Self-Regulatory Organizations; The Depository Trust Company; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Modify Fee in Connection With Its Offering of a Mechanism by Which It Collects and Passes-Through Fees Owed by Participants to American Depositary Receipt Agents for Certain Issues, 8217-8218 [E7-3072]

Download as PDF Federal Register / Vol. 72, No. 36 / Friday, February 23, 2007 / Notices SECURITIES AND EXCHANGE COMMISSION [Release No. 34–55306; File No. SR–DTC– 2006–21] Self-Regulatory Organizations; The Depository Trust Company; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Modify Fee in Connection With Its Offering of a Mechanism by Which It Collects and Passes-Through Fees Owed by Participants to American Depositary Receipt Agents for Certain Issues February 15, 2007. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’),1 notice is hereby given that on December 29, 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 the proposed rule change pursuant to Section 19(b)(3)(A)(ii) of the Act 2 and Rule 19b–4(f)(2) 3 thereunder so that the proposal was effective upon filing with the Commission. The Commission is publishing this notice to solicit comments on the rule change from interested parties. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The purpose of the rule change is to modify DTC’s fee for offering the mechanism by which it collects and passes-through fees owed by participants to American Depositary Receipt (‘‘ADR’’) agents for certain issues. cprice-sewell on PROD1PC61 with NOTICES 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 1 15 U.S.C. 78s(b)(1). U.S.C. 78s(b)(3)(A)(ii). 3 17 CFR 240.19b–4(f)(2). 4 The Commission has modified the text of the summaries prepared by DTC. 2 15 VerDate Aug<31>2005 15:07 Feb 22, 2007 Jkt 211001 A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change Typically, an ADR agent is authorized under its agreement with the issuer to impose a custody fee on holders of the issue. A common practice for collection of this fee is for the ADR agent to subtract the amount of the fee from the gross dividend payable to the ADR holders. This practice is effectuated by DTC announcing to participants both the gross dividend rate and the net dividend rate after deduction of the ADR custody fee, and the ADR agent paying DTC the net dividend and DTC allocating the net dividend to participants. However, a number of ADR issues do not pay periodic dividends, which prevents the associated fees from being collected through the abovedescribed mechanism. Pursuant to discussions with industry representatives and in order to facilitate a more efficient ADR fee collection process, DTC recently introduced a mechanism by which it collects from participants and passes through to ADR agents custody fees for issues that do not pay periodic dividends as such fees are reported to DTC by the ADR agents.5 DTC discussed that proposal with three divisions of the Securities Industry Association (‘‘SIA’’), the Corporate Actions Division, Dividends Division, and Securities Operations Divisions (‘‘SOD’’). The SOD Regulatory and Clearance Committee prepared and sent to DTC a memorandum on DTC’s proposal. The memorandum concluded that DTC should collect such fees through its normal monthly billing process.6 In order to cover costs incurred in collecting fees associated with ADR issues that do not pay periodic dividends, DTC currently retains a collection charge equal to three percent (3%) of the ADR agent fee amount collected from each participant up to a maximum of $4,000 per CUSIP per participant position. DTC does not retain a fee if the computed collection charge is less than $50. Due to recently implemented processing improvements, DTC has determined that the costs incurred in providing the collection function have decreased. DTC is modifying the fee it 5 Securities Exchange Act Release No. 34–53970 (June 12, 2006), 71 FR 34974 (June 16, 2006) [File No. SR–DTC–2006–08]. 6 Memorandum from Albert Howell, Chairman, Regulatory & Clearance Committee, Securities Operations Division, Securities Industry Association, to William Hodash, Managing Director, The Depository Trust and Clearing Company (March 7, 2006). PO 00000 Frm 00069 Fmt 4703 Sfmt 4703 8217 retains for this service by changing the frequency of the charge from one levied per CUSIP per participant position to one levied per CUSIP only. DTC is also changing the maximum amount collected from $4,000 per CUSIP per participant position to $10,000 per CUSIP. DTC projects that these changes will result in an overall reduction in the charges DTC retains for this service in an amount consistent with the overall reduction in the cost of offering the service. The modified fee became effective January 2, 2007. DTC believes the proposed rule change is consistent with Section 17A of the Act,7 as amended, because it updates its fee schedule. As such, it provides for the equitable allocation of fees among its participants and aligns fees for services with the associated cost to deliver the service. 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 The foregoing proposed rule change has become effective upon filing pursuant to Section 19(b)(3)(A)(ii) of the Act 8 and Rule 19b–4(f)(2) 9 thereunder because the rule establishes a due, fee, or other charge. 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. 7 15 U.S.C. 78q–1. U.S.C. 78s(b)(3)(A)(ii). 9 17 CFR 240.19b–4(f)(2). 8 15 E:\FR\FM\23FEN1.SGM 23FEN1 8218 Federal Register / Vol. 72, No. 36 / Friday, February 23, 2007 / Notices Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission’s Internet comment form (http://www.sec.gov/ rules/sro.shtml) or • Send an e-mail to rulecomments@sec.gov. Please include File Number SR–DTC–2006–21 on the subject line. Paper Comments SECURITIES AND EXCHANGE COMMISSION [Release No. 34–55289; File No. SR–ISE– 2007–04] Self-Regulatory Organizations; International Securities Exchange, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to Network Fee Changes February 13, 2007. Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 (the ‘‘Act’’),1 and Rule 19b–4 thereunder,2 notice is hereby given that on January 17, 2007, the International Securities Exchange, LLC (‘‘ISE’’ or ‘‘Exchange’’) filed with the Securities and Exchange All submissions should refer to File Commission (‘‘Commission’’) the Number SR–DTC–2006–21. This file proposed rule change as described in number should be included on the subject line if e-mail is used. To help the Items I, II, and III below, which Items have been substantially prepared by the Commission process and review your ISE. The ISE has designated this comments more efficiently, please use only one method. The Commission will proposal as one establishing or changing post all comments on the Commission’s a due, fee, or other charge applicable only to a member under section Internet Web site (http://www.sec.gov/ 19(b)(3)(A)(ii) of the Act,3 and rule 19b– rules/sro.shtml). Copies of the 4(f)(2) thereunder,4 which renders the submission, all subsequent proposal effective upon filing with the amendments, all written statements Commission. The Commission is with respect to the proposed rule publishing this notice to solicit change that are filed with the comments on the proposed rule change Commission, and all written from interested persons. communications relating to the proposed rule change between the I. Self-Regulatory Organization’s Commission and any person, other than Statement of the Terms of Substance of those that may be withheld from the the Proposed Rule Change public in accordance with the The ISE is proposing to amend its provisions of 5 U.S.C. 552, will be Schedule of Fees to adopt a tiered available for inspection and copying in structure for one of the Exchange’s the Commission’s Public Reference network fees. The text of the proposed Section, 100 F Street, NE., Washington, rule change is available at the Exchange, DC 20549. Copies of such filings also the Commission’s Public Reference will be available for inspection and Room, and at http:// copying at the principal office of DTC www.iseoptions.com. and on DTC’s Web site at https:// II. Self-Regulatory Organization’s login.dtcc.com/dtcorg/. All comments received will be posted without change; Statement of the Purpose of, and Statutory Basis for, the Proposed Rule the Commission does not edit personal Change identifying information from submissions. You should submit only In its filing with the Commission, the information that you wish to make ISE included statements concerning the available publicly. All submissions purpose of, and basis for, the proposed should refer to File Number SR–DTC– rule change and discussed any 2006–21 and should be submitted on or comments it received on the proposed before March 16, 2007. rule change. The text of these statements may be examined at the places specified For the Commission by the Division of in item IV below. The ISE has prepared Market Regulation, pursuant to delegated summaries, set forth in sections A, B, authority.10 and C below, of the most significant Florence E. Harmon, aspects of such statements. Deputy Secretary. cprice-sewell on PROD1PC61 with NOTICES • Send paper comments in triplicate to Nancy M. Morris, Secretary, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549–1090. [FR Doc. E7–3072 Filed 2–22–07; 8:45 am] BILLING CODE 8010–01–P 10 17 15:07 Feb 22, 2007 U.S.C. 78s(b)(1). CFR 240.19b–4. 3 15 U.S.C. 78s(b)(3)(A)(ii). 4 17 CFR 240.19b–4(f)(2). 2 17 CFR 200.30–3(a)(12). VerDate Aug<31>2005 1 15 Jkt 211001 PO 00000 Frm 00070 Fmt 4703 Sfmt 4703 A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The purpose of this proposed rule change is to amend the Exchange’s Schedule of Fees to adopt a tiered structure for the Ethernet/Managed Service Provider fee charged to members. The Ethernet/Managed Service Provider fee is a fee charged to ISE members to access the ISE’s trading system via an Ethernet connection or a third-party managed service provider. The Ethernet/Managed Service Provider connection carries the same information (such as quotation and trade information) as other forms of connection (such as T–1 and T–3 pointto-point connections) and does not require any changes to the Exchange’s surveillance or communications rules. There is no change to, or impact on, the Exchange’s trading systems as a result of this method of connection. An Ethernet/Managed Service Provider connection enables users to acquire bandwidth in megabit increments. The ISE currently charges members $25.00 per Megabit (MB), and members may purchase up to 15MBs. The Exchange recently launched a new service whereby members will now be able to purchase up to 1000MBs. To bring this network fee in line with the new service, the ISE proposes to establish a new pricing structure for connection speeds. Specifically, the ISE proposes to charge members $100.00 per month for a member’s purchase of up to 10MBs of connection speed, $250.00 per month for the purchase of 11 to 100MBs of connection speed, and $500.00 per month for the purchase of 101MBs to 1GB (1000MBs) of connection speed. These fees will be charged on a per connection basis. As noted above, the Exchange previously limited any connection to a maximum of 15MBs. The Exchange notes that the fees proposed herein are intended to cover and reasonably relate to its costs in rolling out and supporting the new service. 2. Statutory Basis The basis under the Act for this proposed rule change is the requirement under section 6(b)(4) 5 that an exchange have an equitable allocation of reasonable dues, fees and other charges among its members and other persons using its facilities. In particular, these fees will enable the Exchange to cover 5 15 E:\FR\FM\23FEN1.SGM U.S.C. 78f(b)(4). 23FEN1

Agencies

[Federal Register Volume 72, Number 36 (Friday, February 23, 2007)]
[Notices]
[Pages 8217-8218]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E7-3072]



[[Page 8217]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-55306; File No. SR-DTC-2006-21]


Self-Regulatory Organizations; The Depository Trust Company; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Modify Fee in Connection With Its Offering of a Mechanism by Which It 
Collects and Passes-Through Fees Owed by Participants to American 
Depositary Receipt Agents for Certain Issues

February 15, 2007.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on December 29, 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 the proposed rule change pursuant to Section 
19(b)(3)(A)(ii) of the Act \2\ and Rule 19b-4(f)(2) \3\ thereunder so 
that the proposal was effective upon filing with the Commission. The 
Commission is publishing this notice to solicit comments on the rule 
change from interested parties.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \3\ 17 CFR 240.19b-4(f)(2).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The purpose of the rule change is to modify DTC's fee for offering 
the mechanism by which it collects and passes-through fees owed by 
participants to American Depositary Receipt (``ADR'') agents for 
certain issues.

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\
---------------------------------------------------------------------------

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

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

    Typically, an ADR agent is authorized under its agreement with the 
issuer to impose a custody fee on holders of the issue. A common 
practice for collection of this fee is for the ADR agent to subtract 
the amount of the fee from the gross dividend payable to the ADR 
holders. This practice is effectuated by DTC announcing to participants 
both the gross dividend rate and the net dividend rate after deduction 
of the ADR custody fee, and the ADR agent paying DTC the net dividend 
and DTC allocating the net dividend to participants. However, a number 
of ADR issues do not pay periodic dividends, which prevents the 
associated fees from being collected through the above-described 
mechanism.
    Pursuant to discussions with industry representatives and in order 
to facilitate a more efficient ADR fee collection process, DTC recently 
introduced a mechanism by which it collects from participants and 
passes through to ADR agents custody fees for issues that do not pay 
periodic dividends as such fees are reported to DTC by the ADR 
agents.\5\ DTC discussed that proposal with three divisions of the 
Securities Industry Association (``SIA''), the Corporate Actions 
Division, Dividends Division, and Securities Operations Divisions 
(``SOD''). The SOD Regulatory and Clearance Committee prepared and sent 
to DTC a memorandum on DTC's proposal. The memorandum concluded that 
DTC should collect such fees through its normal monthly billing 
process.\6\
---------------------------------------------------------------------------

    \5\ Securities Exchange Act Release No. 34-53970 (June 12, 
2006), 71 FR 34974 (June 16, 2006) [File No. SR-DTC-2006-08].
    \6\ Memorandum from Albert Howell, Chairman, Regulatory & 
Clearance Committee, Securities Operations Division, Securities 
Industry Association, to William Hodash, Managing Director, The 
Depository Trust and Clearing Company (March 7, 2006).
---------------------------------------------------------------------------

    In order to cover costs incurred in collecting fees associated with 
ADR issues that do not pay periodic dividends, DTC currently retains a 
collection charge equal to three percent (3%) of the ADR agent fee 
amount collected from each participant up to a maximum of $4,000 per 
CUSIP per participant position. DTC does not retain a fee if the 
computed collection charge is less than $50.
    Due to recently implemented processing improvements, DTC has 
determined that the costs incurred in providing the collection function 
have decreased. DTC is modifying the fee it retains for this service by 
changing the frequency of the charge from one levied per CUSIP per 
participant position to one levied per CUSIP only. DTC is also changing 
the maximum amount collected from $4,000 per CUSIP per participant 
position to $10,000 per CUSIP. DTC projects that these changes will 
result in an overall reduction in the charges DTC retains for this 
service in an amount consistent with the overall reduction in the cost 
of offering the service. The modified fee became effective January 2, 
2007.
    DTC believes the proposed rule change is consistent with Section 
17A of the Act,\7\ as amended, because it updates its fee schedule. As 
such, it provides for the equitable allocation of fees among its 
participants and aligns fees for services with the associated cost to 
deliver the service.
---------------------------------------------------------------------------

    \7\ 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 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

    The foregoing proposed rule change has become effective upon filing 
pursuant to Section 19(b)(3)(A)(ii) of the Act \8\ and Rule 19b-4(f)(2) 
\9\ thereunder because the rule establishes a due, fee, or other 
charge. 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.
---------------------------------------------------------------------------

    \8\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \9\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------

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.

[[Page 8218]]

Comments may be submitted by any of the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://
www.sec.gov/rules/sro.shtml) or
     Send an e-mail to rule-comments@sec.gov. Please include 
File Number SR-DTC-2006-21 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-2006-21. 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 (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 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 at https://login.dtcc.com/dtcorg/. 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-2006-21 and should be 
submitted on or before March 16, 2007.

    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority.\10\
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    \10\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
 [FR Doc. E7-3072 Filed 2-22-07; 8:45 am]
BILLING CODE 8010-01-P