Notice2024-15912
Self-Regulatory Organizations; The Depository Trust Company; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend the Guide to the DTC Fee Schedule
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
July 19, 2024
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 89 Issue 139 (Friday, July 19, 2024)</title>
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[Federal Register Volume 89, Number 139 (Friday, July 19, 2024)]
[Notices]
[Pages 58829-58836]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2024-15912]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-100532; File No. SR-DTC-2024-005]
Self-Regulatory Organizations; The Depository Trust Company;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Amend the Guide to the DTC Fee Schedule
July 15, 2024.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on July 2, 2024, 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)(2)
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)(2).
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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 Guide to the
DTC Fee Schedule (``Fee Guide'') \5\ to (i) modify the application of a
fee (``One-Day Surcharge'') charged to a Participant that submits an
eligibility request or required offering documents for a new issue one
business day prior to the closing date; \6\ (ii) eliminate certain
Deposit Services fees; and (iii) make a technical change relating to
transfer agent ``pass-through'' charges (``Transfer Agent Charges''),
as described in greater detail below.\7\
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\5\ Available at www.dtcc.com/~/media/Files/Downloads/legal/fee-
guides/DTC-Fee-Schedule.pdf.
\6\ The closing date is the date on which DTC will distribute an
issue for book-entry delivery and settlement, to the DTC Account of
the Participant serving as underwriter for an issue, upon
notification by both the underwriter and the issuer that an issue
has closed. See DTC Underwriting Service Guide, available at <a href="https://www.dtcc.com/-/media/Files/Downloads/legal/service-guides/Underwriting-Service-Guide.pdf">https://www.dtcc.com/-/media/Files/Downloads/legal/service-guides/Underwriting-Service-Guide.pdf</a> at 7.
\7\ Each capitalized term not otherwise defined herein has its
respective meaning as set forth the Rules, By-Laws and Organization
Certificate of DTC (the ``Rules''), available at <a href="http://www.dtcc.com/legal/rules-and-procedures">www.dtcc.com/legal/rules-and-procedures</a>.
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II. Clearing Agency's Statement of the Purpose of, and Statutory Basis
for, the Proposed Rule Change
In its filing with the Commission, the clearing agency included
statements concerning the purpose of and basis for the proposed rule
change and discussed any comments it received on the proposed rule
change. The text of these statements may be examined at the places
specified in Item IV below. The clearing agency has prepared summaries,
set forth in sections A, B, and C below, of the most significant
aspects of such statements.
(A) Clearing Agency's Statement of the Purpose of, and Statutory Basis
for, the Proposed Rule Change
1. Purpose
The proposed rule change would amend the Fee Guide to (i) modify
the application of the One-Day Surcharge; (ii) eliminate certain
Deposit Services fees; and (iii) make a technical change relating to
Transfer Agent Charges, as described below.\8\
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\8\ Pursuant to Rule 2, Section 1, each Participant shall pay to
DTC the compensation due it for services rendered to the Participant
based on DTC's fee schedules. See Rule 2, supra note 7.
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[[Page 58830]]
Proposed Rule Changes
Modification of the One-Day Surcharge
Participants that seek to make a Security eligible for DTC services
are required to provide an eligibility request for the Security to DTC
by the submission of all required issuer and securities data and all
required offering documents. Such data and documents must be provided
to DTC through the online Securities Origination, Underwriting and
Reliable Corporate Action Environment (``UW SOURCE'') or the
Underwriting Central (``UWC'') system for the Security to be considered
for full-service eligibility at DTC.\9\ In addition to meeting other
eligibility requirements set forth in the OA,\10\ a Participant that
seeks to make a new issue eligible for Deposit at DTC must submit the
eligibility request and offering documentation described above through
UW SOURCE or UWC at least six business days prior to the closing
date.\11\ If the Participant submits the eligibility request or the
required offering documentation for a new issue one day prior to the
closing date, the Participant will be subject to fees, referred to in
the Fee Guide as late surcharges.
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\9\ See DTC Operational Arrangements (Necessary for Securities
to Become and Remain Eligible for DTC Services) (``OA''), available
at http://www.dtcc.com/~/media/Files/Downloads/legal/
issueeligibility/eligibility/operationalarrangements.pdf at 6-7.
\10\ See OA, supra note 9 at 6-22.
\11\ See OA, supra note 9 at 86.
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As outlined in the Fee Guide, the One-Day Surcharge for submission
of an eligibility request or the required offering documentation one
day prior to the closing date is $5,000 per issue. After evaluation of
the Securities being submitted for eligibility and the move to a T+1
Settlement Cycle, DTC is proposing to change the applicability of the
One-Day Surcharge so that it is not charged with respect to new
issuances of private Securities (``Private Securities'').\12\
Specifically, the One-Day Surcharge is currently levied on eligibility
requests for all Securities submitted one day prior to the scheduled
closing date, irrespective of whether the Security's information is
publicly available at that time. However, offering information
regarding Private Securities is not intended for public consumption
until the day the security is available for secondary market trading.
Therefore, DTC proposes to eliminate the One-Day Surcharge for
issuances of Private Securities, as the security information is not
available in advance of the day prior to closing. DTC would revise the
Fee Guide to reflect this change.
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\12\ For purposes of this proposed rule change, Private
Securities are identified as (i) issues exempt from SEC registration
under rule 144 A or REG S, and (ii) continuously issued structured
note programs where the securities are drawn down from a CUSIP block
provided by CUSIP Global Services and submitted into DTC as an
equity derivative or debt derivative.
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Deposit Services--Elimination of Fees
DTC reviewed the current DTC Fee Guide to ensure alignment with
current practice and streamline DTC's fee structure for a better client
experience. Following this review, DTC is proposing to eliminate the
researching fee under Deposit Services to improve customer billing
transparency and provide clearer guidance on when fees are applied. The
proposed change would eliminate fees for outdated and non-value-add
services. These changes will not have a material impact on the total
dollar amount of Deposit Services fees charged to Participants.
The following entries in the Deposit Services section of the Fee
Guide would be revised (bold, italicized text indicates additions and
bold strikethrough text indicates deletions):
BILLING CODE 8011-01-P
[[Page 58831]]
[GRAPHIC] [TIFF OMITTED] TN19JY24.000
[[Page 58832]]
[GRAPHIC] [TIFF OMITTED] TN19JY24.001
Technical Change--Transfer Agent Charges
The proposed change would move the Transfer Agent Charges to be
listed under the ``Custody and Securities Processing'' subheading
rather than at the end of the section. This proposed change would
provide enhanced clarity and transparency related to the pass-through
of Transfer Agent Charges. Transfer Agent Charges refers to fees DTC
collects from Participants on behalf of transfer agents, and such fees
are passed through by DTC for many activity types. Each activity type
has a unique suffix which is included on Participant invoices.
In this regard, Custody and Securities Processing Section of the
Fee Guide would be revised as follows (bold, italicized text indicates
additions and bold strikethrough text indicates deletions):
[[Page 58833]]
[GRAPHIC] [TIFF OMITTED] TN19JY24.002
[[Page 58834]]
[GRAPHIC] [TIFF OMITTED] TN19JY24.003
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[GRAPHIC] [TIFF OMITTED] TN19JY24.004
BILLING CODE 8011-01-C
Effective Date
DTC would implement the proposed changes by September 26, 2024.
2. Statutory Basis
DTC believes this proposal is consistent with the requirements of
the Act and the rules and regulations thereunder applicable to a
registered clearing agency. Specifically, DTC believes the proposed
changes to (i) modify the application of the One-Day Surcharge; (ii)
eliminate certain Deposit Services fees; and (iii) make a technical
change relating to Transfer Agent Charges, as described above, are
consistent with Section 17A(b)(3)(D) of the Act,\13\ for the reasons
described below. DTC also believes that the proposed changes to update
the Fee Guide are consistent with Rule 17ad-22(e)(23)(ii),\14\ as
promulgated under the Act, for the reasons described below.
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\13\ 15 U.S.C. 78q-1(b)(3)(D).
\14\ 17 CFR.17ad-22(e)(23)(ii).
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Section 17A(b)(3)(D) of the Act requires, inter alia, that the
Rules provide for the equitable allocation of reasonable dues, fees,
and other charges among participants.\15\ DTC believes the proposed
rule change to (i) modify the application of the One-Day Surcharge;
(ii) eliminate certain Deposit Services fees; and (iii) make a
technical change relating to Transfer Agent Charges, would provide for
the equitable allocation of reasonable fees. Because no Participant
will be charged the One-Day Surcharge for Private Securities and all
Participants will continue to be charged the One-Day Surcharge for
publicly trading Securities, and because the research fee will be
eliminated for all Participants, DTC believes the fees would continue
to be equitably allocated.
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\15\ 15 U.S.C. 78q-1(b)(3)(D).
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DTC also believes its fees will continue to be reasonable under the
proposed changes because the One-Day Surcharge will only be charged on
Securities that are publicly trading, as the security information is
available in advance of the day prior to closing and the research fee
will be eliminated for all Participants. For this reason, DTC believes
that this proposed change, as described above, is reasonable and
consistent with Section 17A(b)(3)(D) of the Act.\16\
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\16\ Id.
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Rule 17ad-22(e)(23)(ii) under the Act \17\ requires DTC to
establish, implement, maintain, and enforce written policies and
procedures reasonably designed to provide sufficient information to
enable participants to identify and evaluate the risks, fees, and other
material costs they incur by participating in the covered clearing
agency. The fees under the proposed changes would continue to be
clearly and transparently published in the Fee Guide, which is
available on a public website,\18\ thereby enabling Participants to
identify the fees and costs associated with participating in DTC. As
such, DTC believes the proposed rule change is consistent with Rule
17ad-22(e)(23)(ii) under the Act.\19\
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\17\ 17 CFR 240.17ad-22(e)(23)(ii).
\18\ See supra note 5.
\19\ 17 CFR 240.17ad-22(e)(23)(ii).
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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, because the elimination of the One-Day Surcharge
on privately trading Securities should not have a material effect on
(i) a determination by an underwriter on whether to submit an
eligibility request for a new issue, or (ii) costs incurred by
Participants in using DTC's eligibility services. Further, the research
fees would continue to be eliminated for all Participants, as described
above.
(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="http://sec.gov/regulatory-actions/how-to-submit-comments">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#4d393f2c2924232a2c2329202c3f2628393e0d3e282e632a223b"><span class="__cf_email__" data-cfemail="deaaacbfbab7b0b9bfb0bab3bfacb5bbaaad9eadbbbdf0b9b1a8">[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
The foregoing rule change has become effective pursuant to Section
19(b)(3)(A) \20\ of the Act and paragraph (f) \21\ 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
[[Page 58836]]
interest, for the protection of investors, or otherwise in furtherance
of the purposes of the Act.
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\20\ 15 U.S.C. 78s(b)(3)(A).
\21\ 17 CFR 240.19b-4(f).
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IV. Solicitation of Comments
Interested persons are invited to submit written data, views and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
<bullet> Use the Commission's internet comment form (<a href="https://www.sec.gov/rules/sro.shtml">https://www.sec.gov/rules/sro.shtml</a>); or
<bullet> Send an email to <a href="/cdn-cgi/l/email-protection#b0c2c5dcd59dd3dfddddd5dec4c3f0c3d5d39ed7dfc6"><span class="__cf_email__" data-cfemail="5f2d2a333a723c3032323a312b2c1f2c3a3c71383029">[email protected]</span></a>. Please include
file number SR-DTC-2024-005 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-2024-005. 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="https://www.sec.gov/rules/sro.shtml">https://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
a.m. and 3 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">dtcc.com/legal/sec-rule-filings</a>). Do not include personal
identifiable information in submissions; you should submit only
information that you wish to make available publicly. We may redact in
part or withhold entirely from publication submitted material that is
obscene or subject to copyright protection. All submissions should
refer to File Number SR-DTC-2024-005 and should be submitted on or
before August 9, 2024.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\22\
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\22\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2024-15912 Filed 7-18-24; 8:45 am]
BILLING CODE 8011-01-P
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