Federal Register / Vol. 86, No. 152 / Wednesday, August 11, 2021 / Notices 44077 

97 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3Each capitalized term not otherwise defined 

herein has its respective meaning as set forth in 

DTC’s rules, including, but not limited to, the 

Rules, By-Laws and Organization Certificate of DTC 

(‘‘Rules’’), the DTC Settlement Service Guide 

(‘‘Settlement Guide’’), and the Guide to the 2020 

DTC Fee Schedule (‘‘Fee Guide’’), available at 

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

4On July 22, 2021, NSCC filed a proposed rule 

change and an advance notice to establish the NSCC 

SFT Service (‘‘NSCC Proposed Rules’’). See SR– 

NSCC–2021–010 and SR–NSCC–2021–803, which 

were filed with Commission and the Board of 

Governors of the Federal Reserve System, 

respectively, but have not been published in the 

Federal Register. Copies of the proposed rule 

Continued 

of the purpose of the Act. The Exchange 

notes that the proposed rule change will 

facilitate the listing and trading of Trust 

Issued Receipts based on Bitcoin and 

that will enhance competition among 

market participants, to the benefit of 

investors and the marketplace. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

No written comments were solicited 

or received with respect to the proposed 

rule change. 

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 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 

the 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– 

NYSEArca–2021–53 on the subject line. 

Paper Comments 

• Send paper comments in triplicate 

to: Secretary, Securities and Exchange 

Commission, 100 F Street NE, 

Washington, DC 20549–1090. 

All submissions should refer to File 

Number SR–NYSEArca–2021–53. 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 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–NYSEArca–2021–53 and 

should be submitted on or before 

September 1, 2021. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.97

Jill M. Peterson, 

Assistant Secretary. 

[FR Doc. 2021–17078 Filed 8–10–21; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–92572; File No. SR–DTC– 

2021–014] 

Self-Regulatory Organizations; The 

Depository Trust Company; Notice of 

Filing of a Proposed Rule Change To 

Provide Settlement Services for 

Transactions Entered Into Under the 

Proposed Securities Financing 

Transaction Clearing Service of the 

National Securities Clearing 

Corporation 

August 5, 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 July 22, 

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 of DTC 

would amend the Rules, the Settlement 

Guide, and the Fee Guide 3 in order to 

provide Participants that are also 

members of the National Securities 

Clearing Corporation (‘‘NSCC’’) with 

settlement services in connection with a 

proposed optional securities financing 

transaction clearing service of NSCC 

(‘‘NSCC SFT Service’’). 

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 would 

amend the Rules, the Settlement Guide, 

and the Fee Guide in order to provide 

Participants that are also members of 

NSCC with settlement services in 

connection the NSCC SFT Service. The 

proposed NSCC SFT Service would 

provide central clearing for equity 

securities financing transactions, which 

are, broadly speaking, transactions 

where the parties exchange equity 

securities against cash and 

simultaneously agree to exchange the 

same securities and cash, plus or minus 

a rate payment, on a future date (each, 

an ‘‘SFT’’).4 SFTs between 


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change and the advance notice are available at 

http://www.dtcc.com/legal/sec-rule-filings.aspx. 

5 DTC understands that the NSCC SFT Service 

would offer the clearance of SFT transactions 

between a buy-side entity (a ‘‘Sponsored Member’’) 

and the member of NSCC that sponsored that entity 

for the NSCC SFT Service (‘‘Sponsoring Member’’). 

This proposed rule change by DTC does not relate 

to Sponsoring Members, Sponsored Members, or 

their SFT transactions at NSCC. All SFT 

transactions between a Sponsored Member and its 

Sponsoring Member would settle on the books of 

the Sponsoring Member. These SFT transactions 

and the related activity would occur outside of DTC 

and would not settle at DTC. The term ‘‘NSCC SFT 

Counterparty,’’ as used in this filing, does not refer 

to Sponsored Members or Sponsoring Members. 

6 DTC understands that, pursuant to the NSCC 

Proposed Rules, NSCC would establish a new 

membership category for agent clearing members 

(each, an ‘‘Agent CM’’), where members of NSCC 

would be permitted to submit SFTs to NSCC for 

novation on behalf of their customers. All SFTs 

settling at DTC would be processed by DTC without 

regard to whether a Participant is acting as Agent 

CM under the NSCC Proposed Rules or is acting on 

its own behalf. DTC would not establish any SFT 

or Agent CM Participant membership type, or any 

special SFT or Agent CM Participant accounts, at 

DTC. 

7 DTC understands that the Proposed NSCC Rules 

would define such credit/debit amount as a ‘‘Price 

Differential,’’ which would include, but would not 

be limited to, mark-to-market payments and 

payments relating to offsetting SFT obligations. 

8The NSCC SFT Account, which would appear 

in the Rules as the ‘‘Special Representative SFT 

Account,’’ would be Account No. 881. 

9 DTC understands that the Proposed NSCC Rules 

would define the term ‘‘Approved SFT Submitter’’ 

as a provider of transaction data on an SFT that the 

parties to the SFT have selected and NSCC has 

approved. 10 DTC understands that the NSCC Proposed 

Rules would provide that the obligations reflected 

in the transaction data on an SFT would be deemed 

to have been confirmed and acknowledged by each 

NSCC SFT Counterparty designated by the 

Approved SFT Submitter as a party thereto and to 

have been adopted by such NSCC SFT Counterparty 

and, for the purposes of determining the rights and 

obligations between NSCC and such NSCC SFT 

Counterparty under the NSCC Proposed Rules, 

would be valid and binding upon such NSCC SFT 

Counterparty. 

11The NSCC Proposed Rules would provide that 

the submission of each SFT to NSCC constitutes an 

authorization to NSCC by the NSCC SFT 

Counterparties for NSCC to give instruction 

regarding the SFT to DTC in respect of the relevant 

Participant Accounts of the NSCC SFT 

Counterparties at DTC. 

12See e.g., Rule 11 of the NSCC Rules & 

Procedures, available at http://www.dtcc.com/legal/ 

rules-and-procedures.aspx. 

13The Special Representative CNS Account is 

Account No. 888. 

14See supra notes 10 and 11. 

15 DTC uses its risk management controls, the 

Collateral Monitor and Net Debit Cap, to manage its 

credit risk. These two controls work together to 

protect the DTC settlement system in the event of 

Participant default. The Collateral Monitor requires 

net debit settlement obligations, as they accrue 

intraday, to be fully collateralized; the Net Debit 

Cap limits the amount of any Participant’s net debit 

settlement obligation to an amount that can be 

satisfied with DTC liquidity resources (the 

Participants Fund and the committed line of credit 

from a consortium of lenders). See Settlement 

Guide, supra note 3, at 64–67. 

counterparties that are members of 

NSCC (each, an ‘‘NSCC SFT 

Counterparty’’) 5 would be settled 

through their respective Participant 

Accounts at DTC.6

Pursuant to the proposed rule change, 

DTC would (i) expand the types of 

instructions that NSCC, as the 

representative (‘‘Special 

Representative’’) of each Participant that 

is also a member of NSCC, can submit 

to DTC on behalf of a Participant with 

respect to an Account of the Participant, 

(ii) establish a new type of payment 

order for the crediting and debiting of 

payment amounts relating to SFT 

activity at NSCC (‘‘SFT Price 

Differential’’ or ‘‘SFT PD’’) 7 to and from 

the Accounts of the Participants that are 

NSCC SFT Counterparties, (iii) apply a 

modified look-ahead process to the new 

Account that NSCC would maintain at 

DTC in connection with the NSCC SFT 

Service (the ‘‘NSCC SFT Account’’ or 

‘‘Special Representative SFT 

Account’’),8 and (iv) establish a fee for 

the payor and payee of an SFT Price 

Differential payment order. Finally, DTC 

is proposing to make clarifying and 

conforming changes, as discussed 

below. 

(i) Overview of Proposed Rule Change 

DTC understands that, pursuant to the 

Proposed NSCC Rules and consistent 

with the manner in which NSCC accepts 

cash market transactions, SFTs would 

be submitted to NSCC by an Approved 

SFT Submitter 9 already matched as 

between the pre-novation NSCC SFT 

Counterparties (i.e., on a locked in 

basis).10 Once the SFT instruction is 

processed by NSCC, NSCC would 

submit Delivery Versus Payment 

(‘‘DVP’’) instructions or SFT PD 

payment orders to DTC in accordance 

with the NSCC Proposed Rules. 

Pursuant to the NSCC Proposed Rules 

and the proposed rule change, NSCC 

would typically only submit pairs of 

instructions to DTC, as follows: (i) One 

instruction on its own behalf, with 

respect to the NSCC SFT Account, and 

(ii) one instruction on behalf of a 

Participant, as its Special 

Representative, with respect to the DTC 

Account of the Participant.11

Accordingly, these DVP and SFT PD 

transactions between Participants that 

are NSCC SFT Counterparties to an SFT 

would pass through the NSCC SFT 

Account. 

A. NSCC Instructions to DTC 

(1) NSCC as the Special Representative 

of Participants That Are Members of 

NSCC 

Pursuant to Rule 6, NSCC is the 

Special Representative of each 

Participant that is also a Member of 

NSCC. Currently, as the Special 

Representative of the Participant, NSCC 

may instruct DTC, on behalf of the 

Participant, to make a transfer of 

securities from the Account of the 

Participant to an Account that NSCC 

maintains at DTC in connection with its 

Continuous Net Settlement (‘‘CNS’’) 

System 12 (the ‘‘Special Representative 

CNS Account’’).13 The purpose of these 

transfers is to settle the CNS obligations 

of a member of NSCC to NSCC through 

the member’s Participant Account at 

DTC. 

The NSCC SFT Service would operate 

separately from the NSCC CNS system, 

and NSCC would use its new NSCC SFT 

Account, and not the NSCC CNS 

Account, in connection with the NSCC 

SFT Service. In order to efficiently 

provide Participants with settlement 

services for SFTs cleared through the 

NSCC SFT Service and settled at DTC, 

DTC is proposing to leverage the status 

of NSCC as the Special Representative 

of Participants that are members of 

NSCC. Pursuant to the proposed rule 

change, Rule 6 would provide NSCC, as 

the Special Representative of a 

Participant, with the additional 

authority to submit instructions to DTC 

with respect to DVP and SFT PD 

transactions from the Account of the 

Participant to the NSCC SFT Account.14

(2) DVP Instructions 

As noted above, pursuant to the 

proposed rule change, NSCC would 

submit pairs of instructions to DTC as 

follows: (i) One instruction on its own 

behalf, with respect to the NSCC SFT 

Account, and (ii) one instruction on 

behalf of a Participant as its Special 

Representative, with respect to the DTC 

Account of the Participant. Accordingly, 

in order to effectuate a DVP transaction 

between Participants that are NSCC SFT 

Counterparties to an SFT, NSCC would 

send DTC a pair of DVP instructions: (i) 

One instruction, as the Special 

Representative of the Participant that is 

an NSCC SFT Counterparty, to deliver 

the subject securities versus payment 

from the Account of the delivering 

Participant to the NSCC SFT Account, 

and (ii) one instruction, on NSCC’s own 

behalf, to deliver the subject securities 

versus payment from the NSCC SFT 

Account to the Account of the receiving 

Participant that is the other NSCC SFT 

Counterparty. As explained in more 

detail below, if the pair of instructions 

satisfy DTC risk management controls 15

and the modified look-ahead, DTC 

would process the deliveries. If risk 

management controls and the modified 

look-ahead are not satisfied, the 


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16For a description of Recycle Processing, see 

Settlement Guide, supra note 3, at 56. 

17This paragraph does not apply to a ‘‘Bilaterally 

Initiated SFT,’’ which is described in the NSCC 

Proposed Rules as an SFT that was submitted to 

NSCC after the initial transfer of securities versus 

payment had already occurred. DTC is agnostic to 

whether an NSCC SFT instruction relates to a 

Bilaterally Initiated SFT or a typical SFT. 

18 If the SFT was not submitted to NSCC on that 

business day, the Participant DVP instruction 

would be rejected. 

19See Rule 9(A), supra note 3. 20See Settlement Guide, supra note 3, at 3. 

21See Settlement Guide, supra note 3, at 45. See 

also supra note 15. 

22The DTCC Reference ID is the fourteen-digit 

UTC Loan ID that NSCC assigns to each SFT 

transaction. 

23 DTC uses the same modified look-ahead 

(except for the DTCC Reference ID) for DVP 

transactions to and from the OCC Market Loan 

Program Account, which is maintained by The 

Options Clearing Corporation (‘‘OCC’’) at DTC in 

connection with the OCC Market Loan Program. See 

Securities Exchange Act Release No. 59298 (January 

26, 2009), 74 FR 5692 (January 30, 2009) (SR–DTC– 

2008–15). 

instructions would recycle 16 and, if not 

completed, would drop at the end of the 

day. 

There is only one situation where 

NSCC would only send a single DVP 

instruction to DTC.17 Specifically, 

pursuant to the NSCC Proposed Rules, 

the initial transfer of the securities that 

are the subject of the SFT versus the 

payment amount would be initiated at 

DTC by the Participant that is the 

delivering NSCC SFT Counterparty. 

Therefore, pursuant to the proposed rule 

change, the Participant that is the 

delivering NSCC SFT Counterparty 

would submit the DVP instruction to 

DTC to deliver the subject securities 

versus the payment amount from the 

Account of the Participant to the NSCC 

SFT Account. Provided that the SFT 

had already been submitted to NSCC by 

an Approved SFT Submitter on that 

business day,18 NSCC would submit a 

DVP instruction to DTC to deliver the 

subject securities versus the payment 

amount from the NSCC SFT Account to 

the Account of the Participant that is the 

receiving NSCC SFT Counterparty. If the 

Participant instruction and the NSCC 

instruction satisfy DTC risk 

management controls and the modified 

look-ahead, DTC would process the 

deliveries. If risk management controls 

and the modified look-ahead are not 

satisfied, the instructions would recycle 

and, if not completed, would drop at the 

end of the day. 

(3) Price Differential Payment Orders 

Pursuant to the proposed rule change, 

NSCC would also submit SFT PD 

payment orders to DTC on behalf of 

itself and on behalf of DTC Participants, 

as their Special Representative, in 

connection with SFT activity at NSCC. 

DTC Rule 9(A) provides that a 

Participant may submit to DTC an 

instruction to (i) credit the Account of 

the Participant with an amount of funds 

and debit the Account of another 

Participant the same amount of funds, 

or (ii) debit the Account of the 

Participant with an amount of funds and 

credit the Account of another 

Participant the same amount of funds 

(each, a ‘‘payment order’’).19 The 

Settlement Guide describes the DTC 

payment order service as providing 

Participants with a method for settling 

money payments for securities 

transactions that were processed 

separately.20 Currently, Participants use 

payment orders to collect option 

contract premiums (a ‘‘premium 

payment order’’ or ‘‘PPO’’) and mark-tomarket open contracts such as stock 

loans (a ‘‘securities payment order’’ or 

‘‘SPO’’). Payment orders are subject to 

DTC risk management controls. 

Pursuant to the proposed rule change, 

DTC would enhance the DTC payment 

order service by adding the SFT PD 

payment order. The SFT PD payment 

order would offer an efficient way for 

NSCC to instruct DTC, on behalf of a 

Participant or on its own behalf, to 

credit and debit funds between the 

NSCC SFT Account and the Accounts of 

the Participants that are NSCC SFT 

Counterparties. DTC understands that 

the amount of each SFT PD would be 

calculated and instructed by NSCC in 

accordance with the instructions of an 

Approved SFT Submitter. 

In order to effectuate the payments 

between Participants that are NSCC SFT 

Counterparties in connection with SFT 

activity at NSCC, NSCC would submit a 

pair of SFT PD payment orders to DTC: 

(i) One instruction, on NSCC’s own 

behalf, to debit the payment amount 

from the Account of the payor 

Participant and credit the payment 

amount to the NSCC SFT Account, and 

(ii) one instruction, as the Special 

Representative of the payee Participant, 

to debit the payment amount from the 

NSCC SFT Account and credit the 

payment amount to the Account of the 

payee Participant. If the pair of 

instructions satisfy DTC risk 

management controls and the modified 

look-ahead, DTC would process the 

transaction. If the pair of SFT PD 

payment orders do not satisfy DTC risk 

management controls and the modified 

look-ahead, the instructions would 

recycle and, if they are not completed, 

would drop at the end of the day. 

B. Modified Look-Ahead Processing 

The typical look-ahead process 

utilized by DTC reduces transaction 

blockage by applying the net amount of 

offsetting receive and deliver 

transactions in the same security rather 

than the gross amount of the receive 

transaction to a Participant’s Net Debit 

Cap. The look-ahead process calculates 

and processes submitted transactions in 

the same CUSIP that, when processed 

simultaneously, would not violate the 

risk management controls of the 

involved Participants. Specifically, the 

look-ahead process identifies a receive 

transaction pending due to a net debit 

cap insufficiency and determines 

whether an offsetting delivery 

transaction pending because of a 

quantity deficiency in the same security 

would permit both transactions to be 

completed in compliance with DTC risk 

management controls.21

As noted above, the NSCC SFT 

Account is intended to be a passthrough account for DVP and SFT PD 

transactions between Participants that 

are NSCC SFT Counterparties. DTC 

understands that because NSCC, as the 

central counterparty, would substitute 

itself as the counterparty for each SFT, 

it is essential to NSCC that there not be 

any net settlement obligation against the 

NSCC SFT Account intraday or at the 

end of any day. It is essential to NSCC 

that its obligations to DTC with respect 

to all completed DVP and SFT PD 

transactions to which the NSCC SFT 

Account was a party should be netted to 

zero with respect to both securities and 

funds. In an effort to help ensure that 

there would not be any net settlement 

obligation against the NSCC SFT 

Account, and to prevent transaction 

blockage due to risk management 

controls on the NSCC SFT Account, 

DTC is proposing to use a modified 

look-ahead process for the instructions 

it receives from NSCC in connection 

with the NSCC SFT Account. 

Pursuant to the proposed rule change, 

upon receipt of a pair of DVP 

instructions or SFT PD payment orders 

from NSCC, DTC would only complete 

the transaction if the modified lookahead is satisfied. The modified lookahead would be satisfied when (i) the 

pair of instructions from NSCC are 

consistent in terms of the number of 

subject shares and/or dollar amount, 

CUSIP, and DTCC Reference ID,22 and 

(ii) the net effect of processing the 

instructions would not violate the 

respective Net Debit Caps, Collateral 

Monitor or other risk management 

system controls of the Participants that 

are on each side of the DVP or SFT PD 

transaction.23 If the modified lookahead is not satisfied, then the pair of 

instructions would recycle until the 


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24 DTC would also set the Net Debit Cap of the 

NSCC SFT Account to one dollar ($1), which would 

help ensure that no DVP or SFT PD to or from the 

NSCC SFT Account would be completed unless an 

offsetting DVP or SFT PD is also completed. The 

OCC Market Loan Program Account is similarly risk 

managed to help ensure that no receives are 

completed to the OCC Market Loan Program 

Account unless an offsetting delivery is also 

completed. See Securities Exchange Act Release No. 

59298 (January 26, 2009), 74 FR 5692 (January 30, 

2009) (SR–DTC–2008–15). 

25A reclaim is the return of a deliver order, 

payment order, institutional delivery transaction or 

MMI transaction received by a Participant. RAD is 

a control mechanism that allows a Participant to 

review transactions prior to completion of 

processing. See Settlement Guide, supra note 3, at 

6. 

26See supra notes 10 and 11. 

27 DTC understands that since NSCC would be 

offering central clearing for overnight SFTs for the 

first time, NSCC is not able at this time to anticipate 

the size and composition of the SFT portfolios and 

activity. Therefore, DTC is not yet able to estimate 

the volume of SFT PD payment orders that it would 

process after the NSCC SFT Service is 

implemented. Once the NSCC SFT Service is 

implemented and historical data is available, DTC 

may, if circumstances warrant, review the amount 

of the SFT PD payment order fee. 

look-ahead is satisfied or until the 3:10 

p.m. cutoff time, when all recycling 

valued transactions at DTC are 

dropped.24

In addition, because the modified 

look-ahead relies on the completion of 

offsetting transactions, transactions to 

and from the NSCC SFT Account would 

not be subject to either reclaims or 

Receiver Authorized Delivery 

(‘‘RAD’’).25 Since both reclaims and 

RAD effectively permit one side of the 

transaction to reject or reverse the 

transaction, allowing such activity 

would interfere with the ability of the 

modified look-ahead to rely on the 

completion of the offsetting 

transactions. DTC believes that 

Participants would not be affected by 

the exclusion of reclaims and RAD 

because the NSCC SFT instructions 

would be based on instructions that 

were matched and submitted to NSCC 

on a locked-in basis by an Approved 

SFT Submitter on behalf of the NSCC 

SFT Counterparties. Therefore, the 

Participants that are NSCC SFT 

Counterparties to an SFT would have 

already agreed to the transactions to and 

from the NSCC SFT Account relating to 

their Participant Account, and, as such, 

the reclaim and RAD functions would 

not be necessary.26

C. SFT Price Differential Fee 

DTC is proposing to amend the Fee 

Guide to establish a fee for SFT PD 

payment orders. DTC is proposing a fee 

of $0.005 per item delivered or received, 

to be charged to the payor and to the 

payee of an SFT PD payment order. 

DTC recognizes that the fee for SFT 

PD payment orders would be 

significantly less than the $0.10 fee for 

SPO payment orders, which are used by 

Participants in connection with their 

noncleared stock loan transactions. DTC 

is proposing to establish this lower fee 

for SFT PD payment orders because 

settling payment obligations for cleared 

SFTs would require a higher volume of 

payment orders than would otherwise 

be required for settling payment 

obligation for uncleared SFTs. More 

specifically, pursuant to the NSCC 

Proposed Rules, NSCC SFT 

Counterparties would pay and collect 

Price Differentials at the individual 

transaction level. In the bilateral world, 

mark-to-market payments and 

collections on securities lending 

transactions are typically done at the 

CUSIP level via SPOs, inclusive of all 

open securities lending transactions of a 

given participant. Accordingly, it is 

likely that there would be more SFT PD 

payment orders processed by DTC in 

connection with SFTs than the amount 

of SPOs DTC would have otherwise 

processed if those SFTs were bilateral, 

non-cleared securities lending 

transactions. Therefore, as an initial 

matter,27 DTC is proposing to charge the 

lower fee $0.005 for SFT PD payment 

orders in an effort to maintain cost 

efficiency for both the cleared SFT 

activity and the uncleared securities 

financing transactions of market 

participants.’’ 

(ii) Proposed Rule Change 

A. Amendments to the Rules 

(1) Rule 1 

In order to clearly differentiate 

between the Special Representative CNS 

Account and the NSCC SFT Account in 

Rule 6, DTC is proposing to insert the 

following definitions into Section 1 of 

Rule 1: 

i. Special Representative: The term 

‘‘Special Representative’’ has the meaning 

provided in Rule 6. 

ii. Special Representative CNS Account: 

The term ‘‘Special Representative CNS 

Account’’ means the Account of the Special 

Representative that it uses in connection 

with its continuous net settlement system. 

iii. Special Representative SFT Account: 

The term ‘‘Special Representative SFT 

Account’’ means the Account of the Special 

Representative that it uses in connection 

with its securities financing transaction 

service. 

In addition, DTC is proposing to 

remove ‘‘Special Representative’’ from 

the list of definitions in Section 2 of 

Rule 1, because it would be redundant 

once the definition is inserted into 

Section 1 of Rule 1 pursuant to the 

proposed rule change. 

(2) Rule 6 

Pursuant to the proposed rule change, 

DTC would replace references to the 

‘‘Account of the Special Representative’’ 

with ‘‘Special Representative CNS 

Account,’’ to (i) clearly differentiate the 

Account that NSCC uses in connection 

with CNS from the proposed Special 

Representative SFT Account, and (ii) 

clearly delineate the transfer and 

delivery instructions that NSCC as the 

Special Representative submits to DTC 

in connection with the CNS system and 

the DVP instructions and SFT PD 

payment orders that NSCC as the 

Special Representative would submit to 

DTC in connection with the NSCC SFT 

Service. 

Under current Rule 6, the scope of 

NSCC’s authority as Special 

Representative to instruct DTC with 

respect to an Account of a Participant 

that is a member of NSCC is limited to 

transfers of securities from the Account 

of the Participant to the Account of the 

Special Representative (which would be 

renamed ‘‘Special Representative CNS 

Account,’’ as proposed above). Pursuant 

to the proposed rule change, DTC would 

amend Rule 6 to provide that NSCC, as 

the Special Representative, may submit 

to DTC, on behalf of the Participant, 

instructions for ‘‘the Delivery Versus 

Payment of Securities from the Account 

of a Participant to the Special 

Representative SFT Account,’’ and for 

‘‘an amount of money to be credited to 

the Account of a Participant and debited 

from the Special Representative SFT 

Account, in connection with a 

transaction in Securities, in accordance 

with Rule 9(A) and as specified in the 

Procedures.’’ 

B. Amendments to the Settlement Guide 

(1) In the ‘‘Settlement Transactions’’ 

subsection of the ‘‘About Settlement’’ 

section, DTC is proposing to add ‘‘Price 

Differentials (as defined in the NSCC 

Rules)’’ to the description of payment 

orders. 

(2) In the ‘‘Important Terms’’ 

subsection of the ‘‘About Settlement’’ 

section, DTC is proposing to: 

a. Amend the description of a 

‘‘payment order’’ to be consistent with 

the amended description in the 

‘‘Settlement Transactions’’ subsection. 

Specifically, DTC would replace the 

sentence ‘‘A transaction in which a 

Participant charges another Participant 

for changes in value for outstanding 

stock loans or option contract 

premiums’’ with ‘‘The payment order 

service provides Participants with a 

mechanism for settling amounts of 

money related to securities transactions 

that are effected separately through 


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28A Pend Hold allows a Participant that initiated 

a DO or pledge transaction to hold (i.e., exclude 

from processing) the transaction if it is pending for 

insufficient position. Since a DVP to the NSCC SFT 

Account is instructed by NSCC as the Special 

Representative, a Pend Hold is not relevant. 

29 DTC is proposing to add the legend to Rules 1 

and 6. 

DTC. Participants use payment orders to 

collect option contract premiums 

(premium payment order), mark-tomarket open contracts such as stock 

loans (securities payment order), and 

Price Differentials (SFT PD payment 

order).’’ 

b. Insert the term ‘‘SFT Price 

Differential (‘‘SFT PD’’) payment order’’ 

with the following description: ‘‘A 

payment order through which the 

amount of a Price Differential (as 

defined in the NSCC Rules) is (i) debited 

from the account of a Participant and 

credited to the NSCC SFT Account, or 

(ii) is debited from the NSCC SFT 

Account and credited to the account of 

a Participant.’’ 

c. Insert the term ‘‘NSCC Securities 

Financing Transaction Service (SFT) 

Service’’ with the following description: 

‘‘A securities financing transaction 

clearing service offered by NSCC.’’ 

(3) After the ‘‘NSCC ACATS 

Settlement Accounting Operation— 

Processing at DTC’’ section of the 

Settlement Guide, DTC is proposing to 

insert a new section titled ‘‘NSCC 

Securities Financing Transactions (SFT) 

Service.’’ The new section would 

include the following subsections: 

‘‘About the Product,’’ which would 

briefly describe the NSCC SFT Service; 

‘‘Initial Transfer of SFT Securities at 

DTC,’’ which would describe the 

process for the DVP instructions for the 

initial transfer of securities versus 

payment for an SFT; ‘‘NSCC 

Instructions to DTC,’’ which would 

describe the pairs of DVP instructions 

and SFT PD payment orders that NSCC 

would submit to DTC in connection 

with SFT activity at NSCC; and ‘‘NSCC 

SFT Account Look-Ahead Processing,’’ 

which would describe the modified 

look-ahead process and inform 

Participants that transactions to and 

from the NSCC SFT Account would not 

be subject to RAD and that reclaims 

from the NSCC SFT Account would be 

blocked. 

(4) In the subsection titled 

‘‘Settlement Processing Schedule’’ of the 

‘‘End-of-Day Settlement Process’’ 

section, DTC is proposing to: 

a. In the 3:00 p.m. ‘‘Cutoff Time ET’’ 

row, under ‘‘Cutoff for,’’ insert a third 

item in the bulleted list that reads: ‘‘SFT 

Transactions cannot be entered after 

3:00 p.m.’’ 

b. In the 3:10 p.m. ‘‘Cutoff Time ET’’ 

row, under ‘‘Cutoff for,’’ insert ‘‘/SFT’’ 

after ‘‘CNS’’ in the second bulleted 

paragraph to reflect that recycling NSCC 

SFT instructions would be dropped at 

that time. 

(5) In the section ‘‘Look-Ahead 

Processing,’’ DTC proposes to correct 

the first sentence to reflect that DTC’s 

current look-ahead process runs on twominute intervals, not on fifteen-minute 

intervals. 

(6) In the subsection ‘‘Optional Memo 

Segregation Indicators’’ of the ‘‘Memo 

Segregation’’ section, DTC is proposing 

to make a conforming change in order 

to reflect that securities positions from 

deliver orders relating to SFT activity at 

NSCC would be treated the same as 

stock loan positions. Specifically, DTC 

is proposing to insert the SFT reason 

codes 200 and 201 into (i) the row for 

Activate Indicator 4 as follows: 

‘‘Turnaround securities positions, 

regardless of Memo Segregation 

constraints, for positions received from 

DOs with reason codes 10, 30, 200, and 

600, except those with reason codes 10, 

20, 200, 201, 260, 270, 280, or 290,’’ and 

(ii) the row for Activate Indicator 5 as 

follows: ‘‘Turnaround securities 

positions, regardless of Memo 

Segregation constraints, for positions 

received from: All DOs, except those 

with reason codes 20–29, 40–48, 99, 

201, 261–268, 270–278, 290, 291, 330– 

338, 340–348, 390, 610–619, 705–707 

and CNS receives from the ‘‘C’’ and ‘‘E’’ 

accounts except if the turnaround is a 

reason code 10, 20, 200, 201, 260, 270, 

280, or 290.’’ 

(7) In order to provide clarification 

around the payment order service and to 

differentiate between PPOs and SPOs on 

the one hand and SFT PD payment 

orders on the other hand, DTC is 

proposing to amend the ‘‘Payment 

Orders’’ section by: 

a. Amending the ‘‘About the Product’’ 

subsection to insert a general 

description of the payment order service 

that would state: ‘‘A payment order 

authorizes DTC to credit the payee 

Participant’s settlement account with 

the specified amount and to debit the 

payor Participant’s settlement account 

for the same amount. All payment 

orders must satisfy the payor 

Participant’s risk management controls 

before being processed.’’ 

b. Amending the ‘‘How the Product 

Works’’ subsection by (i) inserting 

‘‘Premium Payment Order (PPO) and 

Securities Payment Order (SPO)’’ as a 

new heading for the description of PPOs 

and SPOs, (ii) deleting the sentence 

‘‘Either type of payment order 

authorizes DTC to credit the payee 

Participant’s settlement account with 

the specified amount and to debit the 

payor Participant’s settlement account 

for the same amount,’’ from the first 

paragraph, (iii) changing a reference to 

‘‘the Payment Order Service’’ to ‘‘PPOs 

and SPOs,’’ (iv) inserting ‘‘SFT Price 

Differential (SFT PD) Payment Order’’ as 

a new heading, and (v) inserting the 

sentence ‘‘For a description of SFT Price 

Differential payment orders, please see 

NSCC Securities Financing Transactions 

(SFT) Service’’ under the SFT Price 

Differential Payment Order (SFT PD) 

heading. 

(8) In order to reflect that a Participant 

would not be able to use the ‘‘Pend 

Hold’’ function for a DVP to the NSCC 

SFT Account, DTC is proposing to insert 

‘‘with the exception of DOs to and from 

the NSCC SFT Account’’ into the 

description of Pend Hold function in the 

‘‘Pend Hold’’ subsection.28

(9) In Annex A, DTC is proposing to 

insert the following new reason codes 

into the ‘‘Memo Segregation 

Supplement/DO Reason Code 

Description Reference’’ section: 200 

(SFT Stock Loan) and 201 (SFT Stock 

Loan Return). These new settlement 

reason codes would be established at 

DTC to support on-leg and off-leg 

settlement of SFTs. 

C. Amendments to the Fee Guide 

Pursuant to the proposed rule change, 

DTC would amend the Fee Guide to 

insert an SFT Price Differential delivery 

or receipt fee of $0.005 per item 

delivered or received. 

Implementation Date 

DTC will implement the proposed 

changes when DTC and NSCC receive 

all necessary regulatory approvals for 

this proposed rule change and NSCC’s 

proposed rule changes. DTC will 

announce the implementation date of 

the proposed rule change in an 

Important Notice posted on its website. 

As proposed, a legend would be 

added to the Rules,29 Settlement Guide, 

and Fee Guide stating there are changes 

that have been approved but have not 

yet been implemented. The proposed 

legend also would include that the 

implementation date would be 

announced in an Important Notice to be 

issued by DTC. In addition, the 

proposed legend would state that the 

legend would automatically be removed 

upon the implementation of the 

proposed changes. 

2. Statutory Basis 

DTC believes that the proposed rule 

change is consistent with the 

requirements of the Act and the rules 

and regulations thereunder applicable to 

a registered clearing agency. 

Specifically, DTC believes that the 


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30 15 U.S.C. 78q–1(b)(3)(F). 

31 15 U.S.C. 78q–1(b)(3)(D). 

32 15 U.S.C. 78q–1(b)(3)(F). 

33 Id. 

34 15 U.S.C. 78q–1(b)(3)(D). 35See supra note 27. 

proposed rule change is consistent with 

Sections 17A(b)(3)(F) 30 and 

17A(b)(3)(D) of the Act 31 for the reasons 

described below. 

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

requires, in part, that the Rules be 

designed to promote the prompt and 

accurate clearance and settlement of 

securities transactions.32 DTC is 

proposing to expand the types of 

instructions that NSCC, as the Special 

Representative of a Participant that is 

also a member of NSCC, can submit to 

DTC on behalf of a Participant with 

respect to an Account of the Participant. 

As noted above, the NSCC Proposed 

Rules would provide that the 

submission of each SFT to NSCC by the 

Approved SFT Submitter on behalf of 

the NSCC SFT Counterparties would 

constitute an authorization to NSCC by 

the NSCC SFT Counterparties for NSCC 

to give instructions regarding the SFT to 

DTC in respect of the relevant 

Participant Accounts of the NSCC SFT 

Counterparties at DTC. The proposed 

rule change would provide a basis for 

DTC to accept and rely on those NSCC 

instructions. Specifically, DTC would 

amend Rule 6 to provide for the 

additional authority of NSCC, as the 

Special Representative of a Participant, 

to submit DVP instructions and SFT PD 

payment orders to DTC, on behalf of 

Participant, from the Account of the 

Participant to the NSCC SFT Account. 

By providing NSCC with the authority 

to submit these instructions on behalf of 

a Participant, the proposed rule change 

supports the efficient settlement of 

cleared SFTs, thereby promoting the 

prompt and accurate clearance and 

settlement of securities transactions, 

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

the Act, cited above. 

Pursuant to the proposed rule change, 

DTC would establish the SFT PD 

payment order, which would be a 

payment order for NSCC to instruct 

DTC, on behalf of Participants that are 

NSCC SFT Counterparties, as well as on 

its own behalf, to credit and debit funds 

between the NSCC SFT Account and the 

Accounts of the Participants in 

connection with SFT activity at NSCC. 

By establishing this new type of 

payment order that would utilize the 

efficiency of the DTC payment order 

service to settle payments relating to 

cleared SFTs, the proposed rule change 

is designed to promote the prompt and 

accurate clearance and settlement of 

payment obligations relating to 

securities transactions, consistent with 

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

above. 

The proposed rule change would also 

apply a modified look-ahead process to 

the new NSCC SFT Account. As 

discussed above, DTC would use 

modified look-ahead processing in an 

effort to (i) ensure that there would not 

be any net settlement obligation against 

the NSCC SFT Account and (ii) prevent 

transaction blockage that could occur 

from unsatisfied risk management 

controls on the NSCC SFT Account. By 

applying a modified look-ahead to the 

new NSCC SFT Account, DTC believes 

that the proposed rule change is 

designed to promote efficient processing 

of DVP and SFT PD transactions relating 

to cleared SFTs. In this way, DTC 

believes that the proposed rule change 

would promote the prompt and accurate 

clearance and settlement of securities 

transactions, consistent with Section 

17A(b)(3)(F) of the Act, cited above. 

DTC also believes that the proposed 

rule change to make conforming and 

technical changes to the Rules and the 

Settlement Guide would promote the 

prompt and accurate clearance and 

settlement of securities transactions. 

DTC believes that the proposed 

conforming and technical changes 

would help ensure consistency in the 

Rules and the Settlement Guide and 

help ensure that the Rules and the 

Settlement Guide remain clear and 

accurate. Having clear and accurate 

Rules and Settlement Guide would help 

Participants to better understand their 

rights and obligations regarding DTC 

settlement services in connection with 

the NSCC SFT Service. DTC believes 

that when Participants better 

understand their rights and obligations 

regarding DTC settlement services, they 

can act in accordance with the Rules 

and Procedures. DTC believes that better 

enabling Participants to comply with 

the Rules and the Settlement Guide 

would promote the prompt and accurate 

clearance and settlement of securities 

transactions. As such, DTC believes the 

proposed rule change to make 

conforming and technical changes is 

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

the Act.33

Section 17A(b)(3)(D) of the Act 

requires, inter alia, that the Rules 

provide for the equitable allocation of 

reasonable dues, fees, and other charges 

among Participants.34 Pursuant to the 

proposed rule change, DTC would 

establish a fee of $0.005 per item 

delivered or received, which would be 

charged to the payor and the payee of 

an SFT PD payment order. For the 

reasons set forth below, DTC believes 

that the proposed fee for SFT PD 

payment orders would provide for the 

equitable allocation of reasonable dues, 

fees, and other charges among 

Participants. First, DTC believes that the 

proposed fee of $0.005 is reasonable. 

DTC recognizes that the fee for SFT PD 

orders would be significantly less than 

the $0.10 fee for SPOs, which are used 

by Participants in connection with 

bilateral stock loan transactions. DTC is 

proposing to establish this lower fee for 

SFT PD payment orders because settling 

payment obligations for cleared SFTs 

would require a higher volume of 

payment orders than would otherwise 

be required for uncleared SFTs. More 

specifically, pursuant to the NSCC 

Proposed Rules, NSCC SFT 

Counterparties would pay and collect 

Price Differentials at the individual 

transaction level. In the bilateral world, 

mark-to-market payments and 

collections on securities lending 

transactions are typically done at the 

CUSIP level via SPOs, inclusive of all 

open securities lending transactions of a 

given participant. Accordingly, it is 

likely that there would be more SFT PD 

payment orders processed by DTC in 

connection with SFTs than the amount 

of SPOs DTC would have otherwise 

processed if those SFTs were bilateral, 

non-cleared securities lending 

transactions. Therefore, as an initial 

matter, DTC is proposing to charge the 

lower fee $0.005 for SFT PD payment 

orders in an effort to maintain cost 

efficiency for both the cleared SFT 

activity and the uncleared securities 

financing transactions of market 

participants. As noted above,35 due to 

the lack of history for cleared SFT 

activity, DTC cannot estimate at this 

time the average number of SFT PD 

payment orders that would be processed 

and cannot, therefore, quantify a precise 

fee. However, DTC believes that the 

proposed fee of $0.005 is designed to 

take into account the imbalance 

between the amount of payment orders 

that would be required for cleared SFTs 

and the amount required for uncleared 

SFTs and is therefore reasonable. DTC 

also believes that the proposed fee 

would be equitably allocated because 

the fee would be charged to payors and 

payees per item delivered or received in 

accordance with their use of SFT PD 

payment orders and all such payors and 

payees would be treated equally with 

respect to the fee. Accordingly, DTC 

believes that the proposed rule change 

establishing a fee for the delivery and 

receipt of an SFT PD payment order is 

designed to provide for the equitable 


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36 15 U.S.C. 78q–1(b)(3)(I). 

37 Id. 

38 Id. 

39 Id. 

40 Id. 

41 15 U.S.C. 78q–1(b)(3)(I). 

42 Id. 

43 Id. 

allocation of reasonable dues, fees, and 

other charges among participants, 

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

the Act, cited above. 

(B) Clearing Agency’s Statement on 

Burden on Competition 

DTC does not believe that the 

proposed rule change to expand the 

types of instructions that NSCC, as 

Special Representative of a Participant 

that is a member of NSCC, can submit 

to DTC on behalf of the Participant with 

respect to an Account of the Participant 

would have an impact on competition.36

The proposed rule change is designed to 

support the use of the NSCC SFT 

Service by NSCC SFT Counterparties by 

providing a mechanism for NSCC to 

submit DVP instructions and SFT PD 

payment orders to DTC, on behalf of a 

Participant that is an NSCC SFT 

Counterparty, for the settlement of the 

NSCC SFT Counterparty’s obligations 

relating to a cleared SFT. The proposed 

rule change would only affect 

Participants that are NSCC SFT 

Counterparties and would apply to all 

such Participants equally. Therefore, 

DTC believes that the proposed rule 

change to expand the types of 

instructions that NSCC, as the Special 

Representative of Participants that are 

also members of NSCC, can submit to 

DTC on behalf of a Participant with 

respect to an Account of the Participant 

would not have an impact on 

competition.37

DTC does not believe that the 

proposed rule change to provide for SFT 

PD payment orders and to establish a fee 

for SFT PD payment orders would have 

an impact on competition.38 As 

discussed above, an SFT PD payment 

order would provide Participants a way 

to utilize the efficiency of the DTC 

payment order service to settle 

payments relating to their cleared SFT 

activity. The establishment of the SFT 

PD payment order would only affect 

Participants that are NSCC SFT 

Counterparties and would apply to all 

such Participants equally. In addition, 

the proposed fee for SFT PD payment 

orders would be charged to payors and 

payees per their use of SFT PD payment 

orders and all such payors and payees 

would be treated equally with respect to 

the fee. Therefore, DTC believes that the 

proposed rule change to provide for SFT 

PD payment orders and to establish a fee 

for SFT PD payment orders would not 

have an impact on competition.39

DTC does not believe that the 

proposed rule changes to use modified 

look-ahead processing for transactions 

to and from the NSCC SFT Account 

would have an impact on competition.40

The proposed rule changes would apply 

to all DVP and SFT PD transactions to 

and from the NSCC SFT Account, and 

are designed to promote efficient 

processing of transactions relating to 

SFTs cleared by NSCC. The proposed 

rule change would only affect 

Participants that are NSCC SFT 

Counterparties and would apply to all 

such Participants equally. Therefore, 

DTC believes that the proposed rule 

change to use modified look-ahead 

processing for transactions to and from 

the NSCC SFT Account would not have 

an impact on competition.41

DTC does not believe that the 

proposed rule change to make 

conforming and technical changes to the 

Rules and the Settlement Guide would 

have an impact on competition.42

Having clear and accurate Rules and 

Settlement Guide would facilitate 

Participants’ understanding of the Rules 

and Settlement Guide and provide 

Participants with increased 

predictability and certainty regarding 

their obligations regarding DTC 

settlement services in connection with 

the NSCC SFT Service. Therefore, DTC 

believes that the proposed rule change 

to make conforming and technical 

changes to the Rules and the Settlement 

Guide would not have an impact on 

competition.43

(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 comments are 

cautioned that, according to Section IV 

(Solicitation of Comments) of the 

Exhibit 1A in the General Instructions to 

Form 19b–4, 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 

https://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 

tradingandmarkets@sec.gov or 202– 

551–5777. 

DTC reserves the right not to respond 

to any comments received. 

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–2021–014 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–2021–014. 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 


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44 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3 15 U.S.C. 78s(b)(3)(A)(iii). 

4 17 CFR 240.19b–4(f)(6). 

5Rule 5.6(c) defines a ‘‘Book Only’’ order as an 

order the System ranks and executes pursuant to 

Rule 5.32, subjects to the Price Adjust process 

pursuant to Rule 5.32, or cancels, as applicable (in 

accordance with User instructions), without routing 

away to another exchange. Users may designate 

bulk messages as Book Only as set forth in Rule 

5.5(c). 

6The term ‘‘bulk message’’ means a bid or offer 

included in a single electronic message a User 

submits with an M Capacity to the Exchange in 

which the User may enter, modify, or cancel up to 

an Exchange-specified number of bids and offers. A 

User may submit a bulk message through a bulk 

port as set forth in Rule 5.5(c)(3). The System 

handles a bulk message in the same manner as it 

handles an order or quote, unless the Rules specify 

otherwise. See Rule 1.1. 

7A ‘‘bulk port’’ is a dedicated logical port that 

provides Users with the ability to submit bulk 

messages, single orders, and auction responses, 

each subject to certain restrictions. See Rule 

5.5(c)(3). 

8To accommodate this change, the proposed rule 

change numbers the current introductory paragraph 

to Rule 5.32(b) as subparagraph (1) (some of which 

becomes subparagraph (A)) and makes 

nonsubstantive changes to reflect two 

subparagraphs to new subparagraph (1). 

9The Exchange notes that pursuant to Rule 

5.5(c)(3)(A), only appointed Market-Makers may 

submit such orders and bulk messages through a 

bulk port. 

10This is how these orders and messages are 

currently handled pursuant to Rule 5.32(b). 

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– 

2021–014 and should be submitted on 

or before September 1, 2021. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.44

Jill M. Peterson, 

Assistant Secretary. 

[FR Doc. 2021–17077 Filed 8–10–21; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–92574; File No. SR–C2– 

2021–011] 

Self-Regulatory Organizations; Cboe 

C2 Exchange, Inc.; Notice of Filing and 

Immediate Effectiveness of a Proposed 

Rule Change To Enhance and Clarify 

Its Price Adjust Process and Modify 

the Bulk Message Fat Finger Check 

August 5, 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 July 28, 

2021, Cboe C2 Exchange, Inc. 

(‘‘Exchange’’ or ‘‘C2’’) 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 Exchange. The 

Exchange filed the proposal as a ‘‘noncontroversial’’ proposed rule change 

pursuant to Section 19(b)(3)(A)(iii) of 

the Act 3 and Rule 19b–4(f)(6) 

thereunder.4 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 

Cboe C2 Exchange, Inc. (the 

‘‘Exchange’’ or ‘‘C2 Options’’) proposes 

to enhance and clarify its Price Adjust 

process and modify the bulk message fat 

finger check. The text of the proposed 

rule change is provided in Exhibit 5. 

The text of the proposed rule change 

is also available on the Exchange’s 

website (http://markets.cboe.com/us/ 

options/regulation/rule_filings/ctwo/), 

at the Exchange’s Office of the 

Secretary, and at the Commission’s 

Public Reference Room. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, the 

Exchange 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 

Exchange has prepared summaries, set 

forth in sections A, B, and C below, of 

the most significant aspects of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The Exchange proposes to enhance its 

Price Adjust (as defined below) process 

for certain Market-Maker interest— 

specifically Book Only 5 orders and bulk 

messages 6 submitted through bulk 

ports 7—and clarify other parts of that 

process, as well as modify the bulk 

message fat finger check. 

Rule 5.32(b) describes the Price 

Adjust process, which applies to an 

order unless a user enters instructions 

for the order to not be subject to the 

Price Adjust process. The System ranks 

and displays a buy (sell) order that at 

the time of entry would lock or cross a 

Protected Quotation of the Exchange or 

another exchange at one minimum price 

increment below (above) the current 

national best offer (‘‘NBO’’) (national 

best bid (‘‘NBB’’)) (‘‘Price Adjust’’). 

This Price Adjust process applies to 

Book Only orders and bulk messages 

submitted that are designated as Price 

Adjust (and not designated as Cancel 

Back). Separately, a Book Only order or 

bulk message bid or offer (or unexecuted 

portion) is rejected if submitted by a 

Market-Maker with an appointment in 

the class through a bulk port if it would 

execute against a resting offer or bid, 

respectively with a capacity of M. 

Therefore, if a Book Only bulk message 

bid of an appointed Market-Maker does 

not execute upon entry and would rest 

at the same price as an offer not 

represented by a capacity of M, that bid 

price would be adjusted and rest on the 

book at one minimum price variation 

below the offer. However, if the offer 

was represented by a capacity of M, the 

System would reject the bid since it may 

not execute against that resting offer. 

The proposed rule change amends the 

Price Adjust process so that an 

appointed Market-Maker’s Book Only 

bids and offers submitted through a bulk 

port may have the opportunity to rest on 

the book if they are submitted at the 

same price as the opposite side of the 

market when represented by MarketMaker interest. Specifically, the 

proposed rule change adds 

subparagraph (1)(B) to Rule 5.32(b),8

which states if the bid (offer) of a Book 

Only order or bulk message 9 submitted 

through a bulk port at the time of entry 

would lock or cross (1) a protected offer 

(bid) of another options exchange 10 or 

a resting offer (bid) with a Capacity of 


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