Federal Register: December 10, 2008 (Volume 73, Number 238)
DOCID: fr10de08-106 FR Doc E8-29135
SECURITIES AND EXCHANGE COMMISSION
Securities and Exchange Commission
DOCUMENT ID: [Release No. 34-59035; File No. SR-DTC-2007-07]
NOTICE: NOTICES
DOCID: fr10de08-106
ACTION: Self-Regulatory Organizations; Proposed Rule Changes:
SUBJECT CATEGORY:
Self-Regulatory Organizations; The Depository Trust Company; Order Approving Proposed Rule Change To Amend the Applicant Disqualification Criteria Contained in Its Rules
DOCUMENT SUMMARY:
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
DTC200707 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.
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. 80a1 et seq.
\7\ 15 U.S.C. 80b1 et seq.
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. 78q1(b)(3)(F).
\9\ 15 U.S.C. 78q1(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. 78q1.
It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\11\ that the proposed rule change (File No. SRDTC200707) be, and hereby is, approved.\12\
\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\
\13\ 17 CFR 200.303(a)(12).
Florence E. Harmon,
Acting Secretary.
[FR Doc. E829135 Filed 12908; 8:45 am]
BILLING CODE 801101P
SUMMARY:
The Depository Trust Company,
DOCUMENT BODY 2:
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
DTC200707 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.
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. 80a1 et seq.
\7\ 15 U.S.C. 80b1 et seq.
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. 78q1(b)(3)(F).
\9\ 15 U.S.C. 78q1(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. 78q1.
It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\11\ that the proposed rule change (File No. SRDTC200707) be, and hereby is, approved.\12\
\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\
\13\ 17 CFR 200.303(a)(12).
Florence E. Harmon,
Acting Secretary.
[FR Doc. E829135 Filed 12908; 8:45 am]
BILLING CODE 801101P