[Federal Register Volume 77, Number 214 (Monday, November 5, 2012)]
[Notices]
[Pages 66497-66498]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-26946]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-68114; File No. SR-DTC-2012-08]


Self-Regulatory Organizations; The Depository Trust Company; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Update Its Corporate Actions Service in Order To Introduce a New 
Standard To Communicate Certain Corporate Actions Information to 
Participants

October 26, 2012.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'') \1\ and Rule 19b-4 thereunder \2\ notice is hereby given that 
on October 16, 2012, The Depository Trust Company (``DTC'') filed with 
the Securities and Exchange Commission (``Commission'') the proposed 
rule change as described in Items I, II and III below, which Items have 
been prepared primarily by DTC. DTC filed the proposed rule change 
pursuant to Section 19(b)(3)(A)(iii) \3\ of the Act and Rule 19b-
4(f)(4)(i) \4\ thereunder, so that the proposed rule change was 
effective upon filing with the Commission. 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).
    \2\ 17 CFR 240.19b-4.
    \3\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \4\ 17 CFR 240.19b-4(f)(4)(i).
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I. Self-Regulatory Organization's Statement of Terms of Substance of 
the Proposed Rule Change

    As discussed below, this rule change updates DTC's standards for 
communicating information related to distribution events by publishing 
the data in industry-standard International Organization for 
Standardization (``ISO'') 20022 format for the entire lifecycle of the 
event. Additionally, DTC will be replacing corporate actions functions 
on its Participant Terminal System (PTS)/Participant Browser Service 
(PBS) applications with a new browser user interface related to the 
processing of distribution events.

II. Self-Regulatory Organization's Statement of 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.\5\
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    \5\ The Commission has modified the text of the summaries 
prepared by DTC.
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(A) Self-Regulatory Organization's Statement of Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    When significant events occur in the life of a security, they are 
typically announced to shareholders and others in a press release or a 
Commission filing. DTC handles essential aspects of processing 
distribution events \6\ by routinely receiving and distributing 
information to its Participants using its proprietary computer to 
computer facility (``CCF'') files. In order to reduce risk, improve 
transparency and increase efficiency in the announcing and processing 
of distribution events, DTC is updating its standards for communicating 
information related to these events by publishing the data in industry-
standard ISO 20022 format for the entire lifecycle of the event.\7\ DTC

[[Page 66498]]

will also be replacing corporate actions functions on its PTS/PBS 
applications with a new browser user interface related to the 
processing of distribution events.
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    \6\ The lifecycle of a distribution event includes an 
announcement of the event, a record date entitlement assigned to 
each Participant entitled to a distribution, a potential instruction 
given from the Participant as to how to handle an optional 
distribution, an allocation of a credit to the Participant and a 
post allocation communication to those Participants involved in the 
distribution.
    \7\ The ISO 20022 format allows for a greater number of data 
elements from their equivalent CCF formats, and the new real-time 
messaging protocols allow for more frequent updates and access to 
messages intraday as opposed to many of the end-of-day batch CCF 
files.
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    Participants that have volunteered to participate in a pilot 
program will receive ISO 20022 messages across the entire life cycle of 
distribution events (announcement, entitlements, instructions and 
allocations) for testing purposes. The pilot program will be two-tiered 
in nature, where testing will initially begin with DTC emailing sample 
ISO 20022 messages containing test data and then gradually move to 
messages that are generated systemically in order for Participants to 
conduct a parallel production test. The Participants who are 
participating in the pilot will continue to receive all distribution 
event data via CCF files in order to run their proprietary production 
systems. The pilot program will run until the second quarter of 2014. 
Following the termination of the pilot program, Participants will have 
the option to rely on the ISO 20022 distribution event information to 
process daily activity in their production environments. However, DTC 
will continue to support its legacy proprietary CCF files for 
distribution event information until 2015.
    Additionally, DTC will be replacing corporate actions functions on 
its PTS/PBS applications with a new browser user interface related to 
the processing of distribution events. The interface will incorporate 
the entire lifecycle of a distribution event into one platform with a 
unique corporate action identifier per event that follows the event 
through its lifecycle.\8\ DTC's proprietary codes and acronyms will be 
replaced with market standard language. For example, a cash dividend 
payment in the market that DTC identifies and communicates as an ``08'' 
function code in PTS/PBS and via CCF file will now be identified as a 
``Cash Dividend'' event. Participants will also be able to customize 
information on certain screens on the interface and have flexible 
search methods. Testing of the interface will take place in 2013 and 
use of the new user interface for processing of distribution events 
will be mandatory for all DTC Participants beginning in the second 
quarter of 2014. DTC will offer training to all customers at least six 
months prior to implementation. To assist with the transition, DTC will 
continue to support PTS/PBS functionality for customers via an inquiry-
only view for at least six months after the use of the new interface 
becomes mandatory.
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    \8\ This contrasts with the current announcements processed 
through PTS/PBS in which there are multiple function codes 
associated with an event's lifecycle.
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    DTC believes that the proposed rule change is consistent with the 
requirements of the Act, and the rules and regulations thereunder, 
because it modifies a DTC service in order to make the process for 
notifying Participants of distribution events more efficient.

(B) Self-Regulatory Organization's Statement on Burden on Competition

    DTC does not believe that the proposed 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 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

    The foregoing rule change has become effective pursuant to Section 
19(b)(3)(A)(iii) of the Act \9\ and Rule 19b-4(f)(4)(i) \10\ thereunder 
because it effects a change in an existing service of DTC that does not 
significantly 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 DTC or 
persons using this service. At any time within 60 days of the filing of 
the proposed rule change, the Commission summarily may temporarily 
suspend 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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    \9\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \10\ 17 CFR 240.19b-4(f)(4)(i).
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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 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 email to [email protected]. Please include 
File No. SR-DTC-2012-08 on the subject line.

Paper Comments

     Send in triplicate to Elizabeth M. Murphy, Secretary, 
Securities and Exchange Commission, 100 F Street NE., Washington, DC, 
20549-1090.

    All submissions should refer to File Number SR-DTC-2012-08. This 
file number should be included on the subject line if email 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 Web site viewing and 
printing in the Commission's Public Reference Room, 100 F Street NE., 
Washington, DC 20549 on official business days between the hours of 
10:00 a.m. and 3:00 p.m. Copies of such filings will also be available 
for inspection and copying at the principal office of DTC and on DTC's 
Web site at http://www.dtcc.com/downloads/legal/rule_filings/2012/dtc/SR-DTC-2012-08.pdf.

    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-2012-08 
and should be submitted on or before November 26, 2012.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\11\
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    \11\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-26946 Filed 11-2-12; 8:45 am]
BILLING CODE 8011-01-P