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[Federal Register Volume 89, Number 247 (Thursday, December 26, 2024)]
[Notices]
[Pages 105138-105140]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-30684]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-101964; File No. SR-DTC-2024-015]

Self-Regulatory Organizations; The Depository Trust Company; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change to 
DTC's New Issue Information Dissemination Service To Unwind a Prior 
Rule Filing and Provide a More Accurate Description of the Service

December 18, 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 December 12, 2024, The Depository Trust Company ``DTC'') filed with 
the Securities and Exchange Commission (``Commission'') the proposed 
rule change as described in Items I, II and III below, which Items have 
been prepared by the clearing agency. DTC filed the proposed rule 
change pursuant to Section 19(b)(3)(A) of the Act \3\ and Rule 19b-
4(f)(4) thereunder.\4\ The Commission is publishing this notice to 
solicit comments on the proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 15 U.S.C. 78s(b)(3)(A).
    \4\ 17 CFR 240.19b-4(f)(4).
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I. Clearing Agency's Statement of the Terms of Substance of the 
Proposed Rule Change

    The proposed rule change will (i) correct DTC's rule filing record 
by unwinding a prior rule filing (``2014 Filing'') \5\ regarding DTC's 
New Issue Information Dissemination Service (``NIIDS'') and (ii) update 
the description of NIIDS in the DTC Operational Arrangements (Necessary 
for Securities to Become and Remain Eligible for DTC Service) (``OA'') 
\6\ to more clearly describe NIIDS, as described in greater detail 
below.\7\
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    \5\ Securities Exchange Act Release No. 72763 (Aug. 5, 2014), 79 
FR 46886 (Aug. 11, 2014) (SR-DTC-2014-08).
    \6\ Available at www.dtcc.com/~/media/Files/Downloads/legal/
issue-eligibility/eligibility/operational-arrangements.pdf.
    \7\ Each capitalized term not otherwise defined herein has its 
respective meaning as set forth the Rules, By-Laws and Organization 
Certificate of DTC (the ``Rules'') available at www.dtcc.com/legal/rules-and-procedures.
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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 will (i) correct DTC's rule filing record 
by unwinding the 2014 Filing regarding DTC's NIIDS and (ii) update the 
description of NIIDS in the OA to more clearly describe NIIDS.

[[Page 105139]]

Background

    NIIDS was established by DTC in 2008.\8\ It was built to improve 
the process by which brokers comply with Municipal Securities Rule 
Making Board (``MSRB'') standards for making available certain data 
information (``NIIDS Data Elements'') pertaining to the reporting, 
comparison, confirmation, and settlement of trades in newly issued 
municipal securities (``New Muni Issues'').\9\ Through NIIDS, 
underwriters or other authorized representatives (``Dissemination 
Agents'') are able to distribute NIIDS Data Elements to data vendors or 
other users of such information, as required by the MSRB.\10\
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    \8\ Securities Exchange Act Release No. 57768 (May 2, 2008), 73 
FR 26181 (May 8, 2008) (SR-DTC-2007-10).
    \9\ NIIDS Data Elements are needed for trade reporting, trade 
matching and to set up trade confirmation for certain municipal 
securities.
    \10\ MSRB Rule G-34(a)(ii)(C).
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    DTC collects NIIDS Data Elements about New Muni Issues from 
Dissemination Agents in electronic format through DTC's underwriting 
system as part of DTC's New Muni Issue underwriting process. Those 
NIIDS Data Elements are then disseminated to market participants that 
subscribed to such information (``NIIDS Subscribers'').

2014 Filing

    Prior to 2014, DTC was responsible for disseminating NIIDS Data 
Elements to NIIDS Subscribers upon approval to do so by the 
Dissemination Agent. The 2014 Filing was a rule change by DTC to 
transfer the dissemination process from DTC to a non-clearing agency 
affiliate (i.e., the ``NIIDS Disseminator'').\11\ The impetus for 
moving the dissemination process was in anticipation of further 
business opportunities for the NIIDS Disseminator. However, such 
opportunities did not materialize, and the dissemination process was 
never transferred from DTC to the NIIDS Disseminator. Because the 
transfer never occurred, the OA was never updated to reflect the 
proposed changes from the 2014 Filing.
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    \11\ Securities Exchange Act Release No. 72763 (Aug. 5, 2014), 
79 FR 46886 (Aug. 11, 2014) (SR-DTC-2014-08).
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    Since the OA was never updated and because DTC will remain the 
disseminator of NIIDS Data Elements, DTC is now proposing to correct 
the record and unwind the 2014 Filing with this rule filing.

Updated NIIDS Description

    In addition to unwinding the 2014 Filing, this proposed rule change 
will delete the current NIIDS description in the OA and replace that 
language with a more concise, clear, and accurate description of the 
NIIDS dissemination process. The proposed language would not change the 
way NIIDS works; rather, the new description would simply provide a 
more thorough and precise explanation of NIIDS. Specifically, the 
proposed rule language would (1) provide an improved introduction and 
explanation of the purpose of NIIDS, how NIIDS is integrated into DTC's 
underwriting system (i.e., UW SOURCE), and give a clearer overview of 
NIIDS's role and its regulatory context; (2) explain the specific 
process that the Dissemination Agent must follow to successfully 
disseminate NIIDS Data Elements, outline the steps involved, and 
emphasize, for clarity, that failure to enter the required data or 
select the dissemination function would prevent the information from 
being disseminated; (3) clarify the role and importance of NIIDS Data 
Elements by defining them and distinguishing them from the DTC 
eligibility process; (4) correct grammatical and technical errors 
(e.g., the term ``New Issue Identification Dissemination System'' would 
be replaced by the correct term ``New Issue Information Dissemination 
Service''); and (5) provide an updated legal disclaimer, which 
specifies that DTC functions solely as a conduit for NIIDS, disclaims 
responsibility for validating the accuracy or completeness of NIIDS 
Data Elements and limits liability for any faults, errors or damages 
arising from the use of NIIDS. In order to provide a disclaimer that is 
more precise, accurate and more aligned to DTC's current disclaimer 
language, the updated disclaimer is broader, more detailed, and 
explicitly addresses data faults, warranties and limits liability for 
various damages, including the adequacy, quality, accuracy, 
completeness, or timeliness of information made available through 
NIIDS.
2. Statutory Basis
    Section 17A(b)(3)(F) of the Act requires that the rules of the 
clearing agency be designed, inter alia, to promote the prompt and 
accurate clearance and settlement of securities transactions.\12\ DTC 
believes that the proposed rule change is consistent with the Section 
17A(b)(3)(F) of the Act.
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    \12\ 15 U.S.C. 78q-1(b)(3)(F).
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    As described above, the proposed rule change will (i) correct DTC's 
filing record by unwinding the 2014 Filing, and (ii) remove the current 
description of NIIDS in the OA and replace it with an update 
description that more clearly and accurately describes the service, 
including an updated and clearer liability disclaimer. By unwinding the 
2014 Filing and updating and correcting the description of NIIDS in the 
OA, the proposed rule change clarifies for Participants, NIIDS 
Subscribers, and other interested parties in NIIDS how the service 
works, which, in turn, better enables the timely and accurate reporting 
of NIIDS Data Elements and their use in associated transactions. 
Therefore, DTC believes that the proposed rule change would help 
promote the prompt and accurate clearance and settlement of securities 
transactions, consistent with the requirements of the Act, in 
particular Section 17A(b)(3)(F) of the Act, cited above.

(B) Clearing Agency's Statement on Burden on Competition

    DTC does not believe that the proposed rule change would have any 
impact or impose any burden on competition because, as described above, 
the proposed rule change simply corrects DTC's filing record with 
respect to the dissemination of NIIDS Data Elements, and more clearly 
describes NIIDS, without making any actual changes to the service.

(C) Clearing Agency's Statement on Comments on the Proposed Rule Change 
Received From Members, Participants, or Others

    DTC has not received or solicited any written comments relating to 
this proposal. If any written comments are received, they will be 
publicly filed as an Exhibit 2 to this filing, as required by Form 19b-
4 and the General Instructions thereto.
    Persons submitting written comments are cautioned that, according 
to Section IV (Solicitation of Comments) of the Exhibit 1A in the 
General Instructions to Form 19b-4, the Securities and Exchange 
Commission (``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-to-submit-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 [email protected] or 202-551-5777.

[[Page 105140]]

    DTC reserves the right to not respond to any comments received.

III. Date of Effectiveness of the Proposed Rule Change, and Timing for 
Commission Action

    The foregoing rule change has become effective pursuant to Section 
19(b)(3)(A) \13\ of the Act and paragraph (f) \14\ of Rule 19b-4 
thereunder. At any time within 60 days of the filing of the proposed 
rule change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act.
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    \13\ 15 U.S.C. 78s(b)(3)(A).
    \14\ 17 CFR 240.19b-4(f).
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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 (https://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
file number SR-DTC-2024-015 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-2024-015. 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 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-2024-015 and should be submitted on or 
before January 16, 2025.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\15\
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    \15\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2024-30684 Filed 12-23-24; 8:45 am]
BILLING CODE 8011-01-P
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