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Notice

Self-Regulatory Organizations; Notice of Filing and Order Granting Accelerated Approval of Proposed Rule Change by The Depository Trust Company Relating to DTC Settling Trades Executed on Nasdaq Europe

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Information about this document as published in the Federal Register.

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This document has been published in the Federal Register. Use the PDF linked in the document sidebar for the official electronic format.

Start Preamble June 6, 2001.

Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”),[1] notice is hereby given that on, May 25, 2001, The Depository Trust Company (“DTC”) filed with the Securities and Exchange Commission (“Commission”) the proposed rule change as described in Items I and II below, which items have been prepared primarily by DTC. The Commission is publishing this notice and order to solicit comments on the proposed rule change from interested parties and to grant accelerated approval of the proposed rule change.

I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change

The proposed rule change provides that participants who settle trades executed on Nasdaq Europe through book-entry deliveries at DTC (i) are required to effect the settlement of such trades in the manner prescribed by DTC so that such trades can be separately identified and (ii) authorize DTC to provide to Nasdaq Europe information relating to the settlement of such trades.

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 these statements.

(A) Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change

It is expected that on or about June 8, 2001, Nasdaq Europe, an exchange established under Belgian law, will begin listing securities on its European Trading System. In order to facilitate the settlement of these securities, Nasdaq Europe plans to approve DTC as a settlement location for Nasdaq Europe trades in DTC-eligible securities. To allow Nasdaq Europe to designate DTC as an approved settlement location under Belgian law, DTC must agree to provide Nasdaq Europe upon request with information that DTC has pertaining to the settlement of Nasdaq Europe trades at DTC. In order for DTC to be able to provide this information, DTC must require its participants (1) to effect the settlement of such transactions in a manner that separately identifies them from the participants' other settlement activities [2] and (2) to authorize DTC to provide information related to such trades to Nasdaq Europe.

Under the proposed rule change, DTC will require that the settlement of Nasdaq Europe trades be effected in a separate subaccount that will be established by the participant solely for the settlement of Nasdaq Europe trades. If it is determined that a more automated solution should be developed in the future, DTC will make the necessary systems changes to allow participants to designate settlement activity relating to Nasdaq Europe trades by entering a special activity code in their deliver order instructions. If such systems changes are made, participants will be required to use the activity code to identify Nasdaq Europe trades. Participants will be kept informed by Important Notices if DTC determines that it will further automate the identification of settlement activity related to Nasdaq Europe trades.

The proposed rule change is consistent with the requirements of section 17A of the Act and the rules and regulations thereunder because the proposed rule change will increase operational efficiencies for participants by allowing for the settlement at DTC of Nasdaq Europe trades in DTC-eligible securities. The proposed rule change will be implemented consistently with the safeguarding of securities and funds in DTC's custody or control or for which it is responsible because all of DTC's risk management controls will continue in effect.

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

DTC perceives no impact on competition by reason of the proposed rule change.Start Printed Page 31728

(C) Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received from Members, Participants or Others

Written comments from participants or others have not been solicited or received on the proposed rule change. All participants will be informed of the proposed rule change by an Important Notice.

III. Date of Effectiveness of Proposed Rule Change and Timing for Commission Action

The Commission finds that allowing DTC to require participants to set up separate subaccounts solely for the settlement of Nasdaq Europe trades and to authorize DTC to provide settlement information to Nasdaq Europe is consistent with the requirements of section 17A of the Act and the rules and regulations thereunder applicable to clearing agencies. Specifically, the Commission believes that the proposal is consistent with section 17A(b)(3)(F) because it will facilitate the prompt and accurate clearance and settlement of securities transactions by allowing for the settlement at DTC of Nasdaq Europe trades in DTC-eligible securities.

The Commission finds good cause for approving the proposed rule change prior to the thirtieth day after the date of publication of notice thereof in the Federal Register because approval prior to the thirtieth day of the publication will allow DTC to settle trades in DTC-eligible securities executed on the Nasdaq Europe when Nasdaq Europe begins trading such securities, which it is scheduled to do on Friday, June 8, 2001.

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. Persons making written submissions should file six copies thereof with the Secretary, Securities and Exchange Commission, 450 Fifth Street, NW., Washington, DC 20549-0609. 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. Copies of such filing also will be available for inspection and copying at the principal office of DTC. All submissions should refer to File No. SR-DTC-2001-08 and should be submitted by July 3, 2001.

It Is Therefore Ordered, pursuant to Section 19(b)(2) of the Act,[3] that the proposed rule change is hereby approved on an accelerated basis.

Start Signature

For the Commission, by the Division of Market Regulation, pursuant to delegated authority.[4]

Margaret H. McFarland,

Deputy Secretary.

End Signature End Preamble

Footnotes

2.  Nasdaq Europe plans to issue a compliance notice requiring its members to ensure that settlement at DTC of Nasdaq Europe trades are done in accordance with the procedures prescribed by DTC.

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[FR Doc. 01-14736 Filed 6-11-01; 8:45 am]

BILLING CODE 8010-01-M