Federal Register / Vol. 88, No. 168 / Thursday, August 31, 2023 / Notices 60251 

1 12 U.S.C. 5465(e)(1). 

2 17 CFR 240.19b–4(n)(1)(i). 

3Capitalized terms not defined herein are defined 

in the Rules, By-Laws and Organization Certificate 

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

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

4See Securities Exchange Act Release Nos. 82377 

(Dec. 21, 2017), 82 FR 61617 (Dec. 28, 2017) (SR– 

DTC–2017–004; SR–FICC–2017–008; SR–NSCC– 

2017–005). Following the completion of the initial 

Continued 

the reorganization were paid by the 

applicant and the applicant’s 

investment adviser. 

Filing Date: The application was filed 

on July 21, 2023. 

Applicant’s Address: 100 Bellevue 

Parkway, Wilmington, Delaware 19809. 

BlackRock New York Municipal 

Income Quality Trust [File No. 811– 

21179] 

Summary: Applicant, a closed-end 

investment company, seeks an order 

declaring that it has ceased to be an 

investment company. The applicant has 

transferred its assets to BlackRock New 

York Municipal Income Trust, and on 

May 3, 2021 made a final distribution to 

its shareholders based on net asset 

value. Expenses of $149,154 incurred in 

connection with the reorganization were 

paid by the applicant and the 

applicant’s investment adviser. 

Filing Date: The application was filed 

on July 21, 2023. 

Applicant’s Address: 100 Bellevue 

Parkway, Wilmington, Delaware 19809. 

BlackRock New York Municipal 

Income Trust II [File No. 811–21124] 

Summary: Applicant, a closed-end 

investment company, seeks an order 

declaring that it has ceased to be an 

investment company. The applicant has 

transferred its assets to BlackRock New 

York Municipal Income Trust, and on 

May 3, 2021 made a final distribution to 

its shareholders based on net asset 

value. Expenses of $134,844 incurred in 

connection with the reorganization were 

paid by the applicant and the 

applicant’s investment adviser. 

Filing Date: The application was filed 

on July 21, 2023. 

Applicant’s Address: 100 Bellevue 

Parkway, Wilmington, Delaware 19809. 

BlackRock Strategic Municipal Trust 

[File No. 811–09401] 

Summary: Applicant, a closed-end 

investment company, seeks an order 

declaring that it has ceased to be an 

investment company. The applicant has 

transferred its assets to BlackRock 

Municipal Income Trust II, and on May 

3, 2021 made a final distribution to its 

shareholders based on net asset value. 

Expenses of $210,319 incurred in 

connection with the reorganization were 

paid by the applicant and the 

applicant’s investment adviser. 

Filing Date: The application was filed 

on July 21, 2023. 

Applicant’s Address: 100 Bellevue 

Parkway, Wilmington, Delaware 19809. 

Hartford Funds NextShares Trust [File 

No. 811–23215] 

Summary: Applicant seeks an order 

declaring that it has ceased to be an 

investment company. On June 11, 2019, 

applicant made a liquidating 

distribution to its shareholders based on 

net asset value. Expenses of $21,000 

incurred in connection with the 

liquidation were paid by the applicant’s 

investment adviser. 

Filing Date: The application was filed 

on July 6, 2023. 

Applicant’s Address: 690 Lee Road, 

Wayne, Pennsylvania 19087. 

USCF Mutual Funds Trust [File No. 

811–23213] 

Summary: Applicant seeks an order 

declaring that it has ceased to be an 

investment company. On March 21, 

2019, applicant made a liquidating 

distribution to its shareholders based on 

net asset value. Expenses of $10,000 

incurred in connection with the 

liquidation were paid by the applicant’s 

investment adviser. 

Filing Date: The application was filed 

on July 28, 2023. 

Applicant’s Address: 1850 Mt. Diablo 

Boulevard, Suite 640, Walnut Creek, 

California 94596. 

For the Commission, by the Division of 

Investment Management, pursuant to 

delegated authority. 

J. Matthew DeLesDernier, 

Deputy Secretary. 

[FR Doc. 2023–18771 Filed 8–30–23; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–98227; File No. SR–DTC– 

2023–801] 

Self-Regulatory Organizations; The 

Depository Trust Company; Notice of 

Filing of Advance Notice To Raise 

Prefunded Liquidity Resources 

Through the Periodic Issuance and 

Private Placement of Senior Notes 

August 25, 2023. 

Pursuant to section 806(e)(1) of title 

VIII of the Dodd-Frank Wall Street 

Reform and Consumer Protection Act 

entitled the Payment, Clearing, and 

Settlement Supervision Act of 2010 

(‘‘Clearing Supervision Act’’) 1 and Rule 

19b–4(n)(1)(i) under the Securities 

Exchange Act of 1934 (‘‘Act’’),2 notice is 

hereby given that on August 15, 2023, 

The Depository Trust Company (‘‘DTC’’) 

filed with the Securities and Exchange 

Commission (‘‘Commission’’) the 

advance notice SR–DTC–2023–801 

(‘‘Advance Notice’’) 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 

Advance Notice from interested 

persons. 

I. Clearing Agency’s Statement of the 

Terms of Substance of the Advance 

Notice 

This advance notice is filed by DTC 

in connection with a proposal to raise 

prefunded liquidity resources through 

the periodic issuance and private 

placement of senior notes (‘‘Debt 

Issuance’’). The proceeds from the Debt 

Issuance would supplement DTC’s 

existing default liquidity risk 

management resources, as described in 

greater detail below.3

II. Clearing Agency’s Statement of the 

Purpose of, and Statutory Basis for, the 

Advance Notice 

In its filing with the Commission, the 

clearing agency included statements 

concerning the purpose of and basis for 

the Advance Notice and discussed any 

comments it received on the Advance 

Notice. 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 and B below, of the most 

significant aspects of such statements. 

(A) Clearing Agency’s Statement on 

Comments on the Advance Notice 

Received from Members, Participants, or 

Others 

Written comments on the advance 

notice have not been solicited or 

received. DTC will notify the 

Commission of any written comments 

received by DTC. 

(B) Advance Notice Filed Pursuant to 

Section 806(e) of the Clearing 

Supervision Act 

Description of Proposed Change 

DTC is proposing to raise prefunded 

liquidity through the periodic issuance 

and private placement of senior notes to 

qualified institutional investors in an 

aggregate amount not to exceed $5 

billion, as described in greater detail 

below. The proceeds of the Debt 

Issuance would supplement DTC’s 

qualifying liquidity resources, which are 

described in the Clearing Agency 

Liquidity Risk Management Framework 

(‘‘Framework’’) 4 and include cash 


ddrumheller on DSK120RN23PROD with NOTICES1
60252 Federal Register / Vol. 88, No. 168 / Thursday, August 31, 2023 / Notices 

issuance and private placement of senior notes, the 

Clearing Agencies would file a proposed rule 

change to amend the Framework to include the 

proceeds of the Debt Issuance as an additional 

qualifying liquidity resource of DTC. 5Capitalized terms not defined herein are defined 

in the Rules, By-Laws and Organization Certificate 

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

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

See also Securities Exchange Act Release No. 80605 

(May 5, 2017), 82 FR 21850 (May 10, 2017) (SR– 

DTC–2017–802; SR–NSCC–2017–802). 

6 In addition to default liquidity, DTC may use the 

proceeds of a Debt Issuance to prepay a prior Debt 

Issuance before maturity but would not use the 

proceeds for any other purpose. DTC filed as a 

confidential exhibit to this filing a sample term 

sheet that may be indicative of the possible terms 

of any future Debt Issuance. 

7Supra note 4. Each of the Clearing Agencies is 

a wholly-owned subsidiary of The Depository Trust 

& Clearing Corporation, which operates on a shared 

service model with respect to the Clearing 

Agencies. Most corporate functions are established 

and managed on an enterprise-wide basis pursuant 

to intercompany agreements under which it is 

generally DTCC that provides relevant services to 

the Clearing Agencies. 

8 Id. 

9A description of the calculation of each 

Participant’s Net Debit Cap and Collateral Monitor 

is available in the Settlement Service Guide. See 

DTC Settlement Service Guide, available at 

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

service-guides/Settlement.pdf. 

10Under DTC Rule 10 (Discretionary 

Termination) and DTC Rule 11 (Mandatory 

Termination), a Participant will be in default if it 

fails to pay any amount due to DTC within 

specified timeframes, including the failure to fund 

a settlement obligation, to pay required deposits to 

the Participants Fund or to pay adequate assurances 

to DTC within the required timeframes. See supra 

note 5. 

11 15 U.S.C. 77d(a)(2). 

12 If market conditions at the time of the inaugural 

issuance are favorable, DTC may issue an initial 

aggregate amount of more than $1 billion. 

deposits to its Participants Fund and 

cash that would be obtained by drawing 

upon DTC’s committed 364-day credit 

facility with a consortium of banks 

(‘‘Line of Credit’’).5

More precisely, while the specific 

terms of any future Debt Issuance would 

depend on a number of factors, as 

described in greater detail below, DTC 

is requesting the authority to use the 

proceeds of any Debt Issuance as default 

liquidity.6

DTC, along with its affiliates, National 

Securities Clearing Corporation 

(‘‘NSCC’’) and Fixed Income Clearing 

Corporation (‘‘FICC,’’ and, together with 

NSCC and DTC, the ‘‘Clearing 

Agencies’’), maintain the Framework 

which sets forth the manner in which 

DTC measures, monitors and manages 

the liquidity risks that arise in or are 

borne by it.7 DTC’s liquidity risk 

management strategy and tools are 

designed to maintain sufficient available 

liquid resources to complete systemwide settlement on each business day, 

with a high degree of confidence and 

notwithstanding the failure to settle of 

the Participant, or affiliated family of 

Participants, with the largest settlement 

obligation.8

The proposed Debt Issuance would 

provide DTC with an additional source 

of default liquidity, which would allow 

it to diversify its sources of default 

liquidity and mitigate risks to DTC that 

it is unable to secure default liquidity 

resources in an amount necessary to 

meet its liquidity needs. DTC utilizes 

certain rules-based tools, including the 

Net Debit Cap and the Collateral 

Monitor, to manage the liquidity risks 

its Participants’ present to it.9 These two 

controls work together to protect the 

DTC settlement system in the event of 

a Participant default. The Collateral 

Monitor requires net debit settlement 

obligations, as they accrue intraday, to 

be fully collateralized and the Net Debit 

Cap limits the amount of any 

Participant’s net debit settlement 

obligation to an amount that can be 

satisfied with DTC’s default liquidity 

resources. As stated above, DTC 

currently maintains two key default 

liquidity resources to draw upon in the 

event of a Participant default: cash 

deposits to its Participants Fund and 

cash that would be obtained by drawing 

upon the Line of Credit.10 By allowing 

DTC to diversify its sources of default 

liquidity, the proposal would mitigate 

the risk, for example, that DTC is unable 

to renew its Line of Credit at the 

targeted amount by providing DTC with 

an alternative and supplemental source 

of default liquidity. 

Terms of the Debt Issuance. DTC does 

not have immediate plans to initiate the 

Debt Issuance. The timing of a Debt 

Issuance would depend on a number of 

factors, including, for example, market 

conditions for the issuance of senior 

notes and the timing of any changes to 

DTC’s liquidity needs. However, when 

it determines to do so it would engage 

a trustee and underwriting banks to 

issue the senior notes to qualified 

institutional investors through a private 

placement and offering in reliance on an 

exemption from registration under 

section 4(a)(2) of the Securities Act of 

1933.11 DTC would be party to certain 

transaction documents in connection 

with each issuance and private 

placement, including an indenture with 

the trustee and purchase agreements. 

The purchase agreements would each be 

based on the standard form of dealer 

agreement for similar debt issuances, 

which is published by the Securities 

Industry and Financial Markets 

Association. 

While the anticipated material terms 

and conditions of a future Debt Issuance 

are summarized below, the actual terms 

of a future Debt Issuance would depend 

on a number of factors, including DTC’s 

liquidity needs and the debt market 

conditions at the time of issuance. 

Therefore, with the exception of the 

authorized aggregate amount that DTC 

may issue of $5 billion, the anticipated 

terms summarized below are reasonable 

estimates, but may not reflect the actual 

terms of a future Debt Issuance. 

DTC is proposing to issue up to an 

aggregate amount of $5 billion in senior 

notes, with an expected average amount 

issued and outstanding at any time of 

approximately $2–3 billion, as DTC 

deems reasonable, or as necessitated by 

liquidity needs. While, at the time of 

this filing, DTC would not need to issue 

up to the aggregate amount of $5 billion 

based on its current liquidity 

requirements, DTC believes that is 

advisable to authorize up to this 

aggregate amount in order to help 

manage its potential future liquidity 

needs and the potential risk that it is not 

able to obtain the requisite amounts 

from its other sources of default 

liquidity. 

DTC estimates that each issuance 

would be in an amount between 

approximately $250 million and $1.5 

billion, with an initial issuance 

expected to be between approximately 

$500 million and $1 billion.12 DTC 

believes an initial issuance should be at 

an amount that would attract the 

attention of potential investors. 

Therefore, DTC believes that between 

approximately $500 million and $1 

billion would be an appropriate amount 

for the initial issuance for this reason. 

The senior notes would be 

represented by unsecured, 

unsubordinated and non-convertible 

medium-term and long-term global 

notes held in the name of DTC (as the 

central securities depository) or its 

nominee, Cede & Co. The notes would 

be issued and transferred only through 

the book-entry system of DTC. The 

senior notes would be interest bearing at 

either fixed or floating interest rates that 

are set at market rates customary for 

such type of debt and reflective of the 

creditworthiness of DTC. 

DTC expects the average maturity of 

the senior notes issued under the Debt 

Issuance would be no shorter than 

approximately two years and no longer 

than approximately ten years, which are 

the typical lengths of medium-term and 

long-term debt. DTC does not believe 

maturities over ten years would be 

suitable as debt with longer maturities 

are generally more expensive to issue 

and may present higher risks related to 

interest rates. DTC would time each 

debt issuance and stagger maturity dates 


ddrumheller on DSK120RN23PROD with NOTICES1
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13See Securities Exchange Act Release Nos. 

79528 (Dec. 12, 2016), 81 FR 91232 (Dec. 16, 2016) 

(SR–DTC–2016–007, SR–FICC–2016–005, SR– 

NSCC–2016–003); 84949 (Dec. 21, 2018), 83 FR 

67779 (Dec. 31, 2018) (SR–DTC–2018–012, SR– 

FICC–2018–014, SR–NSCC–2018–013). Following 

the issuance of a Notice of No Objection by the 

Commission of this proposal, the Clearing Agencies 

would file a proposed rule change to amend the 

Clearing Agency Investment Policy to include the 

proceeds as default liquidity funds, within the 

definition of ‘‘Investable Funds,’’ as such term is 

defined therein, and provide that such amounts 

would be held in bank deposits at eligible 

commercial banks or at DTC’s cash deposit account 

at the FRBNY. 

14Supra note 4. 

15Supra note 5. 

16 17 CFR 240.17Ad–22(a)(14). 

of each issuance in order to ladder the 

maturities. DTC would have the ability 

to make use of optional features to 

redeem the issued senior notes, in 

whole or in part, at any time prior to the 

maturity date of notes. More 

specifically, DTC would have the option 

to prepay any amount of principal owed 

on the issued senior notes before such 

payment is due, i.e., before the maturity 

date. 

DTC would hold the proceeds from 

the Debt Issuance in either its cash 

deposit account at the Federal Reserve 

Bank of New York (‘‘FRBNY’’) or in 

accounts at other creditworthy financial 

institutions in accordance with the 

Clearing Agency Investment Policy.13

These amounts would be available to 

draw to complete settlement as needed. 

DTC Liquidity Risk Management. 

DTC’s liquidity needs for settlement are 

driven by protecting DTC against the 

possibility that a Participant may fail to 

pay its settlement obligations on a 

business day. The tools available to DTC 

under its Rules (e.g., the Participants 

Fund, Net Debit Cap and Collateral 

Monitor) allow it to regularly test the 

sufficiency of liquid resources on an 

intraday and end-of-day basis and adjust 

to stressed circumstances during a 

settlement day to protect itself and 

Participants against liquidity exposure 

under normal and stressed market 

conditions.14 DTC calculates its 

liquidity needs per Participant (at a 

legal entity level) and further aggregates 

these amounts at a family level (that is, 

including all affiliated Participants, 

based on the assumption that all such 

affiliates may fail simultaneously). In 

this regard, DTC monitors settlement 

flows and net-debit obligations on a 

daily basis, determines the 

appropriateness of each Participant’s 

Net Debit Cap and monitors net 

settlement activity. 

As noted above, the Framework 

describes DTC’s liquidity risk 

management strategy, which is designed 

to maintain sufficient liquid resources 

to complete system-wide settlement on 

each business day, with a high degree of 

confidence and notwithstanding the 

failure to settle of the Participant, or 

affiliated family of Participants, with the 

largest settlement obligation.15 The 

Framework also describes how DTC 

meets its requirement to hold qualifying 

liquid resources, as such term is defined 

in Rule 17Ad–22(a)(14) under the 

Securities Exchange Act of 1934 

(‘‘Act’’),16 sufficient to meet its 

minimum liquidity resource 

requirement in each relevant currency 

for which it has payment obligations 

owed to its Participants. DTC considers 

each of its existing default liquidity 

resources to be qualifying liquid 

resources, and the proceeds from the 

Debt Issuance would also be default 

liquidity that is considered a qualifying 

liquid resource. 

The proceeds from the Debt Issuance 

would provide DTC with additional, 

prefunded, and readily available 

qualifying liquid resources to be used to 

complete system-wide settlement if a 

Participant defaults. For DTC, the 

Participants Fund, Net Debit Cap and 

Collateral Monitor tools work together 

to limit potential liquidity requirements 

in default scenarios both on an intra-day 

and end-of-day basis. So, while DTC’s 

current available liquidity resources are 

sufficient to satisfy the single-largest 

family default under stressed but 

plausible conditions, the Debt Issuance 

would allow DTC to diversify its 

sources of default liquidity and mitigate 

risks to DTC that it is unable to secure 

default liquidity resources in an amount 

necessary to meet its liquidity needs. 

More specifically, the proposal would 

provide DTC with the flexibility to 

reduce its reliance on the Line of Credit, 

which is renewed annually and 

dependent on continued lender interest 

and meet any increased liquidity needs 

it may face in the future. As a source of 

prefunded, default liquidity, the Debt 

Issuance would provide additional 

certainty, stability, and safety to DTC, 

its Participants, and the U.S. markets 

that it serves. 

By diversifying DTC’s sources of 

qualifying liquid resources, the Debt 

Issuance could also mitigate 

concentration risks related to its 

liquidity providers. More specifically, 

while DTC would not limit the potential 

qualified institutional investors that 

purchase senior notes and, therefore, is 

not able to ensure that the Debt Issuance 

would reduce concentration risk, the 

types of entities who typically invest in 

senior notes (for example, insurance 

companies, asset managers and pension 

funds) are generally not Participants of 

DTC or lenders under the Line of Credit. 

Therefore, the prospective investors in 

the senior notes are not expected to be 

the same firms that currently provide 

any material amount of default liquidity 

resources to DTC either through the 

Line of Credit, or as DTC Participants. 

In this way, the proposed Debt Issuance 

would reduce the concentration risk 

related to its liquidity providers, by 

reducing the likelihood that an 

impairment of a liquidity provider to 

perform under one qualifying liquid 

resource would impact DTC’s ability to 

fully access its other qualifying liquid 

resources. 

Anticipated Effect on and Management 

of Risk 

In connection with its role as a central 

securities depository (‘‘CSD’’), DTC 

provides for both the settlement of bookentry transfer and pledge of interests in 

eligible deposited securities and net 

funds settlement. A financially strong 

and well-managed, well-designed CSD, 

with appropriate risk management 

arrangements, can reduce the risk faced 

by participants, contributing to the goal 

of systemic financial stability. In order 

to sufficiently perform this role, it is 

critical that DTC has access to adequate 

liquidity resources to enable it to 

complete system-wide settlement every 

business day, including following a 

Participant default. DTC believes that 

the overall impact of the proposed Debt 

Issuance on risks presented by DTC 

would be to reduce the liquidity risks 

associated with DTC’s net settlement 

obligations by providing it with an 

additional source of liquidity to 

complete system-wide settlement in the 

event of a Participant default. DTC 

further believes that a reduction in its 

liquidity risk would reduce systemic 

risk and would have a positive impact 

on the safety and soundness of the 

wider financial system. 

While the proposed Debt Issuance, 

like any liquidity resource, would 

involve certain risks, most of these risks 

are standard in any debt issuance. One 

risk associated with the proposed Debt 

Issuance would be the risk that DTC 

does not have sufficient funds to repay 

issued senior notes when the notes 

mature. DTC believes that this risk is 

extremely remote, as the proceeds of the 

Debt Issuance would be used only in the 

event of a Participant default, and DTC 

would replenish that cash, as it would 

replenish any of its liquidity resources 

that are used to facilitate settlement in 

the event of a Participant default, with 

the proceeds of the close out of that 

defaulted Participant’s portfolio. This 

notwithstanding, in the event that 

proceeds from the close out are 


ddrumheller on DSK120RN23PROD with NOTICES1
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17See Rule 4 (Participants Fund and Participants 

Investment) of the Rules, supra note 5. 

18The ‘‘net cost of carry’’ generally refers to the 

difference between the interest earned on the 

invested proceeds of an issuance and the interest 

rate paid on that issuance. 

19See supra note 12. 

20 12 U.S.C. 5464(a)(2) and (b)(1). 21 12 U.S.C. 5464(b)(1). 

22 12 U.S.C. 5464(a)(2). 

23 Id. 

24 17 CFR 240.17Ad–22(e). 

25 Id. 

26 17 CFR 240.17Ad–22(e)(7)(i), (ii). 

27 17 CFR 240.17Ad–22(e)(7)(i). 

insufficient to fully repay a liquidity 

borrowing, then DTC would look to its 

loss waterfall to repay any outstanding 

liquidity borrowings.17 DTC would 

further mitigate this risk through the 

timing of each debt issuance and by 

staggering the maturity dates of the 

issued senior notes in a way that would 

provide DTC with time to complete the 

close out of a defaulted Participant’s 

portfolio. A second risk is that DTC may 

be unable to issue new senior notes as 

issued notes mature due to, for example, 

stressed markets at the time the issued 

debt matures. This risk is mitigated by 

the fact that DTC maintains a number of 

different default liquidity resources, 

described above, and would not depend 

on the Debt Issuance as its sole source 

of liquidity. 

DTC may be exposed to interest rate 

risk, which is the risk that a change in 

interest rates could cause an increase to 

the net cost of carry of the Debt 

Issuance.18 DTC would mitigate this risk 

by issuing senior notes at different 

maturities and at both fixed interest 

rates and floating interest rates. The 

interest rates for the senior notes issued 

at floating interest rates would generally 

correlate with the rates on investments 

of those proceeds 19 and would be 

expected to result in a largely stable net 

spread between the borrowing interest 

rate and the investment interest rate, 

mitigating this risk. For the senior notes 

issued with a fixed interest rate, DTC 

would consider interest rate swaps as a 

method to mitigate interest rate risk, 

depending on market environment at 

that time. 

DTC could also face a related 

financial risk that the expense of a Debt 

Issuance exceeds DTC’s income and 

may have a negative impact on DTC’s 

financial health or its creditworthiness. 

DTC would mitigate this risk by 

evaluating the expected net cost of carry 

(discussed above) of a Debt Issuance 

prior to issuing any debt, and if the 

financing costs for the issuance of senior 

notes increase, such that it is not 

financially advisable to issue additional 

senior notes, then DTC may determine 

to use its alternative liquidity resources 

to meet its liquidity needs during those 

market conditions. 

DTC believes that the significant 

systemic risk mitigation benefits of 

providing DTC with additional, 

prefunded liquidity resources outweigh 

these risks. 

Consistency With Clearing Supervision 

Act 

DTC believes that that proposal would 

be consistent with Title VIII of the 

Dodd-Frank Wall Street Reform and 

Consumer Protection Act entitled the 

Payment, Clearing, and Settlement 

Supervision Act of 2010 (‘‘Clearing 

Supervision Act’’), specifically with the 

risk management objectives and 

principles of section 802(b)(1), and with 

certain of the risk management 

standards adopted by the Commission 

pursuant to section 805(a)(2), for the 

reasons described below.20

(i) Consistency With Section 805(b)(1) of 

the Clearing Supervision Act 

Although the Clearing Supervision 

Act does not specify a standard of 

review for an advance notice, its stated 

purpose is instructive: to mitigate 

systemic risk in the financial system 

and promote financial stability by, 

among other things, promoting uniform 

risk management standards for 

systemically important financial market 

utilities and strengthening the liquidity 

of systemically important financial 

market utilities.21

DTC believes the proposal is 

consistent with section 805(b)(1) of the 

Clearing Supervision Act because it 

would support the mitigation of 

systemic risk in the financial system 

and promote financial stability in the 

event of a Participant default by 

strengthening DTC’s liquidity. The 

proposed Debt Issuance is designed to 

reduce DTC’s liquidity risks by 

providing it with an additional source of 

liquidity to complete system-wide 

settlement in the event of a Participant 

default. By supplementing DTC’s 

existing default liquidity resources with 

prefunded liquidity, the proposal would 

contribute to DTC’s goal of assuring that 

DTC has adequate liquidity resources to 

meet its settlement obligations 

notwithstanding the default of any of its 

Participants. 

In its critical role as a CSD, DTC 

provides for both the settlement of bookentry transfer and pledge of interests in 

eligible deposited securities and net 

funds settlement. In order to sufficiently 

perform this role, it is critical that DTC 

has access to adequate liquidity 

resources to enable it to complete 

system-wide settlement every business 

day, including following a Participant 

default. Therefore, a reduction in DTC’s 

liquidity risk would reduce systemic 

risk and would have a positive impact 

on the safety and soundness of the 

wider financial system. 

As a result, DTC believes the 

proposed Debt Issuance would be 

consistent with the objectives and 

principles of section 805(b)(1) of the 

Clearing Supervision Act, which specify 

the promotion of robust risk 

management, promotion of safety and 

soundness, reduction of systemic risks 

and support of the stability of the 

broader financial system by, among 

other things, strengthening the liquidity 

of systemically important financial 

market utilities, such as DTC. 

(ii) Consistency With Rule 17Ad– 

22(e)(7)(i) and (ii) Under the Act 

Section 805(a)(2) of the Clearing 

Supervision Act authorizes the 

Commission to prescribe risk 

management standards for the payment, 

clearing and settlement activities of 

designated clearing entities, like DTC, 

and financial institutions engaged in 

designated activities for which the 

Commission is the supervisory agency 

or the appropriate financial regulator.22

The Commission has accordingly 

adopted risk management standards 

under section 805(a)(2) of the Clearing 

Supervision Act 23 and section 17A of 

the Act (‘‘Covered Clearing Agency 

Standards’’).24 The Covered Clearing 

Agency Standards require covered 

clearing agencies to establish, 

implement, maintain, and enforce 

written policies and procedures that are 

reasonably designed to meet certain 

minimum requirements for their 

operations and risk management 

practices on an ongoing basis.25

DTC believes that the proposed Debt 

Issuance is consistent with Rule 17Ad– 

22(e)(7)(i) and (ii) of the Covered 

Clearing Agency Standards for the 

reasons described below.26

Rule 17Ad–22(e)(7)(i) under the Act 

requires that DTC establish, implement, 

maintain and enforce written policies 

and procedures reasonably designed to 

maintain sufficient liquid resources at 

the minimum in all relevant currencies 

to effect same-day and, where 

appropriate, intraday and multiday 

settlement of payment obligations with 

a high degree of confidence under a 

wide range of foreseeable stress 

scenarios that includes, but is not 

limited to, the default of the participant 

family that would generate the largest 

aggregate payment obligation for the 

covered clearing agency in extreme but 

plausible market conditions.27 Rule 


ddrumheller on DSK120RN23PROD with NOTICES1
Federal Register / Vol. 88, No. 168 / Thursday, August 31, 2023 / Notices 60255 

28 17 CFR 240.17Ad–22(e)(7)(ii). For purposes of 

this Rule, ‘‘qualifying liquid resources’’ are defined 

in Rule 17Ad–22(a)(14) as including, in part, cash 

held either at the central bank of issue or at 

creditworthy commercial banks. 17 CFR 240.17Ad– 

22(a)(14). 

29Supra note 13. 

30 17 CFR 240.17Ad–22(a)(14). 

31 17 CFR 240.17Ad–22(e)(7)(i). 

32 17 CFR 240.17Ad–22(e)(7)(i), (ii). 

33 17 CFR 200.30–3(a)(91). 

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

2 17 CFR 240.19b–4. 

3References herein to Nasdaq Rules in the 4000 

Series shall mean Rules in Nasdaq Equity 4. 

17Ad–22(e)(7)(ii) under the Act requires 

that DTC establish, implement, maintain 

and enforce written policies and 

procedures reasonably designed to hold 

qualifying liquid resources sufficient to 

meet the minimum liquidity resource 

requirement under Rule 17Ad– 

22(e)(7)(i) in each relevant currency for 

which DTC has payment obligations 

owed to its Participants.28

As described above, the proposed 

Debt Issuance would provide DTC with 

an additional resource of prefunded 

default liquidity, which it would use to 

complete system-wide settlement every 

business day, including following a 

Participant default. The proceeds of the 

Debt Issuance would be cash held by 

DTC at either its cash deposit account 

at the FRBNY or at a creditworthy 

commercial bank, pursuant to the 

Clearing Agency Investment Policy.29

Therefore, the proceeds of the Debt 

Issuance would be considered a 

qualifying liquid resource, as defined by 

Rule 17Ad–22(a)(14).30 As such, the 

proposed Debt Issuance would support 

DTC’s ability to hold sufficient 

qualifying liquid resources to meet its 

minimum liquidity resource 

requirement under Rule 17Ad– 

22(e)(7)(i).31

For these reasons, DTC believes the 

proposal would support DTC’s 

compliance with Rule 17Ad–22(e)(7)(i) 

and (ii) by providing it with an 

additional qualifying liquid resource.32

III. Date of Effectiveness of the Advance 

Notice, and Timing for Commission 

Action 

The proposed change may be 

implemented if the Commission does 

not object to the proposed change 

within 60 days of the later of (i) the date 

that the proposed change was filed with 

the Commission or (ii) the date that any 

additional information requested by the 

Commission is received. The clearing 

agency shall not implement the 

proposed change if the Commission has 

any objection to the proposed change. 

The Commission may extend the 

period for review by an additional 60 

days if the proposed change raises novel 

or complex issues, subject to the 

Commission providing the clearing 

agency with prompt written notice of 

the extension. A proposed change may 

be implemented in less than 60 days 

from the date the advance notice is 

filed, or the date further information 

requested by the Commission is 

received, if the Commission notifies the 

clearing agency in writing that it does 

not object to the proposed change and 

authorizes the clearing agency to 

implement the proposed change on an 

earlier date, subject to any conditions 

imposed by the Commission. 

The clearing agency shall post notice 

on its website of proposed changes that 

are implemented. 

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views and 

arguments concerning the foregoing, 

including whether the Advance Notice 

is consistent with the Clearing 

Supervision Act. Comments may be 

submitted by any of the following 

methods: 

Electronic Comments 

• Use the Commission’s internet 

comment form 

(https://www.sec.gov/rules/sro.shtml); 

or 

• Send an email to rule-comments@

sec.gov. Please include file number SR– 

DTC–2023–801 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–2023–801. 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 (https://www.sec.gov/ 

rules/sro.shtml). Copies of the 

submission, all subsequent 

amendments, all written statements 

with respect to the Advance Notice that 

are filed with the Commission, and all 

written communications relating to the 

Advance Notice 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 

a.m. and 3 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-rule-filings.aspx). 

Do not include personal identifiable 

information in submissions; you should 

submit only information that you wish 

to make available publicly. We may 

redact in part or withhold entirely from 

publication submitted material that is 

obscene or subject to copyright 

protection. All submissions should refer 

to File Number SR–DTC–2023–801 and 

should be submitted on or before 

September 21, 2023. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.33

J. Matthew DeLesDernier, 

Deputy Secretary. 

[FR Doc. 2023–18776 Filed 8–30–23; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–98225; File No. SR– 

NASDAQ–2023–030] 

Self-Regulatory Organizations; The 

Nasdaq Stock Market LLC; Notice of 

Filing and Immediate Effectiveness of 

Proposed Rule To Delay 

Implementation of Pending 

Amendments to Equity 4, Rules 4120, 

4702 and 4703 and To Make Further 

Amendments to Rules 4702 and 4703 

August 25, 2023. 

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

Securities Exchange Act of 1934 (the 

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

notice is hereby given that on August 

16, 2023, The Nasdaq Stock Market LLC 

(‘‘Nasdaq’’ or ‘‘Exchange’’) filed with the 

Securities and Exchange Commission 

(the ‘‘Commission’’) the proposed rule 

change as described in Items I and II 

below, which Items have been prepared 

by the Exchange. The Commission is 

publishing this notice to solicit 

comments on the proposed rule change 

from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to delay 

implementation of pending 

amendments to Equity 4, Rules 4120, 

4702 and 4703 3 as well as to make 

further amendments to Rules 4702 and 

4703, as described further below. 

The text of the proposed rule change 

is available on the Exchange’s website at 

https://listingcenter.nasdaq.com/ 

rulebook/nasdaq/rules, at the principal 


ddrumheller on DSK120RN23PROD with NOTICES1