Self-Regulatory Organizations; Notice of Filing of Proposed Rule Change by The Depository Trust Company Relating to Eliminating the SRO Requirement as a Condition of DTC-Eligibility for Securities That Are Eligible for Resale Under Rule 144A Under the Securities Act of 1933, 76688-76689 [E8-29900]
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76688
Federal Register / Vol. 73, No. 243 / Wednesday, December 17, 2008 / Notices
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.10
Florence E. Harmon,
Acting Secretary.
[FR Doc. E8–29903 Filed 12–16–08; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–59088; File No. SR–DTC–
2008–13]
Self-Regulatory Organizations; Notice
of Filing of Proposed Rule Change by
The Depository Trust Company
Relating to Eliminating the SRO
Requirement as a Condition of DTCEligibility for Securities That Are
Eligible for Resale Under Rule 144A
Under the Securities Act of 1933
December 11, 2008.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’),1 notice is hereby given that on
October 9, 2008, The Depository Trust
Company (‘‘DTC’’) 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 primarily by DTC. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
DTC proposes to eliminate the SRO
Requirement, as defined below, as a
condition of DTC-eligibility for
securities that are eligible for resale
under Rule 144A (‘‘Rule 144A
Securities’’) under the Securities Act of
1933 (‘‘Securities Act’’).2
pwalker on PROD1PC71 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 such statements.
10 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 230.144A.
1 15
VerDate Aug<31>2005
18:58 Dec 16, 2008
Jkt 217001
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In April 1990, the Commission
adopted Rule 144A under the Securities
Act.3 This rule provides a safe-harbor
from the registration requirements of the
Securities Act for resales to qualified
institutional buyers (‘‘QIBs’’) of certain
restricted securities that when issued
were not of the same class as securities
listed on a national securities exchange
registered under the Act. Rule
144A(d)(2) 4 requires that the seller or
any person acting on its behalf take
reasonable steps to ensure that the
purchaser is aware that the seller may
rely on the safe-harbor provided by Rule
144A.
In 1993, the Commission approved a
DTC rule filing whereby DTC would
make Rule 144A securities eligible for
deposit, book-entry delivery, and other
depository services provided, in part,
that DTC was required to ‘‘condition the
eligibility of the Rule 144A Securities
(other than Investment Grade Securities)
on initial and continued inclusion of
those securities in an SRO Rule 144A
System, such as the NASD’s PORTAL
Market System.’’ 5 This condition is
referred to herein as the ‘‘SRO
Requirement.’’ The SRO Requirement
contemplated that an SRO Rule 144A
System would include comprehensive
safeguards to facilitate the SRO’s ability
to detect violations of Rule 144A.
However, the only SRO Rule 144A
System that was developed was the
NASD’s PORTAL Market System
(‘‘PORTAL’’) and not only did PORTAL
not develop as anticipated but also it
did not include the safeguards
contemplated by the DTC rule filing and
Commission order of 1993.6 In light of
the above, DTC believes that the SRO
Requirement is no longer necessary or
appropriate.
DTC believes that eliminating the
SRO Requirement will result in a
uniform procedure for making Rule
144A Securities DTC-eligible whether or
not they were classified as investment
grade securities. Under the proposed
rule change, issuers and participants
would continue to be responsible for
3 Supra
note 2.
CFR 230.144A(d)(2).
5 Securities Exchange Release No. 33327 (Dec. 13,
1993), 58 FR 67878 (Dec. 22, 1993) [File No. SR–
DTC–90–06]. ‘‘Investment Grade Securities’’ are
defined in this release as nonconvertible debt
securities and nonconvertible preferred stock which
are in one of the top four categories by a nationally
recognized statistical rating organization.
6 Securities Exchange Release No. 56172 (Jul. 31,
2007), 72 FR 44196 (Aug. 7, 2007) [File No. SR–
NASDAQ–2006–65].
4 17
PO 00000
Frm 00082
Fmt 4703
Sfmt 4703
determining that their deposit of Rule
144A Securities with DTC and their
transactions in Rule 144A Securities
through the facilities of DTC are in
compliance with existing DTC rules and
the federal securities laws, such as:
(i) Rule 2, Section 8, of DTC’s rules:
‘‘In connection with their use of the
Corporation’s [DTC’s] services,
Participants and Pledgees must comply
with all applicable laws, including all
applicable laws relating to securities,
taxation and money laundering.’’
(ii) DTC’s ‘‘Operational Arrangements
(Necessary for an Issue to Become and
Remain Eligible for DTC Services)’’
relating to BEO issues being made
eligible for DTC services: ‘‘Issuer
recognizes that DTC does not in any
way undertake to, and shall not have
any responsibility to, monitor or
ascertain the compliance of any
transactions in the Securities with the
following, as amended from time to
time: (1) Any exemptions from
registration under the Securities Act of
1933; (2) the Investment Company Act
of 1940; (3) the Employee Retirement
Income Security Act of 1974; (4) the
Internal Revenue Code of 1986; (5) any
rules of any self-regulatory
organizations (as defined under the
Securities Exchange Act of 1934); or (6)
any other local, state, federal, or foreign
laws or regulations there under.’’ 7 This
and other representations made by
issuers to DTC pursuant to the DTC
Operational Arrangements are mirrored
in the Letter of Representations that
DTC receives from issuers in connection
with their deposits of BEO issues with
DTC.
(iii) When a Rule 144A Security is
made DTC eligible, the issuer will
continue to be required to execute a
copy of the rider to the Letter of
Representation in the form it appears
today except that the reference to the
SRO Requirement will be deleted.
DTC believes that the proposed rule
change is consistent with the
requirements of the Act and the rules
and regulations there under because
eliminating the unnecessary SRO
Requirement will remove an
impediment to the perfection of the
7 In 1994, in an order clarifying certain language
in the Rule 144A Approval Order, the Commission
concurred in the position taken by DTC that ‘‘Rule
5 [of DTC’s rules] does not require DTC to
determine whether securities, when deposited at
DTC, may be transferred lawfully by book-entry in
light of the Federal securities law.’’ Order
Approving Proposed Rule Change Relating to a
Clarification of Rule 5, Securities Exchange Act
Release No. 33672, 56 SEC Docket 315 (Feb. 23,
1994) (‘‘Rule 5 Clarification Order’’). DTC Rule 5
was amended to delete any implication that DTC
was under any statutory or contractual obligation to
determine whether securities deposited with DTC
could be legally transferred by book-entry.
E:\FR\FM\17DEN1.SGM
17DEN1
Federal Register / Vol. 73, No. 243 / Wednesday, December 17, 2008 / Notices
mechanism of a national system for the
prompt and accurate clearance and
settlement of securities transactions.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
DTC does not believe that the
proposed rule change will have any
impact or impose any burden on
competition.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
Written comments relating to the
proposed rule change have not yet been
solicited or received. DTC will notify
the Commission of any written
comments received by DTC.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Within 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
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. to 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/legal/
rule_filings/dtc/2008.php. All
comments received will be posted
without change; the Commission does
not edit personal identifying
information from submissions. You
should submit only information that
you wish to make available publicly. All
submissions should refer to File No.
SR–DTC–2008–13 and should be
submitted on or before January 7, 2009.
For the Commission by the Division of
Trading and Markets, pursuant to delegated
authority.8
Florence E. Harmon,
Acting Secretary.
[FR Doc. E8–29900 Filed 12–16–08; 8:45 am]
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:
BILLING CODE 8011–01–P
Electronic Comments
Self-Regulatory Organizations;
International Securities Exchange,
LLC; Notice of Filing and Immediate
Effectiveness of Proposed Rule
Change as Modified by Amendment
No. 1 Thereto Relating to Cancellation
Fees
• 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. SR–DTC–2008–13 on the subject
line.
pwalker on PROD1PC71 with NOTICES
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street, NE.,
Washington, DC 20549–1090.
All submissions should refer to File
No. SR–DTC–2008–13. 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
VerDate Aug<31>2005
18:58 Dec 16, 2008
Jkt 217001
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–59072; File No. SR–ISE–
2008–92]
December 10, 2008.
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
28, 2008, the International Securities
Exchange, LLC (‘‘ISE’’ or ‘‘Exchange’’)
filed with the Securities and Exchange
Commission (‘‘Commission’’) the
8 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
PO 00000
Frm 00083
Fmt 4703
Sfmt 4703
76689
proposed rule change as described in
Items I, II, and III below, which Items
have been prepared by the ISE. On
December 9, 2008, the ISE filed
Amendment No. 1 to the proposed rule
change. The Commission is publishing
this notice to solicit comments on the
proposed rule change, as amended, from
interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The ISE is proposing to amend its
Schedule of Fees regarding its
cancellation fee. The text of the
proposed rule change is available on the
Exchange’s Web site (https://
www.ise.com), at the principal office of
the Exchange, and at the Commission’s
Public Reference Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
self-regulatory organization 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.
The self-regulatory organization has
prepared summaries, set forth in
sections A, B and C below, of the most
significant aspects of such statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The purpose of this proposed rule
change is to amend the ISE’s
cancellation fee. The Exchange
currently has a cancellation fee of $2.00
that applies to Electronic Access
Members (‘‘EAMs’’) that cancelled at
least 500 orders in a month, for each
order cancellation in excess of the total
number of orders such member
executed that month. Further, all orders
from the same clearing EAM executed in
the same underlying symbol at the same
price within a 30 second period are
aggregated and counted as one executed
order for purposes of this fee. This fee
is currently charged only to customer
orders; broker-dealer orders, including
non-member market maker (FARMM)
orders, are excluded from this fee.
Historically, some customers sought
to avoid the cancellation fee by
executing large quantities of small
orders in inexpensive, out of the money
options to offset their cancellation
E:\FR\FM\17DEN1.SGM
17DEN1
]]>Agencies
[Federal Register Volume 73, Number 243 (Wednesday, December 17, 2008)]
[Notices]
[Pages 76688-76689]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-29900]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-59088; File No. SR-DTC-2008-13]
Self-Regulatory Organizations; Notice of Filing of Proposed Rule
Change by The Depository Trust Company Relating to Eliminating the SRO
Requirement as a Condition of DTC-Eligibility for Securities That Are
Eligible for Resale Under Rule 144A Under the Securities Act of 1933
December 11, 2008.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ notice is hereby given that on October 9, 2008, The
Depository Trust Company (``DTC'') 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
primarily by DTC. The Commission is publishing this notice to solicit
comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
DTC proposes to eliminate the SRO Requirement, as defined below, as
a condition of DTC-eligibility for securities that are eligible for
resale under Rule 144A (``Rule 144A Securities'') under the Securities
Act of 1933 (``Securities Act'').\2\
---------------------------------------------------------------------------
\2\ 17 CFR 230.144A.
---------------------------------------------------------------------------
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 such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In April 1990, the Commission adopted Rule 144A under the
Securities Act.\3\ This rule provides a safe-harbor from the
registration requirements of the Securities Act for resales to
qualified institutional buyers (``QIBs'') of certain restricted
securities that when issued were not of the same class as securities
listed on a national securities exchange registered under the Act. Rule
144A(d)(2) \4\ requires that the seller or any person acting on its
behalf take reasonable steps to ensure that the purchaser is aware that
the seller may rely on the safe-harbor provided by Rule 144A.
---------------------------------------------------------------------------
\3\ Supra note 2.
\4\ 17 CFR 230.144A(d)(2).
---------------------------------------------------------------------------
In 1993, the Commission approved a DTC rule filing whereby DTC
would make Rule 144A securities eligible for deposit, book-entry
delivery, and other depository services provided, in part, that DTC was
required to ``condition the eligibility of the Rule 144A Securities
(other than Investment Grade Securities) on initial and continued
inclusion of those securities in an SRO Rule 144A System, such as the
NASD's PORTAL Market System.'' \5\ This condition is referred to herein
as the ``SRO Requirement.'' The SRO Requirement contemplated that an
SRO Rule 144A System would include comprehensive safeguards to
facilitate the SRO's ability to detect violations of Rule 144A.
However, the only SRO Rule 144A System that was developed was the
NASD's PORTAL Market System (``PORTAL'') and not only did PORTAL not
develop as anticipated but also it did not include the safeguards
contemplated by the DTC rule filing and Commission order of 1993.\6\ In
light of the above, DTC believes that the SRO Requirement is no longer
necessary or appropriate.
---------------------------------------------------------------------------
\5\ Securities Exchange Release No. 33327 (Dec. 13, 1993), 58 FR
67878 (Dec. 22, 1993) [File No. SR-DTC-90-06]. ``Investment Grade
Securities'' are defined in this release as nonconvertible debt
securities and nonconvertible preferred stock which are in one of
the top four categories by a nationally recognized statistical
rating organization.
\6\ Securities Exchange Release No. 56172 (Jul. 31, 2007), 72 FR
44196 (Aug. 7, 2007) [File No. SR-NASDAQ-2006-65].
---------------------------------------------------------------------------
DTC believes that eliminating the SRO Requirement will result in a
uniform procedure for making Rule 144A Securities DTC-eligible whether
or not they were classified as investment grade securities. Under the
proposed rule change, issuers and participants would continue to be
responsible for determining that their deposit of Rule 144A Securities
with DTC and their transactions in Rule 144A Securities through the
facilities of DTC are in compliance with existing DTC rules and the
federal securities laws, such as:
(i) Rule 2, Section 8, of DTC's rules: ``In connection with their
use of the Corporation's [DTC's] services, Participants and Pledgees
must comply with all applicable laws, including all applicable laws
relating to securities, taxation and money laundering.''
(ii) DTC's ``Operational Arrangements (Necessary for an Issue to
Become and Remain Eligible for DTC Services)'' relating to BEO issues
being made eligible for DTC services: ``Issuer recognizes that DTC does
not in any way undertake to, and shall not have any responsibility to,
monitor or ascertain the compliance of any transactions in the
Securities with the following, as amended from time to time: (1) Any
exemptions from registration under the Securities Act of 1933; (2) the
Investment Company Act of 1940; (3) the Employee Retirement Income
Security Act of 1974; (4) the Internal Revenue Code of 1986; (5) any
rules of any self-regulatory organizations (as defined under the
Securities Exchange Act of 1934); or (6) any other local, state,
federal, or foreign laws or regulations there under.'' \7\ This and
other representations made by issuers to DTC pursuant to the DTC
Operational Arrangements are mirrored in the Letter of Representations
that DTC receives from issuers in connection with their deposits of BEO
issues with DTC.
---------------------------------------------------------------------------
\7\ In 1994, in an order clarifying certain language in the Rule
144A Approval Order, the Commission concurred in the position taken
by DTC that ``Rule 5 [of DTC's rules] does not require DTC to
determine whether securities, when deposited at DTC, may be
transferred lawfully by book-entry in light of the Federal
securities law.'' Order Approving Proposed Rule Change Relating to a
Clarification of Rule 5, Securities Exchange Act Release No. 33672,
56 SEC Docket 315 (Feb. 23, 1994) (``Rule 5 Clarification Order'').
DTC Rule 5 was amended to delete any implication that DTC was under
any statutory or contractual obligation to determine whether
securities deposited with DTC could be legally transferred by book-
entry.
---------------------------------------------------------------------------
(iii) When a Rule 144A Security is made DTC eligible, the issuer
will continue to be required to execute a copy of the rider to the
Letter of Representation in the form it appears today except that the
reference to the SRO Requirement will be deleted.
DTC believes that the proposed rule change is consistent with the
requirements of the Act and the rules and regulations there under
because eliminating the unnecessary SRO Requirement will remove an
impediment to the perfection of the
[[Page 76689]]
mechanism of a national system for the prompt and accurate clearance
and settlement of securities transactions.
B. Self-Regulatory Organization's Statement on Burden on Competition
DTC does not believe that the proposed rule change will have any
impact or impose any burden on competition.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
Written comments relating to the proposed rule change have not yet
been solicited or received. DTC will notify the Commission of any
written comments received by DTC.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Within 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. SR-DTC-2008-13 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street, NE., Washington, DC 20549-1090.
All submissions should refer to File No. SR-DTC-2008-13. 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. to 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/legal/rule_filings/dtc/2008.php. All comments
received will be posted without change; the Commission does not edit
personal identifying information from submissions. You should submit
only information that you wish to make available publicly. All
submissions should refer to File No. SR-DTC-2008-13 and should be
submitted on or before January 7, 2009.
For the Commission by the Division of Trading and Markets,
pursuant to delegated authority.\8\
---------------------------------------------------------------------------
\8\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Florence E. Harmon,
Acting Secretary.
[FR Doc. E8-29900 Filed 12-16-08; 8:45 am]
BILLING CODE 8011-01-P
