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Notice

Self-Regulatory Organizations; The Depository Trust Company; Notice of Filing of Proposed Rule Change Authorizing DTC to Act Upon Instructions Provided by a Central Matching Service Provider

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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 August 16, 2001.

Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”),[1] notice is hereby given that on June 27, 2001, 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. The Commission is publishing this notice to solicit comments on the proposed rule change from interested parties.

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

The proposed rule change would authorize DTC to act upon instructions provided by a Central Matching Service Provider [2] to (1) accept deliver order instructions to settle transactions between DTC participants and (2) collect service fees on behalf of a Central Matching Service Provider from DTC participants. Under the proposed rule change, DTC would notify its participants of its intention to act upon the instructions of the Central Matching Service Provider except with respect to the account of a participant that advises DTC to the contrary.

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.[3]

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

On April 17, 2001, the Commission approved DTC's proposal to combine its TradeSuite business with institutional trade processing services offered by Thomson Financial ESG in a newly-formed joint venture company, Omgeo LLC (“Omgeo”).[4] The Commission also granted an exemption from clearing agency registration to Global Joint Venture Matching Services-US, LCC, a wholly-owned subsidiary of Omgeo, with respect to Omgeo's provision of Central Matching Services.[5] DTC expects that other entities will seek to become Central Matching Service Providers.[6]

DTC neither engages in matching institutional trade information nor communicates to its participants or others prior to settlement that a transaction has been matched. DTC assumes that the Central Matching Service Provider will make arrangements for the communication of this information to the DTC participants expected to settle matched transactions by book-entry delivery at DTC. DTC is prepared to accept from a Central Matching Service Provider a file of deliver order instructions to settle transactions between DTC participants that have authorized DTC to accept such instructions. The purpose of the proposed rule change is to obtain Commission approval of DTC's proposal whereby DTC will act upon deliver order instructions received from the Central Matching Service Provider and will collect service fees on behalf of the Central Matching Service Provider[7] without the delay and inconvenience to both Central Matching Service Providers and DTC participants that would result if DTC were to require each participant to execute a written form of authorization. Under the proposed rule change, DTC would provide notice to participants of its intention to act upon the instructions of a Central Matching Service Provider, as described above, giving each participant the opportunity to advise DTC not to accept such instructions with respect to its account.

DTC believes that the proposed rule change is consistent with the requirements of Section 17A of the Act [8] and the rules and regulations thereunder applicable to DTC because it will allow DTC to act upon deliver order instructions received from a Central Matching Service Provider and to collect service fees on behalf of the Central Matching Service Provider without the delay and inconveniece to both Central Matching Service Providers and participants that would result were DTC to require each articipant to execute a written form of authorization.

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

DTC perceives no impact on competition by reason of the proposed rule change since it will apply to any Central Matching Service Provider.

(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

Within thirty-five days of the date of publication of this notice in the Federal Register or within such longer period (i) as the Commission may designate up to ninety days of such date if it finds such longer period to be appropriate and publishes its reasons for so finding or (ii) as to which the self-regulatory organization consents, the Commission will:

(A) by order approve such proposed rule change or

(B) institute roceedings to determine whether the proposed rule change should be disapproved.

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 consisent 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 communications relating to the proposed rule change between the Commission and any person, other than those that may be witheld 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, 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-2001-11 and should be submitted by September 12, 2001.

Start Signature

For the Commission by the Division of Market Regulation, pursuant to delegated authority.[9]

Jonathan G. Katz,

Secretary.

End Signature End Preamble

Footnotes

2.  Central Matching Service Provider as such term is used in this proposed rule change refers to an entity that (i) provides a Central Matching Service and (ii) has registered with the Commission as a clearing agency or has been granted an exemption by the Commission from clearing agency registration. Central Matching Service means an electronic service to centrally match information between a broker-dealer and its institutional customer (so long as one or both such parties is a U.S. person) relating to transactions in securities issued by a U.S. issuer regardless of where the transactions are settled.

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3.  The Commission has modified the text of summaries prepared by DTC.

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4.  Securities Exchange Act Release No. 44189 (April 17, 2001), 66 FR 20502 [File No. DTC-00-10].

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5.  Securities Exchange Act Release No. 44188 (April 17, 2001), 66 FR 20494 [File No. 600-32].

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6.  GSTP AG has filed an application with the Commission for an exemption from registration as a clearing agency. If such exemption is granted, under the proposed rule change, DTC would accept and act upon instructions submitted by GSTP AG.

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7.  While DTC will include such fees as debits in the participant's settlement account, DTC's collection of such amounts shall be on a “best efforts” basis.

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[FR Doc. 01-21160 Filed 8-21-01; 8:45 am]

BILLING CODE 8010-01-M