Notice2021-13103
Self-Regulatory Organizations; The Depository Trust Company; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Provide Enhanced Clarity for Deadlines and Processing Times
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Published
June 23, 2021
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 86 Issue 118 (Wednesday, June 23, 2021)</title>
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[Federal Register Volume 86, Number 118 (Wednesday, June 23, 2021)]
[Notices]
[Pages 32987-32989]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2021-13103]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-92198; File No. SR-DTC-2021-009]
Self-Regulatory Organizations; The Depository Trust Company;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Provide Enhanced Clarity for Deadlines and Processing Times
June 16, 2021.
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 June 8, 2021, 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 by the clearing agency. DTC filed the proposed rule change
pursuant to Section 19(b)(3)(A) of the Act \3\ and Rule 19b-4(f)(4)
thereunder.\4\ The Commission is publishing this notice to solicit
comments on the proposed rule change from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ 15 U.S.C. 78s(b)(3)(A).
\4\ 17 CFR 240.19b-4(f)(4).
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I. Clearing Agency's Statement of the Terms of Substance of the
Proposed Rule Change
The proposed rule change of DTC is attached hereto as Exhibit 5,\5\
as described in greater detail below.
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\5\ Each capitalized term not otherwise defined herein has its
respective meaning as set forth in the Rules, By-Laws and
Organization Certificate of DTC (the ``Rules''), the Canadian Link
Service Guide, ClaimConnect Service Guide, Custody Service Guide,
Deposits Service Guide, Distributions Service Guide, Redemptions
Service Guide, Reorganizations Service Guide, Settlement Service
Guide, and Underwriting Service Guide (collectively, the ``Service
Guides'') and the DTC Operational Arrangements (Necessary for
Securities to Become and Remain Eligible for DTC Services)
(``Operational Arrangements'' or ``OA''), available at <a href="http://www.dtcc.com/legal/rules-and-procedures.aspx">http://www.dtcc.com/legal/rules-and-procedures.aspx</a>.
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II. Clearing Agency's Statement of the Purpose of, and Statutory Basis
for, the Proposed Rule Change
In its filing with the Commission, the clearing agency 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 clearing agency has prepared summaries,
set forth in sections A, B, and C below, of the most significant
aspects of such statements.
(A) Clearing Agency's Statement of the Purpose of, and Statutory Basis
for, the Proposed Rule Change
1. Purpose
The proposed rule change would amend the Service Guides and the OA
to provide enhanced clarity around (i) deadlines, timeframes, and
cutoffs established by DTC in connection with DTC services (``DTC-
established Stakeholder Deadlines''), and (ii) the times and timeframes
for DTC actions and processes relating to DTC services (``DTC
Processing Times''). In particular, the proposed rule change would
enhance the transparency around the ability of DTC to extend DTC-
established Stakeholder Deadlines, and around DTC Processing Times,
which are standards, rather than deadlines, as further described below.
(i) DTC-established Stakeholder Deadlines
The Service Guides provide Participants with procedures and
information pertaining to DTC settlement and asset services. The
procedures and information include, among other things, descriptions of
DTC-established Stakeholder Deadlines for Participant and stakeholder
\6\ action relating to DTC services. The OA is designed to provide
Participants and other stakeholders with information and procedures
related to DTC eligibility for securities, and to provide the
requirements for, among other things, the orderly processing of
securities, corporate actions, and distributions. The OA includes
descriptions of DTC-established Stakeholder Deadlines in connection
with the requirements and services.\7\
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\6\ Stakeholders include issuers, agents (as defined in the OA),
underwriters (as defined in the OA), and other parties, as context
requires.
\7\ For example, the OA requires that, in order for DTC to make
a same day allocation of funds, the agent must provide DTC with
CUSIP-specific details for the payment before 2:50 p.m. on payable
date, and that the details must match the amount of funds that are
received by DTC no later than 3:00 p.m. See OA, supra note 5, at 27.
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The purpose of DTC-established Stakeholder Deadlines is to help DTC
efficiently and effectively manage its services and systems, in order
to timely process instructions and securities transactions at DTC.
However, there are times when, due to the facts and circumstances of a
particular situation, DTC determines to extend a DTC-established
Stakeholder Deadline. The situations can include, but are not limited
to, a Participant operational issue or a change to a different deadline
(whether DTC or external) that could affect the ability of one or more
Participants to meet the DTC-established Stakeholder Deadline.
(ii) DTC Processing Times
The Service Guides and the OA also describe DTC Processing Times in
connection with certain services.\8\ The purpose of describing these
DTC Processing Times is to provide Participants and other stakeholders
with information about the typical timing or timeframe of a DTC action
or process, in order to help Participants and other stakeholders to
more efficiently and effectively use and understand DTC's services and
processes. For example, if a Service Guide states that the processing
time for a particular service is typically two business days, the
Participant will understand that it is unlikely that it would get same-
day turnaround from DTC and can plan accordingly, for instance, by
ensuring that it submits its transaction with adequate lead-time.
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\8\ For example, the Settlement Service Guide indicates that at
1:30 p.m. on a settlement day, DTC releases all pending delivery
account positions and reverts to default recycle processing. See
Settlement Service Guide, supra note 5, at 26.
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(iii) Overview of Proposed Rule Change
DTC believes that Participants and other stakeholders benefit from
clear information about their rights and obligations relating to DTC-
established Stakeholder Deadlines and DTC Processing Times so that they
are able to plan and conduct their business and securities transactions
more effectively. Recent events, such as the COVID-19 pandemic and
market volatility, have emphasized the need for flexibility in times of
stress and the importance of transparency with respect to deadlines and
timeframes. Accordingly, after reviewing the Service Guides and the OA,
DTC is proposing to enhance the transparency around the DTC-established
Stakeholder Deadlines and DTC Processing Times that are described in
the Service Guides and the OA.
Therefore, DTC is proposing to amend the Service Guides and the OA
to clarify that (i) DTC may extend any DTC-established Stakeholder
Deadline, including, without limitation, to (x) address operational or
other delays that could reasonably affect the ability of DTC, a
Participant, or other stakeholder from meeting the DTC-established
[[Page 32988]]
Stakeholder Deadline or (y) allow DTC time operationally to exercise
its existing rights under the Rules and Procedures; and (ii) the DTC
Processing Times are standards and not deadlines; actual processing
times may vary, based upon the circumstances. For additional
transparency, DTC is proposing to clarify that any decision to extend a
DTC-established Stakeholder Deadline in one instance does not establish
any precedent for future situations that may arise.
In addition, although the Important Legal Information page of the
Service Guides and the OA already contain general disclaimers of
liability, DTC is proposing to expressly state that DTC disclaims all
liability for any losses and/or expenses incurred by a Participant,
stakeholder, or any third-party resulting from, relating to, or arising
from (i) any action taken by DTC with respect to an extension of a DTC-
established Stakeholder Timeframe, (ii) the determination of DTC to
decline to take action with respect to a DTC-established Stakeholder
Timeframe, and/or (iii) the failure of a Participant, stakeholder or
other third-party to meet any deadline, timeframe, cutoff or
requirement established by a party other than DTC. DTC believes that
this express disclaimer would enhance the understanding of Participants
and other stakeholders of their responsibilities in connection with
DTC-established Stakeholder Deadlines and possible extensions, which
would help them to more effectively assess the risks relating to an
inability to meet a DTC-established Stakeholder Deadline and conduct
their business accordingly.
(iv) Proposed Rule Change
To effectuate the proposed changes described above, DTC would add
the following paragraph near the beginning of each of the Service
Guides and the OA:
Note: DTC, as it deems appropriate, may extend any deadline,
timeframe, or cutoff established by DTC, including, without limitation,
to (i) address operational or other delays that could reasonably affect
the ability of DTC, a Participant or other stakeholder from meeting the
deadline, timeframe, or cutoff; or (ii) allow DTC time operationally to
exercise its existing rights under the Rules and Procedures. In
addition, times applicable to DTC are standards and not deadlines;
actual processing times may vary, based upon the circumstances. Any
action taken by DTC in connection with this paragraph shall not
establish a precedent for any situation that may occur in the future
(or otherwise bind DTC in any manner). DTC disclaims all liability for
any losses and/or expenses incurred by a Participant, stakeholder or
any third-party resulting from, relating to, or arising from (i) any
action taken by DTC in connection with this paragraph, (ii) the
determination of DTC to decline to take action pursuant to this
paragraph, and/or (iii) the failure of a Participant, stakeholder or
any third-party to meet any deadline, timeframe, cutoff or requirement
established by a party other than DTC.
2. Statutory Basis
Section 17A(b)(3)(F) of the Act requires, in part, that the rules
of a clearing agency be designed to promote the prompt and accurate
clearance and settlement of securities transactions.\9\
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\9\ 15 U.S.C. 78q-1(b)(3)(F).
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The proposed rule change would amend the Service Guides and the OA
to clarify that DTC may extend any DTC-established Stakeholder
Deadline, including, without limitation, to (i) address operational or
other delays that could reasonably affect the ability of DTC, a
Participant or other stakeholder from meeting the DTC-established
Stakeholder Deadline; or (ii) allow DTC time operationally to exercise
its existing rights under the Rules and Procedures. The proposed rule
change would also clarify that the DTC Processing Times set forth in
the Service Guides and the OA are standards and not deadlines, and that
they may vary based upon the particular circumstances. The proposed
rule change would also (i) clarify that any decision by DTC to extend a
DTC-established Stakeholder Deadline in one case does not establish any
precedent for future situations that may arise, and (ii) emphasize that
DTC disclaims all liability for any losses or expenses incurred by a
Participant, stakeholder or any third party relating to, or arising
from, the above.
Taken together, the proposed amendments to the Service Guides and
the OA would enhance Participants' and stakeholders' understanding of
their rights and obligations relating to DTC-established Stakeholder
Deadlines and DTC Processing Times. By providing this enhanced clarity
and transparency, the proposed rule change would help Participants and
other stakeholders to appropriately plan and to conduct their business
and securities transactions through DTC more effectively, thereby
promoting the prompt and accurate clearance and settlement of
securities transactions, consistent with Section 17A(b)(3)(F) of the
Act.\10\
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\10\ Id.
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(B) Clearing Agency's Statement on Burden on Competition
DTC does not believe the proposed rule changes described above
would impact competition. Rather, DTC believes that the proposed rule
changes would simply provide enhanced clarity around the rights and
obligations of Participants and other stakeholders with respect to DTC-
established Stakeholder Deadlines and DTC Processing Times, and would
help them to appropriately plan and to conduct their business and
securities transactions through DTC more effectively. As such, DTC
believes the proposed rule changes would not have any impact on
competition.\11\
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\11\ 15 U.S.C. 78q-1(b)(3)(I).
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(C) Clearing Agency'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 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 rule change has become effective pursuant to Section
19(b)(3)(A) \12\ of the Act and paragraph (f) \13\ of Rule 19b-4
thereunder. At any time within 60 days of the filing of the proposed
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).
\13\ 17 CFR 240.19b-4(f).
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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
<bullet> Use the Commission's internet comment form (<a href="http://www.sec.gov/rules/sro.shtml">http://www.sec.gov/rules/sro.shtml</a>); or
<bullet> Send an email to <a href="/cdn-cgi/l/email-protection#bdcfc8d1d890ded2d0d0d8d3c9cefdced8de93dad2cb"><span class="__cf_email__" data-cfemail="295b5c454c044a4644444c475d5a695a4c4a074e465f">[email protected]</span></a>. Please include
File Number SR-DTC-2021-009 on the subject line.
Paper Comments
<bullet> Send paper comments in triplicate to Secretary, Securities
and Exchange
[[Page 32989]]
Commission, 100 F Street NE, Washington, DC 20549.
All submissions should refer to File Number SR-DTC-2021-009. 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 website (<a href="http://www.sec.gov/rules/sro.shtml">http://www.sec.gov/rules/sro.shtml</a>).
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 website 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 10:00 a.m. and
3:00 p.m. Copies of the filing also will be available for inspection
and copying at the principal office of DTC and on DTCC's website
(<a href="http://dtcc.com/legal/sec-rule-filings.aspx">http://dtcc.com/legal/sec-rule-filings.aspx</a>). All comments received
will be posted without change. Persons submitting comments are
cautioned that we do not redact or edit personal identifying
information from comment submissions. You should submit only
information that you wish to make available publicly. All submissions
should refer to File Number SR-DTC-2021-009 and should be submitted on
or before July 14, 2021.
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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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-13103 Filed 6-22-21; 8:45 am]
BILLING CODE 8011-01-P
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