Federal Register / Vol. 83, No. 142 / Tuesday, July 24, 2018 / Notices 35041 

10 Id. 

11 17 CFR 200.30–3(a)(57). 

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

2 17 CFR 240.19b–4. 

3Available at http://www.dtcc.com/legal/rulesand-procedures. Capitalized terms used herein and 

not otherwise defined shall have the meaning 

assigned to such terms in the Rules. 

4 Id. 

5 Id. 

days from that date, and September 21, 

2018, is 240 days from that date. 

The Commission finds it appropriate 

to designate a longer period within 

which to issue an order approving or 

disapproving the proposed rule change 

so that it has sufficient time to consider 

this proposed rule change. Accordingly, 

the Commission, pursuant to Section 

19(b)(2) of the Act,10 designates 

September 21, 2018, as the date by 

which the Commission shall either 

approve or disapprove the proposed 

rule change (File No. SR–NYSEArca– 

2018–02). 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.11

Eduardo A. Aleman, 

Assistant Secretary. 

[FR Doc. 2018–15768 Filed 7–23–18; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

Sunshine Act Meetings 

TIME AND DATE: 2:00 p.m. on Thursday, 

July 26, 2018. 

PLACE: Closed Commission Hearing 

Room 10800. 

STATUS: This meeting will be closed to 

the public. 

MATTERS TO BE CONSIDERED: 

Commissioners, Counsel to the 

Commissioners, the Secretary to the 

Commission, and recording secretaries 

will attend the closed meeting. Certain 

staff members who have an interest in 

the matters also may be present. 

The General Counsel of the 

Commission, or his designee, has 

certified that, in his opinion, one or 

more of the exemptions set forth in 5 

U.S.C. 552b(c)(3), (5), (6), (7), (8), 9(B) 

and (10) and 17 CFR 200.402(a)(3), 

(a)(5), (a)(6), (a)(7), (a)(8), (a)(9)(ii) and 

(a)(10), permit consideration of the 

scheduled matters at the closed meeting. 

Commissioner Jackson, as duty 

officer, voted to consider the items 

listed for the closed meeting in closed 

session. 

The subject matters of the closed 

meeting will be: 

Institution and settlement of 

injunctive actions; 

Institution and settlement of 

administrative proceedings; and 

Other matters relating to enforcement 

proceedings. 

At times, changes in Commission 

priorities require alterations in the 

scheduling of meeting items. 

CONTACT PERSON FOR MORE INFORMATION: 

For further information and to ascertain 

what, if any, matters have been added, 

deleted or postponed; please contact 

Brent J. Fields from the Office of the 

Secretary at (202) 551–5400. 

Dated: July 19, 2018. 

Brent J. Fields, 

Secretary. 

[FR Doc. 2018–15858 Filed 7–20–18; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–83666; File No. SR–NSCC– 

2018–004] 

Self-Regulatory Organizations; 

National Securities Clearing 

Corporation; Notice of Filing of a 

Proposed Rule Change To Terminate 

the Commission Billing Service and 

the Commission Billing Limited 

Membership 

July 18, 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 July 13, 

2018, National Securities Clearing 

Corporation (‘‘NSCC’’) 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 consists of 

amendments to Rules and Procedures of 

NSCC (‘‘Rules’’) in order to in order to 

terminate the Commission Billing 

service and the Commission Billing type 

of limited membership, as described in 

greater detail below.3

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 

NSCC is proposing to revise its Rules 

in order to discontinue its Commission 

Billing service and the Commission 

Billing type of limited membership, for 

the reasons described below. 

Overview of the Commission Billing 

Service 

As currently described in Rule 16, 

NSCC provides a service through which 

it facilitates the payment of 

commissions on monthly basis between 

its Members and Commission Billing 

Members.4 Brokers that use this service 

to charge and collect commissions are 

Commission Billing Members, which is 

a type of limited membership that 

allows these firms to participate in 

NSCC solely for the collection of 

commissions. 

Currently, Commission Billing 

Members are floor broker firms that are 

members of the New York Stock 

Exchange (‘‘NYSE’’) and NYSE 

American (formerly the American Stock 

Exchange), although historically the 

service was available to floor broker 

firms on any U.S. exchange. As 

provided for in Rule 2 of the Rules, 

Commission Billing Members 

participate solely in the collection and 

payment of commissions as provided for 

under Rule 16 of the Rules.5

Floor broker firms execute trades on 

behalf of their clients for a commission. 

In order to process commission charges 

applied to clients who are Members, 

floor broker firms that are Commission 

Billing Members may submit these 

charges to NSCC. Commission charges 

are submitted to NSCC in one of two 

ways. In most cases, where the 

Commission Billing Member is a 

member of NYSE, NYSE may act as a 

payment-data aggregator and creates and 

submits payment files to NSCC. 

Alternatively, Commission Billing 

Members may submit payments directly 

to NSCC through a web-based system. 

NSCC tabulates all payment records 

received on a monthly basis, and either 

sends amounts to The Depository Trust 

Company (‘‘DTC’’) for payment (for 

billed Members that are also 

Participants of DTC) or processes 


jstallworth on DSKBBY8HB2PROD with NOTICES
35042 Federal Register / Vol. 83, No. 142 / Tuesday, July 24, 2018 / Notices 

6 15 U.S.C. 78q–1(b)(3)(F). 

7 Id. 

8 17 CFR 240.17Ad–22(e)(21)(iv). 

payments through Automated Clearing 

House, or ‘‘ACH,’’ payments. 

For many years, the Commission 

Billing service provided these brokers 

and Members with an efficient way to 

submit and receive commission 

payments when few alternative payment 

options existed in the industry that 

would handle the large volume of 

transactions. 

Rationale for Terminating the 

Commission Billing Service and 

Commission Billing Limited 

Membership 

NSCC is proposing to terminate the 

Commission Billing service for a 

number of reasons, as described below. 

Because the Commission Billing type of 

limited membership exists only for the 

purposes of the use of this service, 

NSCC would terminate the existing 

Commission Billing memberships 

simultaneously with the termination of 

the service. 

Over the years, the volumes of trades 

handled by floor brokers firms have 

decreased, leading to a significant 

decrease in commission bill transactions 

and the use of this service. Between 

January 2017 and June 2018, the 

Commission Billing service processed 

an average of approximately 87 

commission payments per month 

(averaging a total of approximately 

$370,000 each month), compared to an 

average of approximately 10,000 

commission payments per month in the 

early 2000’s. The number of 

Commission Billing Members has also 

declined, with only seven new firms 

joining over the last eight years. 

Commission Billing Members have 

alternative methods to process 

commission payments. For example, 

firms may process the charges and 

payments through their own accounts 

payable systems, charging and 

collecting payments from their clients 

directly. Due to the lower volumes of 

commission payments, this is a more 

reasonable alternative to the 

Commission Billing Service than it may 

have been when volumes of payments 

were higher. Therefore, the industry’s 

reliance on this service, which was built 

to provide an efficient way to process 

large volumes of payments, has been 

diminishing. 

Since the introduction of the service, 

NSCC has provided the Commission 

Billing service as a utility service to the 

industry and its Members; the service 

provided its Members and the industry 

with value, but it was not designed to 

generate profit for NSCC. Over time, the 

reduced volumes of transactions has 

caused this service to be provided at a 

financial loss to NSCC. Costs of 

providing the service include engaging 

an ACH settling bank and ongoing 

system operating costs. 

Additionally, due to the use of legacy 

systems that lack automation and 

support features, the service continues 

to rely on manual processes and 

requires personnel involvement. While 

errors in the operation of the service are 

infrequent, the reliance on manual 

processes creates a risk of such errors. 

Remediation of such errors, if they 

occur, could distract support resources 

from higher priority tasks. NSCC would 

be required to invest in enhancements 

to the systems that support the 

Commission Billing service if it 

continued to offer the service. 

Therefore, due to the reduced reliance 

on this service by the industry, the cost 

of providing this service, and the 

availability of other methods for 

Members and brokers to process these 

payments, NSCC is proposing to 

terminate the Commission Billing 

service. 

In order to terminate the Commission 

Billing service, NSCC would amend the 

Rules to remove Rule 16 (Settlement of 

Commissions) and to remove references 

to the Commission Billing type of 

limited membership from Rule 1 

(Definitions and Descriptions), Rule 2 

(Members and Limited Members), Rule 

2A (Initial Membership Requirements), 

Rule 2B (Ongoing Membership 

Requirements and Monitoring), Rule 18 

(Procedures for When the Corporation 

Declines or Ceases to Act), Rule 22 

(Suspension of Rules), Rule 24 (Charges 

for Services Rendered), Rule 26 (Bills 

Rendered), Rule 34 (Insurance), Rule 37 

(Hearing Procedures), Rule 46 

(Restrictions on Access to Services), 

Rule 58 (Limitations on Liability), Rule 

64 (DTCC Shareholders Agreement), 

Addendum A (Fee Structure), 

Addendum B (Qualifications and 

Standards of Financial Responsibility, 

Operational Capability and Business 

History), Addendum D (Statement of 

Policy Envelope Settlement Service, 

Mutual Fund Services, Insurance and 

Retirement Processing Services, and 

Other Services Offered by the 

Corporation), and Addendum P (Fine 

Schedule). NSCC would also make 

necessary conforming changes to 

Addendum B (Qualifications and 

Standards of Financial Responsibility, 

Operational Capability and Business 

History) and Rule 1 (Definitions and 

Descriptions). Finally, NSCC would add 

a legend to each of the above listed 

Rules and Addenda that identifies the 

implementation date of the proposed 

changes. 

Implementation Timeframe 

Given that all current Commission 

Billing Members are floor broker 

members of NYSE and NYSE American, 

NSCC will work closely with these 

exchanges to provide these firms with 

notice of the proposed termination of 

this service and their related limited 

memberships with NSCC. NSCC also 

would provide these firms with time to 

transition to alternative methods for the 

submission of charges and receipt of 

commission payments. Subject to the 

approval of this proposed rule change 

filing, NSCC would implement this 

proposed rule change and terminate the 

Commission Billing service by no later 

than November 30, 2018. 

2. Statutory Basis 

NSCC believes that the proposed 

changes are consistent with the Section 

17A(b)(3)(F) of the Act, which requires, 

in part, that the rules of a registered 

clearing agency be designed to promote 

the prompt and accurate clearance and 

settlement of securities transactions, for 

the reasons described below.6 The 

proposed rule change would terminate a 

service that takes up various resources 

(through its reliance on manual 

operations and by operating at a 

financial loss) and is no longer relied on 

by Members and the industry. Because 

NSCC would no longer need to divert 

resources to an underutilized service, 

the proposed rule change would afford 

NSCC the ability to employ those 

resources in a manner that could better 

support and promote the prompt and 

accurate clearance and settlement of 

securities transactions. In that way, 

NSCC believes the proposed rule change 

is consistent with Section 17A(b)(3)(F) 

of the Act.7

Rule 17Ad–22(e)(21)(iv) under the Act 

requires, in part, that NSCC be efficient 

and effective in meeting the 

requirements of its participants and the 

markets it serves, and have the covered 

clearing agency’s management regularly 

review the efficiency and effectiveness 

of its use of technology and 

communication procedures.8 As 

described above, to continue providing 

the Commission Billing service, NSCC 

would need to enhance the systems and 

technology used to operate the system 

in order to implement more automation 

and support features. However, given 

that the service currently operates at a 

financial loss and does not provide the 

industry with the same value that it has 

in the past, NSCC has determined that 

it would be more efficient and effective 


jstallworth on DSKBBY8HB2PROD with NOTICES
Federal Register / Vol. 83, No. 142 / Tuesday, July 24, 2018 / Notices 35043 

9 Id. 

10 15 U.S.C. 78q–1(b)(3)(F). 

11 17 CFR 240.17Ad–22(e)(21)(iv). 

12 15 U.S.C. 78q–1(b)(3)(F). 

13 17 CFR 240.17Ad–22(e)(21)(iv). 

14 15 U.S.C. 78q–1(b)(3)(F). 

15 17 CFR 240.17Ad–22(e)(21)(iv). 

in meeting the requirements of its 

Members to eliminate the service and 

instead use its resources for higher 

priority services. Therefore, NSCC 

believes the proposed rule change is 

consistent with Rule 17Ad– 

22(e)(21)(iv).9

(B) Clearing Agency’s Statement on 

Burden on Competition 

The proposed rule change could have 

an impact on competition because 

Commission Billing Members that 

currently use the service to process their 

commission bills, and firms that may 

apply to use the service in the future, 

would no longer be able to do so. 

However, NSCC does not believe that 

the impact of this proposed rule change 

on competition would be significant. 

First, the proposal is unlikely to have a 

significant impact because the use of the 

service has diminished over time, as 

described above. NSCC has not 

onboarded a new Commission Billing 

Member in over two years, and the 

number of active Commission Billing 

Members has declined over time. 

Therefore, elimination of the service is 

unlikely to impact many firms that may 

wish to join as Commission Billing 

Members in the future. Second, while 

current Commission Billing Members 

would need to use other methods to 

process commission payments, 

alternatives currently exist, including 

using their own accounts payable 

system. Given that volumes of 

commission bills have trended lower 

over the past few years, these firms 

should not incur a significant cost in 

processing commission bills and 

collecting commission payments 

through their own internal billing 

systems. Therefore, NSCC does not 

believe that the proposed rule change 

would have a significant impact on 

competition. 

NSCC also believes that any impact 

the proposed rule change may have on 

competition would be both necessary 

and appropriate in furtherance of the 

purposes of the Act. 

The proposed rule change would 

afford NSCC the option to utilize its 

resources for matters that better support 

and promote the prompt and accurate 

clearance and settlement of securities 

transactions, consistent with Section 

17A(b)(3)(F) of the Act.10 The proposed 

rule change would also allow NSCC to 

be more efficient and effective in 

meeting the requirements of its 

Members by using its resources for 

higher priority services, consistent with 

Rule 17Ad–22(e)(21)(iv) under the 

Act.11 Therefore, by advancing NSCC’s 

ability to meet the requirements of both 

Section 17A(b)(3)(F) of the Act 12 and 

Rule 17Ad–22(e)(21)(iv) under the 

Act,13 NSCC believes any impact the 

proposed rule change may have on 

competition would be necessary in 

furtherance of the purposes of the Act. 

Additionally, NSCC believes that the 

proposed rule change is a reasonable 

method of advancing NSCC’s ability to 

meet these requirements. As noted 

above, Members’ use of this service has 

reduced over time, and the cost to NSCC 

of providing the service has outweighed 

the benefit it provides to the industry. 

NSCC would provide Members and 

Commission Billing Members with 

notice and time to transition to other 

viable methods for processing these 

payments. Therefore, NSCC believes the 

proposed rule change is a reasonable 

method of advancing NSCC’s ability to 

meet the requirements of both Section 

17A(b)(3)(F) of the Act 14 and Rule 

17Ad–22(e)(21)(iv) under the Act.15

Therefore, NSCC does not believe that 

the proposed rule change would have a 

significant impact on competition, and 

further believes that any such impact 

would be both necessary and 

appropriate in furtherance of the 

purposes of the Act. 

(C) Clearing Agency’s Statement on 

Comments on the Proposed Rule 

Change Received From Members, 

Participants, or Others 

NSCC has not solicited or received 

any written comments relating to this 

proposal. NSCC will notify the 

Commission of any written comments 

that it receives. 

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– 

NSCC–2018–004 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–NSCC–2018–004. 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 NSCC 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–NSCC– 

2018–004 and should be submitted on 

or before August 14, 2018. 


jstallworth on DSKBBY8HB2PROD with NOTICES
35044 Federal Register / Vol. 83, No. 142 / Tuesday, July 24, 2018 / Notices 

16 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3Each capitalized term not otherwise defined 

herein has its respective meaning as set forth in the 

Rules, By-Laws and Organization Certificate of The 

Depository Trust Company (the ‘‘Rules’’), available 

at http://www.dtcc.com/legal/rules-andprocedures.aspx. 

4Collateral management generally involves 

calculating collateral requirements and facilitating 

the transfer of collateral between counterparties. 

See Securities Exchange Act Release No. 64796 

(July 1, 2011), 76 FR 39963, 39964 (July 7, 2011) 

(S7–28–11). 

5See Securities Exchange Act Release No. 80598 

(May 4, 2017), 82 FR 21837 (May 10, 2017) (SR– 

DTC–2017–001). 

6 DEGCL is a joint venture of The Depository 

Trust & Clearing Corporation, the corporate parent 

of DTC, and Euroclear S.A./N.V. and was formed for 

the purpose of offering global information, record 

keeping, and processing services for derivatives 

collateral transactions and other types of financing 

transactions. DEGCL offers service options for the 

selection of collateral to satisfy the collateral 

obligations of its users (‘‘DEGCL CMS’’). One option 

relates exclusively to Securities held at DTC, and 

is dependent on Rule 35. For more information on 

DEGCL and DEGCL CMS, see Securities Exchange 

Act Release No. 80280 (March 20, 2017), 82 FR 

15081 (March 24, 2017) (SR–DTC–2017–001). 

7Rule 35 provides that by establishing a CMS 

Sub-Account, a Participant authorizes DEGCL to 

receive from DTC (x) a ‘‘CMS Report,’’ which 

provides information regarding Securities credited 

to the CMS Sub-Account of such Participant at the 

time of the report, and (y) ‘‘CMS Delivery 

Information,’’ which provides real-time information 

regarding any Delivery or Pledge from, or Delivery 

or Release to, the CMS Sub-Account of such 

Participant. 

8 DTC understands that DEGCL expects to be a 

CMSP under proposed Rule 35 and expects to offer 

collateral management services under the amended 

rule. 

9Rule 35 currently requires that a designated 

Account must be a sub-Account, and can only be 

designated by a Participant, which were DEGCL 

specifications. By expanding the rule to Accounts 

more generally, which could be designated by any 

Participant or Pledgee, the proposed rule would 

provide a Participant or a Pledgee flexibility to 

choose among CMSPs with different models for 

collateral management services and to structure its 

Accounts in a manner that aligns most efficiently 

with its collateral management needs and the 

specifications of its designated CMSP(s). 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.16

Eduardo A. Aleman, 

Assistant Secretary. 

[FR Doc. 2018–15766 Filed 7–23–18; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–83667; File No. SR–DTC– 

2018–006] 

Self-Regulatory Organizations; The 

Depository Trust Company; Notice of 

Filing of Proposed Rule Change To 

Amend Rule 35 To Provide for 

Designated Accounts for Use With 

Designated Collateral Management 

Service Providers 

July 18, 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 July 9, 

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. 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 

would amend Rule 35 3 to permit a 

Participant or Pledgee to designate one 

or more collateral management service 

providers,4 acting on behalf of the 

Participant or Pledgee, to receive reports 

and information from, and provide 

certain instructions to, DTC with respect 

to specified Accounts of the Participant 

or Pledgee. In addition, the proposed 

rule change would make ministerial 

changes to Rule 35, as discussed 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 Rule 35 to permit a 

Participant or Pledgee to designate one 

or more collateral management service 

providers, acting on behalf of the 

Participant or Pledgee, to receive reports 

and information from, and provide 

certain instructions to, DTC with respect 

to specified Accounts of the Participant 

or Pledgee. In addition, the proposed 

rule change would make ministerial 

changes to Rule 35, as discussed below. 

A. Background 

i. Rule 35 

On May 4, 2017, the Commission 

approved a DTC rule change that added 

Rule 35.5 DTC introduced Rule 35 at the 

request of DTCC Euroclear Global 

Collateral Ltd. (‘‘DEGCL’’) 6 in 

accordance with DEGCL specifications. 

The purpose of Rule 35 was to permit 

a Participant to authorize DEGCL to 

receive certain reports and information 

with respect to Securities held by the 

Participant at DTC in one or more subaccounts (each, a ‘‘CMS Sub-Account’’) 

so that DEGCL might provide collateral 

management services with respect to 

such Securities.7

As DEGCL sought to expand its 

activities under Rule 35, which would 

have required one or more amendments 

to the rule, DTC considered whether a 

more comprehensive approach to Rule 

35 might better serve the collateral 

management needs of its Participants 

and Pledgees. 

ii. Proposed Rule Changes 

The proposed rule change to amend 

Rule 35 would apply to any collateral 

management service provider that 

satisfies the requirements of the rule, 

and to any Account designated by a 

Participant or Pledgee. The amended 

rule would authorize DTC to provide 

information to the collateral 

management service provider (as it does 

for DEGCL currently) but, further, to act 

on instructions of the collateral 

management service provider. 

More specifically, the proposed rule 

change would: 

(1) Introduce the concept of a 

‘‘CMSP,’’ a collateral management 

service provider designated to DTC by a 

Participant or Pledgee to act on behalf 

of the Participant or Pledgee under the 

proposed rule. The concept of a CMSP 

would replace the singular designation 

of DEGCL to act under this rule; 8

(2) Introduce the concept of a ‘‘CMSP 

Account,’’ an Account of a Participant 

or Pledgee that the Participant or 

Pledgee, respectively, has designated as 

subject to the proposed rule. The scope 

of a CMSP Account would replace the 

narrower concept of the existing CMS 

Sub-Account; 9

(3) Add the concept of a ‘‘CMSP 

Instruction,’’ an instruction of a CMSP 

to DTC for the Delivery, Pledge, or 

Release of Securities to or from a CMSP 

Account for which the CMSP is 

designated under the proposed rule; and 

(4) Introduce the defined terms 

‘‘CMSP Position Report’’ and ‘‘CMSP 

Information’’ (collectively, ‘‘CMSP 


jstallworth on DSKBBY8HB2PROD with NOTICES