
[Federal Register: January 15, 2010 (Volume 75, Number 10)]
[Notices]               
[Page 2570-2572]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr15ja10-90]                         

=======================================================================
-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-61318; File No. SR-DTC-2009-18]

 
Self-Regulatory Organizations; The Depository Trust Company; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Modify Its Settlement Progress Payment and Principal and Income 
Withdrawal Cutoff Times

January 8, 2010.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on December 23, 2009, The 
Depository Trust Company (``DTC'') filed with the Securities and 
Exchange Commission (``Commission'') the proposed rule change described 
in Items I, II, and III below, which items have been prepared primarily 
by DTC. DTC filed the proposal pursuant to Section 19(b)(3)(A)(iii) of 
the Act \2\ and Rule 19b-4(f)(4) \3\ thereunder so that the proposal 
was effective upon filing with the Commission. The Commission is 
publishing this notice to solicit

[[Page 2571]]

comments on the rule change from interested parties.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \3\ 17 CFR 240.19b-4(f)(4).
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The proposed rule change would amend DTC's rules to modify its 
Settlement Progress Payment (``SPP'') and Principal and Income 
(``P&I'') withdrawal cutoff times.

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 OCC.
---------------------------------------------------------------------------

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

    A SPP is a payment sent intraday by Fedwire to DTC when a DTC 
participant (``Participant'') has insufficient collateral \5\ or at DTC 
or is at its net debit cap. The SPP creates a credit to the 
Participant's settlement account, thereby reducing its net debit and 
allowing the Participant to continue to receive deliveries into its 
Participant account. Currently, Participants are able to request that 
DTC return an SPP that was submitted to DTC earlier in the day 
(``Return Request'') until 3 p.m. eastern time. When DTC receives a 
Return Request, DTC returns the full amount or a portion of the SPP as 
long as the return does not result in a negative collateral monitor \6\ 
or cause the Participant's net settlement debit to exceed its net debit 
cap.
---------------------------------------------------------------------------

    \5\ The term ``collateral'' of a Participant on any business day 
means the sum of (i) The actual participants fund deposit of the 
Participant, (ii) the actual preferred stock investment of a 
Participant, (iii) all net additions of the Participant and (iv) any 
SPPs wired by the Participant to DTC's account at the Federal 
Reserve Bank of New York in the manner specified in DTC's 
Procedures.
    \6\ DTC tracks collateral in a Participant's account through the 
Collateral Monitor (``CM''). The CM reflects the amount by which the 
collateral in the account exceeds the net debit in the account. When 
processing a transaction, DTC verifies that the Participant's CM 
would not become negative when the transaction completes. If the 
transaction would cause the Participant to have a negative CM, the 
transaction will recycle until the Participant has sufficient 
collateral for the transaction to complete.
---------------------------------------------------------------------------

    P&I allocations are credited to a Participant's settlement accounts 
throughout each processing day as P&I payments are received. The 
current early P&I withdrawal process allows Participants to withdraw 
intraday P&I payments for non-Money Market Instrument issues that DTC 
has allocated to the Participant's settlement account until 3 p.m. 
eastern time. P&I withdrawals can be made in any dollar amount subject 
to DTC's Risk Management Controls.\7\ The total amount of funds that a 
Participant may withdraw cannot exceed the sum of all of the 
Participant's P&I allocations for that day.
---------------------------------------------------------------------------

    \7\ Withdrawals that are blocked as a result of insufficient 
collateral or net debit cap will recycle until enough collateral or 
settlement credits are generated to satisfy the collateral or net 
debit cap deficiency or until the end of the recycle period when 
transactions that have not successfully completed are dropped by the 
system.
---------------------------------------------------------------------------

    In an effort to maximize the early return of available liquidity to 
Participants, DTC is proposing to extend the cutoff times for when 
Participants may request the return of SPP and the withdrawal of P&I to 
3:20 p.m. eastern time. These changes will necessitate revisions to the 
existing DTC Settlement Guide.
    The proposed rule change is consistent with Section 17A of the 
Act,\8\ as amended, and the rules and regulations thereunder applicable 
to DTC. The proposed rule change will maximize the early return of 
available liquidity to Participants and will be implemented 
consistently with the safe guarding of securities and funds in DTC's 
custody or control or for which it is responsible because all of DTC's 
risk management controls will continue to be in effect.
---------------------------------------------------------------------------

    \8\ 15 U.S.C. 78q-1.
---------------------------------------------------------------------------

(B) Self-Regulatory Organization's Statement on Burden on Competition

    DTC does not believe that the proposed rule change will have any 
impact or impose any burden on competition.

(C) Self-Regulatory Organization's Statement on Comments on the 
Proposed Rule Change Received From Members, Participants, or Others

    Written comments relating to the proposed rule change were not and 
are not intended to be solicited or received. DTC will notify the 
Commission of any written comments received by DTC.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    The foregoing proposed rule change has become effective upon filing 
pursuant to Section 19(b)(3)(A)(iii) of the Act \9\ and Rule 19b-
4(f)(4) \10\ thereunder because the proposed rule change effects a 
change in an existing service of DTC that: (i) Does not adversely 
affect the safeguarding of securities or funds in the custody or 
control of DTC or for which it is responsible and (ii) does not 
significantly affect the respective rights or obligations of DTC or 
persons using the service. At any time within sixty days of the filing 
of the proposed rule change, the Commission may summarily abrogate such 
rule change if it appears to the Commission that such action is 
necessary or appropriate in the public interest, for the protection of 
investors, or otherwise in furtherance of the purposes of the Act.
---------------------------------------------------------------------------

    \9\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \10\ 17 CFR 240.19b-4(f)(4).
---------------------------------------------------------------------------

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 (http://
www.sec.gov/rules/sro.shtml); or
     Send an e-mail to rule-comments@sec.gov. Please include 
File Number SR-DTC-2009-18 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Elizabeth 
M. Murphy, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-DTC-2009-18. This file 
number should be included on the subject line if e-mail is used. To 
help the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's Internet Web site (http://www.sec.gov/rules/
sro.shtml). Copies of the submission, all subsequent amendments, all 
written statements with respect to the proposed rule change that are 
filed with the Commission, and all written communications relating to 
the

[[Page 2572]]

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 filings also will be available for 
inspection and copying at the principal office of DTC and on DTC's Web 
site at http://www.dtcc.com/downloads/legal/rule_filings/2009/dtc/
2009-18.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-
2009-18 and should be submitted on or before February 5, 2010.
---------------------------------------------------------------------------

    \11\ 17 CFR 200.30-3(a)(12).

    For the Commission by the Division of Trading and Markets, 
pursuant to delegated authority.\11\
Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-633 Filed 1-14-10; 8:45 am]
BILLING CODE 8011-01-P

