Federal Register / Vol. 86, No. 131 / Tuesday, July 13, 2021 / Notices 36833 

45 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3Capitalized terms not defined herein are defined 

in the Rules, available at https://www.dtcc.com/ 

legal/rules-and-procedures. 

4As provided in the Rules, the term ‘‘Participant’’ 

includes the term ‘‘Limited Participant’’ unless (i) 

the context otherwise requires or (ii) the Procedures 

otherwise provide. Section 1 of Rule 2, id. 

5Rule 2 relates to initial and ongoing 

requirements to become and continue to be a 

Participant and/or Pledgee, including information 

that DTC may require applicants or Participants to 

provide to DTC. Id. 

inspection and copying at the principal 

office of the Exchange. All comments 

received will be posted without change. 

Persons submitting comments are 

cautioned that we do not redact or edit 

personal identifying information from 

comment submissions. You should 

submit only information that you wish 

to make available publicly. All 

submissions should refer to File 

Number SR–NYSEAMER–2021–32, and 

should be submitted on or before 

August 3, 2021. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.45

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2021–14793 Filed 7–12–21; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–92342; File No. SR–DTC– 

2021–011] 

Self-Regulatory Organizations; The 

Depository Trust Company; Notice of 

Filing of Proposed Rule Change 

Relating to Confidential Information, 

Market Disruption Events, and Other 

Changes 

July 7, 2021. 

Pursuant to Section 19(b)(1) of the 

Securities Exchange Act of 1934 

(‘‘Act’’) 1 and Rule 19b–4 thereunder,2

notice is hereby given that on June 25, 

2021, 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 consists of 

modifications to DTC’s Rules, Bylaws 

and Organization Certificate (the 

‘‘Rules’’) 3 to (i) revise certain provisions 

in the Rules relating to the 

confidentiality of information furnished 

by Participants 4 to DTC, (ii) require that 

each Participant maintain confidential 

information furnished by DTC or its 

affiliates in confidence, and restrict use 

and disclosure of such information, (iii) 

add certain officers who are allowed to 

determine that there is a Market 

Disruption Event pursuant to Rule 38 

and (iv) add a new Rule 38(A) to 

address situations in which it is 

necessary to disconnect a Participant, or 

third party service provider, or service 

bureau due to an imminent threat of 

harm to DTC, Participants and/or other 

market participants. Each of the 

proposed changes is described in greater 

detail 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 consists of 

modifications to (i) revise certain 

provisions in the Rules relating to the 

confidentiality of information furnished 

by Participants to DTC, (ii) require that 

each Participant maintain confidential 

information furnished by DTC or its 

affiliates in confidence and restrict use 

and disclosure of such information, (iii) 

add certain officers who are allowed to 

determine that there is a Market 

Disruption Event pursuant to Rule 38 

and (iv) add a new Rule 38(A) to 

address situations in which it is 

necessary to disconnect a Participant, or 

third party service provider, or service 

bureau due to an imminent threat of 

harm to DTC, Participants and/or other 

market participants. Each of the 

proposed changes is described in greater 

detail below. 

(i) DTC Confidentiality Requirements 

Section 1 of Rule 2 5 contains 

provisions relating to confidentiality of 

information furnished by Participants to 

DTC (collectively, the ‘‘DTC 

Confidentiality Requirements’’). Each of 

the DTC Confidentiality Requirements 

provides that the rights of DTC to 

inspect books and records, or to be 

furnished with information, is subject to 

any applicable laws or rules, or 

regulations of regulatory bodies having 

jurisdiction over the Participant, that 

relate to confidentiality of records. DTC 

is proposing to update the DTC 

Confidentiality Requirements because 

such provisions (i) may result in 

unequal treatment of Participants due to 

differing laws or regulations of 

regulatory bodies, (ii) may result in a 

potential conflict of laws where rules or 

regulations governing a regulatory body 

of a Participant differ from the laws 

applicable to DTC, or a Participant has 

multiple regulatory bodies whose rules 

conflict, (iii) are burdensome as they 

require DTC to track the rules and 

regulations of each regulatory body of 

its Participants to determine what 

applicable laws or rules or regulations 

of regulatory bodies that relate to 

confidentiality of records affect its rights 

to receive information and (iv) are 

unnecessary as DTC has sufficient 

protections in place relating to 

protection and confidentiality of 

Participant data. 

The regulatory bodies that have 

jurisdiction over Participants differ by 

Participant depending on certain criteria 

of each Participant, including the type 

of entity of the Participant, where the 

Participant was organized, the types of 

businesses in which the Participant 

engages and where the Participant is 

doing business. In addition, many 

Participants are regulated by more than 

one regulatory body. As a result, a 

requirement to maintain confidentiality 

standards for information provided by a 

Participant or the right to receive 

information based on the regulatory 

body or bodies that regulate such 

Participant result in varying standards 

of confidentiality for Participants that 

are regulated by different regulatory 

bodies. Such varying standards may 

result in unequal treatment of 

Participants due to differing laws or 

regulations of the regulatory body or 

bodies governing such Participants. In 

addition, such varying standards may 

result in a potential conflict of laws 

where rules or regulations governing a 

regulatory body of a Participant differ 

from the laws applicable to DTC or an 

entity that has multiple regulatory 

bodies whose rules conflict. 

DTC believes that it is unnecessarily 

burdensome to determine the rules and 

regulations of each of the regulatory 

bodies that regulate its Participants. 


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36834 Federal Register / Vol. 86, No. 131 / Tuesday, July 13, 2021 / Notices 

6 DTCC provides a set of core business processes 

for DTC and DTCC’s other subsidiaries, including 

the technology systems and networks that provide 

connectivity between DTC and its participants and 

that provide the ability of DTC to provide the 

services as required under its Rules. 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 DTC and DTCC’s other 

subsidiaries. 

7Rule 38, supra note 3. 

8 Id. 

9 Id. 

10Section 2 of Rule 38, id. 

Such regulatory bodies include 

numerous U.S. federal and state 

regulators as well as foreign national, 

state and local regulators. DTC proposes 

revising the language in the DTC 

Confidentiality Requirements to 

maintain one confidentiality standard 

for all Participants rather than 

maintaining potentially different 

confidentiality standards for 

Participants based on the various, 

unrelated regulatory bodies regulating 

such Participants. DTC is proposing to 

replace the existing language in the DTC 

Confidentiality Requirements with 

language that would provide that DTC 

will hold non-public information 

furnished pursuant to those Rules in 

confidence as may be required under 

the law or the rules and regulations 

applicable to DTC that relate to the 

confidentiality of records. Such laws, 

rules and regulations would include 

national, state and foreign laws 

governing confidentiality of data that 

are applicable to DTC in connection 

with its collection and disclosure of 

data. 

DTC believes that the rules and 

regulations applicable to DTC governing 

the use and disclosure of confidential 

information provide standards that are 

representative of those of the various 

regulatory bodies governing its 

Participants. As a result, DTC does not 

believe that the proposed rule change 

relating to the DTC Confidentiality 

Requirements would result in any 

change to DTC’s practices relating to 

data protection and confidentiality of 

information provided by Participants. 

(ii) Participant Confidentiality 

Requirements 

Historically, DTC has generally not 

provided, nor been requested to 

provide, information that contains 

confidential or proprietary information 

of DTC or its affiliates to its Participants 

except for information necessary for 

Participants and their service providers 

and service bureaus to connect to DTC 

and to participate in the services that 

DTC offers to its Participants. While 

certain information is protected by 

intellectual property rights of DTC and 

its affiliates under applicable 

intellectual property laws, such as 

copyright laws and trademark laws, the 

Rules do not include any express 

obligations for Participants to protect 

confidential information received by 

them from DTC or its affiliates. 

In connection with the development 

of cyber and information security 

programs pursuant to applicable 

regulatory requirements by Participants, 

DTC and its parent company, The 

Depository Trust & Clearing Corporation 

(‘‘DTCC’’), have received an increasing 

number of requests from Participants for 

confidential and proprietary 

information of DTC and DTCC.6 This 

includes, for example, information 

regarding DTCC’s network operations 

and data security practices, legal 

settlements, and other information. 

Additionally, in the event there is a 

cyber incident relating to a Participant, 

DTC or DTCC may be requested to 

disclose confidential information 

regarding its cyber threat indicators, 

sources of cyber threat information, or 

other information and actions taken 

related to a cyber event. 

In order to provide for contractual 

protections for such confidential 

information of DTCC, DTC and DTCC’s 

other subsidiaries, DTC is proposing to 

add provisions to the Rules that would 

require Participants to maintain 

confidential information of DTC and its 

affiliates that DTC provides to such 

Participants in confidence and not to 

disclose such confidential information 

except as necessary to perform such 

Participant’s obligations under DTC’s 

Rules or as otherwise required by 

applicable law (‘‘Participant 

Confidentiality Requirements’’). The 

Participant Confidentiality 

Requirements would provide that in the 

event of a breach of the Participant 

Confidentiality Requirements, DTC or 

DTCC would be entitled to seek any 

temporary or permanent injunctive or 

other equitable relief in addition to any 

monetary damages under the Rules. In 

addition, as with any failure to comply 

with its Rules, DTC would have the 

ability to impose other disciplinary 

proceedings or restrictions on access to 

services as provided in the Rules for 

failure to comply with the Participant 

Confidentiality Requirements. 

(iii) Market Disruption Events 

Rule 38 (Market Disruption and Force 

Majeure) 7 (the ‘‘Force Majeure Rule’’) 

contains provisions that identify the 

events or circumstances that would be 

considered a Market Disruption Event, 

including, for example, events that lead 

to the suspension or limitation of 

trading or banking in the markets in 

which DTC operates, or the 

unavailability or failure of any material 

payment, bank transfer, wire or 

securities settlement systems.8 Under 

the Force Majeure Rule, during the 

pendency of a Market Disruption Event, 

DTC would be entitled to (i) suspend 

the provision of any or all services and 

(ii) take, or refrain from taking, or 

require Members to take, or refrain from 

taking, any actions DTC considers 

appropriate to address, alleviate, or 

mitigate the event and facilitate the 

continuation of DTC’s services as may 

be practicable.9

Section 2 of the Force Majeure Rule 

provides that the Board of Directors may 

determine the existence of a Market 

Disruption Event and the actions to be 

taken in response thereto.10 However, if 

the Board of Directors is unable to 

convene, the Force Majeure Rule 

provides that certain officers may make 

such determination, on an interim basis, 

which determination is then ratified, 

modified or rescinded as soon as 

practicable by the Board of Directors. 

The officers that may make such 

determination are all senior executive 

officers of DTC: Chief Executive Officer, 

Chief Financial Officer, Group Chief 

Risk Officer and General Counsel. 

The proposed rule change would add 

two senior executive officers of DTC, the 

Chief Information Officer and the Head 

of Clearing Agency Services, to the list 

of officers that could make such 

determination if the Board of Directors 

is unable to convene. These two officers, 

like the other senior executive officers 

currently listed in the Rules, maintain 

senior executive level positions at DTC, 

oversee divisions of DTC, and hold 

positions at DTC that would provide 

them a necessary global view into DTC’s 

operations and systems to enable them 

to determine the existence of a Market 

Disruption Event in the event that the 

Board of Directors in unable to convene. 

Adding these two additional officers 

would facilitate DTC’s ability to 

implement its emergency procedures in 

the event of a Market Disruption Event. 

(iv) Systems Disconnect: Threat of 

Significant Impact to DTC’s Systems 

The proposed rule change would add 

a new Rule 38(A) (Systems Disconnect: 

Threat of Significant Impact to the 

Corporation’s Systems) (‘‘Systems 

Disconnect Rule’’) that would address 

situations in which DTC determines it is 

necessary for DTC to disconnect a single 

or limited number of Participants, or 

third party service providers, or service 

bureaus used by Participants to connect 


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Federal Register / Vol. 86, No. 131 / Tuesday, July 13, 2021 / Notices 36835 

11Some Participants use third parties to connect 

to DTC’s systems and/or to send data to DTC and 

receive data from DTC on the Participant’s behalf. 

Such third parties are referred to as ‘‘service 

providers’’ or ‘‘service bureaus’’ herein. 

12 ‘‘Affiliate’’ would be defined as a Person that 

controls or is controlled by or is under common 

control with another Person. Control of a Person 

means the direct or indirect ownership, or power 

to vote more than 50% of any class of the voting 

securities or other voting interests of such Person. 

13Section 1 of Rule 2, supra note 3. 

14Section 1 of Rule 2, supra note 3. 

15Section 1 of Rule 1, supra note 3. 

to DTC11 (collectively, ‘‘DTCC Systems 

Participants’’) from DTC’s systems or 

network due to an imminent threat of 

harm to DTC’s or DTCC’s systems. The 

imminent threat could be the result of 

a system disruption or cyber incident 

applicable to the DTCC Systems 

Participants. This would allow DTCC to 

work with the affected Participants 

while protecting DTC, its systems and 

its other Participants. 

The proposed Systems Disconnect 

Rule would be structured similarly to 

the Force Majeure Rule. The Systems 

Disconnect Rule would address DTC’s 

authority to take certain actions upon 

the occurrence, and during the 

pendency, of a Major Event. A ‘‘Major 

Event’’ would be defined as the 

happening of one or more Systems 

Disruption(s) (as defined below) that is 

reasonably likely to have a significant 

impact on DTC’s operations, including 

the DTCC Systems (as defined below), 

that affect the business, operations, 

safeguarding of securities or funds, or 

physical functions of DTC, Participants 

and/or other market participants. 

‘‘Systems Disruption’’ would be defined 

as the unavailability, failure, 

malfunction, overload, or restriction 

(whether partial or total) of a DTCC 

Systems Participant’s systems that 

disrupts or degrades the normal 

operation of such DTCC Systems 

Participant’s systems; or anything that 

impacts or alters the normal 

communication, or the files that are 

received, or information transmitted, to 

or from the DTCC Systems. ‘‘DTCC 

Systems’’ would be defined as the 

systems, equipment and technology 

networks of DTCC, DTC and/or their 

Affiliates,12 whether owned, leased, or 

licensed, software, devices, IP addresses 

or other addresses or accounts used in 

connection with providing the services 

set forth in the Rules, or used to transact 

business or to manage the connection 

with DTC. 

The proposed Systems Disconnect 

Rule would allow DTC to mitigate the 

effect of such events by facilitating the 

continuity of services (or, if deemed 

necessary, the temporary suspension of 

services). To that end, under the 

proposed Systems Disconnect Rule, 

DTC would be entitled, during the 

pendency of a Major Event, to (1) 

disconnect a DTCC Systems 

Participant’s systems from the DTCC 

Systems, (2) suspend the receipt and/or 

transmission of files or communications 

to or from the DTCC Systems Participant 

to the DTCC Systems and/or (3) take, or 

refrain from taking, or require a DTCC 

Systems Participant to take or refrain 

from taking, any actions that DTC 

considers appropriate to prevent, 

address, correct, mitigate or alleviate the 

Major Event and facilitate the 

continuation of services as may be 

practicable and, in that context, issue 

instructions to the DTCC Systems 

Participant. 

The proposed Systems Disconnect 

Rule would define the governance 

procedures for how DTC would 

determine whether, and how, to 

implement the provisions of the rule. A 

determination that a Major Event has 

occurred could be made by the same 

officers with delegated authority under 

the Force Majeure Rule as discussed 

above (an ‘‘Officer Major Event 

Action’’). Following this determination, 

any management committee on which 

all of the foregoing officers serve would 

convene, and DTC would convene a 

Board of Directors meeting as soon as 

practicable thereafter, and in any event 

within five Business Days following 

such determination, in each case, to 

ratify, modify, or rescind the Officer 

Major Event Action. The proposed 

Systems Disconnect Rule would require 

Participants to notify DTC immediately 

upon becoming aware of a Major Event, 

and, likewise, would require DTC to 

promptly notify the DTCC Systems 

Participant(s) of any action DTC takes or 

intends to take with respect to such 

DTCC Systems Participant(s) pursuant 

to the proposed rule. 

Finally, the Systems Disconnect Rule 

would address certain miscellaneous 

matters including: (i) A limitation of 

liability for any failure or delay in 

performance, in whole or in part of 

DTC’s obligations under the Rules, 

arising out of or related to a Major 

Event, (ii) a statement that the power of 

DTC to take any action pursuant to the 

Systems Disconnect Rule also includes 

the power to repeal, rescind, revoke, 

amend or vary such action, (iii) a 

statement that the powers of DTC 

pursuant to the Systems Disconnect 

Rule shall be in addition to, and not in 

derogation of, authority granted 

elsewhere in the Rules to take action as 

specified therein, (iv) a requirement that 

Participants shall keep any DTCC 

Confidential Information (as defined 

below) provided to them by DTC and/ 

or in connection with a Major Event 

confidential and (v) a statement that in 

the event of any conflict between the 

provisions of the Systems Disconnect 

Rule and any other Rules or Procedures, 

the provisions of the Systems 

Disconnect Rule would prevail. 

(v) Proposed Rule Changes 

The proposed rule change would 

amend the Rules to make the following 

changes to implement the changes 

discussed above: 

DTC Confidentiality Requirements 

Changes 

The proposed rule change would 

amend the DTC Confidentiality 

Requirements in two paragraphs in 

Section 1 of Rule 2,13 to state as follows: 

. . . any non-public information 

furnished to the Corporation pursuant to 

this Rule shall be held in confidence as 

may be required under the laws, rules 

and regulations applicable to the 

Corporation that relate to the 

confidentiality of records. 

As discussed above, the proposed 

language is intended to provide one 

standard that DTC would apply 

uniformly to all Participants, which 

assures Participants that such 

information would be held in 

confidence with appropriate controls. 

DTC would add ‘‘non-public’’ when 

describing the information that is 

subject to the DTC Confidentiality 

Requirements to make it clear that such 

requirements would only apply to 

information that is not public. 

Certain Rules relating to DTC 

Confidentiality Requirements would 

also include language relating to 

Participant Confidentiality 

Requirements as described below. 

Participant Confidentiality 

Requirements 

In order to provide for Participant 

Confidentiality Requirements, DTC 

would add a provision at the end of 

Section 1 of Rule 2 14 to state that each 

applicant and Participant shall maintain 

DTCC Confidential Information in 

confidence to the same extent and using 

the same means it uses to protect its 

own confidential information, but no 

less than a reasonable standard of care, 

and shall not use DTCC Confidential 

Information or disclose DTCC 

Confidential Information to any third 

party except as necessary to perform its 

obligations under the Rules or as 

otherwise required by applicable law. 

DTC would add a new definition of 

DTCC Confidential Information in 

Section 1 of Rule 1 15 to provide that 


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36836 Federal Register / Vol. 86, No. 131 / Tuesday, July 13, 2021 / Notices 

16Rule 32(A), supra note 3. 

17Rule 38, supra note 3. 

18 15 U.S.C. 78q–1(b)(3)(F). 

19 17 CFR 240.17Ad–22(e)(1) and (e)(21). 

20 17 CFR 240.17Ad–22(e)(2) and (e)(17). 

21 15 U.S.C. 78q–1(b)(3)(F). 

22Section 1 of Rule 2, supra note 3. 

23 15 U.S.C. 78q–1(b)(3)(F). 24 Id. 

‘‘DTCC Confidential Information’’ 

would mean all non-public information 

provided by DTCC and/or DTC that (i) 

is marked or otherwise identified in 

writing prior to disclosure to the 

recipient as confidential, (ii) is 

designated by DTCC or DTC as 

confidential, or (iii) the recipient knows 

or, under the circumstances 

surrounding disclosure, ought to 

reasonably know is confidential. DTC 

would also add a definition of DTCC in 

Section 1 of Rule 1 and remove a 

corresponding definition in Rule 

32(A) 16 since it would be defined in 

Section 1 of Rule 1. 

DTC would also add a statement in 

the provision relating to Participant 

Confidentiality Requirements that each 

applicant and Participant acknowledges 

that a breach of its confidentiality 

obligations under the Rules may result 

in serious and irreparable harm to DTC 

and/or DTCC for which there is no 

adequate remedy at law. In the event of 

such a breach by the applicant or 

Participant, DTC and/or DTCC would be 

entitled to seek any temporary or 

permanent injunctive or other equitable 

relief in addition to any monetary 

damages. 

Force Majeure Rule Officer Additions 

The proposed rule change would add 

the Chief Information Officer and the 

Head of Clearing Agency Services to the 

list of officers that could make a 

determination of a Market Disruption 

Event if the Board of Directors is unable 

to convene in Rule 38.17

Systems Disconnect Rule 

The proposed rule change would add 

a new Rule 38(A) entitled ‘‘Systems 

Disconnect: Threat of Significant Impact 

to the Corporation’s Systems’’ that 

would address situations in which DTC 

determines it is necessary for DTC to 

disconnect a DTCC Systems Participant 

or DTCC Systems Participants from 

DTC’s systems or network due to an 

imminent threat of harm to DTC’s or 

DTCC’s systems consistent with the 

description above. The proposed 

Systems Disconnect Rule would include 

new definitions for ‘‘DTCC Systems,’’ 

‘‘DTCC Systems Participant,’’ ‘‘Major 

Event’’ and ‘‘Systems Disruption’’ 

consistent with the descriptions of the 

Systems Disconnect Rule above. 

2. Statutory Basis 

DTC believes that the proposal is 

consistent with the requirements of the 

Act, and the rules and regulations 

thereunder applicable to a registered 

clearing agency. In particular, DTC 

believes that each of the proposed rule 

changes is consistent with Section 

17A(b)(3)(F) of the Act,18 and Rules 

17Ad–22(e)(1) and (e)(21) 19

promulgated under the Act. In addition, 

DTC believes that the proposed changes 

to add the two senior executive officers 

in the Force Majeure Rule and to add 

the proposed Systems Disconnect Rule 

are consistent with Rules 17Ad–22(e)(2) 

and (e)(17) under the Act.20

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

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

requires, in part, that the Rules be 

designed to promote the prompt and 

accurate clearance and settlement of 

securities transactions, to assure the 

safeguarding of securities and funds 

which are in the custody or control of 

DTC or for which it is responsible, and 

to remove impediments to and perfect 

the mechanism of a national system for 

the prompt and accurate clearance and 

settlement of securities transactions. 

DTC believes that the proposed 

changes revising the DTC 

Confidentiality Requirements and 

adding the Participant Confidentiality 

Requirements are each consistent with 

this provision of the Act. The proposed 

revisions to the DTC Confidentiality 

Requirements are consistent with this 

provision because the proposed 

revisions would provide a clear and 

consistent standard relating to how DTC 

holds the information furnished by 

Participants pursuant to Section 1 of 

Rule 2.22 The confidential information 

that DTC receives pursuant to this rule 

is used by DTC to determine whether to 

admit a Participant, to continue to allow 

such Participant to be a Participant, or 

to better understand the risks relating to 

each Participant. Providing a clear and 

consistent standard would facilitate this 

process by allowing Participants to 

better understand DTC’s obligations 

with respect to such information and 

providing a uniform obligation for DTC 

with respect to such information. DTC 

believes that facilitating the ability of 

DTC to evaluate Participants would 

promote the prompt and accurate 

clearance and settlement of securities 

transactions by DTC. As such, DTC 

believes the proposed rule changes are 

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

the Act.23

DTC also believes that the proposed 

rule change adding the Participant 

Confidentiality Requirements is 

consistent with this provision of the Act 

because the proposed revisions to the 

Participant Confidentiality 

Requirements would provide a clear and 

consistent contractual obligation for 

applicants and Participants who are 

requesting confidential information 

from DTC. Having clear and consistent 

Rules would help applicants and 

Participants to better understand their 

rights and obligations regarding DTC’s 

clearance and settlement services. The 

information requested by applicants and 

Participants that would be subject to the 

Participant Confidentiality 

Requirements would be used by 

applicants and Participants to determine 

whether to participate in DTC’s services, 

DTC system requirements and DTC 

system safeguards. DTC believes that 

when Participants better understand 

their rights and obligations regarding 

DTC’s clearance and settlement services, 

they can better act in accordance with 

the Rules. DTC believes that better 

enabling Participants to comply with 

the Rules would promote the prompt 

and accurate clearance and settlement of 

securities transactions by DTC. As such, 

DTC believes the proposed rule changes 

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

of the Act.24

DTC believes that the proposed 

changes to add the two officers to make 

a determination of a Market Disruption 

Event and to add the Systems 

Disconnect Rule are also consistent with 

this provision of the Act because those 

changes would enhance and streamline 

DTC’s ability to take necessary actions 

in the event of a Market Disruption 

Event or a Major Event. Improving the 

ability of DTC to react to a Market 

Disruption Event or a Major Event 

would allow DTC to protect its 

Participants and their ability to 

promptly and accurately clear and settle 

securities transactions, and allow DTC 

to safeguard securities and funds that 

are in its custody or control. In 

particular, allowing two additional 

officers that are able to make an interim 

determination of a Market Disruption 

Event in the event that the Board of 

Directors is unable to convene would 

add additional flexibility and tools to 

DTC while maintaining proper risk 

controls and improve the ability of DTC 

to act in the event of a Market 

Disruption Event. Also, providing for 

the ability of DTC to disconnect DTCC 

Systems Participants, suspend the 

receipt or transmission of files or 

communications to or from a DTCC 

Systems Participant, and/or require the 

DTCC Systems Participant to take such 


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25 Id. 

26 Id. 

27 17 CFR 240.17Ad–22(e)(1). 

28 Id. 

29 17 CFR 240.17Ad–22(e)(21). 30 Id. 

other actions as are necessary to protect 

DTC and its Participants would, in each 

case, provide additional tools for DTC in 

the event of a Major Event. 

Improving the governance around the 

determination of a Market Disruption 

Event, and the implementation of 

procedures allowing DTC to disconnect 

a DTCC Systems Participant or DTCC 

Systems Participants from DTC’s 

systems or network due to an imminent 

threat of harm, would improve DTC’s 

ability to address and minimize losses 

to DTC and its Participants. Risks, 

threats and potential vulnerabilities due 

to a Market Disruption Event or a Major 

Event could impact DTC’s ability to 

clear and settle securities transactions, 

or to safeguard the securities and funds 

which are in its custody or control or for 

which it is responsible. In addition, 

providing governance around the ability 

to disconnect a DTCC Systems 

Participant that is having a systems 

disruption that could disrupt the ability 

of DTC or other DTCC Systems 

Participants from using DTC’s systems 

would remove impediments to and 

perfect the mechanism of a national 

system for the prompt and accurate 

clearance and settlement of securities 

transactions. Although disconnecting or 

limiting the service of a DTCC Systems 

Participant in the event of a Major Event 

would likely be an impediment to such 

DTCC Systems Participant, improving 

DTC’s ability to address and minimize 

losses to DTC and its Participants, and 

reducing risks, threats and potential 

vulnerabilities due to a Major Event that 

could impact DTC’s ability to clear and 

settle securities transactions, or to 

safeguard the securities and funds 

which are in its custody or control or for 

which it is responsible, would be 

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

the Act.25

Therefore, by implementing tools that 

would help to mitigate these risks, DTC 

believes that the proposed rule change 

would promote the prompt and accurate 

clearance and settlement of securities 

transactions, assure the safeguarding of 

securities and funds which are in the 

custody or control of DTC or for which 

it is responsible, and remove 

impediments to and perfect the 

mechanism of a national system for the 

prompt and accurate clearance and 

settlement of securities transactions, 

consistent with the requirements of 

Section 17A(b)(3)(F) of the Act.26

Rule 17Ad–22(e)(1) 

In addition, the proposed rule change 

is designed to be consistent with Rule 

17Ad–22(e)(1) promulgated under the 

Act,27 which requires DTC to establish, 

implement, maintain and enforce 

written policies and procedures 

reasonably designed to provide for a 

well-founded, clear, transparent and 

enforceable legal basis for each aspect of 

its activities in all relevant jurisdictions. 

Establishing clear and consistent rules 

for each Participant with respect to the 

DTC Confidentiality Requirements 

would allow DTC to maintain one 

confidentiality standard for all 

Participants rather than maintaining 

potentially different confidentiality 

standards for Participants based on the 

various, unrelated regulatory bodies 

governing such Participants. In 

addition, setting forth a clear 

contractual obligation relating to 

Participant Confidentiality 

Requirements would enhance the 

understanding of the Participants 

receiving information from DTC and 

allow DTC to treat Participants equally 

with respect to how the information 

furnished to Participants should be 

protected by the Participants. 

Adding the two officers to make a 

determination of a Market Disruption 

Event and adding the Systems 

Disconnect Rule are also consistent with 

Rule 17Ad–22(e)(1) under the Act 

because those changes would describe 

the circumstances under which DTC 

could take actions in the event of a 

Market Disruption Event or a Major 

Event that are necessary to protect DTC 

and its Participants. Providing clear 

guidelines with respect to Market 

Disruption Events and Major Events 

would allow DTC Participants to 

understand the rights and obligations of 

the Participants in the event of a Market 

Disruption Event or a Major Event. 

Therefore, by establishing uniform 

and clear standards with respect to its 

receipt and furnishing of confidential 

information, and by providing clear 

rights and obligations of DTC and its 

Participants with respect to Market 

Disruption Events and Major Events, 

DTC believes that the proposed rule 

change is consistent with the 

requirements of Rule 17Ad–22(e)(1) 

promulgated under the Act.28

Rule 17Ad–22(e)(21) 

In addition, the proposed rule change 

is designed to be consistent with Rule 

17Ad–22(e)(21) promulgated under the 

Act,29 which requires DTC to, inter alia, 

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. The proposed rule change would 

streamline the DTC Confidentiality 

Requirements by providing that DTC 

would apply one standard for all 

Participants relating to confidential 

information sent to DTC by Participants, 

which would enhance (i) efficiency by 

avoiding applying varying standards of 

confidentiality based on the rules and 

regulations of the varying regulatory 

bodies that regulate the Participants, 

and (ii) effectiveness by reducing 

potential conflicts of laws and providing 

equal treatment to Participants relating 

to such confidential information. 

The addition of the Participant 

Confidentiality Requirements would 

also provide a uniform and easily 

discernable requirement for all 

Participants with respect to confidential 

information provided by DTC allowing 

DTC to provide necessary information to 

such Participants in a safe and efficient 

manner. Adding two additional officers 

that are able to make an interim 

determination of a Market Disruption 

Event in the event that the Board of 

Directors is unable to convene would 

add additional flexibility and tools to 

DTC while maintaining proper risk 

controls and improve the ability of DTC 

to act quickly, efficiently and effectively 

in a Market Disruption Event to address 

and minimize losses. Also, providing for 

the ability of DTC to disconnect DTCC 

Systems Participants, suspend the 

receipt or transmission of files or 

communications to or from a DTCC 

Systems Participant, and/or require the 

DTCC Systems Participant to take such 

other actions as are necessary to protect 

DTC and its Participants would, in each 

case, provide additional tools for DTC in 

the event of a Major Event and improve 

DTC’s ability to act quickly, efficiently 

and effectively in the event of a Major 

Event to address and minimize losses. 

Therefore, by establishing a more 

efficient and effective process for the 

treatment of confidential language, and 

establishing procedures designed to 

improve DTC’s ability to act quickly, 

efficiently and effectively in the event of 

a Market Disruption Event and a Major 

Event, DTC believes that the proposed 

rule change is consistent with the 

requirements of Rule 17Ad–22(e)(21) 

promulgated under the Act.30

Rule 17Ad–22(e)(2) 

In addition, the proposed rule change 

is designed to be consistent with Rule 

17Ad–22(e)(2) promulgated under the 


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36838 Federal Register / Vol. 86, No. 131 / Tuesday, July 13, 2021 / Notices 

31 17 CFR 240.17Ad–22(e)(2). 

32 Id. 

33 Id. 

34 Id. 

35 17 CFR 240.17Ad–22(e)(17)(i). 36 Id. 

37 15 U.S.C. 78q–1(b)(3)(I). 

38 Id. 

39 15 U.S.C. 78q–1(b)(3)(F). 

40 17 CFR 240.17Ad–22(e)(1), (e)(2), (e)(17) and 

(e)(21). 

Act,31 which requires DTC to, inter alia, 

establish, implement, maintain and 

enforce written policies and procedures 

reasonably designed to provide for 

governance arrangements that are clear 

and transparent and that specify clear 

and direct lines of responsibility. 

Adding two additional officers that 

are able to make an interim 

determination of a Market Disruption 

Event in the event that the Board of 

Directors is unable to convene would 

add additional flexibility and tools to 

DTC while maintaining proper risk 

controls, and improve the ability of DTC 

to act quickly, efficiently and effectively 

in a Market Disruption Event and 

mitigate any impact from such Market 

Disruption Event. Adding these officers 

to the governance procedures relating to 

a determination of a Market Disruption 

Event would make such governance 

procedures clear and transparent, and 

specify clear and direct lines of 

responsibility with respect to the 

determination of a Market Disruption 

Event, consistent with Rule 17Ad– 

22(e)(2) under the Act.32

Adding the governance procedures 

relating to making a determination of a 

Major Event in the Systems Disconnect 

Rule is also consistent with Rule 17Ad– 

22(e)(2) promulgated under the Act.33

Identifying the officers that have the 

ability to determine if there is a Major 

Event, and providing for the ability of 

any management committee on which 

all of such officers serve and the Board 

of Directors to ratify, modify or rescind 

any determination of a Major Event by 

an officer would make such governance 

procedures clear and transparent, and 

specify clear and direct lines of 

responsibility with respect to the 

determination of a Major Event, 

consistent with Rule 17Ad–22(e)(2).34

Rule 17Ad–22(e)(17) 

In addition, the proposed rule change 

is designed to be consistent with Rule 

17Ad–22(e)(17)(i) promulgated under 

the Act,35 which requires DTC to 

establish, implement, maintain and 

enforce written policies and procedures 

reasonably designed to manage the 

covered clearing agency’s operational 

risks by identifying the plausible 

sources of operational risk, both internal 

and external, and mitigating their 

impact through the use of appropriate 

systems, policies, procedures, and 

controls. 

Adding two additional officers that 

are able to make an interim 

determination of a Market Disruption 

Event in the event that the Board of 

Directors is unable to convene would 

add additional flexibility and tools to 

DTC while maintaining proper risk 

controls and improve the ability of DTC 

to act quickly, efficiently and effectively 

in a Market Disruption Event and 

mitigate any impact from such Market 

Disruption Event. Also, providing for 

the ability of DTC to disconnect DTCC 

Systems Participants, suspend the 

receipt or transmission of files or 

communications to or from a DTCC 

Systems Participant, and/or require the 

DTCC Systems Participant to take such 

other actions as are necessary to protect 

DTC and its Participants would, in each 

case, provide additional tools for DTC in 

the event of a Major Event and improve 

DTC’s ability to act quickly, efficiently 

and effectively in the event of a Major 

Event and mitigate any impact from 

such Major Event. 

Therefore, by providing clear, 

efficient procedures of DTC and its 

Participants with respect to Market 

Disruption Events and Major Events that 

help identify and mitigate operational 

risks, DTC believes that the proposed 

rule change is consistent with the 

requirements of Rule 17Ad–22(e)(17)(i) 

promulgated under the Act.36

(B) Clearing Agency’s Statement on 

Burden on Competition 

DTC does not believe that the 

proposed changes relating to the DTC 

Confidentiality Requirements would 

have any impact on competition. These 

changes would provide one standard for 

how DTC treats Participant information 

furnished subject to the DTC 

Confidentiality Requirements but would 

not affect the information that the 

Participants are required to provide or 

affect the manner in which the 

Participants must provide the 

information. As such, DTC believes 

these proposed rule changes would not 

have any impact on competition. 

DTC does not believe the proposed 

changes relating to adding Participant 

Confidentiality Requirements would 

have any impact on competition. 

Although the addition of the Participant 

Confidentiality Requirements would be 

adding obligations on Participants with 

respect to how they treat confidential or 

proprietary information of DTC or its 

affiliates, such obligations would be 

minimal because DTC would only 

require that such Participants hold such 

confidential information using the same 

means they use to protect their own 

confidential information but not less 

than a reasonable standard of care. The 

use of this standard would protect DTC 

by providing a clear legal obligation to 

protect such information but would not 

be burdensome or expensive for 

Participants, and therefore DTC believes 

that it would not have any impact on 

competition. 

DTC does not believe the changes 

relating to adding the two officers to 

make a determination of a Market 

Disruption Event would have any 

impact on competition. The proposed 

rule change would add two senior 

executive officers of DTC, the Chief 

Information Officer and the Head of 

Clearing Agency Services, to the list of 

officers that could make a determination 

of a Market Disruption Event if the 

Board of Directors is unable to convene. 

Such addition would provide additional 

officers who could determine whether 

there is a Market Disruption Event but 

would not otherwise affect the rights of 

Participants or DTC in the 

determination of a Market Disruption 

Event or if a Market Disruption Event is 

declared. Therefore, DTC does not 

believe that the addition of the two 

officers would have any impact on 

competition. 

DTC does not believe that the changes 

relating to adding the Systems 

Disconnect Rule would have any 

impact, or impose any burden, on 

competition not necessary or 

appropriate in furtherance of the 

purposes of the Act.37 To the extent that 

DTC determines that there is a Major 

Event, it could take or refrain from 

taking actions, or require Participants to 

take or refrain from taking actions, that 

could burden competition because such 

requirements could cause Participants 

to incur additional costs, allow DTC to 

suspend services or communications, or 

disconnect a DTCC Systems Participant 

from the DTCC Systems. DTC believes 

such burden on competition could be 

significant but would be both necessary 

and appropriate in furtherance of the 

purposes of the Act, as permitted by 

Section 17A(b)(3)(I) of the Act,38 for the 

reasons described below. 

DTC believes that the proposed 

changes to add the Systems Disconnect 

Rule are necessary in furtherance of the 

purposes of Section 17A(b)(3)(F) of the 

Act,39 and Rules 17Ad–22(e)(1), (e)(2), 

(e)(17) and (e)(21) promulgated under 

the Act.40 The proposed changes to add 

the Systems Disconnect Rule would (i) 


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Federal Register / Vol. 86, No. 131 / Tuesday, July 13, 2021 / Notices 36839 

41 15 U.S.C. 78q–1(b)(3)(F). 

42 17 CFR 240.17Ad–22(e)(1). 

43 17 CFR 240.17Ad–22(e)(2). 

44 17 CFR 240.17Ad–22(e)(17)(i). 

45 17 CFR 240.17Ad–22(e)(21). 46 15 U.S.C. 78q–1(b)(3)(I). 47 17 CFR 200.30–3(a)(12). 

improve the ability of DTC to react to a 

Major Event allowing DTC to protect 

itself and its Participants and their 

ability to promptly and accurately clear 

and settle securities transactions, and 

allow DTC to safeguard securities and 

funds that are in its custody or control, 

consistent with the requirements of 

Section 17A(b)(3)(F) of the Act,41 (ii) 

provide clear guidelines with respect to 

Major Events that would allow 

Participants to understand the rights 

and obligations of the Participants and 

DTC in the event of a Major Event, 

consistent with Rule 17Ad–22(e)(1) 

promulgated under the Act,42 (iii) 

identify the officers that have the ability 

to determine if there is a Major Event, 

and provide for the ability of any 

management committee on which all of 

such officers serve, and the Board of 

Directors, to ratify, modify or rescind 

any determination of a Major Event by 

an officer, which would make such 

governance procedures clear and 

transparent, and specify clear and direct 

lines of responsibility with respect to 

the determination of a Major Event, 

consistent with Rule 17Ad 22(e)(2) 

promulgated under the Act,43 (iv) 

improve the ability of DTC to act 

quickly, efficiently and effectively in the 

event of a Major Event, and mitigate any 

impact from such event by providing 

clear, efficient procedures of DTC and 

its Participants with respect to such 

event, consistent with the requirements 

of Rule 17Ad–22(e)(17)(i) promulgated 

under the Act 44 and (v) establish 

procedures designed to improve DTC’s 

ability to act quickly, efficiently and 

effectively in the event of a Major Event, 

consistent with the requirements of Rule 

17Ad–22(e)(21) promulgated under the 

Act.45

In addition, DTC believes that the 

proposed changes to add the Systems 

Disconnect Rule are appropriate in 

furtherance of the Act. Such changes 

have been designed to improve the 

ability of DTC to act quickly, efficiently 

and effectively in the event of a Major 

Event, and mitigate any impact from 

such event while also providing the 

Participants clear guidelines with 

respect to such event to allow 

Participants to understand their rights 

and obligations. Such changes have also 

been designed to apply uniformly to all 

Participants in the event of a Major 

Event and should not affect DTC’s dayto-day operations under normal 

circumstances, or in the management of 

a typical Participant default scenario or 

non-default event. 

Therefore, DTC does not believe that 

the proposed rule change would impose 

any burden on competition that is not 

necessary or appropriate in furtherance 

of the purposes of the Act.46

(C) Clearing Agency’s Statement on 

Comments on the Proposed Rule 

Change Received From Members, 

Participants, or Others 

DTC has not received or solicited any 

written comments relating to this 

proposal. DTC will notify the 

Commission of any written comments 

received by DTC. 

III. Date of Effectiveness of the 

Proposed Rule Change, and Timing for 

Commission Action 

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–2021–011 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–2021–011. 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– 

2021–011 and should be submitted on 

or before August 3, 2021. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.47

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2021–14797 Filed 7–12–21; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Investment Company Act Release No. 

34324, File No. 812–15232] 

Hartford Funds Exchange-Traded 

Trust, et al. 

July 7, 2021. 

AGENCY: Securities and Exchange 

Commission (‘‘Commission’’). 

ACTION: Notice. 

Notice of an application for an order 

under section 6(c) of the Investment 

Company Act of 1940 (‘‘Act’’) for an 

exemption from sections 2(a)(32), 

5(a)(1), 22(d) and 22(e) of the Act and 

rule 22c–1 under the Act, and under 

sections 6(c) and 17(b) of the Act for an 

exemption from sections 17(a)(1) and 

17(a)(2) of the Act, and under Section 

12(d)(1)(J) of the Act for an exemption 

from sections 12(d)(1)(A) and 

12(d)(1)(B) of the Act. 


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