Notice2025-12817
Self-Regulatory Organizations; The Depository Trust Company; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend the Settlement Service Guide To Make a Technical Change Relating to DTC's Memo Segregation Function and To Update DTC's Mailing Address
Primary source
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Published
July 10, 2025
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 90 Issue 130 (Thursday, July 10, 2025)</title>
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[Federal Register Volume 90, Number 130 (Thursday, July 10, 2025)]
[Notices]
[Pages 30713-30715]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2025-12817]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-103398; File No. SR-DTC-2025-010]
Self-Regulatory Organizations; The Depository Trust Company;
Notice of Filing and Immediate Effectiveness of a Proposed Rule Change
To Amend the Settlement Service Guide To Make a Technical Change
Relating to DTC's Memo Segregation Function and To Update DTC's Mailing
Address
July 7, 2025.
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 June 27, 2025, 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 the Settlement
Service Guide (``Settlement Guide'') \5\ to (i) make a technical change
relating to DTC's Memo Segregation (``Memo Seg'') function and (ii)
update DTC's mailing address.\6\
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\5\ The Settlement Guide is available at <a href="http://www.dtcc.com/-/media/Files/Downloads/legal/service-guides/Settlement.pdf">www.dtcc.com/-/media/Files/Downloads/legal/service-guides/Settlement.pdf</a>. The Settlement
Guide constitutes Procedures of DTC relating to its Settlement
services. Pursuant to the DTC Rules, the term ``Procedures'' means
the Procedures, service guides, and regulations of DTC adopted
pursuant to Rule 27 (Procedures), as amended from time to time. Rule
1 (Definitions; Governing Law), Section 1, infra note 6. DTC's
Procedures are filed with Commission. They are binding on DTC and
each Participant in the same manner as they are bound by the DTC
Rules. Rule 27, infra note 6.
\6\ Capitalized terms not defined herein shall have the meaning
assigned to such terms in the Rules, By-Laws and Organization
Certificate of DTC, available at <a href="http://www.dtcc.com/-/media/Files/Downloads/legal/rules/dtc_rules.pdf">www.dtcc.com/-/media/Files/Downloads/legal/rules/dtc_rules.pdf</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
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''), and Rule 19b-4 thereunder, DTC is filing with the Securities
and Exchange Commission (``Commission'') a proposed rule change to
amend the Settlement Guide to (i) make a technical change relating to
DTC's Memo Seg and (ii) update DTC's mailing address.
Memo Segregation
Participants use Memo Seg and its ``counter'' mechanism to protect
a designated quantity of Securities in a given CUSIP \7\ from
unintended intraday Delivery at DTC.\8\ More specifically, when a
Participant uses Memo Seg, Delivery of a given CUSIP will not occur if
the Delivery would result in the total quantity of Securities in that
CUSIP being equal to or less than the amount designated for protection
by the Participant, unless (a) the Participant reduces the amount
designated under the counter, or (b) the amount designated under the
counter is automatically reduced due to other
[[Page 30714]]
transactions executed by the Participant. In this way, Memo Seg helps
automate Securities processing by reducing the number of manual entries
a Participant must make to maintain a certain quantity of Securities in
an Account.
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\7\ A CUSIP number is the identification number created by the
American Banking Association's Committee on Uniform Security
Identification Procedures (``CUSIP'') to uniquely identify issuers
and issues of securities and financial instruments. See Committee on
Uniform Security Identification Procedures, available at
<a href="http://www.aba.com/about-us/our-story/cusip-securities-identification">www.aba.com/about-us/our-story/cusip-securities-identification</a>.
\8\ Participants that are registered broker-dealers can use Memo
Seg as a tool to maintain compliance with their obligations under
Commission Rule 15c3-3. 17 CFR 240.15c3-3.
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A Participant can activate any of five Memo Seg indicators by
providing DTC with a standing Memo Seg instruction. When the
Participant activates a Memo Seg indicator, the Participant's free
position and Memo Segregation position are automatically updated
according to the Participant-elected indicators. These indicators
include, but are not limited to, transactions relating to receipt of
certain free and valued Deliveries, movements through the ACATS system,
and receipt of Deliveries from the E sub-account (``E Account'') of
National Securities Clearing Corporation's (``NSCC'') Continuous Net
Settlement (``CNS'') System.\9\
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\9\ Capitalized terms not defined herein shall have the meaning
assigned to such terms in the NSCC Rules & Procedures (``NSCC
Rules''), available at <a href="http://www.dtcc.com/-/media/Files/Downloads/legal/rules/nscc_rules.pdf">www.dtcc.com/-/media/Files/Downloads/legal/rules/nscc_rules.pdf</a>.
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The E Account can be used by NSCC Members for receipt of fully-
paid-for securities from NSCC's main CNS account. The NSCC Member
receiving Securities from the E Account is credited with the respective
fully-paid-for securities in its DTC Participant Account. When a
Participant provides a standing Memo Seg instruction relating to
securities received into the E Account (i.e., by activating ``Indicator
3''), the Participant's Memo Seg counter is automatically increased by
the number of shares it receives through the E Account.\10\
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\10\ Settlement Guide, supra note 5, at 40-42.
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In a separate proposed rule change filed by NSCC (i.e., SR-NSCC-
2025-010) on June 17, 2025 (``NSCC's Rule Filing''), NSCC proposes to
decommission the E Account as it is an underutilized CNS function. As a
result of NSCC's Rule Filing, DTC's Memo Seg Indicator 3, which
correlates with the E Account, would become obsolete. Therefore,
pursuant to NSCC's Rule Filing, DTC would make a technical amendment to
the Settlement Guide to remove the reference to Indicator 3 and the
related functionality for securities received from the E Account. DTC
is not otherwise altering its Memo Seg functionality, and it would
otherwise remain available to Participants.\11\ DTC would also make a
corresponding edit to remove reference to a certain number of Memo
Segregation Indicators.\12\
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\11\ Id.
\12\ The Settlement Guide erroneously stated that a Participant
could activate any of five Memo Segregation indicators, although
there were six Memo Segregation indicators. Id., at 41-42. With this
proposed edit, any future changes to the number of available Memo
Segregation indicators will not require an edit to the paragraph
preceding the table of Memo Segregation indicators.
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Address Update
Currently, the Settlement Guide lists the DTC mailing address for
letters of instruction to establish or change the Net Debit Cap as
DTC's former address at 55 Water Street, New York, NY.\13\ The former
address should have been changed to 570 Washington Blvd., Jersey City,
NJ 07310 in a prior DTC rule filing but was overlooked.\14\ With this
proposed rule change, it is being updated.
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\13\ Supra note 5, at 21.
\14\ Securities Exchange Act Release No. 97250 (Apr. 4, 2023),
88 FR 21214 (Apr. 10, 2023) (SR-DTC-2023-004).
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Implementation Timeframe
The proposed rule change would be implemented in two phases. The
proposed changes concerning DTC's mailing address update would be
implemented upon filing. The proposed changes concerning elimination of
Memo Seg Indicator 3 would be implemented on September 11, 2025.
2. Statutory Basis
Section 17A(b)(3)(F) of the Act requires that the rules of the
clearing agency be designed, among other things, to promote the prompt
and accurate clearance and settlement of securities transactions.\15\
DTC believes the proposed rule change is consistent with Section
17A(b)(3)(F) of the Act.
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\15\ 15 U.S.C. 78q-1(b)(3)(F).
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As described above, the proposed rule change would amend the
Settlement Guide to (i) reflect the elimination of an obsolete Memo Seg
indicator relating to NSCC's decommissioning of its CNS E Account
functionality and (ii) change the mailing address from 55 Water Street,
New York, NY to 570 Washington Blvd., Jersey City, NJ 07310 when it was
previously overlooked.
Each of these proposed rule changes is intended to provide
Participants with current and accurate information regarding DTC
services, thus enabling users to be better informed on how they may
engage and use DTC for securities transactions. Therefore, DTC believes
that the proposed rule change would help promote the prompt and
accurate clearance and settlement of securities transactions,
consistent with the requirements of the Act, in particular Section
17A(b)(3)(F) of the Act, cited above.
(B) Clearing Agency's Statement on Burden on Competition
Section 17A(b)(3)(I) of the Act \16\ requires that the rules of the
clearing agency do not impose any burden on competition not necessary
or appropriate in furtherance of the Act. DTC does not believe that the
proposed rule change would impose a burden or otherwise have a
significant impact on competition. DTC does not believe the proposed
change to remove the Memo Seg Indicator 3 would have any impact or
impose any burden on competition as it is merely a technical change to
the text of the Settlement Guide to correspond with a change to NSCC
Rules. Notwithstanding the decommissioning of the E Account
functionality proposed by NSCC's Rule Filing, Memo Seg would otherwise
remain available to Participants to provide instructions directly
through DTC for the protection of fully-paid-for securities. DTC
therefore believes the proposed rule change would not impose any burden
on competition.
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\16\ 15 U.S.C. 78q-1(b)(3)(I).
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DTC does not believe that the proposed rule change regarding DTC's
mailing address would have any impact or impose any burden on
competition. The proposed rule change simply updates DTC's contact
information that was previously overlooked during an earlier rule
filing \17\ which should not have any competitive impact on
Participants or their use of DTC services.
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\17\ Supra note 14.
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(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, 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.
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
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<a href="http://www.sec.gov/rules-regulations/how-submit-comments">www.sec.gov/rules-regulations/how-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#5d292f3c3934333a3c3339303c2f3638292e1d2e383e733a322b"><span class="__cf_email__" data-cfemail="dda9afbcb9b4b3babcb3b9b0bcafb6b8a9ae9daeb8bef3bab2ab">[email protected]</span></a> or 202-
551-5777.
III. Date of Effectiveness of the Proposed Rule Change, and Timing for
Commission Action
Because the foregoing proposed rule change does not:
(i) significantly affect the protection of investors or the public
interest;
(ii) impose any significant burden on competition; and
(iii) become operative for 30 days from the date on which it was
filed, or such shorter time as the Commission may designate, it has
become effective pursuant to Section 19(b)(3)(A) of the Act \18\ and
Rule 19b-4(f)(6) thereunder.\19\
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\18\ 15 U.S.C. 78s(b)(3)(A).
\19\ 17 CFR 240.19b-4(f)(4).
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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.
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#0a787f666f27696567676f647e794a796f69246d657c"><span class="__cf_email__" data-cfemail="9be9eef7feb6f8f4f6f6fef5efe8dbe8fef8b5fcf4ed">[email protected]</span></a>. Please include
file number SR-DTC-2025-010 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-2025-010. 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="https://dtcc.com/legal/sec-rule-filings.aspx">https://dtcc.com/legal/sec-rule-filings.aspx</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-2025-010 and should be submitted on
or before July 31, 2025.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\20\
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\20\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2025-12817 Filed 7-9-25; 8:45 am]
BILLING CODE 8011-01-P
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