[Federal Register Volume 69, Number 127 (Friday, July 2, 2004)]
[Notices]
[Pages 40426-40427]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-15048]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-49924; File No. SR-DTC-2004-05]


Self-Regulatory Organizations; The Depository Trust Company; 
Notice of Filing of Proposed Rule Change Relating to the Look-Ahead 
Process

June 28, 2004.
    Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on May 7, 2004, 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 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 proposed rule change would allow DTC to expand the application 
of its Look-Ahead process to all equity transactions and to all valued 
pledge and valued release transactions.\2\
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    \2\ Look-Ahead processing is currently available for municipal 
and corporate bonds transactions pursuant to Securities Exchange Act 
Release No. 48007 (June 10, 2003), 68 FR 35744 (June 16, 2003) (File 
No. DTC-2003-07) (order allowing DTC to establish Look-Ahead 
processing).
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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 these 
statements.

(A) Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    Currently, DTC's Look-Ahead process reduces transaction blockage 
for debt securities. To do so, the Look-Ahead processing system 
identifies a receive transaction pending due to a net debit cap 
insufficiency and determines if there is an offsetting delivery 
transaction pending because of a quantity deficiency in the same 
security that would permit both transactions to be completed in 
compliance with DTC's risk management system controls. The system 
calculates the net effect of offsetting transactions in the accounts of 
the three participants involved. If the net effect of the transaction 
is in positive risk management controls in all three accounts, the 
transactions will be completed. As a result of this reduced blockage, 
participants have experienced improved timeliness of transactions 
completing in the system, increased trade certainty, and improved 
straight-through processing.
    To extend and benefits of the Look-Ahead process, DTC proposes to 
expand the Look-Ahead process to include all equity transactions and to 
include all valued pledge and valued release

[[Page 40427]]

transactions in addition to deliveries. DTC intends to implement the 
proposed enhancement in the third quarter of 2004.
    The proposed rule change is consistent with the requirements of 
section 17A(b)(3)(A) of the Act \3\ and the rules and regulations 
thereunder because it will promote the prompt and accurate settlement 
of securities transactions and will be implemented in a manner that is 
consistent with DTC's risk management controls.
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    \3\ 15 U.S.C. 78q(b)(3)(A).
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(B) Self-Regulatory Organization's Statement on Burden on Competition

    DTC does not believe that the proposed rule change will impose any 
burden on competition not necessary or appropriate in furtherance of 
the Act.

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

    DTC has discussed this rule change proposal in its current form 
with various participants and industry groups. DTC advised participants 
of the proposed enhancements in Important Notice 5749 (January 
22, 2004).

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

    Within 35 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 90 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 DTC 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. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an e-mail to [email protected]. Please include 
File Number SR-DTC-2004-05 on the subject line.

Paper Comments

     Send paper comments in triplicate to Jonathan G. Katz, 
Secretary, Securities and Exchange Commission, 450 Fifth Street, NW., 
Washington, DC 20549-0609. All submissions should refer to File Number 
SR-DTC-2004-05. This file number should be included on the subject line 
if e-mail is used. To help the Commission process and review your 
comments more efficiently, please use only one method. The Commission 
will post all comments on the Commission's internet Web site (http://www.sec.gov/rules/sro.shtml). 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 DTC and on DTC's Web site at http://www.dtc.org. 
All comments received will be posted without change; the Commission 
does not edit personal identifying information from submissions. You 
should submit only information that you wish to make available 
publicly. All submissions should refer to File Number SR-DTC-2004-05 
and should be submitted on or before July 23, 2004.

    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. 04-15048 Filed 7-1-04; 8:45 am]
BILLING CODE 8010-01-M