[Federal Register Volume 69, Number 172 (Tuesday, September 7, 2004)]
[Notices]
[Pages 54169-54170]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E4-2077]


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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-50279; File No. SR-DTC-2004-08]


Self-Regulatory Organizations; The Depository Trust Company; 
Notice of Filing and Immediate Effectiveness of a Proposed Rule Change 
Relating to the Investor's Voluntary Redemptions and Sales Service

August 27, 2004.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on August 2, 2004, The 
Depository Trust Company (``DTC'') filed a proposed rule change with 
the Securities and Exchange Commission (``Commission'') 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.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The proposed rule change will enhance DTC's Investor's Voluntary 
Redemptions and Sales (``IVORS'') service to allow for the 
communication and processing of unit investment trust (``UIT'') 
rollover instructions.

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\
---------------------------------------------------------------------------

    \2\ The Commission has modified the text of the summaries 
prepared by DTC.
---------------------------------------------------------------------------

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

    Prior to this rule change, DTC participants holding expired UITs 
could only redeem such assets for cash or receive securities by book-
entry and sell back to the UIT's sponsor in exchange for a cash 
payment.\3\ The flow of instructions and confirmations typically occurs 
outside DTC using faxes or e-mails between the participant and the 
sponsor or sponsor's agent. Settlement of the transaction was usually 
accomplished by the submission of deposit/withdrawal at custodian 
(``DWAC'') instructions. This process was very manual and labor 
intensive and exposed participants, agents, and sponsors to risk and 
expense.
---------------------------------------------------------------------------

    \3\ Upon maturity (and in some cases earlier), most UITs allow a 
shareholder to take the redemption value of their holding and roll 
it over into a new series of UITs. These instructions are submitted 
prior to the deadline established by the transfer agent or sponsor.
---------------------------------------------------------------------------

    Under this proposed rule change, DTC will enhance its IVORS service 
to allow participants to rollover their current UIT into any of up to 
ten new UITs that the transfer agent or sponsor may have designated as 
being eligible for the rollover. Under the new procedures, the UIT 
transfer agent or sponsor will announce the details of an eligible UIT 
rollover using IVORS. Once announced, DTC will create a new 
communication code that will include the deadline for submitting 
rollover instructions thereby enabling participants to submit rollover 
instructions to their current UIT.
    As with the current IVORS redemption function, prior to the 
transaction settlement date of the transaction, the transfer agent or 
sponsor enters the settlement details into IVORS. In the case of 
rollovers, these details will include the redemption price of the 
surrendered UIT, any accrued dividends that are payable, the purchase 
price of the new UIT, and any concession fee that may be payable. On 
settlement date, IVORS processes the necessary entries to debit the 
surrendered UITs and credit participants with the new UITs and any 
associated cash-in-lieu or other payments. All of this is accomplished 
within the IVORS system, eliminating the need to process faxed 
instructions and DWAC entries.
    DTC's proposed rule is designed to eliminate unnecessary 
certificate movements, reduce and simplify cash movements, and 
synchronize the decisions of all parties involved in the rollover of 
UITs. The proposed rule

[[Page 54170]]

change is consistent with the requirements of Section 17A of the Act 
and the rules and the regulations thereunder applicable to DTC in that 
it promotes efficiencies in 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 impose any 
burden on competition.

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

    DTC has not solicited nor received written comments on the proposed 
rule change. DTC will inform the Commission of any written comments it 
receives.

III. 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) \4\ of the Act and Rule 19b-4(f)(4) \5\ thereunder 
because it effects a change in an existing service of DTC that does not 
adversely affect the safeguarding of securities or funds in DTC's 
control or for which DTC is responsible and does not significantly 
affect DTC's or its participants' respective rights or obligations. At 
any time within 60 days of the filing of such 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.
---------------------------------------------------------------------------

    \4\ 4 15 U.S.C. 78s(b)(3)(A)(iii).
    \5\ 5 17 CFR 240.19b-4(f)(4).
---------------------------------------------------------------------------

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-2004-08 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-2004-08. 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 DTC's principal office 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-2004-08 and should be submitted on 
or before September 28, 2004.
---------------------------------------------------------------------------

    \6\ 17 CFR 200.30-3(a)(12).

    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority.\6\
Margaret H. McFarland,
Deputy Secretary.
 [FR Doc. E4-2077 Filed 9-3-04; 8:45 am]
BILLING CODE 8010-01-P