
    To recover the development, implementation, and processing costs, 
as well as the Fed fees associated with each transaction, DTC is 
revising these fees. The deliver order fee for government securities 
will be set at $2.25. In addition to the transaction charge, this fee 
recovers the $0.70 fee surcharged by the Fed. Present fees for deliver 
orders are $0.44 to the deliverer and $0.26 to the receiver. Monthly 
long position fees for government securities will be set at $1.00, 
helping to offset a $0.45 Fed imposed fee. Present long position fees 
are $0.35.
    DTC believes that the proposed rule change is consistent with the 
requirements of section 17A of the Act and the rules and regulations 
thereunder because it is consistent with DTC's longstanding policy to 
set service fees at a level of full cost recovery along its different 
product lines.

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

    DTC does not believe that the proposed rule change will have any 
impact or impose any burden on competition.

(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

    Because the foregoing rule change establishes or changes fees to be 
imposed by DTC, it has become effective pursuant to section 
19(b)(3)(A)(ii) of the Act \4\ and rule 19b-4(f)(2).\5\ At any time 
within sixty days of the filing of the 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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    \4\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \5\ 17 CFR 240.19b-4(f)(2).
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VI. 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

[[Page 53821]]

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 will also be available for 
inspection and copying at the principal office of DTC. All submissions 
should refer to the File No. SR-DTC-2002-09 and should be submitted by 
September 9, 2002.

    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority.\6\
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    \6\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 02-20980 Filed 8-16-02; 8:45 am]
BILLING CODE 8010-01-P