Self-Regulatory Organizations; The Depository Trust Company; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Provide Centralized Billing Process Relating to the Profile Modification System in DRS, 24770-24771 [E6-6249]
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24770
Federal Register / Vol. 71, No. 80 / Wednesday, April 26, 2006 / Notices
wwhite on PROD1PC61 with NOTICES
Amendment No. 1 to the proposed rule
change.4 The proposed rule change, as
amended, was published for comment
in the Federal Register on March 14,
2006.5 The Commission received no
comments on the proposal. This order
approves the proposed rule change, as
amended.
Under the Exchange’s rules, the
Committee on Specialist Assignment
and Evaluation (‘‘CSAE’’) is responsible
for appointing participant firms to act as
specialists on the Exchange.6 From time
to time, the CSAE may make a
temporary assignment of one or more
securities to a specialist firm.7
Temporary assignments may be made,
for example, when one specialist firm
has requested and been granted the
opportunity to deregister in one or more
of its securities before the formal
posting and assignment process has
been completed.8 Through this
proposed rule change, as amended, the
Exchange seeks to confirm, retroactive
to January 1, 2006, that, when a firm has
been appointed to act as specialist in a
security on a temporary basis, the firm
will not be charged the specialist fixed
fees otherwise associated with the
trading of that security.
The Commission finds that the
proposed rule change, as amended, is
consistent with the requirements of
Section 6 of the Act,9 and the rules and
regulations thereunder applicable to a
national securities exchange.10 In
particular, the Commission finds that
effective immediately, specialist fixed fees would
not be assessed to a specialist firm with respect to
securities that are temporarily assigned. See
Securities Exchange Act Release No. 53429 (March
6, 2006), 71 FR 13197 (March 14, 2006).
4 In Amendment No. 1, the Exchange revised the
proposal’s rule text to clarify its meaning.
5 See Securities Exchange Act Release No. 53433
(March 7, 2006), 71 FR 13196.
6 See Article IV, Rule 6.
7 See Article XXX, Rule 1.
8 The Exchange represents that when a security is
to be assigned or reassigned, the Exchange notifies
specialist firms of the assignment opportunity and
invites applications for the security. See Article
XXX, Rule 1, Interpretation and Policy .01, Section
II. The Exchange further represents that if more
than one firm seeks the assignment, the CSAE holds
meetings with the firms to review their
demonstrated ability, experience, financial
responsibility and other factors that are relevant to
the CSAE’s assignment decision. See Article XXX,
Rule 1, Interpretation and Policy .01, Section II and
Section III. The Exchange represents that depending
upon the number of firms applying for a security
and the availability of committee members and
specialist firm representatives, this process could
take several weeks to complete. An interim
temporary assignment allows a security to continue
to be traded by a specialist firm, while the process
is completed.
9 15 U.S.C. 78f(b).
10 In approving this proposed rule change, the
Commission has considered the proposed rule’s
impact on efficiency, competition, and capital
formation. 15 U.S.C. 78c(f).
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the proposed rule change is consistent
with Section 6(b)(4) of the Act,11 which
requires that the Exchange’s rules
provide for the equitable allocation of
reasonable dues, fees, and other charges
among its members and issuers and
other persons using its facilities. The
Commission believes that the
suspension, retroactive to January 1,
2006, of the specialist fixed fees for
specialist firms who accepted a
temporary assignment of securities is
appropriate because it creates an
incentive for a specialist firm to act as
specialist on a temporary basis pending
completion of the Exchange’s formal
process for assigning securities to a
specialist.
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act,12 that the
proposed rule change (SR–CHX–2006–
08), as amended, is approved.
For the Commission, by the Division of
Market Regulation, pursuant to delegated
authority.13
Nancy M. Morris,
Secretary.
[FR Doc. E6–6230 Filed 4–25–06; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–53679; File No. SR–DTC–
2006–05]
Self-Regulatory Organizations; The
Depository Trust Company; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change To Provide
Centralized Billing Process Relating to
the Profile Modification System in DRS
April 19, 2006.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’),1 notice is hereby given that on
February 17, 2006, 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. DTC filed pursuant to
Section 19(b)(3)(A)(iii) and Rule 19b–
4(f)(4) thereunder so that the proposed
rule change was effective upon filing
with the Commission.2 The Commission
is publishing this notice to solicit
comments on the proposed rule change
from interested parties.
11 15
U.S.C. 78f(b)(5).
U.S.C. 78s(b)(2).
13 17 CFR 200.30–3(a)(12).
1 15 U.S.C. 78s(b)(1).
2 15 U.S.C. 78s(b)(3)(A)(iii) and 17 CFR
240.19(b)(4).
12 15
PO 00000
Frm 00134
Fmt 4703
Sfmt 4703
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The purpose of the proposed rule
change is to provide a centralized
billing process for fees related to certain
transactions in the Profile Modification
System (‘‘Profile’’) facility of the Direct
Registration System (‘‘DRS’’).
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
In 1996 through the efforts of a joint
industry working committee, DTC (1)
Established procedures for DRS that
enabled an investor to transfer his
securities positions registered in his
name and held in book-entry form on
the records of the issuer maintained by
the transfer agent to his broker-dealer to
be held in street name at DTC and vice
versa and (2) established a new category
of participants, DRS limited
participants, which authorized
qualifying transfer agents to use certain
services of DTC related to DRS.4 In
2000, DTC enhanced its DRS facility by
implementing Profile as a feature of
DRS.5 Profile is an electronic messaging
system that allows a DTC participant or
a DRS limited participant (i.e., a transfer
agent) to send instructions to transfer
investors’ book-entry position from one
to the other.
When a DTC participant uses Profile
to send instructions to a transfer agent
in order to transfer an investor’s bookentry positions from the transfer agent
to the broker-dealer’s account at DTC, a
DTC participant must enter certain
identifying criteria of the investor into
Profile. If the submitted identifying
criteria does not match the information
3 The Commission has modified the text of the
summaries prepared by the DTC.
4 Securities Exchange Act Release No. 37931
(November 7, 1996), 61 FR 58600 (November 15,
1996), [File No. SR–DTC–96–15].
5 Securities Exchange Act Release No. 42704
(April 19, 2000), 65 FR 24242 (April 25, 2000), [File
No. SR–DTC–00–04].
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26APN1
Federal Register / Vol. 71, No. 80 / Wednesday, April 26, 2006 / Notices
wwhite on PROD1PC61 with NOTICES
the DRS limited participant has on its
securityholder records, the result is a
‘‘Profile reject,’’ which in many cases
results in a fee being assessed by the
DRS limited participant to the DTC
participant. Currently these fees are
assessed and collected by DRS limited
participants outside of the auspices of
DTC. The manual processing of these
fees is a costly and labor-intensive
process for both DTC participants and
DRS limited participant. In order to
make this process more efficient and
cost effective, DTC participants and DRS
limited participants have asked DTC to
centralize the billing and collection
process for Profile reject fees.
Accordingly, DTC proposes a
centralized process for the billing and
collection of such reject fees.6
Participation in the centralized billing
process will be voluntary for both DTC
participants and DRS limited
participants. A fee schedule for Profile
reject fees will be supplied by each DRS
limited participant at the time of its
enrollment and can be changed by
providing DTC with notice of fee
changes no later than 60 calendar days
prior to such change taking effect. DTC
will permit only one fee increase in any
24 month period. DTC participants that
join the program may elect to opt out of
participating with one or more DRS
limited participants at the time they
enroll in the centralized billing program
or at any time after enrollment. Reject
fees will appear on DTC participants’
monthly billing statements, and the
appropriate fees will be credited to the
respective DRS limited participant’s
account.
DTC will not take part in any dispute
between a DRS limited participant and
a DTC participant relating to assessed
fees. If a dispute is brought to the
attention of DTC and cannot be resolved
by the two parties, DTC will reverse the
charge in the next billing cycle,7 and the
two parties will have to work outside of
the billing system and DTC to resolve
the dispute. Along with the billing
statements, DTC will supply to both
DTC participants and DRS limited
participants a full report listing each
instruction that generated the reject,
date of reject, and reason for the reject.
To offset the cost of building and
maintaining the centralized billing
process, DTC will assess each DRS
limited participant a fee equal to 5% of
the total fees collected through the
6 DTC has the authority under its rules to collect
from its participants fees and charges from third
parties. See Securities Exchange Act Release No.
51870 (June 17, 2005), 70 FR 36678 (June 24, 2005)
[File No. SR–DTC–2005–03].
7 Billing cycles run for 30 days.
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24771
Profile centralized billing process each
month for that DRS limited participant.
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 promote efficiencies for DTC
participants and DRS limited
participants using Profile and DRS
services generally.
Electronic Comments
(B) Self-Regulatory Organization’s
Statement on Burden on Competition
• Send paper comments in triplicate
to Nancy M. Morris, Secretary,
Securities and Exchange Commission,
100 F Street, NE., Washington, DC
20549–1090.
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 the 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)(4) 10 thereunder because it is
effecting a change in an existing service
of a registered clearing agency that does
not adversely affect the safeguarding of
securities or funds in the custody or
control of the clearing agency or for
which it is responsible and does not
significantly affect the respective rights
or obligations of the clearing agency or
persons using the service. At any time
within sixty days of the filing of such
rule change, the Commission could have
summarily abrogated such rule change if
it appeared to the Commission that such
action were 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:
U.S.C. 78q–1.
U.S.C. 78s(b)(3)(A)(iii).
10 17 CFR 240.19b–4(f)(4).
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml) or
• Send an e-mail to rulecomments@sec.gov. Please include File
Number SR–DTC–2006–05 on the
subject line.
Paper Comments
All submissions should refer to File
Number SR–DTC–2006–05. 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 (https://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 inspection and copying in
the Commission’s Public Reference
Section, 100 F Street, NE., Washington,
DC 20549. Copies of such filings also
will be available for inspection and
copying at the principal office of DTC
and on DTC’s Web site, https://
www.dtcc.com. 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–
2006–05 and should be submitted on or
before May 17, 2006.
For the Commission by the Division of
Market Regulation, pursuant to delegated
authority.11
Nancy M. Morris,
Secretary.
[FR Doc. E6–6249 Filed 4–25–06; 8:45 am]
BILLING CODE 8010–01–P
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9 15
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11 17
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CFR 200.30–3(a)(12).
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]]>Agencies
[Federal Register Volume 71, Number 80 (Wednesday, April 26, 2006)]
[Notices]
[Pages 24770-24771]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E6-6249]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-53679; File No. SR-DTC-2006-05]
Self-Regulatory Organizations; The Depository Trust Company;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Provide Centralized Billing Process Relating to the Profile
Modification System in DRS
April 19, 2006.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ notice is hereby given that on February 17, 2006, 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. DTC filed pursuant to Section 19(b)(3)(A)(iii) and Rule 19b-
4(f)(4) thereunder so that the proposed rule change was effective upon
filing with the Commission.\2\ The Commission is publishing this notice
to solicit comments on the proposed rule change from interested
parties.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 15 U.S.C. 78s(b)(3)(A)(iii) and 17 CFR 240.19(b)(4).
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The purpose of the proposed rule change is to provide a centralized
billing process for fees related to certain transactions in the Profile
Modification System (``Profile'') facility of the Direct Registration
System (``DRS'').
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\
---------------------------------------------------------------------------
\3\ The Commission has modified the text of the summaries
prepared by the DTC.
---------------------------------------------------------------------------
(A) Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In 1996 through the efforts of a joint industry working committee,
DTC (1) Established procedures for DRS that enabled an investor to
transfer his securities positions registered in his name and held in
book-entry form on the records of the issuer maintained by the transfer
agent to his broker-dealer to be held in street name at DTC and vice
versa and (2) established a new category of participants, DRS limited
participants, which authorized qualifying transfer agents to use
certain services of DTC related to DRS.\4\ In 2000, DTC enhanced its
DRS facility by implementing Profile as a feature of DRS.\5\ Profile is
an electronic messaging system that allows a DTC participant or a DRS
limited participant (i.e., a transfer agent) to send instructions to
transfer investors' book-entry position from one to the other.
---------------------------------------------------------------------------
\4\ Securities Exchange Act Release No. 37931 (November 7,
1996), 61 FR 58600 (November 15, 1996), [File No. SR-DTC-96-15].
\5\ Securities Exchange Act Release No. 42704 (April 19, 2000),
65 FR 24242 (April 25, 2000), [File No. SR-DTC-00-04].
---------------------------------------------------------------------------
When a DTC participant uses Profile to send instructions to a
transfer agent in order to transfer an investor's book-entry positions
from the transfer agent to the broker-dealer's account at DTC, a DTC
participant must enter certain identifying criteria of the investor
into Profile. If the submitted identifying criteria does not match the
information
[[Page 24771]]
the DRS limited participant has on its securityholder records, the
result is a ``Profile reject,'' which in many cases results in a fee
being assessed by the DRS limited participant to the DTC participant.
Currently these fees are assessed and collected by DRS limited
participants outside of the auspices of DTC. The manual processing of
these fees is a costly and labor-intensive process for both DTC
participants and DRS limited participant. In order to make this process
more efficient and cost effective, DTC participants and DRS limited
participants have asked DTC to centralize the billing and collection
process for Profile reject fees.
Accordingly, DTC proposes a centralized process for the billing and
collection of such reject fees.\6\ Participation in the centralized
billing process will be voluntary for both DTC participants and DRS
limited participants. A fee schedule for Profile reject fees will be
supplied by each DRS limited participant at the time of its enrollment
and can be changed by providing DTC with notice of fee changes no later
than 60 calendar days prior to such change taking effect. DTC will
permit only one fee increase in any 24 month period. DTC participants
that join the program may elect to opt out of participating with one or
more DRS limited participants at the time they enroll in the
centralized billing program or at any time after enrollment. Reject
fees will appear on DTC participants' monthly billing statements, and
the appropriate fees will be credited to the respective DRS limited
participant's account.
---------------------------------------------------------------------------
\6\ DTC has the authority under its rules to collect from its
participants fees and charges from third parties. See Securities
Exchange Act Release No. 51870 (June 17, 2005), 70 FR 36678 (June
24, 2005) [File No. SR-DTC-2005-03].
---------------------------------------------------------------------------
DTC will not take part in any dispute between a DRS limited
participant and a DTC participant relating to assessed fees. If a
dispute is brought to the attention of DTC and cannot be resolved by
the two parties, DTC will reverse the charge in the next billing
cycle,\7\ and the two parties will have to work outside of the billing
system and DTC to resolve the dispute. Along with the billing
statements, DTC will supply to both DTC participants and DRS limited
participants a full report listing each instruction that generated the
reject, date of reject, and reason for the reject. To offset the cost
of building and maintaining the centralized billing process, DTC will
assess each DRS limited participant a fee equal to 5% of the total fees
collected through the Profile centralized billing process each month
for that DRS limited participant.
---------------------------------------------------------------------------
\7\ Billing cycles run for 30 days.
---------------------------------------------------------------------------
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 promote
efficiencies for DTC participants and DRS limited participants using
Profile and DRS services generally.
---------------------------------------------------------------------------
\8\ 15 U.S.C. 78q-1.
---------------------------------------------------------------------------
(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 the 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)(4) \10\
thereunder because it is effecting a change in an existing service of a
registered clearing agency that does not adversely affect the
safeguarding of securities or funds in the custody or control of the
clearing agency or for which it is responsible and does not
significantly affect the respective rights or obligations of the
clearing agency or persons using the service. At any time within sixty
days of the filing of such rule change, the Commission could have
summarily abrogated such rule change if it appeared to the Commission
that such action were necessary or appropriate in the public interest,
for the protection of investors, or otherwise in furtherance of the
purposes of the Act.
---------------------------------------------------------------------------
\9\ 15 U.S.C. 78s(b)(3)(A)(iii).
\10\ 17 CFR 240.19b-4(f)(4).
---------------------------------------------------------------------------
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
Use the Commission's Internet comment form (https://
www.sec.gov/rules/sro.shtml) or
Send an e-mail to rule-comments@sec.gov. Please include
File Number SR-DTC-2006-05 on the subject line.
Paper Comments
Send paper comments in triplicate to Nancy M. Morris,
Secretary, Securities and Exchange Commission, 100 F Street, NE.,
Washington, DC 20549-1090.
All submissions should refer to File Number SR-DTC-2006-05. 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 (https://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 inspection and
copying in the Commission's Public Reference Section, 100 F Street,
NE., Washington, DC 20549. Copies of such filings also will be
available for inspection and copying at the principal office of DTC and
on DTC's Web site, https://www.dtcc.com. 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-2006-05 and should be submitted on
or before May 17, 2006.
For the Commission by the Division of Market Regulation,
pursuant to delegated authority.\11\
---------------------------------------------------------------------------
\11\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Nancy M. Morris,
Secretary.
[FR Doc. E6-6249 Filed 4-25-06; 8:45 am]
BILLING CODE 8010-01-P
