[Federal Register Volume 68, Number 35 (Friday, February 21, 2003)]
[Notices]
[Pages 8535-8536]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-4200]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-47365; File No. SR-DTC-2003-02]


Self-Regulatory Organizations; the Depository Trust Company; 
Notice of Filing of Proposed Rule Change Concerning Requests for 
Withdrawal of Certificates by Issuers

February 13, 2003.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on February 3, 2003, The 
Depository Trust Company (``DTC'') filed with the Securities and 
Exchange Commission (``Commission'') and on February 11, 2003, amended 
the proposed rule change as described in Items I, II, and III below, 
which items have been prepared primarily by the 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 purpose of the proposed rule change is to clarify that DTC will 
only honor requests for withdrawal of certificates submitted by its 
participants and not by the issuer of the securities.

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. The DTC has prepared summaries, set forth in sections 
(A), (B), and (C) below, of the most significant aspects of these 
statements.\2\
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    \2\ The Commission has modified the text of the summaries 
prepared by the DTC.
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(A) Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    Recently a number of issuers of securities have requested that DTC 
exit from the depository all securities of their issues (``Issuer 
Withdrawal Request'' or ``Issuer Withdrawal Requests''). The issuers 
have also advised DTC that they will refuse to reregister any 
securities into the name of DTC or its nominee, Cede & Co. These 
issuers have no legal or beneficial interest in the securities they are 
requesting to be exited from DTC. The securities at issue generally 
became eligible for DTC services at the request, or for the 
convenience, of DTC's participants who wish to utilize DTC's book-entry 
transfer system. The subject securities are held by DTC for the benefit 
of its participants.
    DTC's current rules and procedures permit participants to submit 
withdrawal requests if they wish to withdraw their securities from DTC. 
However, DTC's current rules and procedures do not provide for DTC to 
comply with an Issuer Withdrawal Request without participants' 
instructions. Through the proposed rule filing, DTC is seeking to 
clarify the procedures that it will follow upon receiving an Issuer 
Withdrawal Request. Upon receipt of an Issuer Withdrawal Request, DTC 
will, among other things:
    [sbull] Issue an ``Important Notice'' notifying participants of the 
receipt of the Issuer Withdrawal Request and reminding participants 
that they can utilize DTC withdrawal procedures if they wish to 
withdraw their securities from DTC.
    [sbull] Notify the transfer agent for the issuer that failure to 
reregister certificates pursuant to DTC's instructions is a violation 
of the transfer agent's obligations under, among other things, DTC's 
rule and procedures, such as DTC's Operational Arrangements.
    [sbull] Process in the ordinary course of business withdrawal 
requests submitted by participants and refuse to effectuate withdrawals 
based upon the Issuer Withdrawal Request.
    Since this is a clarification of DTC's rules and procedures, DTC 
will

[[Page 8536]]

continue to not honor Issuer Withdrawal Requests regardless of any 
purported approval of the Issuer Withdrawal Request by the shareholders 
or board of directors of the issuer.\3\
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    \3\ The proposed rule filing is not applicable to securities 
that may not legally be held at DTC (e.g., securities restricted 
pursuant to Rule 144 or Rule 145 under the Securities Act of 1933).
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    DTC believes that the proposed rule filing is consistent with 
Section 17A of the Act and the rules and regulations thereunder because 
it will promote the prompt and accurate clearance and settlement of 
securities transactions

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

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

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

    DTC has discussed the substance of this proposed rule change with 
various DTC participants and industry groups and has received favorable 
reaction.

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 proceedings 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 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. 
Comments may also be submitted electronically at the following e-mail 
address: [email protected]. All comment letters should refer to 
File No. SR-DTC-2003-03. This file number should be included on the 
subject line if e-mail is used. 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 also will be available for inspection and copying at the 
principal office of the DTC. All submissions should refer to File No. 
SR-DTC-2003-03 and should be submitted by March 14, 2003.

    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority.\4\
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    \4\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 03-4200 Filed 2-20-03; 8:45 am]
BILLING CODE 8010-01-P