Notice2022-06513
Self-Regulatory Organizations; The Depository Trust Company; Order Instituting Proceedings To Determine Whether To Approve or Disapprove a Proposed Rule Change To Enhance Capital Requirements and Make Other Changes
Primary source
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Published
March 30, 2022
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 87 Issue 61 (Wednesday, March 30, 2022)</title>
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[Federal Register Volume 87, Number 61 (Wednesday, March 30, 2022)]
[Notices]
[Pages 18451-18453]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2022-06513]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-94495; File No. SR-DTC-2021-017]
Self-Regulatory Organizations; The Depository Trust Company;
Order Instituting Proceedings To Determine Whether To Approve or
Disapprove a Proposed Rule Change To Enhance Capital Requirements and
Make Other Changes
March 23, 2022.
I. Introduction
On December 13, 2021, The Depository Trust Company (``DTC'') filed
with the Securities and Exchange Commission (``Commission'') proposed
rule change SR-DTC-2021-017 (the ``Proposed Rule Change'') pursuant to
Section 19(b)(1) of the Securities
[[Page 18452]]
Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder.\2\ The
Proposed Rule Change was published for comment in the Federal Register
on December 29, 2021,\3\ and the Commission received no comment letters
regarding the changes proposed in the Proposed Rule Change.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ Securities Exchange Act Release No. 93854 (December 22,
2021), 86 FR 74122 (December 29, 2021) (SR-DTC-2021-017)
(``Notice'').
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On January 26, 2022, pursuant to Section 19(b)(2) of the Act,\4\
the Commission designated a longer period within which to approve,
disapprove, or institute proceedings to determine whether to approve or
disapprove the Proposed Rule Change.\5\ This order institutes
proceedings, pursuant to Section 19(b)(2)(B) of the Act,\6\ to
determine whether to approve or disapprove the Proposed Rule Change.
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\4\ 15 U.S.C. 78s(b)(2).
\5\ Securities Exchange Act Release No. 94067 (January 26,
2022), 87 FR 5548 (February 1, 2022) (SR-DTC-2021-017).
\6\ 15 U.S.C. 78s(b)(2)(B).
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II. Summary of the Proposed Rule Change
As described in the Notice, DTC proposes to amend its Rules, By-
Laws and Organization Certificate (``Rules'') in order to (1) revise
the capital requirements applicable to its participants, (2) streamline
its two credit risk monitoring systems, Watch List and enhanced
surveillance list, and (3) make certain other clarifying, technical,
and supplementary changes to implement items (1) and (2).\7\
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\7\ The description of the Proposed Rule Change is based on the
statements prepared by DTC in the Notice. See Notice, supra note 3.
Capitalized terms used herein and not otherwise 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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First, DTC proposes to revise various aspects of its capital
requirements for several types of participants. DTC proposes to
increase minimum capital requirements for certain participants. DTC
also proposes to revise how it measures certain participants' capital
by incorporating common equity tier 1 capital and the standards
established in the capital adequacy rules and regulations of the
Federal Deposit Insurance Corporation. DTC would revise the reporting
requirements concerning the capital requirements for certain
participants. In addition, for certain types of participants who
currently do not have specific amounts for their minimum capital
requirements, the proposal would establish such a requirement.
Second, DTC proposes to revise its Watch List and enhanced
surveillance list, which are both currently used to identify
participants who would receive additional or enhanced credit risk
monitoring. DTC proposes to revise its Watch List and delete its
enhanced surveillance list. DTC also proposes to clarify that
participants on the Watch List are reported to DTC's management
committees and regularly reviewed by DTC's senior management.
Third, DTC proposes to (1) revise or add headings and sub-headings
and renumbering sections as appropriate, (2) delete undefined terms and
add appropriate defined terms to facilitate the proposed changes, (3)
consolidate paragraphs to promote readability, (4) fix typographical
and other errors, and (5) other changes in order to improve the
accessibility and transparency of the Rules.
III. Proceedings To Determine Whether To Approve or Disapprove the
Proposed Rule Change and Grounds for Disapproval Under Consideration
The Commission is instituting proceedings pursuant to Section
19(b)(2)(B) of the Act \8\ to determine whether the Proposed Rule
Change should be approved or disapproved. Institution of proceedings is
appropriate at this time in view of the legal and policy issues raised
by the Proposed Rule Change. Institution of proceedings does not
indicate that the Commission has reached any conclusions with respect
to any of the issues involved. Rather, the Commission seeks and
encourages interested persons to comment on the Proposed Rule Change,
providing the Commission with arguments to support the Commission's
analysis as to whether to approve or disapprove the Proposed Rule
Change.
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\8\ 15 U.S.C. 78s(b)(2)(B).
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Pursuant to Section 19(b)(2)(B) of the Act,\9\ the Commission is
providing notice of the grounds for disapproval under consideration.
The Commission is instituting proceedings to allow for additional
analysis of, and input from commenters with respect to, the Proposed
Rule Change's consistency with Section 17A of the Act,\10\ and the
rules thereunder, including the following provisions:
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\9\ Id.
\10\ 15 U.S.C. 78q-1.
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<bullet> Section 17A(b)(3)(F) of the Act,\11\ which requires, among
other things, that the rules of a clearing agency must be designed to
promote the prompt and accurate clearance and settlement of securities
transactions, to assure the safeguarding of securities and funds which
are in the custody or control of the clearing agency or for which it is
responsible, and to protect investors and the public interest;
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\11\ 15 U.S.C. 78q-1(b)(3)(F).
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<bullet> Section 17A(b)(3)(I) of the Act,\12\ which requires that
the rules of a clearing agency do not impose any burden on competition
not necessary or appropriate in furtherance of the purposes of the Act;
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\12\ 15 U.S.C. 78q-1(b)(3)(I).
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<bullet> Rule 17Ad-22(e)(18) under the Act,\13\ which requires that
a covered clearing agency 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.
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\13\ 17 CFR 240.17Ad-22(e)(18).
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IV. Procedure: Request for Written Comments
The Commission requests that interested persons provide written
submissions of their views, data, and arguments with respect to the
issues identified above, as well as any other concerns they may have
with the Proposed Rule Change. In particular, the Commission invites
the written views of interested persons concerning whether the Proposed
Rule Change is consistent with Section 17A(b)(3)(F) of the Act,\14\
Section 17A(b)(3)(I) of the Act,\15\ Rule 17Ad-22(e)(18) under the
Act,\16\ or any other provision of the Act, or the rules and
regulations thereunder.
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\14\ 15 U.S.C. 78q-1(b)(3)(F).
\15\ 15 U.S.C. 78q-1(b)(3)(I).
\16\ 17 CFR 240.17Ad-22(e)(18).
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Interested persons are invited to submit written data, views, and
arguments regarding whether the Proposed Rule Change should be approved
or disapproved by April 20, 2022. Any person who wishes to file a
rebuttal to any other person's submission must file that rebuttal by
May 4, 2022.
The Commission asks that commenters address the sufficiency of
DTC's statements in support of the Proposed Rule Change, which are set
forth in the Notice,\17\ in addition to any other comments they may
wish to submit about the Proposed Rule Change.
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\17\ See Notice, supra note 3.
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Comments may be submitted by any of the following methods:
[[Page 18453]]
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#d5a7a0b9b0f8b6bab8b8b0bba1a695a6b0b6fbb2baa3"><span class="__cf_email__" data-cfemail="3143445d541c525e5c5c545f4542714254521f565e47">[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 20549-1090.
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 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 April 20, 2022. Rebuttal comments should be submitted by May
4, 2022.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\18\
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\18\ 17 CFR 200.30-3(a)(31).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2022-06513 Filed 3-29-22; 8:45 am]
BILLING CODE 8011-01-P
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