Federal Register / Vol. 85, No. 234 / Friday, December 4, 2020 / Notices 78371 

26 15 U.S.C. 78s(b)(3)(A). 

27 17 CFR 240.19b–4(f)(6). In addition, Rule 19b– 

4(f)(6)(iii) requires a self-regulatory organization to 

give the Commission written notice of its intent to 

file the proposed rule change, along with a brief 

description and text of the proposed rule change, 

at least five business days prior to the date of filing 

of the proposed rule change, or such shorter time 

as designated by the Commission. The Exchange 

has satisfied this requirement. 28 17 CFR 200.30–3(a)(12). 

information to perform the necessary 

regulatory functions associated with 

listing and trading the Shares on the 

Exchange, including the ability to 

monitor compliance with the initial and 

continued listing requirements as well 

as the ability to surveil for manipulation 

of the Shares. 

In addition, Form N–PORT requires 

reporting of a fund’s complete portfolio 

holdings on a position-by-position basis 

on a quarterly basis within 60 days after 

fiscal quarter end. Investors can obtain 

a fund’s Statement of Additional 

Information, its Shareholder Reports, its 

Form N–CSR, filed twice a year, and its 

Form N–CEN, filed annually. A fund’s 

SAI and Shareholder Reports are 

available free upon request from the 

Investment Company, and those 

documents and the Form N–PORT, 

Form N–CSR, and Form N–CEN may be 

viewed on-screen or downloaded from 

the Commission’s website at 

www.sec.gov. The Exchange also notes 

that the Exemptive Relief provides that 

the Funds will comply with Regulation 

Fair Disclosure, which prohibits 

selective disclosure of any material nonpublic information, which otherwise do 

not apply to issuers of Tracking Fund 

Shares. 

Information regarding market price 

and trading volume of the Shares will be 

continually available on a real-time 

basis throughout the day on brokers’ 

computer screens and other electronic 

services. Information regarding the 

previous day’s closing price and trading 

volume information for the Shares will 

be published daily in the financial 

section of newspapers. Quotation and 

last sale information for the Shares will 

be available via the CTA high-speed 

line. The Exchange deems Tracking 

Fund Shares to be equity securities, thus 

rendering trading in the Shares subject 

to the Exchange’s existing rules 

governing the trading of equity 

securities. As provided in Rule 

14.11(m)(2)(C), the minimum price 

variation for quoting and entry of orders 

in securities traded on the Exchange is 

$0.01. 

For the above reasons, the Exchange 

believes that the proposed rule change 

is consistent with the requirements of 

Section 6(b)(5) of the Act. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Exchange does not believe that 

the proposed rule change will impose 

any burden on competition that is not 

necessary or appropriate in furtherance 

of the purpose of the Act. Rather, the 

Exchange notes that the proposed rule 

change will facilitate the listing of 

several new series of actively-managed 

exchange-traded product, thus 

enhancing competition among both 

market participants and listing venues, 

to the benefit of investors and the 

marketplace. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

The Exchange has neither solicited 

nor received written comments on the 

proposed rule change. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

Because the foregoing proposed rule 

change does not: (i) Significantly affect 

the protection of investors or the public 

interest; (ii) impose any significant 

burden on competition; and (iii) become 

operative for 30 days from the date on 

which it was filed, or such shorter time 

as the Commission may designate, it has 

become effective pursuant to Section 

19(b)(3)(A) of the Act 26 and Rule 19b– 

4(f)(6) thereunder.27

At any time within 60 days of the 

filing of the proposed rule change, the 

Commission summarily may 

temporarily suspend such rule change if 

it appears to the Commission that such 

action is necessary or appropriate in the 

public interest, for the protection of 

investors, or otherwise in furtherance of 

the purposes of the Act. 

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views, and 

arguments concerning the foregoing, 

including whether the proposed rule 

change is consistent with the Act. 

Comments may be submitted by any of 

the following methods: 

Electronic Comments 

• Use the Commission’s internet 

comment form (http://www.sec.gov/ 

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include File Number SR– 

CboeBZX–2020–085 on the subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Secretary, Securities and Exchange 

Commission, 100 F Street NE, 

Washington, DC 20549–1090. 

All submissions should refer to File 

Number SR–CboeBZX–2020–085. 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 (http://www.sec.gov/ 

rules/sro.shtml). Copies of the 

submission, all subsequent 

amendments, all written statements 

with respect to the proposed rule 

change that are filed with the 

Commission, and all written 

communications relating to the 

proposed rule change between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

provisions of 5 U.S.C. 552, will be 

available for website viewing and 

printing in the Commission’s Public 

Reference Room, 100 F Street NE, 

Washington, DC 20549 on official 

business days between the hours of 

10:00 a.m. and 3:00 p.m. Copies of the 

filing also will be available for 

inspection and copying at the principal 

office of the Exchange. All comments 

received will be posted without change. 

Persons submitting comments are 

cautioned that we do not redact or edit 

personal identifying information from 

comment submissions. You should 

submit only information that you wish 

to make available publicly. All 

submissions should refer to File 

Number SR–CboeBZX–2020–085 and 

should be submitted on or before 

December 28, 2020. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.28

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2020–26675 Filed 12–3–20; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–90534; File No. SR–DTC– 

2020–017] 

Self-Regulatory Organizations; The 

Depository Trust Company; Notice of 

Filing of Proposed Rule Change to 

Allow for the Deposit of Electronic 

Certificates of Deposit and Technical 

Changes 

November 30, 2020. 

Pursuant to Section 19(b)(1) of the 

Securities Exchange Act of 1934 

78372 Federal Register / Vol. 85, No. 234 / Friday, December 4, 2020 / Notices 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

3Capitalized terms not defined herein are defined 

in the Rules, By-Laws and Organization Certificate 

of DTC (the ‘‘Rules’’), available at www.dtcc.com/ 

∼/media/Files/Downloads/legal/rules/dtc_rules.pdf, 

the DTC Operational Arrangements (Necessary for 

Securities to Become and Remain Eligible for DTC 

Services) (‘‘OA’’), available at http://

www.dtcc.com/∼/media/Files/Downloads/legal/ 

issue-eligibility/eligibility/operationalarrangements.pdf, and the DTC Underwriting 

Service Guide (‘‘Underwriting Service Guide’’), 

available at http://www.dtcc.com/∼/media/Files/ 

Downloads/legal/service-guides/UnderwritingService-Guide.pdf. 

4The OA and the Underwriting Service Guide 

constitute Procedures of DTC. Pursuant to the 

Rules, the term ‘‘Procedures’’ means the 

Procedures, service guides, and regulations of DTC 

adopted pursuant to Rule 27, as amended from time 

to time. See Rule 1, Section 1, supra note 3. DTC’s 

Procedures are filed with the Commission. They are 

binding on DTC and each Participant in the same 

manner as they are bound by the Rules. See Rule 

27, supra note 3. The OA is also binding on each 

issuer and agent of an Eligible Security. See OA, 

supra note 3 at 5, supra note 3. DTC also maintains 

service guides that constitute Procedures relating to 

services it offers. Available at http://www.dtcc.com/ 

legal/rules-and-procedures?subsidiary=DTC&pgs=1. 

5 Generally, Eligible Securities must have been 

issued in a transaction (i) registered with the 

Commission pursuant to the Securities Act; (ii) 

exempt from registration pursuant to a Securities 

Act exemption without transfer or ownership 

restrictions; or (iii) pursuant to Rule 144A, 17 CFR 

230.144A, or Regulation S, 17 CFR 230.901– 

230.905, under the Securities Act. See OA, supra 

note 3 at 2–3. 6See OA, supra note 3, at 9–10. 

7See Underwriting Service Guide, supra note 3 

at 17. 

8See id. at 1. 

9 Id. 

10 Id. 

11 Id. at 2. 

12 Id. at 4. 

(‘‘Act’’) 1 and Rule 19b–4 thereunder,2

notice is hereby given that on November 

20, 2020, 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. 

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 Procedures 4 of DTC. 

Specifically, the proposed rule change 

would amend the OA and Underwriting 

Service Guide to implement a new 

application and secured electronic vault 

(‘‘E-vault’’) for requests for eligibility, 

execution, Delivery and storage of 

certificates of deposit (‘‘CDs’’) that are 

issued by state and federal chartered 

banks that are Eligible Securities 5 in 

electronic form. Technical changes with 

respect to spelling, punctuation and 

spacing of text would also be made. The 

use of the new application and E-vault 

would replace an existing legacy 

platform and paper-based model for 

Delivery and storage of CDs maintained 

in DTC’s secured physical vault, as 

more fully described below. 

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 of DTC 

would amend the Procedures of DTC. 

Specifically, the proposed rule change 

would amend the OA and Underwriting 

Service Guide to implement a new 

application and secured E-vault for 

requests for eligibility, execution, 

Delivery and storage of CDs that are (i) 

Eligible Securities and (ii) issued by 

state and federal chartered banks in 

electronic form. The use of the new 

application and E-vault would replace 

an existing legacy platform for Delivery 

and storage of CDs maintained in DTC’s 

secured physical vault, as more fully 

described below. 

Background 

DTC (i) makes eligible for Deposit, 

processes and holds physical retail CDs 

issued by various U.S. banks and 

Deposited by Participants and (ii) 

credits interests in those CDs to 

Participant’s Securities Accounts.6 As 

described below, the use of physical 

certificates presents operational 

concerns to Participants and to DTC and 

DTC has undertaken efforts to promote 

dematerialization of Securities. To 

address operational concerns relating to 

processing of physical CDs, DTC has 

developed a system that would 

eliminate the need for physical 

certificates for certain issue types of CDs 

by allowing them to be issued and held 

in electronic form, as described below. 

Upon implementation, the proposed 

rule change would address operational 

concerns of Participants relating to the 

amount of time and manual effort 

currently required for the issuance and 

redemption of physical CDs by allowing 

for a fully electronic process for the 

execution and Delivery of the affected 

CD certificates. As such, the proposed 

rule change would also reduce the need 

for DTC to (i) perform manual 

processing relating to CD Deposits and 

(ii) reserve space in its secure physical 

vault currently used for CDs by allowing 

for the storage of CDs in electronic form 

in a secure E-vault. 

The proposed electronic process 

would also address concerns relating to 

potential disruptions in the physical 

transport of paper CDs to DTC currently 

made using courier and overnight 

delivery services. Such disruptions may 

be caused by weather-related issues, 

such as Superstorm Sandy which 

impacted physical securities processing 

in 2012, and other previously 

unforeseen circumstances, such as the 

COVID–19 pandemic. Although, DTC 

has been able to maintain securities 

eligibility and processing operations 

during such circumstances, including 

by utilizing a letter of securities 

possession 7 (‘‘LOP’’) process that 

enables DTC to accept Delivery of 

securities represented in physical form 

even if the circumstances prevent 

physical delivery at that time, such 

disruptions could delay the Deposit of 

CDs and impact the timely closing of 

issuances and otherwise affect liquidity 

in the marketplace for CDs. 

Current DTC Eligibility Process for CDs 

Only Participants can request that 

DTC make a Security eligible for 

Deposit.8 It is therefore incumbent on an 

issuer to have a relationship with an 

underwriter or other financial 

institution that is a Participant, or is 

directly associated with a Participant, 

that is willing to sponsor the eligibility 

process for the issuer’s Securities.9 A 

Participant may submit a Deposit 

eligibility request for a CD through the 

underwriting services of DTC at the time 

a security is initially being offered and 

distributed to the marketplace or at a 

later time for already issued and 

outstanding securities.10

Participants must provide an 

eligibility request for the specified 

securities to Underwriting by submitting 

all required issuer and securities data 

and all related offering documents, at a 

minimum, through the online Securities 

Origination, Underwriting and Reliable 

Corporate Action Environment (‘‘UW 

SOURCE’’) system.11

CDs are book entry-only (‘‘BEO’’) 

Securities 12 registered to DTC’s 

Federal Register / Vol. 85, No. 234 / Friday, December 4, 2020 / Notices 78373 

13 Id. 

14See DTC Deposits Service Guide (‘‘Deposits 

Guide’’), available at http://www.dtcc.com/∼/ 

media/Files/Downloads/legal/service-guides/ 

Deposits.pdf, at 8. The closing date is the date on 

which Underwriting will distribute an issue to the 

underwriter’s Participant account at DTC for bookentry delivery and settlement upon notification by 

both the underwriter and the issuer that an issue 

has closed (i.e., the distribution date). See 

Underwriting Guide, supra note 3, at 6. On the 

closing date, when an issuer or its agent and the 

underwriter confirm with DTC that the issue has 

closed and verifies pertinent data, DTC releases the 

position from an internal DTC account and credits 

the underwriter’s Participant account, provided that 

DTC received the certificates. See id. at 9. 

15Pursuant to Rule 1, the term ‘‘Security 

Entitlement’’ has the meaning given to the term 

‘‘security entitlement’’ in Section 8–102 of the New 

York Uniform Commercial Code (‘‘NYUCC’’). See 

Rule 1, supra note 3. See also NYUCC 8–102. The 

interest of a Participant or Pledgee in a Security 

credited to its Account is a Security Entitlement. 

See Rule 1, supra note 3. 

16See Deposits Guide, supra note 14, at 8. 

17A Fixed Rate CD pays a fixed interest rate over 

the entire term of the CD. A Step Rate CD allows 

for increases in the interest rate at specific, intervals 

that are pre-defined by the issuer. A Callable CD 

contains a call feature that gives the issuing bank 

the ability to redeem the CD prior to its stated 

maturity, usually within a given time frame and at 

a preset call price as set forth in the ‘‘call provision’’ 

in the master certificate. A certificate without such 

a provision cannot not be called by the issuer prior 

to maturity date (Non-Callable). 

nominee, Cede & Co. BEO Securities are 

DTC-eligible Securities for which (i) 

physical certificates are not available to 

investors and (ii) DTC, through its 

nominee, Cede & Co., will hold the 

entire balance of the offering, either at 

DTC (in physical form) or through a 

FAST Agent in DTC’s Fast Automated 

Securities Transfer (‘‘FAST’’) program. 

Issuers of BEO Securities must submit to 

DTC a Letter of Representations (‘‘LOR’’) 

among the issuer, its agent (as 

applicable) and DTC, prior to such issue 

being determined to be eligible. For 

corporate and municipal securities, 

there are two acceptable forms of LOR: 

A Blanket Issuer Letter of 

Representations (‘‘BLOR’’) or an Issuer 

Letter of Representations (‘‘ILOR’’). A 

BLOR is issuer specific and applicable 

to all DTC-eligible securities (debt and/ 

or equity) of the same issuer. Once a 

BLOR is on file for an issuer, a new 

BLOR is not required for future 

issuances unless the issuer’s name 

changes (in which case an opinion of 

counsel may also be required). An ILOR 

may be used for discrete issuances, and 

is applicable only to that issue of 

securities, such as trust issuances. Each 

issuer of a BEO Security must submit to 

DTC a fully executed LOR on DTC’s 

preprinted form. This LOR represents 

the issuer’s agreement to comply with 

the requirements set forth in the OA, as 

amended from time to time.13

Once DTC has determined to make a 

Security eligible, a Participant may 

Deposit the Security at DTC for 

crediting to its Securities Account. For 

a CD issuance, the issuing bank and 

Depositing Participant must coordinate 

the execution and Delivery of the 

physical certificate to DTC in order for 

the Participant to timely receive credit 

by the anticipated closing date.14 Once 

DTC receives an acceptable Deposit of 

an eligible CD from a Participant, DTC 

credits a Security Entitlement 15 in the 

CD to the Participant’s Securities 

Account 16 and DTC holds the original 

paper certificate in its secure vault for 

the duration of the term of the CD. 

Proposal 

Pursuant to the proposed rule change, 

DTC is proposing to launch a new 

program to support Deposit of electronic 

CDs that would be issued by banks (‘‘E– 

CDs’’). The program would allow E–CDs 

to be electronically generated, signed, 

delivered to DTC and held in electronic 

form in a secure E-vault. 

Upon implementation of the proposed 

rule change, CDs of state and federally 

chartered banks containing certain 

standard terms that conform to one of 

four proposed templates (‘‘System E–CD 

Templates’’) would be eligible for the 

new program, as described below. The 

System E–CD Templates were 

developed with input from DTC 

Participants that act as underwriters of 

CD. The templates would cover four 

basic types of CDs, specifically (i) Fixed 

Rate Non-Callable, (ii) Fixed Rate 

Callable, (iii) Step Rate Non-Callable 

and (iv) Step Rate Callable.17

After implementation, in order to 

facilitate needs of issuers and 

underwriters, DTC may, at its own 

discretion, (i) edit the System E–CD 

Templates and/or (ii) add additional 

templates for use in the E–CD program 

as published via Important Notice that 

would also be deemed System E–CD 

Templates. Any edits to the System E– 

CD Templates would not affect E–CDs 

that were previously issued into DTC. 

More complex CDs that do not 

conform to the System E–CD Templates, 

including those referred to as structured 

CDs, would be excluded from the 

proposed new process, because they 

typically contain terms that are not 

amenable to the creation of fixed 

templates in the format proposed 

herein. 

Upon implementation, Participants 

would request eligibility for E–CDs that 

conform to the System E–CD Templates 

through a new system referred to as 

Underwriting Central (‘‘UWC’’). UW 

SOURCE would continue to remain 

available for other types of issuances, 

including the issuances of CDs in 

physical form. 

In order to request eligibility of a CD 

to be issued in electronic form, the 

Underwriter would provide all required 

information relating to the CD through 

UWC, including but not limited to 

offering documentation and the terms to 

be populated in the electronic 

certificate. The relevant data (e.g., 

interest rate(s) and maturity date) will 

be populated into the templates as 

entered by the underwriter into the 

UWC application. It would be the 

responsibility of the Underwriter to 

disseminate the electronic master 

certificate to the issuer for electronic 

signature via UWC. The issuer would be 

required to electronically sign and 

Deliver the master certificate to DTC 

prior to closing. 

For CDs that do not conform to the 

System E–CD Templates, eligibility 

request would continue to be entered by 

the Underwriter through UW SOURCE 

and a physical certificate delivered to 

DTC prior to closing. 

Whether issued in electronic or 

physical form, securities should be 

delivered to DTC by no later than noon 

Eastern Time on the business day prior 

to the Closing Date as currently 

specified in Exhibit B of the OA. 

In addition, each issuer that opts to 

issue E–CDs would be required to 

provide a new BLOR designed for use 

with the E–CD program, as described 

below. 

Legal Framework Supporting Issuance 

of Electronic CDs 

The following discussion is provided 

by DTC and includes its own analysis of 

applicable state law provisions that DTC 

believes supports the validity of the 

issuance and Deposit of E–CDs at DTC 

pursuant to the proposed rule change. 

Based on its analysis, DTC believes that 

the proposed rule change would allow 

E–CDs to be electronically generated, 

signed, Delivered to DTC and held in 

electronic form in a secure E-vault 

within a legal framework that supports 

the validity of E–CDs in a manner 

comparable to that of physical issuance 

and Deposit of CDs that are eligible for 

DTC services pursuant to the Rules and 

Procedures. This analysis is not part of 

the proposed rule, but a separate, 

analysis of applicable law. DTC 

emphasizes that neither the following, 

nor any aspect of the proposed rule 

change, is intended by DTC to be legal 

advice by DTC to any Participant, issuer 

or other third party, and should not be 

considered to be legal advice by DTC to 

any Participant, issuer, or other third 

party. 

78374 Federal Register / Vol. 85, No. 234 / Friday, December 4, 2020 / Notices 

18See Rule 2, supra note 3. 

19Unless otherwise specified, citations in this 

proposed rule change to provisions of the UCC are 

to the UCC as adopted in New York under the 

NYUCC. 

20See NYUCC 3–102 and 3–104 (defining CDs as 

negotiable instruments). 

21See NYUCC 8–102 (for NYUCC definitions of 

‘‘financial asset’’ and ‘‘security’’). 

22See NYUCC 8–501–8–508. 

23See Comment 2 to Section 8–110 of the UCC 

(explaining that the law of the issuer’s jurisdiction 

governs the validity of a security in order to ensure 

that a single body of law governs the questions 

addressed in Part 2 of Article 8). Part 2 of Article 

8 of the UCC describes the circumstances in which 

an issuer can and cannot assert invalidity as a 

defense against purchasers, including lack of 

genuineness, unauthorized signatures and 

incomplete certificates. This implies that the term 

‘‘validity’’ in Section 8–110 of the UCC refers to a 

broader set of issues than just the validity of 

issuance of the security under the issuer’s 

governing documents and local law. 

24N.Y. State Tech. Law § 30[•] (McKinney 2012). 

25Unif. Electronic Transactions Act (Unif. L. 

Comm’n 1999). 

26 Illinois, New York and Washington have not 

adopted UETA. Although it has adopted UETA, 

California has not adopted Section 16 of UETA, 

which, as described in further detail below, is the 

section of UETA that provides for the electronic 

creation, signature and storage of negotiable 

instruments such as CDs. 

27Unif. Elec. Transactions Act § 16 (Unif. L. 

Comm’n 1999). 

28See Comment 2 to Section 16 of UETA 

(explaining that Section 16 is not intended to cover 

the conversion of a paper note to an electronic 

record; instead, transferable records must be 

electronic at the time they are created). 

DTC’s Rules are Governed by the Law of 

New York 

DTC’s activities and its Rules are 

structured in accordance with the laws 

of New York and the United States, and 

provide that they shall be governed by, 

and construed in accordance with, the 

law of New York.18 A principal law 

comprising the legal framework under 

which DTC operates includes, but is not 

limited to, the NYUCC, which among 

other things, supports a legal framework 

for the issuance of Securities and the 

indirect holding system, under which 

DTC credits in Securities to its 

Participants. 

NYUCC and Electronic Signature Laws; 

and Impact Regarding E–CDs 

CDs are ‘‘negotiable instruments’’ 

under Article 3 of the Uniform 

Commercial Code (the ‘‘UCC’’),19 which 

has been adopted in New York under 

the NYUCC,20 and, depending on how 

they are structured, may also be 

‘‘securities’’ and/or ‘‘financial assets,’’ 

as defined in Article 8 of the UCC, 

which has been adopted in New York 

under the NYUCC.21 In addition, 

because the CDs are held in DTC 

through the indirect holding system, the 

rights and duties of DTC, as a securities 

intermediary, and its Participants, as 

entitlement holders, are governed by 

Part 5 of Article 8 of the UCC,22 also 

adopted in New York under the 

NYUCC. In this regard, the rights and 

obligations associated with CDs held at 

DTC are governed by the relevant 

provisions of the NYUCC. 

Section 8–110 of the UCC provides 

that only the law of the issuer’s 

jurisdiction will govern the ‘‘validity’’ of 

a ‘‘security’’—the laws of another 

jurisdiction cannot be selected to govern 

validity issues. The term ‘‘validity’’ is 

not defined in the UCC. DTC believes 

that laws governing the creation and 

existence of an electronic record as a 

substitute for a written instrument may 

be viewed as laws that govern the 

‘‘validity’’ of an instrument.23

An E–CD that is both a negotiable 

instrument and a security, will be 

governed as to its validity by the law of 

the issuer’s jurisdiction, by virtue of 

Section 8–110 of the UCC. If the validity 

of a security is determined to include its 

electronic nature, then the electronic 

signature and record laws of each 

individual issuer’s jurisdiction would 

apply to each E–CD. Therefore, 

requiring an E–CD to be a security could 

adversely impact the valid issuance of 

the E–CD if the laws of the issuer’s 

jurisdiction do not contemplate the 

electronic signature of a security. 

However, as discussed below, Article 

3 negotiable instruments allow for a 

choice of law. In this regard, DTC 

believes that requiring E–CDs to be 

issued as negotiable instruments would 

facilitate the valid issuance of E–CDs 

regardless of an issuer’s jurisdiction, so 

long as the law of a jurisdiction that 

contemplates the use of electronic 

signatures as part of a valid issuance is 

chosen to govern the E–CD. 

As more fully described in the 

discussion of electronic signature laws 

provided by DTC below, DTC proposes 

to apply New York law for this purpose, 

but also proposes to design the E–CD 

program such that E–CDs issued into 

DTC would be valid under the laws of 

all states that allow the use of electronic 

records and signatures in any 

transaction that would otherwise 

require a paper document and/or wetink signature. 

Discussion of Electronic Signature Laws 

The New York Electronic Signatures 

and Records Act 

The New York Electronic Signatures 

and Records Act 24 (‘‘ESRA’’) governs 

the validity of electronic records and 

signatures in New York. ESRA is like 

UETA in that it accords the same power 

and effect to electronic records and 

signatures as would otherwise be 

accorded to writings under New York 

law. 

ESRA does not apply to negotiable 

instruments, such as CDs, unless an 

electronic record of such instrument is 

created, stored or transferred in a 

manner that meets the Uniqueness 

Standard. If the Uniqueness Standard is 

met, then CDs that are issued, created 

and signed electronically have the same 

power and effect as paper CDs under 

New York law. 

The Uniform Electronic Transactions 

Act 

The Uniform Electronic Transactions 

Act 25 (‘‘UETA’’), has been adopted in 

various forms by 47 U.S. states.26 UETA 

generally allows parties to agree to use 

electronic records and signatures in any 

transaction that would have otherwise 

required a paper document and/or wetink signature. 

Section 16 of UETA 27 provides legal 

support for the creation, transferability 

and enforceability, of, among other 

things, negotiable instruments such as 

CDs, if they meet the following 

standards: 

• The E–CD must be a ‘‘transferable 

record,’’ which is defined, in part, as an 

electronic record that would be a note 

under Article 3 of the UCC (CDs are 

notes in all relevant UETA 

jurisdictions), and the issuer has 

expressly agreed that it is a transferable 

record. 

• The E–CD must initially be created 

as an electronic record, and not as a 

paper document that is converted to 

one.28

• Each E–CD must be stored in a 

system that meets the following 

standards (the ‘‘Section 16 Safe 

Harbor’’): 

Æ The E–CD is created, stored and 

assigned in a manner that a single 

authoritative copy of the transferable 

record exists which is unique, 

identifiable and, subject to certain 

exceptions, unalterable (the 

‘‘Uniqueness Standard’’). 

Æ The authoritative copy must (i) 

identify the person claiming control 

(i.e., the person to which the 

transferable record was issued or 

transferred), (ii) be maintained by the 

person claiming control or its designee 

and (iii) be unalterable except with the 

permission of the person claiming 

control. 

Æ Copies of and authorized revisions 

to the authoritative copy must be clearly 

marked as such. 

DTC believes that any E–CD that is a 

transferable record and is stored in a 

system that falls within the Section 16 

Federal Register / Vol. 85, No. 234 / Friday, December 4, 2020 / Notices 78375 

29Because Section 16 of UETA only contemplates 

a transferable record that has been electronic since 

its creation and requires that the transferable record 

comply with the Section 16 Safe Harbor, including 

the Uniqueness Standard, at all times, DTC believes 

that the legal issues relating to the electronic 

signature of a negotiable instrument such as a CD 

are necessarily intertwined with its electronic 

creation and storage. Thus, an electronic negotiable 

instrument cannot be created outside of an 

appropriate system that complies with the Section 

16 Safe Harbor even if electronically signed. 

30Although Section 307 of ESRA does not 

provide the same robust provisions and 

commentary as Section 16 of UETA, it is still 

sufficiently clear that E–CDs that meet the 

Uniqueness Standard are valid. 

31Electronic Signatures in Global and National 

Commerce 15 U.S.C. § 70[•]. 

32Section 3–119 of the NYUCC provides that a 

negotiable instrument may be ‘‘modified or affected 

by any other written agreement executed as part of 

the same transaction.’’ 

33While a CD cannot expressly be made subject 

to the terms of an additional agreement, Section 3– 

105(1)(c) of the UCC permits the CD to refer to or 

state that it arises out of a separate agreement. 

Safe Harbor will have the same rights 

and obligations of an equivalent writing 

under the UCC.29

Because the Section 16 UETA 

provisions are more robust than ESRA 

and the guidance in Section 16 of UETA 

is more developed, the E–CDs that 

would be made eligible by DTC would 

be structured to meet the requirements 

of UETA, including the Section 16 Safe 

Harbor, even though, as discussed 

below, the E–CDs will also be structured 

so that they are governed by New York 

law (including ESRA).30 This construct 

will help ensure that an E–CD also will 

remain valid in the jurisdictions that 

have adopted Section 16 of UETA, in 

the unlikely event that a court of 

competent jurisdiction would determine 

not to recognize the selection of New 

York law. 

E-Sign 

The federal Electronic Signatures in 

Global and National Commerce Act 31

(‘‘E-Sign’’) generally provides for the 

legal effect, validity and enforceability 

of electronic signatures and records 

relating to transactions in interstate or 

foreign commerce and preempts state 

law with respect to such transactions 

except to the extent the state has 

enacted UETA or other alternative 

procedures or requirements that are 

consistent with E-Sign. E-Sign generally 

tracks the provisions of UETA but does 

not apply to transactions that are 

governed by the UCC, such as the 

issuance of CDs. E-Sign’s equivalent of 

Section 16 of UETA expressly limits the 

use of transferable records to debt 

obligations secured by an interest in real 

property (i.e., mortgage notes). Instead, 

state law must provide for the electronic 

creation and signature of a CD for it to 

be valid. 

Others 

In addition to New York, Illinois and 

Washington also did not adopt UETA. 

Illinois adopted an electronic records 

and signatures law that is similar to 

UETA and contains a section that is 

analogous to Section 16 of UETA. 

Washington adopted an electronic 

records and signatures law that is very 

different than UETA and does not 

clearly contemplate or provide for the 

issuance of electronic negotiable 

instruments such as CDs. As noted 

above, California has not adopted 

Section 16 of UETA. Therefore DTC is 

unable to conclude whether CDs that are 

created, signed and stored electronically 

would be valid under Washington or 

California law because it has not 

identified a legal framework under those 

laws whereby an issuer could issue a 

valid E–CD that could in turn be 

Deposited at DTC in accordance with 

the proposed rule change. 

Proposed Rule Changes 

Pursuant to the proposed rule change, 

DTC would amend the OA and 

Underwriting Service Guide, and create 

a new BLOR and the System E–CD 

Templates to be used exclusively for the 

issuance of E–CDs, in order to 

implement the proposed UWC system 

and E-vault for the issuance Delivery 

and Deposit of E–CDs and put in place 

the Procedures and a framework that 

conforms to the legal requirements for 

the maintenance of valid E–CDs, as 

described above. 

Each Issuer that Opts to Participate in 

the E–CD Program Would Sign a New 

BLOR. 

Pursuant to the proposed rule change, 

the OA would require each E–CD issuer 

to submit a new BLOR (‘‘E–CD BLOR’’) 

to DTC through UWC prior to its first 

issuance of E–CDs. In order to minimize 

the additional provisions in the 

Electronic Master Certificate (as defined 

below), the E–CD BLOR would contain 

supplemental terms related to the E–CD 

program (in addition to the 

representations that are currently 

included in a BLOR). The new E–CD 

BLOR would provide that all E–CDs 

issued in connection therewith and 

under one of the base CUSIP numbers 

set forth on the face of the E–CD BLOR 

would be part of the same transaction in 

which the E–CD BLOR was executed.32

Pursuant to Section 3–119 of the UCC, 

a holder in due course of a negotiable 

instrument must have notice of any 

separate agreement in order to be 

subject to its limitations. Therefore, the 

Electronic Master Certificate (as defined 

below) would contain a reference to the 

new E–CD BLOR.33

Each Issuer Issuing E–CDs Would 

Electronically Sign and Issue an 

Electronic Master Certificate. 

E–CDs would be issued on a new form 

of master electronic certificate 

(‘‘Electronic Master Certificate’’) that 

has been specially created for the E–CD 

program. A separate electronic Master 

Certificate would be issued by the issuer 

for each broker that participates in an E– 

CD offering. Because E–CDs must 

necessarily be created, signed and 

thereafter maintained in electronic form 

using a system that complies with the 

Section 16 Safe Harbor, including the 

Uniqueness Standard, DTC would only 

make eligible E–CDs that have been 

initiated by the related broker/dealer 

through UWC, then created, signed and 

submitted to DTC through an electronic 

signature system designed by DTC for 

this purpose. UWC would allow 

Participants to initiate a new E–CD 

issuance by creating a draft Electronic 

Master Certificate using the applicable 

System E–CD Template that would be 

sent to an issuer for verification and 

signature. The issuer will verify and 

affix its electronic signature to the 

Electronic Master Certificate created by 

the Participant in a manner that creates 

an executed Electronic Master 

Certificate that complies with the 

Uniqueness Standard. 

Once Issued, Each Original Electronic 

Master Certificate Would be 

Automatically Stored in an Electronic 

Vault Repository. 

Once an issuer verifies and affixes its 

electronic signature to an Electronic 

Master Certificate, the Electronic Master 

Certificate would be automatically 

stored in an E-vault repository that 

complies with the Section 16 Safe 

Harbor, and the Electronic Master 

Certificate would immediately be 

deemed ‘‘Delivered’’ to DTC. The Evault will identify Cede & Co. as the 

person to which the Electronic Master 

Certificate was issued. The E-vault will 

maintain an audit trail that will track all 

events that occur with respect to the 

Electronic Master Certificate, including 

any authorized changes, such as 

notations to reflect withdrawals, which 

will be noted in the audit trail instead 

of on the body of the Electronic Master 

Certificate. The audit trail will be 

incorporated as part of the Electronic 

78376 Federal Register / Vol. 85, No. 234 / Friday, December 4, 2020 / Notices 

34See Comment 2 to Section 8–110 of the UCC 

(explaining that the law of the issuer’s jurisdiction 

governs the validity of a security in order to ensure 

that a single body of law governs the questions 

addressed in Part 2 of Article 8). Part 2 of Article 

8 of the UCC describes the circumstances in which 

an issuer can and cannot assert invalidity as a 

defense against purchasers, including lack of 

genuineness, unauthorized signatures and 

incomplete certificates. This implies that the term 

‘‘validity’’ in Section 8–110 of the UCC refers to a 

broader set of issues than just the validity of 

issuance of the security under the issuer’s 

governing documents and local law. 

35See Section 3–103(1) of the UCC (providing 

that Article 3 does not apply to investment 

securities); Comment 2 to Section 3–103 of the UCC 

(explaining that if an instrument is negotiable in 

form under Article 3, but is, because of its manner 

of use, a ‘‘security’’ under Article 8, Article 8 and 

not Article 3 applies); and Section 8–103(d) of the 

UCC and Comment 5 to Section 8–103 of the UCC 

(providing that a writing that is a security certificate 

is governed by Article 8, even though it also meets 

the requirements of Article 3). 

36 In particular, as noted above, if the E–CDs are 

Article 8 securities, then DTC would be unable to 

conclude that E–CDs would be valid under the laws 

of California and Washington, and issuers in 

California and Washington would likely be 

excluded from the E–CD program. 

37Section 8–103(d) of the UCC provides, in part, 

‘‘a negotiable instrument governed by Article 3 is 

a financial asset if it is held in a securities account.’’ 

See also, the definition of ‘‘financial asset’’ in 

Section 8–102(a)(9) of the UCC, which provides that 

any property held by a securities intermediary for 

another person in a securities account will be a 

financial asset if the securities intermediary has 

expressly agreed with the other person that the 

property is to be treated as such. 

38 DTC’s corporate powers are listed in its 

Organization Certificate, which include, among 

other things, the receipt on deposit for safe-keeping 

money, securities, papers of any kind and any other 

personal property for the account of its participants 

in connection with DTC’s acting as a clearing 

corporation. 

39See Comment 5 to Section 8–103 of the UCC 

(explaining that the indirect holding rules apply to 

any Article 3 negotiable instrument that is held 

through a securities intermediary; Comment 9 to 

Section 8–102 of the UCC (explaining that the 

indirect holding rules in Part 5 of Article 8 may 

apply to financial assets even where the rules in 

Parts 2, 3 and 4 of Article 8 do not apply); and 

Comment 1 to Section 8–104 of the UCC (explaining 

that Article 3 and not Article 8 specifies how one 

acquires a direct interest in a bankers’ acceptance, 

which is a negotiable instrument under Article 3 

and a financial asset under Article 8, and Part 5 of 

Article 8 governs the rights of a clearing 

corporation’s participants with respect to a bankers’ 

acceptance that is held by the clearing corporation 

on account for its participants). 

Master Certificate in accordance with 

the BLOR. 

E–CDs Would be Governed by New 

York Law. 

The parties would select New York 

law as the governing law for all E–CDs, 

as described below. Because there are 

variations between the electronic record 

and signature laws (including in the 

provisions of UETA, as adopted) across 

the various U.S. jurisdictions, the 

selection of New York law (including 

ESRA) as the law governing the E–CDs 

would allow DTC to structure a single 

E–CD program that will be valid for 

issuers in all U.S. jurisdictions. 

DTC believes that the System E–CD 

Templates for the E–CDs and the 

proposed BLOR to be used for E–CD 

issuances have been structured in a 

manner that complies with the 

applicable rules governing jurisdiction 

selection, as follows: 

• Each BLOR would provide that the 

laws of New York would govern the 

terms of the E–CD, which is issued and 

payable to DTC in New York. The 

jurisdiction selection rule in Section 1– 

301 of the UCC, which applies to CD 

issuances under Article 3 of the UCC, 

allows parties to a transaction that bears 

a reasonable relation to a state to select 

the laws of that state to govern their 

rights and duties. 

• Each Electronic Master Certificate 

would have a minimum denomination 

of $250,000. The jurisdiction selection 

rule in Section 5–1401 of the New York 

General Obligations Law allows parties 

to any transaction that results in an 

obligation of at least $250,000 to select 

New York law to govern their rights and 

obligations. 

• Each Electronic Master Certificate 

would expressly provide that it is 

payable in New York. The general rule 

in New York (and in most other 

jurisdictions) is that a note (such as a 

CD) that is executed in one state and 

payable in another, is governed as to its 

nature, validity, interpretation and 

effect by the laws of the state where it 

is made payable. 

E–CDs Would be Structured as 

‘‘financial assets’’—but not as 

‘‘Securities’’—Under Article 8 of the 

UCC. 

Section 8–110 of the UCC provides 

that only the law of the issuer’s 

jurisdiction will govern the ‘‘validity’’ of 

a ‘‘security’’—the laws of another 

jurisdiction cannot be selected to govern 

validity issues. The term ‘‘validity’’ is 

not defined in the UCC. DTC believes 

that laws governing the creation and 

existence of an electronic record as a 

substitute for a written instrument may 

be viewed as laws that govern the 

‘‘validity’’ of an instrument.34

CDs may be both ‘‘negotiable 

instruments’’ under Article 3 of the UCC 

and ‘‘securities’’ under Article 8 of the 

UCC, in which case the provisions of 

Article 8 will govern the CD.35 This 

means that an E–CD that is both a 

negotiable instrument and a security, 

will be governed as to its validity by the 

law of the issuer’s jurisdiction, by virtue 

of Section 8–110 of the UCC. If the 

validity of a security is determined to 

include its electronic nature, then the 

electronic signature and record laws of 

each individual issuer’s jurisdiction 

would apply to each E–CD, and the 

selection of New York’s ESRA would 

not be valid. As a result, any 

jurisdiction that has not enacted a law 

that clearly provides for electronic 

negotiable records would necessarily 

have to be excluded from the E–CD 

program.36

In order to ensure that the parties can 

properly choose New York law, 

including ESRA, to govern the E–CDs, 

E–CDs would be structured so that they 

are not Article 8 Securities. To do this, 

each Electronic Master Certificate would 

provide that it can be transferred only 

by delivery and indorsement. A 

‘‘security,’’ as defined in Section 8– 

102(a)(15) of the UCC, must be in 

‘‘bearer’’ or ‘‘registered’’ form. ‘‘Bearer 

form’’ requires that the security be 

payable to bearer. Because each 

Electronic Master Certificate would be 

payable to Cede & Co., as nominee for 

DTC, it would not be in bearer form. 

‘‘Registered form’’ requires that transfers 

of a security be registered upon books 

maintained for that purpose by or on 

behalf of the issuer, or the security 

certificate must so state. Because E–CDs 

would be transferrable only by delivery 

and indorsement and not on the books 

of the issuer, they will not be in 

registered form and therefore will not 

fall within the definition of ‘‘security’’ 

in Article 8 of the UCC. 

Although the E–CDs would not be 

Article 8 securities, under Section 8– 

103(d) of the UCC they will still be 

‘‘financial assets’’ if held in a securities 

account.37 DTC Rule 6 provides, among 

other things, that DTC will accept 

Securities for deposit and may offer 

such other services as are consistent 

with its purposes and powers.38

‘‘Securities’’ are defined in the DTC 

Rules as anything that would be a 

‘‘financial asset’’ under Section 8–102 of 

the UCC. The DTC Rules further provide 

that any item credited to a securities 

account will be deemed a Security 

under the DTC Rules and treated as a 

financial asset under Article 8 of the 

UCC. Accordingly, E–CDs, each of 

which will be a financial asset under 

Article 8 of the UCC, may be made 

eligible by DTC, credited by DTC to the 

securities accounts of its participants, 

and treated as a ‘‘Security’’ for all 

purposes, in each case under the DTC 

Rules. 

The rules relating to the indirect 

holding system, security entitlements 

and the rights and duties of securities 

intermediaries (e.g., DTC) and 

entitlement holders, which are specified 

in Part 5 of Article 8 of the UCC, apply 

to all financial assets.39 Thus, although 

Federal Register / Vol. 85, No. 234 / Friday, December 4, 2020 / Notices 78377 

40 DTC currently accepts for deposit bankers’ 

acceptances, which are not Article 8 securities, and 

proposes to do the same with respect to the E–CDs. 

41Comment 1 to Section 8–504 of the UCC 

explains that Section 8–504 recognizes the reality 

that these items are held as fungible bulk and are 

not identified to a customer. The language in 

Section 8–504 of the UCC applies to all financial 

assets (not just securities) and would therefore 

provide the basis for holding E–CDs as fungible 

bulk, even if they are not Article 8 securities. 

42See Comment 8 to Section 3–105 of the UCC 

(‘‘an instrument is not negotiable unless the holder 

can ascertain all of its essential terms from its 

face’’). 

43Section 16 of UETA requires that the issuer 

expressly agree that the E–CD is a transferable 

record. Comment 2 to Section 16 of UETA explains 

that it is likely that this agreement will be set forth 

in the body of the electronic record. 

the E–CDs would not be securities, 

because they would be financial assets, 

they may be issued and deposited with 

DTC, and DTC can credit security 

entitlements therein to its Participants, 

as it currently does with respect to 

paper CDs.40 E–CDs would be 

maintained as fungible bulk by DTC, in 

accordance with the requirement in 

Section 8–504 of the UCC that a 

securities intermediary maintain a 

financial asset in a quantity 

corresponding to the aggregate of all 

security entitlements it has established 

therein.41

Summary of Selected E–CD Terms 

Section 3–104 of the UCC provides 

that a negotiable instrument may only 

contain an unconditional promise to 

pay a sum certain, a prescribed set of 

other obligations and powers, and no 

other promise, order, obligation or 

power. Because it is unclear exactly 

what would constitute an additional 

obligation or power, only those 

provisions that are necessary to ensure 

that a holder can ascertain all of the E– 

CDs essential terms 42 would be 

included in the Electronic Master 

Certificate, either directly, or by 

reference to the issuer’s E–CD BLOR. 

Selected Terms Contained in the Master 

Electronic Certificate 

The following terms would be 

included in each System E–CD 

Template: 

• The E–CD would be payable in New 

York—this ensures that the E–CD will 

be governed by New York law. 

• The E–CD is issued in connection 

with a BLOR between the issuer and 

DTC—this allows for the additional 

terms contained in the BLOR to modify 

or affect the terms of the E–CD and puts 

any holder of the E–CD on notice of the 

existence of such additional terms. 

• The E–CD is an electronic record 

created in accordance with ESRA, and 

a transferable record under UETA—this 

makes clear the issuer’s intent that the 

E–CD be a valid electronic instrument 

under both ESRA and UETA.43

• The E–CD would be stored in the Evault—this is necessary to understand 

how the notation and transfer 

provisions in the Electronic Master 

Certificate will work. 

• The E–CD may be transferred only 

by delivery and indorsement—this 

ensures that the E–CD would not be an 

Article 8 security and, therefore, not 

subject to the limitation on jurisdiction 

selection with respect to validity. 

Selected Terms Contained in the BLOR: 

• Paper out provision—this allows 

DTC to convert the E–CD to a paper CD, 

if deemed necessary, without further 

action from the issuer. 

• Selection of New York governing 

law and jurisdiction—included in the 

BLOR to minimize additions to the 

Electronic Master Certificate. 

• No contravention representation by 

the issuer—the issuer is responsible for 

ensuring that the issuance of an E–CD 

complies with applicable local law and 

regulation and the issuer’s governing 

documents. 

Other Proposed Changes to the OA 

In addition to the proposed changes 

described above, the OA would be 

amended as follows: 

a. Section I.A.1. would be amended to 

add a reference to UWC, in addition to 

UW SOURCE, as a system that may be 

used by Participants to submit eligibility 

requests. Additionally, the hyperlink to 

the website of DTC’s parent, The 

Depository Trust & Clearing Corporation 

(‘‘DTCC’’) for information on UW 

SOURCE will be amended to refer to the 

Underwriting section of DTCC’s 

website. The proposed changes in this 

section would facilitate Participants’ 

ability to access DTC’s systems for 

eligibility requests. 

b. Section 1.B.1 relating to the 

documentation requirements for BEO 

Securities would be amended to add a 

new subsection c. with the following 

text under a new heading titled 

‘‘Electronic Certificates for Retail CDs’’: 

Issuers leveraging the use of 

electronic master certificates for Retail 

CDs must submit to DTC on DTC’s form, 

a fully executed BLOR and its 

associated Rider, for each base CUSIP 

issuing Retail CDs through the 

electronic process. For the current form 

of the E–CD BLOR please refer to 

https://www.dtcc.com/legal/issueeligibility. 

In addition, subsection a. of this 

Section, which describes the current 

Letter of Representation requirements 

for BEO Securities, would be amended 

in order to clarify that the requirements 

described in that subsection apply to 

BEO Securities other than E–CDs, 

namely FAST securities or securities 

where a physical master certificate is 

delivered to DTC. 

The proposed changes to this section 

would facilitate Participants’ and 

issuers’ access to documentation used in 

connection with eligibility requests. 

c. Section 1.C.1., which relates to 

considerations relating to eligibility of 

CDs, would be amended to add a 

subsection c. that would be titled 

‘‘Electronic Master Certificates,’’ to 

provide for issuance and Delivery of E– 

CDs and a legal disclaimer as follows: 

In lieu of issuing and delivering 

physical master certificates to DTC, the 

Underwriter can facilitate issuance of 

Retail CDs for state and federally 

chartered banks in electronic form by 

using specific master certificate 

templates (‘‘System E–CD Templates’’) 

provided by DTC through UWC. 

The relevant data (e.g., maturity date) 

will be populated into a System E–CD 

Template as entered by the Underwriter 

into the UWC application. It is the 

responsibility of the Underwriter to 

disseminate the populated electronic 

master certificate to the Issuer for 

electronic signature via UWC. The 

Issuer must electronically sign the 

electronic master certificate prior to 

closing. 

Each electronic master certificate is 

stored in a secure electronic vault 

maintained by DTC. 

For Retail CDs that do not conform to 

the System E–CD Templates, a physical 

master certificate must be delivered to 

DTC prior to closing. 

Note: Whether issued in electronic or 

physical form, securities should be delivered 

to DTC by no later than noon ET on the 

business day prior to the Closing Date as 

outlined in Exhibit B. 

IMPORTANT LEGAL NOTICE: 

DTC DOES NOT VALIDATE, 

CERTIFY, REPRESENT OR SEEK TO 

CONFIRM (i) THE VALIDITY OF THE 

DATA ELEMENTS ENTERED BY A 

PARTICIPANT, ITS CORRESPONDENT 

UNDERWRITERS AND OR VENDORS 

INTO UWC (TOGETHER WITH ANY 

OTHER PERSON USING UWC, ‘‘UWC 

USERS’’) OR (ii) THE FITNESS OF THE 

ELECTRONIC MASTER CERTIFICATES 

FOR ANY PURPOSE. USE OF UWC 

AND/OR ELECTRONIC MASTER 

CERTIFICATES BY ANY UWC USER 

SHALL BE DEEMED TO CONSTITUTE 

A WAIVER OF ANY AND ALL CLAIMS 

(WHETHER DIRECT OR INDIRECT) 

AGAINST DTC AND ITS AFFILIATES, 

AND AN AGREEMENT THAT DTC 

78378 Federal Register / Vol. 85, No. 234 / Friday, December 4, 2020 / Notices 

44See OA, supra note 3 at ii-iii and Rule 6, supra 

note 3. 

45See Securities Exchange Act Release No. 88050 

(January 27, 2020), 85 FR 5728 (January 31, 2020) 

(File No. SR–DTC–2020–002). 

46 Id. 

47See https://www.dtcc.com/legal/importantnotices. 48See Underwriting Service Guide at 2–3, supra 

note 3 at ii–iii and Rule 6, supra note 3. 

AND ITS AFFILIATES SHALL NOT BE 

LIABLE FOR ANY LOSS, COST, 

EXPENSE OR LIABILITY IN RELATION 

TO THE USE OF UWC AND/OR 

DISSEMINATION OR USE OF 

RELATED DOCUMENTATION, 

INCLUDING MASTER CERTIFICATES 

OF DEPOSIT, WHICH ARE PROVIDED 

‘‘AS IS.’’ 

EACH PARTICIPANT AGREES TO 

INDEMNIFY AND HOLD HARMLESS 

DTC AND ITS AFFILIATES FROM AND 

AGAINST ANY AND ALL LOSSES, 

DAMAGES, COSTS, JUDGMENTS, 

CHARGES AND EXPENSES ARISING 

OUT OF OR RELATING TO ANY USE 

OF UWC BY THE PARTICIPANT AND/ 

OR ANY UWC USER, INCLUDING BUT 

NOT LIMITED TO ANY ISSUANCES 

OF CERTIFICATES OF DEPOSIT AND 

RELATED TRANSACTIONS BY SUCH 

PERSON OR ITS AFFILIATES, 

AGENTS, CUSTOMERS OR 

DESIGNEES.’’ 

This proposed change would facilitate 

the implementation and use of System 

E–CD Templates, as described above, 

and set forth a disclaimer by DTC and 

indemnification consistent with the 

requirements of DTC’s current Rule and 

Procedures which allocate the 

responsibility to Participants for the 

accuracy of information and 

instructions provided by them to DTC 

and the indemnification of DTC by 

Participants in this regard.44

d. Exhibit B, which sets forth 

timeframes for submission of documents 

by Participants to DTC Underwriting in 

connection with eligibility requests, 

would be revised to reflect that the 

timeframes described in the exhibit 

relate to documents and information 

submitted through UWC, in addition to 

UW SOURCE. The proposed change to 

Exhibit B would align timeframes for 

submissions through UWC with those 

that apply to submissions to 

UWSOURCE. 

e. Technical changes with respect to 

spelling, punctuation and spacing of 

text would also be made. The proposed 

technical changes to the OA would 

provide enhanced clarity for 

Participants and Issuers with respect to 

Procedures relating to eligibility 

processing and the Deposit of CDs. 

Proposed Changes to the Underwriting 

Service Guide 

a. A glossary description provided for 

BLOR in the Underwriting Guide 

currently describes a BLOR as an 

agreement between DTC and an issuer 

of municipal securities. As described 

above, a BLOR or LOR is required to be 

submitted with respect to any issue of 

BEO Securities which also includes 

corporate Securities. Pursuant to the 

proposed rule change, the text would be 

clarified so that the description of the 

term BLOR is not described as limited 

to applying only to municipal 

Securities. The proposed change to this 

glossary description would provide 

enhanced clarity for Participants and 

Issuers with respect to Procedures 

relating to eligibility documentation 

required for BEO Securities. 

b. Pursuant to the proposed rule 

change, DTC would eliminate references 

to the Participant Terminal System 

(‘‘PTS’’) functions ART and PUND as 

these functions have become obsolete. 

ART related to inquiries about 

transactions of a Participant processed 

by DTC and PUND related to inquiries 

relating to issues and certificates for 

issues held by a Participant. Participant 

inquiries may now be directed to the 

Client Center available on dtcc.com.45

The proposed rule change would update 

the Underwriting Service Guide to 

provide clarity for Participants on how 

to submit inquires relating to DTC’s 

services.46

c. Pursuant to the proposed rule 

change, a reference to the IMPP function 

in PTS would be deleted. The IMPP 

function allowed Participants to view 

Important Notices about underwriting, 

transfer agents, and money market 

instruments (‘‘MMI’’). This function is 

not being widely used by Participants. 

All DTC Important Notices are 

accessible on dtcc.com.47

d. The Section titled ‘‘Packaging 

Inquiries’’ provides information and 

requirements relating to the delivery of 

securities to DTC. Pursuant to the 

proposed rule change, DTC would add 

the following text under a subheading 

titled ‘‘Retail (brokered) Certificates of 

Deposit’’ to note the existence of the 

proposed process for E–CDs with a 

reference to the OA for additional 

information: 

In lieu of issuing and delivering 

physical master certificates to DTC, the 

Underwriter can facilitate issuance of 

Retail CDs for state and federally 

chartered banks in electronic form by 

using available master certificate 

templates through the Underwriting 

Central system (‘‘UWC’’), in accordance 

with the provisions of the OA. 

Each electronic master certificate 

deposited at DTC is stored in a secure 

electronic vault maintained by DTC.’’ 

This Section would also include use, 

waiver of liability and indemnification 

provisions as follows: 

IMPORTANT LEGAL NOTE: 

DTC DOES NOT VALIDATE, 

CERTIFY, REPRESENT OR SEEK TO 

CONFIRM (i) THE VALIDITY OF THE 

DATA ELEMENTS ENTERED BY A 

PARTICIPANT, ITS CORRESPONDENT 

UNDERWRITERS AND OR VENDORS 

INTO UWC (TOGETHER WITH ANY 

OTHER PERSON USING UWC, ‘‘UWC 

USERS’’) OR (ii) THE FITNESS OF THE 

ELECTRONIC MASTER CERTIFICATES 

FOR ANY PURPOSE. USE OF UWC 

AND/OR ELECTRONIC MASTER 

CERTIFICATES BY ANY UWC USER 

SHALL BE DEEMED TO CONSTITUTE 

A WAIVER OF ANY AND ALL CLAIMS 

(WHETHER DIRECT OR INDIRECT) 

AGAINST DTC AND ITS AFFILIATES, 

AND AN AGREEMENT THAT DTC 

AND ITS AFFILIATES SHALL NOT BE 

LIABLE FOR ANY LOSS, COST, 

EXPENSE OR LIABILITY IN RELATION 

TO THE USE OF UWC AND/OR 

DISSEMINATION OR USE OF 

RELATED DOCUMENTATION, 

INCLUDING MASTER CERTIFICATES 

OF DEPOSIT, WHICH ARE PROVIDED 

‘‘AS IS.’’ 

EACH PARTICIPANT AGREES TO 

INDEMNIFY AND HOLD HARMLESS 

DTC AND ITS AFFILIATES FROM AND 

AGAINST ANY AND ALL LOSSES, 

DAMAGES, COSTS, JUDGMENTS, 

CHARGES AND EXPENSES ARISING 

OUT OF OR RELATING TO ANY USE 

OF UWC BY THE PARTICIPANT AND/ 

OR ANY UWC USER, INCLUDING BUT 

NOT LIMITED TO ANY ISSUANCES 

OF CERTIFICATES OF DEPOSIT AND 

RELATED TRANSACTIONS BY SUCH 

PERSON OR ITS AFFILIATES, 

AGENTS, CUSTOMERS OR 

DESIGNEES. 

The proposed changes to this section 

would facilitate the implementation and 

use of System E–CD Templates, as 

described above, and set forth a 

disclaimer by DTC and indemnification 

consistent with the requirements of 

DTC’s current Rule and Procedures 

which allocate the responsibility to 

Participants for the accuracy of 

information and instructions provided 

by them to DTC and the indemnification 

of DTC by Participants in this regard.48

System Access and Information Security 

Considerations 

A Participant controls access to its 

account and transaction information 

relating to its holdings and activity in 

DTC’s systems through DTCC’s access 

Federal Register / Vol. 85, No. 234 / Friday, December 4, 2020 / Notices 78379 

49https://www.dtcc.com/client-center/accesscoordinators. 50See Rule 2, supra note 3. 51See OA, supra note 3 at 55. 52See Privacy Policy on DTCC website, available 

at https://www.dtcc.com/privacy. 

53 15 U.S.C. 78q–1(b)(3)(F). 

54 Id. 55 17 CFR 240.1717Ad–22(d)(1). 

coordinator program.49 This program 

includes, but is not limited to, controls 

on access to UWSOURCE, and would 

also encompass UWC access upon 

implementation of the proposal. DTC 

may provide to the issuer of any 

security, including but not limited to 

CDs, at any time credited to the Account 

of a Participant the name of the 

Participant and the amount of the 

issuer’s securities so credited, and the 

Corporation is authorized to provide 

similar information to any appropriate 

governmental authority.50 An issuer 

must provide authorization annually for 

a third party agent to obtain access to an 

position information with respect to 

Securities of such issuer.51

DTCC, for itself and on behalf of its 

subsidiaries, including DTC, maintains 

a privacy policy, which among other 

things, states that DTCC maintains an 

information security program setting 

forth standards for maintaining 

administrative, technical and physical 

safeguards to protect the personal 

information provided by users of 

services, which would include personal 

information provided through the E–CD 

program, against accidental, unlawful or 

unauthorized destruction, loss, 

alteration, access, disclosure or use. 

DTCC periodically tests the security 

protections of its information systems 

and monitors the effectiveness of its 

information security controls, systems 

and procedures.52

Implementation Timeframes 

The proposed rule change would be 

implemented by DTC in two phases, 

with the first phase beginning after 

approval of the proposed rule change by 

the Commission and prior to the end of 

January 2021. 

Initially, underwriters would be 

invited to participate, on a voluntary 

basis. The underwriters that would 

participate in this initial phase are those 

that expressed interest in participating 

after outreach by DTC to those 

Participants that participated in the 

development of the proposed E–CD 

program. The Participants that would 

participate during the first phase are 

those Participants that expect to be able 

to submit an issuance during this phase 

that would meet the requirements of the 

proposed E–CD program, as those 

requirements are described above. This 

phased approach to implementation 

would facilitate a smooth transition, 

from an operational perspective, for 

ultimately making UWC available for all 

E–CD offerings of state and federally 

chartered banks that conform to the 

System Templates. 

Subsequently, the E–CD program 

would be made available to all 

underwriters in early 2021, with the 

implementation date of such availability 

to be announced via Important Notice. 

Upon approval of the proposed rule 

change, a legend would be added to the 

OA and Underwriting Service Guide 

indicating that the applicable provisions 

relating to E–CDs would apply only to 

(i) issuers whose issuances are 

submitted to DTC through UWC and (ii) 

Participants that submit and/or hold 

eligible issuances submitted through 

UWC, during this first phase, until a 

date to be announced by DTC via 

Important Notice when the E–CD 

program would become available, on a 

voluntary basis, for all eligible 

issuances. This legend would read as 

follows: 

Applicable provisions relating to 

UWC and Electronic Master Certificates 

for Certificates of Deposit, as described 

herein, apply only to (i) Issuers whose 

issuances are submitted to DTC through 

UWC, and (ii) Participants that submit 

and/or hold eligible issuances submitted 

through UWC during an initial phase of 

the electronic CD program, until a date 

to be announced by DTC via Important 

Notice when the E–CD program would 

become available, on a voluntary basis, 

for all eligible issuances of state and 

federally chartered banks. This legend 

will be removed upon full 

implementation of the E–CD program on 

a date to be announced via Important 

Notice. 

Issuers and underwriters that choose 

not to use the new E–CD program could 

continue to use the existing process 

through UW SOURCE, including 

making Deposits using physical 

certificates. 

2. Statutory Basis 

Section 17A(b)(3(F) of the Act 

The Clearing Agencies believe that the 

Framework is consistent with Section 

17A(b)(3)(F) of the Act,53 for the reasons 

described below. 

Section 17A(b)(3)(F) of the Act 54

requires, inter alia, that the rules of a 

clearing agency be designed to assure 

the safeguarding of securities and funds 

which are in the custody or control of 

the clearing agency or for which it is 

responsible. As described above, the 

proposed rule change would provide for 

the issuance of Electronic Master 

Certificates for E–CDs which would be 

stored in a secure E-Vault, as described 

above. Therefore, by providing for the 

storage of E–CDs in a secure electronic 

vault, the proposed rule change is 

designed to assure the safeguarding of 

securities which are in the custody or 

control of DTC. 

Section 17A(b)(3)(F) of the Act also 

requires that the rules of the clearing 

agency be designed, inter alia, to 

promote the prompt and accurate 

clearance and settlement of securities 

transactions. DTC believes that the 

proposed rule change is consistent with 

this provision of the Act because DTC 

believes that the proposed E–CD 

program would reduce closing delays 

caused by disruptions to physical 

delivery of certificates by eliminating 

the need for DTC to receive original 

paper master certificates in advance of 

CD issuances that would be eligible for 

issuance through the new program. 

Therefore, by facilitating the potential 

reduction of closing delays for issuances 

of CDs that utilize the E–CD program, 

DTC believes that the proposed rule 

change would promote the prompt and 

accurate clearance and settlement of 

securities transactions. 

DTC also believes that the proposed 

rule changes are consistent with Section 

17A(b)(3)(F), cited above, because by 

making technical changes with respect 

to spelling, punctuation and spacing of 

text within the Procedures, as described 

above, the proposed rule change would 

provide enhanced clarity for 

Participants and Issuers with respect to 

Procedures relating to eligibility 

processing and the Deposit of CDs. By 

providing Participants and Issuers with 

enhanced clarity with regard to the 

Procedures relating to, and therefore 

facilitating eligibility processing and the 

Deposit of CDs that may be the subject 

of transactions processed through the 

DTC system, DTC believes that the 

proposed rule change would promote 

the prompt and accurate clearance and 

settlement of securities transactions 

consistent with the Act. 

Rule 17Ad–22(e)(1) 

Rule 17Ad–22(d)(1) promulgated 

under the Act 55 requires that each 

registered clearing agency shall 

establish, implement, maintain and 

enforce written policies and procedures 

reasonably designed to provide for a 

well-founded, clear, transparent, and 

enforceable legal basis for each aspect of 

its activities in all relevant jurisdictions. 

As described above, DTC believes that 

requiring E–CDs at DTC to be negotiable 

instruments governed by New York law 

would allow for the valid issuance into 

78380 Federal Register / Vol. 85, No. 234 / Friday, December 4, 2020 / Notices 

56Although Section 307 of ESRA does not 

provide the same robust provisions and 

commentary as Section 16 of UETA, it is still 

sufficiently clear that E–CDs that meet the 

Uniqueness Standard are valid. 

57 17 CFR 240.1717Ad–22(d)(10). 

58 17 CFR 240.1717Ad–22(d)(11)(i)(ii) and (iii). 

DTC of E–CDs of issuers in all relevant 

jurisdictions. Therefore, by providing 

for E–CDs to be deemed negotiable 

instruments governed by New York law, 

as described above, DTC believes that 

DTC’s Rules and Procedures, as 

amended by the proposed rule change, 

would provide for a well-founded, clear, 

transparent, and enforceable legal basis 

for the valid issuance of E–CDs into 

DTC from issuers domiciled in any 

relevant jurisdiction. 

Also, as described above, because 

DTC believes the Section 16 UETA 

provisions are more robust than ESRA 

and the guidance in Section 16 of UETA 

is more developed, the proposal 

provides would provide that E–CDs that 

would be made eligible by DTC would 

be structured to meet the requirements 

of UETA, including the Section 16 Safe 

Harbor, even though, as discussed 

above, the E–CDs would also be 

structured so that they are governed by 

New York law (including ESRA).56 DTC 

believes that this construct will help 

ensure that an E–CD also would be valid 

in the jurisdictions that have adopted 

Section 16 of UETA, in the unlikely 

event that a court of competent 

jurisdiction would determine not to 

recognize the selection of New York 

law. Therefore, DTC believes that 

structuring E–CDs to meet the 

requirements of UETA would allow 

DTC’s Rules and Procedures to provide 

additional support for a well-founded, 

clear, transparent, and enforceable legal 

basis for the valid issuance of E–CDs 

into DTC from issuers domiciled in 

jurisdictions that have adopted Section 

16 of UETA. 

DTC believes that with respect to all 

jurisdictions, including those that have 

not adopted Section 16 of UETA or 

ESRA, the Procedures, as amended 

pursuant to the proposed rule change, 

would continue to facilitate the issuance 

of CDs in physical form into DTC. As 

indicated above, the validity of a 

physical security does not depend on 

the provisions of electronic signature 

laws. DTC believes that Article 8 of the 

UCC as adopted in all relevant 

jurisdictions allows for the physical 

issuance of CDs as securities. Therefore, 

an issuer from any relevant jurisdiction 

would continue to be able to issue valid 

CDs in physical form that meet DTC’s 

eligibility requirements into DTC. 

Therefore, DTC believes that DTC’s 

Procedures, as amended pursuant to the 

proposed rule change, would continue 

to provide a well-founded, clear, 

transparent, and enforceable legal basis 

for the valid issuance of CDs into DTC 

from issuers domiciled in any relevant 

jurisdiction. 

Rule 17Ad–22(e)(10) 

Rule 17Ad–22(d)(10) promulgated 

under the Act 57 requires that each 

registered clearing agency shall 

establish, implement, maintain and 

enforce written policies and procedures 

reasonably designed, inter alia, to, as 

applicable, establish and maintain 

operational practices that manage the 

risks associated with such physical 

deliveries. As mentioned above, the 

proposed rule change would eliminate 

the requirement for the delivery of a 

physical master certificate for a CD 

offering to the extent it is eligible for, 

and processed through, the electronic 

process established through UWC, and 

stored in the E-Vault. DTC believes the 

proposed electronic process for Delivery 

of E–CDs to DTC would reduce risks of 

loss related to the physical CDs that 

would otherwise be physically 

transported to DTC for Deposit and later 

returned to issuers or their agents for 

redemption upon maturity of the CD. 

Therefore, by reducing the risk of loss 

of physical master certificates by 

allowing their replacement with 

Electronic Master Certificates, DTC 

believes that the proposed rule change 

would establish and maintain 

operational practices that manage risks 

associated with eligible offerings of CDs, 

as described above. 

Rule 17Ad–22(e)(11) 

Rule 17Ad–22(e)(11) promulgated 

under the Act 58 requires that each 

covered clearing agency shall establish, 

implement, maintain and enforce 

written policies and procedures 

reasonably designed to, as applicable, 

when the covered clearing agency 

provides central securities depository 

services: (i) Maintain securities in an 

immobilized or dematerialized form for 

their transfer by book entry, ensure the 

integrity of securities issues, and 

minimize and manage the risks 

associated with the safekeeping and 

transfer of securities; (ii), inter alia, 

prevent the unauthorized creation or 

deletion of securities; and (iii) Protect 

assets against custody risk through 

appropriate rules and procedures 

consistent with relevant laws, rules, and 

regulations in jurisdictions where it 

operates. 

DTC believes the proposed rule 

change is consistent with the provisions 

of Rule 17Ad–22(e)(11)(i), cited above, 

because (i) by providing for the Deposit 

of Securities in the name of Cede & Co. 

to be deposited in electronic form and 

stored in an electronic vault, the 

proposed rule change would provide for 

the immobilization and 

dematerialization of master certificates 

for the transfer of CDs by book entry, (ii) 

the integrity of E–CDs would be 

maintained by such storage in the 

secure electronic vault and (iii) it would 

minimize the risks associated with the 

safekeeping and transfer of securities by 

providing for purely electronic 

processing of the certificates and 

therefore preventing potential of loss of 

certificates if the applicable issues were 

to be issued and processed in physical 

form. 

DTC believes the proposed rule 

change is consistent with the provisions 

of Rule 17Ad–22(e)(11)(ii), cited above, 

because it would provide for a process 

allowing the issuance and Deposit of the 

related Securities through the use of 

UWC and associated System Templates 

for creation of E–CDs, signature of E– 

CDs and Delivery of the E–CDs to DTC 

for storage in the E-Vault. Through the 

use of this centralized process for 

issuance and processing of CDs, the 

proposed rule change would facilitate 

the prevention of the unauthorized 

creation or deletion of securities 

processed through the E–CD program. 

DTC believes the proposed rule 

change is consistent with the provisions 

of Rule 17Ad–22(e)(11)(iii) because, as 

discussed above, it would provide for 

Procedures for the issuance of E–CDs, 

Deposit of E–CDs, and custody of E–CDs 

in the E-Vault in a manner consistent 

with the requirements applicable to the 

validity of electronic negotiable 

instruments under the NYUCC and the 

e-signature laws, as discussed above. 

The applicable Procedures would be 

established through proposed rule 

changes to the Underwriting Service 

Guide and the OA, and the utilization 

of Electronic Master Certificates in the 

forms of System E–CD Templates issued 

under the applicable E–CD BLOR, as 

discussed above. Therefore, DTC 

believes that E–CDs issued, Deposited 

and stored in accordance with the 

proposed rule change would be 

Financial Assets that constitute Eligible 

Securities under the Rules, and would 

be valid and binding negotiable 

instruments under applicable law, and 

therefore protect the applicable assets 

against custody risk through appropriate 

rules and procedures consistent with 

relevant laws, rules, and regulations in 

jurisdictions where DTC operates. 

Federal Register / Vol. 85, No. 234 / Friday, December 4, 2020 / Notices 78381 

59 17 CFR 200.30–3(a)(12). 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

(B) Clearing Agency’s Statement on 

Burden on Competition 

Once the proposed rule change is 

fully implemented as described above, 

DTC does not believe that the proposed 

rule change would have any impact, or 

impose any burden, on competition 

because the proposed rule change 

provides for an additional method 

under which Participants may request 

eligibility of, process, and Deliver CDs 

on a voluntary basis. The new method 

would be available to all Participants 

through UWC, on a date to be 

announced by Important Notice. 

The existing method for Deposit of 

CDs at DTC, that includes the use of a 

physical master certificate, would 

continue to remain available to all 

Participants even after the new E–CD 

process was implemented. 

DTC does not believe that the aspect 

of the proposed rule change to initially 

make the proposed E–CD process 

available to a subset of Participants 

prior to full implementation, as 

described above, would have any 

impact, or impose any burden on 

competition. Participants not 

participating in the initial phase 

described above would be able to 

continue to Deposit eligible CDs in 

physical form. However, to the extent 

the proposed rule change could cause a 

burden because certain Participants 

would continue to be able to Deliver 

electronic certificates during an 

interruption of Participants’ ability to 

make physical delivery of securities to 

DTC, and/or DTC’s ability to accept 

physical deliveries of securities, DTC 

does not believe the burden have a 

significant impact on competition 

because Participants could utilize the 

LOP process, mentioned above, to effect 

Delivery of a security represented in 

physical form to DTC despite any such 

interruption of physical delivery 

services. 

DTC does not believe that the 

proposed rule change to make technical 

changes with respect to spelling, 

punctuation and spacing of text within 

the Procedures, as described above, 

would have any impact, or impose any 

burden, on competition because the 

technical changes would merely provide 

enhanced clarity with respect to the 

Procedures and not have an effect on the 

rights or obligations of Participants and/ 

or Issuers with respect to eligibility 

processing and Deposit of Eligible 

Securities at DTC. 

(C) Clearing Agency’s Statement on 

Comments on the Proposed Rule 

Change Received From Members, 

Participants, or Others 

DTC has not solicited or received any 

written comments relating to this 

proposal. DTC will notify the 

Commission of any written comments 

received by the DTC. 

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 Act. 

Comments may be submitted by any of 

the following methods: 

Electronic Comments 

• Use the Commission’s internet 

comment form (http://www.sec.gov/ 

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include File Number SR– 

DTC–2020–017 on the subject line. 

Paper Comments 

• 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–2020–017. 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 (http://www.sec.gov/ 

rules/sro.shtml). Copies of the 

submission, all subsequent 

amendments, all written statements 

with respect to the proposed rule 

change that are filed with the 

Commission, and all written 

communications relating to the 

proposed rule change between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

provisions of 5 U.S.C. 552, will be 

available for website viewing and 

printing in the Commission’s Public 

Reference Room, 100 F Street NE, 

Washington, DC 20549 on official 

business days between the hours of 

10:00 a.m. and 3:00 p.m. Copies of the 

filing also will be available for 

inspection and copying at the principal 

office of DTC and on DTCC’s website 

(http://dtcc.com/legal/sec-rulefilings.aspx). All comments received 

will be posted without change. Persons 

submitting comments are cautioned that 

we do not redact or edit personal 

identifying information from comment 

submissions. You should submit only 

information that you wish to make 

available publicly. All submissions 

should refer to File Number SR–DTC– 

2020–017 and should be submitted on 

or before December 28, 2020. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.59

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2020–26676 Filed 12–3–20; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–90536; File No. SR–CBOE– 

2020–106] 

Self-Regulatory Organizations; Cboe 

Exchange, Inc.; Notice of Filing of a 

Proposed Rule Change, as Modified by 

Amendment No. 1, To Amend Its Rules 

Regarding the Minimum Increments for 

Electronic Bids and Offers and 

Exercise Prices of Certain FLEX 

Options and Clarify in the Rules How 

the System Ranks FLEX Option Bids 

and Offers for Allocation Purposes 

November 30, 2020. 

Pursuant to Section 19(b)(1) of the 

Securities Exchange Act of 1934 

(‘‘Act’’),1 and Rule 19b-4 thereunder,2

notice is hereby given that on November 

16, Cboe Exchange, Inc. (‘‘Exchange’’ or 

‘‘Cboe Options’’) filed with the 

Securities and Exchange Commission 

(‘‘Commission’’) the proposed rule 

change, and on November 30, 2020, the 

Exchange filed Amendment No. 1 to the 

proposed rule change, which amended 

and replaced the proposed rule change 

in its entirety. The proposed rule 

change, as modified by Amendment No. 

1, as described in Items I, II, and III