[Federal Register Volume 70, Number 183 (Thursday, September 22, 2005)]
[Notices]
[Pages 55641-55642]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-18896]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-52450; File No. SR-DTC-2005-07]


Self-Regulatory Organizations; The Depository Trust Company; 
Order Approving Proposed Rule Change To Expand DTC's Inventory 
Management System

September 15, 2005.

I. Introduction

    On July 8, 2005, the Depository Trust Company (``DTC'') filed with 
the Securities and Exchange Commission (``Commission'') and on July 8, 
2005, amended \1\ proposed rule change SR-DTC-2005-07 pursuant to 
Section 19(b)(1) of the Securities Exchange Act of 1934 (``Act'').\2\ 
Notice of the proposal was published in the Federal Register on August 
1, 2005.\3\ No comment letters were received. For the reasons discussed 
below, the Commission is approving the proposed rule change.
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    \1\ The amendment corrected a typographical error in the 
original filing.
    \2\ 15 U.S.C. 78s(b)(1).
    \3\ Securities Exchange Act Release No. 52123 (July 26, 2005), 
70 FR 44132.
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II. Description

    DTC is expanding 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 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 change: (i) Increases participant control over the 
processing order by adding two new recycle profiles; (ii) expands the 
recycle profiles to include Initial Public Offering (``IPO'') 
transactions; and (iii) allows a participant's input to be subjected to 
secondary authorization through a new transaction type in IMS.
    The new recycle profiles 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 in addition 
to the applicable delivery fee.
    Currently, participants only can route their night delivery orders 
to IMS for authorization. The rule change allows participants also to 
submit their manual or automated day delivery orders for authorization 
based on predetermined profiles. A user can create a profile by asset 
class and within asset class by input source (e.g., only deliveries 
submitted by DTC's Participant Browser Service). The user can 
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 are not required to make any systemic changes and may 
continue to process their deliveries as they do today. IMS recycle 
profiles are optional, and users that do not elect to prioritize their 
deliveries through IMS continue to be subjected to the existing default 
recycle profile.

III. Discussion

    Section 17A(b)(3)(F) of the Act requires that the rules of a 
clearing agency be designed to provide for the prompt and accurate 
clearance and settlement of securities.\4\ The Commission finds that 
DTC's proposed rule change is consistent with this requirement because 
it will allow participants to have all of their deliveries residing at 
DTC throughout the day and will maximize their priority deliveries and 
associated settlement credits. As such, the proposed rule change should 
promote the prompt and accurate clearance and settlement of securities 
transactions by increasing efficiency of processing participants' 
transactions.
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    \4\ 15 U.S.C. 78q-1(b)(3)(F).
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IV. 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,\5\ that the proposed rule change (File No. SR-

[[Page 55642]]

DTC-2005-07) be and hereby is approved.
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    \5\ 15 U.S.C. 78s(b)(2).

    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority.\6\
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    \6\ 17 CFR 200.30-3(a)(12).
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Jonathan G. Katz,
Secretary.
[FR Doc. 05-18896 Filed 9-21-05; 8:45 am]
BILLING CODE 8010-01-P