Federal Register / Vol. 83, No. 128 / Tuesday, July 3, 2018 / Notices 31223 

31 17 CFR 200.30–3(a)(12). 

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) and (f)(4). 

5Capitalized 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. 6Available at http://www.dtcc.com/∼/media/ 

Files/Downloads/legal/fee-guides/ 

dtcfeeguide.pdf?la=en. 

7See Rule 2, Section 1, supra note 5. 

8See Rule 2, Section 3, supra note 5. 

9See Policy Statement, supra note 5 at 133–134. 

10The Required Documentation relates to the 

DTC services the Applicant seeks to utilize and 

includes, but is not limited to, the applicable form 

of agreement with DTC providing, among other 

matters, that the Applicant will abide by the Rules 

and agreeing to New York governing law. There is 

a standard form Participant’s Agreement to be 

signed by a Participant Applicant, and a standard 

form Pledgee’s Agreement to be signed by a Pledgee 

Applicant. Certain certifications and other 

documentation, including but not limited to 

opinions of counsel, authorizing resolutions and 

appointment of authorized signers, may be required 

of a Participant Applicant depending on the nature 

and level of DTC services the Participant Applicant 

seeks to use. Participant Applicants are also 

required to provide certain financial and regulatory 

reports and other information, as applicable, to 

allow DTC to evaluate the Applicant’s financial 

condition, operational capability and character. See 

Rule 2, supra note 5, and the Policy Statement, 

supra note 9. 

All submissions should refer to File 

Number SR–NYSEArca–2018–40. 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 such 

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–NYSEArca–2018–40, and 

should be submitted on or before July 

24, 2018. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.31

Eduardo A. Aleman, 

Assistant Secretary. 

[FR Doc. 2018–14300 Filed 7–2–18; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–83544; File No. SR–DTC– 

2018–002] 

Self-Regulatory Organizations; The 

Depository Trust Company; Notice of 

Filing and Immediate Effectiveness of 

Proposed Rule Change To Amend the 

Rules and Fee Schedule Relating to 

Participant and Pledgee Applications 

June 28, 2018. 

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 June 21, 

2018, 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 Rules 19b–4(f)(2) and 

(f)(4) 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 of DTC 5

consists of proposed modifications to (i) 

the DTC Fee Schedule (‘‘Fee 

Schedule’’) 6 to add two new application 

fees that would be charged, respectively, 

to legal entities that formally submit an 

application (‘‘Application’’) to become 

either a Participant 7 (each, a 

‘‘Participant Applicant’’) or a Pledgee 8

(each, a ‘‘Pledgee Applicant’’) of DTC 

(Participant Applicants and Pledgee 

Applicants, referred to collectively as 

‘‘Applicants’’), and (ii) DTC’s Policy 

Statements on the Admission of 

Participants (jointly referred to as the 

‘‘Policy Statement’’) with respect to the 

provision that requires a non-U.S. entity 

that applies to become a Participant 

(‘‘Non-U.S. Participant Applicant’’) to 

provide to DTC a legal opinion 

(‘‘Foreign Legal Opinion’’) of its counsel 

in its jurisdiction of organization 

(‘‘Jurisdiction of Organization’’).9 With 

respect to (i) above, the Fee Schedule 

would be amended to charge (A) each 

Participant Applicant a fee of $5,000 in 

connection with its Application to 

become a Participant (‘‘Participant 

Application Fee’’), and (B) each Pledgee 

Applicant a fee of $2,500 in connection 

with its Application to become a 

Pledgee (‘‘Pledgee Application Fee’’) 

(Participant Application Fee and 

Pledgee Application Fee, collectively 

referred to as ‘‘Application Fees’’). With 

respect to (ii) above, the Policy 

Statement would be amended to (A) 

remove the provision that requires each 

Non-U.S. Participant Applicant to 

obtain a Foreign Legal Opinion from its 

counsel and (B) provide that DTC would 

obtain a Foreign Legal Opinion from its 

outside counsel (‘‘DTC Counsel’’) in the 

Jurisdiction of Organization of a new 

Non-U.S. Participant Applicant, which 

opinion DTC would use in conjunction 

with its review of the Application of 

that and each subsequent new Non-U.S. 

Participant Applicant domiciled in that 

Jurisdiction of Organization, as 

described below. Each Non-U.S. 

Participant Applicant would be charged 

a fee (‘‘Foreign Legal Opinion Fee’’) 

with respect to the applicable Foreign 

Legal Opinion obtained by DTC, as 

described below. The proposed rule 

change would also amend the Policy 

Statement to impose a time limit (‘‘Time 

Limit’’) of six months for an Applicant 

to complete its Application with 

required documentation (‘‘Required 

Documentation’’),10 before its 

Application would expire, as described 

below. The proposed rule change would 

also make other changes of a technical 

nature to the Rules text, as 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. 


sradovich on DSK3GMQ082PROD with NOTICES
31224 Federal Register / Vol. 83, No. 128 / Tuesday, July 3, 2018 / Notices 

11Supra note 6. 

12See Rule 3, supra note 5 (setting forth 

qualifications for eligibility for Participants) and 

Section 3 of Rule 2, supra note 5 (setting forth 

Persons/entity types that may become Pledgees). 

13See Rule 2, supra note 5. 

14See Rule 2, supra note 5, and the Policy 

Statement, supra note 9 (setting forth Required 

Documentation and other requirements that an 

Applicant must satisfy prior to DTC’s approval of 

the Applicant’s Application). 

15The Portal is a closed website that allows 

Applicants to retrieve the Application forms and 

templates of Required Documentation and to submit 

completed Applications, including Required 

Documentation, to DTC. 

16See Sections 1 and 2 of Policy Statement, supra 

note 9. 

17See Section 1 of Rule 2, supra note 5 (setting 

forth the terms of the Participant’s Agreement). 

18See Section 2 of Policy Statement, supra note 

9. 

(A) Clearing Agency’s Statement of the 

Purpose of, and Statutory Basis for, the 

Proposed Rule Change 

1. Purpose 

The proposed rule change consists of 

proposed modifications to (i) the Fee 

Schedule 11 to add the Application Fees 

and (ii) the Policy Statement with 

respect to the provision that requires a 

Non-U.S. Participant Applicant to 

provide a Foreign Legal Opinion, as 

described below. With respect to (i) 

above, the Fee Schedule would be 

amended to charge (A) each Participant 

Applicant the proposed Participant 

Application Fee, and (B) each Pledgee 

Applicant the proposed Pledgee 

Application Fee, as described below. 

With respect to (ii) above, the Policy 

Statement would be amended to (A) 

remove the provision that requires each 

Non-U.S. Participant Applicant to 

obtain a Foreign Legal Opinion from its 

counsel and (B) provide that DTC would 

obtain a Foreign Legal Opinion from 

DTC Counsel in the Jurisdiction of 

Organization of a new Non-U.S. 

Participant Applicant. Each Non-U.S. 

Participant Applicant would be charged 

a Foreign Legal Opinion Fee with 

respect to the applicable Foreign Legal 

Opinion obtained by DTC, as described 

below. The proposed rule change would 

also amend the Policy Statement to 

impose the Time Limit of six months for 

an Applicant to submit an Application, 

with Required Documentation, before its 

Application would expire, as described 

below. The proposed rule change would 

also make other changes of a technical 

nature to the Rules text, as described 

below. 

Proposed Application Fees and Time 

Limit 

DTC may approve an Applicant 

eligible for admission as a Participant or 

Pledgee 12 only upon a determination by 

DTC that the Applicant meets 

reasonable standards of financial 

condition, operational capability and 

character at the time of its Application 

and on an ongoing basis thereafter.13 To 

facilitate DTC’s review of an 

Application, the Applicant must satisfy 

DTC’s Application requirements in form 

and substance satisfactory to DTC, 

including Required Documentation, in 

accordance with the Rules.14

The review of Participant and Pledgee 

Applications by DTC requires 

significant application of personnel and 

other resources related to legal, risk, 

compliance, account administration and 

other functions. In order to align 

revenue with these costs, DTC proposes 

to amend the Fee Schedule to charge (i) 

a Participant Application Fee of $5,000 

to each Participant Applicant that 

formally submits a Participant 

Application on or after July 2, 2018 

(‘‘Effective Date’’) and (ii) a Pledgee 

Application Fee of $2,500 to each 

Pledgee Applicant that formally submits 

a Pledgee Application on or after the 

Effective Date. 

Payment of the full amount of the 

applicable Application Fee would be 

due as of the date DTC provides the 

Applicant with access to DTC’s online 

Application portal (‘‘Portal’’) 15 and 

related payment instructions. An 

Application Fee would be nonrefundable regardless of the outcome of 

the respective Application (i.e., 

approval, disapproval or expiration). 

Pursuant to the proposed rule change, 

if an Applicant does not submit a 

completed Application with Required 

Documentation within the Time Limit 

of six months (‘‘Submission 

Timeframe’’), then the Application 

would expire. If after the expiration of 

an Application, the entity still wishes to 

apply, it would be required to formally 

re-apply by submitting a new 

Application with the Required 

Documentation, and incur another 

charge for the applicable Application 

Fee. The Submission Timeframe would 

begin on the date that DTC provides the 

Applicant with access to the Portal. 

DTC believes the proposed Time 

Limit is reasonable, necessary and 

appropriate because (i) Required 

Documentation consists primarily of 

standard forms and other 

documentation, certifications and 

information, as applicable, that would 

be readily available to an Applicant that 

meets the applicable DTC membership 

qualifications and financial and 

operational requirements mentioned 

above and (ii) information contained in 

the Application and Required 

Documentation submitted by the 

Applicant, including financial reports 

and information, authorizing 

resolutions, appointment of authorized 

signers and opinions of counsel, may 

become out-of-date and/or inaccurate 

due to internal operational or financial 

changes at the Applicant, or due to 

changes in applicable law, if an 

Applicant does not complete an 

Application in a timely manner. 

Proposed Legal Opinion Fee 

The Required Documentation for U.S. 

and Non-U.S. Participant Applicants 

includes an opinion of counsel of the 

Applicant.16 The Applicant’s counsel 

must provide an opinion to the effect 

that the Participant’s Agreement— 

which, among other provisions, 

provides that the DTC Rules and ByLaws shall be a part of the terms and 

conditions of every contract or 

transaction that the Participant may 

make or have with DTC—will be 

binding and enforceable on the 

Applicant when it becomes a 

Participant.17 To the extent that a 

Participant Applicant is organized 

under the laws of a jurisdiction outside 

of the United States, the required 

opinion must, in addition, specifically 

address issues such as DTC’s ability to 

enforce its Rules (including its netting 

and default management rules) under 

the applicable insolvency regime of the 

Jurisdiction of Organization, and the 

enforceability of the choice of New York 

law to govern the Participant’s 

Agreement and Rules.18

In order to address the legal costs of 

the review of legal opinion letters for 

Non-U.S. Participant Applicants, DTC 

proposes to modify the current process 

for obtaining Foreign Legal Opinions 

and implement the new Foreign Legal 

Opinion Fee. 

Currently, the Non-U.S. Participant 

Applicant provides a Foreign Legal 

Opinion from counsel in its Jurisdiction 

of Organization; the opinion is then 

reviewed (and negotiated with the 

Applicant’s counsel, as needed) by DTC 

with the advice of DTC’s counsel. 

Costs to DTC to review Foreign Legal 

Opinions vary depending on issues 

raised by an Applicant’s counsel in their 

Foreign Legal Opinion, and the level of 

review and negotiation required for DTC 

to gain comfort that the law of the 

Applicant’s Jurisdiction of Organization 

does not provide material impediments 

to enforcement of the Rules. Foreign 

Legal Opinion review is typically 

conducted by DTC with its U.S. counsel. 

Often, DTC may also need advice from 

outside counsel in the foreign 

jurisdiction of the Applicant, adding to 

the cost of the review. 


sradovich on DSK3GMQ082PROD with NOTICES
Federal Register / Vol. 83, No. 128 / Tuesday, July 3, 2018 / Notices 31225 

19 15 U.S.C. 78q–1(b)(3)(D). 

Pursuant to the proposed rule change, 

DTC would select DTC Counsel to 

provide a Foreign Legal Opinion 

satisfactory to DTC for each applicable 

Jurisdiction of Organization. DTC would 

rely on each Foreign Legal Opinion for 

a specified time (subject to any interim 

change in applicable law). The proposed 

rule change would benefit Non-U.S. 

Participant Applicants because 

efficiencies would be gained from 

consolidating the process so that each 

Non-U.S. Participant Applicant would 

not be required to obtain a separate 

Foreign Legal Opinion. When the 

specified period expires, DTC would 

obtain periodic updates from its 

counsel, as reasonable. 

Pursuant to the proposed rule change, 

the Fee Schedule would reflect that the 

initial Non-U.S. Participant Applicant 

from a given Jurisdiction of 

Organization to submit a Participant 

Application after the Effective Date, 

would be advised of a ‘‘Maximum 

Estimated Charge’’ based on an estimate 

of fees and charges provided to DTC by 

DTC Counsel with respect to obtaining 

a Foreign Legal Opinion for that 

Jurisdiction of Organization. DTC would 

advise the Non-U.S. Participant 

Applicant of the Maximum Estimated 

Charge in writing after DTC has had a 

reasonable opportunity to consult with 

DTC Counsel and obtain an estimate of 

fees and charges of DTC Counsel that 

would comprise the Maximum 

Estimated Charge. 

DTC would attempt to minimize costs 

of DTC Counsel as reasonable. The 

amount of the Foreign Legal Opinion 

Fee charged to the Non-U.S. Participant 

Applicant would be the lesser of the 

Maximum Estimated Charge and the 

actual costs charged to DTC by DTC 

Counsel in connection with the review 

of the Foreign Legal Opinion. If within 

five business days after DTC advises the 

Non-U.S. Participant Applicant of the 

Maximum Estimated Charge, as 

described above, the Non-U.S. 

Participant Applicant notifies DTC in 

writing that it will terminate its 

Participant Application, the Non-U.S. 

Participant Applicant would not be 

charged a Foreign Legal Opinion Fee. If 

the Application is terminated, the 

Maximum Estimated Charge would no 

longer apply and DTC would obtain a 

new Maximum Estimated Charge from 

DTC Counsel if it receives a subsequent 

Application. If the initial Non-U.S. 

Participant Applicant does not 

terminate its Application within five 

business days of DTC advising it of the 

Maximum Estimated Charge, then the 

Non-U.S. Applicant would be billed for 

the Legal Opinion Fee in the amount 

that would be determined as described 

above, promptly after DTC Counsel has 

provided to DTC a final invoice stating 

the actual amount to be charged to DTC 

for the Foreign Legal Opinion. Payment 

by the Non-U.S. Participant Applicant 

of the full amount of the Foreign Legal 

Opinion Fee would be due within ten 

business days of the Non-U.S. 

Participant Applicant’s receipt of an 

invoice, including payment 

instructions, from DTC. 

Each subsequent Non-U.S. Participant 

Applicant (‘‘Subsequent Non-U.S. 

Applicant’’) from a Jurisdiction of 

Organization would be charged a 

Foreign Legal Opinion Fee in an amount 

equal to the Foreign Legal Opinion Fee 

charged to the first Non-U.S. Participant 

Applicant from the Jurisdiction of 

Organization that was charged a Foreign 

Legal Opinion Fee. DTC would notify 

each Subsequent Non-U.S. Applicant in 

writing of the amount of the Legal 

Opinion Fee that was determined as 

described above. If within five business 

days after DTC advises the Subsequent 

Non-U.S. Participant Applicant of the 

applicable Legal Opinion Fee, the NonU.S. Participant Applicant notifies DTC 

in writing that it will terminate its 

Participant Application, the Non-U.S. 

Participant Applicant would not be 

charged a Foreign Legal Opinion Fee. If 

the Subsequent Non-U.S. Applicant 

does not terminate its Application 

within five business days of DTC 

advising it of the amount of the Legal 

Opinion Fee, then the Applicant would 

be billed accordingly. Payment by the 

Non-U.S. Participant Applicant of the 

full amount of the Foreign Legal 

Opinion Fee would be due within ten 

business days of the Non-U.S. 

Participant Applicant’s receipt of an 

invoice, including payment 

instructions, from DTC. 

The Fee Schedule would not 

expressly include an absolute maximum 

amount for the Foreign Legal Opinion 

Fee because, based on DTC’s experience 

in reviewing Foreign Legal Opinions, 

the level of review required for DTC to 

gain comfort that the law of the 

Applicant’s Jurisdiction of Organization 

does not provide material impediments 

to enforcement of the Rules can vary 

significantly by jurisdiction, resulting in 

significant variance in counsel costs to 

DTC. The Fee Schedule would not 

include an absolute minimum amount 

for the Foreign Legal Opinion Fee, 

because DTC would not charge an 

Applicant a Foreign Legal Opinion Fee 

that is in an amount that is higher than 

the actual amount billed by DTC 

Counsel to provide the applicable 

Foreign Legal Opinion. 

Proposed Rule Changes 

DTC proposes to amend (i) the text of 

the Policy Statement to (a) delete text 

requiring that a Foreign Legal Opinion 

be submitted by each Non-U.S. 

Participant Applicant, (b) add text to 

reflect that the Non-U.S. Participant 

Applicant would be required to agree to 

pay a fee (i.e., Foreign Legal Opinion 

Fee) relating to DTC obtaining a Foreign 

Legal Opinion from DTC Counsel, as 

discussed above, and (c) add a new 

Section 3 to the Policy Statement titled 

‘‘Policy Statement on Application Fees 

and Time Limit for Submission of 

Applications and Required 

Documentation by Applicants,’’ which 

would set forth the proposed Time 

Limit and a reference to the proposed 

Application Fees, as described above, 

and (ii) the DTC Fee Schedule to add 

the Application Fees and Foreign Legal 

Opinion Fee (and related terms of 

payment), as described above. 

The proposed rule change would also 

make a technical change to modify the 

title of the Policy Statement to ‘‘Policy 

Statements on the Admission of 

Participants and Pledgees.’’ 

In addition, the Policy Statement 

would be amended to add a legend 

(‘‘Legend’’) stating that changes to the 

Policy Statement, as amended by this 

proposed rule change, are available at a 

link on www.dtcc.com. The Legend 

would also state that the changes have 

become effective upon filing with the 

Commission but have not yet been 

implemented. The Legend would state 

that on the Effective Date these changes 

will be implemented and the Legend 

will automatically be removed from the 

Policy Statement. 

Effective Date 

The proposed rule change would 

become effective on the Effective Date. 

2. Statutory Basis 

Section 17A(b)(3)(D) of the Act 19

requires that the Rules provide for the 

equitable allocation of reasonable dues, 

fees, and other charges among its 

participants. DTC believes that the 

proposed Application Fees for 

Participants would be (i) equitably 

allocated because each Participant 

Applicant would be charged a fee for its 

Participant Application in an amount 

equal to the amount that each other 

Participant Applicant would be charged 

and (ii) reasonable because the 

respective Application Fees would 

allow DTC to pass through to 

Participant Applicants the substantial 

costs to DTC associated with the review 

of Participant Applications that would 


sradovich on DSK3GMQ082PROD with NOTICES
31226 Federal Register / Vol. 83, No. 128 / Tuesday, July 3, 2018 / Notices 

20 Id. 

21 15 U.S.C. 78q–1(b)(3)(F). 

22 Id. 

23 Id. 

24 Id. 

25See supra note 9 at 132 and 134. 

26 15 U.S.C. 78q–1(b)(3)(I). 

otherwise be incurred by DTC. DTC 

believes the proposed Foreign Legal 

Opinion Fee would be equitably 

allocated because the amount charged to 

each Non-U.S. Participant Applicant 

with respect to a given Jurisdiction of 

Organization would be tied to, and 

would not exceed, the cost to DTC in 

obtaining the opinion for that 

jurisdiction, and, in accordance with the 

amendment to the Fee Schedule as 

described above, a Foreign Legal 

Opinion Fee in the same amount would 

be charged to all Applicants domiciled 

in the Jurisdiction of Organization for 

which an applicable Foreign Legal 

Opinion was obtained. In addition, DTC 

believes that the proposed Foreign Legal 

Opinion Fee would be reasonable 

because it (i) would be capped in the 

amount of the Maximum Estimated 

Charge, as described above, (ii) the 

amount of a Foreign Legal Opinion Fee 

charged to an Applicant would not be 

greater than the costs DTC may incur in 

connection with obtaining the 

applicable Foreign Legal Opinion, as 

described above and (iii) would allow 

DTC to pass through to Non-U.S. 

Participant Applicants the substantial 

costs to DTC associated with the review 

of Foreign Legal Opinions that would 

otherwise be incurred by DTC. 

Therefore, DTC believes that the 

proposed rule change would provide for 

the equitable allocation of reasonable 

fees among its participants, and is 

consistent with Section 17A(b)(3)(D).20

Section 17A(b)(3)(F) 21 of the Act, 

requires, inter alia, that the Rules are 

designed to promote the prompt and 

accurate clearance and settlement of 

securities transactions. DTC believes 

that the proposed rule change to 

implement the Pledgee Application Fee 

is consistent with this provision because 

collection of the Pledgee Application 

Fee would facilitate DTC’s ability to 

cover costs to it associated with DTC’s 

review of Pledgee Applications, and 

therefore would facilitate DTC’s ability 

to make prompt determinations as to 

whether to make its services available to 

a Pledgee Applicant and allow the 

processing of Pledges by Participants to 

it within DTC’s system. Therefore, DTC 

believes that by facilitating the prompt 

admission of qualified Pledgees to DTC, 

and the inclusion of related pledge 

activity within the DTC system, the 

proposed rules change would promote 

the prompt and accurate clearance and 

settlement of securities transactions.22

In addition, DTC believes that the 

proposed rule change to modify the title 

of the Policy Statement to ‘‘Policy 

Statements on the Admission of 

Participants and Pledgees’’ is consistent 

with this provision because it would 

enhance clarity as to the application of 

the Policy Statement, and the users of 

DTC’s services that would be affected by 

it. By providing for enhanced clarity for 

users of DTC’s services in this regard, 

the proposed rule change would provide 

users with enhanced transparency with 

regard to the Rules relating to applying 

to be able to use DTC’s services, 

including for the processing of 

securities transactions, and, therefore, 

the proposed rule change would 

promote the prompt and accurate 

clearance and settlement of securities 

transactions. 

Section 17A(b)(3)(F) 23 of the Act, 

requires, inter alia, that the Rules are 

not designed to permit unfair 

discrimination in the admission of 

participants in the use of the clearing 

agency. DTC believes the proposed rule 

changes are consistent with this 

provision because (i) the proposal for 

DTC to obtain a single Foreign Legal 

Opinion from DTC Counsel for all new 

Non-U.S. Participant Applicants 

domiciled within a Jurisdiction of 

Organization, rather than requiring each 

Non-U.S. Participant Applicant to 

obtain an opinion from its own in its 

Jurisdiction of Organization, would 

provide for enhanced consistency in the 

review performed by DTC by 

eliminating the need for it to review 

multiple legal opinions submitted by 

each Applicant individually, and (ii) the 

proposed Time Limit would allow a 

sufficient amount of time for an 

Applicant to complete and submit to 

DTC the documentation and 

information necessary for DTC to be 

able to conduct its review of the 

Applicant’s Application, as discussed 

above. Therefore, DTC believes that the 

proposed rule change would not permit 

unfair discrimination in the admission 

of participants in the use of DTC, and 

is consistent with the provisions of 

Section 17A(b)(3)(F).24

(B) Clearing Agency’s Statement on 

Burden on Competition 

DTC believes that the proposed 

changes to the Fee Schedule could 

impose a burden on competition 

because it would implement new fees 

payable by an Applicant in connection 

with an Application to DTC, thereby 

creating costs to the Applicant not 

previously realized by Applicants. DTC 

does not believe that any burden on 

competition imposed by the changes to 

the Fee Schedule would be significant 

because (i) the Application Fees would 

represent de minimus amounts for 

qualified Applicants that meet DTC’s 

financial standards as set forth in the 

Policy Statement 25 and (ii) the Foreign 

Legal Opinion Fee is unlikely to cause 

a material impact to a Non-U.S. 

Participant Applicant’s overall cost of 

applying for DTC membership due to 

the coinciding proposal to eliminate the 

requirement for Non-U.S. Participant 

Applicants to provide a Foreign Legal 

Opinion, as described above, resulting 

in the elimination of the Applicant 

incurring the cost of obtaining a Foreign 

Legal Opinion from its own counsel. 

DTC believes that any burden on 

competition that is created by the 

proposed changes to the Fee Schedule 

would be necessary and appropriate in 

furtherance of the purposes of the Act 26

in order to cover substantial costs to 

DTC associated with the review of 

Participant and Pledgee Applications 

and Foreign Legal Opinions that would 

otherwise be incurred by DTC, and 

ultimately, because DTC operates on an 

‘‘at cost’’ fee model, its Participants 

generally. 

DTC does not believe that the 

proposed rule change for DTC to obtain 

a single Foreign Legal Opinion from 

DTC Counsel for all Non-U.S. 

Participant Applicants domiciled within 

a Jurisdiction of Organization would 

impose a burden on competition, 

because it would it would merely shift 

the task of obtaining Foreign Legal 

Opinions to DTC. The proposed rule 

change may promote competition 

because DTC believes that the 

elimination of the requirement for each 

individual Non-U.S. Participant 

Applicant to obtain a Foreign Legal 

Opinion would facilitate enhanced 

consolidation and efficiency in the 

review of Non-U.S. Participant 

Applicants’ Applications by DTC, as 

described above. 

DTC does not believe the proposed 

rule change to implement the Time 

Limit for submission of Required 

Documentation would impact 

competition, because the Required 

Documentation consists primarily of 

standard agreements, forms and other 

documentation, certifications and 

information, as applicable, that are 

currently required of Applicants and 

would be readily available, or could be 

readily prepared, within the proposed 

Time Limit, by an Applicant that meets 

the applicable DTC membership 

qualifications and financial and 


sradovich on DSK3GMQ082PROD with NOTICES
Federal Register / Vol. 83, No. 128 / Tuesday, July 3, 2018 / Notices 31227 

27 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3References herein to rules refer to rules of Phlx, 

unless otherwise noted. 

operational requirements mentioned 

above. 

(C) Clearing Agency’s Statement on 

Comments on the Proposed Rule 

Change Received From Members, 

Participants, or Others 

DTC has not received or solicited any 

written comments relating to this 

proposal. 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) 

of the Act and paragraph (f) 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–2018–002 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–2018–002. 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– 

2018–002 and should be submitted on 

or before July 24, 2018. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.27

Eduardo A. Aleman, 

Assistant Secretary. 

[FR Doc. 2018–14298 Filed 7–2–18; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–83530; File No. SR–Phlx– 

2018–50] 

Self-Regulatory Organizations; Nasdaq 

Phlx LLC; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change To Extend the 

Exchange’s Penny Pilot Program 

June 28, 2018. 

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 June 25, 

2018, Nasdaq Phlx LLC (‘‘Phlx’’ or 

‘‘Exchange’’) filed with the Securities 

and Exchange Commission (‘‘SEC’’ or 

‘‘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 amend 

Phlx Rule 1034 (Minimum Increments) 3

to extend through December 31, 2018 or 

the date of permanent approval, if 

earlier, the Penny Pilot Program in 

options classes in certain issues (‘‘Penny 

Pilot’’ or ‘‘Pilot’’), and to change the 

date when delisted classes may be 

replaced in the Penny Pilot. 

The text of the proposed rule change 

is set forth below. Proposed new 

language is italicized and proposed 

deleted language is in brackets. 

* * * * * 

Nasdaq PHLX Rules 

Options Rules 

* * * * * 

Rule 1034. Minimum Increments 

(a) Except as provided in subparagraphs (i)(B) and (iii) below, all 

options on stocks, index options, and 

Exchange Traded Fund Shares quoting 

in decimals at $3.00 or higher shall have 

a minimum increment of $.10, and all 

options on stocks and index options 

quoting in decimals under $3.00 shall 

have a minimum increment of $.05. 

(i)(A) No Change. 

(B) For a pilot period scheduled to 

expire [June 30, 2018]December 31, 

2018 or the date of permanent approval, 

if earlier (the ‘‘pilot’’), certain options 

shall be quoted and traded on the 

Exchange in minimum increments of 

$0.01 for all series in such options with 

a price of less than $3.00, and in 

minimum increments of $0.05 for all 

series in such options with a price of 

$3.00 or higher, except that options 

overlying the PowerShares QQQ Trust 

(‘‘QQQQ’’)®, SPDR S&P 500 Exchange 

Traded Funds (‘‘SPY’’), and iShares 

Russell 2000 Index Funds (‘‘IWM’’) 

shall be quoted and traded in minimum 

increments of $0.01 for all series 

regardless of the price. A list of such 

options shall be communicated to 

membership via an Options Trader Alert 

(‘‘OTA’’) posted on the Exchange’s 

website. 

The Exchange may replace any pilot 

issues that have been delisted with the 

next most actively traded multiply 

listed options classes that are not yet 

included in the pilot, based on trading 

activity in the previous six months. The 

replacement issues may be added to the 

pilot on the second trading day 

following [January 1, 2018]July 1, 2018. 

(C) No Change. 


sradovich on DSK3GMQ082PROD with NOTICES