Self-Regulatory Organizations; The Depository Trust Company; Notice of Filing of Proposed Rule Change to Restructure Its Rules Relating to Fines and To Harmonize Them With Similar Rules of Its Affiliates, 21673-21675 [E8-8598]
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sroberts on PROD1PC70 with NOTICES
Federal Register / Vol. 73, No. 78 / Tuesday, April 22, 2008 / Notices
Investment by the Lending Funds of
Cash Collateral in the Non Money
Market Investment Funds
1. Section 12(d)(1)(A) of the Act
provides, in relevant part, that no
registered investment company may
acquire securities of another investment
company representing more than 3% of
the acquired company’s outstanding
voting stock, more than 5% of the
acquiring company’s total assets, or,
together with the securities of other
investment companies, more than 10%
of the acquiring company’s total assets.
Section 12(d)(1)(B) of the Act provides
that no registered open-end investment
company, any principal underwriter
thereof, or any broker or dealer may sell
securities of the investment company to
another investment company if the sale
will cause the acquiring company to
own more than 3% of the acquired
company’s voting stock, or if the sale
will cause more than 10% of the
acquired company’s voting stock to be
owned by investment companies.
Section 12(d)(1)(J) of the Act provides
that the Commission may exempt any
person or transaction from any
provision of section 12(d)(1) if and to
the extent that the exemption is
consistent with the public interest and
the protection of investors.
2. Applicants request an exemption
under section 12(d)(1)(J) to permit the
Lending Funds to invest Cash Collateral
in shares of the Non Money Market
Investment Funds in excess of the limits
imposed by section 12(d)(1)(A), and
each Non Money Market Investment
Fund to sell its shares to the Lending
Funds in excess of the limits in section
12(d)(1)(B).
3. Applicants state that none of the
abuses meant to be addressed by
sections 12(d)(1)(A) and (B) of the Act
will be created by the proposed
investment of Cash Collateral in the Non
Money Market Investment Funds.
Applicants represent that the proposed
arrangement will not result in an
inappropriate layering of fees because
shares of the Non Money Market
Investment Funds will not be subject to
a sales charge or service fee. Applicants
further represent that there will not be
any duplicative advisory fees.
Applicants also represent that no Non
Money Market Investment Fund will
acquire shares of any other investment
company or company relying on section
3(c)(1) or 3(c)(7) of the Act other than as
permitted by rule 12d1–1 under the Act,
so that there will not be any complex
fund structure.
4. Applicants also request an
exemption under sections 6(c) and 17(b)
of the Act, and an order pursuant to rule
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Jkt 214001
17d–1 under the Act, to permit the Non
Money Market Investment Funds to sell
their shares to the Registered Lending
Funds, the Registered Lending Funds to
redeem shares from the Non Money
Market Funds, and the Lending Agent to
effectuate the investment of Cash
Collateral in the Non Money Market
Funds.
5. Applicants state that the Affiliated
Lending Funds and the Non Money
Market Investment Funds may be
deemed to be under common control
and therefore affiliated persons of each
other. Applicants also state that if any
Other Lending Fund acquires 5% or
more of a Non Money Market
Investment Fund’s shares, the Other
Lending Fund and the Non Money
Market Investment Fund may be
deemed affiliated persons of each other.
Therefore, the sale of shares of the Non
Money Market Investment Fund to the
Registered Lending Funds, and the
redemption of such shares in
connection with the investment of Cash
Collateral may be prohibited under
sections 17(a)(1) and (2) of the Act.
Applicants also state that the Lending
Funds (by purchasing and redeeming
shares of the Non Money Market
Investment Funds), FAF Advisors (by
managing the portfolio securities of the
Affiliated Lending Funds and the Non
Money Market Investment Funds at the
same time that the Affiliated Lending
Funds’ Cash Collateral is invested in the
Non Money Market Investment Funds,
and serving as lending agent and
receiving a portion of the Securities
Lending Revenue), and the Non Money
Market Investment Funds (by selling
their shares to and redeeming shares
from the Lending Funds) could be
deemed to be participants in a joint
enterprise or other joint arrangement
within the meaning of section 17(d) of
the Act and rule 17d–1 under the Act.
6. Applicants state that the requested
relief satisfies the standards of sections
6(c) and 17(b) of the Act and rule 17d–
1 under the Act. Applicants state that
shares of the Non Money Market Funds
will be purchased and redeemed by the
Lending Funds at net asset value, on the
same basis as the shares are purchased
and redeemed by all other shareholders
of the Non Money Market Funds.
Applicants’ Conditions
The applicants agree that any order
granting the requested relief will be
subject to the following conditions:
1. The securities lending program of
each Registered Lending Fund,
including the investment of Cash
Collateral, will comply with all present
and future guidelines of the
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21673
Commission and its staff regarding
securities lending arrangements.
2. No Registered Lending Fund will
purchase shares of any Investment Fund
unless participation in the Program has
been approved by a majority of the
directors or trustees of the Registered
Lending Fund that are not interested
persons of the Registered Lending Fund
within the meaning of section 2(a)(19) of
the Act. Such directors or trustees of
each Registered Lending Fund also will
evaluate the Program no less frequently
than annually and determine that
investing Cash Collateral in the
Investment Fund is in the best interests
of the shareholders of the Registered
Lending Fund.
3. Investment in shares of an
Investment Fund by a particular
Registered Lending Fund will be
consistent with the Registered Lending
Fund’s investment objectives and
policies. A Registered Lending Fund’s
Cash Collateral will be invested in a
particular Investment Fund only if the
Registered Lending Fund has approved
that Investment Fund for investment
and if that Investment Fund invests in
the types of instruments that the
Registered Lending Fund has authorized
for the investment of its Cash Collateral.
4. Shares of any Investment Fund will
not be subject to a sales charge or
service fee, as defined in rules
2830(b)(8) and (9), respectively, of the
Conduct Rules of the National
Association of Securities Dealers, Inc.
5. No Investment Fund may invest in
shares of any investment company or
company relying on section 3(c)(1) or
3(c)(7) of the Act, other than as
permitted by rule 12d1–1 under the Act.
For the Commission, by the Division of
Investment Management, under delegated
authority.
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E8–8652 Filed 4–21–08; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–57665; File No. SR–DTC–
2007–05]
Self-Regulatory Organizations; The
Depository Trust Company; Notice of
Filing of Proposed Rule Change to
Restructure Its Rules Relating to Fines
and To Harmonize Them With Similar
Rules of Its Affiliates
April 15, 2008.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
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21674
Federal Register / Vol. 73, No. 78 / Tuesday, April 22, 2008 / Notices
(‘‘Act’’),1 notice is hereby given that on
May 15, 2007, The Depository Trust
Company (‘‘DTC’’) filed with the
Securities and Exchange Commission
(‘‘Commission’’) and on December 10,
2007, amended 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, as amended, from interested
parties.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The proposed rule change seeks to
amend DTC’s fine structure relating to
participants not providing financial
information and notice of significant
corporate changes to DTC in a timely
manner and to harmonize DTC’s rules
with similar rules of DTC’s affiliates, the
National Securities Clearing Corporation
(‘‘NSCC’’) and the Fixed Income
Clearing Corporation (‘‘FICC’’). NSCC
and FICC have filed similar proposed
rule changes.2 DTC’s proposed fine
schedule is set forth in Exhibit 5 to its
proposed rule change.
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. 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.3
(A) Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
sroberts on PROD1PC70 with NOTICES
(1) Fines Scheduled for Failure to
Submit Financial and Other Information
DTC’s rules (a) require participants to
submit certain financial, regulatory, and
other information within certain time
frames and (b) enable DTC to levy fines
against participants for violations of its
rules. However, DTC’s rules do not
explicitly set forth the amount of the
fine with respect to failure to submit
such information. As part of the ongoing
1 15
U.S.C. 78s(b)(1).
Exchange Act Release No. 57667
(April 15, 2008) [SR–NSCC–2007–07]. Securities
Exchange Act Release No. 57666 (April 15, 2008)
[SR–FICC–2007–05].
3 The Commission has modified the text of the
summaries prepared by DTC.
2 Securities
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16:25 Apr 21, 2008
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effort to harmonize its rules with those
of its clearing agency affiliates, DTC is
proposing to adopt FICC’s fine schedule
for such violations.4 Pursuant to its
filing, participants would be fined $300,
$600, and $1,500 for their first, second,
and third occasion of failing to timely
provide financial and other related
information. The determination of the
fine amount for the fourth and any
subsequent occurrence of a late
submission offense within a twelvemonth rolling period would be made by
management of DTC with the
concurrence of the Board of Directors or
a committee appointed by the Board.
Often a member that is fined is a
common member of DTC and FICC, DTC
and NSCC, or DTC, FICC, and NSCC
(collectively the ‘‘Clearing Agencies’’),
which would cause the member to incur
multiple penalties for the same offense.
DTC is proposing that when a common
member of the Clearing Agencies is late
in providing the same information to
more than one Clearing Agency, the fine
amount will be divided equally among
the Clearing Agencies.5
(2) General Continuance Standards
DTC Rule 2 sets forth the basic
standards for the admission of DTC
participants. The rule states that the
admission of a participant is subject to
an applicant’s demonstration that it
meets reasonable standards of financial
responsibility, operational capability,
and character. Rule 2 also requires DTC
participants to demonstrate that these
standards are met on an ongoing basis.
Each applicant, upon approval of its
application for DTC participation, signs
a letter of representation that outlines
the nature of the applicant’s business,
its DTC settlement projections, and its
financial condition at the time of the
approval and that requires the applicant
to affirm that such representations are
accurate. Moreover, the participant
acknowledges its obligation to promptly
notify DTC whenever there is any
anticipated change in the
representations given.
Under Rule 10, if a participant fails to
continue to adhere to these standards,
4 NSCC has also proposed to adopt FICC’s
schedule. See File No. NSCC–2007–07.
5 For example, if a firm that is a member of DTC
and FICC did not submit its annual audited
financial statements within the required time frame,
and this was the firm’s first failure to meet the
deadline, the $200 fine will be split equally
between DTC and FICC.
Where the member is a participant of DTC and
also a member of one or more of the other Clearing
Agencies, the fine would be collected by DTC and
allocated equally among the other Clearing
Agencies, as appropriate. If the member is not a
DTC participant, but is a common member of NSCC
and FICC, NSCC will collect the fine and allocate
the appropriate portion to FICC.
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then DTC, based on its judgment, may
at any time cease to act for the
participant with respect to a particular
transaction, particular transactions,
transactions generally, or a program and
may terminate a participant’s right to act
as a Settling Bank. Both Rule 2 and Rule
10 give DTC the discretion to admit
participants or to continue to act for
them on a temporary or other
conditional basis.
In the interest of harmonizing this
provision with a similar FICC provision,
DTC is proposing to: (a) Require a
member to notify DTC of a member’s
non-compliance with general member
continuance standards within two
business days; (b) require the member to
notify DTC within the two-day time
frame if it becomes subject to a statutory
disqualification; and (c) subject the
member to a $1,000 fine for failure to
timely notify DTC.
In addition, DTC proposes to add a
provision to its fine schedule that would
impose a fine in the amount of $5,000
if a participant fails to notify DTC of a
‘‘material change’’ to its business. A
‘‘material change’’ would include events
such as a merger or acquisition
involving the participant, a change in
corporate form, a name change, a
material change in ownership, control
or management, and participation as a
defendant in litigation which could
reasonably be anticipated to have a
direct negative impact on the
participant’s financial condition or
ability to conduct its business. The
proposed provision would provide that
the notification must be provided 90
calendar days prior to the effective date
of such event unless the participant
demonstrates that it could not have
reasonably have given notice within that
time frame.
With respect to both fines, DTC is
proposing that when a common
member’s failure to timely notify relates
to the same information to more than
one Clearing Agency, the fine amount
will be divided equally among the
Clearing Agencies.6
DTC believes that the proposed rule
change is consistent with the
requirements of Section 17A of the Act 7
and the rules and regulations
thereunder. The proposed rules and fine
provisions are intended to protect DTC
and its participants from undue risk.
6 Where the member is a participant of DTC and
also a member of one or more of the other Clearing
Agencies, the fine would be collected by DTC and
allocated equally among the other Clearing
Agencies, as appropriate. If the member is not a
DTC participant, but is a common member of NSCC
and FICC, NSCC will collect the fine and allocate
the appropriate portion to FICC.
7 15 U.S.C. 78q–1.
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Federal Register / Vol. 73, No. 78 / Tuesday, April 22, 2008 / Notices
DTC further states that the proposed
changes will assist DTC and its
participants in interpreting and
understanding its fines. As a result, DTC
will be better able to assure the
safeguarding of securities in DTC’s
possession 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
DTC has not solicited or received
written comments relating to the
proposed rule change.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Within thirty-five days of the date of
publication of this notice in the Federal
Register or within such longer period (i)
as the Commission may designate up to
ninety days of such date 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 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:
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
Room, 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 filing also will be
available for inspection and copying at
DTC’s principal office and on DTC’s
Web site at https://www.dtcc.com/
downloads/legal/rule_filings/2007/dtc/
2007-05.pdf and https://www.dtcc.com/
downloads/legal/rule_filings/2007/dtc/
2007-05-amendment.pdf. 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 No. SR–DTC–2007–
05 and should be submitted on or before
May 13, 2008.
For the Commission by the Division of
Trading and Markets pursuant to delegated
authority.8
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E8–8598 Filed 4–21–08; 8:45 am]
BILLING CODE 8010–01–P
Electronic Comments
• 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
No. DTC–2007–05 on the subject line.
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Jkt 214001
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–57666; File No. SR–FICC–
2007–05]
Self-Regulatory Organizations; Fixed
Income Clearing Corporation; Notice of
Filing of Proposed Rule Change To
Restructure the Rules of the
Government Securities Division and
the Mortgage-Backed Securities
Division Relating to Fines and To
Harmonize Them With Similar Rules of
Its Affiliates and To Restructure the
Watch List
April 15, 2008.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’),1 notice is hereby given that on
April 30, 2007, the Fixed Income
Clearing Corporation (‘‘FICC’’) filed
with the Securities and Exchange
Commission (‘‘Commission’’) and on
May 18, 2007, December 10, 2007, and
January 31, 2008, amended the
proposed rule change as described in
Items I, II, and III below, which items
have been prepared by FICC. The
Commission is publishing this notice to
solicit comments on the proposed rule
change, as amended, from interested
parties.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
FICC is seeking to (i) restructure the
Government Securities Division
(‘‘GSD’’) and the Mortgage-Backed
Securities Division (‘‘MBSD’’) rules
related to fines, clearing fund
consequences imposed on members for
rule violations, and certain aspects of
the watch list and (ii) harmonize its
rules with similar rules of FICC’s
clearing agency affiliates, The
Depository Trust Company (‘‘DTC’’) and
the National Securities Clearing
Corporation (‘‘NSCC’’). DTC and NSCC
have filed similar proposed rule
changes.2 FICC’s proposed revisions to
its fine schedule are set forth in Exhibit
5 to its proposed rule change.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission,
FICC included statements concerning
the purpose of and basis for the
proposed rule change and discussed any
comments it received on the proposed
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 No.
SR–DTC–2007–05. This file number
should be included on the subject line
21675
1 15
U.S.C. 78s(b)(1).
Exchange Act Release No. 57665
(April 15, 2008) [SR–DTC–2007–05]. Securities
Exchange Act Release No. 57667 (April 15, 2008)
[SR–NSCC–2007–07].
2 Securities
8 17
PO 00000
CFR 200.30–3(a)(12).
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]]>Agencies
[Federal Register Volume 73, Number 78 (Tuesday, April 22, 2008)]
[Notices]
[Pages 21673-21675]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-8598]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-57665; File No. SR-DTC-2007-05]
Self-Regulatory Organizations; The Depository Trust Company;
Notice of Filing of Proposed Rule Change to Restructure Its Rules
Relating to Fines and To Harmonize Them With Similar Rules of Its
Affiliates
April 15, 2008.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
[[Page 21674]]
(``Act''),\1\ notice is hereby given that on May 15, 2007, The
Depository Trust Company (``DTC'') filed with the Securities and
Exchange Commission (``Commission'') and on December 10, 2007, amended
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,
as amended, from interested parties.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The proposed rule change seeks to amend DTC's fine structure
relating to participants not providing financial information and notice
of significant corporate changes to DTC in a timely manner and to
harmonize DTC's rules with similar rules of DTC's affiliates, the
National Securities Clearing Corporation (``NSCC'') and the Fixed
Income Clearing Corporation (``FICC''). NSCC and FICC have filed
similar proposed rule changes.\2\ DTC's proposed fine schedule is set
forth in Exhibit 5 to its proposed rule change.
---------------------------------------------------------------------------
\2\ Securities Exchange Act Release No. 57667 (April 15, 2008)
[SR-NSCC-2007-07]. Securities Exchange Act Release No. 57666 (April
15, 2008) [SR-FICC-2007-05].
---------------------------------------------------------------------------
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. 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.\3\
---------------------------------------------------------------------------
\3\ 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
(1) Fines Scheduled for Failure to Submit Financial and Other
Information
DTC's rules (a) require participants to submit certain financial,
regulatory, and other information within certain time frames and (b)
enable DTC to levy fines against participants for violations of its
rules. However, DTC's rules do not explicitly set forth the amount of
the fine with respect to failure to submit such information. As part of
the ongoing effort to harmonize its rules with those of its clearing
agency affiliates, DTC is proposing to adopt FICC's fine schedule for
such violations.\4\ Pursuant to its filing, participants would be fined
$300, $600, and $1,500 for their first, second, and third occasion of
failing to timely provide financial and other related information. The
determination of the fine amount for the fourth and any subsequent
occurrence of a late submission offense within a twelve-month rolling
period would be made by management of DTC with the concurrence of the
Board of Directors or a committee appointed by the Board.
---------------------------------------------------------------------------
\4\ NSCC has also proposed to adopt FICC's schedule. See File
No. NSCC-2007-07.
---------------------------------------------------------------------------
Often a member that is fined is a common member of DTC and FICC,
DTC and NSCC, or DTC, FICC, and NSCC (collectively the ``Clearing
Agencies''), which would cause the member to incur multiple penalties
for the same offense. DTC is proposing that when a common member of the
Clearing Agencies is late in providing the same information to more
than one Clearing Agency, the fine amount will be divided equally among
the Clearing Agencies.\5\
---------------------------------------------------------------------------
\5\ For example, if a firm that is a member of DTC and FICC did
not submit its annual audited financial statements within the
required time frame, and this was the firm's first failure to meet
the deadline, the $200 fine will be split equally between DTC and
FICC.
Where the member is a participant of DTC and also a member of
one or more of the other Clearing Agencies, the fine would be
collected by DTC and allocated equally among the other Clearing
Agencies, as appropriate. If the member is not a DTC participant,
but is a common member of NSCC and FICC, NSCC will collect the fine
and allocate the appropriate portion to FICC.
---------------------------------------------------------------------------
(2) General Continuance Standards
DTC Rule 2 sets forth the basic standards for the admission of DTC
participants. The rule states that the admission of a participant is
subject to an applicant's demonstration that it meets reasonable
standards of financial responsibility, operational capability, and
character. Rule 2 also requires DTC participants to demonstrate that
these standards are met on an ongoing basis. Each applicant, upon
approval of its application for DTC participation, signs a letter of
representation that outlines the nature of the applicant's business,
its DTC settlement projections, and its financial condition at the time
of the approval and that requires the applicant to affirm that such
representations are accurate. Moreover, the participant acknowledges
its obligation to promptly notify DTC whenever there is any anticipated
change in the representations given.
Under Rule 10, if a participant fails to continue to adhere to
these standards, then DTC, based on its judgment, may at any time cease
to act for the participant with respect to a particular transaction,
particular transactions, transactions generally, or a program and may
terminate a participant's right to act as a Settling Bank. Both Rule 2
and Rule 10 give DTC the discretion to admit participants or to
continue to act for them on a temporary or other conditional basis.
In the interest of harmonizing this provision with a similar FICC
provision, DTC is proposing to: (a) Require a member to notify DTC of a
member's non-compliance with general member continuance standards
within two business days; (b) require the member to notify DTC within
the two-day time frame if it becomes subject to a statutory
disqualification; and (c) subject the member to a $1,000 fine for
failure to timely notify DTC.
In addition, DTC proposes to add a provision to its fine schedule
that would impose a fine in the amount of $5,000 if a participant fails
to notify DTC of a ``material change'' to its business. A ``material
change'' would include events such as a merger or acquisition involving
the participant, a change in corporate form, a name change, a material
change in ownership, control or management, and participation as a
defendant in litigation which could reasonably be anticipated to have a
direct negative impact on the participant's financial condition or
ability to conduct its business. The proposed provision would provide
that the notification must be provided 90 calendar days prior to the
effective date of such event unless the participant demonstrates that
it could not have reasonably have given notice within that time frame.
With respect to both fines, DTC is proposing that when a common
member's failure to timely notify relates to the same information to
more than one Clearing Agency, the fine amount will be divided equally
among the Clearing Agencies.\6\
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\6\ Where the member is a participant of DTC and also a member
of one or more of the other Clearing Agencies, the fine would be
collected by DTC and allocated equally among the other Clearing
Agencies, as appropriate. If the member is not a DTC participant,
but is a common member of NSCC and FICC, NSCC will collect the fine
and allocate the appropriate portion to FICC.
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DTC believes that the proposed rule change is consistent with the
requirements of Section 17A of the Act \7\ and the rules and
regulations thereunder. The proposed rules and fine provisions are
intended to protect DTC and its participants from undue risk.
[[Page 21675]]
DTC further states that the proposed changes will assist DTC and its
participants in interpreting and understanding its fines. As a result,
DTC will be better able to assure the safeguarding of securities in
DTC's possession or control or for which it is responsible.
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\7\ 15 U.S.C. 78q-1.
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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
DTC has not solicited or received written comments relating to the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Within thirty-five days of the date of publication of this notice
in the Federal Register or within such longer period (i) as the
Commission may designate up to ninety days of such date 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 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:
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 No. DTC-2007-05 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 No. SR-DTC-2007-05. 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 Room, 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 filing also will be available for
inspection and copying at DTC's principal office and on DTC's Web site
at https://www.dtcc.com/downloads/legal/rule_filings/2007/dtc/2007-
05.pdf and https://www.dtcc.com/downloads/legal/rule_filings/2007/dtc/
2007-05-amendment.pdf. 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 No. SR-
DTC-2007-05 and should be submitted on or before May 13, 2008.
For the Commission by the Division of Trading and Markets
pursuant to delegated authority.\8\
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\8\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E8-8598 Filed 4-21-08; 8:45 am]
BILLING CODE 8010-01-P
