[Federal Register Volume 73, Number 4 (Monday, January 7, 2008)]
[Notices]
[Pages 1239-1240]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-25655]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-57071; File No. SR-DTC-2007-15]
Self-Regulatory Organizations; The Depository Trust Company;
Notice of Filing and Immediate Effectiveness of a Proposed Rule Change
Relating to Stock Loan and Repurchase Processing
December 31, 2007.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ notice is hereby given that on November 7, 2007, 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) of the Act \2\ and Rule 19b-4(f)(4) \3\
thereunder so that the proposal 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\ 15 U.S.C. 78s(b)(3)(A)(iii).
\3\ 17 CFR 240.19b-4(f)(4).
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
Under the proposed rule change, DTC will provide participants using
DTC's Stock Loan REPO Adjustment Menu (``SLRM'') system with new
warning messages advising participants if any corrective action is
needed to complete their stock loan or repurchase transaction.
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 such statements.
[[Page 1240]]
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
Prior to this rule change, DTC's SLRM system did not validate the
reason code used to reclaim a stock loan or repurchase (``repo'')
transaction. DTC participants have stated that the majority of errors
associated with this process arose when the wrong reason code was used
by counterparties.
To reduce the frequency of these errors and the associated burden
of correcting them, DTC is modifying its system by providing warning
messages that advise a participant that a transaction will be rejected
due to an incorrect reason code for reclaiming these items. As a
result, users will be prompted to correct the reason code. In addition,
if a participant that is to return the stock of a loan or repo
transaction does not have sufficient inventory in its DTC deliverer/
CUSIP/contra account to cover the return, it will receive a
notification advising that an insufficient position exists so that it
can take corrective action. Finally, if there is an open repo position
for the same major/contra/CUSIP in DTC's system, a new warning message
will be displayed stating that an open repo position for the contra/
CUSIP exists.
A new help screen will be displayed in SLRM to guide users when
they submit a stock loan or repo transaction. The screen will describe
the impact that a given action will have on the originator's stock loan
or repo account and the related dividend payment. Also, the SLRM
summary screen will be modified to list outstanding adjustments for a
period of twenty business days instead of the current five business
days. This will give participants more time to react to open stock loan
or repo items so that they may be reconciled in a more timely fashion.
Proposed system changes will necessitate revisions to existing DTC
Service Guides.\4\
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\4\ The affected section of DTC's Guide is attached as Exhibit 5
to DTC's rule filing.
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DTC states that the proposed rule change is consistent with Section
17A of the Act \5\ and the rules and regulations thereunder applicable
to DTC as it allows for more efficient processing of certain
transactions and will not adversely affect the safeguarding of funds or
securities in DTC's custody and control or for which it is responsible.
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\5\ 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 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
DTC has not solicited or received written comments relating to the
proposed rule change. DTC will notify the Commission of any written
comments it receives.
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) \6\ of the Act and Rule 19b-4(f)(4) \7\ thereunder
because it effects a change in an existing service of a registered
clearing agency that does not adversely affect the safeguarding of
securities or funds in the custody or control of the clearing agency
and does not significantly affect the respective rights or obligations
of the clearing agency or persons using the service. At any time within
60 days of the filing of the proposed 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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\6\ 15 U.S.C. 78s(b)(3)(A)(iii).
\7\ 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 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 e-mail to [email protected]. Please include
File No. SR-DTC-2007-15 on the subject line.
Paper Comments
Send paper comments in triplicate to Nancy M. Morris,
Secretary, Securities and Exchange Commission, Station Place, 100 F
Street, NE., Washington, DC 20549-1090.
All submissions should refer to File No. SR-DTC-2007-15. 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 Room, 450 Fifth Street,
NW., Washington DC 20549, on official business days between the hours
of 10 a.m. and 3 p.m. Copies of such filing also will be available for
inspection and copying at DTC's principal office and on DTC's Web site
at http://www.dtc.org/impNtc/mor/index.html. 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 submission
should refer to File No. SR-DTC-2007-15 and should be submitted on or
before January 28, 2008.
For the Commission by the Division of Trading and Markets
pursuant to delegated authority.\8\
Nancy M. Morris,
Secretary.
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\8\ 17 CFR 200.30-3(a)(12).
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[FR Doc. E7-25655 Filed 1-4-08; 8:45 am]
BILLING CODE 8011-01-P