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Self-Regulatory Organizations; The Depository Trust Company; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Implement a Disincentive Fee Associated With the Deposit Automation Management System

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Start Preamble October 28, 2010.

Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”),[1] notice is hereby given that on October 18, 2010, The Depository Trust Company (“DTC”) filed with the Securities and Exchange Commission (“Commission”) the proposed rule change described in Items I and II below, which items have been prepared primarily by DTC.[2] DTC filed the proposed rule change pursuant to Section 19(b)(3)(A)(iii) and Rule 19b-4(f)(3) thereunder so that the proposed rule change was effective upon filing with the Commission.[3] 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 will amend DTC rules to provide that DTC will impose a new disincentive fee for certain deposits made through DTC's Deposit Automation Management (“DAM”) system.

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.[4]

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

The DAM system allows participants to transmit details of a deposit before forwarding physical securities to DTC. Under the DAM system, a participant is able to send to DTC details regarding securities that the participant plans to deposit.[5] DTC uses the deposit details to determine whether the proposed deposit is acceptable by checking for such things as issue eligibility, chill status, correct CUSIP information, etc. The deposit detail information is stored in DTC's database. Upon the submitting participant's initiation, DTC's systems send a transmission to the submitting participant's printer using a Systems Network Architecture (“SNA”) connection.[6] The transmission causes bar-coded deposit tickets to print at the participant's office on dedicated thermal printers.[7] The bar-coded deposit tickets contain a variety of information required for DTC's processing of deposits.

Since IBM's recent announcement that it would no longer support SNA, DTC has begun making the deposit tickets available in PDF format. The method used by participants to initiate the print process did not change but rather than send the deposit tickets to a dedicated thermal printer at the participant's location, DTC “pushes” the deposit tickets to the requesting participant's work station in PDF format where the ticket can then be printed from any printer attached to that work station (“PDF method”). This process eliminates the need for participants to use expensive thermal printers or “peel-off” bar code labels.

Effective October 8, 2010, DTC retired the outdated and unsupported SNA ticket print stream and the use of “peel-off” adhesive bar code labels. Participants continue to have the ability to produce DAM deposit tickets for submission to DTC using the PDF method. Effective Monday, November 1, 2010, all DAM deposits received by DTC must be accompanied by a deposit ticket printed using the PDF method. Pursuant to this rule change, all deposits received without a DAM deposit ticket generated using the PDF method will continue to be processed by DTC but will incur a $100.00 processing fee in addition to the current DAM deposit fee.

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 that are applicable to DTC Start Printed Page 68014because the proposed rule will promote efficiencies in DTC's DAM service, and as such, it should help DTC remove undue impediments to and perfect the mechanism of a national system for the clearance and settlement of securities transactions.

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

DTC does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act.

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

No written comments relating to the proposed rule change have 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

The foregoing rule change has become effective upon filing pursuant to Section 19(b)(3)(A)(iii) of the Act [9] and Rule 19b-4(f)(3)[10] thereunder because it establishes or changes a due, fee, or other charge imposed by DTC. At any time within sixty days of the filing of such rule change, the Commission summarily may temporarily suspend 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. Comments may be submitted by any of the following methods:

Electronic Comments

Paper Comments

  • Send paper comments in triplicate to Elizabeth M. Murphy, Secretary, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549-1090.

All submissions should refer to File Number SR-DTC-2010-13. 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 (​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 Web site viewing and printing in the Commission's Public Reference Section, 100 F Street, NE., Washington, DC 20549, on official business days between the hours of 10 a.m. and 3 p.m. Copies of such filings also will be available for inspection and copying at the principal office of DTC and on DTC's Web site, 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-2010-13 and should be submitted on or before November 26, 2010.

Start Signature

For the Commission by the Division of Trading and Markets, pursuant to delegated authority.[11]

Florence E. Harmon,

Deputy Secretary.

End Signature End Preamble


2.  The text of the proposed rule change is attached as Exhibit 5 to DTC's filing, which is available at​downloands/​legal/​rule_​filings/​2010/​dtc/​2010-13.pdf.

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3.  15 U.S.C. 78s(b)(3)(A)(iii) and 17 CFR 240.19b-4(f)(3).

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

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5.  Participants send the deposit details to DTC using either a Participant Terminal System message (“DAMP”), a PBS transmission, or a CF2DEP file.

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6.  SNA is a network system developed by IBM in the early 1980s to move large amounts of data through the Internet.

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7.  Some participants with low volumes of deposits have elected to use “peel-off” adhesive bar code labels instead of investing in expensive thermal printers.

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9.  15 U.S.C. 78s(b)(3)(A)(iii).

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[FR Doc. 2010-27856 Filed 11-3-10; 8:45 am]