This PDF is the current document as it appeared on Public Inspection on 09/04/2013 at 08:45 am.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”)  and Rule 19b-4 thereunder, notice is hereby given that on August 22, 2013, 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 persons.
I. Clearing Agency's Statement of the Terms of Substance of the Proposed Rule Change
As more fully discussed below, the proposed rule change is to terminate the Sealed Envelope Service, which is part of DTC's Custody Service.
II. Clearing Agency'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.
(A) Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change
In 2002, DTC launched the Sealed Envelope Service (the “Service”) as a service extension to DTC's Custody Service. The Service was designed to provide physical custody to Participants for documents or instruments that are not securities, such as loan agreements, wills, deeds, mortgages, contracts and option agreements. The Service strictly prohibits the deposit of securities certificates as well as tangible assets such as currency, gold coins or jewelry. DTC initially launched the Service in response to a request from Participants to assist in fully outsourcing their vaults to DTC. Subsequently, there has not been much use of the Service by Participants, and it is, accordingly, not economically efficient to maintain the Service.
Currently, DTC allows for these non-security items to be held in custody in a sealed envelope in one of DTC's vaults. The envelopes are such that the contents cannot be viewed when sealed. DTC does not open any sealed envelopes, but x-rays all packages and envelopes received to assure [sic] no dangerous contents. DTC also assigns a user-CUSIP number for tracking and record keeping purposes. The depositing Participant is required to list the contents of the envelope on the outside of the envelope. Participants balance their sealed envelopes daily with DTC in the same manner as they presently do for securities held in the Custody Service. DTC does not verify the contents of the envelope and this has presented a concern since DTC has no way of knowing whether the contents qualify for the Service. Start Printed Page 54697
As part of the Hurricane Sandy storm recovery, DTC has determined that it is not recovering its costs from usage of the Service by only a few Participants. Only fifteen Participants currently use the Service, with one of those Participants representing approximately 85% of the total volume. All fifteen of these Participants have been notified of DTC's intention to discontinue the Service and none of the Participants have objected. Accordingly, upon approval by the SEC, DTC will terminate the Service. DTC will work with the Participants that currently use the Service to develop a timeline that is not unduly burdensome to return the existing sealed envelope inventory.
DTC believes the proposed rule change, as described above, is consistent with the requirements of the Act, specifically Section 17A(b)(3)(F), and the rules and regulations thereunder applicable to DTC, because the change, which terminates the Service, eliminates risk to the depository associated with the safeguarding of items in DTC's physical custody and therefore enhances DTC's ability to safeguard securities or funds in its custody or control or for which it is responsible.
(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
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 45 days of the date of publication of this notice in the Federal Register or within such longer period up to 90 days (i) as the Commission may designate 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 or disapprove such proposed rule change, or
(B) institute proceedings 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 consistent with the Act. Comments may be submitted by any of the following methods:
- Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
- Send an email to email@example.com. Please include File Number SR-DTC-2013-10 on the subject line.
- 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-2013-10. This file number should be included on the subject line if email 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 Web site viewing and printing in the Commission's Public Reference Room, 100 F Street NE., Washington, DC 20549, on official business days between the hours of 10:00 a.m. and 3:00 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 at http://dtcc.com/legal/rule_filings/dtc/2013.php. 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-2013-10 and should be submitted on or before September 26, 2013.Start Signature
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Elizabeth M. Murphy,
3. Securities Exchange Act Release No. 46018 (Jun. 3, 2002), 67 FR 39454 (Jun. 7, 2002) (SR-DTC-2002-03).Back to Citation
[FR Doc. 2013-21561 Filed 9-4-13; 8:45 am]
BILLING CODE 8011-01-P