[Federal Register Volume 70, Number 181 (Tuesday, September 20, 2005)]
[Notices]
[Pages 55196-55197]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-18668]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-52422; No. SR-DTC-2005-11]


Self-Regulatory Organizations; The Depository Trust Company; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Establish an Insurance Program as Part of the Profile Modification 
System Feature of Its Direct Registration System

September 14, 2005.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on August 22, 2005, The 
Depository Trust Company (``DTC'') filed with the Securities and 
Exchange Commission (``Commission'') and on August 22, 2005, amended 
\2\ the 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 rule change from interested 
parties.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ The amendment corrected a pagination error in the original 
filing.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The rule change establishes an insurance program as part of DTC's 
Profile Modification System (``Profile'') of its Direct Registration 
System (``DRS'').

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 rule change and discussed 
any comments it received on the 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

    Currently, Profile allows a DTC participant to submit 
electronically to a transfer agent that is a DRS limited participant an 
investor's instruction that its share positions be moved from the 
investor's DRS account with the DRS limited participant to the 
investor's broker-dealer's participant account at DTC. Similarly, a DRS 
limited participant may submit an investor's instruction for the 
movement of its share positions from the investor's broker-dealer's 
participant account at DTC to an account maintained by the DRS limited 
participant.
    Currently, all Profile users must agree to a Participant Terminal 
System (``PTS'') screen indemnity as part of their use of Profile and 
must procure a surety bond relating to their obligations under such 
indemnity (``Surety Program''). Participation in the Surety Program 
requires the payment of an annual premium of $3,150 to a surety 
provider and a DTC administration fee of $250. The Surety Program 
provides for a coverage limit of $3 million per occurrence and an 
annual aggregate limit of $6 million.
    DTC believes the cost of the annual surety and the coverage limit 
may be a disincentive for some to use Profile. In order to encourage 
greater participation in the service, DTC proposes the implementation 
of the DTC Profile Modification System Indemnity Insurance Program 
(``Insurance Program''). Under the Insurance Program, Profile users 
will have the option to procure indemnity insurance with higher 
coverage limits ($25 million per occurrence per policy with an annual 
aggregate limit of $100 million) than the surety bond under the Surety 
Program provides, which will allow larger transactions to be covered 
under one policy. Furthermore, Profile users will have the option to 
procure indemnity insurance at an annual fee that is less than the 
premium for the Surety Program. In addition to any pass-through fee 
from the insurer, DTC will charge users participating in the Insurance 
Program an annual administration fee of $250 and a $2.50 per 
transaction fee. Users will be able to participate in both the Surety 
Program and the Insurance Program but would be required and permitted 
to use only one provider per Profile transaction.
    The issuing insurance company will be either a company selected by 
DTC as the administrator of such insurance or an insurance company 
selected by the user procuring the insurance, provided the insurance 
company will issue insurance subject to the terms and conditions 
established by DTC for the Insurance Program.
    DTC believes the rule change is consistent with Section 17A of the 
Act,\4\ as amended, because it is a modification of a DTC service that 
enhances the safeguards for transactions processed in the service. As 
such it is a change to an existing service that will not adversely 
affect the safeguarding of securities and funds in DTC's custody or 
control.
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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 rule change will have any impact or 
impose any burden on competition.

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

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

[[Page 55197]]

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

    The foregoing rule change has become effective upon filing pursuant 
to Section 19(b)(3)(A)(iii) of the Act \5\ and Rule 19b-4(f)(4) \6\ 
thereunder because it does not adversely affect the safeguarding of 
securities or funds in the custody or control of DTC or for which it is 
responsible and does not significantly affect the respective rights or 
obligations of the clearing agency or persons using the service. At any 
time within sixty days of the filing of the 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.
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    \5\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \6\ 17 CFR 240.19b-4(f)(4).
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IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the 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-2005-11 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-2005-11. 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 rule change that are filed 
with the Commission, and all written communications relating to the 
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 
https://login.dtcc.com/dtcorg/. 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-2005-11 and should be submitted on or before October 
11, 2005.

    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority.\7\
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    \7\ 17 CFR 200.30-3(a)(12).
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Jonathan G. Katz,
Secretary.
[FR Doc. 05-18668 Filed 9-19-05; 8:45 am]
BILLING CODE 8010-01-P