Notice2026-10241
Self-Regulatory Organizations; The Depository Trust Company; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend the DTC Operational Arrangements (Necessary for Securities to Become and Remain Eligible for DTC Services)
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 22, 2026
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 91 Issue 99 (Friday, May 22, 2026)</title>
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[Federal Register Volume 91, Number 99 (Friday, May 22, 2026)]
[Notices]
[Pages 30346-30353]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-10241]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-105522; File No. SR-DTC-2026-007]
Self-Regulatory Organizations; The Depository Trust Company;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Amend the DTC Operational Arrangements (Necessary for Securities to
Become and Remain Eligible for DTC Services)
May 19, 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 May 11, 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)(6)
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)(6).
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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 DTC
Operational Arrangements (Necessary for Securities to Become and Remain
Eligible for DTC Services) (the ``OA'') \5\ to consolidate and update
the documentation for Agents processing Participant instructions for a
corporate action offer, election, solicitation or tabulation (each, an
``Offer'') through the DTC Automated Tender Offer Program (ATOP) \6\ or
DTC Automated Subscription Offer Program (ASOP),\7\ as further
described below.
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\5\ Available at www.dtcc.com/~/media/Files/Downloads/legal/
issue-eligibility/eligibility/operational-arrangements.pdf. Each
term not otherwise defined herein has its respective meaning as set
forth in the OA, the Rules, By-Laws and Organization Certificate of
DTC (the ``DTC Rules'') and the Reorganizations Service Guide (the
``Reorganizations Guide''), available at <a href="http://www.dtcc.com/legal/rules-and-procedures">www.dtcc.com/legal/rules-and-procedures</a>.
\6\ For the history of ATOP, see Securities Exchange Act Release
Nos. 26538 (Feb. 13,1989), 54 FR 7316 (Feb. 17, 1989) (SR-DTC-88-
19); 27139 (Aug. 14, 1989), 54 FR 34841 (Aug. 22, 1989) (SR-DTC-88-
19); 29168 (May 7, 1991), 56 FR 22742 (May 16, 1991) (SR-DTC-91-04);
30678 (May 7, 1992), 57 FR 20541 (May 13, 1992) (SR-DTC-91-11);
32645 (July 16, 1993), 58 FR 39585 (July 23, 1993) (SR-DTC-92-12);
33797 (Mar. 22, 1994), 58 FR 66043 (Mar. 29, 1994) (SR-DTC-93-11);
and 35108 (Dec. 16, 1994), 59 FR 14696 (Dec. 29, 1994) (SR-DTC-94-
15).
\7\ For more information about ASOP, see Securities Exchange Act
Release No. 35108 (Dec. 16, 1994), 59 FR 67356 (Dec. 29, 1994) (SR-
DTC-94-15).
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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 the proposed rule change is to amend the OA to
consolidate and update the documentation for Agents processing
[[Page 30347]]
Participant instructions for a corporate action offer, election,
solicitation or tabulation an Offer through ATOP or ASOP, as further
described below.
(i) Background
ATOP is an instruction processor originally developed by DTC in
1988 to automate the processing of tender and exchange offers through
DTC. Over the years, ATOP has evolved and now can be used with any
corporate action event that DTC deems appropriate (an ``ATOP-eligible
Offer''), including, but not limited to, tenders and exchanges, cash
conversions, consent solicitations, and event processing of mergers
with elections.\8\ When an Offer is ATOP-eligible, a Participant can
(i) submit instructions and elections for the Offer \9\ without having
to provide a letter of transmittal \10\ or a notice of guaranteed
delivery \11\ (or other documentation that would otherwise be required
by the terms of the Offer) to the Agent, which instead receives an
electronic message transmitted by DTC (an ``Agent's Message'') \12\
through ATOP with respect to each Participant instruction and election;
and (ii) tender the subject securities directly from the Participant's
account into the Agent's account maintained by DTC for purposes of the
Offer.
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\8\ See Securities Exchange Act Release Nos. 56538 (Sept. 26,
2007), 72 FR 56409 (Oct. 3, 2007) (SR-DTC-2007-09); 62119 (May 18,
2010), 75 FR 29374 (May 25, 2010) (SR-DTC-2010-08); 69597 (May 16,
2013), 78 FR 30382 (May 22, 2013) (SR-DTC-2013-06); and 81096 (July
7, 2017), 82 FR 32406 (July 13, 2017) (SR-DTC-2017-011).
\9\ Participants can submit instructions for ATOP-eligible
Offers via the DTC Participant Terminal System (``PTS'') PTOP
function, the DTC Participant Browser Service (``PBS'') Voluntary
Tenders and Exchanges function, and Automated Instruction Messaging
(ISO 20022 messages and Application Program Interfaces). See
Securities Exchange Act Release No. 92339 (July 7, 2021), 86 FR
36810 (July 13, 2021) (SR-DTC-2021-010). See generally
Reorganizations Guide pp. 32-42, supra note 6.
\10\ The letter of transmittal is the legal document signed by
the securities holder in which it agrees to tender its securities
pursuant to the terms of the offer. It contains information about
the certificates and quantity being tendered as well as where and to
whom the payment should be made.
\11\ A notice of guaranteed delivery, sometimes called a
``protect,'' is a document submitted to the tender agent prior to
the expiration of the tender offer whereby the holder submitting the
notice guarantees delivery of securities (a ``cover'' of the
protect) after the expiration of the Offer but before the expiration
of the protection period.
\12\ When ATOP was established in 1989, the term ``Agent's
Message'' referred to the hardcopy message for each Participant's
ATOP instruction that was generated on the Agent's DTC PTS printer
in the office of the Agent. In 1991, DTC began transmitting Agent's
Messages electronically. See Securities Exchange Act Release No.
29168 (May 7, 1991), 56 FR 22742 (May 16, 1991) (SR-DTC-91-04). The
term ``Agent's Message'' appears in the Original Master Agreements
(as defined below), the Procedures Documents (as defined below), and
throughout the Reorganizations Guide.
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ASOP is an instruction processor developed by DTC in 1994 to
automate the processing of rights subscription offers through DTC. ASOP
is similar to ATOP, but ASOP also provides a mechanism for debiting
payments from Participant accounts in connection with the Offer and
provides functionality relating to rights step-up and oversubscription
privileges. When an Offer is ASOP-eligible (an ``ASOP-eligible
Offer''), a Participant can (i) submit subscription instructions \13\
without providing a subscription form, letter of transmittal, or a
notice of guaranteed delivery (that would otherwise be required by the
terms of the Offer) to the Agent, which instead receives an Agent's
Message through the ASOP system with respect to each Participant
instruction; (ii) tender the subject rights directly from the
Participant's account into the Agent's account maintained by DTC for
purposes of the ASOP-eligible Offer; and (iii) authorize DTC to debit
the payment from Participant's account and credit the payment to the
Agent's account.
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\13\ Participants can submit instructions for ASOP-eligible
Offers via the PTS PSOP function, the PBS Rights Subscriptions
function, and Automated Instruction Messaging. See Securities
Exchange Act Release No. 95197 (July 5, 2022), 87 FR 41153 (July 11,
2022) (SR-DTC-2022-007). See generally Reorganizations Guide pp. 51-
68, supra note 6.
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In order for an Agent to be able to process Offers through ATOP or
ASOP, the Agent must become an ATOP Agent or ASOP Agent, as the case
may be. To become an ATOP Agent or ASOP Agent, the Agent is required to
execute the master agreement for ATOP Agents (the ``Original ATOP Agent
Master Agreement'') \14\ or the master agreement for ASOP Agents \15\
(the ``Original ASOP Agent Master Agreement,'' together with the
Original ATOP Agent Master Agreement, the ``Original Master
Agreements''). The Original ATOP Agent Master Agreement and the
Original ASOP Master Agreement reference the ``DTC ATOP Agents
Procedures'' and the ``DTC ASOP Agents Procedures'' as the procedures
for ATOP-eligible Offers and the ASOP eligible Offers, respectively.
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\14\ See Securities Exchange Release No. 33797 (Mar. 22, 1994),
59 FR 32645 (Mar. 29, 1994) (SR-DTC-93-11).
\15\ See Securities Exchange Act Release No. 35108 (Dec. 16,
1994), 59 FR 67356 (Dec. 29, 1994) (SR-DTC-94-15).
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The Original ASOP Master Agreement is virtually identical to the
Original ATOP Master Agreement, except that references to ``ATOP'' are
replaced by ``ASOP'' and a reference to ``letter of transmittal'' is
replaced by the term ``subscription form.'' The Original Master
Agreements were last updated in 1994. The ATOP Agents Procedures and
ASOP Agents Procedures (collectively, the ``Procedures Documents'')
that are referenced in the Original Master Agreements \16\ are
documents that DTC provides to ATOP Agents and ASOP Agents upon
onboarding. The ATOP Agents Procedures document was last updated in
2008, and the ASOP Agents Procedures document was last updated in 1998.
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\16\ The Original ATOP Agent Master Agreement also references
the DTC Voluntary Offerings Agents Procedures, which is obsolete.
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In addition, for each Offer the Agent makes ATOP-eligible or ASOP-
eligible, the Agent is required to electronically approve a letter of
agreement (``LOA''), which is used to confirm the agreement between the
Agent and DTC to handle the particular offer in ATOP or ASOP, as the
case might be, and to confirm the additional procedures, terms and
conditions applicable to the specific Offer.\17\
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\17\ For example, an LOA could reflect that the particular ATOP-
eligible Offer provides for withdrawal rights or that the particular
ASOP-eligible Offer allows the bulking of odd lot instructions.
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(ii) Proposed Rule Change
Although the current governing procedures, terms and conditions for
ATOP-eligible Offers and ASOP-eligible Offers are reflected across the
OA, the Reorganizations Guide, as well as in the specific LOA for each
Offer as applicable,\18\ the Original Master Agreements and the
Procedures Documents still exist but do not reflect the current state
and continuing evolution of ATOP/ASOP technology and processing. In
addition, the ATOP Agents Procedures and ASOP Agents Procedures are
separate standalone documents outside of the OA, and therefore not as
easily accessible for Agents. Finally, there is substantial overlap
between the Original ATOP Agent Master Agreement and the Original ASOP
Agent Master Agreement, between the ATOP Agents Procedures document and
ASOP Agents Procedures document, and among the population of ATOP
Agents and ASOP Agents. DTC believes that having separate designations,
agreements, and procedure documents for Agents has become inefficient
and unnecessary.
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\18\ In addition, an ``ATOP Agent User Guide'' and an ``ASOP
Agent User Guide,'' which contain current descriptions of technical
processes and screenshots of the ATOP and ASOP systems, are posted
on the DTCC website.
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Therefore, in order to provide enhanced clarity, transparency and
[[Page 30348]]
certainty to Agents with respect to their roles, rights, and
obligations as Agents processing ATOP-eligible and ASOP-eligible
Offers, DTC is proposing to amend the OA to: (i) replace the discrete
designations of an ATOP Agent and ASOP Agent with a combined
designation of an ``ATOP/ASOP Agent,'' which would be permitted to
process both types of Offers; (ii) replace the discrete and separate
agreements for ATOP Agents and ASOP Agents with a consolidated and
updated single form of master agreement applicable to ATOP/ASOP Agents
(the ``New Master Agreement''), which would be attached as an Exhibit
to the OA; and (iii) insert consolidated procedures for ATOP/ASOP
Agents that appropriately reflect the current processing of ATOP-
eligible and ASOP-eligible Offers.
A. New Automated Tender Offer (ATOP)/Automated Subscription Offer
Program (ASOP) Agent Master Agreement--New Exhibit C to the OA
Pursuant to the proposed rule change, the New Master Agreement
would (i) reflect consolidated terms from the Original Master
Agreements, which would be updated to: (x) align with the current state
of the technology and processing of Offers through ATOP and ASOP, and
(y) address the increasing complexity and scope of Offers processed
through ATOP and ASOP; (ii) clarify and highlight important terms,
particularly for new Agents or Agents using ATOP and ASOP for Offers
other than standard tender, exchange, or subscription rights Offers;
and (iii) make conforming and technical changes, as described in more
detail below.
(1) Agent Information
To enhance DTC recordkeeping and Agent identification, the proposed
New Master Agreement would require the following information from the
Agent:
a. ``Agent Name:
b. Agent Address:
c. Agent Phone:
d. Reorg Agent (RA) \19\ or FAST #:
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\19\ DTC assigns an RA number to ATOP Agents and ASOP Agents
that are not already FAST Agents.
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e. Date of Executed Operational Arrangements Agent Letter: \20\
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\20\ All Agents are required to have an executed Operational
Arrangements Agent Letter on file at DTC. See OA, p. 6, supra note
6.
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f. LEI #:
g. If LEI is not available, then at least one of the following legal
entity identifiers:
<bullet> DUNS ID:
<bullet> S&P CIQ ID:
<bullet> EIN:
h. Agent Primary Contact Name:
i. Agent Primary Contact Phone:
j. Agent Primary Contact Email:''
(2) Preamble of the New Master Agreement
The proposed preamble of the New Master Agreement would reflect the
new designation of an Agent as an ATOP/ASOP Agent and would clarify
that the DTC Rules and Procedures, including, but not limited to the
OA, and the LOA for a particular Offer, governs each ATOP-eligible
Offer and ASOP-eligible Offer.\21\ The proposed preamble of the New
Master Agreement would also indicate that the New Master Agreement
replaces and supersedes all Original Master Agreements.
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\21\ The preamble of the Original Master Agreements states:
``The Depository Trust Company (``DTC'') and the agent named above
(the ``Agent'') hereby agree that the provisions of the [DTC
Automated Tender Offer Program (``ATOP'') Agents Procedures and the
DTC Voluntary Offerings Agents Procedures (the ATOP Agents
Procedures and the Voluntary Offerings Agent Procedures being
hereinafter referred to together as the ``Agents Procedures'')][DTC
Automated Subscription Offer Program (``ASOP'') Agent Operating
Procedures] will govern the rights and obligations of DTC, its
Participants and the Agent in respect of any [tender or
exchange][rights] offer (an ``Offer'') which DTC and the Agent agree
to make eligible for [ATOP][ASOP], to the extent that the provisions
of the Agents Procedures are not reflected in the terms of the
Offer. The Agreement of DTC and the Agent to make an Offer eligible
for [ATOP][ASOP] shall be indicated in the manner prescribed in the
Agents Procedures, a copy of which is in the possession of the
Agent. The Agents Procedures may be amended by DTC from time to time
on 10 days' prior written notice to the Agent.''
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Accordingly, pursuant to the proposed rule change, the preamble of
the New Master Agreement would state as follows:
``The Depository Trust Company (``DTC'') and the agent named
above (the ``Agent'') hereby agree that the provisions of this
Automated Tender Offer Program (``ATOP'')/Automated Subscription
Offer Program (``ASOP'') Agent Master Agreement (``Master
Agreement''), the DTC Rules and Procedures (including, without
limitation, the DTC Operational Arrangements (``OA'')), as may be
amended from time to time, and the Letter of Agreement (``LOA'') for
each particular offer (``Offer'') will govern the rights and
obligations of DTC, its Participants and the Agent in respect of any
Offer which DTC and the Agent agree to make eligible for either ATOP
or ASOP. This Master Agreement replaces and supersedes any and all
Automated Tender Offer Program DTC/Agent Master Agreements and
Automated Subscription Offer Program DTC/Agent Master Agreements
entered into between DTC and the Agent before execution of this
Master Agreement.''
(3) Paragraph 1 of the New Master Agreement
Paragraph 1 of the New Master Agreement would adopt and update the
terms of clause (i) of the second paragraph of the Original Master
Agreements \22\ as follows:
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\22\ Clause (i) of the second paragraph of the Original Master
Agreements states: ``The Agent agrees that (i) the delivery by DTC
of an Agent's Message in accordance with the provisions of the
Agents Procedures will satisfy the terms of each Offer made eligible
for [ATOP][ASOP] as to the execution and delivery of a [letter of
transmittal][subscription form] or a notice of guaranteed delivery,
as the case may be, in the form of the letter of transmittal or
notice of guaranteed delivery required by the Offer by the
Participant identified in such Agent's Message and (ii) the
agreement set forth in the preceding clause (i) will be enforceable
against the offeror in each Offer made eligible for [ATOP][ASOP] by
the Participant identified in such Agent's Message. The Agent
represents and warrants that the Agent will be authorized by the
offeror in each Offer made eligible for [ATOP][ASOP] to make the
agreements in the preceding sentence.''
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a. To align with technological evolution of the ATOP and ASOP
systems, the reference to ``the delivery by DTC of an Agent's Message''
would be replaced with ``the transmission by DTC of an Agent's
Message;''
b. To clearly reflect the use of ATOP for Offers other than
standard tenders and exchanges, which could require documentation other
than, or in addition to, a letter of transmittal or notice of
guaranteed delivery, DTC would expand the reference to ``letter of
transmittal, notice of guaranteed delivery, or other form of
instruction, election, or acceptance;'' and, similarly,
c. To reflect the use of ASOP for Offers other than standard
subscription rights Offers, which could require documentation other
than, or in addition to, a subscription form or a notice of guaranteed
delivery, DTC would expand references to ``a subscription form, a
notice of guaranteed delivery, other form of instruction, election, or
acceptance.''
Accordingly, pursuant to the proposed rule change, Paragraph 1 of
the New Master Agreement would state as follows:
``1. The transmission by DTC of an Agent's Message will satisfy
the terms of:
(a) each ATOP-eligible Offer as to the execution and delivery of
a letter of transmittal, a notice of guaranteed delivery, or other
form of instruction, election, or acceptance, as the case may be, in
the form of the letter of transmittal, notice of guaranteed
delivery, or other form of instruction, election, or acceptance
required by the Offer by the Participant identified in such Agent's
Message;
(b) each ASOP-eligible Offer as to the execution and delivery of
a subscription form, a notice of guaranteed delivery, other form of
instruction, election, or acceptance, as the case may be, in the
form of the subscription form, notice of guaranteed delivery, or
other form of instruction, election, or acceptance required by the
Offer
[[Page 30349]]
by the Participant identified in such Agent's Message.''
(4) Paragraph 2 of the New Master Agreement
To highlight for Agents what constitutes a timely Participant
instruction through ATOP or ASOP for purposes of an Offer, Paragraph 2
of the New Master Agreement would substantively mirror the existing
language in the OA as to what constitutes a timely submission of an
instruction through DTC instruction processors (which include, but are
not limited to, ATOP and ASOP).\23\
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\23\ See OA p. 59, supra note 6.
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Specifically, Paragraph 2 of the proposed New Master Agreement
would state:
``2. Notwithstanding anything to the contrary, for purposes of
making a determination of the timeliness of an instruction,
election, or acceptance and, if applicable, the tender of
securities, the date and time of a Participant's submission of any
instruction, election, or acceptance to DTC through ATOP or ASOP (as
reflected in the Transaction ID or Subscription ID of the
transaction), and not the date and time of the transmission of the
Agent's Message by DTC to the Agent, shall govern. By way of
example, but without limitation, for purposes of determining the
timeliness of a Participant's instruction and/or tender in
connection with an event, the Participant's instruction is deemed to
have been timely received by, and, if applicable, the securities
timely tendered to, the Agent when the date and time of the
submission of a Participant's instruction to DTC (as reflected in
the Transaction ID or Subscription ID of the completed transaction)
is prior to the applicable cutoff/expiration date and time, even if
the transaction does not complete and/or an Agent's Message is not
transmitted until after the applicable cutoff/expiration date and
time for the event.''
(5) Paragraphs 3 and 4 of the New Master Agreement
Clause (ii) and the last sentence of the second paragraph of the
Original Master Agreements,\24\ provide (x) for the enforceability of
the agreements in clause (i) of the second paragraph of the Original
Master Agreements against the offeror in each Offer by the Participant
identified in the Agent's Message, and (y) that the Agent represents
and warrants that it will be authorized by the offeror in each Offer to
make the foregoing agreements. Paragraphs 3 and 4 of the New Master
Agreement would expand the scope of those provisions to include the
agreement in Paragraph 2 of the New Master Agreement as to the
timeliness of a Participant instruction.
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\24\ Clause (ii) and the last sentence of the second paragraph
of the Original Master Agreements states: ``(ii) the agreement set
forth in the preceding clause (i) will be enforceable against the
offeror in each Offer made eligible for [ATOP][ASOP] by the
Participant identified in such Agent's Message. The Agent represents
and warrants that the Agent will be authorized by the offeror in
each Offer made eligible for [ATOP][ASOP] to make the agreements in
the preceding sentence.''
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Specifically, paragraphs 3 and 4 of the proposed New Master
Agreement would state as follows:
``3. The agreements set forth in the preceding paragraphs 1 and
2 are enforceable against the offeror in each ATOP-eligible Offer or
ASOP-eligible Offer by the Participant identified in such Agent's
Message.''
4. The Agent represents and warrants that prior to making an
Offer eligible for ATOP or ASOP, the Agent will be authorized by the
offeror in each Offer to make the agreements in the preceding
paragraphs 1-3.''
(6) Paragraphs 5 and 6 of the New Master Agreement
Pursuant to the proposed rule change, Paragraphs 5 and 6 of the New
Master Agreement would highlight the Agent's obligations to review the
Agent's Messages upon receipt and to directly notify the Participant if
the Agent believes that the Participant's instruction was deficient.
Specifically, Paragraphs 5 and 6 of the New Master Agreement would
provide as follows:
``5. The Agent is required to inspect all Agent's Messages
promptly upon receipt and to immediately escalate any questions to
the appropriate DTC contacts identified in the OA and in the LOA for
the specific Offer.
6. If the Agent believes that the acceptance of an Offer
(including, without limitation, acceptance by notice of guaranteed
delivery and cover of protect instructions), instruction, election
and/or the tender of securities reflected in an Agent's Message is
deficient for some reason, it is the sole responsibility of the
Agent to promptly notify the affected Participant directly to
resolve the issue and/or request that the Participant enter a
withdrawal of its acceptance, instruction, or election, as the case
might be. The Agent must also promptly notify DTC about the
deficiency by emailing the DTC contacts listed in the OA and in the
LOA for the specific Offer.''
(7) Paragraph 7 of the New Master Agreement
Pursuant to the proposed rule change, Paragraph 7 of the New Master
Agreement would contain termination provisions with respect to the New
Master Agreement and with respect to a specific Offer that DTC and the
Agent agreed to make eligible for ATOP or ASOP. The terms of Paragraph
7 of the New Master Agreement would be consistent with those in the
third paragraph of the Original Master Agreements,\25\ except as
follows: (i) given technological advances, termination of the New
Master Agreement by either party would only require 10 days prior
written notice, instead of 30, and (ii) to take into account the
increasing complexity of ATOP-eligible Offers and ASOP-eligible Offers,
DTC's ability to terminate the ATOP-eligibility or ASOP-eligibility of
an Offer would include circumstances when DTC becomes aware of a fact,
factor, or circumstance about the Offer and determines that, in light
of such fact, factor or circumstance, that DTC does not have the
operational capacity to process the Offer and/or that processing the
Offer through DTC could adversely affect DTC, Participants or
investors.
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\25\ The third paragraph of the Original Master Agreements
states: ``This agreement may be terminated by either party on 30
days' prior written notice to the other party; provided, however,
that this Agreement shall continue in effect thereafter in respect
of any Offer which was made eligible for [ATOP][ASOP] prior to such
termination. DTC may terminate the agreement of DTC and the Agent to
make an Offer eligible for [ATOP][ASOP] in the event that the terms
of such Offer are amended and DTC determines in its discretion that
as a result of such amendment DTC no longer has the operational
capability to provide services in respect of such Offer.''
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Specifically, Paragraph 7 of the New Master Agreement would state:
``7. This agreement may be terminated by either party on 10
days' prior written notice to the other party; provided, however,
that this Agreement shall continue in effect thereafter in respect
of any Offer which was made eligible for ATOP or ASOP prior to such
termination. DTC may terminate the agreement of DTC and the Agent to
make an Offer ATOP-eligible or ASOP-eligible in the event that the
terms of such Offer are amended, or if DTC becomes aware of a fact,
factor, or circumstance about the Offer, and DTC determines in its
discretion that as a result of the amendment or in light of such
fact, factor or circumstance, DTC no longer has the operational
capability to provide services in respect of such Offer and/or that
processing the Offer through ATOP or ASOP could adversely affect the
rights of DTC, Participants, or investors.''
(8) Paragraph 8 of the New Master Agreement
Pursuant to the proposed rule change, Paragraph 8 of the New Master
Agreement would provide for New York choice of law and venue in order
to provide enhanced legal certainty. Specifically, Paragraph 8 of the
New Master Agreement would state:
``8. The Master Agreement shall be governed by and construed in
accordance with the laws of the state of New York without regard to
its conflict of laws provisions. Any disputes, controversies, or
claims arising out of this Master Agreement shall be heard in the
state or federal courts of New York County, New York, and the Agent
waives any objection to the
[[Page 30350]]
jurisdiction of these courts, whether based on convenience or
otherwise. The Agent waives, to the fullest extent permitted by
applicable law, any right it may have to trial by jury in any legal
proceeding directly or indirectly arising out of or relating to this
Master Agreement or the transactions contemplated hereby.''
B. Proposed Amendments to the OA
Pursuant to the proposed rule change, DTC would amend the OA as
follows:
(1) Deletions and Renumbering
DTC is proposing to (i) delete Section VI.D.2 (Rights Offers (Use
of DTC's Automated Subscription Offer Program (``ASOP'')), because use
of ASOP would be addressed in the text of the proposed rule change;
(ii) renumber Section VI.D.3 to VI.D.2; and (iii) delete the headings
and first three paragraphs of Section VI.D.4. (Voluntary Tenders/
Exchanges/Mergers with Election (Use of DTC's Automated Tender Offer
Program (``ATOP'')), because those terms would be addressed in the text
of the proposed rule change.
(2) New Section VI.D.3: DTC's Automated Tender Offer Program (``ATOP'')
and DTC's Automated Subscription Offer Program (``ASOP'')
In place of the headings and first three paragraphs of Section
VI.D.4.a., DTC is proposing to insert a new section VI.D.3 that would
be titled ``DTC's Automated Tender Offer Program (``ATOP'') and DTC's
Automated Subscription Offer Program (``ASOP''),'' a new subsection
VI.D.3.a. titled ``Becoming an ATOP/ASOP Agent,'' and a new subsection
VI.D.3.b. titled ``ATOP Eligibility or ASOP Eligibility of an Offer.''
New subsection VI.D.3.a. (Becoming an ATOP/ASOP Agent) would
reflect the new consolidated designation of an Agent as an ATOP/ASOP
Agent and would restate the requirements for an Agent to become an
ATOP/ASOP Agent. Specifically, proposed new subsection VI.D.3.a would
state as follows:
``To make a corporate action event, offer, election,
solicitation or tabulation (each, an ``Offer'') eligible to be
processed through ATOP (``ATOP-eligible Offer'') or ASOP (``ASOP-
eligible Offer''), an Agent must be an ATOP/ASOP Agent. To become an
ATOP/ASOP Agent, the Agent must: (1.) obtain the proper connectivity
to access the ATOP and ASOP functions as may be required by DTC;
(2.) execute a DTC Operational Arrangements (``OA'') Agent Letter,
if the Agent does not already have one on file with DTC; and (3.)
execute an Automated Tender Offer Program (ATOP)/Automated
Subscription Offer Program (ASOP) Agent Master Agreement (``ATOP/
ASOP Master Agent Agreement''). The template ATOP/ASOP Agent Master
Agreement is attached to these Operational Arrangements as Exhibit
C.''
Proposed new subsection VI.D.3.b. (ATOP Eligibility or ASOP
Eligibility of an Offer) would reflect the current procedures on how an
Agent can make an Offer ATOP-eligible or ASOP-eligible, including the
requirement for the Agent to approve the LOA for the Offer. In
addition, the subsection would highlight DTC's discretion to decline to
process any Offer and the responsibility of an Agent to confirm in
advance whether a non-standard Offer could be made ATOP-eligible or
ASOP-eligible. The subsection would also note the specific DTC cutoff
date/time for Participants to submit instructions through ATOP and ASOP
as compared to the actual expiration date/time of the Offer and would
reflect that DTC does not accept Participant instructions after the
applicable DTC cut-off time.\26\
---------------------------------------------------------------------------
\26\ DTC notes that to the extent an Agent accepts an email
instruction directly from a Participant on the expiration date
between the applicable DTC cutoff time and the actual cutoff time,
DTC will continue its current practice of coordinating with the
Agent and Participant after the expiration date with respect to any
tender of securities and/or adjustment of the ATOP or ASOP record
relating to such email instruction. See e.g., Reorganizations Guide
p. 33, supra note 6. (``If you intended to accept an offer via PTS
PTOP, PBS Voluntary Tenders and Exchanges, or Automated Instruction
Messaging, but missed the cutoff for submitting the acceptance via
PTS PTOP, PBS Voluntary Tenders and Exchanges or Automated
Instruction Messaging, it is your responsibility to contact the
agent and determine if they will accept an email submission
directly. If accepted, the agent will notify DTC and the Participant
should submit an acceptance instruction form to DTC via email. DTC
will then input the acceptance on behalf of the Participant. The
Participant must confirm the acceptance input by DTC is accurate.'')
---------------------------------------------------------------------------
The proposed new subsection would provide as follows:
``To make an Offer ATOP-eligible or ASOP-eligible, the Agent
must send the offering announcement, including the source document,
and a completed DTC questionnaire to DTC within the timeframes and
in the manner described in the OA (see, as applicable, Section VI.A.
Standards for Mandatory and Voluntary Reorganization Notices). DTC
may require the Agent to provide additional documentation on the
Offer. For an ASOP-eligible Offer, the Agent must also provide the
``Agent Wire Instructions Letter'' for which DTC is to send the
subscription payments. After DTC reviews the documentation and
information and determines it is complete, DTC will post the terms
of the Offer on ATOP or ASOP, as the case may be, viewable by the
Agent only. Within one business day of posting, the Agent shall
review and approve the details of the Offer and the terms of the
Letter of Agreement (``LOA'') for the Offer by entering an
acknowledgement in ATOP or ASOP, as applicable. Any delays by the
Agent may impact the timeliness of opening the Offer to
Participants.
If the Agent disagrees with one or more terms of the LOA or
details of the Offer as posted by DTC, the Agent must notify DTC of
its disagreement by entering the LOA rejection and the reason for
the rejection in ATOP or ASOP, as applicable, and by email to the
DTC contacts listed in the LOA. DTC, at its option, may work with
the Agent to modify the terms and/or details of the Offer and
resolve any differences with the Agent. DTC will not make an Offer
available to Participants unless the LOA approval has been received
from the Agent.
Note: When making an Offer ATOP-eligible or ASOP-eligible, DTC
will confirm with the Agent the actual expiration date/time of the
Offer and the DTC cutoff date/time for the Offer. For Offers in
which the offering documentation (i) allows for holders to
participate in the Offer (i.e., submit instructions) on the
expiration date until a time later than the DTC cutoff time of 6:00
p.m. ET for equities or 5:00 p.m. ET for debt (e.g., Offers with an
actual expiration time of 11:59 p.m. ET on expiration date), or (ii)
reflects an Offer expiration time on expiration date that is earlier
than the DTC cutoff time for equities or 5:00 p.m. ET on expiration
date (e.g., an Offer with an 11:00 a.m. ET expiration time on
expiration date), in which case DTC's cutoff date and time for such
Offer will typically be at 6:00 p.m. ET for equities or 5:00 p.m. ET
for debt on the business day prior to the actual expiration date.
DTC will not accept Participant instructions for ATOP-eligible or
ASOP-eligible Offers after the applicable DTC cutoff time.''
New subsection VI.D.3.c. (Processing an ATOP-eligible Offer and an
ASOP-eligible Offer) would consolidate existing language in the OA that
provides a brief background on the use of ATOP or ASOP for certain
tender and exchange Offers and subscription exercise activities as a
DTC-eligibility requirement for DTC-eligibility (except if certain
conditions preclude such use). The subsection would note that ATOP or
ASOP can be used for any Offer as DTC may deem appropriate, and, in
addition, would highlight that DTC may require additional instructions,
indemnification and processing fees from the Agent and Issuer for
Offers that require special handling.
Specifically, proposed subsection VI.D.3.c. would state as follows:
``With regard to certain Offers such as for tenders or exchanges
and mergers with elections, ATOP procedures and systems must be used
for all elections (e.g., original acceptances, withdrawals of
acceptances, notices of guaranteed deliveries, conditional
acceptances). Use of ATOP for these purposes is an eligibility
requirement for securities that are the subject of such Offers
unless it is communicated by the offeror or Agent to DTC and
determined by DTC that certain conditions preclude the use of DTC's
processors for a particular Offer, or preclude DTC from allocating
entitlements for such an Offer (e.g., restricted securities that
cannot be made DTC eligible). In the case of rights offerings, DTC's
ASOP procedures and systems must be used to process subscription
[[Page 30351]]
exercise activities, including the submission of instructions for
basic subscriptions, the exercise of oversubscriptions, sales of
rights, notices of guaranteed deliveries, and all related
activities. Use of ASOP for these purposes is an eligibility
requirement for securities that are the subject of rights offers.
The following sections describe the standard processes for
tender or exchange Offers on ATOP and rights offerings processed
through ASOP. However, ATOP and ASOP can be used for processing any
Offer as DTC may deem appropriate. Accordingly, certain processes
and requirements may differ and, when applicable, will be
communicated to the Agent by DTC in writing and/or in a rider to the
ATOP/ASOP Master Agreement and/or in the LOA. In addition, for such
Offers, including, but not limited to, Offers that require special
or manual processing, DTC may require the Agent and Issuer to
provide additional written instructions and indemnifications from
the Agent and Issuer and to pay additional processing fees. Unless
otherwise agreed, DTC's announcement of the Offer to Participants is
contingent on receipt of payment for all additional processing fees,
if any.
Note: DTC has the discretion to decline to process any Offer
through ATOP or ASOP, and DTC's acceptance of a particular Offer in
one case does not set a precedent for any future Offers. An Agent
with a proposed non-standard Offer that could require special
processing must confirm with DTC whether the particular Offer can be
processed on the ATOP or ASOP platform before including references
to, or instructions or directions for, ATOP or ASOP processing in
any documentation or filings relating to the Offer.''
(3) Section VI.D.4: Processing an ATOP-eligible Offer
DTC is proposing to insert a new Section VI.D.4, titled
``Processing an ATOP-eligible Offer,'' a new subsection VI.D.4.a titled
``Participant Acceptances and Surrender of Securities Through ATOP,'' a
new subsection VI.D.4.b titled ``Withdrawal of Acceptances (including
acceptances by notice of guaranteed delivery or instructions to cover
the protect),'' and a new subsection heading VI.D.4.c. titled ``After
Expiration of an ATOP-eligible Offer.''
Proposed subsection VI.D.4.a. (Participant Acceptances and
Surrender of Securities Through ATOP) would describe the general
mechanics of a Participant's acceptance of an Offer through ATOP,
stating as follows:
``When a Participant submits an instruction to DTC for an ATOP-
eligible Offer, such as an acceptance and surrender of securities,
acceptance by submission of a notice of guaranteed delivery (a
``protect''), or a surrender of securities to cover a notice of
guaranteed delivery (a ``cover of a protect'') through ATOP, the
ATOP system will typically (x) process the Participant submission,
and, in the case of an acceptance with surrender of securities or a
cover of a protect, effect a book-entry delivery of the
Participant's subject position in the securities to the Agent's
account maintained by DTC for ATOP-eligible Offers and ASOP-eligible
Offers (the ``ATOP/ASOP Agent Account''), and (y) enter information
about the submission (including the time of the Participant's
submission into DTC) into ATOP, and transmit an Agent's Message to
the Agent that indicates the Participant's acceptance of the ATOP-
eligible Offer or its instruction to cover a protect, as the case
may be, and, to the extent applicable, reflects the book-entry
delivery of the securities into the ATOP/ASOP Agent Account.''
For clarity, proposed subsection VI.D.4.a. would include a footnote
explaining that ``[t]he Agent's Message is the electronic message that
is generated and transmitted to the Agent through ATOP or ASOP with
respect to each Participant instruction and election.''
Proposed subsection VI.D.4.b. (Withdrawal of Acceptances (including
acceptances by notice of guaranteed delivery or instructions to cover
the protect)) would describe the general mechanics of a Participant's
withdrawal of its acceptance through ATOP, stating as follows:
``If permitted under the terms of the ATOP-eligible Offer,
Participants can submit an instruction for a partial or full
withdrawal of their acceptance of an ATOP-eligible Offer. When a
Participant submits a withdrawal request, the ATOP System will
transmit a form of Agent's Message with respect to the withdrawal
(``Withdrawal Message'') to the Agent indicating the withdrawal
instruction submitted by the Participant. The Agent must promptly
inspect all Withdrawal Messages upon receipt to verify the validity
of the withdrawal request. No later than 30 minutes after DTC's
cutoff time on the day of the withdrawal instruction, the Agent must
take one of the following actions with respect to each Withdrawal
Message it receives:
(1) If the Agent determines to accept the withdrawal, the Agent
must transmit an acceptance (``Withdrawal Acceptance'') to DTC
through ATOP; or
(2) If the Agent determines to reject the request, the Agent
must transmit a rejection (``Withdrawal Rejection'') to DTC through
ATOP.
The Agent's failure to timely accept or reject a pending
Withdrawal Message could affect the Agent's ability to balance with
DTC and delay any payments due to Participants pursuant to the ATOP-
eligible Offer.
Note: The Withdrawal Acceptance and Withdrawal Rejection must be
for the full amount of the Participant's withdrawal request.
If the withdrawal instruction relates to securities delivered to
the ATOP/ASOP Agent Account in connection with the acceptance of the
ATOP-eligible Offer, the Withdrawal Acceptance shall constitute an
authorization from the Agent to DTC to deliver by book-entry from
the ATOP/ASOP Agent Account to the account of the Participant
submitting the withdrawal instruction the securities that are the
subject of the Participant's withdrawal instruction. Upon receipt of
such a Withdrawal Acceptance, DTC will effect a book-entry delivery
returning the securities to the Participant from the ATOP/ASOP Agent
Account. If the withdrawal request relates to an acceptance of the
ATOP-eligible Offer by notice of guaranteed delivery, the Withdrawal
Acceptance constitutes an authorization from the Agent to DTC to
reduce the quantity of securities to which the notice of guaranteed
delivery relates by the quantity of securities that are subject to
the withdrawal instruction.''
Subsection VI.D.4.c. (After Expiration of an ATOP-eligible Offer)
would contain the existing enumerated list of requirements, with some
changes to correct grammar and typos, make conforming changes, and
insert the following sentence into No. 2 in the list: ``Agent must
reconcile balances with DTC at least one business day prior to the
allocation of entitlements and must receive DTC confirmation prior to
wiring funds to DTC.'' DTC would also delete No. 4 of the list, because
the payment of additional fees for non-standard Offers is already
addressed in new subsection VI.D.3.c. Pursuant to the proposed rule
change, subsection VI.D.4.c. would state as follows:
``1. At least one business day prior to payment and allocation
of entitlements by DTC, Agent must provide the specific rate and
entitlement information for all tender/exchange offers processed
through ATOP in the format required by DTC. Payment detail should be
sent via email to <a href="/cdn-cgi/l/email-protection#9fedfaf0edf8ebfaf1fbfaedecdffbebfcfcb1fcf0f2"><span class="__cf_email__" data-cfemail="3446515b465340515a5051464774504057571a575b59">[email protected]</span></a> and shall include:
<bullet> amount of tendered Securities;
<bullet> cash and security rates (per $1,000 principal amount,
for debt security);
<bullet> proration rates and handling of unaccepted positions
with unique denominations;
<bullet> handling of baby bonds (target and entitlement
securities);
<bullet> maximum shares to be issued;
<bullet> amount of new Securities to be issued (specifying the
CUSIP number);
<bullet> amount of Securities to be returned (specifying the
CUSIP number); and
<bullet> amount of cash to be disbursed.
Securities that will be issued as the entitlement payment of the
Offer must have a CUSIP number and Agent must notify DTC of such
CUSIP number assigned to the new securities no less than 3 business
days prior to allocation of the entitlement if the security is
already DTC eligible. If the security is not DTC eligible, Agent
must provide all required documentation no later than 5 business
days prior to allocation of the entitlement security for DTC to
complete the eligibility process prior to allocation. Additional
eligibility processing time could be required dependent upon the
eligibility review and any requirements for additional
documentation, (e.g., legal opinion for a Non-US security) and
Issuer and Agent shall plan accordingly. See Section I, Eligibility
Requirements, as the
[[Page 30352]]
Securities will be subject to these standards and requirements.
2. Upon expiration and leading up to the payment of the
entitlements, Agent must provide additional information specific to
the positions and entitlements. In the event processing requires the
use of a spreadsheet as determined by DTC, Agent shall be
responsible for ensuring the accuracy of all details within the
spreadsheet, including agreeing to use a format specified by DTC and
providing the spreadsheet to DTC in advance of the anticipated
payment date to confirm it complies with DTC's formatting
requirements. The spreadsheet must include instruction level detail
(i.e., calculated for each Agent's Message input into ATOP) and
participant level detail and be password protected and encrypted
when emailed to DTC. DTC may require additional lead time to process
complex spreadsheets, (e.g., 2 business days prior to payment).
Agent must reconcile balances with DTC at least one business day
prior to the allocation of entitlements and must receive DTC
confirmation of the balances prior to wiring funds to DTC. The
timeframe required for Agent to provide DTC the final spreadsheet
will be included in the LOA for Agent's review and approval. Agent
must provide entitlements calculated at the instruction level and
when applicable, Agent must be able to provide DTC's participants
directly with instruction level detail.
3. In the event there is a default allocation for holders not
instructing, Agent must provide the opportunity to cash-out bulk
securities entitlements in order to appropriately process
entitlements of securities and cash (or cash-in-lieu) at the
beneficial holder level. (See Section VI (B) Fractional Entitlements
in Cash or Additional Roundup Shares.)''
(4) Renumber Existing ATOP Subsections
Pursuant to the proposed rule change, DTC would conform the
numbering of the subsections previously numbered VI.D.4.b.-4.f. to
become VI.D.4.d.-VI.D.4.h.
(5) New Section VI.D.5: Processing an ASOP-eligible Offer
Before Section VI.E. (Chargeback of Reorganization Payments), DTC
is proposing to insert a new Section VI.D.5, titled ``Processing an
ASOP-eligible Offer,'' a new subsection VI.D.5.a titled ``Participant
Acceptances of the ASOP-eligible Offer and Surrender of Rights through
ASOP,'' and a new subsection VI.D.5.b titled ``Instructions to
Surrender and Sell Rights Through ASOP.''
Proposed subsection VI.D.5.a. (Participant Acceptances of the ASOP-
eligible Offer and Surrender of Rights through ASOP) would describe the
general mechanics of a Participant's acceptance of an Offer through
ASOP, stating as follows:
``When a Participant submits an instruction to DTC for an ASOP-
eligible Offer, such as an acceptance and surrender of rights,
acceptance by submission of a protect, or a surrender of securities
as a cover of a protect, through ASOP, the ASOP system will
typically (x) process the Participant submission, and in the case of
an acceptance with surrender of rights or cover of a protect, effect
a book-entry delivery of the Participant's subject position in the
rights from Participant's account to the ATOP/ASOP Agent Account,
(y) debit the required subscription payment from the Participant's
account and credit the payment to the ATOP/ASOP Agent Account, and
(z) enter information about the submission (including the time of
the Participant's submission into DTC) into ASOP, and transmit an
Agent's Message to the Agent that indicates the Participant's
acceptance of the ASOP-eligible Offer and reflects the crediting of
the required subscription payment to the ATOP/ASOP Agent Account,
and, to the extent applicable, the book-entry delivery of the rights
into the ATOP/ASOP Agent Account.
The subscription payment indicated on the Agent's Message is
typically credited to the ATOP/ASOP Agent Account on the same day,
except where the Agent agrees to, or the Terms and Conditions of the
Offer provides for, different procedures with respect to payment.
Once the funds are credited to the ATOP/ASOP Agent Account, the
funds are usually wired to the Agent on the following business
day.''
Proposed subsection VI.D.5.a. would include a footnote that states:
``Depending on the terms of the Offer, the subscription payment may be
debited at the end of the Offer.''
Proposed subsection VI.D.5.b. (Instructions to Surrender and Sell
Rights Through ASOP) would describe the general mechanics of a
Participant selling rights through ASOP, stating as follows:
``For any ASOP-eligible Offer on which the Agent accepts
instructions to sell rights, when a Participant submits instructions
to sell rights through the Agent by means of ASOP, the ASOP system
will typically (x) process the Participant submission, (y) effect a
book-entry delivery of the Participant's position in the subject
rights from the Participant's account to the ATOP/ASOP Agent
Account, and (z) enter information about the submission (including
the time of the Participant's submission into DTC) into ASOP,
transmit an Agent's Message to the Agent that indicates the
Participant's instruction to sell rights, and reflect the book-entry
delivery of the rights into the ATOP/ASOP Agent Account.''
2. Statutory Basis
DTC believes these proposed changes are consistent with the
requirements of the Act, and the rules and regulations thereunder
applicable to DTC. Specifically, DTC believes that the proposed changes
are consistent with Section 17A(b)(3)(F) of the Act \27\ and Rules
17ad-22(e)(1) \28\ and 17ad-22(e)(21) \29\ under the Act.
---------------------------------------------------------------------------
\27\ 15 U.S.C. 78q-1(b)(3)(F).
\28\ 17 CFR 240.17ad-22(e)(1).
\29\ 17 CFR 240.17ad-22(e)(21).
---------------------------------------------------------------------------
Section 17A(b)(3)(F) of the Act requires, in part, that the Rules
be designed to promote the prompt and accurate clearance and settlement
of securities transactions.\30\ As described above, the proposed rule
change would (i) replace the discrete designations of an ATOP Agent and
ASOP Agent with a combined designation of an ATOP/ASOP Agent; (ii)
replace the discrete and separate agreements for ATOP Agents and ASOP
Agents with the consolidated and updated New Master Agreement; and
(iii) insert consolidated procedures for ATOP/ASOP Agents that
appropriately reflect the current processing of ATOP-eligible and ASOP-
eligible Offers. DTC believes that these proposed changes would provide
streamlined, transparent, and current procedures for ATOP/ASOP Agents,
thereby allowing Agents to more efficiently and effectively process
corporate action 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.
---------------------------------------------------------------------------
\30\ 15 U.S.C. 78q-1(b)(3)(F).
---------------------------------------------------------------------------
Rule 17ad-22(e)(1) under the Act requires DTC to establish,
implement, maintain and enforce written policies and procedures
reasonably designed to provide for a well-founded, clear, transparent,
and enforceable legal basis for each aspect of its activities in all
relevant jurisdictions.\31\ As described above, the proposed rule
change would provide (i) an updated agreement that DTC would enter into
with ATOP/ASOP Agents, and (ii) updated ATOP/ASOP Agent procedures,
which together would provide a clear, transparent, and enforceable
legal basis for, among other things (i) the ATOP/ASOP Agent's
acceptance of Participant elections without separate documentation such
as letters of transmittal or notices of guaranteed delivery, as well as
the enforceability of such Participant elections against the offeror;
(ii) the timeliness of Participant elections through ATOP/ASOP to be
determined by the time of submission; (iii) DTC's discretion to permit
ATOP and ASOP to be used for any Offer as DTC may deem appropriate;
(iv) DTC's right to terminate the agreement to make a
[[Page 30353]]
particular Offer ATOP-eligible or ASOP-eligible in the event that the
DTC becomes aware of a fact, factor, or circumstance about the Offer,
and DTC determines in its discretion that in light of such fact, factor
or circumstance, processing the Offer through ATOP or ASOP could
adversely affect the rights of DTC, Participants, or investors; and (v)
New York choice of law and venue. Based on the foregoing, DTC believes
that the proposed rule change is designed to provide for a well-
founded, clear, transparent, and enforceable legal basis necessary for
DTC's clearance and settlement of securities transactions associated
with Offers, consistent with Rule 17ad-22(e)(1) under the Act, cited
above.
---------------------------------------------------------------------------
\31\ 17 CFR 240.17ad-22(e)(1).
---------------------------------------------------------------------------
(B) Clearing Agency's Statement on Burden on Competition
DTC believes that the proposed rule change to amend the OA to
consolidate and update the documentation for Agents processing ATOP-
eligible Offers and ASOP-eligible Offers will not have any impact on
competition.\32\ The proposed rule change would provide procedures that
are more accessible, transparent, and reflective of current processes
and would apply to all ATOP/ASOP Agents equally. Any additional efforts
required on the part of Agents would be merely administrative, such as
entering into the New Master Agreement. In light of the foregoing, DTC
does not believe that the proposed rule change would impose a burden on
competition.\33\
---------------------------------------------------------------------------
\32\ 15 U.S.C. 78q-1(b)(3)(I).
\33\ 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="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#582c2a393c31363f39363c35392a333d2c2b182b3d3b763f372e"><span class="__cf_email__" data-cfemail="0e7a7c6f6a6760696f606a636f7c656b7a7d4e7d6b6d20696178">[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) \34\ of the Act and
Rule 19b-4(f)(6) \35\ thereunder.
---------------------------------------------------------------------------
\34\ 15 U.S.C 78s(b)(3)(A).
\35\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------
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#3f4d4a535a125c5052525a514b4c7f4c5a5c11585049"><span class="__cf_email__" data-cfemail="e193948d84cc828e8c8c848f9592a1928482cf868e97">[email protected]</span></a>. Please include
file number SR-DTC-2026-007 on the subject line.
Paper Comments
<bullet> Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
All submissions should refer to File Number SR-DTC-2026-007. 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 filing will be available for inspection and
copying at the principal office of DTC and on DTCC's website (<a href="https://www.dtcc.com/legal/sec-rule-filings">https://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
obscene or subject to copyright protection. All submissions should
refer to File Number SR-DTC-2026-007 and should be submitted on or
before June 12, 2026.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\36\
---------------------------------------------------------------------------
\36\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2026-10241 Filed 5-21-26; 8:45 am]
BILLING CODE 8011-01-P
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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.