Self-Regulatory Organizations; The Depository Trust Company; Notice of Filing of Proposed Rule Change To Modernize the Direct Registration System

Issuing agencies

Full Text

<html>
<head>
<title>Federal Register, Volume 91 Issue 191 (Monday, October 5, 2026)</title>
</head>
<body><pre>
[Federal Register Volume 91, Number 191 (Monday, October 5, 2026)]
[Notices]
[Pages 63327-63333]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-20301]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-106552; File No. SR-DTC-2026-012]


Self-Regulatory Organizations; The Depository Trust Company; 
Notice of Filing of Proposed Rule Change To Modernize the Direct 
Registration System

September 30, 2026.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Exchange Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby 
given that on September 29, 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. 
The Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Clearing Agency's Statement of the Terms of Substance of the 
Proposed Rule Change

    The proposed rule change \3\ consists of amendments to the Deposits 
Guide \4\ and the Fee Guide in connection with DTC's modernization of 
its Direct Registration System (``DRS''). The proposed rule change 
would update the Deposits Guide to (i) add a DRS section describing the 
availability of DRS through DTC's Securities Processing Application 
(``SPA'') via the DTCC Portal, as well as through an application 
programming interface (``API'') or message queue (``MQ'') based 
messaging; (ii) describe the processing of DRS Profile Deposit 
Requests, DRS Deliver Orders, and DRS Withdrawal by Transfer 
instructions; (iii) document the existing requirement that DRS Profile 
Deposits require Profile Surety \5\ to be processed by DTC; (iv) 
describe pass-through fees, as defined below, and the use of DTC's 
Centralized Billing to collect and remit such fees, including an 
associated DTC charge for applicable DRS Profile Deposit Requests; (v) 
describe the assignment of Transaction Status values in SPA and 
maintenance of an audit trail of status changes, including where to get 
additional information on DRS functionality; and (vi) provide a 
navigation table for SPA functionality.
---------------------------------------------------------------------------

    \3\ Each term not otherwise defined herein has its respective 
meaning as set forth in the Deposits Service Guide (``Deposits 
Guide''), the Guide to the DTC Fee Schedule (``Fee Guide''), or the 
Rules, By-Laws and Organization Certificate of The Depository Trust 
Company (``DTC Rules''), each available at <a href="http://www.dtcc.com/legal/rules-and-procedures">http://www.dtcc.com/legal/rules-and-procedures</a>.
    \4\ The Deposits Guide is a Procedure of DTC. Pursuant to the 
DTC Rules, the term ``Procedures'' means the Procedures, service 
guides, and regulations of DTC adopted pursuant to DTC Rule 27, as 
amended from time to time. DTC Rule 1, Section 1, supra note 3. 
DTC's Procedures are binding on DTC and each Participant in the same 
manner that they are bound by the DTC Rules.
    \5\ The Profile Surety Program is a DTC-administered program 
under which a Participant submitting a DRS Profile Deposit Request 
must obtain a surety bond supporting the Participant's indemnity 
relating to the instruction. The indemnity covers, among other 
things, the Participant's representations that it has authority and 
consent for the instruction and that the information provided is 
accurate and complete. A Participant may obtain the surety bond from 
the surety provider selected by DTC to administer the program or 
from another qualifying surety provider selected by the Participant, 
provided that the bond satisfies DTC's requirements. See Securities 
Exchange Act Release No. 42704 (Apr. 19, 2000), 65 FR 24242 (Apr. 
25, 2000) (SR-DTC-00-04) (establishing Profile and the related 
screen-based indemnities); also see Securities Exchange Act Release 
No. 43586 (Nov. 17, 2000), 65 FR 70745 (Nov. 27, 2000) (SR-DTC-00-
09) (establishing the Profile Indemnity Surety Program).
---------------------------------------------------------------------------

    The proposed rule change would update the Fee Guide to (i) expand 
DTC's existing Centralized Billing service for DRS transactions \6\ to 
require DRS Agents' use of Centralized Billing when an agent elects to 
impose a fee in connection with a DRS transaction (i.e., a ``pass-
through fee''), and (ii) establish a DTC charge for when DTC collects 
and remits a pass-through fee in connection with certain DRS Profile 
Deposit Request transactions.
---------------------------------------------------------------------------

    \6\ See Securities Exchange Act Release No. 53679 (Apr. 19, 
2006), 71 FR 24770 (Apr. 26, 2006) (SR-DTC-2006-05).
---------------------------------------------------------------------------

II. Clearing Agency's Statement of the Purpose of, and Statutory Basis 
for, the Proposed Rule Change

    In its filing with the Commission, the clearing agency included 
statements concerning the purpose of and basis for the proposed rule 
change and discussed any comments it received on the proposed rule 
change. The text of these statements may be examined at the places 
specified in Item IV below. The clearing agency has prepared summaries, 
set forth in sections A, B, and C below, of the most significant 
aspects of such statements.

(A) Clearing Agency's Statement of the Purpose of, and Statutory Basis 
for, the Proposed Rule Change

1. Purpose
    The proposed rule change would amend the Deposits Guide and the Fee 
Guide in connection with DTC's modernization of DRS. The proposed rule 
change would update the Deposits Guide to (i) add a DRS section

[[Page 63328]]

describing the availability of DRS through SPA via the DTCC Portal, as 
well as through API or MQ based messaging; (ii) describe the processing 
of DRS Profile Deposit Requests, DRS Deliver Orders, and DRS Withdrawal 
by Transfer instructions; (iii) document the existing requirement that 
DRS Profile Deposits require Profile Surety to be processed by DTC; 
(iv) describe pass-through fees, as defined below, and the use of DTC's 
Centralized Billing to collect and remit such fees, including an 
associated DTC charge for applicable DRS Profile Deposit Requests; (v) 
describe the assignment of Transaction Status values in SPA and 
maintenance of an audit trail of status changes, including where to get 
additional information on DRS functionality; and (vi) provide a 
navigation table for SPA functionality.
    The proposed rule change would update the Fee Guide to (i) expand 
DTC's existing Centralized Billing service for DRS transactions \7\ to 
require DRS Agents' use of Centralized Billing when an agent elects to 
impose a fee in connection with a DRS transaction (i.e., a ``pass-
through fee''), and (ii) establish a DTC charge for when DTC collects 
and remits a pass-through fee in connection with certain DRS Profile 
Deposit Request transactions.
---------------------------------------------------------------------------

    \7\ See Securities Exchange Act Release No. 53679 (Apr. 19, 
2006), 71 FR 24770 (Apr. 26, 2006) (SR-DTC-2006-05).
---------------------------------------------------------------------------

Background

    DRS is a DTC service that enables investors \8\ to hold their DRS 
eligible securities (``DRS Securities'') \9\ either indirectly, through 
DTC's book-entry holding model (a/k/a, holding in ``street name,'') or 
directly on the books of the Issuer's transfer agent if the transfer 
agent is a DTC DRS Agent, with the ability to transfer DRS Securities 
between the two holding structures without the issuance of a paper 
certificate.\10\
---------------------------------------------------------------------------

    \8\ When holding securities indirectly through DTC, an 
individual investor is considered a ``beneficial owner,'' who is the 
customer of a DTC Participant and possesses the beneficial interest 
in a security, while legal title to the security is held through 
DTC's nominee, Cede & Co. The beneficial interest in the security is 
passed down from DTC, through the DTC Participant (e.g., the 
customer's broker-dealer), to the customer who is the actual 
investor. When holding securities directly with an Issuer's transfer 
agent, the investor is considered the ``registered owner,'' as the 
investor is specifically named as the owner of the securities on the 
transfer agent's books and records.
    \9\ ``DRS Securities'' are securities accepted by DTC as 
Eligible Securities pursuant to DTC Rule 5 and made eligible for, 
and participating in, DRS through the FAST Program. For DRS 
Securities, investors may hold their positions directly on the books 
of the issuer's transfer agent or indirectly through DTC and its 
Participants and may transfer their positions between those two 
holding structures. See DTC Rule 5, Section 1, supra note 3; DTC 
Operational Arrangements (``DTC OA''), Section II.B.2.a (FAST), 
available at <a href="https://www.dtcc.com/legal/rules-and-procedures">https://www.dtcc.com/legal/rules-and-procedures</a>.
    \10\ See DTC OA, Section II.B.2.a (FAST) (describing DRS as 
permitting an investor to hold a security directly on the books of 
the issuer's transfer agent, rather than indirectly through a 
securities intermediary or in certificated form, and to transfer the 
position between direct and indirect holding through DTC and its 
Participants), available at <a href="https://www.dtcc.com/legal/rules-and-procedures">https://www.dtcc.com/legal/rules-and-procedures</a>.
---------------------------------------------------------------------------

    To move DRS Securities from an investor's account at a DRS Agent, 
where the shares are registered in the name of the investor, to a 
Participant's account at DTC registered in the name of DTC's nominee, 
Cede & Co. (``Cede''), the Participant must submit a DRS Profile 
Deposit Request to DTC, which must be approved by the DRS Agent. 
Following approval by the DRS Agent, the shares are reregistered to 
Cede and moved from the DRS Agent to DTC, where it credits the shares 
to the Participant's account at DTC. If rejected, the transaction 
status is updated with the reason for the rejection, and the 
Participant is notified.
    Alternatively, an investor may instruct its DRS Agent directly to 
transfer DRS Securities to the investor's account with a Participant. 
In that case, the DRS Agent creates a DRS Deliver Order without a DRS 
Profile Deposit Request. The DRS Deliver Order is completed through 
DTC's standard Deliver Order process and does not require the receiving 
Participant to take any action to approve or accept the Deliver Order; 
however, the receiving Participant may reject the Deliver Order after 
receipt.
    A Participant may submit a DRS Withdrawal by Transfer instruction 
requesting that shares be removed from the Participant's free position 
at DTC and credited to the investor's account, in the investor's name, 
at the DRS Agent. Only a Participant may initiate a DRS Withdrawal by 
Transfer instruction. An investor seeking to move shares from Cede's 
name to the investor's account at the DRS Agent must request the 
withdrawal through its Participant. Upon the DRS Agent's approval of a 
DRS Withdrawal by Transfer request, the shares are moved out of Cede's 
name, and into the investor's name, and credited to the investor's DRS 
account maintained on the DRS Agent's books. If the request is 
rejected, the transaction status is updated with the reason for the 
rejection and the participant is notified.
    Under the current transfer process, Participants and DRS Agents 
utilize a combination of legacy applications, including Participant 
Terminal System (``PTS'') and Participant Browser Service (``PBS'') 
functions,\11\ CCF batch-file processing, multiple steps, and manual 
operational processes to submit, review, approve, and complete DRS 
transfers. These processes can increase operational complexity and 
extend transaction processing timeframes.
---------------------------------------------------------------------------

    \11\ PTS refers to DTC's legacy TN3270 terminal access method, 
and PBS refers to DTC's Participant Browser Service, each of which 
provides access to certain DTC functions and services.
---------------------------------------------------------------------------

    With respect to the collection of DRS Agent pass-through fees, DTC 
currently provides Centralized Billing for fees associated with 
incomplete DRS Profile Deposit Requests rejected by DRS Agents and fees 
associated with completed Deposits and Withdrawal at Custodian (DWAC) 
transactions. Whereas other DRS Agent pass-through fees are invoiced by 
DRS Agents to Participants and collected and remitted outside DTC.
DRS Modernization
    The proposed DRS modernization is designed to support a more 
automated and streamlined DRS transaction lifecycle, reducing 
transaction processing times from days to minutes. As part of the 
modernization, DTC would retire the PTS and PBS functions currently 
used to access certain DRS functionality and CCF batch-file processing 
as operational methods for certain DRS transactions. Instead, DRS would 
be available for human-to-machine processing through SPA via the DTCC 
Portal, and for machine-to-machine processing through API and MQ-based 
messaging. These new access methods would enable Participants and DRS 
Agents to more efficiently and effectively submit, review, approve, 
reject, and monitor DRS transfer instructions.
    The enhanced process would automate the creation of the related 
Deliver Order following a DRS Agent's approval of a DRS Profile Deposit 
Request (eliminating the separate step currently required for the DRS 
Agent to also initiate the Deliver Order following approval of the 
Participant's request), assign Transaction Status values in SPA that 
reflect the disposition of each instruction throughout its lifecycle, 
and maintain an audit trail of status changes.\12\
---------------------------------------------------------------------------

    \12\ Transaction Status values and audit-trail information would 
apply to instructions submitted or acted upon through the DTCC 
Portal, API, or MQ-based messaging, except that certain Transaction 
Status values associated with maker/checker functionality would 
apply only to transactions processed through the DTCC Portal.
---------------------------------------------------------------------------

    In response to the industry's request, the enhanced process would 
also

[[Page 63329]]

facilitate the collection of additional DRS Agent pass-through fees 
through the expansion of DTC's Centralized Billing service and the 
assessment of any related DTC charges. As part of the proposed 
modernization, where a DRS Agent elects to impose an applicable pass-
through fee in connection with a DRS transaction, the fee must be 
collected and remitted through DTC's Centralized Billing service.
    By enabling DRS processing through SPA via the DTCC Portal and 
through API and MQ-based messaging, the enhanced process would 
eliminate reliance on legacy PTS and PBS functions and CCF batch-file 
processing for certain DRS transactions, reduce reliance on other 
legacy applications and scheduled file transmissions, reduce manual 
processing activities by Participants and DRS Agents, and eliminate the 
separate step currently required for the DRS Agent to initiate the 
applicable Deliver Order following approval of a DRS Profile Deposit 
Request. The expansion of Centralized Billing would reduce reliance on 
invoicing and payment remittance processes conducted between DRS Agents 
and Participants outside DTC.
    Although the proposed modernization of DRS would provide for more 
efficient DRS processing, the service would still rely on actions and 
timelines outside of DTC's control. For example, once a transfer 
instruction is submitted into the DRS workflow, processing of that 
instruction would remain subject to applicable validations and any 
required action by the DRS Agent.\13\ Accordingly, DRS modernization is 
designed to reduce processing latency at DTC, but it does not eliminate 
the actions required by DRS Agents to complete the applicable transfer.
---------------------------------------------------------------------------

    \13\ For a DRS Profile Deposit Request and a DRS Withdrawal by 
Transfer instruction, the DRS Agent would still need to review and 
approve or reject the request, and, accordingly, transfer the shares 
in/out of Cede's name or in/out of the investor's name on the DRS 
Agent's books.
---------------------------------------------------------------------------

Proposed Rule Changes
    To effectuate the proposed rule change, DTC would update the 
Deposits Guide and the Fee Guide as described below.\14\
---------------------------------------------------------------------------

    \14\ Note: The operational retirement of CCF batch-file 
processing for certain DRS transactions would not require changes to 
the Deposits Guide because the Deposits Guide does not currently 
describe DRS or CCF batch-file processing for DRS transactions.
---------------------------------------------------------------------------

Deposits Guide Changes
    DTC would amend the Deposits Guide to add a new ``Direct 
Registration System (DRS)'' section describing DRS and the manner in 
which Participants and DRS Agents would access and process DRS 
transfers through SPA via the DTCC Portal, as well as via API and MQ-
based messaging. The proposed section would also describe how users 
would be provisioned for SPA access through their designated Super 
Access Coordinator and how firms may automate the input and output of 
transaction instructions through API and MQ connectivity.
    The proposed section would also describe the processing of DRS 
Profile Deposit Requests, DRS Deliver Orders and DRS Withdrawal by 
Transfer instructions. Specifically, the proposed section would explain 
that a DRS Profile Deposit Request may be initiated by a Participant. A 
DRS Profile Deposit Request may be used to request that shares held in 
an investor's name, in the investor's account at a DRS Agent, be 
registered in Cede's name and moved to the Participant's account at 
DTC. Upon approval of the request by the DRS Agent, SPA would 
automatically create the related Deliver Order to credit the DRS 
Securities to the Participant's account at DTC. If the DRS Agent 
rejects the request, the Transaction Status would be updated to reflect 
the rejection, including the reason for the rejection, and the 
Participant would be notified.
    The proposed section would also document the existing requirement 
that DRS Profile Deposits require Profile Surety \15\ to be processed 
by DTC. The proposed rule change would not modify the scope of 
transactions subject to the existing Profile Surety requirement.
---------------------------------------------------------------------------

    \15\ See supra note 5.
---------------------------------------------------------------------------

    Alternatively, an investor may instruct its DRS Agent directly to 
transfer DRS Securities to the investor's account with a Participant. 
In that case, the DRS Agent would continue to create a Deliver Order 
but without a DRS Profile Deposit Request.
    The proposed section would also explain that a Participant may 
submit a DRS Withdrawal by Transfer instruction to request that the DRS 
Agent approve that shares be removed from the Participant's free 
position at DTC, reregistered in the name of the investor, and credited 
to the investor's account at the DRS Agent. If the DRS Agent rejects 
the instruction, the Transaction Status would be updated to reflect the 
rejection, including the reason for the rejection, and the Participant 
would be notified.
    The proposed section would describe DRS Agent pass-through fees and 
their collection and remittance through DTC's Centralized Billing 
service.\16\ At the request of Participants and DRS Agents, Centralized 
Billing would be expanded to support the collection of applicable fees 
associated with approved DRS Profile Deposit Requests, completed DRS 
Deliver Orders, and DRS Withdrawal by Transfer instructions approved or 
rejected by DRS Agents. A DRS Agent may elect whether to impose an 
applicable pass-through fee in connection with a DRS transaction; 
however, if a DRS Agent elects to impose such a fee, collection and 
remittance of that fee through DTC's Centralized Billing service would 
be mandatory for the DRS Agent and Participant. Centralized Billing 
would be mandatory for covered pass-through fees to eliminate the 
bifurcated process under which certain fees are collected through DTC 
and other fees are invoiced and paid outside DTC.
---------------------------------------------------------------------------

    \16\ DRS Centralized Billing was launched in April 2006, at the 
request of Participants and DRS Agents, to automate the billing and 
collection of fees associated with incomplete DRS Profile Deposit 
Requests rejected by DRS Agents. See Securities Exchange Act Release 
No. 53679 (Apr. 19, 2006), 71 FR 24770 (Apr. 26, 2006) (SR-DTC-2006-
05).
---------------------------------------------------------------------------

    The pass-through fees are fees imposed and determined by a DRS 
Agent in connection with a DRS Profile Deposit Request or DRS 
Withdrawal by Transfer instruction and paid by the applicable 
Participant. The pass-through fees are not fees charged by DTC.\17\ 
When collected through Centralized Billing, pass-through fees would be 
reflected in the Participant's monthly invoice and would also be 
available to the Participant through daily billing reports. 
Participants would continue to pay the standard DTC fees applicable to 
the underlying deposit or withdrawal transaction, as set forth in the 
Fee Guide. DTC would not assess Participants any additional fee for the 
use of DRS in connection with the proposed Centralized Billing 
functionality.
---------------------------------------------------------------------------

    \17\ See Securities Exchange Act Release No. 51870 (June 17, 
2005), 70 FR 36678 (June 24, 2005) (SR-DTC-2005-03) (approving DTC's 
collection from Participants of fees and charges for services 
provided by other entities).
---------------------------------------------------------------------------

    DTC currently assesses a five-percent collection charge in 
connection with its existing DRS Centralized Billing service. The five-
percent collection charge is not a new fee. Under the proposal, DTC 
would apply the same five-percent collection charge when DTC collects 
and remits an applicable pass-through fee in connection with certain 
DRS Profile Deposit transactions. The charge would equal five percent 
of the applicable pass-through fee collected by DTC and would be 
deducted from the amount remitted to the applicable DRS Agent. The 
proposed expansion of Centralized Billing would not increase

[[Page 63330]]

the percentage of the existing collection charge.
    In addition, the proposed section would describe the Transaction 
Status values and audit-trail information available through SPA. SPA 
would assign a Transaction Status indicating the instruction's 
disposition within its lifecycle and maintain an audit trail of status 
changes. Transaction Status values and audit-trail information would 
apply to instructions submitted or acted upon through the DTCC Portal, 
API, or MQ-based messaging, except that certain Transaction Status 
values associated with maker/checker functionality would apply only to 
transactions processed through the DTCC Portal.
    The proposed section would also identify the applicable SPA Portal 
navigation paths and provide information regarding the APIs and MQs and 
related technical documentation. The APIs and MQs would provide a real-
time machine-to-machine processing solution. The proposed section would 
direct users to DTCC Learning for the SPA function user guide and MQ 
specifications and to the DTCC API Marketplace for API information.
    As part of the proposed modernization, DTC would retire certain PTS 
and PBS functions that currently support DRS processing, as well as CCF 
batch-file processing as an operational method for certain DRS 
transactions. Participants and DRS Agents that currently utilize the 
applicable PTS or PBS functions for DRS processing would instead use 
SPA via the DTCC Portal for human-to-machine processing, while those 
that currently utilize CCF batch-file processing to process DRS 
transactions would instead process DRS transactions through SPA via the 
DTCC Portal, API, or MQ-based messaging. The proposed DRS section would 
identify the processing methods that would be available for DRS 
transactions following implementation of the proposal. The retirement 
of the applicable PTS and PBS functions and CCF batch-file processing 
would eliminate legacy DRS processing methods in favor of the more 
automated processing methods described above.
Fee Guide Changes
    DTC would amend the Fee Guide to add six fee entries in connection 
with the expansion of DTC's Centralized Billing service for DRS 
transactions. The proposed entries would permit DTC to automate the 
collection of certain pass-through fees imposed by DRS Agents, not DTC, 
and paid by Participants and to assess related DTC collection charges 
in connection with certain DRS Profile Deposit transactions. Currently, 
the pass-through fees that would be covered by the proposed Fee Guide 
entries are generally invoiced by DRS Agents to Participants and paid 
outside DTC. The proposed pass-through fee entries would facilitate 
DTC's collection and remittance of fees established by the applicable 
DRS Agent but would not establish the amount of those underlying fees. 
Separately, the proposed DTC collection charges would compensate DTC 
for providing the centralized collection and remittance functionality.
    Specifically, DTC would add ``DRS Profile Deposit Participant 
Initiated Fee Collection,'' and ``DRS Profile Deposit Manual Movement 
Fee Collection,'' to support the collection of pass-through fees 
associated with DRS Profile Deposits. DTC would also add ``DRS Profile 
Deposit Participant Initiated Movement Collection Charges LPA,'' and 
``DRS Profile Deposit Participant Manual Movement Collection Charges 
LPA,'' to reflect DTC's collection charges associated with the 
processing of those pass-through fees. DTC would also add ``DRS 
Withdrawal by Transfer Fee Collection--Approval,'' and ``DRS Withdrawal 
by Transfer Fee Collection--Rejection,'' to support the collection of 
pass-through fees associated with the approval or rejection of 
electronic DRS Withdrawal by Transfer instructions. For purposes of 
``DRS Profile Deposit Participant Initiated Movement Collection Charges 
LPA'' and ``DRS Profile Deposit Participant Manual Movement Collection 
Charges LPA,'' ``LPA'' refers to the limited participant account of the 
applicable DRS Agent.
    The amount of each pass-through fee would vary because the 
applicable DRS Agent, rather than DTC, would determine the underlying 
fee. DTC would collect the applicable amount from the Participant and 
remit it to the DRS Agent, less a DTC collection charge equal to five 
percent of the amount collected for applicable DRS deposits.
Implementation Timeframe
    Pending Commission approval, the proposed rule change is expected 
to be implemented on November 13, 2026. If DTC is unable to implement 
on that date, it will implement the proposed changes no later than 
January 2027, with the specific date announced in advance by Important 
Notice. If approved, a legend would be added to the Fee Guide and the 
Deposits Guide stating that the proposed changes have been approved by 
the Commission but have not yet been implemented, identifying the 
implementation date and file number of this proposal, and stating that 
the legend would automatically be removed upon implementation.
2. Statutory Basis
    DTC believes that the proposed rule change is consistent with the 
requirements of the Exchange Act, and the rules and regulations 
thereunder applicable to a registered clearing agency. Specifically, 
DTC believes that the proposed rule change is consistent with Sections 
17A(b)(3)(F) and 17A(b)(3)(D) of the Exchange Act,\18\ as well as Rule 
17ad-22(e)(21) \19\ thereunder, for the reasons described below.
---------------------------------------------------------------------------

    \18\ 15 U.S.C. 78q-1(b)(3)(F) and (D).
    \19\ 17 CFR 240.17ad-22(e)(21).
---------------------------------------------------------------------------

    Section 17A(b)(3)(F) of the Exchange Act requires, in part, that 
the rules of a clearing agency, such as DTC, be designed to promote the 
prompt and accurate clearance and settlement of securities 
transactions.\20\ As described above, the proposed changes would amend 
the Deposits Guide to (i) add a section describing the availability of 
DRS through SPA via the DTCC Portal, an API, or MQ-based messaging; 
(ii) describe the processing of DRS Profile Deposit Requests, DRS 
Deliver Orders and DRS Withdrawal by Transfer instructions; (iii) 
document the existing requirement that DRS Profile Deposits Requests 
require Profile Surety to be processed by DTC; (iv) describe pass-
through fees and the use of DTC's Centralized Billing to collect and 
remit such fees, including an associated DTC charge for some DRS 
Profile Deposit Requests; (v) describe the assignment of Transaction 
Status values in SPA and maintenance of an audit trail of status 
changes, including where to get additional information on DRS 
functionality; and (vi) provide a navigation table for SPA 
functionality.
---------------------------------------------------------------------------

    \20\ 15 U.S.C. 78q-1(b)(3)(F).
---------------------------------------------------------------------------

    Although not associated with any needed rule text change, the 
proposal would also provide for the retirement of certain PTS and PBS 
functions that currently support DRS processing and CCF batch-file 
processing as an operational method for certain DRS transactions.
    By making DRS functionality available through SPA and through APIs 
and MQ-based messaging, and by providing Participants and DRS Agents 
with automated methods for submitting, reviewing, approving, rejecting, 
and monitoring DRS transactions, the proposed rule change would reduce 
the operational risk, complexity, and delay

[[Page 63331]]

associated with legacy applications, scheduled batch-file 
transmissions, and manual processing activities. Similarly, retiring 
certain PTS and PBS functions that currently support DRS processing and 
CCF batch-file processing as an operational method for certain DRS 
transactions as part of this modernization would further reduce 
reliance on legacy user interfaces and scheduled batch processing and 
would consolidate DRS processing onto the more automated access methods 
described above. Meanwhile, the proposed Transaction Status and audit-
trail functionality would provide greater transparency into the 
processing stage and disposition of DRS transactions, while the 
expansion of DTC's Centralized Billing service would reduce reliance on 
invoicing and payment-remittance processes conducted outside DTC.
    DTC believes these proposed changes would, individually and 
collectively, promote the prompt and accurate clearance and settlement 
of securities transactions because they would support more automated, 
timely, and transparent processing of DRS transactions and reduce 
reliance on legacy and batch-based processing methods, thereby reducing 
associated operational complexity and processing delays. Therefore, DTC 
believes the proposed changes described above are consistent with 
Section 17A(b)(3)(F) of the Exchange Act.\21\
---------------------------------------------------------------------------

    \21\ Id.
---------------------------------------------------------------------------

    Section 17A(b)(3)(D) of the Exchange Act requires that DTC's Rules 
provide for the equitable allocation of reasonable dues, fees, and 
other charges among its Participants.\22\ DTC believes that the 
proposed Fee Guide entries are consistent with this provision of the 
Exchange Act, for the reasons described below. As described above, DTC 
would update the Fee Guide to add ``DRS Profile Deposit Participant 
Initiated Fee Collection'' and ``DRS Profile Deposit Manual Movement 
Fee Collection'' to support collection of pass-through fees imposed by 
DRS Agents in connection with DRS Profile Deposits. DTC would also add 
``DRS Withdrawal by Transfer Fee Collection--Approval'' and ``DRS 
Withdrawal by Transfer Fee Collection--Rejection'' to support 
collection of pass-through fees imposed by DRS Agents in connection 
with the approval and rejection of electronic DRS Withdrawal by 
Transfer instructions. The amount of each pass-through fee would be 
determined by the applicable DRS Agent, rather than DTC. DTC would not 
establish or increase the amount of the underlying pass-through fee but 
would collect the applicable amount from the Participant and remit it 
to the DRS Agent through Centralized Billing.
---------------------------------------------------------------------------

    \22\ 15 U.S.C. 78q-1(b)(3)(D).
---------------------------------------------------------------------------

    DTC believes the proposed pass-through fee entries would provide 
for the equitable allocation of fees because the applicable fee would 
be collected only from a Participant whose DTC transaction gives rise 
to the fee imposed by the DRS Agent. Accordingly, DTC believes the 
proposed pass-through fee entries are consistent with Section 
17A(b)(3)(D).
    Separately, DTC would add ``DRS Profile Deposit Participant 
Initiated Movement Collection Charges LPA'' and ``DRS Profile Deposit 
Participant Manual Movement Collection Charges LPA,'' to reflect DTC's 
collection charges associated with Participant-initiated and manual DRS 
Profile Deposit transactions, respectively. DTC believes that the 
proposed five-percent collection charge would be reasonable because it 
would apply only when DTC collects and remits an applicable pass-
through fee on behalf of a DRS Agent, and the proposed charge is 
consistent with the collection charge established in connection with 
DTC's existing DRS Centralized Billing service.\23\ Consistent with 
that existing fee structure, the proposed collection charge would be 
equal to five percent of the applicable DRS Agent fee. Additionally, 
the proposed collection charge would apply only when DTC performs the 
applicable collection and remittance function and would be calculated 
consistently at five percent of the applicable DRS Agent fee. 
Therefore, DTC believes that the proposed collection charge would 
provide for the equitable allocation of reasonable dues, fees, and 
other charges among its Participants, consistent with Section 
17A(b)(3)(D) of the Exchange Act.\24\
---------------------------------------------------------------------------

    \23\ See Securities Exchange Act Release No. 53679 (Apr. 19, 
2006), 71 FR 24770, 24771 (Apr. 26, 2006) (SR-DTC-2006-05).
    \24\ Id.
---------------------------------------------------------------------------

    Rule 17ad-22(e)(21) under the Exchange Act requires, in part, that 
DTC establish, implement, maintain and enforce written policies and 
procedures reasonably designed to be efficient and effective in meeting 
the requirements of its Participants and the markets it serves.\25\ As 
described above, the proposed modernization of DRS is designed to 
provide for more efficient and effective processing of DRS transactions 
by retiring certain PTS and PBS functions that currently support DRS 
processing and CCF batch-file processing as operational methods for 
certain DRS transactions and providing more automated processing 
methods through SPA, API and MQ-based messaging. The proposed changes 
would reduce reliance on legacy applications, scheduled batch-file 
transmissions, and manual processing activities and would automate 
certain steps in the processing of DRS transactions. The proposed 
Transaction Status and audit-trail functionality would also provide 
Participants and DRS Agents with greater transparency into the 
processing and disposition of DRS transactions. In addition, the 
expansion of Centralized Billing would provide a more efficient process 
for the collection and remittance of applicable DRS Agent pass-through 
fees by reducing reliance of invoicing and payment-remittance processes 
conducted outside DTC. Accordingly, DTC believes that the proposed rule 
change would help promote the efficiency and effectiveness in the 
processing of DRS transactions in a manner consistent with Rule 17ad-
22(e)(21).\26\
---------------------------------------------------------------------------

    \25\ 17 CFR 240.17ad-22(e)(21).
    \26\ Id.
---------------------------------------------------------------------------

(B) Clearing Agency's Statement on Burden on Competition

    Section 17A(b)(3)(I) of the Exchange Act \27\ requires that the 
rules of a clearing agency not impose any burden on competition not 
necessary or appropriate in furtherance of the purposes of the Exchange 
Act. DTC believes that certain aspects of the proposed rule change 
could impose a burden on competition because Participants and DRS 
Agents that currently use certain PTS and PBS functions that currently 
support DRS processing or CCF batch-file processing for certain DRS 
transactions would be required to transition to SPA through the DTCC 
Portal or to API or MQ-based messaging. Some firms may incur costs 
associated with implementing, testing, and maintaining connectivity to 
an alternative processing method and may need to modify their existing 
systems or operational processes. The extent of such costs may vary 
among firms depending on, among other things, their existing technology 
and connectivity to DTC.
---------------------------------------------------------------------------

    \27\ 15 U.S.C. 78q-1(b)(3)(I).
---------------------------------------------------------------------------

    DTC does not believe, however, that any such burden would unfairly 
affect competition or constitute a burden on competition that is not 
necessary or appropriate in furtherance of the purposes of the Exchange 
Act. The operational retirement of certain PTS and PBS functions that 
currently

[[Page 63332]]

support DRS processing and CCF batch-file processing would apply to all 
Participants and DRS Agents that currently use those processing 
methods, and the same alternative access methods would be available to 
similarly situated users. The proposed change would not restrict any 
Participant or DRS Agent from accessing DRS based on its identity, 
size, or business model nor would it provide a competitive advantage to 
any particular Participant or DRS Agent.
    Moreover, DTC believes that any burden associated with 
transitioning from certain PTS and PBS functions that currently support 
DRS processing and CCF batch-file processing would be necessary and 
appropriate in furtherance of the purposes of the Exchange Act. As 
described above, retiring these legacy processing methods for certain 
DRS transactions would reduce reliance on scheduled batch-file 
transmissions and legacy processing methods. Requiring current users 
these legacy processing methods to transition to SPA through the DTCC 
Portal, API or MQ-based messaging would support more automated and 
timely DRS processing, provide greater transparency into Transaction 
Status and processing outcomes, and reduce the operational risk and 
complexity associated with maintaining legacy processing methods in 
addition to the modernized DRS infrastructure. Accordingly, DTC 
believes that any burden associated with these transitions would be 
necessary and appropriate in furtherance of the purposes of the 
Exchange Act because the transition is necessary to achieve the 
operational efficiencies and risk reductions described above.
    DTC does not believe that the proposed changes relating to DRS 
processing, Transaction Status and audit-trail functionality would 
impose a burden on competition. DTC would continue to facilitate DRS 
Profile Deposit Requests, DRS Deliver Orders, and DRS Withdrawal by 
Transfer instructions, with the proposed changes principally modifying 
the manner in which DRS transactions are submitted, processed and 
monitored. The proposed Transaction Status and audit-trail 
functionality would be available to Participants and DRS Agents using 
the applicable DRS processing methods and would not favor or 
disadvantage a particular Participant or DRS Agent. Certain Transaction 
Status values associated with the maker/checker functionality would 
apply only to transactions processed through the DTCC Portal because 
that operational control is specific to manual transaction input 
through the DTCC Portal and is not applicable to API or MQ-based 
messaging.
    Similarly, DTC believes that the proposed expansion of Centralized 
Billing and required use of the service to collect and remit applicable 
pass-through fees imposed by DRS Agents could impose a burden on 
competition because Participants and DRS Agents may incur costs 
associated with modifying existing billing or payment remittance 
processes to use Centralized Billing for the applicable DRS 
transactions. However, the proposal would not establish or increase the 
underlying pass-through fees imposed by DRS Agents. Rather, DTC would 
provide a centralized mechanism for collecting and remitting applicable 
pass-through fees and would assess the related DTC collection charges 
described above. A DRS Agent would continue to determine whether to 
impose an applicable pass-through fee and, if so, the amount. Where a 
DRS Agent elects to impose such a fee, the requirement to use 
Centralized Billing for its collection and remittance would apply 
uniformly to similarly situated Participants and DRS Agents. The 
applicable fee entries and collection charges would apply consistently 
to Participants that use the applicable DRS transaction type. 
Accordingly, DTC believes the Centralized Billing change would not 
favor or disadvantage any particular Participant or DRS Agent.
    Moreover, DTC believes that any burden associated with the required 
use of Centralized Billing would be necessary and appropriate in 
furtherance of the purposes of the Exchange Act. As described above, 
the proposed expansion of Centralized Billing would provide a 
centralized mechanism for the collection and remittance of applicable 
DRS Agent pass-through fees and would replace billing and payment 
remittance processes that may otherwise occur outside DTC. Accordingly, 
DTC believes that any burden associated with modifying existing billing 
or payment remittance processes to use Centralized Billing would be 
necessary and appropriate to achieve the operational efficiencies 
associated with the proposed expansion and required use of Centralized 
Billing for the applicable DRS transactions.
    Therefore, DTC believes that the proposed rule change would not 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purposes of the Exchange Act.

(C) Clearing Agency's Statement on Comments on the Proposed Rule Change 
Received From Members, Participants, or Others

    The DTC has not received or solicited any written comments relating 
to this proposal. If any written comments are received, DTC would amend 
its filing to publicly file such comments as an Exhibit 2 to its 
filing, as required by Form 19b-4 and the General Instructions thereto.
    Persons submitting written 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 a Comment, available at <a href="http://www.sec.gov/regulatory-actions/how-to-submit-comments">www.sec.gov/regulatory-actions/how-to-submit-comments</a>. General questions regarding 
the rule filing process or logistical questions regarding this filing 
should be directed to the Main Office of the Commission's Division of 
Trading and Markets at <a href="/cdn-cgi/l/email-protection#d1a5a3b0b5b8bfb6b0bfb5bcb0a3bab4a5a291a2b4b2ffb6bea7"><span class="__cf_email__" data-cfemail="25515744414c4b42444b414844574e405156655640460b424a53">[email&#160;protected]</span></a> or 202-551-5777.
    DTC reserves the right to not respond to any comments received.

III. Date of Effectiveness of the Proposed Rule Change, and Timing for 
Commission Action

    Within 45 days of the date of publication of this notice in the 
Federal Register or within such longer period up to 90 days (i) as the 
Commission may designate if it finds such longer period to be 
appropriate and publishes its reasons for so finding or (ii) as to 
which the self-regulatory organization consents, the Commission will:
    (A) by order approve or disapprove such proposed rule change, or
    (B) institute proceedings to determine whether the proposed rule 
change should be disapproved.

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 Exchange Act. Comments may be submitted 
by any of the following methods:

Electronic Comments

    <bullet> Use the Commission's internet comment form (https://
www.sec.gov/

[[Page 63333]]

rules-regulations/self-regulatory-organization-rulemaking); or
    <bullet> Send an email to <a href="/cdn-cgi/l/email-protection#93e1e6fff6bef0fcfefef6fde7e0d3e0f6f0bdf4fce5"><span class="__cf_email__" data-cfemail="7002051c155d131f1d1d151e0403300315135e171f06">[email&#160;protected]</span></a>. Please include 
File Number SR-DTC-2026-012 on the subject line.

Paper Comments

    <bullet> Send paper comments in triplicate to Secretary, Securities 
and Exchange Commission, 100 F Street NE, Washington, DC 20549.

All submissions should refer to File Number SR-DTC-2026-012. 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-regulations/self-regulatory-organization-rulemaking">https://www.sec.gov/rules-regulations/self-regulatory-organization-rulemaking</a>). Copies of the 
filing will be available for inspection and copying at the principal 
office of DTC and on DTCC's website (<a href="http://www.dtcc.com/legal/sec-rule-filings">www.dtcc.com/legal/sec-rule-filings</a>). Do not include personal identifiable information in 
submissions; you should submit only information that you wish to make 
available publicly. We may redact in part or withhold entirely from 
publication submitted material that is obscene or subject to copyright 
protection. All submissions should refer to File Number SR-DTC-2026-012 
and should be submitted on or before October 26, 2026.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\28\
---------------------------------------------------------------------------

    \28\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2026-20301 Filed 10-2-26; 8:45 am]
BILLING CODE 8011-01-P


</pre><script data-cfasync="false" src="/cdn-cgi/scripts/5c5dd728/cloudflare-static/email-decode.min.js"></script></body>
</html>