Notice2026-09127
Self-Regulatory Organizations; The Depository Trust Company; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend the DTC Rules To Align a Provision With Rule 17ad-22(e)(19) Under the Securities Exchange Act of 1934
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
May 8, 2026
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 91 Issue 89 (Friday, May 8, 2026)</title>
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[Federal Register Volume 91, Number 89 (Friday, May 8, 2026)]
[Notices]
[Pages 25408-25410]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-09127]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-105373; File No. SR-DTC-2026-005]
Self-Regulatory Organizations; The Depository Trust Company;
Notice of Filing and Immediate Effectiveness of a Proposed Rule Change
To Amend the DTC Rules To Align a Provision With Rule 17ad-22(e)(19)
Under the Securities Exchange Act of 1934
May 5, 2026.
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 April 28, 2026, 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 \5\ consists of amendments to the DTC
Rules to align a provision of the DTC Rules with Rule 17ad-22(e)(19)
under the Act.
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\5\ Capitalized terms not defined herein are defined in the
Rules, By-Laws and Organization Certificate of DTC (``DTC 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 purpose of this proposed rule change is to amend the DTC Rules
to align a provision of the DTC Rules with Rule 17ad-22(e)(19) under
the Act.
(i) Background
As a covered clearing agency,\6\ DTC is required to comply with
specific rules, including Rule 17ad-22(e) under the Act,\7\ which sets
forth risk management and operational requirements to ensure robust
governance, transparency, and the protection of market participants.
The Covered Clearing Agency Standards help mitigate systemic risk and
safeguard the integrity of the clearing and settlement processes.
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\6\ 17 CFR 240.17ad-22(a).
\7\ 17 CFR 240.17ad-22(e) (hereinafter, the ``Covered Clearing
Agency Standards'' or, when referring to a specific rule, ``CCAS
Rule 17ad-22(e)'').
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CCAS Rule 17ad-22(e)(19) \8\ requires each covered clearing agency
to establish, implement, maintain and enforce written policies and
procedures reasonably designed to identify, monitor and manage the
material risks to the covered clearing agency arising from arrangements
in which firms that are indirect participants in the covered clearing
agency rely on the services provided by direct participants to access
the covered clearing agency's payment, clearing, or settlement
facilities.
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\8\ 17 CFR 240.17ad-22(e)(19).
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Because DTC does not usually have a direct relationship with
indirect participants, DTC relies on its Participants that act on
behalf of indirect participants to obtain information necessary to help
identify, monitor and manage the material risks posed by those indirect
participants, in compliance with CCAS Rule 17ad-22(e)(19) .
DTC Rule 2 provides some support for DTC's compliance with CCAS
Rule 17ad-22(e)(19) in that it requires Participants to provide certain
information regarding firms on whose behalf they utilize DTC's
services.\9\ However, DTC Rule 2 also includes language that can
prevent DTC from requiring certain information from its Participants
relating to indirect participants that is needed to help identify,
monitor and manage the material risks posed by indirect participants
and facilitate DTC's compliance with CCAS Rule 17ad-22(e)(19).
Specifically, under the current DTC Rule 2 language, DTC's authority to
request information of its Participants ``shall not extend to books,
records and information relating to the Participant's relationship with
Persons upon whose behalf it may obtain services of [DTC] nor to books,
records and information relating to such persons, their accounts or
market activity.'' \10\ That restrictive DTC Rule 2 language preceded
the implementation of the Covered Clearing Agency Standards and can
complicate DTC's ability to obtain information in compliance with CCAS
Rule 17ad-22(e)(19).
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\9\ DTC Rule 2, supra note 5 (``Upon the request of [DTC], a
Participant shall furnish to [DTC] information sufficient to
demonstrate its satisfactory financial condition and operational
capability, including, but not limited to, such information as [DTC]
may request regarding the businesses and operations of the
Participant and its risk management practices with respect to
services of [DTC] utilized by the Participant for another Person or
Persons'' (emphasis added)).
\10\ DTC Rule 2, supra note 5.
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Therefore, in light of the requirements imposed on DTC under CCAS
Rule 17ad-22(e)(19), DTC proposes to update DTC Rule 2 to permit DTC to
inspect books, records and information relating to the Participant's
relationship with Persons upon whose behalf it may obtain the services
of DTC, and to inspect books, records and information relating to such
Persons, their accounts or market activity. The amendment
[[Page 25409]]
would expressly permit DTC to inspect and obtain such information. This
change is intended to enable DTC to better identify, monitor and manage
the material risks posed by indirect participants and to ensure robust
risk management in accordance with regulatory requirements, in support
of DTC's compliance with CCAS Rule 17ad-22(e)(19).
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. Specifically, DTC believes
that the proposed rule change is consistent with Section 17A(b)(3)(F)
of the Act \11\ and CCAS Rule 17ad-22(e)(19) \12\ for the reasons
described below.
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\11\ 15 U.S.C. 78q-1(b)(3)(F).
\12\ 17 CFR 240.17ad-22(e)(19).
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Section 17A(b)(3)(F) of the Act requires, in part, that the rules
of a clearing agency, such as DTC, be designed to assure the
safeguarding of securities and funds which are in the custody or
control of the clearing agency or for which it is responsible.\13\ By
permitting DTC to better access the necessary books, records, and
information relating to indirect participants, the proposed rule change
supports robust risk management practices and helps safeguard the
integrity of the financial markets, thereby reinforcing DTC's critical
role in the safeguarding of securities and funds. As such, DTC believes
that the proposed amendment to DTC Rule 2 is consistent with the
requirements of the Act, and the rules and regulations thereunder
applicable to a registered clearing agency.
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\13\ 15 U.S.C. 78q-1(b)(3)(F).
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DTC believes the proposal is also consistent with CCAS Rule 17ad-
22(e)(19), which requires a clearing agency to establish, implement,
maintain and enforce written policies and procedures reasonably
designed to identify, monitor and manage the material risks to the
covered clearing agency arising from arrangements in which firms that
are indirect participants in the covered clearing agency rely on the
services provided by direct participants to access the covered clearing
agency's payment, clearing, or settlement facilities.\14\ In this
regard, DTC proposes to amend DTC Rule 2 to eliminate the current
restriction preventing DTC from accessing books, records, and
information related to a Participant's relationship with entities for
whom the Participant may obtain DTC services, as well as information
regarding those entities' accounts or market activity. The revised rule
would expressly authorize DTC to inspect and obtain such information.
This amendment is designed to strengthen DTC's ability to identify,
monitor and manage the risks posed by indirect participants, thereby
supporting robust risk management and helping ensure compliance with
regulatory obligations established under CCAS Rule 17ad-22(e)(19).
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\14\ 17 CFR 240.17ad-22(e)(19).
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(B) Clearing Agency's Statement on Burden on Competition
DTC does not believe that the proposed changes to the DTC Rules, as
described above, would have any impact, or impose any burden, on
competition.
The proposed amendments are intended solely to update the DTC Rules
to ensure alignment with DTC's obligations under CCAS Rule 17ad-
22(e)(19), thereby reflecting current regulatory requirements and
strengthening DTC's risk management framework. Importantly, the updated
DTC Rule 2 language would be applied uniformly to all Participants,
ensuring fairness and consistency. As a result, DTC believes that the
proposed rule change would not impose any burden on competition, but
rather supports the continued integrity and transparency of DTC's
operations in compliance with applicable regulations.
(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 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="http://www.sec.gov/rules-regulations/how-submit-comment">www.sec.gov/rules-regulations/how-submit-comment</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#c7b3b5a6a3aea9a0a6a9a3aaa6b5aca2b3b487b4a2a4e9a0a8b1"><span class="__cf_email__" data-cfemail="b5c1c7d4d1dcdbd2d4dbd1d8d4c7ded0c1c6f5c6d0d69bd2dac3">[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) of the Act \15\ and paragraph (f) of Rule 19b-4
thereunder.\16\ 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 form (<a href="http://www.sec.gov/rules/sro.shtml">www.sec.gov/rules/sro.shtml</a>); or
<bullet> Send an email to <a href="/cdn-cgi/l/email-protection#0775726b622a64686a6a626973744774626429606871"><span class="__cf_email__" data-cfemail="7103041d145c121e1c1c141f0502310214125f161e07">[email protected]</span></a>. Please include
File Number SR-DTC-2026-005 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-2026-005. 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="http://www.sec.gov/rules/sro.shtml">www.sec.gov/rules/sro.shtml</a>). Copies
of the filing will be available for inspection and copying at the
principal office of DTC and on DTCC's website (<a href="http://www.dtcc.com/legal/sec-rule-filings">www.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
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obscene or subject to copyright protection. All submissions should
refer to File Number SR-DTC-2026-005 and should be submitted on or
before May 29, 2026.
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. 2026-09127 Filed 5-7-26; 8:45 am]
BILLING CODE 8011-01-P
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