Notice2026-17674
DTCC ITP LLC; Notice of Filing of Application for Exemption From Registration as a Clearing Agency Under Section 17A of 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
August 31, 2026
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 91 Issue 167 (Monday, August 31, 2026)</title>
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[Federal Register Volume 91, Number 167 (Monday, August 31, 2026)]
[Notices]
[Pages 55933-55939]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-17674]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-106203; File No. 600-46]
DTCC ITP LLC; Notice of Filing of Application for Exemption From
Registration as a Clearing Agency Under Section 17A of the Securities
Exchange Act of 1934
August 26, 2026.
I. Introduction
On September 18, 2025, DTCC ITP LLC (``DTCC ITP'' or ``Applicant'')
filed with the Securities and Exchange Commission (``Commission'') an
application (``Application'') on Form CA-1 seeking an exemption from
registration as a clearing agency pursuant to Section 17A of the
Securities Exchange Act of 1934 (``Exchange Act'').\1\ The Application
explains that DTCC ITP proposes to engage in a transaction involving
its wholly owned subsidiary, DTCC ITP Matching (``ITPM''), that will
result in DTCC ITP providing the central trade matching services \2\
and electronic trade confirmation (``ETC'') services that ITPM
currently provides pursuant to a conditional exemption from
registration as a clearing agency granted by the Commission in 2001
(``ITPM Exemption'').\3\ Accordingly, in its Application DTCC ITP seeks
an exemption from registration as a
[[Page 55934]]
clearing agency to provide these same services.\4\
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\1\ See 15 U.S.C. 78q-1; 17 CFR 240.17Ab2-1.
\2\ The term ``matching service'' as used here means an
electronic service to centrally match trade information between a
broker-dealer and its institutional customer. On April 6, 1998, the
Commission issued an interpretive release regarding matching
services (the ``Matching Release''). See Confirmation and
Affirmation of Securities Trades; Matching, Exchange Act Release No.
34-39829 (Apr. 6, 1998), 63 FR 17943 (Apr. 13, 1998). In the
Matching Release, the Commission concluded that ``matching
constitutes a clearing agency function within the meaning of the
clearing agency definition'' under Section 3(a)(23)(A) of the
Exchange Act; specifically, ``comparison of data respecting the
terms of settlement of securities transactions.'' See id., 63 FR at
17943; see also 15 U.S.C. 78c(a)(23)(A).
\3\ Global Joint Venture Matching Services--US, LLC; Order
Granting Exemption From Registration as a Clearing Agency, Exchange
Act Release No. 44188 (Apr. 17, 2001), 66 FR 20494 (Apr. 23, 2001)
(``ITPM Exemption'').
\4\ Application, Exhibit S. DTCC ITP subsequently amended its
application on September 23, 2025. The non-confidential exhibits of
its application are available for viewing on the Commission's
website at <a href="https://www.sec.gov/rules-regulations/commission-orders-notices/other-commission-orders-notices-information">https://www.sec.gov/rules-regulations/commission-orders-notices/other-commission-orders-notices-information</a>. All capitalized
terms that are not defined in this notice are defined in the
Application.
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The Commission is publishing this notice to solicit comments from
interested persons on the Application. The Commission will consider any
comments it receives in making its determination whether to grant DTCC
ITP's request for an exemption from registration as a clearing
agency.\5\
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\5\ Because DTCC ITP filed an application for an exemption from
registration (rather an application for registration) as a clearing
agency, the timing requirements in Section 19(a) of the Exchange Act
(``Section 19(a)'') do not apply. See 15 U.S.C. 78q-1(b)(2)
(applying the provisions of Section 19(a) to applications for
registration as a clearing agency).
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II. Background
DTCC ITP's wholly owned subsidiary, ITPM, has been providing
central matching and ETC services pursuant to the ITPM Exemption since
2001.\6\ As described more fully in Exhibit S, DTCC ITP proposes to
assume ITPM's role and obligations as a central matching services
provider and exempt clearing agency, so that eventually, ITPM may
withdraw its exemption status and be duly dissolved.\7\ As a result,
DTCC ITP intends to directly provide the services that had been
provided previously by its subsidiary. As part of this assumption of
ITPM's role, DTCC ITP would enter into agreements with the National
Securities Clearing Corporation (``NSCC'') and The Depository Trust
Company (``DTC'') to act as a Qualified Clearing Agency or Matching
Utility for purposes of managing interactions and instructions sent to
NSCC and DTC under their rules.\8\
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\6\ See supra note 3.
\7\ See Application, Exhibit S, at 7.
\8\ See Application, Exhibit S, at 9.
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III. Summary of the Applicant's Organization and Services
A. Organization
DTCC ITP states that it is a Delaware limited liability company
whose sole member (``Member'') is the Depository Trust & Clearing
Corporation (``DTCC''), a New York corporation.\9\ In its Application,
DTCC ITP states that its Amended and Restated Limited Liability Company
Agreement (``LLC Agreement'') would provide that its member, DTCC,
``shall have full discretion to manage and control the business and
affairs'' of DTCC ITP and to ``take all actions it deems necessary,
appropriate or convenient to accomplish the purpose of the DTCC ITP,''
except for power granted to the Board of Managers (``Board'') under the
LLC Agreement.\10\ DTCC ITP describes that the LLC Agreement provides
for up to 16 managers on the Board (each, a Manager), up to three of
whom are representatives of DTCC.\11\ DTCC ITP also describes that the
Board will have the powers set forth in the LLC Agreement and in the
proposed DTCC ITP LLC Board of Managers Charter.\12\
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\9\ See Application, Exhibit A, at 1. The Applicant became a
wholly owned subsidiary of DTCC on October 1, 2013, when DTCC and
Thomson Financial Inc. completed a transaction pursuant to which
DTCC acquired full ownership of Omgeo LLC (``Omgeo''). Omgeo's name
was changed to ``DTCC ITP LLC'' effective November 14, 2017.
\10\ See Application, Exhibit A, at 1.
\11\ See Application, Exhibit A, at 1.
\12\ See Application, Exhibit A, at 1.
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In the Application, DTCC ITP explains that it operates entirely
through its services agreements with DTCC (``Service Agreements'').\13\
DTCC ITP further explains that it has ``zero'' employees and that all
personnel who are engaged in or support the clearing agency activities
its Application describes are employed by DTCC or one DTCC's affiliate
entities acting as a service provider (``Service Provider'').\14\
Specifically, DTCC ITP states that approximately 60 full-time employees
provide dedicated support to DTCC ITP.\15\ DTCC ITP writes that it also
has two Executive Officers, the Principal and the General Manager, who
control the operation of its business.\16\
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\13\ See Application, Exhibit S, at 8.
\14\ See Application, Schedule A, at 3 (``Item 8(a)'').
\15\ See Application, Exhibit S, at 8.
\16\ See Application, Exhibit S, at 8; see also Exhibits A at 4;
B at 1-2; and C at 3-4.
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B. Description of Services in Application
1. Proposed Services
As described further in Exhibit J, DTCC ITP proposes to provide the
same services ITPM currently provides (collectively, the ``Client
Services'') to support post-trade allocation, confirmation, matching,
and affirmation of securities transactions for its clients.\17\ DTCC
ITP writes that its clients would comprise a ``broad array'' of
securities market participants.\18\ Specifically, DTCC ITP states these
clients would continue to include: (i) investment managers, investment
manager outsourcers, hedge funds, and other institutions (all,
``institutions''); (ii) broker-dealers (including brokers acting as
clearing brokers, brokers acting as agents or correspondents for other
brokers, and traditional executing brokers); (iii) custodians (and
brokers acting as custodians by providing prime brokerage services);
and (iv) agents (including parties without ``an active role in post-
trade processing but may have an interest in, or need access to the
[Client Services] for the administration of the allocation,
confirmation, matching, and/or allocation process'' (collectively,
``Clients'').\19\
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\17\ See Application, Exhibit J, at 1.
\18\ See Application, Exhibit J, at 1.
\19\ See Application, Exhibit J, at 1.
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DTCC ITP describes that its Client Services would continue to
consist of three (3) core services: (i) CTM (``a post-trade matching
service''); (ii) TradeSuite ID (``primarily a confirmation and
affirmation service''); and (iii) ALERT (``a global database of
securities, cash and collateral standing settlement
instructions'').\20\ As discussed further below, these core services
may involve additional functionality, depending on the subscription
type, as well as optional workflows and ``add-on or ancillary''
services.\21\ DTCC ITP writes that it will also continue to offer one
non-core service: ITP Integration Business Services, to assist its
clients to implement the Client Services.\22\
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\20\ See Application, Exhibit J, at 1.
\21\ See Application, Exhibit J, at 1.
\22\ See Application, Exhibit J, at 1.
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(a) CTM
In Exhibit J, DTCC ITP states that CTM is a central matching
platform used to allocate and centrally match securities transactions
post-trade.\23\ In Exhibit J, DTCC ITP describes CTM's process as
occurring between a broker-dealer (or ``confirming'') Client, and
institution (or ``instructing'') Client.\24\ After the Clients enter
the trade's block and allocation data into CTM, CTM compares and
matches (matching based on ``both mandatory and optional trade
data'').\25\
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\23\ See Application, Exhibit J, at 9.
\24\ See Application, Exhibit J, at 9.
\25\ See Application, Exhibit J, at 9.
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If CTM determines that all mandatory and optional trade data match,
then CTM sends a status message to each Client that is a party to the
trade and generates block and allocation matched status messages to
update each party to the trade.\26\ If data submitted by the Client
does not match for the mandatory and select optional matching fields,
then an exception occurs.\27\ If an exception occurs, CTM automatically
sends each party to the trade a notification message that provides the
matching status and provides each party to the trade the ability to
identify and
[[Page 55935]]
correct the trade.\28\ Once the trade matches in CTM, CTM automatically
sends messages to the parties to the trade.\29\ The parties to the
trade would then settle the trade outside of CTM. DTCC ITP states that
CTM does not stage trades for settlement and does not communicate
matched trades to any clearing agency for settlement.\30\
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\26\ See Application, Exhibit J, at 9.
\27\ See Application, Exhibit J, at 10.
\28\ See Application, Exhibit J, at 10.
\29\ See Application, Exhibit J, at 10.
\30\ See Application, Exhibit A, at 1.
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CTM's system includes ``additional functionality depending on the
subscription type.'' \31\ Such functionality includes archival
services: (i) Confirm Archive (allowing customers to electronically
search for match-agreed confirmations and cancel match-agreed
confirmations in a DTCC system that DTCC ITP uses for storing the
archived confirmations); \32\ and (ii) Trade Archive (allowing
institutional clients to access archived records of their trades and
trade related information).\33\ CTM's included system functionality
also includes ITP Data Analytics Operational Metrics (providing Clients
with metrics and analytics of operational performance (e.g., timeliness
of trade entry in CTM, type and count of trade exception reasons, and
timeliness of achieving a CTM match agreed status) with counterparties
over a quarterly, monthly, and weekly time period).\34\
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\31\ See Application, Exhibit J, at 1.
\32\ See Exhibit J, Application, Exhibit J, at 9; 13; 57.
\33\ See Exhibit J, Application, Exhibit J, at 13; 57.
\34\ See Exhibit J, Application, Exhibit J, at 14.
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DTCC ITP proposes to continue using the existing optional workflows
for CTM Clients, including: (i) Match to Instruct (``M2i,'' which
creates the TradeSuite ID confirmation on the broker-dealer's behalf,
including standing settlement instructions (``SSI'') enrichment, and
automatically affirms the trade if the trade matches against trade data
entered by the institution in CTM); \35\ (ii) CTM for Prime Broker
(enabling prime brokers to see trade and match status for trades they
will eventually have to settle); \36\ and (iii) ALERT SSI Enrichment
(enabling SSI enrichment into CTM) through either (A) standard ALERT
enrichment by clients providing a trade's ALERT Keys (``Country
Security, Method'') into CTM,\37\ or (B) through suggestions made by
the ALERT Key Auto Select (``AKAS,'' which uses CTM trade information
to derive the country and security type for a transaction and determine
a default depository),\38\ along with (C) the ASSIsT service (providing
institutions with an alternative mechanism to communicate account and
settlement instructions to broker-dealers).\39\
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\35\ See Exhibit J, Application, Exhibit J, at 47; 58-59.
\36\ See Exhibit J, Application, Exhibit J, at 1; 9; 22.
\37\ See Exhibit J, Application, Exhibit J, at 24.
\38\ See Exhibit J, Application, Exhibit J, at 24.
\39\ See Exhibit J, Application, Exhibit J, at 6.
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DTCC ITP also proposes to continue to offer the following add-on or
ancillary services to CTM Clients: (i) Settlement Instruction Manager
(giving the institution and broker-dealer Clients the ability to
automatically generate and send settlement instructions to custodians);
\40\ (ii) inSITE (storing confirmation disclosures in conjunction with
broker-dealers' use of TradeSuite ID or CTM); \41\ and (iii) ITP Data
Analytics Benchmarking (allowing comparison of matching performance
across peers).\42\
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\40\ See Exhibit J, Application, Exhibit J, at 9; 27; 54.
\41\ See Exhibit J, Application, Exhibit J, at 9; 30; 54; 72.
\42\ See Exhibit J, Application, Exhibit J, at 32; 45; 74.
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(b) TradeSuite ID
In Exhibit J, DTCC ITP states that TradeSuite ID ``automates the
electronic distribution of trade details between counterparties for
post-trade processing of DTC-eligible securities to facilitate
electronic settlement and Clients' regulatory compliance.'' \43\
TradeSuite ID uses various mandatory fields and optional fields (as
selected by the institution) contained within both allocation input and
broker confirmation (trade input) to determine a match.\44\ The trade
is only automatically affirmed if the institution and the executing
broker match on the financial terms of the trade.\45\ If the trade
details in a TradeSuite ID confirmation meet the required eligibility
criteria to determine if the trade is eligible to settle at DTC or
clear at NSCC, then TradeSuite ID will send a settlement instruction
message to the applicable depository or clearing agency.\46\
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\43\ See Exhibit J, Application, Exhibit J, at 33.
\44\ See Exhibit J, Application, Exhibit J, at 37.
\45\ See Exhibit J, Application, Exhibit J, at 37.
\46\ See Exhibit J, Application, Exhibit J, at 37.
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DTCC ITP states that ``Clients that use TradeSuite ID have access''
to the following archival services: \47\ (i) Confirm Archive (allowing
customers to electronically search for match-agreed confirmations and
cancel match-agreed confirmations in a DTCC system that DTCC ITP uses
for storing the archived confirmations); \48\ and (ii) Trade Archive
(allowing institutional clients to access archived records of their
trades and trade related information).\49\ DTCC ITP states that Clients
that use TradeSuite ID have access to ITS Data Analytics Operational
Metrics (providing Clients with analytics entered in TradeSuite ID and
the timeliness of affirmations).\50\
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\47\ See Exhibit J, Application, Exhibit J, at 40.
\48\ See Exhibit J, Application, Exhibit J, at 9; 13; 57.
\49\ See Exhibit J, Application, Exhibit J, at 13; 57.
\50\ See Exhibit J, Application, Exhibit J, at 40.
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Finally, DTCC ITP proposes to continue to allow Clients that use
TradeSuite ID to have access to inSITE as an add-on or ancillary
service.\51\
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\51\ See Exhibit J, Application, Exhibit J, at 40.
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(c) ALERT
DTCC ITP states that ALERT ``is a global database supporting the
input, maintenance, and retrieval of accounts (which maintain
underlying reference data points such as tax identifiers, country of
domicile, and Legal Entity Identifiers, which allows customers to
confirm available SSIs)'' available to Clients that either: (i) input
data into ALERT; or (ii) retrieve account and/or SSI data from
ALERT.\52\ DTCC ITP states that ALERT enables Clients to ``confirm SSIs
and whether accounts are ready for settlement.'' \53\ DTCC ITP does not
state that is proposing optional workflows or ancillary services
related to ALERT.\54\
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\52\ See Exhibit J, Application, Exhibit J, at 3.
\53\ See Exhibit J, Application, Exhibit J, at 3.
\54\ See Exhibit J, Application, Exhibit J, at 3.
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2. Risk Management
DTCC ITP states that, due to its Client Services and operations,
risk exposures, and the competitive landscape in which it operates,
risks are limited primarily to operational risk.\55\ DTCC ITP also
states that certain types of risks inherent in clearing activities
would not apply to DTCC ITP based on its Client Services.\56\
Specifically, DTCC ITP describes that it does not: (i) bear credit risk
or liquidity risk; (ii) maintain collateral or hold funds or
securities; (iii) perform final settlement; (iv) perform central
securities depository services or hold securities; or (v) work with
security-based swaps.\57\ Moreover, DTCC ITP states that it is not
subject to risks from indirect clients of its services.\58\
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\55\ See Application, Exhibit J, at 43.
\56\ See Application, Exhibit J, at 43.
\57\ See Application, Exhibit J, at 43.
\58\ See Application, Exhibit J, at 43.
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DTCC ITP also explains that its operations are supported by an
existing shared services model that DTCC uses to operate its multiple
subsidiaries.\59\ More specifically, DTCC ITP writes that its
operations are ``conducted entirely'' through support services
(``Support Services'') from other DTCC controlled
[[Page 55936]]
entities (i.e., Service Providers).\60\ DTCC ITP states that it manages
its operational risk by applying the DTCC Corporate Risk Framework.\61\
DTCC ITP states that the DTCC Corporate Risk Framework defines the risk
management program as applicable to DTCC, its clearing agency
subsidiaries (i.e., DTC, FICC, and NSCC), and its affiliate companies
(e.g., DTCC ITP).\62\ DTCC ITP explains that the DTCC Corporate Risk
Framework provides guidelines for managing risk, where ``each
identified risk is underscored by the `three lines of defense'
strategy:'' (i) the ``first line'' involves business lines and
functional units with a ``mandate to proactively manage risk;'' (ii)
the ``second line'' involves control functions (i.e., ``areas that fall
under the purview of the DTCC Chief Risk Officer, Legal, Privacy/Data
Protection, and Compliance'') that advise the first line ``to adhere to
established risk standards and to monitor compliance with those
standards;'' and (iii) the ``third line'' is the Internal Audit
Department that ``assesses the overall control environment, risk
management, and control framework.'' \63\ DTCC ITP explains that DTCC
Operational Risk is a Support Service that works with DTCC ITP to
``determine how to apply Risk Assessments and on-going reviews of
operational risk and business metrics to the Applicant.'' \64\
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\59\ See Application, Exhibit C, at 1.
\60\ See Application, Exhibit C, at 1.
\61\ See Application, Exhibit J, at 43.
\62\ See Application, Exhibit J, at 43.
\63\ See Application, Exhibit J, at 43-44.
\64\ See Application, Exhibit J, at 44.
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3. Approach to Technology and Systems
As described in Exhibit K, DTCC ITP employs various measures and
procedures to provide for the security of systems used when providing
the core and ancillary services.\65\ DTCC ITP states that DTCC
implements DTCC ITP's Information Security and IT Risk Management
Controls through Service Agreements with DTCC ITP.\66\ In addition, as
described in Exhibit M, DTCC ITP receives ``business continuity
management'' Support Services through Service Agreements with DTCC
entities for its data centers that operate across multiple regions.\67\
In its Application, DTCC ITP also explains that these services enable
it to effectively and efficiently assess the impact of a disruption,
organize communication and decision-making, and coordinate a response
effort, and include backup systems or subsystems designed to prevent
interruptions.\68\
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\65\ Application, Exhibit K, at 1.
\66\ Application, Exhibit K, at 1.
\67\ See Application, Exhibit M, at 1.
\68\ See Application, Exhibit M, at 1, 4.
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In its Application, DTCC ITP proposes to become an SCI entity
pursuant to Regulation Systems Compliance and Integrity (``Regulation
SCI'').\69\ The Application explains that, pursuant to the proposed
conditions to the exemption, DTCC ITP will be an SCI entity under
Regulation SCI.\70\ DTCC ITP states that ``as such, its systems will be
required to have sufficient operational and processing capacity,
integrity, resiliency, and security to facilitate prompt and accurate
services facilitating allocation and matching, confirmation, and
affirmation (including central trade matching services and ETC
services).'' \71\
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\69\ Id. (``If the Applicant is approved as an exempt clearing
agency, it will become an `SCI entity,' subject to the [Regulation
SCI] policies and procedures implemented by DTCC, as set forth
herein. DTCC performs functions for the Applicant to comply with
[Regulation SCI] obligations pursuant to the Services Agreements.'')
ITPM is also an SCI entity.
\70\ See Application, Exhibit S, at 31.
\71\ See Application, Exhibit S, at 31.
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IV. Statutory Standard
Section 17A(b)(1) of the Exchange Act requires any clearing agency
to register with the Commission before performing the functions of a
clearing agency with respect to any security (other than an exempted
security).\72\ Section 17A(b)(1) also provides that, by rule or order,
upon its own motion or upon application, the Commission may
conditionally or unconditionally exempt a clearing agency from any
provisions of Section 17A or the rules or regulations thereunder if the
Commission finds that such exemption is consistent with the public
interest, the protection of investors, and the purposes of Section 17A,
including the prompt and accurate clearance and settlement of
securities transactions and the safeguarding of securities and
funds.\73\
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\72\ See 15 U.S.C. 78q-1(b)(1); 17 CFR 240.17Ab2-1.
\73\ See 15 U.S.C. 78q-1(b)(1).
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In the Matching Release, the Commission stated that an entity that
limited its clearing agency functions to providing matching services
might not have to be subject to the full range of clearing agency
regulation, consistent with the exemptive authority provided in Section
17A(b)(1).\74\ The Commission stated that a conditional exemption would
exempt an entity from clearing agency registration under appropriate
conditions.\75\ The Commission anticipated that an entity seeking an
exemption from clearing agency registration for matching would be
required to: (i) provide the Commission with information on its
matching services and notice of material changes to its matching
services; (ii) establish an electronic link to a registered clearing
agency that provides for the settlement of its matched trades; (iii)
allow the Commission to inspect its facilities and records; and (iv)
make periodic disclosures to the Commission regarding its
operations.\76\
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\74\ See Matching Release, supra note 3, 63 FR at 17947.
\75\ See id. at 17947.
\76\ See id. at 17947 n.28.
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V. Request for Exemption
In its Application, DTCC ITP requests that the Commission grant a
conditional exemption to permit it to operate the services described in
Part III above without registering as a clearing agency for the reasons
discussed below.
A. Application of Statutory Standard
In its Application, DTCC ITP includes five reasons in support of
its request for an exemption from registration as a clearing agency, as
follows: \77\
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\77\ See Application, Exhibit S, at 2-3.
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<bullet> It proposes to perform the same limited clearing agency
activities that the Commission authorized ITPM to perform for the last
25 years. DTCC ITP states that there will be no expansion of clearing
agency activities resulting from the Application.
<bullet> In consideration of applicable changes in the regulation
of clearing agencies since the Commission granted the ITPM Exemption,
DTCC ITP states that it is prepared to adopt new controls and provide
greater transparency into its activities to ensure it can continue to
meet the needs of the market and its Clients.
<bullet> DTCC ITP states that its clearing agency functions are
limited to providing matching services. According to DTCC ITP, beyond
matching, the Client Services offered by the Applicant facilitate
allocation, confirmation, and affirmation, and facilitate straight
through processing, all of which precede final settlement. In DTCC
ITP's view, it is not necessary for DTCC ITP to be a self-regulatory
organization to meet its obligations with respect to this limited
clearing agency function and status as a central matching service
provider under 17 CFR 240.17ad-27 (``Rule 17Ad-27'').
<bullet> DTCC ITP states that its proposed limited clearing agency
activities do not implicate the overwhelming majority of clearing
agency rules, as such rules are largely designed for and applicable to
clearing agencies engaged in CCP or
[[Page 55937]]
CSD services; the handling, transfer, custody, or physical delivery of
funds or securities; final settlement services; the exercise of
disciplinary authority over members; and activities involving
significant credit and liquidity risks; among other activities.
<bullet> The Applicant states that the Commission will have
adequate authority to oversee, and even take action against, an exempt
clearing agency via annual reporting under Exchange Act Rule 17Ad-27,
and other reporting in the Applicant's proposed conditions tailored to
the Applicant's operations and business.\78\
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\78\ See id. at 2-3.
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Additionally, DTCC ITP cites the track record of ITPM's provision
of central matching services, including most recently through multiple
market structure changes and the shortening of the U.S. settlement
cycle on May 28, 2024.\79\ DTCC ITP states that ITPM played a key role
in the move to T+1 settlement and did so effectively as an exempt
clearing agency.\80\ DTCC ITP also states that ITPM played a similarly
important and effective role as an exempt clearing agency in the move
from T+3 to T+2 in 2017, and it is not necessary that DTCC ITP register
as a clearing agency to continue to provide post-trade processing
services in a T+1 environment.\81\ The Application explains that
imposing the full range of regulation that applies to clearing agencies
that perform CSD and CCP services would unnecessarily increase
compliance and related costs (that could lead to increased fees to
customers) and reduce the efficiency of entities that perform only
post-trade processing services.\82\
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\79\ See Application, Exhibit S, at 35.
\80\ See Application, Exhibit S, at 26.
\81\ See Application, Exhibit S, at 27.
\82\ See Application, Exhibit S, at 27.
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In its request, DTCC ITP summarizes past Commission views,
expressed in the Matching Release, that matching services concerns two
areas that the Commission and the securities industry view as critical
to maintaining a sound clearance and settlement system: reducing errors
and reducing the amount of settlement time.\83\ The Application
describes the Commission's statement in the Matching Release that an
entity that limits its clearing agency functions to providing matching
services does not have to be subject to the full range of clearing
agency regulations, and states that DTCC ITP would also be limiting its
clearing agency functions in the same manner.\84\ The Application
explains that, pursuant to the proposed conditions to the exemption,
DTCC ITP will be an SCI entity under Regulation SCI and, as such, its
systems will be required to have sufficient operational and processing
capacity, integrity, resiliency, and security to facilitate prompt and
accurate services facilitating allocation and matching, confirmation,
and affirmation (including central trade matching services and ETC
services).\85\ Finally, the Applicant states that it maintains primary
responsibility for appropriate governance and control measures, while
also benefiting from the support of its Service Providers, from which
it can leverage experience and robust practices related to governance
and control measures.\86\
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\83\ See Application, Exhibit S, at 15.
\84\ See Application, Exhibit S, at 22.
\85\ See Application, Exhibit S, at 31.
\86\ See Application, Exhibit S, at 32.
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The Applicant states that these arrangements will help ensure that
the Applicant operates in a matter that is consistent with the public
interest.\87\ For example, the Applicant states its services agreements
require Service Providers to provide qualified and competent personnel
and provide it the right to require removal of any personnel provided
by Service Provider for unsatisfactory performance.\88\ The Applicant
also states that the Services Agreements require the Service Provider
to cause its personnel to comply with the Applicant's policies,
procedures, and code of conduct and to be subject to reasonable
background checks, providing the Applicant with control of the
personnel who provide Support Services to it and the conditions to
which the performance of the Support Services is subject.\89\
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\87\ See Application, Exhibit S, at 32.
\88\ See Application, Exhibit S, at 26.
\89\ See Application, Exhibit C, at 2.
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B. Conditions to Exemption
The Applicant explains that, while it is a new applicant with
respect to this Application and request for exemption, CTM and
TradeSuite ID are existing services that the Applicant will incorporate
into its operations and that will remain unchanged upon the completion
of the Proposed Transaction in terms of their client base and core
services functionality.\90\ In its Application, DTCC ITP represents
that the addition of the direct provision of central trade matching and
ETC services to the Applicant's existing suite of services will not
result in the Applicant offering any additional services that the
Commission has indicated are clearing agency services--beyond central
trade matching (and central trade matching is an activity of the type
that the Commission has previously considered and specifically
determined to be appropriate for exempt clearing agencies rather than
requiring clearing agency registration).\91\ DTCC ITP also states that,
as with ITPM today, the requested conditional exemption order would
specify that the Applicant would not perform the other functions of a
clearing agency (e.g., no CCP or CSD services, no payment or
delivery).\92\
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\90\ See Application, Exhibit S, at 129.
\91\ Id.
\92\ Id.
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In support of its request for an exemption from registration, the
Applicant proposes a new set of conditions, as set forth below, that
relate to: (i) the operations of the services described in its
Application (the ``Proposed Operational Conditions''); and (ii) the
interoperability with the services described in its Application (the
``Proposed Interoperability Conditions''),with which it would comply if
its request for an exemption from registration is granted.\93\ The
Applicant explains that these changes have been designed following
review of Commission rules applicable to clearing agencies adopted
since the granting of the ITPM Exemption and other standards that apply
to DTCC's registered clearing agency subsidiaries,\94\ and that they
are designed to provide greater oversight and transparency into the
Client Services, including operations, governance, and key
agreements.\95\
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\93\ See Application, Exhibit S, at 32-35.
\94\ See Application, Exhibit S, at 2 (citing to Commission
rules for registered clearing agencies under 17 CFR 240.17ad-22 and
the CPMI-IOSCO Principles for Financial Market Infrastructures,
published in 2012).
\95\ See Application, Exhibit S, at 2.
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1. Proposed Operational Conditions
DTCC ITP proposes the following operational conditions as part of
its request for an exemption from registration as a clearing agency:
1. The Applicant will offer Client Services to facilitate the
allocation and matching, confirmation, and affirmation of securities
transactions (including central trade matching and ETC services). The
Applicant will not perform any other clearing agency function (such as
net settlement, maintaining a balance of open positions between buyers
and sellers, or marking securities to the market) other than as
permitted by the previous sentence.\96\
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\96\ See Application, Exhibit S, at 32.
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2. The Applicant will be subject to Regulation SCI (as the
successor rule to
[[Page 55938]]
the Commission's ARP) as an exempt clearing agency.\97\
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\97\ See Application, Exhibit S, at 32. In reproducing the
proposed conditions in this notice, the notice replaces instances of
``SEC'' with ``Commission'' to avoid confusion and ensure
consistency with usage throughout this notice. The notice also
replaces uses of ``Reg SCI'' with ``Regulation SCI'' to avoid
confusion and ensure consistency with usage throughout this notice.
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3. The Applicant's Board will include representation from its
Client segments, and a majority of the Applicant's Board will consist
of Industry Managers.\98\
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\98\ See Application, Exhibit S, at 32.
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4. The Applicant's Board will oversee management's compliance with
the CMSP rules.\99\
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\99\ See Application, Exhibit S, at 33. Commission rules for
CMSPs are codified in Rule 17Ad-27.
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5. The Applicant's Board will review reporting on ongoing
monitoring of arrangements with the Significant ITP Service Providers,
and any action taken by the Applicant to remedy significant
deterioration in performance or address changing risks or material
issues identified through such monitoring.\100\
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\100\ See Application, Exhibit S, at 33.
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6. The Applicant will establish, implement, maintain and enforce
written policies and procedures reasonably designed to:
a. require the Board to review reporting from the Applicant's
Regional Advisory Councils, which include Clients and other relevant
stakeholders, regarding material developments in operations on a
recurring basis;
b. to identify, monitor, and manage risks related to any link the
Applicant establishes with one or more other clearing agencies; and
c. to support and accommodate, relevant internationally accepted
communication procedures and standards in order to facilitate the
allocation and matching, confirmation, and affirmation of securities
transactions (including central trade matching and ETC services).\101\
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\101\ See Application, Exhibit S, at 33.
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7. The Applicant will establish, implement, maintain and enforce
written policies and procedures, systems, and controls, reasonably
designed to identify, measure, mitigate, monitor, and manage legal,
operational, and general business risks, that are subject to review on
a periodic basis.\102\
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\102\ See Application, Exhibit S, at 33.
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8. The Applicant will:
a. respond and require the Service Providers to respond to requests
from the Commission for additional information relating to Client
Services that facilitate the allocation and matching, confirmation, and
affirmation of securities transactions and provide access to the
Commission to conduct on-site inspections of all facilities (including
automated systems and systems environment), records, and personnel
related to the Client Services. The Applicant proposed that such
requests for information will be made and the inspections will be
conducted solely for the purpose of reviewing the Client Services
operations that facilitate the allocation and matching, confirmation,
and affirmation of securities transactions (including central trade
matching and ETC services), and compliance with the federal securities
laws and the terms and conditions of the exemptive order; and
b. (i) keep and preserve at least one copy of the allocations and
matching, confirmations, and affirmations of securities transactions;
reports and notices sent to Clients or to the Commission; Client
Contracts; Procedures (as defined in the Client Contracts);
Intercompany Agreements; and agreements with Significant ITP Service
Providers, in each case as they pertain to the Client Services to
facilitate the allocation and matching, confirmation, and affirmation
of securities transactions (including central trade matching and ETC
services); (ii) keep all such documents for a period of not less than
five years, the first two years in an easily accessible place; and
(iii) upon request from any representative of the Commission, promptly
furnish such representative copies of any such documents required to be
kept and preserved by the Applicant pursuant to this condition.\103\
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\103\ See Application, Exhibit S, at 33-34.
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9. The records that the Applicant will be required to keep pursuant
to Proposed Operational Condition 8.b will be subject at any time, or
from time to time, to such reasonable periodic, special, or other
examinations by the Commission as the Commission deems necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the Exchange Act.\104\
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\104\ See Application, Exhibit S, at 34.
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10. The Applicant will permit fair and open access to the Client
Services subject to transparent eligibility criteria for the use of any
Client Services, providing that an entity may become a Client so long
as the Client completes the appropriate legal terms and conditions
governing the Client's use of the Client Services. The Applicant's
parent conducts sanctions screenings against various watch lists and
collects certain documents from Clients for purposes of Client
verification.\105\
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\105\ See Application, Exhibit S, at 34.
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11. The Applicant will, on at least a quarterly basis, within 45
calendar days after the end of each calendar quarter, update the
Commission on the following (other than reporting pursuant to
Regulation SCI), including relevant dates: (i) changes to the DTCC ITP
Services Catalog, as updated from time to time pursuant to the
Applicant's applicable policies and procedures; (ii) changes to pricing
that would result in an introduction of a new Fee (as such term is
defined in the Client Contracts), a retirement or removal of an
existing Fee, an increase to a Fee, or a decrease of a Fee for Client
Services to facilitate the allocation and matching, confirmation, and
affirmation of securities transactions (including central trade
matching and ETC services); (iii) the current STP Roadmap for the
quarter, and rationale for significant changes to the STP Roadmap; (iv)
changes which require Client notification pursuant to the Applicant's
applicable policies and procedures, (including, without limitation,
changes to interface requirements, upgrades, or changes to fields that
Clients must populate in the Client Services), to the extent not
covered in condition 11(i); (v) changes to: (a) Intercompany
Agreements; (b) the Charter; (c) the LLC Agreement; (d) DTCC's sole
ownership and control of the Applicant; (e) forms of the Applicant's
Client Contracts; and (f) eligibility criteria. For the avoidance of
doubt, the changes above will not require the Commission's approval
before they are implemented.\106\
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\106\ See Application, Exhibit S, at 34-35.
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12. The Applicant will provide to the Commission, on a confidential
basis, its annual audited financial statements on or before June 30th
of the year immediately following the end of the fiscal year being
audited, which will: (i) include two years of consolidated balance
sheets as of the end of the two most recent fiscal years, statements of
income, changes in stockholders' equity, and cash flow statements for
each of the two most recent fiscal years; (ii) be prepared in
accordance with U.S. generally accepted accounting principles; (iii) be
audited in accordance with the standards of the Public Company
Accounting Oversight Board by a registered public accounting firm that
is qualified and independent in accordance with 17 CFR 210.2-01; and
(iv) include a report of the registered public accounting firm that
complies with paragraphs (a) through (d) of 17 CFR 210.2-02.\107\
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\107\ See Application, Exhibit S, at 35.
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[[Page 55939]]
2. Proposed Interoperability Conditions
The Applicant proposed the following interoperability conditions to
its request for an exemption from clearing agency registration:
1. The Applicant will maintain an interface which permits
connections to any exempt clearing agency that wishes to utilize the
Applicant's central trade matching service (``Interface'') with
specifications that support industry standards and are available in a
readily accessible location.\108\
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\108\ See Application, Exhibit S, at 35.
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2. Upon receipt of a written interoperability request, the
Applicant will work to complete all steps reasonably necessary for any
exempt clearing agency to establish a connection to the Interface in a
timely and efficient manner.\109\
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\109\ See Application, Exhibit S, at 35.
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3. The Applicant will institute fair, reasonable, and non-
discriminatory fees and terms for use of the Interface.\110\
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\110\ See Application, Exhibit S, at 35.
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4. The Applicant will provide access to the Interface: (i) on a
first-in-time priority basis with respect to activity between the
Applicant's Clients and the clients of other exempt clearing agencies;
and (ii) without bias in performance relative to similar transactions
processed completely within the Applicant's systems.\111\
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\111\ See Application, Exhibit S, at 35.
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5. The Applicant will provide its Clients, other exempt clearing
agencies, and the Commission with advance notice of material changes to
the Interface.\112\
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\112\ See Application, Exhibit S, at 35.
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VI. Request for Written Comments
Interested persons are invited to provide written data, views, and
arguments concerning the foregoing, including whether the Application's
proposed exemption is consistent with the public interest, the
protection of investors, and the purposes of Section 17A of the
Exchange Act. To the extent possible, commenters are requested to
provide empirical data and other factual support for their views. In
addition, the Commission seeks comment generally on the following
questions relevant to the consideration of the Application:
1. Since the Commission issued the ITPM Exemption in 2001, has
ITPM, as subsidiary of DTCC ITP, provided central trade matching
services and operated consistent with the public interest, the
protection of investors, and the purposes of the Exchange Act? Why or
why not? To what extent has ITPM's provision of central trade matching
services affected the ongoing development of the national system for
clearance and settlement?
2. Would the provision of central trade matching and ETC services
by the Applicant using the same set of operational arrangements and
framework for service agreements as ITPM, as described in the
Application, be consistent with the public interest, the protection of
investors, and the purposes Section 17A of the Exchange Act? Why or why
not?
3. Does DTCC ITP's proposed set of new conditions adequately
reflect the evolution since 2001 of the services provided, DTCC ITP's
role within the broader market structure for facilitating central
matching, and DTCC ITP's potential impact on the securities market? If
not, please explain the ways in which DTCC ITP's proposed approach does
not sufficiently address this evolution, including what issues or areas
have not been sufficiently addressed.
4. Are the Applicant's Proposed Operational Conditions consistent
with the public interest, the protection of investors, and the purposes
of Section 17A of the Exchange Act, including the prompt and accurate
clearance and settlement of securities transactions and the
safeguarding of securities and funds? To the extent the proposed
approach differs from the set of conditions in the existing ITPM
Exemption, are those changes sufficiently designed to be consistent
with the public interest, the protection of investors, and the purposes
of Section 17A of the Exchange Act? If not, why not?
5. Are the Applicant's Proposed Interoperability Conditions
consistent with the public interest, the protection of investors, and
the purposes of Section 17A of the Exchange Act, including the prompt
and accurate clearance and settlement of securities transactions and
the safeguarding of securities and funds? To the extent the proposed
approach differs from the set of conditions in the existing ITPM
Exemption, are those changes sufficiently designed to be consistent
with the public interest, the protection of investors, and the purposes
of Section 17A of the Exchange Act? If not, why not?
6. Are the Applicant's Proposed Interoperability Conditions
designed to promote innovation and to facilitate competition among
central trade matching and ETC service providers?
7. Are there any aspects of the services provided by ITPM and
proposed to be provided by DTCC ITP directly, or aspects of DTCC ITP's
Application, that support modifying or revising the interpretations
provided by the Commission in the Matching Release? If so, in what ways
or how?
8. Are there any aspects of the services provided by ITPM and
proposed to be provided by DTCC ITP directly that would support
applying Commission rules other than Regulation SCI and Rule 17Ad-27?
For example, should the recordkeeping requirements for registered
clearing agencies under 17 CFR 240.17a-1 be applied to DTCC ITP as a
central matching service provider? Are there other rules that should
apply to DTCC ITP, and, if so, why?
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#daa8afb6bff7b9b5b7b7bfb4aea99aa9bfb9f4bdb5ac"><span class="__cf_email__" data-cfemail="6715120b024a04080a0a020913142714020449000811">[email protected]</span></a>. Please include
file number 600-46 on the subject line.
Paper Comments
<bullet> Send paper comments to Secretary, Securities and Exchange
Commission, 100 F Street NE, Washington, DC 20549-1090.
To help the Commission process and review your comments more
efficiently, please use only one method of submission. The Commission
will post all comments on the Commission's internet website (<a href="https://www.sec.gov/rules-regulations/commission-orders-notices/other-commission-orders-notices-information">https://www.sec.gov/rules-regulations/commission-orders-notices/other-commission-orders-notices-information</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 600-46 and should be submitted on or before
October 15, 2026.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\113\
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\113\ 17 CFR 200.30-3(a)(16).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2026-17674 Filed 8-28-26; 8:45 am]
BILLING CODE 8011-01-P
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