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Notice

Self-Regulatory Organizations; The Depository Trust Company; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Relating to Enhancements to DTC's Memo Segregation Procedures

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Start Preamble October 24, 2002.

Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”),[1] notice is hereby given that on September 3, 2002, 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 persons.

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

The proposed rule change consists of enhancements to the Memo Segregation (“Memo Seg”) procedures of DTC.

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.[2]

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

The proposed rule change makes enhancements to DTC's existing Memo Start Printed Page 66436Seg process. The enhancements are as follows. First, a special reclaim reasons code will be created for free and valued deliver orders that will not affect Memo Seg. Therefore, free and valued reclaims processed with this code will not reduce the deliverer's Memo Seg. Second, a special reclaim reason code will be created for free and valued deliver orders that will reduce Memo Seg. Therefore, free and valued reclaims processed with this code will always reduce the deliverer's Memo Seg. Third, reason codes will be added to the list of exception reason codes for non-optional Memo Seg procedures. Therefore, free deliveries processed with these codes will not automatically reduce Memo Seg. Fourth, additional reason codes will be added to Memo Seg indicators. Fifth, same-day Matched Reclaims will automatically increase the Memo Seg of the receiver of the reclaim if the original delivery decreased Memo Seg regardless of the reclaim reason code. Sixth, pledges will reduce Turnaround position. All enhancements are further described in DTC's Important Notice No. 3733, Memo Segregation Enhancement, which was made available to participants starting September 5, 2002. Important Notice No. 3733 is attached as an exhibit to DTC's proposed rule change.

The proposed rule change is consistent with the requirements of section 17A of the Act and the rules and regulations thereunder applicable to DTC because it will give participants additional options in using DTC's Memo Seg procedures. 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 since the proposed rule change will modify DTC's existing Memo Seg procedures.

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

DTC perceives no adverse impact on competition by reason of the proposed rule change.

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

Written comments from DTC's participants have not been solicited nor received on the proposed rule change.

II. 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) of the Act [3] and Rule 19b-4(f)(4)[4] promulgated thereunder because the proposal effects a change in an existing service of DTC that (A) does not adversely affect the safeguarding of securities or funds in the custody or control of DTC or for which it is responsible and (B) does not significantly affect the respective rights or obligations of DTC 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.

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 Section, 450 Fifth Street NW., Washington, DC 20549. Copies of such filing will also be available for inspection and copying at the principal office of the DTC. All submissions should refer to the File No. SR-DTC-2002-12 and should be submitted by November 21, 2002.

Start Signature

For the Commission by the Division of Market Regulation, pursuant to delegated authority.[5]

Margaret H. McFarland,

Deputy Secretary.

End Signature End Preamble

Footnotes

2.  The Commission has modified parts of these statements.

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3.  15 U.S.C. 78s(b)(3)(A)(iii).

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[FR Doc. 02-27663 Filed 10-30-02; 8:45 am]

BILLING CODE 8010-01-P