[Federal Register Volume 70, Number 146 (Monday, August 1, 2005)]
[Notices]
[Pages 44132-44133]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E5-4078]



[[Page 44132]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-52123; File No. SR-DTC-2005-07]


Self-Regulatory Organizations; the Depository Trust Company; 
Notice of Filing of Proposed Rule Change Relating to an Expansion of 
DTC's Inventory Management System

July 26, 2005.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on July 8, 2005, the 
Depository Trust Company (``DTC'') filed with the Securities and 
Exchange Commission (``Commission'') and on July 8, 2005, amended the 
proposed rule change 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

    DTC is seeking to expand its Inventory Management System (``IMS'') 
to offer additional customized transaction recycling capabilities and 
to provide users with an enhanced approval mechanism in order to give a 
user greater internal control over deliveries that they submit to 
DTC.\2\
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    \2\ For additional information on DTC's IMS processing, see 
Securities Exchange Act Release Nos. 47826 (May 9, 2003), 68 FR 
27876 (May 21, 2003) [File No. SR-DTC-2002-19] and 50690 (November 
18, 2004), 69 FR 69433 (November 29, 2004) [File No. SR-DTC-2004-
10].
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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.\3\
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    \3\ The Commission has modified the text of the summaries 
prepared by DTC.
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(A) Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    The purpose of the proposed rule change is to expand IMS to offer 
additional customized transaction recycling capabilities and to provide 
users with an enhanced approval mechanism in order to give users 
greater internal control over deliveries that they submit to DTC.
    Currently, a participant using IMS can prepopulate its profile to 
customize the position recycle order for its night cycle deliveries. 
These ``high priority'' transactions are processed in the prescribed 
order if the participant has sufficient shares in its account. If there 
are insufficient shares to complete these high priority transactions, 
then DTC attempts to complete lower prioritized transactions that can 
be completed with the shares the participant has available.
    The rule proposal would: (i) Increase control over the processing 
order by adding two new recycle profiles; (ii) expand the recycle 
profiles to include Initial Public Offering (``IPO'') transactions, and 
(iii) allow a participant's input to be subjected to secondary 
authorization through a new transaction type in IMS.
    The new recycle profiles will allow participants to further 
customize the processing of their deliveries by either: (i) Electing to 
have the deliveries processed in strict profile order or (ii) enabling 
the participant to hold all or a specific set of deliveries in a 
separate profile until they are ready to release those transactions for 
processing. For each delivery that is customized and recycled based 
upon profile selection, a participant will be charged $0.06.
    Currently, participants can only route their NDOs to IMS for 
authorization. Under this proposed rule, participants will be able to 
submit their manual or automated day deliveries for authorization based 
on predetermined profiles. A user will be able to create a profile by 
asset class and within asset class by input source (e.g., only 
deliveries submitted by Participant Browser Service). The user will 
also be able to determine, based on input source, which delivery types 
(all valued, all free, only under/over valued deliveries) should be 
routed for authorization. For these deliveries, participants will be 
charged the current authorization fee of $0.006 each in addition to the 
applicable delivery fee.
    Participants would not be required to make any systematic changes 
and could continue to process their deliveries as they do today. IMS 
recycle profiles would be optional, and users that do not elect to 
prioritize their deliveries through IMS will continue to be subjected 
to the existing default recycle profile.
    DTC believes the new enhancements will enable participants to route 
all of their deliveries to IMS, which will: (i) Increase their ability 
to achieve straight-through processing; (ii) allow them to maximize 
their priority deliveries and associated settlement credits; and (iii) 
improve business continuity by having all of their deliveries residing 
at DTC throughout the day.
    DTC believes the proposed rule change is consistent with the 
requirements of Section 17A of the Act \4\ and the rules and 
regulations thereunder applicable to DTC because it will promote the 
prompt and accurate clearance and settlement of securities transactions 
by increasing efficiency in processing member transactions.
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    \4\ 15 U.S.C. 78q-1.
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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. DTC has discussed the rule change proposal in 
its current form with various DTC participants and industry groups, a 
number of whom have worked closely in developing the proposed IMS 
system.

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

    Written comments relating to the proposed rule change have not yet 
been solicited or received. DTC will notify the Commission of any 
written comments received by DTC.

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. Comments may be submitted by any of 
the following methods:

[[Page 44133]]

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-2005-07 on the subject line.

Paper Comments

     Send paper comments in triplicate to Jonathan G. Katz, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-9303.
    All submissions should refer to File Number SR-DTC-2005-07. 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, 100 F Street, 
NE., Washington, DC 20549. Copies of such filings 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-2005-07 and should be submitted on 
or before August 22, 2005.

    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. E5-4078 Filed 7-29-05; 8:45 am]
BILLING CODE 8010-01-P