Self-Regulatory Organizations; The Depository Trust Company; Order Approving Proposed Rule Change To Amend the Applicant Disqualification Criteria Contained in Its Rules, 75161 [E8-29135]

Download as PDF Federal Register / Vol. 73, No. 238 / Wednesday, December 10, 2008 / Notices For the Commission by the Division of Trading and Markets, pursuant to delegated authority.11 Florence E. Harmon, Acting Secretary. [FR Doc. E8–29156 Filed 12–9–08; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–59035; File No. SR–DTC– 2007–07] Self-Regulatory Organizations; The Depository Trust Company; Order Approving Proposed Rule Change To Amend the Applicant Disqualification Criteria Contained in Its Rules December 1, 2008. I. Introduction On April 30, 2007, the Depository Trust Company (‘‘DTC’’) filed with the Securities and Exchange Commission (‘‘Commission’’) and on February 7, 2008, and March 18, 2008, amended proposed rule change SR–DTC–2007–07 pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’).1 The proposed rule change was published for comment in the Federal Register on July 16, 2008.2 No comment letters were received on the proposal. This order approves the proposal. its affiliates, DTC is adding such a provision to its rules. B. Associated Persons DTC rules include applicant disqualification criteria for persons and/ or entities ‘‘associated’’ with an applicant. Because it is not easily ascertainable as to what entities or individuals are ‘‘associated’’ with a particular entity, DTC is amending these provisions in its rules so that they are consistent with internal surveillance procedures. DTC is changing references to persons ‘‘associated’’ with the applicant to references to ‘‘controlling management,’’ which shall be defined to mean the Chief Executive Officer, Chief Financial Officer, and Chief Operating Officer, or their equivalents. These are the officers that are currently screened by DTC’s risk management pursuant to internal procedures. DTC is also adding language to its rules that would require applicants to inform DTC as to any member of its controlling management that is or becomes subject to statutory disqualification. C. Amendment to Willful Violation 75161 17A(b)(3)(H) 9 which, among other things, requires that the rules of a clearing agency provide a fair procedure with respect to the disciplining of participants and the denial of participation to any person seeking to be a participant. The Commission finds that the proposed rule change, which amends DTC’s applicant disqualification criteria contained within its rules, is consistent with those statutory obligations. IV. Conclusion On the basis of the foregoing, the Commission finds that the proposal is consistent with the requirements of the Act and in particular with the requirements of Section 17A of the Act 10 and the rules and regulations thereunder. It is therefore ordered, pursuant to Section 19(b)(2) of the Act,11 that the proposed rule change (File No. SR– DTC–2007–07) be, and hereby is, approved.12 For the Commission by the Division of Trading and Markets, pursuant to delegated authority.13 Florence E. Harmon, Acting Secretary. [FR Doc. E8–29135 Filed 12–9–08; 8:45 am] The proposed rule change amends the applicant disqualification criteria contained in DTC’s rules in order to harmonize them with similar rules of DTC’s affiliates, National Securities Clearing Corporation (‘‘NSCC’’) and Fixed Income Clearing Corporation (‘‘FICC’’). DTC rules currently include as a disqualification criterion the applicant’s or an associated person’s ‘‘willful’’ violation of the Securities Act of 1933,5 the Act, the Investment Company Act of 1940,6 the Investment Advisors Act of 1940,7 or any rule or regulation promulgated thereunder. DTC is removing the word ‘‘willful’’ from this provision because DTC believes that any violation of these provisions should be a disqualification criterion. Changes similar to those outlined in Sections A, B, and C above will be made to DTC Rule 10, ‘‘Discretionary Termination.’’ A. Statutory Disqualification III. Discussion DTC Rule 2 sets forth the basic standards for the admission of DTC Participants and defines certain criteria that may disqualify an applicant from participation. While the factors that may disqualify an applicant are generally consistent among DTC, FICC, and NSCC rules, DTC’s rules do not specifically reference an order of statutory disqualification as defined in Section 3(a)(39) of the Act 3 among its disqualification criteria.4 To promote uniformity among the rules of DTC and December 3, 2008. The Commission finds that the proposed rule change is consistent with the requirements of the Act and the rules and regulations thereunder applicable to a registered clearing agency. In particular, the Commission believes the proposal is consistent with the requirements of Section 17A(b)(3)(F),8 which, among other things, requires that the rules of a clearing agency are designed to remove impediments to and perfect the mechanisms of a national system for the prompt and accurate clearance and settlement of securities transactions and with the requirements of Section Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’) 1 and Rule 19b–4 thereunder,2 notice is hereby given that on November 21, 2008, the NASDAQ Stock Market LLC (‘‘Nasdaq’’) filed with the Securities and Exchange Commission (‘‘Commission’’) the proposed rule change as described in Items I, II, and III below, which Items have been prepared by Nasdaq. Nasdaq has filed mstockstill on PROD1PC66 with NOTICES II. Description 11 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 Securities Exchange Act Release No. 58122 (Jul. 9, 2008), 73 FR 40888. 3 15 U.S.C. 78c(a)(39). 4 As a clearing agency registered under the Act, DTC must evaluate its participants subject to an order of statutory disqualification. 1 15 VerDate Aug<31>2005 16:49 Dec 09, 2008 Jkt 217001 5 15 U.S.C. 77a et seq. U.S.C. 80a–1 et seq. 7 15 U.S.C. 80b–1 et seq. 8 15 U.S.C. 78q–1(b)(3)(F). 6 15 PO 00000 Frm 00085 Fmt 4703 Sfmt 4703 BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–59043; File No. SR– NASDAQ–2008–089] Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Modify Fees for Members Using the Nasdaq Options Market 9 15 U.S.C. 78q–1(b)(3)(H). U.S.C. 78q–1. 11 15 U.S.C. 78s(b)(2). 12 In approving the proposed rule change, the Commission considered the proposal’s impact on efficiency, competition, and capital formation. 15 U.S.C. 78c(f). 13 17 CFR 200.30–3(a)(12). 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 10 15 E:\FR\FM\10DEN1.SGM 10DEN1

Agencies

[Federal Register Volume 73, Number 238 (Wednesday, December 10, 2008)]
[Notices]
[Page 75161]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-29135]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-59035; File No. SR-DTC-2007-07]


Self-Regulatory Organizations; The Depository Trust Company; 
Order Approving Proposed Rule Change To Amend the Applicant 
Disqualification Criteria Contained in Its Rules

December 1, 2008.

I. Introduction

    On April 30, 2007, the Depository Trust Company (``DTC'') filed 
with the Securities and Exchange Commission (``Commission'') and on 
February 7, 2008, and March 18, 2008, amended proposed rule change SR-
DTC-2007-07 pursuant to Section 19(b)(1) of the Securities Exchange Act 
of 1934 (``Act'').\1\ The proposed rule change was published for 
comment in the Federal Register on July 16, 2008.\2\ No comment letters 
were received on the proposal. This order approves the proposal.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ Securities Exchange Act Release No. 58122 (Jul. 9, 2008), 73 
FR 40888.
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II. Description

    The proposed rule change amends the applicant disqualification 
criteria contained in DTC's rules in order to harmonize them with 
similar rules of DTC's affiliates, National Securities Clearing 
Corporation (``NSCC'') and Fixed Income Clearing Corporation 
(``FICC'').

A. Statutory Disqualification

    DTC Rule 2 sets forth the basic standards for the admission of DTC 
Participants and defines certain criteria that may disqualify an 
applicant from participation. While the factors that may disqualify an 
applicant are generally consistent among DTC, FICC, and NSCC rules, 
DTC's rules do not specifically reference an order of statutory 
disqualification as defined in Section 3(a)(39) of the Act \3\ among 
its disqualification criteria.\4\ To promote uniformity among the rules 
of DTC and its affiliates, DTC is adding such a provision to its rules.
---------------------------------------------------------------------------

    \3\ 15 U.S.C. 78c(a)(39).
    \4\ As a clearing agency registered under the Act, DTC must 
evaluate its participants subject to an order of statutory 
disqualification.
---------------------------------------------------------------------------

B. Associated Persons

    DTC rules include applicant disqualification criteria for persons 
and/or entities ``associated'' with an applicant. Because it is not 
easily ascertainable as to what entities or individuals are 
``associated'' with a particular entity, DTC is amending these 
provisions in its rules so that they are consistent with internal 
surveillance procedures. DTC is changing references to persons 
``associated'' with the applicant to references to ``controlling 
management,'' which shall be defined to mean the Chief Executive 
Officer, Chief Financial Officer, and Chief Operating Officer, or their 
equivalents. These are the officers that are currently screened by 
DTC's risk management pursuant to internal procedures. DTC is also 
adding language to its rules that would require applicants to inform 
DTC as to any member of its controlling management that is or becomes 
subject to statutory disqualification.

C. Amendment to Willful Violation

    DTC rules currently include as a disqualification criterion the 
applicant's or an associated person's ``willful'' violation of the 
Securities Act of 1933,\5\ the Act, the Investment Company Act of 
1940,\6\ the Investment Advisors Act of 1940,\7\ or any rule or 
regulation promulgated thereunder. DTC is removing the word ``willful'' 
from this provision because DTC believes that any violation of these 
provisions should be a disqualification criterion.
---------------------------------------------------------------------------

    \5\ 15 U.S.C. 77a et seq.
    \6\ 15 U.S.C. 80a-1 et seq.
    \7\ 15 U.S.C. 80b-1 et seq.
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    Changes similar to those outlined in Sections A, B, and C above 
will be made to DTC Rule 10, ``Discretionary Termination.''

III. Discussion

    The Commission finds that the proposed rule change is consistent 
with the requirements of the Act and the rules and regulations 
thereunder applicable to a registered clearing agency. In particular, 
the Commission believes the proposal is consistent with the 
requirements of Section 17A(b)(3)(F),\8\ which, among other things, 
requires that the rules of a clearing agency are designed to remove 
impediments to and perfect the mechanisms of a national system for the 
prompt and accurate clearance and settlement of securities transactions 
and with the requirements of Section 17A(b)(3)(H) \9\ which, among 
other things, requires that the rules of a clearing agency provide a 
fair procedure with respect to the disciplining of participants and the 
denial of participation to any person seeking to be a participant. The 
Commission finds that the proposed rule change, which amends DTC's 
applicant disqualification criteria contained within its rules, is 
consistent with those statutory obligations.
---------------------------------------------------------------------------

    \8\ 15 U.S.C. 78q-1(b)(3)(F).
    \9\ 15 U.S.C. 78q-1(b)(3)(H).
---------------------------------------------------------------------------

IV. Conclusion

    On the basis of the foregoing, the Commission finds that the 
proposal is consistent with the requirements of the Act and in 
particular with the requirements of Section 17A of the Act \10\ and the 
rules and regulations thereunder.
---------------------------------------------------------------------------

    \10\ 15 U.S.C. 78q-1.
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    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\11\ that the proposed rule change (File No. SR-DTC-2007-07) be, 
and hereby is, approved.\12\
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    \11\ 15 U.S.C. 78s(b)(2).
    \12\ In approving the proposed rule change, the Commission 
considered the proposal's impact on efficiency, competition, and 
capital formation. 15 U.S.C. 78c(f).

    For the Commission by the Division of Trading and Markets, 
pursuant to delegated authority.\13\
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    \13\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Acting Secretary.
[FR Doc. E8-29135 Filed 12-9-08; 8:45 am]
BILLING CODE 8011-01-P