Federal Register / Vol. 89, No. 243 / Wednesday, December 18, 2024 / Notices 102985 

19 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4(n)(1)(i). 

3Securities Exchange Act Release No. 98227 

(Aug. 25, 2023), 88 FR 60251 (Aug. 31, 2023). 

4Comments on the Initial Filing are available at 

https://www.sec.gov/comments/sr-dtc-2023-801/ 

srdtc2023801.htm. 

5 12 U.S.C. 5465(e)(1). 

6 17 CFR 240.19b–4(n)(1)(i). 

7See Securities Exchange Act Release No. 98227 

(Aug. 25, 2023), 88 FR 60251 (Aug. 31, 2023) (SR– 

DTC–2023–801). 

8See Securities Exchange Act Release Nos. 82377 

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

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

2017–005). Following the completion of the initial 

issuance and private placement of senior notes, the 

Clearing Agencies would file a proposed rule 

change to amend the Framework to include the 

proceeds of the Debt Issuance as an additional 

qualifying liquidity resource of DTC. 

9Capitalized terms not defined herein are defined 

in the Rules, By-Laws and Organization Certificate 

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

Continued 

All submissions should refer to file 

number SR–PEARL–2024–57. This file 

number should be included on the 

subject line if email is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

internet website (https://www.sec.gov/ 

rules/sro.shtml). Copies of the 

submission, all subsequent 

amendments, all written statements 

with respect to the 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 

a.m. and 3 p.m. Copies of the filing also

will be available for inspection and

copying at the principal office of the

Exchange. Do not include personal

identifiable information in submissions;

you should submit only information

that you wish to make available

publicly. We may redact in part or

withhold entirely from publication

submitted material that is obscene or

subject to copyright protection. All

submissions should refer to file number

SR–PEARL–2024–57 and should be

submitted on or before January 8, 2025.

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.19

Sherry R. Haywood, 

Assistant Secretary. 

[FR Doc. 2024–29928 Filed 12–17–24; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–101890; File No. SR–DTC– 

2023–801] 

Self-Regulatory Organizations; The 

Depository Trust Company; Notice of 

Filing of Amendment No. 1 to Advance 

Notice To Raise Prefunded Liquidity 

Resources Through the Periodic 

Issuance and Private Placement of 

Senior Notes 

December 12, 2024. 

On August 15, 2023, The Depository 

Trust Company (‘‘DTC’’) filed with the 

Securities and Exchange Commission 

(‘‘Commission’’) advance notice SR– 

DTC–2023–801 (‘‘Initial Filing’’) 

pursuant Section 806(e)(1) of Title VIII 

of the Dodd-Frank Wall Street Reform 

and Consumer Protection Act entitled 

the Payment, Clearing, and Settlement 

Supervision Act of 2010 (‘‘Clearing 

Supervision Act’’) 1 and Rule 19b– 

4(n)(1)(i) under the Securities Exchange 

Act of 1934 (‘‘Act’’).2 The Initial Filing 

was published for comment in the 

Federal Register on August 31, 2023.3

The Commission has received comment 

on the Initial Filing.4 Notice is hereby 

given that on December 3, 2024, DTC 

filed with the Commission Amendment 

No. 1 to the Initial Filing as described 

in Items I, II and III below, which Items 

have been prepared by the clearing 

agency. This Amendment No. 1 

supersedes and replaces the Initial 

Filing in its entirety. The Commission is 

publishing this notice to solicit 

comments on Amendment No. 1 from 

interested persons. 

I. Clearing Agency’s Statement of the

Terms of Substance of the Advance

Notice

Pursuant to the Clearing Supervision 

Act 5 and Rule 19b–4(n)(1)(i) under the 

Act,6 DTC is filing this Amendment No. 

1 to advance notice SR–DTC–2023–801 7

in connection with a proposal to raise 

prefunded liquidity resources through 

the periodic issuance and private 

placement of senior notes (‘‘Debt 

Issuance’’). The proceeds from the Debt 

Issuance would supplement DTC’s 

existing default liquidity risk 

management resources, as described in 

greater detail below. 

II. Clearing Agency’s Statement of the

Purpose of, and Statutory Basis for, the

Advance Notice

In its filing with the Commission, the 

clearing agency included statements 

concerning the purpose of and basis for 

the Advance Notice and discussed any 

comments it received on the Advance 

Notice. The text of these statements may 

be examined at the places specified in 

Item IV below. The clearing agency has 

prepared summaries, set forth in 

sections A and B below, of the most 

significant aspects of such statements. 

(A) Clearing Agency’s Statement on

Comments on the Advance Notice

Received From Members, Participants,

or Others

Written comments on the advance 

notice have not been solicited or 

received. DTC will notify the 

Commission of any written comments 

received by DTC. If any written 

comments are received by DTC, they 

will be publicly filed as an Exhibit 2 to 

this filing. 

Persons submitting comments are 

cautioned that, the Commission does 

not edit personal identifying 

information from comment submissions. 

Commenters should submit only 

information that they wish to make 

available publicly, including their 

name, email address, and any other 

identifying information. 

All prospective commenters should 

follow the Commission’s instructions on 

how to submit comments, available at 

www.sec.gov/regulatory-actions/how-tosubmit-comments. General questions 

regarding the rule filing process or 

logistical questions regarding this filing 

should be directed to the Main Office of 

the Commission’s Division of Trading 

and Markets at tradingandmarkets@

sec.gov or 202–551–5777. 

DTC reserves the right not to respond 

to any comments received. 

(B) Advance Notice Filed Pursuant to

Section 806(e) of the Clearing

Supervision Act

Description of Proposed Change 

DTC is proposing to raise prefunded 

liquidity through the periodic issuance 

and private placement of senior notes to 

qualified institutional investors in an 

aggregate amount not to exceed $3 

billion, as described in greater detail 

below. The proceeds of the Debt 

Issuance would supplement DTC’s 

qualifying liquidity resources, which are 

described in the Clearing Agency 

Liquidity Risk Management Framework 

(‘‘Framework’’) 8 and include cash 

deposits to its Participants Fund and 

cash that would be obtained by drawing 

upon DTC’s committed 364-day credit 

facility with a consortium of banks 

(‘‘Line of Credit’’).9


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102986 Federal Register / Vol. 89, No. 243 / Wednesday, December 18, 2024 / Notices 

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

See also Securities Exchange Act Release No. 80605 

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

DTC–2017–802; SR–NSCC–2017–802). 10 In addition to default liquidity, DTC may use 

the proceeds of a Debt Issuance to prepay a prior 

Debt Issuance before maturity but would not use the 

proceeds for any other purpose. DTC filed as a 

confidential exhibit to this filing a sample term 

sheet that may be indicative of the possible terms 

of any future Debt Issuance. 

11Supra note 6. Each of the Clearing Agencies is 

a wholly owned subsidiary of The Depository Trust 

& Clearing Corporation, which operates on a shared 

service model with respect to the Clearing 

Agencies. Most corporate functions are established 

and managed on an enterprise-wide basis pursuant 

to intercompany agreements under which it is 

generally DTCC that provides relevant services to 

the Clearing Agencies. 

12 Id. 

13A description of the calculation of each 

Participant’s Net Debit Cap and Collateral Monitor 

is available in the Settlement Service Guide. See 

DTC Settlement Service Guide, available at 

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

service-guides/Settlement.pdf. 

14Under DTC Rule 10 (Discretionary 

Termination) and DTC Rule 11 (Mandatory 

Termination), a Participant will be in default if it 

fails to pay any amount due to DTC within 

specified timeframes, including the failure to fund 

a settlement obligation, to pay required deposits to 

the Participants Fund or to pay adequate assurances 

to DTC within the required timeframes. See supra 

note 7. 

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

More precisely, while the specific 

terms of any future Debt Issuance would 

depend on a number of factors, as 

described in greater detail below, DTC 

is requesting the authority to use the 

proceeds of any Debt Issuance as default 

liquidity.10

DTC, along with its affiliates, National 

Securities Clearing Corporation 

(‘‘NSCC’’) and Fixed Income Clearing 

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

NSCC and DTC, the ‘‘Clearing 

Agencies’’), maintain the Framework 

which sets forth the manner in which 

DTC measures, monitors and manages 

the liquidity risks that arise in or are 

borne by it.11 DTC’s liquidity risk 

management strategy and tools are 

designed to maintain sufficient available 

liquid resources to complete systemwide settlement on each business day, 

with a high degree of confidence and 

notwithstanding the failure to settle of 

the Participant, or affiliated family of 

Participants, with the largest settlement 

obligation.12

The proposed Debt Issuance would 

provide DTC with an additional source 

of default liquidity, which would allow 

it to (a) diversify its sources of default 

liquidity, including the concentration of 

liquidity providers, and (b) mitigate 

risks to DTC that it is unable to secure 

default liquidity resources in an amount 

necessary to meet its liquidity needs. 

DTC utilizes certain rules-based tools, 

including the Net Debit Cap and the 

Collateral Monitor, to manage the 

liquidity risks its Participants’ present 

to it.13 These two controls work together 

to protect the DTC settlement system in 

the event of a Participant default. The 

Collateral Monitor requires net debit 

settlement obligations, as they accrue 

intraday, to be fully collateralized and 

the Net Debit Cap limits the amount of 

any Participant’s net debit settlement 

obligation to an amount that can be 

satisfied with DTC’s default liquidity 

resources. 

As stated above, DTC currently 

maintains two key default liquidity 

resources to draw upon in the event of 

a Participant default: cash deposits to its 

Participants Fund and cash that would 

be obtained by drawing upon the Line 

of Credit.14 By allowing DTC to 

diversify its sources of default liquidity, 

the proposal would allow DTC 

flexibility in the number of resources it 

has at its disposal, as well as which 

resources it accesses and at what levels 

when it has a liquidity need. 

Diversification mitigates the risk, for 

example, that DTC is unable to renew its 

Line of Credit, which is renewed 

annually and dependent on continued 

lender interest, at the targeted amount 

by providing DTC with an alternative 

and supplemental source of default 

liquidity. Additionally, diversification 

of DTC’s sources of default liquidity 

would provide DTC with the flexibility 

needed to properly manage anticipated 

changes to its liquidity needs, thereby 

allowing DTC to optimize its liquidity 

resources in line with its liquidity 

needs. Lastly, allowing DTC to mitigate 

the risk that it is unable to secure 

default liquidity resources in an amount 

necessary to meet its liquidity needs, 

supports DTC’s liquidity risk 

management strategy. Therefore, 

providing additional certainty, stability, 

and safety to DTC, its Participants, and 

the U.S. markets that it serves. 

Terms of the Debt Issuance. The 

timing of a Debt Issuance would depend 

on a number of factors, including, for 

example, market conditions for the 

issuance of senior notes and the timing 

of any changes to DTC’s liquidity needs. 

However, when it determines to do so 

it would engage a trustee and 

underwriting banks to issue the senior 

notes to qualified institutional investors 

through a private placement and 

offering in reliance on an exemption 

from registration under Section 4(a)(2) 

of the Securities Act of 1933.15 DTC 

would be party to certain transaction 

documents in connection with each 

issuance and private placement, 

including an indenture with the trustee 

and purchase agreements. The purchase 

agreements would each be based on the 

standard form of dealer agreement for 

similar debt issuances, which is 

published by the Securities Industry 

and Financial Markets Association. 

While the anticipated material terms 

and conditions of a future Debt Issuance 

are summarized below, the actual terms 

of a future Debt Issuance would depend 

on a number of factors, including DTC’s 

liquidity needs and the debt market 

conditions at the time of issuance. 

Therefore, with the exception of the 

authorized aggregate amount that DTC 

may issue of $3 billion, the anticipated 

terms summarized below are reasonable 

estimates, but may not reflect the actual 

terms of a future Debt Issuance. 

DTC is proposing to issue up to an 

aggregate amount of $3 billion in senior 

notes, as DTC deems reasonable, or as 

necessitated by liquidity needs. While, 

at the time of this filing, DTC would not 

need to issue up to the aggregate amount 

of $3 billion based on its current 

liquidity requirements, DTC believes 

that is advisable to authorize up to this 

aggregate amount in order to help 

manage its potential future liquidity 

needs and the potential risk that it is not 

able to obtain the requisite amounts 

from its other sources of default 

liquidity. 

The senior notes would be 

represented by unsecured, 

unsubordinated and non-convertible 

medium-term and long-term global 

notes held in the name of DTC (as the 

central securities depository) or its 

nominee, Cede & Co. The notes would 

be issued and transferred only through 

the book-entry system of DTC. The 

senior notes would be interest bearing at 

either fixed or floating interest rates that 

are set at market rates customary for 

such type of debt and reflective of the 

creditworthiness of DTC. 

DTC expects the average maturity of 

the senior notes issued under the Debt 

Issuance would be no shorter than 

approximately two years and no longer 

than approximately ten years, which are 

the typical lengths of medium-term and 

long-term debt. DTC does not believe 

maturities over ten years would be 

suitable as debt with longer maturities 

are generally more expensive to issue 

and may present higher risks related to 

interest rates. DTC would time each 

debt issuance and stagger maturity dates 

of each issuance in order to ladder the 

maturities. DTC would have the ability 

to make use of optional features to 

redeem the issued senior notes, in 

whole or in part, at any time prior to the 

maturity date of notes. More 

specifically, DTC would have the option 

to prepay any amount of principal owed 

on the issued senior notes before such 


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Federal Register / Vol. 89, No. 243 / Wednesday, December 18, 2024 / Notices 102987 

16See Securities Exchange Act Release Nos. 

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

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

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

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

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

the issuance of a Notice of No Objection by the 

Commission of this proposal, the Clearing Agencies 

would file a proposed rule change to amend the 

Clearing Agency Investment Policy to include the 

proceeds as default liquidity funds, within the 

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

defined therein, and provide that such amounts 

would be held in bank deposits at eligible 

commercial banks or at DTC’s cash deposit account 

at the FRBNY. 

17Supra note 6. 

18Supra note 7. 19 17 CFR 240.17ad–22(a)(14). 

20See Rule 4 (Participants Fund and Participants 

Investment) of the Rules, supra note 7. 

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

date. 

DTC would hold the proceeds from 

the Debt Issuance in either its cash 

deposit account at the Federal Reserve 

Bank of New York (‘‘FRBNY’’) or in 

accounts at other creditworthy financial 

institutions in accordance with the 

Clearing Agency Investment Policy.16

These amounts would be available to 

draw to complete settlement as needed. 

DTC Liquidity Risk Management. 

DTC’s liquidity needs for settlement are 

driven by protecting DTC against the 

possibility that a Participant may fail to 

pay its settlement obligations on a 

business day. The tools available to DTC 

under its Rules (e.g., the Participants 

Fund, Net Debit Cap and Collateral 

Monitor) allow it to regularly test the 

sufficiency of liquid resources on an 

intraday and end-of-day basis and adjust 

to stressed circumstances during a 

settlement day to protect itself and 

Participants against liquidity exposure 

under normal and stressed market 

conditions.17 DTC calculates its 

liquidity needs per Participant (at a 

legal entity level) and further aggregates 

these amounts at a family level (that is, 

including all affiliated Participants, 

based on the assumption that all such 

affiliates may fail simultaneously). In 

this regard, DTC monitors settlement 

flows and net-debit obligations on a 

daily basis, determines the 

appropriateness of each Participant’s 

Net Debit Cap and monitors net 

settlement activity. 

As noted above, the Framework 

describes DTC’s liquidity risk 

management strategy, which is designed 

to maintain sufficient liquid resources 

to complete system-wide settlement on 

each business day, with a high degree of 

confidence and notwithstanding the 

failure to settle of the Participant, or 

affiliated family of Participants, with the 

largest settlement obligation.18 The 

Framework also describes how DTC 

meets its requirement to hold qualifying 

liquid resources, as such term is defined 

in Rule 17ad–22(a)(14) under the Act,19

sufficient to meet its minimum liquidity 

resource requirement in each relevant 

currency for which it has payment 

obligations owed to its Participants. 

DTC considers each of its existing 

default liquidity resources to be 

qualifying liquid resources, and the 

proceeds from the Debt Issuance would 

also be default liquidity that is 

considered a qualifying liquid resource. 

The proceeds from the Debt Issuance 

would provide DTC with additional, 

prefunded, and readily available 

qualifying liquid resources to be used to 

complete system-wide settlement if a 

Participant defaults. For DTC, the 

Participants Fund, Net Debit Cap and 

Collateral Monitor tools work together 

to limit potential liquidity requirements 

in default scenarios both on an intra-day 

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

current available liquidity resources are 

sufficient to satisfy the single-largest 

family default under stressed but 

plausible conditions, the Debt Issuance 

would allow DTC to diversify its 

sources of default liquidity and mitigate 

risks to DTC that it is unable to secure 

default liquidity resources in an amount 

necessary to meet its liquidity needs. 

More specifically, the proposal would 

provide DTC with the flexibility to 

reduce its reliance on the Line of Credit, 

which is renewed annually and 

dependent on continued lender interest 

and meet any increased liquidity needs 

it may face in the future. As a source of 

prefunded, default liquidity, the Debt 

Issuance would provide additional 

certainty, stability, and safety to DTC, 

its Participants, and the U.S. markets 

that it serves. 

By diversifying DTC’s sources of 

qualifying liquid resources, the Debt 

Issuance could also mitigate 

concentration risks related to its 

liquidity providers. More specifically, 

while DTC would not limit the potential 

qualified institutional investors that 

purchase senior notes and therefore, is 

not able to ensure that the Debt Issuance 

would reduce concentration risk, the 

types of entities who typically invest in 

senior notes (for example, insurance 

companies, asset managers and pension 

funds) are generally not Participants of 

DTC or lenders under the Line of Credit. 

Therefore, the prospective investors in 

the senior notes are not expected to be 

the same firms that currently provide 

any material amount of default liquidity 

resources to DTC either through the 

Line of Credit, or as DTC Participants. 

In this way, the proposed Debt Issuance 

would reduce the concentration risk 

related to its liquidity providers, by 

reducing the likelihood that an 

impairment of a liquidity provider to 

perform under one qualifying liquid 

resource would impact DTC’s ability to 

fully access its other qualifying liquid 

resources. 

Anticipated Effect on and Management 

of Risk 

In connection with its role as a central 

securities depository (‘‘CSD’’), DTC 

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

eligible deposited securities and net 

funds settlement. A financially strong 

and well-managed, well-designed CSD, 

with appropriate risk management 

arrangements, can reduce the risk faced 

by participants, contributing to the goal 

of systemic financial stability. In order 

to sufficiently perform this role, it is 

critical that DTC has access to adequate 

liquidity resources to enable it to 

complete system-wide settlement every 

business day, including following a 

Participant default. DTC believes that 

the overall impact of the proposed Debt 

Issuance on risks presented by DTC 

would be to reduce the liquidity risks 

associated with DTC’s net settlement 

obligations by providing it with an 

additional source of liquidity to 

complete system-wide settlement in the 

event of a Participant default. DTC 

further believes that a reduction in its 

liquidity risk would reduce systemic 

risk and would have a positive impact 

on the safety and soundness of the 

wider financial system. 

While the proposed Debt Issuance, 

like any liquidity resource, would 

involve certain risks, most of these risks 

are standard in any debt issuance. One 

risk associated with the proposed Debt 

Issuance would be the risk that DTC 

does not have sufficient funds to repay 

issued senior notes when the notes 

mature. DTC believes that this risk is 

extremely remote, as the proceeds of the 

Debt Issuance would be used only in the 

event of a Participant default, and DTC 

would replenish that cash, as it would 

replenish any of its liquidity resources 

that are used to facilitate settlement in 

the event of a Participant default, with 

the proceeds of the close out of that 

defaulted Participant’s portfolio. This 

notwithstanding, in the event that 

proceeds from the close out are 

insufficient to fully repay a liquidity 

borrowing, then DTC would look to its 

loss waterfall to repay any outstanding 

liquidity borrowings.20 DTC would 

further mitigate this risk through the 

timing of each debt issuance and by 

staggering the maturity dates of the 


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102988 Federal Register / Vol. 89, No. 243 / Wednesday, December 18, 2024 / Notices 

21The ‘‘net cost of carry’’ generally refers to the 

difference between the interest earned on the 

invested proceeds of an issuance and the interest 

rate paid on that issuance. 

22 12 U.S.C. 5464(a)(2) and (b)(1). 

23 12 U.S.C. 5464(b)(1). 

24 12 U.S.C. 5464(b)(1). 

25 12 U.S.C. 5464(a)(2). 

26 Id. 

27 17 CFR 240.17ad–22(e). 

28 Id. 

29 17 CFR 240.17ad–22(e)(7)(i), (ii). 

30 17 CFR 240.17ad–22(e)(7)(i). 

issued senior notes in a way that would 

provide DTC with time to complete the 

close out of a defaulted Participant’s 

portfolio. A second risk is that DTC may 

be unable to issue new senior notes as 

issued notes mature due to, for example, 

stressed markets at the time the issued 

debt matures. This risk is mitigated by 

the fact that DTC maintains a number of 

different default liquidity resources, 

described above, and would not depend 

on the Debt Issuance as its sole source 

of liquidity. 

DTC may be exposed to interest rate 

risk, which is the risk that a change in 

interest rates could cause an increase to 

the net cost of carry of the Debt 

Issuance.21 DTC would mitigate this risk 

by issuing senior notes at different 

maturities and at both fixed interest 

rates and floating interest rates. The 

interest rates for the senior notes issued 

at floating interest rates would generally 

correlate with the rates on investments 

of those proceeds and would be 

expected to result in a largely stable net 

spread between the borrowing interest 

rate and the investment interest rate, 

mitigating this risk. For the senior notes 

issued with a fixed interest rate, DTC 

would consider interest rate swaps as a 

method to mitigate interest rate risk, 

depending on market environment at 

that time. 

DTC could also face a related 

financial risk that the expense of a Debt 

Issuance exceeds DTC’s income and 

may have a negative impact on DTC’s 

financial health or its creditworthiness. 

DTC would mitigate this risk by 

evaluating the expected net cost of carry 

(discussed above) of a Debt Issuance 

prior to issuing any debt, and if the 

financing costs for the issuance of senior 

notes increase, such that it is not 

financially advisable to issue additional 

senior notes, then DTC may determine 

to use its alternative liquidity resources 

to meet its liquidity needs during those 

market conditions. 

DTC believes that the significant 

systemic risk mitigation benefits of 

providing DTC with additional, 

prefunded liquidity resources outweigh 

these risks. 

Consistency With Clearing Supervision 

Act 

DTC believes that that proposal would 

be consistent with Title VIII of the 

Dodd-Frank Wall Street Reform and 

Consumer Protection Act entitled the 

Payment, Clearing, and Settlement 

Supervision Act of 2010 (‘‘Clearing 

Supervision Act’’), specifically with the 

risk management objectives and 

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

certain of the risk management 

standards adopted by the Commission 

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

reasons described below.22

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

the Clearing Supervision Act 

Although the Clearing Supervision 

Act does not specify a standard of 

review for an advance notice, its stated 

purpose is instructive: to mitigate 

systemic risk in the financial system 

and promote financial stability by, 

among other things, promoting uniform 

risk management standards for 

systemically important financial market 

utilities and strengthening the liquidity 

of systemically important financial 

market utilities.23

DTC believes the proposal is 

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

Clearing Supervision Act because it 

would support the mitigation of 

systemic risk in the financial system 

and promote financial stability in the 

event of a Participant default by 

strengthening DTC’s liquidity. The 

proposed Debt Issuance is designed to 

reduce DTC’s liquidity risks by 

providing it with an additional source of 

liquidity to complete system-wide 

settlement in the event of a Participant 

default. By supplementing DTC’s 

existing default liquidity resources with 

prefunded liquidity, the proposal would 

contribute to DTC’s goal of assuring that 

DTC has adequate liquidity resources to 

meet its settlement obligations 

notwithstanding the default of any of its 

Participants. 

In its critical role as a CSD, DTC 

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

eligible deposited securities and net 

funds settlement. In order to sufficiently 

perform this role, it is critical that DTC 

has access to adequate liquidity 

resources to enable it to complete 

system-wide settlement every business 

day, including following a Participant 

default. Therefore, a reduction in DTC’s 

liquidity risk would reduce systemic 

risk and would have a positive impact 

on the safety and soundness of the 

wider financial system. 

As a result, DTC believes the 

proposed Debt Issuance would be 

consistent with the objectives and 

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

Clearing Supervision Act, which specify 

the promotion of robust risk 

management, promotion of safety and 

soundness, reduction of systemic risks 

and support of the stability of the 

broader financial system by, among 

other things, strengthening the liquidity 

of systemically important financial 

market utilities, such as DTC.24

(ii) Consistency With Rule 17ad– 

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

Section 805(a)(2) of the Clearing 

Supervision Act authorizes the 

Commission to prescribe risk 

management standards for the payment, 

clearing and settlement activities of 

designated clearing entities, like DTC, 

and financial institutions engaged in 

designated activities for which the 

Commission is the supervisory agency 

or the appropriate financial regulator.25

The Commission has accordingly 

adopted risk management standards 

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

Supervision Act 26 and Section 17A of 

the Act (‘‘Covered Clearing Agency 

Standards’’).27 The Covered Clearing 

Agency Standards require covered 

clearing agencies to establish, 

implement, maintain, and enforce 

written policies and procedures that are 

reasonably designed to meet certain 

minimum requirements for their 

operations and risk management 

practices on an ongoing basis.28

DTC believes that the proposed Debt 

Issuance is consistent with Rule 17ad– 

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

Clearing Agency Standards for the 

reasons described below.29

Rule 17ad–22(e)(7)(i) under the Act 

requires that DTC establish, implement, 

maintain and enforce written policies 

and procedures reasonably designed to 

maintain sufficient liquid resources at 

the minimum in all relevant currencies 

to effect same-day and, where 

appropriate, intraday and multiday 

settlement of payment obligations with 

a high degree of confidence under a 

wide range of foreseeable stress 

scenarios that includes, but is not 

limited to, the default of the participant 

family that would generate the largest 

aggregate payment obligation for the 

covered clearing agency in extreme but 

plausible market conditions.30 Rule 

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

that DTC establish, implement, maintain 

and enforce written policies and 

procedures reasonably designed to hold 

qualifying liquid resources sufficient to 

meet the minimum liquidity resource 

requirement under Rule 17ad–22(e)(7)(i) 


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Federal Register / Vol. 89, No. 243 / Wednesday, December 18, 2024 / Notices 102989 

31 17 CFR 240.17ad–22(e)(7)(ii). For purposes of 

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

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

held either at the central bank of issue or at 

creditworthy commercial banks. 17 CFR 240.17ad– 

22(a)(14). 

32Supra note 14. 

33 17 CFR 240.17ad–22(a)(14). 

34 17 CFR 240.17ad–22(e)(7)(i). 

35 17 CFR 240.17ad–22(e)(7)(i), (ii). 

36 17 CFR 200.30–3(a)(91). 

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

2 17 CFR 240.19b–4. 

in each relevant currency for which 

DTC has payment obligations owed to 

its Participants.31

As described above, the proposed 

Debt Issuance would provide DTC with 

an additional resource of prefunded 

default liquidity, which it would use to 

complete system-wide settlement every 

business day, including following a 

Participant default. The proceeds of the 

Debt Issuance would be cash held by 

DTC at either its cash deposit account 

at the FRBNY or at a creditworthy 

commercial bank, pursuant to the 

Clearing Agency Investment Policy.32

Therefore, the proceeds of the Debt 

Issuance would be considered a 

qualifying liquid resource, as defined by 

Rule 17ad–22(a)(14).33 As such, the 

proposed Debt Issuance would support 

DTC’s ability to hold sufficient 

qualifying liquid resources to meet its 

minimum liquidity resource 

requirement under Rule 17ad–22(e)(7)(i) 

under the Act.34

For these reasons, DTC believes the 

proposal would support DTC’s 

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

and (ii) under the Act by providing it 

with an additional qualifying liquid 

resource.35

III. Date of Effectiveness of the Advance 

Notice, and Timing for Commission 

Action 

The proposed change may be 

implemented if the Commission does 

not object to the proposed change 

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

that the proposed change was filed with 

the Commission or (ii) the date that any 

additional information requested by the 

Commission is received. The clearing 

agency shall not implement the 

proposed change if the Commission has 

any objection to the proposed change. 

The Commission may extend the 

period for review by an additional 60 

days if the proposed change raises novel 

or complex issues, subject to the 

Commission providing the clearing 

agency with prompt written notice of 

the extension. A proposed change may 

be implemented in less than 60 days 

from the date the advance notice is 

filed, or the date further information 

requested by the Commission is 

received, if the Commission notifies the 

clearing agency in writing that it does 

not object to the proposed change and 

authorizes the clearing agency to 

implement the proposed change on an 

earlier date, subject to any conditions 

imposed by the Commission. 

The clearing agency shall post notice 

on its website of proposed changes that 

are implemented. 

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views and 

arguments concerning the foregoing, 

including whether the Advance Notice 

is consistent with the Clearing 

Supervision Act. Comments may be 

submitted by any of the following 

methods: 

Electronic Comments 

• Use the Commission’s internet 

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

rules-regulations/self-regulatoryorganization-rulemaking); or 

• Send an email to rule-comments@

sec.gov. Please include File Number SR– 

DTC–2023–801 on the subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Secretary, Securities and Exchange 

Commission, 100 F Street NE, 

Washington, DC 20549. 

All submissions should refer to File 

Number SR–DTC–2023–801. This file 

number should be included on the 

subject line if email is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

internet website (https://www.sec.gov/ 

rules/sro.shtml). Copies of the 

submission, all subsequent 

amendments, all written statements 

with respect to the Advance Notice that 

are filed with the Commission, and all 

written communications relating to the 

Advance Notice between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

provisions of 5 U.S.C. 552, will be 

available for website viewing and 

printing in the Commission’s Public 

Reference Room, 100 F Street NE, 

Washington, DC 20549 on official 

business days between the hours of 10 

a.m. and 3 p.m. Copies of the filing also 

will be available for inspection and 

copying at the principal office of DTC 

and on DTCC’s website (www.dtcc.com/ 

legal/sec-rule-filings). 

Do not include personal identifiable 

information in submissions; you should 

submit only information that you wish 

to make available publicly. We may 

redact in part or withhold entirely from 

publication submitted material that is 

obscene or subject to copyright 

protection. All submissions should refer 

to File Number SR–DTC–2023–801 and 

should be submitted on or before 

January 8, 2025. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.36

Sherry R. Haywood, 

Assistant Secretary. 

[FR Doc. 2024–29919 Filed 12–17–24; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–101894; File No. SR–MIAX– 

2024–45] 

Self-Regulatory Organizations; Miami 

International Securities Exchange, 

LLC; Notice of Filing and Immediate 

Effectiveness of a Proposed Rule 

Change To Adopt Fees for Dedicated 

Cross Connection Access to the 

Testing Systems Environment 

December 12, 2024. 

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 November 

29, 2024, Miami International Securities 

Exchange, LLC (‘‘MIAX’’ or ‘‘Exchange’’) 

filed with the Securities and Exchange 

Commission (‘‘Commission’’) a 

proposed rule change as described in 

Items I, II, and III 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 is filing a proposal to 

establish a fee for market participants 

that choose to utilize the Exchange’s 

testing systems environment via a 

dedicated cross connection. 

The text of the proposed rule change 

is available on the Exchange’s website at 

https://www.miaxglobal.com/markets/ 

us-options/all-options-exchanges/rulefilings, at MIAX’s principal office, and 

at the Commission’s Public Reference 

Room. 


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