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
Federal Register / Vol. 83, No. 142 / Tuesday, July 24, 2018 / Notices 35045 

10See supra note 8. 

11Sections 1(a)–(h) of Rule 3 provide the 

qualifications for a partnership, corporation or other 

organization or entity to be eligible to become a 

Participant. Specifically, it must satisfy at least one 

of the following qualifications: ‘‘(a) it is a 

corporation which engages in clearance and 

settlement activities and which is a subsidiary of a 

national securities exchange or national securities 

association registered under the Exchange Act; (b) 

it is a member or member organization in good 

standing of a corporation described in paragraph (a) 

above; (c) it is a corporation which is authorized 

pursuant to Article 8 of the Uniform Commercial 

Code, or other similar statutory provision in effect 

in the jurisdiction in which such corporation 

engages in business, to engage in the business of 

effecting the transfer or pledge of Securities by 

book-entry and which engages in such business; (d) 

it is a bank or trust company which is subject to 

supervision or regulation pursuant to the provisions 

of Federal or State banking laws or any subsidiary 

of such a bank or trust company or a bank holding 

company or any subsidiary of a bank holding 

company; (e) it is an insurance company subject to 

supervision or regulation pursuant to the provisions 

of State insurance laws; (f) it is an investment 

company registered under section 8 of the 

Investment Company Act; (g) it is a pension fund 

or other employee benefit fund; or (h) if it does not 

qualify under paragraphs (a) through (g) above, it 

is (i) a financial institution which demonstrates to 

the Board of Directors that its business and 

capabilities are such that it could reasonably expect 

material benefit from direct access to the 

Corporation’s services or (ii) a broker-dealer 

registered under the Exchange Act.’’ Supra note 3. 

12 In order to protect DTC, its Participants and 

Pledgees, a collateral management service provider 

that wishes to act under proposed Rule 35 would 

need to be subject to regulatory oversight 

comparable to a Participant, as provided in 

proposed Section 2(b)(i) of Rule 35, or, if the entity 

is organized in a country other than the United 

States (a ‘‘non-U.S. entity’’), it would need to be 

regulated by a financial regulatory authority in the 

country in which it is organized, as provided in 

proposed Section 2(b)(ii) of Rule 35. Further, the 

proposed rule change would require that, in order 

to be eligible to become a CMSP, the non-U.S. entity 

must notify the Commission in writing of its 

intention to operate under proposed Rule 35. While 

DTC reserves the right to request documentation 

and/or information relating to a collateral 

management service provider’s compliance with the 

requirements of proposed Section 2 of Rule 35, it 

would be the sole responsibility of the Participant 

or Pledgee to evaluate and choose an appropriate 

collateral management service provider that, at a 

minimum, satisfies the requirements. Under 

proposed Section 2 of Rule 35, the designating 

Participant or Pledgee would remain liable as 

principal for the actions of its designated CMSP(s) 

on its behalf, and would indemnify DTC for any 

loss, liability, or expense as a result of any claim 

arising from (i) any act or omission of the CMSP, 

(ii) the provision of CMSP Reports to the CMSP by 

DTC, or (iii) DTC’s compliance with instructions of 

the CMSP. 

13See infra note 15. 

14See supra note 7. 

15The proposed rule change would not alter the 

provision in Rule 35 that states that DTC will 

provide the CMSP Reports ‘‘through such dedicated 

communications channels, satisfactory to [DTC] in 

its sole discretion, as [DTC] shall afford for this 

purpose.’’ Typically, DTC would have 

infrastructure and operations that it would use to 

transmit information to, or receive information 

from, CMSPs under proposed Rule 35. DTC would 

Continued 

Reports’’). These reports are analogous 

to the CMS Report and CMS Delivery 

Information, respectively, provided to 

DEGCL under Rule 35. 

B. Proposed Rule 

i. CMSP 

Proposed Section 2 of Rule 35 would 

set forth the requirements to be a 

CMSP.10 Proposed Section 2 would 

provide that a partnership, corporation 

or other organization or entity may 

become a CMSP for purposes of 

proposed Rule 35 if it satisfies the 

following requirements: (a) It is 

designated to DTC by one or more 

Participants or Pledgees as a collateral 

management service provider for 

purposes of Rule 35; (b) it (i) satisfies at 

least one of the qualifications set forth 

in Section 1(a)–(h) of Rule 3 11 or (ii) is 

organized in a country other than the 

United States, is regulated by a financial 

regulatory authority in the country in 

which it is organized, and demonstrates 

that it has notified the Commission in 

writing of its intention to operate under 

Rule 35; 12 and (c) it establishes a 

connection to DTC in accordance with 

the reasonable requirements of DTC in 

order to be able to receive position and 

transaction information and to submit 

instructions to DTC in accordance with 

the Rules and Procedures.13

Proposed Section 2 of Rule 35 would 

also provide that DTC may decline to 

accept an entity as a CMSP if it would 

present material risk to DTC, its 

Participants and Pledgees, or impose 

material costs to DTC. For illustrative 

purposes only, some examples of 

circumstances in which DTC might 

reject a collateral management service 

provider as a CMSP may include, 

without limitation, circumstances in 

which DTC reasonably believes that 

acceptance of the collateral management 

service provider as a CMSP would (i) 

subject DTC to additional legal or 

regulatory regimes, to which it is not 

otherwise subject; (ii) expose DTC to 

additional technology risk; or (iii) cause 

DTC to be in violation of applicable law 

or regulation. 

ii. CMSP Accounts 

The proposed rule change would 

amend Rule 35 to allow either a 

Participant or a Pledgee to designate any 

Account as a CMSP Account. The key 

feature of a CMSP Account is that it 

allows the designated CMSP access and 

authority to provide instruction to DTC 

(as further described below) for the 

Delivery, Pledge, or Release of 

Securities on behalf of a Participant or 

Pledgee, as applicable. The proposed 

rule change would specify that, with 

respect to a CMSP Account, a 

Participant or Pledgee would retain the 

right to instruct DTC as otherwise 

provided in the Rules and Procedures. 

Pursuant to proposed Section 3 of 

Rule 35, a Participant or Pledgee would 

be able to designate one or more CMSP 

Accounts and, concurrently, designate 

one or more CMSPs with respect to each 

CMSP Account. The designation of a 

CMSP with respect to a CMSP Account 

by a Participant or Pledgee would 

constitute: 

(1) The appointment of the CMSP by 

the Participant or Pledgee of the CMSP 

to act on its behalf under Rule 35; 

(2) the authorization of the appointed 

CMSP by the Participant or Pledgee to 

receive CMSP Reports and to provide 

CMSP Instructions; 

(3) the authorization of DTC by the 

Participant or Pledgee to act in 

accordance with any CMSP Instruction 

of such CMSP; and 

(4) the representation and warranty of 

the Participant or Pledgee that it is duly 

authorized to instruct DTC to provide 

CMSP Reports to the CMSP and to act 

in accordance with any CMSP 

Instruction. 

With the exception of references to 

Pledgees and to the new concept of 

CMSP Instruction, these authorizations, 

representations, and warranties would 

substantially track Rule 35, as 

previously adopted. 

In addition, the proposed rule change 

would not substantially alter the 

liability and indemnification provisions 

in Rule 35. The proposed rule change 

would provide that each Participant and 

Pledgee that designates a CMSP with 

respect to a CMSP Account would 

indemnify DTC, and any nominee of 

DTC, against any loss, liability or 

expense as a result of any claim arising 

from the compliance of DTC with CMSP 

Instructions, except to the extent such 

loss, liability, or expense is caused 

directly by the DTC’s gross negligence 

or willful misconduct. 

iii. CMSP Reports 

As discussed above, Rule 35 currently 

provides a mechanism for a Participant 

to authorize DEGCL to receive position 

and transaction information from DTC, 

in the form of CMS Reports and CMS 

Delivery Information.14 The proposed 

rule change would permit a Participant 

or Pledgee to designate a CMSP that 

would be authorized to receive CMSP 

Reports and give CMSP Instructions 

with respect to CMSP Accounts for 

which the CMSP is designated. The 

CMSP Position Report and CMSP 

Information are analogous to the reports 

provided to DEGCL under existing Rule 

35 (defined as the CMS Report and CMS 

Delivery Information, respectively).15


jstallworth on DSKBBY8HB2PROD with NOTICES
35046 Federal Register / Vol. 83, No. 142 / Tuesday, July 24, 2018 / Notices 

consider requests from CMSPs for alternative 

methods of connectivity, taking into account factors 

that may include, but are not limited to, operational 

feasibility, user demand, and cost. In such a 

situation, the applicable CMSP would be 

responsible for all development, integration, 

implementation, and additional operating costs 

related to such alternate method of transmission. 

16For a CMSP Account of a Participant, that 

would include Delivery or Pledge. For a CMSP 

Account of a Pledgee, that would include Delivery 

or Release. 

17 DTC risk management controls, including 

Collateral Monitor and Net Debit Cap (as defined in 

Rule 1, Section 1 of the Rules), are designed so that 

DTC may complete system-wide settlement 

notwithstanding the failure to settle of its largest 

Participant or Affiliated Family of Participants. The 

Collateral Monitor tests whether a Participant has 

sufficient collateral for DTC to pledge or liquidate 

if that Participant were to fail to meet its settlement 

obligation. Pursuant to these controls under 

applicable DTC Rules and Procedures, DTC would 

not process any Delivery or Pledge instruction order 

from a CMSP Account that would cause the 

Participant to exceed its Net Debit Cap or to have 

insufficient DTC Collateral to secure its obligations 

to DTC. Deliveries would be processed in the same 

order and with the same priority as otherwise 

provided in the Rules and Procedures (i.e., such 

Deliveries and Pledges would not take precedence 

over any other type of Delivery or Pledge in the 

DTC system). 

Existing Rule 35 defines ‘‘CMS 

Delivery Information’’ to mean, ‘‘with 

respect to CMS Securities and any 

Delivery or Pledge thereof from, or 

Delivery or Release thereof to, a CMS 

Sub-Account, a copy of any Delivery, 

Pledge, or Release message sent to the 

CMS Participant by DTC, including the 

following information: (x) the CUSIP, 

ISIN, or other identification number of 

such CMS Securities, and (y) the 

number of shares or other units or 

principal amount of such CMS 

Securities.’’ This definition was drafted 

to align with DEGCL specifications. 

Pursuant to the proposed rule change, 

the definition would be drafted in more 

general terms to provide flexibility for 

the different collateral management 

service offerings of CMSPs (in addition 

to DEGCL). Pursuant to the proposed 

rule change, ‘‘CMSP Information’’ 

would mean, ‘‘with respect to a CMSP 

Account of a Participant or Pledgee, a 

copy of any message sent to the 

Participant or Pledgee by the 

Corporation.’’ These messages would 

include, but would not be limited to, the 

Delivery, Pledge, and Release messages 

referenced in the definition of CMS 

Delivery Information in existing Rule 

35. 

Similarly, existing Rule 35 defines 

‘‘CMS Report’’ to mean, ‘‘with respect to 

a CMS Participant and its CMS SubAccount, the following information 

identifying the CMS Securities that are, 

at the time of such report, credited to 

such CMS Sub-Account: (i) The CUSIP, 

ISIN, or other identification number of 

the CMS Securities, and (ii) the number 

of shares or other units or principal 

amount of the CMS Securities.’’ This 

definition was drafted to align with 

DEGCL specifications. Pursuant to the 

proposed rule change, ‘‘(i) the CUSIP, 

ISIN, or other identification number of 

the CMS Securities, and (ii) the number 

of shares or other units or principal 

amount of the CMS Securities’’ would 

be deleted from the definition. 

Finally, similar to existing Rule 35, 

proposed Rule 35 would provide that 

DTC would have no liability to any 

Participant or Pledgee as a result of 

providing one or more CMSP Reports to 

any CMSP pursuant to proposed Section 

5 of Rule 35. 

iv. CMSP Instructions 

The proposed rule change would 

further amend Rule 35 to provide that 

a CMSP designated by a Participant or 

Pledgee with respect to a CMSP 

Account would be authorized to instruct 

DTC, on behalf of the Participant or 

Pledgee, for the Delivery, Pledge, or 

Release of Securities credited to such 

CMSP Account, as applicable.16 CMSP 

Instructions would be subject to the 

terms and conditions of the Rules and 

the Procedures applicable to Deliveries, 

Pledges, and Releases of Securities 

generally, including risk management 

controls.17 The purpose of this proposed 

change is to streamline collateral 

processing by CMSPs by allowing them 

to receive information directly from 

DTC and to take direct action on that 

information through CMSP Instructions, 

on behalf of Participants and Pledgees. 

Pursuant to the proposed rule change, 

the right of any CMSP to instruct DTC 

with respect to a CMSP Account would 

not preclude instructions by the 

Participant or Pledgee itself, or CMSP 

Instructions by another CMSP, with 

respect to the same CMSP Account. 

Furthermore, Rule 35 would provide 

that DTC has no liability (i) to a 

Participant or Pledgee for acting in 

accordance with, or relying upon, CMSP 

Instructions, or (ii) to any CMSP as a 

result of DTC acting in accordance with, 

or relying upon, instructions of any 

other Person, including, but not limited 

to, the Participant or Pledgee or any 

other designated CMSP. 

C. Proposed Rule Changes 

In connection with the foregoing, DTC 

proposes to make the following changes 

(including ministerial changes) to Rule 

35. 

Title. DTC is proposing to replace the 

current title ‘‘CMS Reporting’’ with 

‘‘CMSP Reports and Instructions,’’ to 

reflect the amended substance of the 

proposed rule. 

Section 1. For stylistic consistency, 

DTC is proposing to insert the title 

‘‘Certain Defined Terms’’ for Section 1. 

For the reasons explained above, DTC is 

further proposing to (i) delete the 

definitions of CMS, CMS Participant, 

CMS Representative, CMS Securities, 

DEGCL, and DTCC; (ii) add definitions 

for CMSP, CMSP Account, CMSP 

Instruction, and CMSP Reports; (iii) 

replace the defined term ‘‘CMS Delivery 

Information’’ with ‘‘CMSP Information’’ 

and simplify the definition by referring 

to ‘‘a copy of any message sent to the 

Participant or Pledgee’’ with respect to 

a CMSP Account, instead of ‘‘a copy of 

any Delivery, Pledge, or Release 

message sent to the CMS Participant by 

DTC, including the following 

information: (x) the CUSIP, ISIN, or 

other identification number of such 

CMS Securities, and (y) the number of 

shares or other units or principal 

amount of such CMS Securities’’; and 

(iv) replace the defined term ‘‘CMS 

Report’’ with ‘‘CMSP Position Report’’ 

and simplify the definition by removing 

the DEGCL specifications of ‘‘(i) the 

CUSIP, ISIN, or other identification 

number of the CMS Securities, and (ii) 

the number of shares or other units or 

principal amount of the CMS 

Securities.’’ 

Proposed Section 2 (New). DTC is 

proposing to insert a new proposed 

Section 2, titled ‘‘Qualification as a 

CMSP.’’ As discussed above, Section 2 

would set forth the requirements that an 

entity must satisfy to become a CMSP. 

Section 2 (Proposed Section 3). DTC 

is proposing to renumber Section 2 to 

Section 3, and to change the title of 

proposed Section 3 to ‘‘CMSP 

Accounts.’’ DTC is further proposing to 

modify subsection (a) to delete DEGCL 

CMS-specific terms and to reflect that (i) 

a Participant or Pledgee can designate 

one or more CMSP Accounts, as well as 

designate one or more CMSPs for each 

CMSP Account, and (ii) the designation 

of a CMSP with respect to a CMSP 

Account by a Participant or Pledgee 

would constitute: (1) The appointment 

of the CMSP by the Participant or 

Pledgee of the CMSP to act on its behalf 

under Proposed Rule 35; (2) the 

authorization of the appointed CMSP by 

the Participant or Pledgee to receive 

CMSP Reports and to provide CMSP 

Instructions; (3) the authorization of 

DTC by the Participant or Pledgee to act 

in accordance with any CMSP 

Instructions of such CMSP; and (4) the 

representation and warranty of the 

Participant or Pledgee that it is duly 

authorized to instruct DTC to provide 


jstallworth on DSKBBY8HB2PROD with NOTICES
Federal Register / Vol. 83, No. 142 / Tuesday, July 24, 2018 / Notices 35047 

18 15 U.S.C. 78q–1(b)(3)(F). 

19 Id. 20 17 CFR 240.17Ad–22(e)(21). 

CMSP Reports to the CMSP and to act 

in accordance with CMSP Instructions. 

DTC is further proposing to modify 

subsection (b) to remove CMS-specific 

references, to reflect the inclusion of 

Pledgees, CMSPs, and CMSP Instruction 

in the proposed rule, and to make 

ministerial changes. Additionally, DTC 

proposes to remove subsection (c) as it 

would be no longer relevant because it 

relates exclusively to DEGCL. 

Section 3 (Proposed Section 4). DTC 

is proposing to renumber Section 3 as 

Section 4, and to change the title of the 

section to ‘‘Instructions on a CMSP 

Account.’’ DTC is further proposing to 

(i) modify subsection (a) to remove 

provisions relating to the transfer of 

Securities to a CMS Sub-Account, and 

to insert a provision stating that a 

Participant or Pledgee retains its right to 

instruct DTC with respect to its CMSP 

Account, and (ii) modify subsection (b) 

to remove provisions relating to the 

transfer of Securities to a CMS SubAccount, and to insert a provision 

specifying that a CMSP may instruct the 

Delivery, Pledge, or Release of 

Securities to or from a CMSP Account 

for which it is designated pursuant to 

proposed Section 3 of Rule 35. Further, 

DTC proposes to insert proposed 

subsection (c) that would state that all 

Deliveries, Pledges, and Releases to or 

from a CMSP Account would be subject 

to the terms and conditions of the Rules 

and Procedures applicable to Deliveries, 

Pledges, and Releases of Securities 

generally. 

Section 4. DTC proposes to delete this 

section, as it relates to DEGCL 

specifications for a CMS Report and 

would no longer be relevant. 

Section 5. DTC is proposing to replace 

the current title of ‘‘CMS Delivery 

Information’’ with ‘‘CMSP Reports.’’ 

DTC is further proposing to insert 

proposed subsection (a) to provide for 

the provision of CMSP Position Reports 

and CMSP Information to each CMSP 

for each CMSP Account for which it is 

designated. DTC additionally proposes 

to delete the following language, 

because it relates to DEGCL-specific 

requirements: ‘‘CMS Delivery 

Information. The Corporation shall, for 

purposes of CMS, provide CMS Delivery 

Information to the CMS Representative, 

in real-time, with respect to (i) each 

Delivery or Pledge from, and (ii) 

Delivery or Release to, any CMS SubAccount.’’ Further, DTC proposes to 

incorporate the remaining language of 

Section 5, modified to conform with the 

defined terms of the proposed rule 

change, into proposed subsection (b). 

Section 6. DTC is proposing to modify 

the section to (i) add references to 

CMSPs, Pledgees, CMSP Reports, and 

CMSP Instructions, (ii) remove 

references to CMS Participant, CMS 

Report, Delivery Information, and CMS 

Representative, and (iii) update a crossreference relating to CMSP Reports. DTC 

is further proposing to add disclaimers 

of liability to (i) a Participant or Pledgee 

for acting in accordance with, or relying 

upon, CMSP Instructions, or (ii) any 

CMSP as a result of DTC acting in 

accordance with, or relying upon, 

instructions of any other Person, 

including, but not limited to, the 

Participant or Pledgee or any other 

designated CMSP, with respect to a 

CMSP Account. 

For additional clarity, DTC is also 

proposing to make ministerial changes 

to (i) update articles, pronouns, and 

determiners, and (ii) modify language 

for stylistic conformity within the 

proposed rule. 

Implementation Timeframe 

DTC will implement the proposed 

rule change two Business Days after 

approval of this filing by the 

Commission. Participants would be 

advised of the implementation date of 

this proposed rule change through the 

issuance of a DTC Important Notice. 

2. Statutory Basis 

DTC believes that the proposed rule 

change is consistent with the 

requirements of the Act, and the rules 

and regulations thereunder applicable to 

DTC, in particular Section 17A(b)(3)(F) 

of the Act.18

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

requires, inter alia, that the Rules be 

designed to promote the prompt and 

accurate clearance and settlement of 

securities transactions. By amending 

Rule 35 (i) to expand its application to 

CMSPs generally, and (ii) to provide 

that Pledgees, in addition to 

Participants, may designate an Account 

under Rule 35, the proposed rule change 

would provide any Participant or 

Pledgee the opportunity to choose one 

or more CMSPs that align most 

efficiently with its specific collateral 

management needs and to structure its 

Accounts accordingly. In addition, by 

amending Rule 35 to permit any 

Participant or Pledgee to designate one 

or more CMSPs to provide CMSP 

Instructions to DTC with respect to a 

CMSP Account, the proposed rule 

change would reduce the number of 

actions that a Participant or Pledgee that 

has a CMSP would need to take in order 

to effect the settlement of collateral 

transactions at DTC, thereby adding 

efficiency by providing straight-through 

submission and processing of settlement 

instructions by a CMSP without further 

actions by the Participant or Pledgee. 

Further, for enhanced clarity, the 

proposed rule change would make 

ministerial changes to Rule 35 so the 

processes relating to CMSPs are clear 

and consistent. Therefore, by (i) 

providing Participants and Pledgees the 

opportunity to choose a CMSP that 

aligns most efficiently with its needs, 

(ii) providing streamlined submission 

and processing of settlement 

instructions by a CMSP on behalf of the 

Participant or Pledgee, and (iii) 

providing a clear and consistent rule 

relating to CMSPs, the proposed rule 

change is designed to improve 

efficiency in the processing and 

settlement of collateral transactions, 

thereby promoting the prompt and 

accurate clearance and settlement of 

securities transactions, consistent with 

the requirements of the Act, in 

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

Rule 17Ad–22(e)(21) promulgated 

under the Act requires, inter alia, that 

each covered clearing agency shall 

establish, implement, maintain and 

enforce written policies and procedures 

reasonably designed to be efficient and 

effective in meeting the requirements of 

its participants and the markets it 

serves.20 By amending Rule 35 to permit 

a Participant or Pledgee to designate one 

or more CMSPs to provide CMSP 

Instructions to DTC with respect to a 

CMSP Account, the proposed rule 

change would provide (i) an efficient 

mechanism for a Participant or Pledgee 

to designate collateral management 

service providers for its Account at 

DTC, and (ii) flexibility to a Participant 

or Pledgee to structure its Accounts in 

a manner that is most effective for the 

collateral management needs of that 

Participant or Pledgee and for the 

specifications of its designated CMSP(s), 

and is therefore designed to be efficient 

and effective in meeting the 

requirements of Participants, consistent 

with the requirements of the Act, in 

particular Rule 17Ad–22(e)(21). 

(B) Clearing Agency’s Statement on 

Burden on Competition 

DTC believes that the proposed rule 

change to amend Rule 35 to (i) expand 

its application to CMSPs generally, (ii) 

provide that Pledgees, in addition to 

Participants, may designate an Account 

under Rule 35, and (iii) provide for 

CMSP Instructions to DTC with respect 

to a CMSP Account, would have an 

impact on competition by potentially 

promoting competition, and would not 


jstallworth on DSKBBY8HB2PROD with NOTICES
35048 Federal Register / Vol. 83, No. 142 / Tuesday, July 24, 2018 / Notices 

21 15 U.S.C. 78q–1(b)(3)(I). 

22 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3Capitalized terms used but not defined herein 

have the meanings specified in the ICE Clear 

Europe Clearing Rules. 

impose a burden on competition.21 By 

removing provisions particular to 

DEGCL only, and providing that any 

Participant or Pledgee can designate a 

CMSP for a CMSP Account, the 

proposed rule change would (i) offer 

collateral management service providers 

(in addition to DEGCL) the opportunity 

to provide collateral management 

services to Participants and Pledgees 

under proposed Rule 35, and (ii) 

provide any Participant or Pledgee the 

opportunity to choose from among 

competing collateral management 

service providers. In addition, by 

providing that a Participant or Pledgee 

can designate one or more CMSPs to 

provide CMSP Instructions to DTC with 

respect to a CMSP Account for which it 

is designated, the proposed rule change 

would provide CMSPs the opportunity 

to include direct messaging to DTC as 

part of their services to Participants or 

Pledgees. Therefore, DTC believes that 

the proposed rule change would not 

impose a burden on competition but 

may promote competition. 

DTC does not believe that the 

proposed ministerial changes to Rule 35 

would have any impact on competition 

because these clarifications would 

merely make changes for accuracy and 

consistency and therefore would not 

affect the rights and obligations of any 

Participant or Pledgee or other 

interested party. 

(C) Clearing Agency’s Statement on 

Comments on the Proposed Rule 

Change Received From Members, 

Participants, or Others 

Written comments relating to the 

proposed rule change have not been 

solicited or received. DTC will notify 

the Commission of any written 

comments received by DTC. 

III. Date of Effectiveness of the 

Proposed Rule Change, and Timing for 

Commission Action 

Within 45 days of the date of 

publication of this notice in the Federal 

Register or within such longer period 

up to 90 days (i) as the Commission may 

designate if it finds such longer period 

to be appropriate and publishes its 

reasons for so finding or (ii) as to which 

the self-regulatory organization 

consents, the Commission will: 

(A) By order approve or disapprove 

such proposed rule change, or 

(B) institute proceedings to determine 

whether the proposed rule change 

should be disapproved. 

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views and 

arguments concerning the foregoing, 

including whether the proposed rule 

change is consistent with the Act. 

Comments may be submitted by any of 

the following methods: 

Electronic Comments 

• Use the Commission’s internet 

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

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include File Number SR– 

DTC–2018–006 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–2018–006. 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– 

2018–006 and should be submitted on 

or before August 14, 2018. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.22

Eduardo A. Aleman, 

Assistant Secretary. 

[FR Doc. 2018–15769 Filed 7–23–18; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–83665; File No. SR–ICEEU– 

2018–009] 

Self-Regulatory Organizations; ICE 

Clear Europe Limited; Notice of Filing 

of Proposed Rule Change Relating to 

Amendments to the ICE Clear Europe 

CDS End-of-Day Price Discovery 

Policy (‘‘Price Discovery Policy’’) 

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 11, 

2018, ICE Clear Europe Limited (‘‘ICE 

Clear Europe’’) filed with the Securities 

and Exchange Commission 

(‘‘Commission’’) the proposed rule 

change described in Items I, II and III 

below, which Items have been prepared 

by ICE Clear Europe. 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, Security-Based Swap 

Submission, or Advance Notice 

ICE Clear Europe proposes to modify 

certain provisions of its Price Discovery 

Policy related to the bid-offer width 

(‘‘BOW’’) methodology for pricing single 

name credit default swap (‘‘CDS’’) 

contracts. These revisions do not require 

any changes to the ICE Clear Europe 

Clearing Rules or Procedures.3

II. Clearing Agency’s Statement of the 

Purpose of, and Statutory Basis for, the 

Proposed Rule Change, Security-Based 

Swap Submission or Advance Notice 

In its filing with the Commission, ICE 

Clear Europe 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. ICE 

Clear Europe has prepared summaries, 


jstallworth on DSKBBY8HB2PROD with NOTICES