Notice2021-28249
Self-Regulatory Organizations; The Depository Trust Company; Notice of Filing of Proposed Rule Change To Enhance Capital Requirements and Make Other Changes
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
December 29, 2021
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 86 Issue 247 (Wednesday, December 29, 2021)</title>
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[Federal Register Volume 86, Number 247 (Wednesday, December 29, 2021)]
[Notices]
[Pages 74122-74130]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2021-28249]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-93854; File No. SR-DTC-2021-017]
Self-Regulatory Organizations; The Depository Trust Company;
Notice of Filing of Proposed Rule Change To Enhance Capital
Requirements and Make Other Changes
December 22, 2021.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Exchange Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby
given that on December 13, 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. 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.
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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 amendments to the Rules, By-
Laws and Organization Certificate (``Rules'') of DTC in order to (i)
enhance DTC's capital requirements for Participants, (ii) redefine
DTC's Watch List and eliminate DTC's enhanced surveillance list and
(iii) make certain other clarifying, technical and supplementary
changes in the Rules, including definitional updates, to accomplish
items (i) and (ii), as described in greater detail below.\3\
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\3\ Capitalized terms not defined herein are defined in the
Rules, available at https://www.dtcc.com/~/media/Files/Downloads/
legal/rules/dtc_rules.pdf.
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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 this proposed rule change is to (i) enhance DTC's
capital requirements for Participants, (ii) redefine DTC's Watch List
and eliminate DTC's enhanced surveillance list and (iii) make certain
other clarifying, technical and supplementary changes in the Rules,
including definitional updates, to accomplish items (i) and (ii).
(i) Background
Central securities depositories (``CSDs'') play a key role in
financial markets by mitigating counterparty credit risk on
transactions of their participants. As a CSD, DTC is exposed to the
credit risks of its Participants. The credit risks borne by DTC are
mitigated, in part, by the capital maintained by Participants, which
serves as a loss-absorbing buffer.
In accordance with Section 17A(b)(4)(B) of the Exchange Act,\4\ a
registered clearing agency such as DTC may, among other things, deny
participation to, or condition the participation of, any person on such
person meeting such standards of financial responsibility prescribed by
the rules of the registered clearing agency.
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\4\ 15 U.S.C. 78q-1(b)(4)(B).
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In furtherance of this authority, DTC requires applicants and
Participants to meet the relevant financial responsibility standards
prescribed by the Rules. These financial responsibility standards
generally require Participants to have and maintain certain levels of
capital, as more particularly described in the Rules and below.
DTC's capital requirements for Participants have not been updated
in over 20 years. Since that time, there have been significant changes
to the financial markets that warrant DTC revisiting its capital
requirements. For example, the regulatory environment within which DTC
and its Participants operate has undergone various changes. The
implementation of the Basel III standards,\5\ the designation of many
banks as systemically important by the Financial Stability Board,\6\ as
well as the designation of DTC as a systemically important financial
market utility (``SIFMU'') by the Financial Stability Oversight
Council,\7\ have significantly increased the regulatory requirements,
including capital requirements, of many financial institutions and
CSDs. Similarly, the Covered Clearing Agency Standards (``CCAS'')
adopted by the Commission have raised the regulatory standards
applicable to CSDs such as DTC.\8\
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\5\ Basel Committee on Banking Supervision, The Basel Framework,
available at <a href="https://www.bis.org/basel_framework/index.htm?export=pdf">https://www.bis.org/basel_framework/index.htm?export=pdf</a> (``Basel III Standards'').
\6\ See Financial Stability Board, 2021 list of global
systemically important banks, available at <a href="https://www.fsb.org/wp-content/uploads/P231121.pdf">https://www.fsb.org/wp-content/uploads/P231121.pdf</a>.
\7\ See U.S. Department of the Treasury, Designations, Financial
Market Utility Designations, available at <a href="https://home.treasury.gov/policy-issues/financial-markets-financial-institutions-and-fiscal-service/fsoc/designations">https://home.treasury.gov/policy-issues/financial-markets-financial-institutions-and-fiscal-service/fsoc/designations</a>.
\8\ 17 CFR 240.17Ad-22(e).
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There also have been significant Participant changes over the past
20 years. Numerous mergers, acquisitions, and new market entrants have
created a diverse group of Participants that has expanded the credit-
risk profiles that DTC must manage.
Moreover, transaction values at DTC have increased significantly
over the years.\9\ Although the increase does not present more risk to
DTC directly, as DTC's services are nonguaranteed and fully
collateralized, DTC does have an interest in ensuring that its
Participants have a certain minimum amount of capital to help support
the increased activity.
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\9\ See, e.g., DTCC Annual Reports, available at <a href="https://www.dtcc.com/about/annual-report">https://www.dtcc.com/about/annual-report</a>. DTC is a wholly owned subsidiary
of The Depository Trust & Clearing Corporation (``DTCC''). The DTCC
Annual Reports highlight and track DTC transactional values year-
over-year.
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Although these factors do not directly require DTC to increase
capital requirements for Participants (e.g., there is no specific
regulation or formula that prescribes a set capital requirement for
participants of a CSD such as DTC), the overarching and collective
focus of the regulatory changes noted above, in light of the many
heightened risks to the financial industry, has been to increase the
stability of the financial markets in order to reduce systemic risk. As
a self-regulatory organization, a SIFMU, and being exposed to the new
and increased risks over the past 20 years, DTC has a responsibility to
do the same. Enhancing its capital requirements helps meet that
responsibility and improve DTC's credit risk management. Enhanced
capital requirements also help mitigate other risks posed directly or
indirectly by Participants such as legal risk, operational risk and
cyber risk, as better capitalized Participants have greater financial
resources in order
[[Page 74123]]
to mitigate the effects of these and other risks.
As for setting the specific capital requirements proposed, again,
there is no regulation or formula that requires or calculates a
specific amount (i.e., there is no magic number). Instead, DTC
considered several factors, including inflation and the capital
requirements of other Financial Market Infrastructures (``FMIs''), both
in the U.S. and abroad, to which the proposed requirements align.\10\
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\10\ See The Options Clearing Corporation, OCC Rules, Rule
301(a), available at <a href="https://www.theocc.com/Company-Information/Documents-and-Archives/By-Laws-and-Rules">https://www.theocc.com/Company-Information/Documents-and-Archives/By-Laws-and-Rules</a> (requiring broker-dealers
to have initial net capital of not less than $2,500,000); Chicago
Mercantile Exchange Inc., CME Rulebook, Rule 970.A.1, available at
<a href="https://www.cmegroup.com/rulebook/CME/I/9/9.pdf">https://www.cmegroup.com/rulebook/CME/I/9/9.pdf</a> (requiring clearing
members to maintain capital of at least $5 million, with banks
required to maintain minimum tier 1 capital of at least $5 billion);
LCH SA, LCH SA Clearing Rule Book, Section 2.3.2, available at
<a href="https://www.lch.com/resources/rulebooks/lch-sa">https://www.lch.com/resources/rulebooks/lch-sa</a> (requiring, with
respect to securities clearing, capital of at least EUR 10 million
for self-clearing members and at least EUR 25 million for members
clearing for others, subject to partial satisfaction by a letter of
credit) (1 EUR = $0.8150 as of December 31, 2020; see <a href="https://www.fiscal.treasury.gov/reports-statements/treasury-reporting-rates-exchange/current.html">https://www.fiscal.treasury.gov/reports-statements/treasury-reporting-rates-exchange/current.html</a> (last visited January 14, 2021)).
Although the requirements of these FMIs are greater than what
DTC proposes, DTC is choosing not to raise the requirement further
given that it employs a fully collateralized model, which mitigates
the level of risk that its Participants pose to DTC.
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In light of these and other developments described below, DTC
proposes to enhance its capital requirements for Participants, as
described in more detail below.
DTC also proposes to redefine the Watch List, which is a list of
Participants that are deemed by DTC to pose a heightened risk to it and
its Participants based on credit ratings and other factors. As part of
the redefinition of the Watch List, DTC proposes to eliminate the
separate enhanced surveillance list and implement a new Watch List that
consists of a relatively smaller group of Participants that exhibit
heightened credit risk, as described in more detail below.
(ii) Current DTC Capital Requirements
The current DTC capital requirements for Participants are set forth
in DTC's Policy Statements on the Admission of Participants and
Pledgees (the ``Policy Statement'').\11\
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\11\ See Policy Statement, supra note 3.
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Policy Statement
The Policy Statement is divided into three sections. Section 1 of
the Policy Statement concerns entities organized in the U.S. (``U.S.
entities'') applying to become Participants. Section 2 of the Policy
Statement concerns entities organized in a country other than the U.S.
and that are not otherwise subject to U.S. federal or state regulation
(``non-U.S. entities'') applying to become Participants. Section 3 of
the Policy Statement concerns fees and time limits on applications to
become a Participant or Pledgee.
As relevant to DTC's proposal to enhance its capital requirements
for Participants:
Section 1
Section 1 of the Policy Statement provides that Rules 2
(Participants and Pledgees) and 3 (Participants Qualifications) set
forth the basic standards for the admission of Participants, including
that the admission of a Participant is subject to an applicant's
demonstration that it meets reasonable standards of financial
responsibility, operational capability, and character at the time of
its application and on an ongoing basis thereafter.
Section 1 of the Policy Statement provides that any applicant that
satisfies the qualifications for eligibility to become a Participant
set forth under subsections (d) or (h)(ii) of Section 1 of Rule 3 must
comply with minimum financial resource requirements in order to qualify
to be admitted, and continue in good standing, as a Participant.
Subsection (d) of Section 1 of Rule 3 provides that a bank or trust
company which is subject to supervision or regulation pursuant to the
provisions of federal or state banking laws, or any subsidiary of such
a bank or trust company or a bank holding company or any subsidiary of
a bank holding company, is eligible to become a Participant.
Pursuant to the Policy Statement, any applicant or Participant that
satisfies the qualifications of subsection (d) of Section 1 of Rule 3
is required to maintain equity capital in the amount of at least $2
million based on the definition of equity capital provided in the form
and instructions of the Consolidated Report of Conditions and Income
maintained by the Federal Financial Institutions Examination Council.
Subsection (h)(ii) of Section 1 of Rule 3 provides that a broker-
dealer registered under the Exchange Act is eligible to become a
Participant.
Pursuant to the Policy Statement, any applicant or Participant that
satisfies the qualifications of subsection (h)(ii) of Section 1 of Rule
3 is required to maintain a minimum amount of not less than $500,000 in
excess net capital over the greater of (i) the minimum capital
requirement imposed on it pursuant to Exchange Act Rule 15c3-1, or (ii)
such higher minimum capital requirement imposed by the registered
broker-dealer's designated examining authority.
Section 2
Section 2 of the Policy Statement provides that non-U.S. entities
are eligible to become Participants.
Section 2 of the Policy Statement requires that non-U.S. entities
applying to become Participants provide to DTC, for financial
monitoring purposes, audited financial statements prepared in
accordance with U.S. generally accepted accounting principles (``U.S.
GAAP'') or other generally accepted accounting principles that are
satisfactory to DTC.
In order to address the risk presented by the acceptance of
financial statements not prepared in accordance with U.S. GAAP, Section
2 of the Policy Statement provides that the minimum financial
requirements applicable to a non-U.S. entity will be subject to a
specified premium, as follows:
i. For financial statements prepared in accordance with
International Financial Reporting Standards, the U.K. Companies Act of
1985 (``U.K. GAAP''), or Canadian generally accepted accounting
principles--a premium of 1\1/2\ times the minimum financial
requirements;
ii. for financial statements prepared in accordance with a European
Union country's generally accepted accounting principles, other than
U.K. GAAP--a premium of 5 times the minimum financial requirements; and
iii. for financial statements prepared in accordance with any other
type of generally accepted accounting principles--a premium of 7 times
the minimum financial requirements.
Accordingly, a non-U.S. entity that does not prepare its financial
statements in accordance with U.S. GAAP is required to meet financial
requirements between 1\1/2\ to 7 times the minimum financial
requirements that would otherwise be applicable to the non-U.S entity.
Given that, as noted above, the financial responsibility requirements
generally require a Participant to have a certain level of capital,
Section 2 of the Policy Statement has the effect of requiring a non-
U.S. entity that does not prepare its financial statements in
accordance with U.S. GAAP to have capital between 1\1/2\ to 7 times the
otherwise-applicable capital requirement.
Section 2 of the Policy Statement also provides that a non-U.S.
entity must be in compliance with the financial
[[Page 74124]]
reporting and responsibility standards of its home country regulator.
(iii) Current DTC Watch List and Enhanced Surveillance List
DTC's Watch List is a list of Participants that are deemed by DTC
to pose a heightened risk to it and its Participants based on credit
ratings and other factors.\12\
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\12\ See Rule 1 (Definitions; Governing Law), supra note 3.
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Specifically, the Watch List is the list of Participants with
credit ratings derived from DTC's Credit Risk Rating Matrix (``CRRM'')
\13\ of 5, 6 or 7, as well as Participants that, based on DTC's
consideration of relevant factors, including those set forth in Section
10 of Rule 2 (Participants and Pledgees),\14\ are deemed by DTC to pose
a heightened risk to it and its Participants.
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\13\ DTC's CRRM is a matrix of credit ratings of Participants
specified in Section 10(a) of Rule 2. The CRRM is developed by DTC
to evaluate the credit risk Participants pose to DTC and its
Participants and is based on factors determined to be relevant by
DTC from time to time, which factors are designed to collectively
reflect the financial and operational condition of a Participant.
These factors include (i) quantitative factors, such as capital,
assets, earnings, and liquidity, and (ii) qualitative factors, such
as management quality, market position/environment, and capital and
liquidity risk management. See Rule 1 (Definitions; Governing Law),
supra note 3.
\14\ Rule 2 (Participants and Pledgees), Section 10, supra note
3.
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In addition to the Watch List, DTC also maintains a separate list
of Participants subject to enhanced surveillance in accordance with the
provisions of Section 10(b) of Rule 2, as discussed below. The enhanced
surveillance list is a list of Participants for which DTC has
heightened credit concerns, which may include Participants that are
already, or may soon be, on the Watch List. As described below, a
Participant is subject to the same potential consequences from being
subject to enhanced surveillance or being placed on the Watch List.
Rule 2 (Participants and Pledgees)
Rule 2 (Participants and Pledgees) specifies the ongoing
participation requirements and monitoring applicable to Participants
and Pledgees.\15\
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\15\ Rule 2 (Participants and Pledgees), supra note 3.
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Section 10(b) of Rule 2 provides that a Participant that is (1) a
U.S. bank or trust company that files the Consolidated Report of
Condition and Income (``Call Report''), (2) a registered broker-dealer
that files the Financial and Operational Combined Uniform Single Report
(``FOCUS Report'') or the equivalent with its regulator, or (3) a non-
U.S. bank or trust company that has audited financial data that is
publicly available, will be assigned a credit rating by DTC in
accordance with the CRRM. A Participant's credit rating is reassessed
each time the Participant provides DTC with requested information
pursuant to Section 1 of Rule 2 or as may be otherwise required under
the Rules.
Section 10(b) further provides that because the factors used as
part of the CRRM may not identify all risks that a Participant assigned
a credit rating by DTC may present to DTC, DTC may, in its discretion,
override such Participant's credit rating derived from the CRRM to
downgrade the Participant. This downgrading may result in the
Participant being placed on the Watch List and/or it may subject the
Participant to enhanced surveillance based on relevant factors.
Section 10(c) of Rule 2 provides that Participants not assigned a
credit rating by DTC will not be assigned a credit rating by the CRRM
but may be placed on the Watch List and/or may be subject to enhanced
surveillance based on relevant factors.
Section 10(d) of Rule 2 provides that the factors to be considered
by DTC in determining whether a Participant is placed on the Watch List
and/or subject to enhanced surveillance include (i) news reports and/or
regulatory observations that raise reasonable concerns relating to the
Participant, (ii) reasonable concerns around the Participant's
liquidity arrangements, (iii) material changes to the Participant's
organizational structure, (iv) reasonable concerns about the
Participant's financial stability due to particular facts and
circumstances, such as material litigation or other legal and/or
regulatory risks, (v) failure of the Participant to demonstrate
satisfactory financial condition or operational capability or if DTC
has a reasonable concern regarding the Participant's ability to
maintain applicable participation standards, and (vi) failure of the
Participant to provide information required by DTC to assess risk
exposure posed by the Participant's activity.
Section 10(e) of Rule 2 provides that a Participant being subject
to enhanced surveillance or being placed on the Watch List (1) will
result in a more thorough monitoring of the Participant's financial
condition and/or operational capability, including on-site visits or
additional due diligence information requests, and (2) may be required
make more frequent financial disclosures to DTC. Participants that are
subject to enhanced surveillance are also reported to DTC's management
committees and regularly reviewed by DTC senior management.
(iv) Proposed Rule Changes
A. Changes To Enhance DTC's Capital Requirements
As noted earlier, as a CSD, DTC is exposed to the credit risks of
its Participants. The credit risks borne by DTC are mitigated, in part,
by the capital maintained by Participants, which serves as a loss-
absorbing buffer.
DTC's financial responsibility standards for Participants generally
require Participants to have and maintain certain levels of capital.
As described in more detail below, DTC proposes to enhance its
capital requirements for Participants as follows:
Rule 1 (Definitions; Governing Law)
In connection with its proposal to enhance capital requirements for
Participants, DTC proposes to add to Rule 1 new defined terms of ``CET1
Capital,'' ``Excess Net Capital,'' ``Tier 1 RBC Ratio'' and ``Well
Capitalized,'' as discussed below.
Policy Statement, Section 1 (Policy Statement on the Admission of U.S.
Entities as Participants)
U.S. Banks and Trust Companies That Are Banks
DTC proposes to (1) change the measure of capital requirements for
U.S. banks and trust companies that are banks from equity capital to
common equity tier 1 capital (``CET1 Capital''),\16\ (2) raise the
minimum capital requirements for U.S. banks and trust companies that
are banks, and (3) require U.S. banks and trust companies that are
banks to be well capitalized (``Well Capitalized'') as defined in the
capital adequacy rules and regulations of the Federal Deposit Insurance
Corporation (``FDIC'').\17\
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\16\ Under the proposal, CET1 Capital would be defined as an
entity's common equity tier 1 capital, calculated in accordance with
such entity's regulatory and/or statutory requirements.
\17\ See 12 CFR 324.403(b)(1).
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DTC proposes to change the measure of capital requirements for U.S.
banks and trust companies that are banks from equity capital to CET1
Capital and raise the minimum capital requirements for U.S. banks and
trust companies that are banks in order to align DTC's capital
requirements with banking regulators' changes to regulatory capital
requirements over the past several years, which have standardized and
harmonized the calculation and measurement of bank capital and leverage
throughout the world.\18\
[[Page 74125]]
Consistent with these changes by banking regulators, DTC believes that
the appropriate capital measure for Participants that are U.S. banks
and trust companies that are banks should be CET1 Capital and that
DTC's capital requirements for Participants should be enhanced in light
of these increased regulatory capital requirements.
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\18\ Compare, e.g., 12 CFR 324.20(b) (FDIC's definition of CET1
Capital), and Regulation (EU) No 575/2013 of the European Parliament
and of the Council of 26 June 2013 on prudential requirements for
credit institutions and investment firms and amending Regulation
(EU) No 648/2012, Article 26, available at <a href="https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A32013R0575">https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A32013R0575</a> (European
Union's definition of CET1 Capital), with Basel Committee on Banking
Supervision, Basel III Standards, CAP10.6, supra note 5 (Basel III
Standards' definition of CET1 Capital).
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In addition, requiring U.S. banks and trust companies that are
banks to be Well Capitalized ensures that Participants are well
capitalized while also allowing adjusted capital to be relative to
either the risk-weighted assets or average total assets of the bank or
trust company. DTC proposes to have the definition of Well Capitalized
expressly tied to the FDIC's definition of ``well capitalized'' to
ensure that the proposed requirement that U.S. banks and trust
companies that are banks be Well Capitalized will keep pace with future
changes to banking regulators' regulatory capital requirements.
Under the proposal, an applicant or Participant that is a U.S. bank
or a U.S. trust company that is a bank must have and maintain at all
times at least $15 million in CET1 Capital and be Well Capitalized at
all times.
U.S. Banks Trust Companies That Are Not Banks
DTC does not propose to change the existing capital requirements
applicable to an applicant or Participant that is a U.S. trust company
that is not a bank, although DTC is proposing to make some clarifying
and conforming language changes to improve the accessibility and
transparency of these capital requirements, without substantive effect.
DTC treats U.S. trust companies that are banks and non-banks
differently because they present different risks based on the attendant
risks of their business activities, with trust companies engaging in
banking activities (e.g., receiving deposits and making loans) being
subject to greater risks than trust companies that limit their
activities to trust activities (e.g., acting as a trustee, other
fiduciary or transfer agent/registrar).
U.S. Broker-Dealers
DTC proposes to increase the minimum excess net capital (``Excess
Net Capital'') \19\ requirements for applicants or Participants that
are U.S. broker-dealers to $1 million. This would double the current
Excess Net Capital requirements applicable to Participants that are
U.S. broker-dealers.
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\19\ Under the proposal, Excess Net Capital would be defined as
a broker-dealer's excess net capital, calculated in accordance with
such broker-dealer's regulatory and/or statutory requirements.
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As described in more detail below, the proposed minimum Excess Net
Capital increase will help ensure DTC's ongoing compliance with
regulatory requirements and expectations related to credit risk, such
as those addressed in CCAS Rules 17Ad-22(e)(4)(i) and (e)(18).\20\
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\20\ 17 CFR 240.17Ad-22(e)(4)(i) and (e)(18).
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U.S. CSDs
DTC proposes to require that an applicant or Participant that is a
U.S. CSD have and maintain at all times at least $5 million in equity
capital. DTC proposes that any clearing corporation would be deemed to
be a CSD for the purposes of determining such applicant or
Participant's minimum financial requirements. DTC proposes to create a
standard capital requirement for Participants that are U.S. CSDs due to
the systemic importance of these Participants and the need to hold
these Participants to a consistent, high standard to ensure that they
have sufficient capital to fulfill their systemically important role.
U.S. Securities Exchanges
DTC proposes to require that an applicant or Participant that is a
national securities exchange registered under the Exchange Act must
have and maintain at all times at least $100 million in equity capital.
DTC proposes to create a standard capital requirement for Participants
that are national securities exchanges due to the systemic importance
of these Participants and the need to hold these Participants to a
consistent, high standard to ensure that they have sufficient capital
to fulfill their systemically important role.
U.S. Settling Banks
DTC proposes to require that a Settling Bank or applicant to be a
Settling Bank that, in accordance with such entity's regulatory and/or
statutory requirements, calculates a Tier 1 RBC Ratio must have a Tier
1 RBC Ratio \21\ at all times equal to or greater than the Tier 1 RBC
Ratio that would be required for such Settling Bank or applicant to be
Well Capitalized.
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\21\ Under the proposal, Tier 1 RBC Ratio would be defined as
the ratio of an entity's tier 1 capital to its total risk-weighted
assets, calculated in accordance with such entity's regulatory and/
or statutory requirements.
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Other U.S. Entities
For any other U.S. entity applicant or Participant that is not
otherwise addressed above, (1) such applicant or Participant must
maintain compliance with its regulator's minimum financial requirements
at all times and (2) DTC may, based on information provided by or
concerning an applicant or Participant, also assign minimum financial
requirements to such applicant or Participant based on how closely it
resembles another Participant type and its risk profile. Any such
assigned minimum financial requirements would be promptly communicated
to, and discussed with, the applicant or Participant.
At the end of Section 1 of the Policy Statement, DTC proposes to
make explicit that, notwithstanding anything to the contrary in such
section, an applicant or Participant must maintain compliance with its
regulator's minimum financial requirements at all times.
Policy Statement, Section 2 (Policy Statement on the Admission of Non-
U.S. Entities as Participants)
Non-U.S. Banks and Trust Companies
DTC proposes to require a Participant that is a non-U.S. bank or
trust company (including a U.S. branch or agency) to (1) have and
maintain at all times at least $15 million in CET1 Capital and comply
at all times with the minimum capital requirements (including, but not
limited to, any capital conservation buffer, countercyclical buffer,
and any Domestic Systemically Important Banks (``D-SIB'') or Global
Systemically Important Bank (``G-SIB'') buffer, if applicable) and
capital ratios required by its home country regulator, or, if greater,
with such minimum capital requirements or capital ratios standards
promulgated by the Basel Committee on Banking Supervision,\22\ (2)
provide an attestation for itself, its parent bank and its parent bank
holding company (as applicable) detailing the minimum capital
requirements (including, but not limited to, any capital conservation
buffer, countercyclical buffer, and any D-SIB or G-SIB buffer, if
applicable) and capital ratios required by their home country
regulator, (3) provide, no less than annually and upon request by DTC,
an attestation for the Participant, its parent bank and its parent bank
holding company (as applicable) detailing the minimum capital
[[Page 74126]]
requirements (including, but not limited to, any capital conservation
buffer, countercyclical buffer, and any D-SIB or G-SIB buffer, if
applicable) and capital ratios required by their home country regulator
and (4) notify DTC: (a) within two Business Days of any of their
capital requirements (including, but not limited to, any capital
conservation buffer, countercyclical buffer, and any D-SIB or G-SIB
buffer, if applicable) or capital ratios falling below any minimum
required by their home country regulator; and (b) within 15 calendar
days of any such minimum capital requirement or capital ratio changing.
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\22\ See Basel Committee on Banking Supervision, Basel III
Standards, supra note 5.
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As described above, pursuant to Section 2 of the Policy Statement,
the current minimum capital requirements for a Participant that does
not prepare its financial statements in accordance with U.S. GAAP is
subject to a multiplier that requires such Participant to have capital
between 1\1/2\ to 7 times the otherwise-applicable capital requirement.
The multiplier was designed to account for the less transparent
nature of accounting standards other than U.S. GAAP. However,
accounting standards have converged over the years (namely IFRS and
U.S. GAAP).\23\ As such, DTC believes the multiplier is no longer
necessary and its retirement would be a welcomed simplification for
both DTC and its Participants.
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\23\ The convergence between IFRS and U.S. GAAP began with the
2002 Norwalk Agreement. (Available at <a href="https://www.ifrs.org/content/dam/ifrs/around-the-world/mous/norwalk-agreement-2002.pdf">https://www.ifrs.org/content/dam/ifrs/around-the-world/mous/norwalk-agreement-2002.pdf</a>.) Under
that agreement, the Financial Accounting Standards Board (``FASB'')
and the International Accounting Standards Board (``IASB'') signed a
memorandum of understanding on the convergence of accounting
standards. Between 2010 and 2013, FASB and IASB published several
quarterly progress reports on their work to improve and achieve
convergence of U.S. GAAP and IFRS. In 2013, the International
Financial Reporting Standards Foundation established the Accounting
Standards Advisory Forum (``ASAF'') to improve cooperation among
worldwide standard setters and advise the IASB as it developed IFRS.
(See <a href="https://www.ifrs.org/groups/accounting-standards-advisory-forum/">https://www.ifrs.org/groups/accounting-standards-advisory-forum/</a>.) FASB was selected as one of the ASAF's twelve members.
FASB's membership on the ASAF helps represent U.S. interests in the
IASB's standard-setting process and continues the process of
improving and converging U.S. GAAP and IFRS. In February 2013, the
Journal of Accountancy published its view of the success of the
convergence project citing converged or partially converged
standards, including business combinations, discontinued operations,
fair value measurement, and share-base payments. (Available at
<a href="https://www.journalofaccountancy.com/issues/2013/feb/20126984.html">https://www.journalofaccountancy.com/issues/2013/feb/20126984.html</a>.)
Subsequent to the publication, IASB and FASB converge on revenue
recognition. While IASB and FASB have not achieved full convergence,
DTC believes the accounting rules are sufficiently aligned such that
the multiplier is no longer required.
---------------------------------------------------------------------------
Accordingly, DTC proposes to delete the language in Section 2 of
the Policy Statement providing that the minimum capital requirements
for a Participant that does not prepare its financial statements in
accordance with U.S. GAAP is subject to a multiplier that requires such
Participants to have capital between 1\1/2\ to 7 times the otherwise-
applicable capital requirement.
As described above, DTC also proposes that non-U.S. banks be
compliant with the minimum capital requirements and capital ratios in
their home jurisdiction. Given the difficulty in knowing and monitoring
compliance with various regulatory minimums for various jurisdictions,
these Participants would be required to provide DTC with periodic
attestations relating to the minimum capital requirements and capital
ratios for their home jurisdiction.
Non-U.S. Broker-Dealers
DTC proposes to impose a minimum capital requirement of $25 million
in total equity capital for applicants or Participants that are non-
U.S. broker-dealers.
Non-U.S. CSDs
DTC proposes to require that an applicant or Participant that is a
non-U.S. CSD have and maintain at all times at least $5 million in
equity capital. DTC proposes that any non-U.S. entity clearing
corporation would be deemed to be a CSD for the purposes of determining
such applicant or Participant's minimum financial requirements. DTC
proposes to create a standard capital requirement for Participants that
are non-U.S. CSDs due to the systemic importance of these Participants
and the need to hold these Participants to a consistent, high standard
to ensure that they have sufficient capital to fulfill their
systemically important role.
Non-U.S. Securities Exchanges
DTC proposes requiring that an applicant or Participant that is a
non-U.S. securities exchange or multilateral trading facility must have
and maintain at all times at least $100 million in equity capital. DTC
proposes to create a standard capital requirement for Participants that
are non-U.S. securities exchanges due to the systemic importance of
these Participants and the need to hold these Participants to a
consistent, high standard to ensure that they have sufficient capital
to fulfill their systemically important role.
Other Non-U.S. Entities
For any other non-U.S. entity applicant or Participant that is not
otherwise addressed above, (1) such applicant or Participant must
maintain compliance with its home country regulator's minimum financial
requirements at all times and (2) DTC may, based on information
provided by or concerning an applicant or Participant, also assign
minimum financial requirements to such applicant or Participant based
on how closely it resembles another Participant type and its risk
profile. Any such assigned minimum financial requirements would be
promptly communicated to, and discussed with, the applicant or
Participant.
At the end of Section 2 of the Policy Statement, DTC proposes to
make explicit that, notwithstanding anything to the contrary in such
section, an applicant or Participant must maintain compliance with its
home country regulator's minimum financial requirements at all times.
Other Proposed Changes to the Policy Statement
Introduction and General Changes
DTC proposes, without substantive effect, to improve the
readability and accessibility of the Policy Statement by (i) adding
appropriate headings and sub-headings and renumbering sections as
appropriate, (ii) deleting undefined terms and replacing them with
appropriate defined terms, including replacing references to ``foreign
entities'' with references to ``non-U.S. entities'' and (iii) fixing
typographical and other errors, in each case throughout the Policy
Statement.
Section 1
In Section 1 of the Policy Statement, DTC proposes to make explicit
that following a U.S. entity applicant's admission as a Participant, it
will be required to remain in good standing as a Participant, meeting
the required qualifications, financial responsibility, operational
capability and character described in the Policy Statement and in the
Rules.
DTC proposes to move under the newly added heading of
``Qualifications'' in Section 1.A of the Policy Statement the existing
language providing that in the event an organization that is not
subject to regulatory oversight desires to become a Participant, DTC
may review with such organization the economic and operational
implications of direct participation in DTC as well as how its
participation could be structured to comply with the Policy Statement.
Section 2
DTC proposes to provide in Section 2 of the Policy Statement that a
non-U.S. entity applicant that satisfies the
[[Page 74127]]
qualifications for eligibility to become a Participant set forth under
Section 1 of Rule 3 must comply with minimum financial resource
requirements in order to qualify for admission. DTC proposes to make
explicit in Section 2 of the Policy Statement that following a non-U.S.
entity applicant's admission as a Participant, it will be required to
remain in good standing as a Participant, meeting the required
qualifications, financial responsibility, operational capability and
character described in the Policy Statement and in the Rules.
B. Changes to DTC's Watch List and Enhanced Surveillance List
DTC proposes to redefine the Watch List and eliminate the separate
enhanced surveillance list and instead implement a new Watch List that
consists of a relatively smaller group of Participants that pose
heightened risk to DTC and its Participants.
DTC believes that the current system of having both a Watch List
and an enhanced surveillance list has confused various DTC
stakeholders, while the proposed approach, as DTC understands from its
experience, will be more consistent with industry practices and
understanding of a ``Watch List.''
The new Watch List would include Participants with a CRRM rating of
6 or 7, as well as Participants that are deemed by DTC to pose a
heightened risk to it and its Participants. The separate enhanced
surveillance list would be merged into the new Watch List, and
references to the separate enhanced surveillance list would be deleted
from the Rules.
In sum, the new Watch List would consist of Participants on the
existing enhanced surveillance list, Participants with a CRRM rating of
6 or 7, and any other Participants that are deemed by DTC to pose a
heightened risk to it and its Participants.
The proposed change will mean that Participants with a CRRM rating
of 5 would no longer automatically be included on the Watch List.
Participants with a CRRM rating of 5 represent the largest single CRRM
rating category, but DTC does not believe all such Participants present
heightened credit concerns.\24\ Nevertheless, DTC would continue to
have the authority to place a Participant on the new Watch List if it
is deemed to pose a heightened risk to DTC and its Participants and/or
to downgrade the CRRM rating of a Participant.
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\24\ The majority of Participants with a CRRM rating of 5 are
either rated ``investment grade'' by external rating agencies or, in
the absence of external ratings, DTC believes are equivalent to
investment grade, as many of these Participants are primary dealers
and large foreign banks. A firm with a rating of ``investment
grade'' is understood to be better able to make its payment
obligations compared to a firm with a lesser rating, such as a
rating of ``speculative.'' As such, among the total population,
firms with investment grade ratings are generally considered good
credit risk along a credit risk scale.
---------------------------------------------------------------------------
DTC also proposes to clarify in Section 10(e) of Rule 2 that
Participants on the Watch List are reported to DTC's management
committees and regularly reviewed by DTC's senior management.
Participant Outreach
Beginning in June 2019, DTC conducted outreach to various
Participants in order to provide them with advance notice of the
proposed enhancements to DTC's capital requirements, the proposed
redefinition of the Watch List, and the proposed elimination of the
enhanced surveillance list. DTC has been in communication with all
Participants whose current capital levels are either below the proposed
minimum capital requirements or only slightly above the proposed
requirements. Any such Participants have been informed of the new
requirement that would be in effect 12 months after approval of the
proposed changes. Following approval, DTC again would contact any
Participants that are either below or only slightly above the new
minimum requirement to remind them of their new capital requirement and
the 12-month grace period in which to come into compliance with the new
requirement.
DTC has not conducted outreach to Participants providing them with
advance notice of the proposed clarification changes to the Rules.
DTC has not received any written comments from Participants on the
proposal.\25\ The Commission will be notified of any written comments
received.
---------------------------------------------------------------------------
\25\ DTC did receive written comments in relation to a proposal
by one of its affiliated clearing agencies (National Securities
Clearing Corporation) to enhance its own capital requirements;
however, those comments do not relate to this proposal and are
therefore not addressed in this rule filing.
---------------------------------------------------------------------------
Implementation Timeframe
Pending Commission approval, DTC would implement the proposed
changes to enhance its capital requirements for Participants one year
after the Commission's approval of this proposed rule change. During
that one-year period, DTC would periodically provide Participants with
estimates of their capital requirements, based on the approved changes,
with more outreach expected for Participants impacted by the changes.
The deferred implementation for all Participants and the estimated
capital requirements for Participants are designed to give Participants
the opportunity to assess the impact of their enhanced capital
requirements on their business profile. All Participants would be
advised of the implementation date of these proposed changes through
issuance of a DTC Important Notice, posted to its website. DTC also
would inform firms applying for participation of the new capital
requirements. Participants and applicants should note that the
methodology/processes used to set their initial capital requirements
would be the same at implementation of the proposed changes as it would
be on an ongoing basis.
DTC expects to implement the proposed changes to redefine the Watch
List and eliminate the enhanced surveillance list within 90 days of
Commission approval. All Participants would be advised of such
implementation through issuance of a DTC Important Notice, posted to
its website.
2. Statutory Basis
DTC believes that the proposed rule change is consistent with the
requirements of the Exchange Act, and the rules and regulations
thereunder applicable to a registered clearing agency. Specifically,
DTC believes that the proposed rule change is consistent with Section
17A(b)(3)(F) of the Exchange Act \26\ and Rules 17Ad-22(e)(4)(i) and
(e)(18),\27\ each as promulgated under the Exchange Act, for the
reasons described below.
---------------------------------------------------------------------------
\26\ 15 U.S.C. 78q-1(b)(3)(F).
\27\ 17 CFR 240.17Ad-22(e)(4)(i) and (e)(18).
---------------------------------------------------------------------------
Section 17A(b)(3)(F) of the Exchange Act requires, in part, that
the Rules be designed to promote the prompt and accurate clearance and
settlement of securities transactions.\28\ As described above, the
proposed rule changes would (1) enhance DTC's capital requirements for
Participants (2) redefine the Watch List and eliminate the enhanced
surveillance list, and (3) make clarification changes to the Rules. DTC
believes that enhancing its capital requirements for Participants,
including continuing to recognize and account for varying Participants
and participation categories, would help ensure that Participants
maintain sufficient capital to absorb losses arising out of their
clearance and settlement activities at DTC and otherwise, and would
help DTC more effectively manage and mitigate the credit risks posed by
its Participants, which would in turn help DTC be better able to
withstand such
[[Page 74128]]
credit risks and continue to meet its clearance and settlement
obligations to its Participants. Similarly, DTC believes that
redefining the Watch List and eliminating the enhanced surveillance
list, as described above, would help DTC better allocate its resources
for monitoring the credit risks posed by its Participants, which would
in turn help DTC more effectively manage and mitigate such credit risks
so that DTC is better able to withstand such credit risks and continue
to meet its clearance and settlement obligations to its Participants.
DTC believes that making clarification changes to the Rules, including
through the use of new defined terms, would help ensure that the Rules
remain clear and accurate, which would in turn help facilitate
Participants' understanding of the Rules and provide Participants with
increased predictability and certainty regarding their rights and
obligations with respect to DTC's clearance and settlement activities.
Therefore, DTC believes that these proposed rule changes would promote
the prompt and accurate clearance and settlement of securities
transactions, consistent with Section 17A(b)(3)(F) of the Exchange Act.
---------------------------------------------------------------------------
\28\ 15 U.S.C. 78q-1(b)(3)(F).
---------------------------------------------------------------------------
Rule 17Ad-22(e)(4)(i) under the Exchange Act requires that DTC
establish, implement, maintain and enforce written policies and
procedures reasonably designed to effectively identify, measure,
monitor, and manage its credit exposures to participants and those
arising from its payment, clearing, and settlement processes, including
by maintaining sufficient financial resources to cover its credit
exposure to each participant fully with a high degree of
confidence.\29\ As described above, DTC proposes to enhance its capital
requirements for Participants, redefine the Watch List, and eliminate
the enhanced surveillance list. DTC believes that enhancing its capital
requirements for Participants (including through the use of new defined
terms), would help ensure that Participants maintain sufficient capital
to absorb losses arising out of their clearance and settlement
activities at DTC and otherwise, which would in turn help DTC more
effectively manage and mitigate its credit exposures to its
Participants and thereby help enhance the ability of DTC's financial
resources to cover fully DTC's credit exposures to Participants with a
high degree of confidence. DTC believes that redefining the Watch List
and eliminating the enhanced surveillance list would help DTC better
allocate its resources for monitoring its credit exposures to
Participants. By helping to better allocate resources, the proposal
would in turn help DTC more effectively manage and mitigate its credit
exposures to its Participants, thereby helping to enhance the ability
of DTC's financial resources to cover fully DTC's credit exposures to
Participants with a high degree of confidence. Therefore, DTC believes
that its proposal to enhance its capital requirements for Participants,
redefine the Watch List, and eliminate the enhanced surveillance list
is consistent with Rule 17Ad-22(e)(4)(i) under the Exchange Act.
---------------------------------------------------------------------------
\29\ 17 CFR 240.17Ad-22(e)(4)(i).
---------------------------------------------------------------------------
Rule 17Ad-22(e)(18) under the Exchange Act requires that DTC
establish, implement, maintain and enforce written policies and
procedures reasonably designed to establish objective, risk-based, and
publicly disclosed criteria for participation, which permit fair and
open access by direct and, where relevant, indirect participants and
other financial market utilities, require participants to have
sufficient financial resources and robust operational capacity to meet
obligations arising from participation in the clearing agency, and
monitor compliance with such participation requirements on an ongoing
basis.\30\ As described above, DTC proposes to (1) enhance its capital
requirements for Participants, (2) redefine the Watch List and
eliminate the enhanced surveillance list, and (3) make clarification
changes to the Rules, including through the use of new defined terms.
DTC's proposed capital requirements would utilize objective
measurements of Participant capital that would be fully disclosed in
the Rules. The proposed capital requirements also would be risk-based
and allow for fair and open access in that they would be based on the
credit risks imposed by the Participant, such as its type of entity
(including whether it is a non-U.S. entity). Accordingly, DTC's
proposed capital requirements would establish objective, risk-based and
publicly disclosed criteria for participation, which would permit fair
and open access by Participants. The proposed capital requirements also
would ensure that Participants maintain sufficient capital to absorb
losses arising out of their clearance and settlement activities at DTC
and otherwise, which would help ensure that they have sufficient
financial resources to meet the obligations arising from their
participation at DTC. DTC's proposed redefinition of the Watch List and
the elimination of the enhanced surveillance list would help DTC better
allocate its resources for monitoring the credit risks posed by its
Participants, including their ongoing compliance with DTC's proposed
enhancements to its capital requirements. DTC's proposed clarification
changes to the Rules, including new defined terms, would help ensure
that the proposed changes to the capital requirements, Watch List, and
enhanced surveillance list are clear and accurate, which would in turn
help facilitate Participants' understanding of DTC's participation
requirements and information related to participation. Therefore, DTC
believes that its proposal to enhance its capital requirements for
Participants, redefine the Watch List, and eliminate the enhanced
surveillance list is consistent with Rule 17Ad-22(e)(18) under the
Exchange Act.
---------------------------------------------------------------------------
\30\ 17 CFR 240.17Ad-22(e)(18).
---------------------------------------------------------------------------
(B) Clearing Agency's Statement on Burden on Competition
DTC does not believe the proposed changes to enhance the capital
requirements for its Participants will have an impact on competition
because Participants largely already meet, and in most cases exceed,
the proposed capital requirements. Nevertheless, DTC fully appreciates
that for the few Participants that do not already meet the proposed
requirements, the proposed rule change could have an impact upon
competition because those Participants could be required to maintain
capital in excess of their current capital levels. That impact could
impose a burden on competition on some of those Participants because
they may bear higher costs to raise capital in order to comply with the
enhanced capital requirements. However, DTC does not believe the burden
on competition would be significant because, again, only a few
Participants do not already meet the proposed requirements. In any
event, to the extent there would be a burden on competition, DTC
believes it would be necessary and appropriate in furtherance of the
purposes of the Exchange Act, as permitted by Section 17A(b)(3)(I)
thereunder.\31\
---------------------------------------------------------------------------
\31\ 15 U.S.C. 78q-1(b)(3)(I).
---------------------------------------------------------------------------
DTC believes the enhanced capital requirements are necessary
because, in short, the current requirements are outdated. As noted
above, the current minimum capital requirements for Participants have
not been adjusted in over 20 years. Meanwhile, there have been
significant changes to the industry (e.g., market structure,
technology, and regulatory environment) within which DTC and all its
Participants operate, exposing DTC and its Participants to more and
different risks than 20 years ago.
[[Page 74129]]
There also have been significant Participant changes over the past
20 years. Numerous mergers, acquisitions, and new market entrants have
created a diverse group of Participants that has expanded the credit-
risk profiles that DTC must manage.
Moreover, as noted above, transaction values at DTC have increased
significantly over the years.\32\ Although the increase does not
present more risk to DTC directly, as DTC's services are nonguaranteed
and fully collateralized, DTC does have an interest in ensuring that
its Participants have a certain minimum amount of capital to help
support the increased activity.
---------------------------------------------------------------------------
\32\ See supra note 9.
---------------------------------------------------------------------------
There also has been heightened focus on legal, operational, and
cyber risk, given the devastating impact that they could have today.
Appreciation of these greater risks have manifested into new regulatory
requirements for certain industry participants,\33\ including DTC,
requiring DTC to maintain greater capital amounts and deploy enhanced
risk management tools.\34\
---------------------------------------------------------------------------
\33\ See, e.g., Basel Committee on Banking Supervision, Basel
III Standards, supra note 5; Financial Stability Board, 2020 list of
G-SIBs, supra note 6; U.S. Department of the Treasury, Designations,
Financial Market Utility Designations, supra note 7.
\34\ See, e.g., CCAS, supra note 8.
---------------------------------------------------------------------------
While DTC believes Participants must understand the risks that
their capitalization presents to DTC and be prepared to monitor their
capitalization and alter their behavior in order to minimize that risk,
as necessary, DTC also appreciates and understands that Participants
must be able to plan for their capital requirements. That is why DTC
would not implement the proposed changes to any of the enhanced capital
requirements until one year after the Commission's approval of the
proposal. During that one-year period, DTC would periodically provide
Participants with estimates of their capital requirements. The deferred
implementation for all Participants and the estimated capital
requirements for Participants are designed to give Participants the
opportunity to assess the impact of their enhanced capital requirements
on their business profile and make any changes that they deem
necessary.
DTC also believes the proposed changes are consistent with and
would improve upon DTC's compliance with applicable regulatory
requirements, as discussed above, including Section 17A(b)(3)(F) of the
Exchange Act and Rules 17Ad-22(e)(4)(i) and (e)(18) promulgated
thereunder.
Therefore, DTC believes the proposed changes to enhance the capital
requirements for its Participants are appropriate in furtherance of the
purposes of the Exchange Act, as permitted by Section 17A(b)(3)(I)
thereunder,\35\ as the proposed changes are purposely tailored and
structured, provide for a one-year implementation period, and are
consistent with applicable provisions of the Exchange Act and rules
thereunder.
---------------------------------------------------------------------------
\35\ 15 U.S.C. 78q-1(b)(3)(I).
---------------------------------------------------------------------------
DTC does not believe that the proposed changes to redefine the
Watch List and eliminate the enhanced surveillance list would impact
competition. Redefining the Watch List and eliminating the enhanced
surveillance list are simply intended to streamline and clarify these
monitoring practices. If anything, by no longer automatically including
Participants with a CRRM rating of 5 on the Watch List, as proposed,
the change could promote competition for such Participants, as such
Participants would no longer automatically be subject to increased
scrutiny by DTC, including the possibility of increased financial and
reporting obligations.
(C) Clearing Agency's Statement on Comments on the Proposed Rule Change
Received From Members, Participants, or Others
DTC has not received or solicited any written comments relating to
this proposal.\36\ If any written comments are received, DTC will amend
this filing to publicly file such comments as an Exhibit 2 to this
filing, as required by Form 19b-4 and the General Instructions thereto.
---------------------------------------------------------------------------
\36\ See supra note 25.
---------------------------------------------------------------------------
Persons submitting written comments are cautioned that, according
to Section IV (Solicitation of Comments) of the Exhibit 1A in the
General Instructions to Form 19b-4, the Commission does not edit
personal identifying information from comment submissions. Commenters
should submit only information that they wish to make available
publicly, including their name, email address, and any other
identifying information.
All prospective commenters should follow the Commission's
instructions on How to Submit Comments, available at <a href="https://www.sec.gov/regulatory-actions/how-to-submit-comments">https://www.sec.gov/regulatory-actions/how-to-submit-comments</a>. General
questions regarding the rule filing process or logistical questions
regarding this filing should be directed to the Main Office of the
Commission's Division of Trading and Markets at
<a href="/cdn-cgi/l/email-protection#34404655505d5a53555a505955465f514047744751571a535b42"><span class="__cf_email__" data-cfemail="76020417121f18111718121b17041d1302053605131558111900">[email protected]</span></a> or 202-551-5777.
DTC reserves the right to not respond to any comments received.
III. Date of Effectiveness of the Proposed Rule Change, and Timing for
Commission Action
Within 45 days of the date of publication of this notice in the
Federal Register or within such longer period up to 90 days (i) as the
Commission may designate if it finds such longer period to be
appropriate and publishes its reasons for so finding or (ii) as to
which the self-regulatory organization consents, the Commission will:
(A) By order approve or disapprove such proposed rule change, or
(B) institute proceedings to determine whether the proposed rule
change should be disapproved.
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#3745425b521a54585a5a525943447744525419505841"><span class="__cf_email__" data-cfemail="ef9d9a838ac28c8082828a819b9caf9c8a8cc1888099">[email protected]</span></a>. Please include
File Number SR-DTC-2021-017 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-2021-017. 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
[[Page 74130]]
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-2021-017 and should be submitted on
or before January 19, 2022.
---------------------------------------------------------------------------
\37\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\37\
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-28249 Filed 12-28-21; 8:45 am]
BILLING CODE 8011-01-P
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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.