[Federal Register Volume 69, Number 159 (Wednesday, August 18, 2004)]
[Notices]
[Page 51341]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-18906]



[[Page 51341]]

-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-50182; File No. SR-DTC-2004-05]


Self-Regulatory Organizations; the Depository Trust Company; 
Order Granting Approval of Proposed Rule Change Relating to the Look-
Ahead Process

August 11, 2004.
    On May 7, 2004, the Depository Trust Company (``DTC'') filed with 
the Securities and Exchange Commission (``Commission'') proposed rule 
change File No. SR-DTC-2004-05 pursuant to section 19(b)(1) of the 
Securities Exchange Act of 1934 (``Act'').\1\ Notice of the proposed 
rule change was published in the Federal Register on July 2, 2004.\2\ 
No comment letters were received. For the reasons discussed below, the 
Commission is now granting approval of the proposed rule change.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ Securities Exchange Act Release No. 49924 (June 28, 2004), 
69 FR 40426.
---------------------------------------------------------------------------

I. Description

    The purpose of this filing is to allow DTC to expand the 
application and extend the benefits of its Look-Ahead process to all 
equity transactions, all valued pledge transactions, and all valued 
release transactions.\3\ DTC's Look-Ahead process is designed to reduce 
transaction settlement blockage. Currently, it is available only for 
municipal and corporate debt transactions.\4\ The Look-Ahead processing 
system reduces transaction settlement blockage by identifying a receive 
transaction pending due to a net debit cap insufficiency and determines 
whether there is an offsetting delivery transaction in the same 
security that is pending because of a quantity deficiency. The system 
calculates the net effect of the offsetting transactions in the 
accounts of the three participants involved. If the net effect of the 
offsetting transactions is that each of the three accounts is in 
compliance with DTC's risk management systems controls, the 
transactions will be completed.
---------------------------------------------------------------------------

    \3\ 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).
    \4\ Id.
---------------------------------------------------------------------------

    As a result of the Look-Ahead process reducing transaction 
settlement blockages in municipal and corporate debt transactions, DTC 
participants have experienced improved timeliness of completion of 
transactions in the system, increased trade certainty, and improved 
straight-through processing. DTC intends to extend the benefits and to 
expand the application of its Look-Ahead process to all equity 
transactions, all valued pledge transactions, and all valued release in 
the third quarter of 2004.

II. Discussion

    Section 17A(b)(3)(F) \5\ 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. By expanding the 
securities to which its Look-Ahead process will be applied, the 
proposed rule change should reduce the number of blocked transactions 
at DTC. As such, the proposed rule change is consistent with DTC's 
statutory obligation to promote the prompt and accurate clearance and 
settlement of securities transactions.
---------------------------------------------------------------------------

    \5\ 15 U.S.C. 78q-1(b)(3)(F).
---------------------------------------------------------------------------

III. Conclusion

    On the basis of the foregoing, the Commission finds that the 
proposed rule change is consistent with the requirements of the Act and 
in particular section 17A of the Act and the rules and regulations 
thereunder.
    It is therefore ordered, pursuant to section 19(b)(2) of the 
Act,\6\ that the proposed rule change (File No. SR-DTC-2004-05) be and 
hereby is approved.
---------------------------------------------------------------------------

    \6\ 15 U.S.C. 78s(b)(2).

    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority.\7\
---------------------------------------------------------------------------

    \7\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 04-18906 Filed 8-17-04; 8:45 am]
BILLING CODE 8010-01-P