[Federal Register Volume 78, Number 99 (Wednesday, May 22, 2013)]
[Notices]
[Pages 30382-30384]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-12167]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-69597; File No. SR-DTC-2013-06]
Self-Regulatory Organizations; The Depository Trust Company;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Revise Its Fees Related to Certain Corporate Action Events
May 16, 2013.
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 May 3, 2013, 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)(ii) \3\ of the Act and Rule 19b-4(f)(2) \4\
thereunder, so that the proposed rule
[[Page 30383]]
change was effective upon filing with the Commission. The Commission is
publishing this notice to solicit comments on the proposed rule change
from interested persons.
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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)(ii).
\4\ 17 CFR 240.19b-4(f)(2).
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I. Clearing Agency's Statement of the Terms of Substance of the
Proposed Rule Change
As more fully discussed below, the proposed rule change is to
modify DTC's Fee Schedule, to include revising, consolidating, and
adding certain fees associated with corporate action events.\5\
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\5\ A schedule of the fee changes that are the subject of this
notice is included in Exhibit 5 of the proposed rule change filing,
available on the Commission's Web site under File No. SR-DTC-2013-
06, Additional Materials, at http://sec.gov/rules/sro/dtc.shtml.
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II. Clearing Agency'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.\6\
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\6\ The Commission has modified the text of the summaries
prepared by DTC.
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(A) Clearing Agency's Statement of the Purpose of, and Statutory Basis
for, the Proposed Rule Change
1. Purpose
The purpose of this proposed rule change is for DTC to revise its
Fee Schedule \7\ related to certain services it provides associated
with corporate action events, as discussed below.
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\7\ See Guide to the 2013 DTC Fee Schedule, http://dtcc.com/products/documentation/dtcfeeguide.pdf.
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Currently, DTC charges its Participants fees for different event
types and processes associated with corporate actions. DTC's Fee
Schedule includes 60 different fees related to corporate actions.\8\
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\8\ Id.
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Pursuant to the proposed rule change, DTC is reducing the number of
fees associated with corporate actions and grouping such fees into five
categories based on transaction type: Allocations, Elections, Voluntary
Corporate Action Event Handling, Treasury Shares Adjustments, and
Coupon Processing. As such, the total number of fees relating to
corporate actions is reduced from 60 to16.
Additionally, DTC states that it is modifying the fee structure
associated with the processing of corporate action events to align the
fee with the appropriate level of risk and operational cost associated
with the event. For example, DTC is reducing fees related to events
with more automation and less complexity, since such events present
less risk in processing. Examples of such events include those that
require payments for principal and interest, redemptions, and cash and
stock dividends.
Similarly, DTC is increasing fees for events that it believes
present more risk and require manual intervention, such as mandatory
and voluntary corporate events. DTC believes those events are
considered riskier because they have greater complexity, and they
require enhanced due diligence by DTC to ascertain exact event details,
client entitlements, and payment calculations.
DTC is also introducing a new fee related to consent-only
processing of reorganization events.\9\ Currently, DTC Participants
mail instructions on Consent-Only Events \10\ directly to the balloting
agents, which are traditionally delivered via a hard-copy letter of
transmittal. However, recently, balloting agents and Participants have
requested that DTC provide Participants with the ability to submit
their elections on Consent-Only Events through PTOP. In an effort to
streamline the process associated with Consent-Only Events, DTC agreed
to allow Participants to submit such elections through PTOP.
Accordingly, DTC will now charge balloting agents a processing fee for
such submissions.
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\9\ DTC collects reorganization activity information through its
Participant Tender Offer Program (``PTOP'') function. Examples of
reorganization activity that DTC processes through PTOP include
voluntary corporate actions, tenders and exchanges, and cash
conversions. See Release No. 34-62119 (May 18, 2010), 75 FR 29374
(May 25, 2010) (for more information regarding events that DTC
processes through PTOP).
\10\ Increasingly, there are reorganization events that only
require DTC Participants to make an election with respect to the
event without surrendering securities (``Consent-Only Events'').
Examples of Consent-Only Events include changes in the board of
directors of an issuer and interest rate modifications to
indentures.
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DTC is also implementing a new late notification of corporate
events fee in the event that an agent does not comply with certain
operational arrangements that require the agent to notify DTC no fewer
than 10 days in advance of expiration of a corporate action event.\11\
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\11\ A late notification shortens the window of time for DTC
Participants to contact their clients to make an election on an
event. A late notification also requires additional DTC resources to
review and announce both the event at issue and the other events
that must be reprioritized accordingly.
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Additionally, DTC is eliminating announcement-related fees and
introducing a voluntary event handling fee.\12\ Voluntary corporate
actions will carry a handling fee because of the effort involved in DTC
reviewing offering materials, confirming terms with issuers and agents,
and then processing the event in DTC's system.
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\12\ Under this revised corporate actions fee structure, DTC
intends to charge a fee relating to the allocation required by the
effectiveness of an event, rather than its announcement.
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DTC is also increasing fees associated with the proxy record date
meeting, in order to align the fees with the operational cost of
handling those events.
DTC believes that the fee revisions discussed above are consistent
with DTC's overall service pricing philosophy--to align service fees
with the underlying costs and to discourage manual and exception
processing.
Implementation Timeframe
The effective date for fee changes contained in the proposed rule
change, as outlined above, is July 1, 2013.
2. Statutory Basis
DTC believes that the proposed rule change is consistent with the
requirements of the Act, as amended, specifically Section
17A(b)(3)(D),\13\ and the rules and regulations thereunder applicable
to DTC because the change clarifies and updates DTC's Fee Schedule to
align fees with the costs of services provided, thus providing for the
equitable allocation of reasonable fees among DTC's Members.
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\13\ 15 U.S.C. 78q-1(b)(3)(D).
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(B) Clearing Agency'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) Clearing Agency'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 forgoing rule change has become effective pursuant to Section
19(b)(3)(A)(ii) of the Act \14\ and Rule
[[Page 30384]]
19b-4(f)(2) \15\ thereunder. 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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\14\ 15 U.S.C. 78s(b)(3)(A)(ii).
\15\ 17 CFR 240.19b-4(f)(2).
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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-2013-06 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 No. SR-DTC-2013-06. 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://dtcc.com/legal/rule_filings/dtc/2013.php.
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 No. SR-DTC-2013-06 and
should be submitted on or before June 12, 2013.
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\16\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\16\
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-12167 Filed 5-21-13; 8:45 am]
BILLING CODE 8011-01-P