[Federal Register: October 31, 2005 (Volume 70, Number 209)]
[Notices]
[Page 62356-62357]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr31oc05-79]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-52653; File No. SR-DTC-2005-15]
Self-Regulatory Organizations; The Depository Trust Company;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Eliminate the Use of Contra CUSIP Numbers To Segregate Partially-Called
Positions of Participants in Variable Rate Demand Obligation Issues
October 21, 2005.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ notice is hereby given that on October 3, 2005, The
Depository Trust Company (``DTC'') filed with the Securities and
Exchange Commission (``Commission'') the proposed 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 proposed rule change from interested parties.
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\1\ 15 U.S.C. 78s(b)(1).
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The proposed rule change eliminates the use of contra CUSIP numbers
to segregate partially-called positions of participants in Variable
Rate Demand Obligation (``VRDO'') issues. These positions will be
handled in the same manner as all other issue types, with the
partially-called positions being segregated in the Call Account under
the issue's regularly assigned CUSIP number.
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 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.\2\
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\2\ The Commission has modified the text of the summaries
prepared by DTC.
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[[Page 62357]]
(A) Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
The use of contra CUSIP numbers for VRDO partial calls was designed
to facilitate the settlement of trades in called securities. The
practice enables participants to process book-entry deliveries versus
payment by the submission of Deliver Order (``DO'') transactions, with
the ultimate receiving participants of the deliveries being credited
with the call proceeds on redemption date. In practice, the use of
contra CUSIPs for this purpose is inefficient for participants and for
DTC. For example, DTC must maintain security master file linkages of
the related CUSIP numbers and separately announce and process the
interest payments due participants and their customers based on contra
CUSIP positions. Furthermore, thousands of partially-called positions
in contra CUSIP numbers are created each month, and DTC has determined
that very few DOs are processed.
In place of the use of contra CUSIP's, DTC will now process
partially-called positions in VRDO issues in the same manner as all
other issue types, with the partially-called positions being segregated
in the Call Account under the issue's regularly assigned CUSIP number.
DTC believes the rule change is consistent with Section 17A of the
Act,\3\ as amended, because it will promote efficiency in processing
partial calls of VRDO issues. The rule change will be implemented
consistently with the safeguarding of securities and funds in the
custody or control of DTC because DTC will be processing partial calls
of VRDO issues in a similar manner to the way DTC processes partial
calls of other issue types.
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\3\ 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 discussed this proposed rule change with various
participants. DTC circulated an Important Notice on August 4, 2005,
describing the proposal and inviting participants to direct comments
and questions to DTC (Important Notice B 8359). DTC received
one comment letter from the Regional Municipal Operations Association,
which supported the rule change. DTC will notify the Commission of any
additional written comments received by DTC.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The foregoing proposed rule change has become effective upon filing
pursuant to Section 19(b)(3)(A)(iii) of the Act \4\ and Rule 19b-
4(f)(4) \5\ 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
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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\4\ 15 U.S.C. 78s(b)(3)(A)(iii).
\5\ 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 rule-comments@sec.gov. Please include
File Number SR-DTC-2005-15 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-2005-15. 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 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-2005-15 and should be
submitted on or before November 21, 2005.
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\6\ 17 CFR 200.30-3(a)(12).
For the Commission by the Division of Market Regulation,
pursuant to delegated authority.\6\
Jonathan G. Katz,
Secretary.
[FR Doc. E5-5997 Filed 10-28-05; 8:45 am]
BILLING CODE 8010-01-P