Notice2022-28080
Self-Regulatory Organizations; The Depository Trust Company; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend the Reorganizations Guide and the Fee Guide
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
December 27, 2022
Issuing agencies
Securities and Exchange Commission
Full Text
<html>
<head>
<title>Federal Register, Volume 87 Issue 247 (Tuesday, December 27, 2022)</title>
</head>
<body><pre>
[Federal Register Volume 87, Number 247 (Tuesday, December 27, 2022)]
[Notices]
[Pages 79388-79393]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2022-28080]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-96543; File No. SR-DTC-2022-013]
Self-Regulatory Organizations; The Depository Trust Company;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Amend the Reorganizations Guide and the Fee Guide
December 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 December 15, 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.
---------------------------------------------------------------------------
\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).
---------------------------------------------------------------------------
I. Clearing Agency's Statement of the Terms of Substance of the
Proposed Rule Change
The purpose of the proposed rule change is to amend the
Reorganizations Guide to (i) provide Participants with the option to
submit instructions for the withdrawal of an earlier acceptance of an
Automated Tender Offer Program (``ATOP'')-eligible \5\ offer (each, an
``ATOP Offer'') via Application Program Interface (``API'') and ISO
20022 real-time messaging (collectively, ``Automated Instruction
Messaging''), (ii) postpone the retirement of DTC's legacy computer-to-
computer facility (``CCF'') files for corporate actions entitlements
and allocations (``CCF Entitlements and Allocations Files'') \6\ to
July 1, 2024, and (iii) make technical and ministerial changes. In
addition, DTC is proposing to amend the Fee Guide to continue to charge
Participants that consume CCF Entitlements and Allocations Files after
December 31, 2022 the CCF File Fee of $50,000, as described in greater
detail below.\7\
---------------------------------------------------------------------------
\5\ ATOP is a DTC program through which Participant instructions
are transmitted to the agent for an ATOP offer and through which a
participant can tender its securities to the agent's account at DTC.
\6\ There are three types of CCF files representing the
corporate actions lifecycle: corporate actions announcements (``CCF
Announcements Files''); the CCF Entitlements and Allocations Files;
and corporate actions instructions from Participants through CCF
files (``CCF Corporate Actions Instructions Files''). All CCF
Announcement Files were retired as of December 31, 2018. See
Securities Exchange Act Release No. 79746 (January 5, 2017), 82 FR
3372 (January 11, 2017) (SR-DTC-2016-014).
\7\ Each term not otherwise defined herein has its respective
meaning as set forth in the Rules, By-Laws and Organization
Certificate of DTC (the ``Rules''), the Guide to the DTC Fee
Schedule (``Fee Guide''), and the Reorganizations Service Guide (the
``Reorganizations Guide''), available at <a href="http://www.dtcc.com/legal/rules-and-procedures.aspx">http://www.dtcc.com/legal/rules-and-procedures.aspx</a>.
---------------------------------------------------------------------------
II. Clearing Agency's Statement of the Purpose of, and Statutory Basis
for, the Proposed Rule Change
In its filing with the Commission, the clearing agency included
statements concerning the purpose of and basis for the proposed rule
change and discussed any comments it received on the proposed rule
change. The text of these statements may be examined at the places
specified in Item IV below. The clearing agency has prepared summaries,
set forth in sections A, B, and C below, of the most significant
aspects of such statements.
(A) Clearing Agency's Statement of the Purpose of, and Statutory Basis
for, the Proposed Rule Change
1. Purpose
The purpose of the proposed rule change is to amend the
Reorganizations Guide to (i) provide Participants with the option to
submit instructions for the withdrawal of an earlier acceptance of an
Automated Tender Offer Program (``ATOP'')-eligible \8\ offer (each, an
``ATOP Offer'') via Application Program Interface (``API'') and ISO
20022 real-time messaging (collectively, ``Automated Instruction
Messaging''), (ii) postpone the retirement of DTC's legacy computer-to-
computer facility (``CCF'') files for corporate actions entitlements
and allocations (``CCF Entitlements and Allocations Files'') \9\ to
July 1, 2024, and (iii) make technical and ministerial changes. In
addition, DTC is proposing to amend the Fee Guide to continue to charge
Participants that consume CCF Entitlements and Allocations Files after
December 31, 2022 the CCF File Fee of $50,000, as discussed more fully
below.
---------------------------------------------------------------------------
\8\ ATOP is a DTC program through which Participant instructions
are transmitted to the agent for an ATOP offer and through which a
participant can tender its securities to the agent's account at DTC.
\9\ There are three types of CCF files representing the
corporate actions lifecycle: corporate actions announcements (``CCF
Announcements Files''); the CCF Entitlements and Allocations Files;
and corporate actions instructions from Participants through CCF
files (``CCF Corporate Actions Instructions Files''). All CCF
Announcement Files were retired as of December 31, 2018. See
Securities Exchange Act Release No. 79746 (January 5, 2017), 82 FR
3372 (January 11, 2017) (SR-DTC-2016-014).
---------------------------------------------------------------------------
(i) Automated Instruction Messaging
A. Background
On July 7, 2021, DTC filed a rule filing \10\ (the ``ATOP Automated
Messaging Filing'') that provided Participants with the option to use
Automated Instruction Messaging to submit acceptance, protect, and
cover of protect instructions (each, an ``Acceptance Instruction'') for
ATOP Offers instead of submitting those instructions through the
Participant Tender Offer Program (``PTOP'') or Voluntary Tenders and
Exchanges functions through PTS and PBS, respectively.\11\
---------------------------------------------------------------------------
\10\ See Securities Exchange Act Release No. 92339 (July 7,
2021), 86 FR 36810 (July 13, 2021) (SR-DTC-2021-010). In addition,
DTC subsequently filed a rule filing that similarly provided
Participants with the option to use Automated Instruction Messaging
to submit acceptance, protect, and cover of protect instructions for
Automated Subscription Offer Program and APUT offers. See Securities
Exchange Act Release No. 95197 (July 5, 2022), 87 FR 41153 (July 11,
2022) (SR-DTC-2022-007).
\11\ PTS (Participant Terminal System) and PBS (Participant
Browser System) are user interfaces for DTC settlement and asset
services functions. PTS is mainframe-based, and PBS is web-based
with a mainframe back-end. Participants may use either PTS or PBS,
as they are functionally equivalent. PTOP and Voluntary Tenders and
Exchanges are functions of PTS and PBS, respectively, that are
currently used by Participants to submit instructions, submit
protects, submit cover of protects, submit cover of protects on
behalf of another Participant, and submit withdrawals on various
voluntary reorganization events.
---------------------------------------------------------------------------
As described in the ATOP Automated Messaging Filing, the submission
of voluntary reorganizations instructions through PTS and PBS is a
nonautomated key-entry process, and there are certain potential risks
and costs associated with manual processing, particularly in connection
with voluntary reorganizations instructions. Nonautomated input may
increase the likelihood of errors, which can result in rejected
instructions or erroneous
[[Page 79389]]
elections. Rejected instructions and erroneous elections can delay the
submission of the instructions for voluntary offers, which typically
have to be submitted within a short timeframe. Further, because
information about a voluntary offer and the compilation and
transmission of instructions flows across different market segments,
the lack of automation and standardization can also lead to errors
along the chain.
ISO 20022 is a standard that provides the financial industry with a
common language to capture business transactions and associated message
flows. The benefits offered by ISO 20022 include, but are not limited
to (i) greater straight through processing by utilizing a data model
that conforms to market practice and (ii) improved accuracy and less
processing risk due to enhanced data elements. APIs provides enhanced
flexibility for Participants, making the process of accessing from, and
transmitting information to, DTC and its downstream customers more
efficient. The flexibility of APIs and its use of modern programming
languages provide benefits that include but are not limited to (i) less
frequent maintenance, (ii) client development and implementation can be
quicker to market, and (iii) more efficient integration channels.
B. Automated Instruction Messaging
DTC is proposing to enhance Automated Instruction Messaging for
ATOP Offers by providing Participants with the ability to use Automated
Instruction Messaging to submit an instruction to withdraw an
Acceptance Instruction.\12\ Automated Instruction Messaging for
withdrawal instructions must be for the full quantity of the original
Acceptance Instruction. Participants that are submitting withdrawal
instructions for less than the full quantity must continue to submit
those instructions via PTS/PBS.
---------------------------------------------------------------------------
\12\ DTC notes that withdrawal actions--whether through
Automated Instruction Messaging or PTS/PBS--are only available when
provided for under the terms of the applicable ATOP Offer.
---------------------------------------------------------------------------
As with Automated Instruction Messaging for other actions for ATOP,
ASOP and APUT eligible offers, Automated Instruction Messaging for
withdrawal instructions for an ATOP Offer would consist of (i)
Automated Instruction Messages for the input of instructions and (ii)
Automated Response Messages for feedback and status output with respect
to submitted instructions. The ISO 20022 Corporate Action Instruction
(CAIN) message and the API POST function are Automated Instruction
Messages. The ISO 20022 Corporate Action Instruction Status Advice
(CAIS) message and the API GET function are Automated Response
Messages.
As noted above, automating the submission of withdrawal
instructions for ATOP Offers would streamline the flow of information
and reduce the costs, errors and risks that are associated with
nonautomated processing. Accordingly, pursuant to the proposed rule
change, DTC would enhance the ability of Participants to automate and
standardize the submission of withdrawal instructions for ATOP Offers
through Automated Instruction Messaging.
C. Proposed Rule Changes
Pursuant to the proposed rule change, DTC is proposing to:
1. Add references to ``Automated Instruction Messaging'' or
``Automated Instruction Message,'' as context requires, where other
types of instruction input for withdrawals of instructions for ATOP
Offers (e.g., PTS PTOP and PBS Voluntary Tenders and Exchanges) are
referenced.
2. In the ``Automated Instruction Messaging'' Section:
a. Amend the text of footnote 1 to read, ``Automated Instruction
Messaging for withdrawal instructions for ATOP-eligible offers will be
available in Q1 of 2023.''
b. At the bottom of the enumerated list of actions for ATOP Offers
that can be taken via Automated Instruction Messaging, insert ``5.
Withdrawal (for full amount of original instruction only).''
c. Amend the note under the enumerated list of actions for ATOP
Offers that can be taken via Automated Instruction Messaging to state:
``Withdrawal instructions submitted via Automated Instruction Messaging
must be for the full quantity of the original instruction. Partial
withdrawal instructions for ATOP-eligible offers must be performed via
PTS/PBS and cannot be instructed via Automated Instruction Message.''
3. In the ``Instructions/Expirations'' section, amend the note
``All withdrawal/cancellation instructions must be performed via PTS/
PBS,'' to read, ``Partial withdrawal instructions must be performed via
PTS/PBS.''
4. At the end of the first paragraph of the ``Withdrawing an
Acceptance of an ATOP-Eligible Offer'' section, insert the following
sentence: ``Note: Only full withdrawals will be accepted via Automated
Instruction Messaging. Partial withdrawal instructions must be
performed via PTS/PBS.''
5. Amend the second paragraph in the ``Checklist for Withdrawing an
Acceptance'' section to read, ``Enter and transmit an instruction to
withdraw the acceptance via PTS PTOP, PBS Voluntary Tenders and
Exchanges, or Automated Instruction Messaging. For instructions
transmitted via PTS/PBS, the withdrawal request can be for all or any
part of the acceptance previously submitted, and you can submit more
than one withdrawal request as long as the quantity of securities
indicated in the withdrawal instructions does not exceed the original
quantity of the acceptance. Withdrawal instructions submitted via
Automated Instruction Messaging must be for the full quantity of the
original instruction.''
6. Amend the first bullet under the fourth paragraph in the
``Checklist for Withdrawing an Acceptance'' section to read, ``You can
inquire about your withdrawal instructions and the status thereof via
the PTS PTOP or PBS Voluntary Tenders and Exchanges function's inquiry
feature, or via Automated Instruction Messaging.''
7. Make ministerial changes for clarity, to correct typos and
omissions and to enhance conformity and readability, including, but not
limited to:
a. In the ``Important Legal Information'' replace ``Copyright
(copyright) 2022'' with ``Copyright (copyright) 2023.''
b. Delete all instances of the following sentences: ``If possible,
DTC will attempt to notify you of the rejection, but DTC cannot
guarantee such notification,'' ``If practicable, DTC will attempt to
notify you of the rejection, but cannot guarantee such notification,''
``DTC will attempt to notify your designated coordinator by telephone
of the rejection, but DTC cannot guarantee that this will be done,''
and ``If rejection is for a reason other than that your tender price
was not accepted or that a pro rata portion of your tender was not
accepted, DTC will attempt to notify you by telephone, calling first
the coordinator (s) at the telephone number (s) entered on the
instructions form, but takes no responsibility therefor.'' DTC is
proposing to delete these sentences in order to make it clear that
Participants are solely responsible for monitoring their accounts and
the response messages to ensure that they properly submitted their
instructions and that the instructions were accepted.
c. In ``How to View Mandatory and Voluntary Reorganization
Announcements'' section, delete the footnote that reads ``The RIPS
function for mandatory reorganizations announcements will be retired on
November 16, 2020.'' DTC is proposing to delete this sentence because
RIPS for
[[Page 79390]]
mandatory reorganizations has been retired.
(ii) CCF Entitlements and Allocations Files and CCF File Fee
A. Background
On November 19, 2020, DTC filed a rule change (the ``2021 CCF
Retirement Filing'') \13\ that amended the Reorganizations Guide and
the Fee Guide to (i) set a retirement date for CCF Entitlements and
Allocations Files of January 1, 2022, and (ii) apply a $50,000 CCF File
Fee, per File Category (Pre-Allocation or Allocation/Post-Allocation)
of CCF Entitlements and Allocations Files,\14\ to Participants that
continued to consume CCF Entitlements and Allocations Files between
January 1, 2021 and December 31, 2021. The CCF File Fee was charged to
the Account of the Participant upon the Participant's first receipt of
CCF Entitlements and Allocations Files in a particular File Category
during 2021. The CCF File Fee covered all CCF Entitlements and
Allocations Files within that File Category during 2021.
---------------------------------------------------------------------------
\13\ See Securities Exchange Act Release No. 90490 (November 23,
2020), 85 FR 76645 (November 30, 2020) (SR-DTC-2020-016).
\14\ Each of the CCF Entitlements and Allocations Files falls
into one of two categories (each, a ``File Category''): (i) pre-
allocation (``Pre-Allocation CCF Files''), which includes files
containing a Participant's allocation projections and entitlements,
or (ii) allocation/post-allocation (``Allocation/Post-Allocation CCF
Files''), which includes files containing information on a
Participant's allocations and pending allocations. See Important
Notice 13851-20 (August 27, 2020), available at <a href="https://www.dtcc.com/legal/important-notices">https://www.dtcc.com/legal/important-notices</a>.
---------------------------------------------------------------------------
Many Participants completed their adoption of ISO 20022 messaging
for entitlements and allocations information, and their migration from
the CCF Entitlements and Allocations Files, before the January 1, 2022
retirement date. However, some Participants had not completed their
system development for the ISO 20022 messaging requested that DTC
continue to offer the CCF Entitlements and Allocations Files for
another year. Accordingly, on December 29, 2021, DTC filed a rule
change (``2022 CCF Retirement Filing'') \15\ to postpone the retirement
date of the CCF Entitlements and Allocation Files to January 1, 2023,
and to charge Participants the $50,000 CCF File Fee for each File
Category of CCF Entitlements and Allocations Files that they consumed
between January 1, 2022 and December 31, 2022. The CCF File Fee was
charged to the Account of the Participant upon the Participant's first
receipt of CCF Entitlements and Allocations Files in a particular File
Category during 2022. The CCF File Fee covered all CCF Entitlements and
Allocations Files within that File Category during 2022.
---------------------------------------------------------------------------
\15\ See Securities Exchange Act Release No. 93885 (December 30,
2021), 87 FR 528 (January 5, 2022) (SR-DTC-2021-018).
---------------------------------------------------------------------------
As discussed in the 2021 and 2022 CCF Retirement Filings, DTC has
been informing Participants that corporate actions CCF files \16\ will
be retired and will be replaced by ISO 20022 messaging since 2011.\17\
As noted above, ISO 20022 messaging offers enhanced efficiency and
transparency in the corporate action lifecycle because, in contrast to
the proprietary function and activity codes of CCF Files, ISO 20022 is
a business-model-based standard for the development of messages for the
international financial services industry.
---------------------------------------------------------------------------
\16\ There are three event groups for CCF files for corporate
actions. Participants subscribe to the CCF files for each event
group separately. The event groups are (i) distributions
(``Distributions''), such as cash and stock dividends, principal and
interest, and capital gain distributions; (ii) redemptions
(``Redemptions''), such as full and partial calls, final paydowns,
and maturities; and (iii) reorganizations (``Reorganizations''),
which include both mandatory and voluntary reorganizations such as
exchange offers, conversions, Dutch auctions, mergers, puts, reverse
stock splits, tender offers, and warrant exercises.
\17\ See Securities Exchange Act Release No. 63886 (February 10,
2011), 76 FR 9070 (February 16, 2011) (SR-DTC-2011-02) (indicating
that DTC would continue to support its legacy proprietary CCF files
until 2015).
---------------------------------------------------------------------------
DTC has been working with Participants to specifically support
their orderly transition from CCF Entitlements and Allocations Files to
ISO 20022 messaging since 2013. DTC began providing Participants with
parallel entitlements and allocations ISO 20022 messaging in 2013
(Distributions), 2015 (Redemptions) and 2017 (Reorganizations). In
addition, since 2016,DTC had been communicating with Participants about
the deadline for retirement of the CCF Entitlements and Allocation
Files and postponed the projected retirement date multiple times.\18\
Until the 2021 CCF Retirement Filing, DTC had not imposed a fee on
Participants' continued use of CCF Entitlements and Allocations Files.
---------------------------------------------------------------------------
\18\ See Important Notice 2538-16 (January 21, 2016), supra note
15; Important Notice 4381-16 (November 4, 2016), supra note 15;
Important Notice 5099-17 (February 2017), supra note 15; Important
Notice 7488-18 (February 28, 2018), supra note 15; Important Notice
9861-18 (October 9, 2018), supra note 15.
---------------------------------------------------------------------------
B. Proposed Rule Change
Almost all Participants have now successfully migrated from CCF
Entitlements and Allocations Files to ISO 20022 messaging. There are,
however, a few Participants that have indicated to DTC that, for
reasons internal to their respective firms, they would not be able to
complete their migration by the end of 2022.
Therefore, pursuant to this proposed rule change, DTC would
postpone the retirement date of the CCF Entitlements and Allocation
Files to July 1, 2024, and would continue to charge each Participant
the CCF File Fee of $50,000 for each File Category of CCF Entitlements
and Allocations Files that it consumes during each of the following fee
periods (each, a ``Fee Period''): (i) from January 1, 2023 through
December 31, 2023, and (ii) from January 1, 2024 through June 30, 2024.
The CCF File Fee would be charged to the Account of the Participant,
upon the Participant's first receipt of CCF Entitlements and
Allocations Files in a particular File Category during that specific
Fee Period. The CCF File Fee would cover all CCF Entitlements and
Allocations Files within that File Category during that Fee Period.
Pursuant to the proposed rule change, DTC would amend the
description of the CCF File Fee in the Fee Guide to conform with the
proposed rule change. DTC would also amend the Reorganizations Guide to
reflect the July 1, 2024, retirement date for CCF Entitlements and
Allocations Files. Specifically, in the ``Preparing to Use the
Services'' subsection of the ``How Reorganizations Work'' section of
the Reorganizations Guide, DTC is proposing to replace ``*CCF files
associated with entitlements and allocations will be retired as of
January 1, 2023'' with ``*CCF files associated with entitlements and
allocations will be retired as of July 1, 2024.''
Implementation Date
DTC will implement the proposed changes on January 1, 2023. DTC
will announce the implementation date of the proposed rule change in an
Important Notice posted on its website.
As proposed, a legend would be added to the Reorganizations Guide
and the Fee Guide stating there are changes that became effective upon
filing with the Commission but have not yet been implemented. The
proposed legend also would include that the implementation date will be
January 1, 2023. In addition, the proposed legend would state that the
legend would automatically be removed upon the implementation of the
proposed changes.
2. Statutory Basis
Section 17A(b)(3)(F) of the Act requires, in part, that the Rules
be designed to promote the prompt and
[[Page 79391]]
accurate clearance and settlement of securities transactions.\19\
---------------------------------------------------------------------------
\19\ 15 U.S.C. 78q-1(b)(3)(F).
---------------------------------------------------------------------------
The proposed rule change would amend the Reorganizations Guide to
provide Participants with the option to use Automated Instruction
Messaging for withdrawal instructions for ATOP Offers. As discussed
above, Automated Instruction Messaging provides greater straight-
through processing, improved accuracy, more efficient integration
channels and less processing risk than nonautomated processing.
DTC believes that the proposed rule change to amend the
Reorganizations Guide to make technical and clarifying changes would
enhance the clarity and transparency of the Reorganizations Guide. By
enhancing the clarity and transparency of the Reorganizations Guide,
the proposed rule change would allow Participants to more efficiently
and effectively conduct their business in connection with processing
reorganization events and associated securities transactions. Based on
the foregoing, DTC believes that the proposed rule change is designed
to promote the prompt and accurate clearance and settlement of
securities transactions, consistent with section 17A(b)(3)(F) of the
Act, cited above.
In addition, the proposed rule change would (i) postpone the
retirement of CCF Entitlements and Allocations Files to July 1, 2024,
and (ii) continue the application of a CCF File Fee of $50,000 to
Participants that continue to consume CCF Entitlements and Allocations
Files after December 31, 2022. By postponing the retirement of CCF
Entitlements and Allocations Files to July 1, 2024, the proposed rule
change would allow Participants to minimize potential business
interruptions by undertaking an orderly and organized migration from
CCF files to the more efficient ISO 20022 standard. Similarly, by
continuing to charge a CCF File Fee of $50,000 to those Participants
that continue to receive CCF Entitlements and Allocations Files after
December 31, 2022, the proposed rule change would encourage the few
remaining Participants still utilizing CCF Entitlements and Allocations
Files to accelerate system development and their adoption of the ISO
20022 standard. In this manner, the proposed rule change would
encourage and facilitate the transition to the ISO 20022 standard,
which provides efficiencies and enhanced transparency in processing
corporate actions and the settlement activities related thereto.
Accordingly, DTC believes that the proposed rule change would promote
the prompt and accurate clearance and settlement of securities
transactions, consistent with the requirements of 17A(b)(3)(F) of the
Act, cited above.
Section 17A(b)(3)(D) of the Act requires that the Rules provide for
the equitable allocation of reasonable dues, fees, and other charges
among its Participants.\20\ DTC believes that the proposed rule change
to continue to apply the $50,000 CCF File Fee to Participants that
continue to consume CCF Entitlements and Allocations Files after
December 31, 2022 would provide for the equitable allocation of
reasonable fees.
---------------------------------------------------------------------------
\20\ 15 U.S.C. 78q-1(b)(3)(D).
---------------------------------------------------------------------------
DTC believes that the proposed application of the CCF File Fee
would be equitably allocated because the CCF File Fee (i) would only be
charged to those Participants that have delayed their migration from
CCF Entitlements and Allocations Files beyond December 31, 2022 \21\
and (ii) would be applied in accordance with the Participant's use of a
particular File Category during a specific Fee Period.
---------------------------------------------------------------------------
\21\ As noted above, DTC has been communicating with
Participants about the migration from CCF files to the ISO 20022
standard for corporate actions events since 2011. Since 2013, DTC
has been communicating with Participants about targeted retirement
dates for CCF Entitlements and Allocations Files and has, at the
request of Participants, postponed the projected dates numerous
times.
---------------------------------------------------------------------------
Further, DTC believes that the continued application of the $50,000
CCF File Fee would be reasonable. As discussed above, Participants that
did not complete their migration to ISO 20022 by January 1, 2021, or
January 1, 2022, were charged the $50,000 CCF File Fee for each File
Category of CCF Entitlements and Allocations Files that they consumed
during each calendar year. Most Participants have now completed their
migration, which DTC believes is due, in part, to the application of
the CCF File Fee. Based on this prior experience with the CCF File Fee,
DTC believes that the CCF File Fee in the amount of $50,000 provides
the necessary encouragement for Participants to accelerate their system
development for their adoption of the ISO 20022 standard for
entitlements and allocations information.\22\ Further, during the prior
applications of the CCF File Fee to CCF Entitlements and Allocations
Files, DTC had not received any negative feedback from Participants
that suggested that the $50,000 fee was overly burdensome.
---------------------------------------------------------------------------
\22\ The CCF File Fee is not designed to cover costs incurred by
DTC as a result of continuing to service CCF files.
---------------------------------------------------------------------------
Therefore, DTC believes that the proposed rule change regarding the
CCF File Fee provides for the equitable allocation of reasonable dues,
fees, and other charges among its Participants, consistent with
17A(b)(3)(D) of the Act, cited above.
(B) Clearing Agency's Statement on Burden on Competition
DTC believes that the proposed rule change to provide Participants
with the option to use Automated Instruction Messaging for withdrawal
instructions for ATOP Offers would not have any impact on competition.
Because Automated Instruction Messaging is an optional service that
would be available to all Participants in connection with ATOP Offers,
DTC does not believe that the proposed rule change would impose a
burden on competition.\23\ In addition, DTC believes that the proposed
rule change to make technical and ministerial changes to the
Reorganizations Guide, would not have any impact on competition because
it would merely enhance the clarity of the procedures relating to ATOP
Offers. In light of the foregoing, DTC does not believe that the
proposed rule changes would impose a burden on competition.\24\
---------------------------------------------------------------------------
\23\ 15 U.S.C. 78q-1(b)(3)(I).
\24\ Id.
---------------------------------------------------------------------------
DTC believes that the proposed rule change with respect to
postponing the retirement of CCF Entitlements and Allocations Files to
July 1, 2024 would not have any impact on competition. The proposed
rule change would provide any Participant that has not completed its
migration from CCF Entitlements and Allocation Files with additional
time to complete its testing and development of its systems and
finalize the transition to ISO 20022 messaging. Therefore, DTC believes
that the proposed rule change with respect to postponing the retirement
of CCF Entitlements and Allocations Files to July 1, 2024 would not
have a burden on competition.\25\
---------------------------------------------------------------------------
\25\ 15 U.S.C. 78q-1(b)(3)(I).
---------------------------------------------------------------------------
DTC believes that the proposed rule change with respect to amending
the Fee Guide to continue to apply the CCF File Fee to Participants
that continue to consume CCF Entitlements and Allocations Files after
December 31, 2022 could have an impact on competition because it could
create a burden on competition.\26\ Although the proposed application
of the CCF File Fee is designed to incentivize Participants to
accelerate and complete their adoption of the ISO 20022 standard, DTC
recognizes and appreciates that continuing to charge
[[Page 79392]]
the fee could negatively affect such Participants' operating costs.
However, DTC believes that any burden on competition would not be
significant and would be necessary and appropriate in furtherance of
the purposes of the Act, as permitted by 17A(b)(3)(I) of the Act.\27\
---------------------------------------------------------------------------
\26\ Id.
\27\ Id.
---------------------------------------------------------------------------
DTC believes any burden on competition would not be significant
because (i) the fee would only be charged once per File Category, upon
the Participant's first receipt of CCF Entitlements and Allocations
Files for a File Category during a particular Fee Period, and (ii) the
application of the CCF File Fee for a File Category would cover the
consumption of all CCF Entitlements and Allocations Files within that
File Category during that Fee Period. In addition, based on DTC's prior
use of the CCF File Fee for CCF Entitlements and Application Files, DTC
has no indication that the amount of the fee creates a significant
burden on any Participant.
DTC believes that any burden on competition that may be created by
the proposed change to amend the Fee Guide to continue to apply the CCF
File Fee to Participants that continue to consume CCF Entitlements and
Allocations Files after December 31, 2022 would be necessary and
appropriate in furtherance of the purposes of the Act, as permitted by
17A(b)(3)(I) of the Act.\28\ DTC believes that this proposed change
would be necessary because some Participants have yet to adopt the ISO
20022 standard, despite at least nine years of communication and
prompting on the issue.\29\ As noted above, the ISO 20022 standard
provides efficiencies and enhanced transparency in processing corporate
actions and the settlement activities related thereto. Thus, DTC
believes that the proposed rule change would promote the prompt and
accurate clearance and settlement of securities transactions,
consistent with 17A(b)(3)(F) of the Act.\30\
---------------------------------------------------------------------------
\28\ Id.
\29\ See supra notes 17 and 18.
\30\ 15 U.S.C. 78q-1(b)(3)(F).
---------------------------------------------------------------------------
DTC believes that the proposed rule change to continue to apply the
CCF File Fee to Participants that continue to consume CCF Entitlements
and Allocations Files after December 31, 2022 would be appropriate in
furtherance of the purposes of the Act, as permitted by 17A(b)(3)(I) of
the Act.\31\ As discussed above, Participants that did not complete
their migration to ISO 20022 by January 1, 2021 or by January 1, 2022
were charged the $50,000 CCF File Fee for each File Category of CCF
Entitlements and Allocations Files that they consumed during the each
calendar year. Most Participants have now completed their migration,
which DTC believes is due, in part, to the application of the $50,000
CCF File Fee. DTC's prior experience with the $50,000 CCF File Fee
illustrates that a $50,000 CCF File Fee provides the necessary
encouragement for Participants to accelerate their system development
for the full adoption of the ISO 20022 standard. Further, during the
previous application of the CCF File Fee to CCF Entitlements and
Allocations Files, DTC had not received any negative feedback from
Participants that suggested that the $50,000 fee was overly burdensome.
Accordingly, DTC believes that the continued application of the $50,000
CCF File Fee would be appropriate here in order to incentivize the
remaining Participants to accelerate their migration to the ISO 20022
standard. In addition, as discussed above, DTC believes that the
proposed continued application of the CCF File Fee would be equitably
allocated because the CCF File Fee (i) would only be charged to those
Participants that have delayed their migration from CCF Entitlements
and Allocations beyond December 31, 2022, and (ii) would be applied in
accordance with the Participant's use of a particular File Category
during a specific Fee Period.
---------------------------------------------------------------------------
\31\ 15 U.S.C. 78q-1(b)(3)(I).
---------------------------------------------------------------------------
Therefore, for these reasons, DTC believes that a perceived
competitive burden of the proposed rule change to continue to apply the
CCF File Fee to Participants that continue to consume CCF Entitlements
and Allocations Files after December 31, 2022, would be necessary and
appropriate in furtherance of the purposes of the Act, as permitted by
17A(b)(3)(I) of the Act.\32\
---------------------------------------------------------------------------
\32\ Id.
---------------------------------------------------------------------------
(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, they would 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#84f0f6e5e0edeae3e5eae0e9e5f6efe1f0f7c4f7e1e7aae3ebf2"><span class="__cf_email__" data-cfemail="ef9b9d8e8b8681888e818b828e9d848a9b9caf9c8a8cc1888099">[email protected]</span></a> or 202-551-5777.
III. Date of Effectiveness of the Proposed Rule Change, and Timing for
Commission Action
The foregoing rule change has become effective pursuant to
19(b)(3)(A) \33\ of the Act and paragraph (f) \34\ 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.
---------------------------------------------------------------------------
\33\ 15 U.S.C. 78s(b)(3)(A).
\34\ 17 CFR 240.19b-4(f).
---------------------------------------------------------------------------
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#90e2e5fcf5bdf3fffdfdf5fee4e3d0e3f5f3bef7ffe6"><span class="__cf_email__" data-cfemail="9ceee9f0f9b1fff3f1f1f9f2e8efdceff9ffb2fbf3ea">[email protected]</span></a>. Please include
File Number SR-DTC-2022-013 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-2022-013. 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
[[Page 79393]]
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-2022-013 and should be submitted on
or before January 17, 2023.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\35\
---------------------------------------------------------------------------
\35\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2022-28080 Filed 12-23-22; 8:45 am]
BILLING CODE 8011-01-P
</pre><script data-cfasync="false" src="/cdn-cgi/scripts/5c5dd728/cloudflare-static/email-decode.min.js"></script></body>
</html>Indexed from Federal Register on December 27, 2022.
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.