162 Federal Register / Vol. 86, No. 1 / Monday, January 4, 2021 / Notices 

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

2 17 CFR 240.19b–4. 

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

4 17 CFR 240.19b–4(f)(2). 

5Capitalized terms not defined herein are defined 

in the Rules, By-Laws and Organization Certificate 

of DTC (‘‘Rules’’) available at http://www.dtcc.com/ 

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

or in the ClaimConnectTM Service Guide available 

at https://www.dtcc.com/-/media/Files/Downloads/ 

legal/service-guides/ClaimConnect.pdf. 6Available at http://www.dtcc.com/-/media/ 

Files/Downloads/legal/fee-guides/dtcfeeguide.pdf. 7See Securities Exchange Act Release No. 90481 

(November 23, 2020), 85 FR 76640 (November 30, 

2020) (SR–DTC–2020–012) (‘‘Approval Order’’). 

8With respect to ClaimConnect, a cash claim or 

cash claim transaction is a cash entitlement (i.e., a 

request for cash) from one Participant to another 

Participant. Typically, cash claims arise as a result 

of trading exceptions from a Corporate Action 

event, where a cash entitlement needs to be 

delivered from one holder to another. Trading 

exceptions include, but are not limited to, trades 

outside of the market’s agreed upon settlement 

cycle, lack of due bill fail tracking, stock loan or 

repo transaction discrepancy, or tax treaty 

differences. 

9See ClaimConnect Service Guide, supra note 5. 

10Separate from ClaimConnect, an existing SPO 

fee of $.10 per side, per SPO will continue to be 

charged. Fee ID 186, Fee Guide, supra note 6. 

11See ClaimConnect Service Guide, supra note 5, 

regarding claim states. 

12Fee ID 709, Fee Guide, supra note 6. 

13 15 U.S.C. 78q–1(b)(3)(D). 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–90805; File No. SR–DTC– 

2020–020] 

Self-Regulatory Organizations; The 

Depository Trust Company; Notice of 

Filing and Immediate Effectiveness of 

a Proposed Rule Change To Add a Fee 

for the New ClaimConnectTM Service 

December 28, 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 December 

18, 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. DTC filed the 

proposed rule change pursuant to 

Section 19(b)(3)(A) of the Act 3 and Rule 

19b–4(f)(2) thereunder.4 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 5 consists of 

amendments to the Guide to the DTC 

Fee Schedule (‘‘Fee Guide’’) 6 to add a 

fee for the new ClaimConnect service at 

DTC,7 as described in greater detail 

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 purpose of the proposed rule 

change is to amend the Fee Guide to add 

a fee for the new ClaimConnect service 

at DTC. 

ClaimConnect, an optional DTC 

service, enables Participants to 

bilaterally match and settle cash claim 

transactions at DTC.8 More specifically, 

ClaimConnect is a validation and 

matching engine that continually 

monitors claims throughout their 

lifecycle in order to settle and close 

claims through DTC’s settlement 

process. Claims can be matched 

manually (i.e., Affirmed) by 

ClaimConnect users or automatically 

(i.e., Auto-matched) by the 

ClaimConnect service when it matches 

two like claims based on the alignment 

of certain data elements. Once matched, 

claims are settled through systematic 

Securities Payment Orders (‘‘SPOs’’) 

generated and submitted by 

ClaimConnect at set times intraday on a 

settlement date.9

With this proposed rule change, DTC 

is establishing a ClaimConnect matching 

fee of a $1.75 per side, per-matched 

claim, whether or not the claim is 

Affirmed or Auto-matched. In other 

words, both parties to a matched claim 

will be charged $1.75, such that DTC 

would collect $3.50 for each matched 

claim.10 No charge will be assessed for 

claims that do not match (e.g., 

Uncompared, DK-uncompared, or 

Canceled claims).11

This per-side matching fee for claims 

processing will be new for Participants 

that use Asset Services products. In 

choosing this fee and fee structure, DTC 

considered various factors. First, DTC 

followed its pricing policy of setting 

fees at cost plus a low-margin markup. 

The ‘‘low-margin markup’’ is applied to 

recover development costs and 

operating expenses, and to accumulate 

capital sufficient to meet regulatory and 

economic requirements. In 

consideration of that policy, the 

aggregate amount of $3.50 per-matched 

claim will help facilitate a four-year 

return on investment for DTC’s creation 

of ClaimConnect and help cover 

continued operating expenses for the 

service. Second, the per-side structure 

was chosen to allocate the cost evenly 

between a claim’s two counterparties. 

Third, in order to align charges for the 

ClaimConnect service with Participants’ 

actual usage of the service, the fee was 

structured as a per-usage fee (i.e., permatched claim) instead of a flat monthly 

or annual fixed-rate fee. Fourth, in 

setting the fee, DTC was mindful that, 

although there are no competing 

services, Participants could choose not 

to use ClaimConnect and continue to 

settle claims as they did prior to 

ClaimConnect (e.g., using internal/ 

proprietary systems, third-party 

software, or some combination thereof). 

Fifth, DTC evaluated its existing Stock, 

Loan, Repo & Fail Adjustments fee that 

DTC charges Participants for such 

entitlement/allocation adjustment 

activity (‘‘Adjustment Service Fee’’), 

similar to a cash claim.12 There, DTC 

charges a $1.50 per adjustment, not per 

side. In other words, whichever party 

submits an adjustment is charged $1.50. 

However, because there is no validation 

and matching process for adjustments, 

unlike with ClaimConnect claims, 

counterparties often need to submit 

multiple adjustments between each 

other before reaching final agreement; 

thus, the total adjustment cost routinely 

exceeds $3.50. 

Changes to the Fee Guide 

To effectuate the ClaimConnect fee, 

the Corporate Action subsection of the 

Custody and Securities Processing 

section of the Fee Guide will be updated 

to include a ClaimConnect Matching 

Fee of $1.75, per each claim side after 

matching. 

Implementation Timeframe 

The ClaimConnect fee will be added 

to the 2021 Fee Guide and charged 

beginning January 1, 2021. 

2. Statutory Basis 

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

requires that DTC’s Rules provide for 

the equitable allocation of reasonable 

dues, fees, and other charges among its 

Participants.13 DTC believes that the 

ClaimConnect fee is consistent with this 

provision of the Act. 

As described above, the ClaimConnect 

service is an optional service that was 

Federal Register / Vol. 86, No. 1 / Monday, January 4, 2021 / Notices 163 

14See Approval Order, supra note 7. 

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

16 17 CFR 240.19b–4(f). 

17 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

developed based on discussions with 

Participants to enable them to bilaterally 

match and settle cash claim transactions 

at DTC.14 Pursuant to this proposed rule 

change, DTC is establishing an aggregate 

fee of $3.50 per-matched claim. DTC 

believes the fee is equitably allocated 

because, as described above, the fee will 

be divided evenly between the two 

counterparties to a claim, such that each 

side of the claim will be charge $1.75 

per-matched claim, which reflects the 

counterparties’ shared usage of the 

service in settling a claim. 

DTC believes the fee is reasonable 

because, as described above, (i) it is 

consistent with DTC’s cost plus lowmargin markup pricing policy; (ii) it is 

expected to produce a four-year return 

on DTC’s investment in developing 

ClaimConnect, compared to a higher fee 

that would produce a quicker return, 

while helping cover continued 

operating expenses for the service; (iii) 

it is structured so that both parties to a 

claim pay the same amount; (iv) it is 

structured to align charges for the 

service with actual usage of the service; 

and (v) it was set in consideration of a 

similar, existing fee (i.e., the Adjustment 

Service Fee) but knowing that parties to 

a claim will not need to submit 

additional claims and pay additional 

ClaimConnect fees to reach agreement 

on a claim, given the service’s 

validation and matching process. 

(B) Clearing Agency’s Statement on 

Burden on Competition 

DTC does not believe that the 

ClaimConnect fee will have any impact 

on competition. 

As described above, DTC believes that 

the proposed fee is equitable, 

reasonable, and on par with fees for 

other DTC services (e.g., the Adjustment 

Service Fee) already used by 

Participants. As such, there is no 

expectation that this particular fee 

would cause any competitive 

advantages or disadvantages among 

Participants. Moreover, although there 

is no service in direct competition with 

ClaimConnect, Participants are able to 

settle their cash claims without using 

ClaimConnect, as they did prior to DTC 

establishing the service. As such, it will 

be up to Participants to decide whether 

settling claims via the ClaimConnect 

service is worth the cost. If a Participant 

concludes that the manner in which it 

was settling claims prior to 

ClaimConnect (e.g., using internal/ 

proprietary systems, a third-party 

software, or some combination thereof) 

is preferable (whether due to cost, 

functionality, or some other factor), then 

the Participant can simply choose not to 

use ClaimConnect and continue to settle 

claims away from DTC. Given this 

optionality, DTC believes that the 

proposed fee should not place any 

Participants at a relative disadvantage 

compared to other Participants. 

(C) Clearing Agency’s Statement on 

Comments on the Proposed Rule 

Change Received From Members, 

Participants, or Others 

Written comments relating to this 

proposed rule change have not been 

solicited or received. DTC will notify 

the Commission of any written 

comments received by DTC. 

III. Date of Effectiveness of the 

Proposed Rule Change, and Timing for 

Commission Action 

The foregoing rule change has become 

effective pursuant to Section 

19(b)(3)(A) 15 of the Act and paragraph 

(f) 16 of Rule 19b–4 thereunder. 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– 

DTC–2020–020 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–2020–020. 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– 

2020–020 and should be submitted on 

or before January 25, 2021. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.17

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2020–29022 Filed 12–31–20; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–90802; File No. SR– 

CboeBZX–2020–042] 

Self-Regulatory Organizations; Cboe 

BZX Exchange, Inc.; Notice of 

Withdrawal of a Proposed Rule Change 

To Accommodate Exchange Listing 

and Trading of Options-Linked 

Securities 

December 28, 2020. 

On May 15, 2020, Cboe BZX 

Exchange, Inc. (‘‘Exchange’’) filed with 

the Securities and Exchange 

Commission (‘‘Commission’’), pursuant 

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

Exchange Act of 1934 (‘‘Act’’) 1 and Rule 

19b–4 thereunder,2 a proposed rule 

change to permit Exchange listing and 

trading of Options-Linked Securities. 

The proposed rule change was