Notice2021-14795
Self-Regulatory Organizations; The Depository Trust Company; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend the Reorganizations Service Guide
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
July 13, 2021
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 86 Issue 131 (Tuesday, July 13, 2021)</title>
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[Federal Register Volume 86, Number 131 (Tuesday, July 13, 2021)]
[Notices]
[Pages 36810-36815]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2021-14795]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-92339; File No. SR-DTC-2021-010]
Self-Regulatory Organizations; The Depository Trust Company;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Amend the Reorganizations Service Guide
July 7, 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 July 1, 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 consists of changes to the Reorganizations
Service Guide (the ``Guide''),\5\ as described in greater detail below.
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\5\ Each term not otherwise defined herein has its respective
meaning as set forth in the Rules, By-Laws and Organization
Certificate of DTC (the ``Rules'') and the Guide, 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 purpose of the proposed rule change is to amend the Guide to
provide Participants with the option to submit instructions via
Application Program Interface (``API'') and ISO 20022 real-time
messaging (collectively, ``Automated Instruction Messaging'') for
Automated Tender Offer Program (``ATOP'') \6\-eligible voluntary
reorganizations offers (each, an ``ATOP Offer'').\7\ DTC is also
proposing to amend the Guide to adjust and clarify DTC processing cut-
off times for the submission of ATOP Offer instructions (``DTC Cut-Off
Time''), and to make technical and ministerial changes to the Guide, as
discussed more fully below.
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\6\ ATOP is a DTC program through which Participant instructions
are transmitted to the agent for an ATOP offers and through which a
participant can tender its securities to the agent's account at DTC.
\7\ DTC anticipates implementing Automated Instruction Messaging
for Automated Subscription Offer Program (``ASOP'')-eligible offers
by Q1 2022.
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(i) Automated Instruction Messaging
A. Background
When an issuer or agent announces an ATOP Offer, it communicates
the details of the offer to DTC, which announces the ATOP Offer to its
Participants in accordance with the Guide and applicable Rules.
Participants then relay the information to their clients, which, in
turn, relay the information to their clients, and so forth, down to the
investor level. For example, the ATOP Offer information flows from the
issuer/agent to DTC, DTC to Participant, Participant to Investor
Manager client, Investment Manager to its investor clients. Each level
of the chain solicits and compiles instructions from its clients and
submits the instructions back up the chain, until the instructions
reach the Participant level. Each Participant compiles and aggregates
all instructions received from its clients and submits the instructions
to DTC through the PTS PTOP or PBS Voluntary Tenders and Exchanges
functions via nonautomated key entry.\8\ The whole process needs to be
completed before the DTC Cut-Off Time for the ATOP Offer.
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\8\ PTS (Participant Terminal System) and PBS (Participant
Browser System) are user interfaces for DTC settlement and asset
services functions. PTS is mainframe-based, and PBS is web-based
with a mainframe back-end. Participants may use either PTS or PBS,
as they are functionally equivalent. PTOP and Voluntary Tenders and
Exchanges are functions of PTS and PBS, respectively, that are
currently used by Participants to submit instructions, submit
protects, submit cover of protects, submit cover of protects on
behalf of another Participant, and submit withdrawals on various
voluntary reorganization events.
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There are certain potential risks and costs associated with manual
processing, particularly in connection with voluntary reorganizations
[[Page 36811]]
instructions. Nonautomated input may increase the likelihood of errors,
which can result in rejected instructions or erroneous elections.
Rejected instructions and erroneous elections can delay the submission
of the instructions for the ATOP Offer, which typically have to be
submitted within a short timeframe. Further, because information about
the ATOP Offer and the compilation and transmission of instructions
flows across different market segments, the lack of automation and
standardization can also lead to errors along the chain. Finally, ATOP
Offers are becoming increasingly complex, thereby requiring a greater
volume of individual nonautomated input by Participants, which adds to
the potential risk of errors and increases the overhead cost for
additional personnel and processes to handle the volume.
Therefore, DTC is proposing to provide Participants with the
ability to use Automated Instruction Messaging via ISO 20022 messages
and API functionality for ATOP-eligible offers. The functionality for
the submission of instructions through standardized ISO 20022 messaging
already exists at DTC. For example, Participants have the ability to
submit ISO 20022 instructions for eligible distributions events.\9\ ISO
20022 is a standard that provides the financial industry with a common
language to capture business transactions and associated message flows.
The benefits offered by ISO 20022 include, but are not limited to: (i)
Greater straight through processing by utilizing a data model that
conforms to market practice, and (ii) improved accuracy and less
processing risk due to enhanced data elements.
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\9\ Participants can submit ISO 20022 instructions on applicable
tax relief, foreign currency payments, dividend reinvestment
including opt out and optional dividend events. See DTC
Distributions Service Guide, p. 16, 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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DTC already offers API functionality for the submission of certain
instructions to DTC. For example, Participants can currently engage
with the DTC ClaimConnect service via APIs.\10\ APIs enable the flow of
information between computer applications and provide Participants the
ability to easily access and evaluate customer data as well as provide
Participants with callable endpoints for deleting data resources and
for reading and updating data resource values. Stated another way, APIs
provides enhanced flexibility for Participants, making the process of
accessing from, and transmitting information to, DTC and its downstream
customers more efficient. The flexibility of APIs and its use of modern
programming languages provide benefits that include, but are not
limited to: (i) Less frequent maintenance, (ii) client development and
implementation can be quicker to market, and (iii) more efficient
integration channels.
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\10\ See ClaimConnect Service Guide, p.8, 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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B. Automated Instruction Messaging
Pursuant to the proposed rule change, Automated Instruction
Messaging would be available for the following ATOP actions: (i)
Accepting an ATOP-Eligible Offer, (ii) Accepting an ATOP-Eligible Offer
via Notice of Guaranteed Delivery, (iii) Submitting a Cover of Protect,
and (iv) Puts. However, withdrawal or cancellation instructions in
connection with the above would still need to be performed via PTS/PBS.
In addition, Automated Instruction Messaging for the Submitting a Cover
of Protect on Behalf of a Third Party action would not be
available.\11\
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\11\ DTC anticipates implementing Automated Instruction
Messaging for withdrawal and cancellation instructions, as well as
for Cover Protect on Behalf of a Third-Party action, by Q1 2022.
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Automated Instruction Messaging would consist of (i) Automated
Instruction Messages for the input of instructions, and (ii) Automated
Response Messages for feedback and status output with respect to
submitted instructions. The ISO 20022 Corporate Action Instruction
(CAIN) message and the API POST function are Automated Instruction
Messages. The ISO 20022 Corporate Action Instruction Status Advice
(CAIS) message and the API GET function are Automated Response
Messages.
As noted above, automating instructions for ATOP Offers would
streamline the flow of information, reducing the costs, errors and
risks that are associated with nonautomated processing. Accordingly,
pursuant to the proposed rule change, DTC would provide Participants
with the ability to automate and standardize the submission of
instructions for ATOP Offers through Automated Instruction Messaging.
(ii) Clarification and Adjustment of Certain Cut-off Times for ATOP
Offer Instructions
The terms of an ATOP Offer include, among other things, the dates
and times by which certain instructions (e.g., acceptances, protects)
must be submitted, as well the date and time that the ATOP Offer
expires. For ATOP Offers processed through DTC, DTC establishes a DTC
Cut-Off Time, which is the deadline for Participants to submit ATOP
Offer instructions to DTC for processing.\12\
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\12\ Participants are able to submit ATOP Offer instructions
after the DTC Cut-Off Time directly to the agent until the actual
expiration time, if provided for under the terms of the ATOP Offer.
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DTC is proposing to (i) amend outdated language about the DTC Cut-
Off Time for an ATOP Offer with an actual expiration time that is 6:00
p.m. ET or later on the expiration date, and (ii) remove the reference
to a 1:00 p.m. ET DTC Cut-Off Time, which, pursuant to the proposed
rule change, would no longer be the established DTC Cut-Off Time for an
ATOP Offer with an actual expiration time before 5:00 p.m. ET.
The current language in the Guide provides that, unless otherwise
specified in the ATOP Offer announcement (i) ATOP Offers being
processed by the agent through ATOP (referred to as an ``ATOP I''
offer, which have an actual expiration time of 5:00 p.m. ET or later)
have a DTC Cut-Off Time of 5:00 p.m. ET, and (ii) ATOP Offers being
processed by the agent without an electronic connection to ATOP
(referred to as an ``ATOP II'' offer, which typically expires before
5:00 p.m. ET) have a DTC Cut-Off Time of 1:00 p.m.
Pursuant to the proposed rule change, DTC would update the language
in the Guide to reflect that for ATOP Offers with an actual expiration
time between 6:00 p.m. ET and midnight on expiration date, the DTC Cut-
Off Time typically will be 6:00 p.m. ET, instead of 5:00 p.m. ET.\13\
DTC extended this processing window by an additional hour to provide
Participants additional time to submit instructions to be processed by
DTC and to avoid Participants submitting instructions directly to the
agent outside of DTC.
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\13\ See Important Notice B#11772-19 (July 15, 2019), available
at https://www.dtcc.com/~/media/Files/pdf/2019/7/15/11772-19.pdf.
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DTC is further proposing to amend the Guide to provide that, with
respect to an ATOP Offer with an actual expiration time earlier than
5:00 p.m. ET on expiration date,\14\ the DTC Cut-Off Time would vary
depending on the particular facts and circumstances of the ATOP Offer
and would be announced in the notice of the ATOP Offer.\15\
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\14\ Although infrequent, there are some circumstances where an
ATOP Offer may have an actual expiration time earlier than 5:00 p.m.
ET. For example, the expiration time of an ATOP Offer from a
jurisdiction in a later time zone could translate in an atypical
early expiration time in the eastern time zone.
\15\ Pursuant to the proposed rule change, DTC would also remove
the references to ATOP I and ATOP II, which are no longer relevant
to DTC Cut-Off Time for the submission of instructions for ATOP
Offers.
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[[Page 36812]]
DTC is also proposing to amend the Guide to remind Participants
that expiration and cutoff times may vary per the terms of the offer
and that Participants are independently responsible for confirming both
the actual offer expiration date and time and the DTC Cut-off Time and
date.
(iii) Proposed Rule Changes
Pursuant to the proposed rule change, DTC is proposing to:
1. Add references to ``Automated Instruction Messaging'' or
``Automated Instruction Message,'' as context requires, where other
types of instruction input for ATOP-eligible offers (e.g., PTS PTOP and
PBS Voluntary Tenders and Exchanges) are referenced.
2. Add references to ``Automated Response Message'' where other
types of response and/or status reports relating to instructions on
ATOP-eligible offers (e.g., PTS/PBS, CA Web or Participant Daily
Activity Statement) are referenced.
3. In the ``Overview'' subsection of the ``About Reorganization
Services''/``Introduction'' section, insert (i) references to ISO 20022
and API as additional methods of inputting voluntary reorganization
instructions, and (ii) a footnote directing Participants to the
``Automated Instruction Messaging'' section for additional information
about Automated Instruction Messaging through ISO 20022 messages and
APIs.
4. After the ``About the Reorganizations Service'' section, insert
a new section titled ``Automated Instruction Messaging.'' The section
would list: (i) The ATOP actions for ATOP-eligible offers for which
Automated Instruction Messaging is available, which would be: Accepting
an ATOP-Eligible Offer, Accepting an ATOP-Eligible Offer via Notice of
Guaranteed Delivery, Submitting a Cover of Protect, and Puts, (ii) the
Automated Instruction Message Types, which are ISO 20002 Corporate
Action Instruction (CAIN) and API POST, and (iii) the Automated
Response Message Types, which are ISO 20022 Corporate Action
Instruction Status Advice (CAIS) and API GET. The section would also
include a note stating that all withdrawal and cancellation
instructions for ATOP-eligible offers must be performed via PTS/PBS and
cannot be instructed via Automated Instruction Message.
5. In the ``Instructions/Expirations'' section, above the
``Important Considerations'' subsection, insert the following warning
as a reminder to Participants of their responsibility to monitor the
status of their instructions and to take any actions necessary to
complete an incomplete transaction:
Warning!
Regarding incomplete instructions: An instruction that was
submitted via PTS (PTOP, PSOP, PUTS, WARR, RCNV, CERR), PBS (Voluntary
Tenders and Exchanges, Rights Subscriptions, Put Option Bonds, Reorg
Conversions, CD Early Redemptions, Warrants Subscriptions) or via
Automated Instruction Messaging but was not fully processed by-DTC is
an incomplete transaction. A Participant has the sole responsibility to
monitor its messages and confirm that its instruction was processed and
that the quantity of securities that are the subject of its instruction
are shown under the contra-CUSIP/RRG specified in the instruction. A
Participant that submits an incomplete instruction via Automated
Instruction Messaging will receive an Automated Response Message
indicating a rejection. Neither DTC nor the agent will take action on
an incomplete transaction. The Participant is solely responsible for
taking the additional processing steps to complete the transactions
before expiration cut-off date and time. DTC shall have no
responsibility in respect of a Participant's failure to recognize its
instruction as incomplete or to take the steps necessary to complete
its transaction. Participants can use the inquiry feature of the
aforementioned PTS and PBS functions, as applicable, to identify an
incomplete transaction. For instructions submitted via Automated
Instruction Messaging, the Automated Response Message will indicate the
reason for rejection.
In addition, DTC is proposing to delete other warnings relating to
incomplete instructions in connection with ATOP-eligible offers, as
they would be redundant with the insertion of the above warning.
6. In the ``Instructions/Expirations'' section, under the new
warning referenced above, insert a note that states that all withdrawal
and cancellation instructions must be performed via PTS/PBS.
7. In the ``About DTC's Automated Tender Offer Program (ATOP)''
subsection of the ``Instructions/Expirations'' section, remove the
phrases ``using the PTS PTOP and PBS Voluntary Tenders and Exchanges or
via CCF,'' and ``by book-entry through PTS PTOP or PBS Voluntary
Tenders and Exchanges, or via CCF,'' as it is unnecessary and limiting.
8. In the ``Proration of an Offer'' section, for accuracy, insert a
reference to CA Web as a source to review the position movements
representing the unaccepted position.
9. Add a reference to ``Automated Instruction Messaging'' to the
following section headings: ``Voluntary Offers by Issuer or Third Party
(Processed via PTOP),'' ``Submitting a Cover of Protect via PTS PTOP or
PBS Voluntary Tenders and Exchanges for an ATOP-Eligible Offer,''
``Checklist for Submitting a Cover of Protect via PTS PTOP or PBS
Voluntary Tenders and Exchanges.''
10. Amend the Guide to reflect that when a Participant uses an
Automated Instruction Message, it must check its Automated Response
Message, in order to ensure that its transactions were properly
processed and recorded, and to note that a Participant could
additionally check its Participant Daily Activity Statement and the CA
Web.
11. Replace the following paragraph, which appears in the
checklists for submitting instructions for ATOP-eligible offers,
``Participants that subscribe to the ISO 20022 Instructions Statement
Report (CAST) will be able to verify instruction status on the
message'' with ``Participants that submit an Automated Instruction
Message must monitor the status of their instruction using the
Automated Response Message. Additionally, the CAST message is available
to monitor instructed and uninstructed balances.''
12. In the ``Accepting an ATOP-Eligible Offer'' section, in order
to reflect that for an ATOP Offer with (i) an actual expiration time
between 6:00 p.m. ET and midnight, the DTC Cut-Off Time would typically
be 6:00 p.m. ET, and (ii) an actual expiration time before 5:00 p.m. ET
on expiration date, the DTC Cut-Off Time would vary depending on the
facts and circumstances of the offer, DTC is proposing to replace the
existing paragraph that begins ``The dates on which you can accept an
offer via PTOP . . .'' with the following paragraphs:
``The dates on which you can accept an offer via PTS PTOP, PBS
Voluntary Tenders and Exchanges, and Automated Instruction Messaging
are specified in the notice about the offer, which you can view via CA
Web Announcements, ISO 20022 messaging and PTS RIPS or PBS
Reorganizations and Redemptions functions. Unless otherwise specified
in the PTS RIPS, PBS Reorganizations and Redemptions or ISO 20022
messaging, PTS PTOP, PBS Voluntary Tenders and Exchanges, and Automated
Instruction
[[Page 36813]]
Messaging are available on those dates for this purpose. DTC processing
cut-off times on the day of expiration typically will be either 5:00
p.m. ET (where the notice of the offer specifies an expiration time of
5:00 p.m. ET on expiration date) or 6:00 p.m. ET (where the notice of
the offer specifies an expiration time between 6:00 p.m. ET and
midnight on expiration date). Please note that the DTC processing cut-
off times for offers that specify an offer expiration time before 5:00
p.m. ET on expiration date will vary depending on the facts and
circumstances of the offer.
Note: Participants are reminded that expiration and cutoff time may
vary per the terms of the offer. Participants are independently
responsible to confirm, per the terms of the offer and announcement,
the offer expiration date and time, as well as the applicable DTC
processing cut-off time, per the terms of the offer and the
announcement.''
13. In the ``Checklist for Submitting an Acceptance'' section,
insert the following language to address how a Participant needs to
acknowledge the Letter of Transmittal when it transmits an acceptance
via Automated Instruction Messaging:
``Likewise, when you transmit an acceptance via Automated
Instruction Messaging, you will be required to acknowledge the Letter
of Transmittal required by the offer identified by the contra-CUSIP you
specify in your acceptance. The message must contain your
acknowledgement. If your message does not contain your acknowledgement,
your acceptance will be rejected. By acknowledging the Letter of
Transmittal via Automated Instruction Messaging, you agree that (i) you
have received, and will be bound by the terms of, the Letter of
Transmittal required by the offer identified in the acceptance and (ii)
the agreement set forth in the preceding clause (i) may be enforced
against you by the Offeror in such offer''.
14. In the ``Submitting a Protect for an ATOP-Eligible Offer''
section, in order to reflect that for an ATOP Offer with (i) an actual
expiration time between 6:00 p.m. ET and midnight, the DTC Cut-Off Time
would typically be 6:00 p.m. ET, and (ii) an actual expiration time
before 5:00 p.m. ET on expiration date, the DTC Cut-Off Time would vary
depending on the facts and circumstances of the offer, DTC is proposing
to replace the existing paragraph that begins ``The dates on which you
can accept an offer by submitting a Notice . . .'' with the following
paragraphs:
``The dates on which you can accept an offer by submitting a Notice
of Guaranteed Delivery via PTS PTOP, PBS Voluntary Tenders and
Exchanges, and Automated Instruction Messaging are specified in the
notice about the offer, which you can view via CA Web Announcements,
ISO 20022 messaging and PTS RIPS or PBS Reorganizations and Redemptions
functions. Unless otherwise specified in the PTS RIPS, PBS
Reorganizations and Redemptions or ISO 20022 messaging, PTS PTOP, PBS
Voluntary Tenders and Exchanges, and Automated Instruction Messaging
are available on those dates for this purpose. DTC processing cut-off
times on the day of expiration typically will be either 5:00 p.m. ET
(where the notice of the offer specifies an expiration time of 5:00
p.m. ET on expiration date) or 6:00 p.m. ET (where the notice of the
offer specifies an expiration time between 6:00 p.m. ET and midnight on
expiration date). Please note that the DTC processing cut-off times for
offers that specify an offer expiration time before 5:00 p.m. ET on
expiration date will vary depending on the facts and circumstances of
the offer.
Note: Participants are reminded that expiration and cutoff time may
vary per the terms of the offer. Participants are independently
responsible to confirm, per the terms of the offer and announcement,
the offer expiration date and time, as well as the applicable DTC
processing cut-off time, per the terms of the offer and the
announcement.''
15. In the ``Checklist for Submitting a Protect'' section, insert
the following language to address how a Participant needs to
acknowledge the Notice of Guaranteed Delivery when it transmits an
acceptance by Notice of Guaranteed Delivery via Automated Instruction
Messaging:
``Likewise, when you transmit an acceptance via Automated
Instruction Messaging, you will be required to acknowledge the Notice
of Guaranteed Delivery required by the offer identified by the contra-
CUSIP you specify in your acceptance. The message must contain your
acknowledgement. If your message does not contain your acknowledgement,
your acceptance will be rejected. By acknowledging the Notice of
Guaranteed Delivery via Automated Instruction Messaging, you agree that
(i) you have received, and will be bound by the terms of, the Notice of
Guaranteed Delivery required by the offer identified in the acceptance
and (ii) the agreement set forth in the preceding clause (i) may be
enforced against you by the Offeror in such offer.''
16. In the ``Submitting a Cover of Protect via PTS PTOP or PBS
Voluntary Tenders and Exchanges for an ATOP-Eligible Offer,'' section,
in order to reflect that for an ATOP Offer with (i) an actual
expiration time between 6:00 p.m. ET and midnight, the DTC Cut-Off Time
would typically be 6:00 p.m. ET, and (ii) an actual expiration time
before 5:00 p.m. ET on expiration date, the DTC Cut-Off Time would vary
depending on the facts and circumstances of the offer, DTC is proposing
to replace the existing paragraph that begins ``The dates on which you
can submit a cover of protect via PTOP . . .'' with the following
paragraphs:
``The dates on which you can submit a cover of protect via PTS
PTOP, PBS Voluntary Tenders and Exchanges, and Automated Instruction
Messaging are specified in the notice about the offer, which you can
view via CA Web Announcements, ISO 20022 messaging and PTS RIPS or PBS
Reorganizations and Redemptions functions. Unless otherwise specified
in the notice, PTS PTOP, PBS Voluntary Tenders and Exchanges, and
Automated Instruction Messaging are available on those dates for this
purpose. DTC processing cut-off times on the day of expiration
typically will be either 5:00 p.m. ET (where the notice of the offer
specifies an expiration time of 5:00 p.m. ET on expiration date) or
6:00 p.m. ET (where the notice of the offer specifies an expiration
time between 6:00 p.m. ET and midnight on expiration date). Please note
that the DTC processing cut-off times for offers that specify an offer
expiration time before 5:00 p.m. ET on expiration date will vary
depending on the facts and circumstances of the offer.
Note: Participants are reminded that expiration and cutoff time may
vary per the terms of the offer. Participants are independently
responsible to confirm, per the terms of the offer and announcement,
the offer expiration date and time, as well as the applicable DTC
processing cut-off time, per the terms of the offer and the
announcement.''
17. In the ``Checklist for Submitting a Cover of Protect via PTS
PTOP or PBS Voluntary Tenders and Exchanges'' section:
a. At the end of the first bulleted paragraph under number 6 of the
checklist, in order to reflect that the ``made'' status of an Automated
Instruction Message would be confirmed in the Automated Response
Message, add the sentence ``The Automated Response Message will confirm
the ``made'' status.''
b. Insert the following language to address how a Participant needs
to acknowledge the Letter of Transmittal when it transmits a cover of
protect via Automated Instruction Messaging:
[[Page 36814]]
``Likewise, when you transmit an instruction to cover a protect via
Automated Instruction Messaging, you will be required to acknowledge
the Letter of Transmittal required by the offer identified by the
contra-CUSIP you specify in your instruction. The message must contain
your acknowledgement. If your message does not contain your
acknowledgement, your instruction will be rejected. By submitting the
acknowledgment via Automated Instruction Messaging, you agree that (i)
you have received, and will be bound by the terms of, the Letter of
Transmittal required by the offer identified in the acceptance and (ii)
the agreement set forth in the preceding clause (i) may be enforced
against you by the Offeror in such offer.''
18. In the ``Submitting a Cover of Protect via PTS PTOP or PBS
Voluntary Tenders and Exchanges on Behalf of Another Participant''
section, in order to reflect that for an ATOP Offer with (i) an actual
expiration time between 6:00 p.m. ET and midnight, the DTC Cut-Off Time
would typically be 6:00 p.m. ET, and (ii) an actual expiration time
before 5:00 p.m. ET on expiration date, the DTC Cut-Off Time would vary
depending on the facts and circumstances of the offer, DTC is proposing
to replace the existing paragraph that begins ``The dates on which you
can submit a cover of protect are specified in the notice about the
offer . . .'' with the following paragraphs:
``The dates on which you can submit a cover of protect via PTS PTOP
and PBS Voluntary Tenders and Exchanges are specified in the notice
about the offer, which you can view via CA Web Announcements, ISO 20022
messaging and PTS RIPS or PBS Reorganizations and Redemptions
functions. Unless otherwise specified in the PTS RIPS, PBS
Reorganizations and Redemptions or ISO 20022 messaging, PTS PTOP and
PBS Voluntary Tenders and Exchanges are available on those dates for
this purpose. DTC processing cut-off times on the day of expiration
typically will be either 5:00 p.m. ET (where the notice of the offer
specifies an expiration time of 5:00 p.m. ET on expiration date) or
6:00 p.m. ET (where the notice of the offer specifies an expiration
time between 6:00 p.m. ET and midnight on expiration date). Please note
that the DTC processing cut-off times for offers that specify an offer
expiration time before 5:00 p.m. ET on expiration date will vary
depending on the facts and circumstances of the offer.
Note: Participants are reminded that expiration and cutoff time may
vary per the terms of the offer. Participants are independently
responsible to confirm, per the terms of the offer and announcement,
the offer expiration date and time, as well as the applicable DTC
processing cut-off time, per the terms of the offer and the
announcement.''
19. In the ``Withdrawing an Acceptance of an ATOP-Eligible Offer''
section, in order to reflect that for an ATOP Offer with (i) an actual
expiration time between 6:00 p.m. ET and midnight, the DTC Cut-Off Time
would typically be 6:00 p.m. ET, and (ii) an actual expiration time
before 5:00 p.m. ET on expiration date, the DTC Cut-Off Time would vary
depending on the facts and circumstances of the offer, DTC is proposing
to replace the existing paragraph that begins ``The dates on which you
can submit a withdrawal of acceptance are specified in the notice about
the offer . . .'' with the following paragraphs:
``The dates on which you can submit a withdrawal of acceptance via
PTS PTOP and PBS Voluntary Tenders and Exchanges are specified in the
notice about the offer, which you can view via CA Web Announcements,
ISO 20022 messaging and PTS RIPS or PBS Reorganizations and Redemptions
functions. Unless otherwise specified in the PTS RIPS, PBS
Reorganizations and Redemptions or ISO 20022 messaging, PTS PTOP and
PBS Voluntary Tenders and Exchanges are available on those dates for
this purpose. DTC processing cut-off times on the day of expiration
typically will be either 5:00 p.m. ET (where the notice of the offer
specifies an expiration time of 5:00 p.m. ET on expiration date) or
6:00 p.m. ET (where the notice of the offer specifies an expiration
time between 6:00 p.m. ET and midnight on expiration date). Please note
that the DTC processing cut-off times for offers that specify an offer
expiration time before 5:00 p.m. ET on expiration date will vary
depending on the facts and circumstances of the offer.
Note: Participants are reminded that expiration and cutoff time may
vary per the terms of the offer. Participants are independently
responsible to confirm, per the terms of the offer and announcement,
the offer expiration date and time, as well as the applicable DTC
processing cut-off time, per the terms of the offer and the
announcement.''
20. Make ministerial changes to correct typos and omissions and to
enhance conformity and readability, including, but not limited to:
a. In the copyright line of the ``Important Legal Information''
section, replacing ``2020'' with ``2021.''
b. Adding the name of the corresponding PBS function where the
equivalent PTS function is referenced.
c. Augmenting mentions of PBS and PTS functions with their full
technical names.
d. Removing internal references to other sections within the Guide
that are incorrect, no longer relevant, or that no longer exist.
e. Inserting references to the CA Web to correctly reflect that a
Participant can check the CA Web, in addition to its Participant Daily
Activity Statement and Automated Response Messages, to ensure that its
transactions were properly processed and recorded.
f. Inserting references to ISO 20022 messaging and the CA Web to
correctly reflect them as sources of ATOP-eligible Offer details.
g. Correcting certain typographical errors.
2. Statutory Basis
Section 17A(b)(3)(F) of the Act requires, in part, that the Rules
be designed to promote the prompt and accurate clearance and settlement
of securities transactions.\16\
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\16\ 15 U.S.C. 78q-1(b)(3)(F).
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The proposed rule change would amend the Guide to provide
Participants with the option to use Automated Instruction Messaging for
ATOP Offers. As discussed above, the use of Automated Instruction
Messaging for ATOP Offers would provide greater straight-through
processing, improved accuracy, more efficient integration channels and
less processing risk than nonautomated processing.
The proposed rule change would also amend the Guide to adjust and
clarify the DTC Cut-Off Times for the submission of instructions in
connection with ATOP Offers. Specifically, the proposed rule change
would clarify that for ATOP Offers with an actual expiration time
between 6:00 p.m. ET and midnight on expiration date, the DTC Cut-Off
Time typically is 6:00 p.m. ET, instead of 5:00 p.m. ET. DTC believes
that providing Participants with clear directions about the deadlines
for the submission of instructions would facilitate the timely
submission of instructions and help avoid the submission of
instructions outside of DTC. In addition, the proposed rule change
would amend the Guide to provide that, with respect to an ATOP Offer
with an actual expiration time earlier than 5:00 p.m. ET on expiration
date, the DTC Cut-Off Time would vary depending on the particular facts
and circumstances of the ATOP Offer. By eliminating the established
1:00 p.m. ET DTC Cut-Off Time for these offers, DTC would have the
flexibility to provide Participants with a
[[Page 36815]]
DTC Cut-off Time that would be most appropriate to the circumstances,
thereby facilitating the timely and orderly submission of instructions.
Finally, DTC believes that the proposed rule change to amend the
Guide to make technical and clarifying changes would enhance the
clarity and transparency of the Guide. By enhancing the clarity and
transparency of the Guide, the proposed rule change would allow
Participants to more efficiently and effectively conduct their business
in connection with processing reorganization events and associated
securities transactions.
Based on the foregoing, DTC believes that the proposed rule change
is designed to promote the prompt and accurate clearance and settlement
of securities transactions, consistent with Section 17A(b)(3)(F) of the
Act, cited above.
(B) Clearing Agency's Statement on Burden on Competition
DTC believes that the proposed rule change to provide Participants
with the option to use Automated Instruction Messaging for ATOP Offers
would not have any impact on competition.\17\ Automated Instruction
Messaging would be an optional service that would be available to all
Participants in connection with ATOP Offers. In addition, DTC believes
that the proposed rule change to amend the Guide to adjust and clarify
DTC Cut-Off Times for the submission of ATOP Offer instructions, and to
make technical and ministerial changes to the Guide, would not have any
impact on competition because it would merely provide Participants with
clear directions about the deadlines for the submission of
instructions, and would enhance the clarity of the procedures relating
to ATOP Offers. In light of the foregoing, DTC does not believe that
the proposed rule change would impose a burden on competition.\18\
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\17\ 15 U.S.C. 78q-1(b)(3)(I).
\18\ Id.
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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) \19\ of the Act and paragraph (f) \20\ 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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\19\ 15 U.S.C. 78s(b)(3)(A).
\20\ 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#3042455c551d535f5d5d555e4443704355531e575f46"><span class="__cf_email__" data-cfemail="ee9c9b828bc38d8183838b809a9dae9d8b8dc0898198">[email protected]</span></a>. Please include
File Number SR-DTC-2021-010 on the subject line.
Paper Comments
<bullet> Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE, Washington, DC 20549.
All submissions should refer to File Number SR-DTC-2021-010. 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-2021-010 and should be submitted on
or before August 3, 2021.
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\21\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\21\
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-14795 Filed 7-12-21; 8:45 am]
BILLING CODE 8011-01-P
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</html>Indexed from Federal Register on July 13, 2021.
This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.