Notice2022-20729
Self-Regulatory Organizations; The Depository Trust Company; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Make Clarifications to the DTC Rules Concerning the Admission of Participants to DTC's Premises and DTC's Authority To Impose Fines
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
September 26, 2022
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 87 Issue 185 (Monday, September 26, 2022)</title>
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[Federal Register Volume 87, Number 185 (Monday, September 26, 2022)]
[Notices]
[Pages 58425-58426]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2022-20729]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-95837; File No. SR-DTC-2022-009]
Self-Regulatory Organizations; The Depository Trust Company;
Notice of Filing and Immediate Effectiveness of a Proposed Rule Change
To Make Clarifications to the DTC Rules Concerning the Admission of
Participants to DTC's Premises and DTC's Authority To Impose Fines
September 20, 2022.
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 September 14, 2022, 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 amendments to DTC Rules, By-
Laws and Organization Certificate (``Rules'') concerning the admission
of Participants to DTC's premises and DTC's authority to impose fines.
DTC filed the proposed rule change pursuant to Section 19(b)(3)(A) of
the Act \5\ and Rule 19b-4(f)(4) \6\ thereunder so that the proposal
was effective upon filing with the Commission, as described in greater
detail below.\7\
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\5\ 15 U.S.C. 78s(b)(3)(A).
\6\ 17 CFR 240.19b-4(f)(4).
\7\ Terms not defined herein are defined in the Rules, available
at http://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
DTC proposes to revise its Rules to clarify requirements related to
the admission of Participants to DTC's premises and DTC's authority to
impose fines. The proposed changes are described in detail below.
DTC Rule 17 provides, among other things, that necessary
credentials for entering DTC's premises shall be provided as specified
in the Procedures.\8\ The rule further provides that, unless revoked by
DTC, all credentials, authorizations and powers of attorney issued
pursuant to Rule 17 or in connection with the work of DTC shall remain
in full force and effect until DTC shall have received notice of the
revocation thereof or of the termination of the holder's employment.\9\
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\8\ The contents of all DTC Service Guides constitute
``Procedures'' of DTC. The Procedures may be found on DTCC's public
website, available at <a href="https://www.dtcc.com/legal/rules-and-procedures">https://www.dtcc.com/legal/rules-and-procedures</a>.
\9\ See Rule 17, supra note 7.
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DTC proposes to revise Rule 17 to delete the requirement that
necessary credentials for entering DTC's premises be provided as
specified in the Procedures. DTC does not currently maintain in its
Procedures any specifications for providing such credentials. The
proposed rule change would therefore remove outdated rule language that
may cause confusion for DTC's Participants and readers of its Rules.
DTC also proposes to revise Rule 17 to clarify that Participants must
provide ``written'' notice of the revocation of any credentials,
authorizations and powers of attorney or the termination of the
holder's employment in order for such revocation or termination to
become effective pursuant to Rule 17. The proposed rule change would
clarify the appropriate method for notifying DTC of a revocation or
termination of credentials and conform the notification requirement in
Rule 17 to the requirements of DTC's affiliate clearing agencies,
providing clear and consistent requirements across the clearing
agencies' rules.\10\
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\10\ See National Securities Clearing Corporation (``NSCC'')
Rule 27, Fixed Income Clearing Corporation (``FICC'') Government
Securities Division (``GSD'') Rule 27, and FICC Mortgage Back
Securities Division (``MBSD'') Rule 20. The NSCC Rules & Procedures,
FICC GSD Rulebook, and FICC MBSD Clearing Rules are available on
DTCC's public website, available at <a href="https://www.dtcc.com/legal/rules-and-procedures">https://www.dtcc.com/legal/rules-and-procedures</a>.
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DTC Rule 21 discusses DTC's authority to discipline Participants or
Pledgees for, among other things, violations of DTC's Rules or
Procedures.\11\ DTC's disciplinary authority includes imposing any of
the following sanctions: expulsion; suspension; limitation of
activities, functions and operations; fine; censure; and any other
fitting sanction.
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\11\ See Rule 21, supra note 7.
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DTC proposes to revise Rule 21 to state that fines shall be payable
in the manner and at such time as determined by DTC from time to time.
The proposed
[[Page 58426]]
rule change would clarify an implicitly understood aspect of DTC's
Rules and more closely align Rule 21 to the requirements of DTC's
affiliate clearing agencies to provide greater consistency across the
DTCC clearing agency rules.\12\
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\12\ See NSCC Rule 17 and FICC GSD Rule 23, supra note 10.
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2. Statutory Basis
DTC believes that the proposed rule change is consistent with the
requirements of the Act and the rules and regulations thereunder
applicable to a registered clearing agency. Section 17A(b)(3)(F) of Act
\13\ requires, in part, that the rules of a clearing agency be designed
to promote the prompt and accurate clearance and settlement of
securities transactions. DTC believes the proposed rule change would
promote the prompt and accurate clearance and settlement of securities
transactions for the reasons set forth below.
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\13\ 15 U.S.C. 78q-1(b)(3)(F).
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The proposed rule change would clarify the appropriate method for
notifying DTC of a revocation or termination of credentials (i.e., in
writing) and remove outdated rule language that may cause confusion for
DTC's Participants and readers of its Rules. The proposed rule change
would also clarify that fines imposed by DTC shall be payable in the
manner and at such time as determined by DTC from time to time. The
proposed rule change would provide additional accuracy, clarity and
transparency around implicitly understood aspects of DTC's Rules and
current practices thereunder. When participants better understand their
rights and obligations regarding the Rules, such participants are more
likely to act in accordance with the Rules, which DTC believes would
promote the prompt and accurate clearance and settlement of securities
transactions consistent with the requirements of Section 17A(b)(3)(F)
of Act.\14\
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\14\ Id.
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(B) Clearing Agency's Statement on Burden on Competition
DTC does not believe that the proposed rule change would have any
impact on competition. The proposed changes concerning the issuance and
revocation of credentials and the payment of fines are intended to
clarify existing processes and would not impose any new material
obligations or requirements on users of DTC's services. The proposed
rule changes would apply equally to all participants and would not
inhibit access to DTC's services or disadvantage or favor any
particular user in relationship to another. DTC therefore does not
believe that the proposed rule change would have any impact on
competition.
(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. If any written comments are received by DTC, they will
be publicly filed as an Exhibit 2 to this filing, as required by Form
19b-4 and the General Instructions thereto.
Persons submitting 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#3f4b4d5e5b5651585e515b525e4d545a4b4c7f4c5a5c11585049"><span class="__cf_email__" data-cfemail="285c5a494c41464f49464c45495a434d5c5b685b4d4b064f475e">[email protected]</span></a> or 202-551-5777.
DTC reserves the right not to respond to any comments received.
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) \15\ of the Act and paragraph (f) \16\ 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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\15\ 15 U.S.C. 78s(b)(3)(A).
\16\ 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 formm (<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#5b292e373e76383436363e352f281b283e38753c342d"><span class="__cf_email__" data-cfemail="bbc9ced7de96d8d4d6d6ded5cfc8fbc8ded895dcd4cd">[email protected]</span></a>. Please include
File Number SR-DTC-2022-009 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-2022-009. This file
number should be included on the subject line if email is used. To help
the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's internet website (<a href="http://www.sec.gov/rules/sro.shtml">http://www.sec.gov/rules/sro.shtml</a>).
Copies of the submission, all subsequent amendments, all written
statements with respect to the proposed rule change that are filed with
the Commission, and all written communications relating to the proposed
rule change between the Commission and any person, other than those
that may be withheld from the public in accordance with the provisions
of 5 U.S.C. 552, will be available for website viewing and printing in
the Commission's Public Reference Room, 100 F Street NE, Washington, DC
20549 on official business days between the hours of 10:00 a.m. and
3:00 p.m. Copies of the filing also will be available for inspection
and copying at the principal office of DTC and on DTCC's website
(<a href="http://dtcc.com/legal/sec-rule-filings.aspx">http://dtcc.com/legal/sec-rule-filings.aspx</a>). All comments received
will be posted without change. Persons submitting comments are
cautioned that we do not redact or edit personal identifying
information from comment submissions. You should submit only
information that you wish to make available publicly. All submissions
should refer to File Number SR-DTC-2022-009 and should be submitted on
or before October 17, 2022.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\17\
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\17\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2022-20729 Filed 9-23-22; 8:45 am]
BILLING CODE 8011-01-P
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