Self-Regulatory Organizations; The Depository Trust Company; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Rules Relating to Existing Operational Arrangements Involving Eligibility of Securities, 77281-77283 [2011-31737]
Download as PDF
Federal Register / Vol. 76, No. 238 / Monday, December 12, 2011 / Notices
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 Web site viewing and
printing 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 the filing also
will be available for inspection and
copying at the principal office of the
Exchange. 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–ISE–
2011–78 and should be submitted on or
before January 3, 2012.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.10
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2011–31735 Filed 12–9–11; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–65901; File No. SR–DTC–
2011–10]
Self-Regulatory Organizations; The
Depository Trust Company; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change To Amend
Rules Relating to Existing Operational
Arrangements Involving Eligibility of
Securities
with the Commission.2 The Commission
is publishing this notice to solicit
comments on the proposed rule change
from interested parties.
I. Self-Regulatory Organization’s
Statement of the Terms of the Substance
of the Proposed Rule Change
The purpose of this proposed rule
change is to update the existing
contractual operational arrangements
necessary for a securities issue to
become and remain eligible for the
services at DTC.3
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
(A) Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
(1) Purpose
DTC’s operational arrangement
(‘‘Operational Arrangement’’ or ‘‘OA’’)
was first published in June 1987 and
subsequently updated in June 1988,
February 1992, December 1994, January
1998, May 2002, and most recently in
January 2009.5 The OA is designed to
maximize the number of issues of
securities that may be made eligible for
DTC services and to provide for the
orderly processing of such securities
and the timely payments to DTC
participants. DTC’s experience
demonstrates that when participants,
jlentini on DSK4TPTVN1PROD with NOTICES
December 6, 2011.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’),1 notice is hereby given that on
November 25, 2011, The Depository
Trust Company (‘‘DTC’’) filed with the
Securities and Exchange Commission
(‘‘Commission’’) the proposed rule
change described in Items I and II
below, which items have been prepared
primarily by DTC. DTC filed the
proposed rule change pursuant to
Section 19(b)(3)(A)(iii) and Rule 19b–
4(f)(4) thereunder so that the proposed
rule change was effective upon filing
10 17
1 15
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
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19:31 Dec 09, 2011
Jkt 226001
2 15 U.S.C. 78s(b)(3)(A)(iii) and 17 CFR 240.19b–
4(f)(4).
3 The text of the proposed rule change is attached
as Exhibit 5 to DTC’s filing, which is available at
https://www.dtcc.com/downloads/legal/rule_filings/
2011/dtc/2011-10.pdf.
4 The Commission has modified the text of the
summaries prepared by NSCC.
5 Securities Exchange Act Release 24818 (August
19, 1987), 52 FR 31833 (August 24, 1987) (File No.
SR–DTC–87–10); 25948 (July 27, 1988), 53 FR
29294 (August 3, 1988) (File No. SR–DTC–88–13);
30625 (April 30, 1992), 57 FR 18534 (April 30,
1992) (File No. SR–DTC–92–06); 35342 (February 8,
1995), 60 FR 8434 (February 14, 1995) (File No. SR–
DTC–94–19); 39894 (April 21, 1998), 63 FR 23310
(April 28, 1998) (File No. SR–DTC–97–23); 45994
(May 29, 2002), 68 FR 35037 (June 11, 2003) (File
No. SR–DTC–2002–02); 59199 (January 6, 2009), 74
FR 1266 (January 12, 2009) (File No. SR–DTC–
2008–14).
PO 00000
Frm 00079
Fmt 4703
Sfmt 4703
77281
issuers, underwriters, agents (as such
terms are defined in the DTC rules or in
the OA), and their counsel are aware of
DTC’s requirements, those requirements
may be more readily met. DTC is now
proposing to update the OA to clarify
DTC’s processes and to mitigate certain
risk associated with those processes.
Additionally, DTC is proposing to make
several ministerial changes, including
changes related to methods of
notification, and to add clarifying
language to provide a more concise
description of OA procedures.
The primary differences between the
proposed amended OA and the OA as
filed with the Commission in 2009 are
as follows:
1. Matters that were previously the
subject of proposed rule change filings
with the Commission but were never
incorporated into the OA:
a. In March 2010, DTC filed with the
Commission a proposed rule change
modifying the required notification
method for the assumption or
termination of transfer agent services.6
DTC is now proposing to update the OA
to reflect those methods for notifying
DTC of transfer agency changes.
b. In May 2010, DTC filed with the
Commission a proposed rule change
updating DTC procedures regarding the
Participant Tender Offer Program in
order to provide DTC participants with
a more efficient process for making
elections regarding corporate action
events which DTC deemed appropriate
for processing.7 DTC is now proposing
to update the OA to reflect that process.
c. In November 2010, DTC filed with
the Commission a proposed rule change
to automate the approval process
relating to providing trustee access to
the Security Position Report Service at
the point of eligibility.8 DTC is now
proposing to update the OA to reflect
that process.
d. In April 2011, the Commission
approved a DTC proposed rule change
amending the requirements for transfer
agents to maintain a balance certificate
in the Fast Automated Securities
Transfer Program (‘‘FAST’’).9 DTC is
now proposing to update the OA to
specify that transfer agents participating
in FAST that act for issues participating
in the Direct Registration System no
6 Securities Exchange Release Act No. 61620
(March 1, 2010) 75 FR 10539 (March 8, 2010) (File
No. SR–DTC–2010–04).
7 For Securities Exchange Act Release No. 62119
(May 18, 2010) 75 FR 29374 (May 25, 2010) (File
No. SR–DTC–2010–08).
8 Securities Exchange Release Act No. 63245
(November 4, 2010) 75 FR 69150 (November 10,
2010) (File No. SR–DTC–2010–10).
9 Securities Exchange Act Release No. 64191
(April 5, 2011), 76 FR 20061 (April 11, 2011) (File
No. SR–DTC–2010–15).
E:\FR\FM\12DEN1.SGM
12DEN1
jlentini on DSK4TPTVN1PROD with NOTICES
77282
Federal Register / Vol. 76, No. 238 / Monday, December 12, 2011 / Notices
longer need to maintain a balance
certificate.
e. In August 2011, the Commission
approved a DTC proposed rule change
relating to processing early redemptions
of certain certificates of deposit.10 DTC
is now proposing to update the OA to
reflect those changes.
2. In January 2011, DTC published an
Important Notice to provide issuers and
their transfer agents guidance on key
criteria and processes applicable to
eligibility for book-entry delivery and
depository services.11 DTC is now
proposing to update the OA in order to
be consistent with the Important Notice
and to clarify DTC’s eligibility process.
3. For purposes of consistency, DTC is
proposing to include an Important Legal
Information Section in the OA, which
adopts language from current DTC’s
Rules and Procedures.
4. The following processes in order to
mitigate risk associated with processing:
a. DTC is proposing to require an
issuer or its transfer agent obtain a new
CUSIP number from Standard & Poor’s
CUSIP Service Bureau in order to
facilitate the adequate processing of a
corporate action event, such as an
interest payment. This change should
reduce the number of processing
problems associated with corporate.
b. DTC is proposing to add language
to the OA to establish that the record
date for equity securities must coincide
with the established ex-date announced
by the applicable stock exchange on
which the security is listed.
Additionally, DTC is proposing to
require that if a security is listed on an
exchange or trading in the secondary
market, the issuer must distribute a
shareholder notice to the respective
exchange that announces the issuer’s
intent to effect a corporate action. These
changes are consistent with current
practice and should help mitigate risk
associated with corporate actions.
c. DTC is proposing to update the OA
to require that agents send payments of
less than $1 billion in same-day funds
no later than 1 p.m. eastern time and to
send payments of $1 billion or more in
same day funds no later than 12 p.m.
eastern time in order to facilitate the
timely processing of payments. This
change reflects the current industry
practice relating to reorganization
payments.
d. DTC is proposing to require issuer
and their agents to annually certify that
10 Securities Exchange Act Release Numbers
64864 (July 12, 2011) 76 FR 42149 (July 18, 2011)
(File No. SR–DTC–11–06).
11 DTC Important Notice B#0006–11 available at
https://www.dtcc.com/downloads/legal/imp_notices/
2011/dtc/set/0006-11.pdf.
VerDate Mar<15>2010
15:55 Dec 09, 2011
Jkt 226001
their bank account numbers on DTC’s
records are accurate.
e. DTC is proposing to codify
established practice of requiring the
issuer or agent to provide DTC a notice
of reduction in the stock distribution or
dividend amount due DTC as a result of
the reduction of treasury or repurchased
shares (i.e., an issuer ‘‘buy back’’) held
on deposit by DTC on record date. As
proposed, the issuer or agent will be
required to provide specified
information together with the
participant or participants’ confirmation
letters preferable five business days but
no fewer than three business days prior
to the payable date for that security.
Failure of a participant to comply with
notification to DTC to effect timely
adjustments to the participant’s
accounts could jeopardize the same-day
distribution of payments to the
participant and beneficial owners
holding through it. DTC is also
proposing to add a disincentive fee for
participants that submit instructions to
DTC outside of the established
timeframes.
5. DTC is proposing to include
corrections and clarifications in the OA
relating to corporate action notification
and processing requirements. These
changes reflect current practice with
agents and include requirements for
what needs to be provided to DTC in the
event that the terms of an offer are
amended.
(2) Statutory Basis
The proposed rule change is
consistent with the requirements of the
Act and the rules and regulations
thereunder applicable to DTC because it
should facilitate the prompt and
accurate clearance and settlement of
securities transactions by clarifying
provisions in the DTC’s OA pertaining
to existing eligibility requirements and
processes. In so doing, these
clarifications should in turn expedite
the process of making securities eligible
for DTC services and reduce risk
associated with processing corporate
reorganization events.
(B) Self-Regulatory Organization’s
Statement on Burden on Competition
DTC does not believe that the
proposed rule change would 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 been
solicited DTC.
PO 00000
Frm 00080
Fmt 4703
Sfmt 4703
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become
effective upon filing pursuant to Section
19(b)(3)(A)(iii) of the Act 12 and Rule
19b–4(f)(4) 13 thereunder because it is a
change in an existing service that does
not adversely affect the safeguarding of
securities or funds in the custody or
control of the clearing agency and does
not significantly affect the respective
rights or obligations of the clearing
agency or persons using the service. At
any time within sixty days of the filing
of such rule change, the Commission
summarily may temporarily suspend
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.
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 email to rulecomments@sec.gov. Please include File
Number SR–DTC–2011–10 on the
subject line.
Paper Comments
• Send paper comments in triplicate
to Elizabeth M. Murphy, Secretary,
Securities and Exchange Commission,
100 F Street NE., Washington, DC
20549–1090.
All submission should refer to File
Number SR–DTC–2011–10. This file
number should be included on the
subject line if email 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
12 15
13 17
E:\FR\FM\12DEN1.SGM
U.S.C. 78s(b)(3)(A)(iii).
CFR 240.19b–4(f)(4).
12DEN1
Federal Register / Vol. 76, No. 238 / Monday, December 12, 2011 / Notices
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for Web site viewing and
printing in the Commission’s Public
Reference Section, 100 F Street NE.,
Washington, DC 20549–1090, on official
business days between the hours of 10
a.m. and 3 p.m. Copies of such filings
will also be available for inspection and
copying at the principal office of NSCC
and on NSCC’s Web site at https://
www.dtcc.com/downloads/legal/
rule_filings/2011/dtc/2011-10.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
Number SR–DTC–2011–10 and should
be submitted on or before January 3,
2012.
For the Commission by the Division of
Trading and Markets, pursuant to delegated
authority.14
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2011–31737 Filed 12–9–11; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–65896; File No. SR–FINRA–
2011–067]
Self-Regulatory Organizations;
Financial Industry Regulatory
Authority, Inc.; Notice of Filing of
Proposed Rule Change Relating to
Whistleblower Claims in Arbitration
December 6, 2011.
jlentini on DSK4TPTVN1PROD with NOTICES
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, 2011, the Financial Industry
Regulatory Authority, Inc. (‘‘FINRA’’)
filed with the Securities and Exchange
Commission (‘‘SEC’’ or ‘‘Commission’’)
the proposed rule change as described
in Items I, II, and III below, which Items
have been prepared by FINRA. 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
FINRA is proposing to amend FINRA
Rule 13201 of the Code of Arbitration
14 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
VerDate Mar<15>2010
15:55 Dec 09, 2011
Jkt 226001
Procedure for Industry Disputes
(‘‘Industry Code’’) to align the rule with
statutes that invalidate predispute
arbitration agreements for whistleblower
claims. The proposed rule change also
would make a conforming amendment
to FINRA Rule 2263.
The text of the proposed rule change
is available on FINRA’s Web site at
https://www.finra.org, at the principal
office of FINRA 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,
FINRA 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. FINRA 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 proposed rule change would
amend FINRA Rule 13201 (Statutory
Employment Discrimination Claims) of
the Industry Code, and FINRA Rule
2263 (Arbitration Disclosure to
Associated Persons Signing or
Acknowledging Form U4), to align the
rules with statutes that invalidate
predispute arbitration agreements for
whistleblower claims.
The Dodd-Frank Wall Street Reform
and Consumer Protection Act (‘‘DoddFrank Act’’) 3 amended the SarbanesOxley Act of 2002 (‘‘SOX’’) by adding a
new paragraph (e) to 18 U.S.C. 1514A 4
to provide that:
(1) WAIVER OF RIGHTS AND
REMEDIES—The rights and remedies
provided for in this section may not be
waived by any agreement, policy form,
or condition of employment, including
by a predispute arbitration agreement.
(2) PREDISPUTE ARBITRATION
AGREEMENTS—No predispute
arbitration agreement shall be valid or
enforceable, if the agreement requires
arbitration of a dispute arising under
this section.
3 See Dodd-Frank Wall Street Reform and
Consumer Protection Act, Public Law 111–203,
§ 919 (2010).
4 See Dodd-Frank Section 922(c)(2), adding 18
U.S.C. 1514A(e) (Nonenforceability of Certain
Provisions Waiving Rights and Remedies or
Requiring Arbitration of Disputes).
PO 00000
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Fmt 4703
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77283
Prior to the Dodd-Frank Act, it was
FINRA staff’s articulated position that
parties were required to arbitrate SOX
whistleblower claims under the
Industry Code.5
In light of the changes set forth in the
Dodd-Frank Act that invalidate
predispute arbitration agreements in the
case of SOX whistleblower claims, the
proposed rule change would amend
FINRA Rule 13201 of the Industry Code
to make clear that parties are not
required to arbitrate SOX whistleblower
claims, superseding the existing
guidance to the contrary. While the
main impetus for the proposed rule
change is the need to update FINRA
staff’s stated position on SOX
whistleblower claims, FINRA proposes
to make the rule text broad enough to
cover any statutes that prohibit
predispute arbitration agreements for
whistleblower claims.6
Rule 13201 of the Industry Code
currently provides that a claim alleging
employment discrimination, including
sexual harassment, in violation of a
statute, is not required to be arbitrated
under the Industry Code. Such a claim
may be arbitrated only if the parties
have agreed to arbitrate it, either before
or after the dispute arose. The proposed
rule change would amend Rule 13201 to
add a new provision to provide that a
dispute arising under a whistleblower
statute that prohibits the use of
predispute arbitration agreements is not
required to be arbitrated under the
Industry Code. The rule would state that
such a dispute may be arbitrated only if
the parties have agreed to arbitrate it
after the dispute arose.
FINRA also would amend the title of
Rule 13201 to reflect the addition of the
new provision relating to whistleblower
claims. FINRA structured the proposed
rule change to separate the provision
relating to statutory employment
discrimination claims from the
provision relating to whistleblower
claims. While parties may agree to
arbitrate a statutory employment
discrimination claim either before or
after a dispute arises, the Dodd-Frank
Act invalidates predispute agreements
to arbitrate certain whistleblower
claims.
The proposed rule change also would
make a conforming amendment to
FINRA Rule 2263, which requires firms
5 See Arbitrability of Sarbanes-Oxley
Whistleblower Claims by Laurence S. Moy, Pearl
Zuchlewski, Linda A. Neilan and Katherine
Blostein, The Neutral Corner (Volume 1—2008).
6 The Dodd-Frank Act also invalidated predispute
arbitration agreements in other whistleblower
statutes, including, for example, 7 USCA § 26(n)
relating to Commodity Exchange Whistleblower
Incentives and Protections.
E:\FR\FM\12DEN1.SGM
12DEN1
Agencies
[Federal Register Volume 76, Number 238 (Monday, December 12, 2011)]
[Notices]
[Pages 77281-77283]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-31737]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-65901; File No. SR-DTC-2011-10]
Self-Regulatory Organizations; The Depository Trust Company;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Amend Rules Relating to Existing Operational Arrangements Involving
Eligibility of Securities
December 6, 2011.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ notice is hereby given that on November 25, 2011, The
Depository Trust Company (``DTC'') filed with the Securities and
Exchange Commission (``Commission'') the proposed rule change described
in Items I and II below, which items have been prepared primarily by
DTC. DTC filed the proposed rule change pursuant to Section
19(b)(3)(A)(iii) and Rule 19b-4(f)(4) thereunder so that the proposed
rule change was effective upon filing with the Commission.\2\ The
Commission is publishing this notice to solicit comments on the
proposed rule change from interested parties.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 15 U.S.C. 78s(b)(3)(A)(iii) and 17 CFR 240.19b-4(f)(4).
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of the
Substance of the Proposed Rule Change
The purpose of this proposed rule change is to update the existing
contractual operational arrangements necessary for a securities issue
to become and remain eligible for the services at DTC.\3\
---------------------------------------------------------------------------
\3\ The text of the proposed rule change is attached as Exhibit
5 to DTC's filing, which is available at https://www.dtcc.com/downloads/legal/rule_filings/2011/dtc/2011-10.pdf.
---------------------------------------------------------------------------
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 NSCC.
---------------------------------------------------------------------------
(A) Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
(1) Purpose
DTC's operational arrangement (``Operational Arrangement'' or
``OA'') was first published in June 1987 and subsequently updated in
June 1988, February 1992, December 1994, January 1998, May 2002, and
most recently in January 2009.\5\ The OA is designed to maximize the
number of issues of securities that may be made eligible for DTC
services and to provide for the orderly processing of such securities
and the timely payments to DTC participants. DTC's experience
demonstrates that when participants, issuers, underwriters, agents (as
such terms are defined in the DTC rules or in the OA), and their
counsel are aware of DTC's requirements, those requirements may be more
readily met. DTC is now proposing to update the OA to clarify DTC's
processes and to mitigate certain risk associated with those processes.
Additionally, DTC is proposing to make several ministerial changes,
including changes related to methods of notification, and to add
clarifying language to provide a more concise description of OA
procedures.
---------------------------------------------------------------------------
\5\ Securities Exchange Act Release 24818 (August 19, 1987), 52
FR 31833 (August 24, 1987) (File No. SR-DTC-87-10); 25948 (July 27,
1988), 53 FR 29294 (August 3, 1988) (File No. SR-DTC-88-13); 30625
(April 30, 1992), 57 FR 18534 (April 30, 1992) (File No. SR-DTC-92-
06); 35342 (February 8, 1995), 60 FR 8434 (February 14, 1995) (File
No. SR-DTC-94-19); 39894 (April 21, 1998), 63 FR 23310 (April 28,
1998) (File No. SR-DTC-97-23); 45994 (May 29, 2002), 68 FR 35037
(June 11, 2003) (File No. SR-DTC-2002-02); 59199 (January 6, 2009),
74 FR 1266 (January 12, 2009) (File No. SR-DTC-2008-14).
---------------------------------------------------------------------------
The primary differences between the proposed amended OA and the OA
as filed with the Commission in 2009 are as follows:
1. Matters that were previously the subject of proposed rule change
filings with the Commission but were never incorporated into the OA:
a. In March 2010, DTC filed with the Commission a proposed rule
change modifying the required notification method for the assumption or
termination of transfer agent services.\6\ DTC is now proposing to
update the OA to reflect those methods for notifying DTC of transfer
agency changes.
---------------------------------------------------------------------------
\6\ Securities Exchange Release Act No. 61620 (March 1, 2010) 75
FR 10539 (March 8, 2010) (File No. SR-DTC-2010-04).
---------------------------------------------------------------------------
b. In May 2010, DTC filed with the Commission a proposed rule
change updating DTC procedures regarding the Participant Tender Offer
Program in order to provide DTC participants with a more efficient
process for making elections regarding corporate action events which
DTC deemed appropriate for processing.\7\ DTC is now proposing to
update the OA to reflect that process.
---------------------------------------------------------------------------
\7\ For Securities Exchange Act Release No. 62119 (May 18, 2010)
75 FR 29374 (May 25, 2010) (File No. SR-DTC-2010-08).
---------------------------------------------------------------------------
c. In November 2010, DTC filed with the Commission a proposed rule
change to automate the approval process relating to providing trustee
access to the Security Position Report Service at the point of
eligibility.\8\ DTC is now proposing to update the OA to reflect that
process.
---------------------------------------------------------------------------
\8\ Securities Exchange Release Act No. 63245 (November 4, 2010)
75 FR 69150 (November 10, 2010) (File No. SR-DTC-2010-10).
---------------------------------------------------------------------------
d. In April 2011, the Commission approved a DTC proposed rule
change amending the requirements for transfer agents to maintain a
balance certificate in the Fast Automated Securities Transfer Program
(``FAST'').\9\ DTC is now proposing to update the OA to specify that
transfer agents participating in FAST that act for issues participating
in the Direct Registration System no
[[Page 77282]]
longer need to maintain a balance certificate.
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\9\ Securities Exchange Act Release No. 64191 (April 5, 2011),
76 FR 20061 (April 11, 2011) (File No. SR-DTC-2010-15).
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e. In August 2011, the Commission approved a DTC proposed rule
change relating to processing early redemptions of certain certificates
of deposit.\10\ DTC is now proposing to update the OA to reflect those
changes.
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\10\ Securities Exchange Act Release Numbers 64864 (July 12,
2011) 76 FR 42149 (July 18, 2011) (File No. SR-DTC-11-06).
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2. In January 2011, DTC published an Important Notice to provide
issuers and their transfer agents guidance on key criteria and
processes applicable to eligibility for book-entry delivery and
depository services.\11\ DTC is now proposing to update the OA in order
to be consistent with the Important Notice and to clarify DTC's
eligibility process.
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\11\ DTC Important Notice B0006-11 available at https://www.dtcc.com/downloads/legal/imp_notices/2011/dtc/set/0006-11.pdf.
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3. For purposes of consistency, DTC is proposing to include an
Important Legal Information Section in the OA, which adopts language
from current DTC's Rules and Procedures.
4. The following processes in order to mitigate risk associated
with processing:
a. DTC is proposing to require an issuer or its transfer agent
obtain a new CUSIP number from Standard & Poor's CUSIP Service Bureau
in order to facilitate the adequate processing of a corporate action
event, such as an interest payment. This change should reduce the
number of processing problems associated with corporate.
b. DTC is proposing to add language to the OA to establish that the
record date for equity securities must coincide with the established
ex-date announced by the applicable stock exchange on which the
security is listed. Additionally, DTC is proposing to require that if a
security is listed on an exchange or trading in the secondary market,
the issuer must distribute a shareholder notice to the respective
exchange that announces the issuer's intent to effect a corporate
action. These changes are consistent with current practice and should
help mitigate risk associated with corporate actions.
c. DTC is proposing to update the OA to require that agents send
payments of less than $1 billion in same-day funds no later than 1 p.m.
eastern time and to send payments of $1 billion or more in same day
funds no later than 12 p.m. eastern time in order to facilitate the
timely processing of payments. This change reflects the current
industry practice relating to reorganization payments.
d. DTC is proposing to require issuer and their agents to annually
certify that their bank account numbers on DTC's records are accurate.
e. DTC is proposing to codify established practice of requiring the
issuer or agent to provide DTC a notice of reduction in the stock
distribution or dividend amount due DTC as a result of the reduction of
treasury or repurchased shares (i.e., an issuer ``buy back'') held on
deposit by DTC on record date. As proposed, the issuer or agent will be
required to provide specified information together with the participant
or participants' confirmation letters preferable five business days but
no fewer than three business days prior to the payable date for that
security. Failure of a participant to comply with notification to DTC
to effect timely adjustments to the participant's accounts could
jeopardize the same-day distribution of payments to the participant and
beneficial owners holding through it. DTC is also proposing to add a
disincentive fee for participants that submit instructions to DTC
outside of the established timeframes.
5. DTC is proposing to include corrections and clarifications in
the OA relating to corporate action notification and processing
requirements. These changes reflect current practice with agents and
include requirements for what needs to be provided to DTC in the event
that the terms of an offer are amended.
(2) Statutory Basis
The proposed rule change is consistent with the requirements of the
Act and the rules and regulations thereunder applicable to DTC because
it should facilitate the prompt and accurate clearance and settlement
of securities transactions by clarifying provisions in the DTC's OA
pertaining to existing eligibility requirements and processes. In so
doing, these clarifications should in turn expedite the process of
making securities eligible for DTC services and reduce risk associated
with processing corporate reorganization events.
(B) Self-Regulatory Organization's Statement on Burden on Competition
DTC does not believe that the proposed rule change would 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 been
solicited DTC.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become effective upon filing pursuant
to Section 19(b)(3)(A)(iii) of the Act \12\ and Rule 19b-4(f)(4) \13\
thereunder because it is a change in an existing service that does not
adversely affect the safeguarding of securities or funds in the custody
or control of the clearing agency and does not significantly affect the
respective rights or obligations of the clearing agency or persons
using the service. At any time within sixty days of the filing of such
rule change, the Commission summarily may temporarily suspend 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.
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\12\ 15 U.S.C. 78s(b)(3)(A)(iii).
\13\ 17 CFR 240.19b-4(f)(4).
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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 email to rule-comments@sec.gov. Please include
File Number SR-DTC-2011-10 on the subject line.
Paper Comments
Send paper comments in triplicate to Elizabeth M. Murphy,
Secretary, Securities and Exchange Commission, 100 F Street NE.,
Washington, DC 20549-1090.
All submission should refer to File Number SR-DTC-2011-10. This file
number should be included on the subject line if email 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
[[Page 77283]]
those that may be withheld from the public in accordance with the
provisions of 5 U.S.C. 552, will be available for Web site viewing and
printing in the Commission's Public Reference Section, 100 F Street
NE., Washington, DC 20549-1090, on official business days between the
hours of 10 a.m. and 3 p.m. Copies of such filings will also be
available for inspection and copying at the principal office of NSCC
and on NSCC's Web site at https://www.dtcc.com/downloads/legal/rule_filings/2011/dtc/2011-10.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 Number SR-DTC-2011-10 and should be submitted on or before January
3, 2012.
For the Commission by the Division of Trading and Markets,
pursuant to delegated authority.\14\
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\14\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2011-31737 Filed 12-9-11; 8:45 am]
BILLING CODE 8011-01-P