[Federal Register Volume 67, Number 211 (Thursday, October 31, 2002)]
[Notices]
[Pages 66435-66436]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-27663]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-46717; File No. SR-DTC-2002-12]


Self-Regulatory Organizations; The Depository Trust Company; 
Notice of Filing and Immediate Effectiveness of a Proposed Rule Change 
Relating to Enhancements to DTC's Memo Segregation Procedures

October 24, 2002.
    Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on September 3, 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 enhancements to the Memo 
Segregation (``Memo Seg'') procedures of DTC.

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 proposed rule change makes enhancements to DTC's existing Memo

[[Page 66436]]

Seg process. The enhancements are as follows. First, a special reclaim 
reasons code will be created for free and valued deliver orders that 
will not affect Memo Seg. Therefore, free and valued reclaims processed 
with this code will not reduce the deliverer's Memo Seg. Second, a 
special reclaim reason code will be created for free and valued deliver 
orders that will reduce Memo Seg. Therefore, free and valued reclaims 
processed with this code will always reduce the deliverer's Memo Seg. 
Third, reason codes will be added to the list of exception reason codes 
for non-optional Memo Seg procedures. Therefore, free deliveries 
processed with these codes will not automatically reduce Memo Seg. 
Fourth, additional reason codes will be added to Memo Seg indicators. 
Fifth, same-day Matched Reclaims will automatically increase the Memo 
Seg of the receiver of the reclaim if the original delivery decreased 
Memo Seg regardless of the reclaim reason code. Sixth, pledges will 
reduce Turnaround position. All enhancements are further described in 
DTC's Important Notice No. 3733, Memo Segregation Enhancement, which 
was made available to participants starting September 5, 2002. 
Important Notice No. 3733 is attached as an exhibit to DTC's proposed 
rule change.
    The proposed rule change is consistent with the requirements of 
section 17A of the Act and the rules and regulations thereunder 
applicable to DTC because it will give participants additional options 
in using DTC's Memo Seg procedures. 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 since the 
proposed rule change will modify DTC's existing Memo Seg procedures.

(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

    Written comments from DTC's participants have not been solicited 
nor received on the proposed rule change.

II. 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) of the Act \3\ and Rule 19b-4(f)(4)\4\ promulgated 
thereunder because the proposal effects a change in an existing service 
of DTC that (A) does not adversely affect the safeguarding of 
securities or funds in the custody or control of DTC or for which it is 
responsible and (B) does not significantly affect the respective rights 
or obligations of DTC or persons using the service. 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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    \3\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \4\ 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 will also be available for 
inspection and copying at the principal office of the DTC. All 
submissions should refer to the File No. SR-DTC-2002-12 and should be 
submitted by November 21, 2002.

    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority.\5\
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    \5\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 02-27663 Filed 10-30-02; 8:45 am]
BILLING CODE 8010-01-P