Document ID: SEC-2019-0958-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: The Depository Trust Co.
Posted Date: 2019-07-08T04:00Z

[Federal Register Volume 84, Number 130 (Monday, July 8, 2019)]
[Notices]
[Pages 32508-32510]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-14400]

-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-86255; File No. SR-DTC-2019-004]

Self-Regulatory Organizations; The Depository Trust Company; 
Notice of Filing and Immediate Effectiveness of a Proposed Rule Change 
To Amend the Reorganizations Service Guide

July 1, 2019.
    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 26, 2019, The Depository Trust Company (``DTC'') filed with the 
Securities and Exchange Commission (``Commission'') the proposed rule 
change as described in Items I, II and III below, which Items have been 
prepared by the clearing agency. DTC filed the proposed rule change 
pursuant to Section 19(b)(3)(A) of the Act \3\ and Rule 19b-4(f)(4) 
thereunder.\4\ The Commission is publishing this notice to solicit 
comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 15 U.S.C. 78s(b)(3)(A).
    \4\ 17 CFR 240.19b-4(f)(4).
---------------------------------------------------------------------------

I. Clearing Agency's Statement of the Terms of Substance of the 
Proposed Rule Change

    The proposed rule change by DTC would revise the Reorganizations 
Service Guide (``Guide'') \5\ to postpone the date for the retirement 
of the RIPS (Reorganization Inquiry for Participants) function on the 
Participant Terminal System (``PTS'') and Participant Browser Service 
(``PBS''),\6\ as more fully described below.
---------------------------------------------------------------------------

    \5\ Each capitalized term not otherwise defined herein has its 
respective meaning as set forth in the Rules, By-Laws and 
Organization Certificate of DTC (``DTC Rules'') and in the Guide, 
available at http://www.dtcc.com/legal/rules-and-procedures.aspx.
    \6\ PTS and PBS are user interfaces for DTC's Settlement and 
Asset Services functions. PTS is mainframe-based and PBS is web-
based with a mainframe back-end. Participants may use either PTS or 
PBS, as they are functionally equivalent. References to a particular 
PTS function in this rule filing include the corresponding PBS 
function.
---------------------------------------------------------------------------

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 purpose of the proposed rule change is to amend the Guide to 
postpone the date for the retirement of the RIPS function on PTS and 
PBS, as more fully described below.
Background
    On May 21, 2019, DTC filed with the Commission a proposed rule 
change to, among other things, update its corporate action service by 
transitioning corporate action functions on PTS and PBS for the 
processing of reorganizations (``Reorganizations'') \7\ to its 
Corporate Action Web (``CA Web'') \8\ system.\9\ The

[[Page 32509]]

rule change provided that, at the conclusion of the pilot test phase in 
Q2 of 2019, Reorganizations activity within the ADJI (Adjustment 
Inquiries), RIPS, and SDAR Dept. C \10\ (Same Day Allocation Reporting) 
functions \11\ will be retired from PTS/PBS and the functionality will 
only be available on CA Web. DTC has been communicating this change to 
Participants through CA Web review sessions, Important Notices, and 
industry outreach.\12\
---------------------------------------------------------------------------

    \7\ DTC offers an array of services for processing corporate 
action events. The services fall into three categories: (i) 
Distributions, such as cash and stock dividends, principal and 
interest, and capital gain distributions; (ii) redemptions, such as 
full and partial calls, final paydowns, and maturities; and (iii) 
Reorganizations, which include both mandatory and voluntary 
reorganizations such as exchange offers, conversions, Dutch 
auctions, mergers, puts, reverse stock splits, tender offers, and 
warrant exercises.
    \8\ In PTS/PBS, corporate actions are announced using DTC 
proprietary codes to signify event types. CA Web replaces DTC's 
proprietary codes with market standard language. For example, a cash 
dividend payment that PTS/PBS identifies as a ``08'' function code 
is identified in CA Web as a ``Cash Dividend'' event. Additionally, 
CA Web incorporates the entire lifecycle of an event into one 
platform with a unique corporate action identifier that follows the 
event through its lifecycle. CA Web gives Participants the ability 
to customize screen displays and offers flexible methods for event 
search, neither of which is available in the PTS/PBS systems.
    \9\ See Securities Exchange Act Release No. 85986 (May 31, 
2019), 84 FR 26466 (June 6, 2019) (SR-DTC-2019-003).
    \10\ The initial rule filing on May 21, 2019 inadvertently 
referred to this function as SDAR Dept ``R'', a related element of 
the SDAR function that had already been retired. The Guide and 
Participant outreach refer to the correct element of the function, 
SDAR Dept ``C''.
    \11\ See PTS/PBS Function Guides, available at http://www.dtcc.com/settlement-and-asset-services/edl-ptspbs-function-guides.
    \12\ See Important Notice B10792-19 (March 14, 2019); Important 
Notice B8760-18 (June 7, 2018), Important Notice B9072-18 (July 9, 
2018) and Important Notice B9122-18 (July 26, 2018), available at 
http://www.dtcc.com/legal/important-notices; and DTC Corporate 
Actions Product Update to SIFMA (October 11, 2018), available at 
https://www.sifma.org/wp-content/uploads/2017/05/SIFMA-CAS_DTCC-Corporate-Actions-Update_2018.pdf.
---------------------------------------------------------------------------

Proposed Rule Change
    Subsequent to the May 21, 2019 rule filing, DTC began to receive 
feedback from Participants indicating that they need additional time to 
test the parallel RIPS functionality on CA Web, the ``Reorganizations 
Announcements'' function, before the retirement of the RIPS function on 
PTS/PBS.
    In response to this feedback, with this proposed rule change, DTC 
would postpone the date for the retirement of the RIPS function on PTS/
PBS. DTC will continue the pilot test phase in which the RIPS function 
would continue to be available on PTS/PBS, and its parallel 
Reorganizations Announcements function would continue to be available 
on CA Web. A new date for the retirement of the RIPS function from PTS/
PBS would be announced, subject to a future proposed rule change and 
Important Notice issued by DTC. The proposed rule change would not 
impact the retirement of PTS/PBS function ADJI and SDAR Dept. C.
    Pursuant to the proposed rule change, DTC would amend the Guide to 
reflect the postponement of the RIPS function from PTS/PBS.
2. Statutory Basis
    DTC believes that this proposal is consistent with the requirements 
of the Act and the rules and regulations thereunder applicable to a 
registered clearing agency. Specifically, DTC believes that this 
proposal is consistent with Section 17A(b)(3)(F) of the Act,\13\ for 
the reasons described below.
---------------------------------------------------------------------------

    \13\ 15 U.S.C. 78q-1(b)(3)(F).
---------------------------------------------------------------------------

    Section 17(A)(b)(3)(F) of the Act, requires, inter alia, that DTC 
Rules be designed to promote the prompt and accurate clearance and 
settlement of securities transactions.\14\ The proposed rule change 
would postpone the date for the retirement of the RIPS function from 
PTS/PBS until further notice. By affording Participants additional time 
to test the Reorganizations Announcements function on CA Web prior to 
the retirement of RIPS, the proposed rule change would provide 
Participants the opportunity to minimize potential business 
interruption in their processing of reorganization events when the RIPS 
function is retired. Therefore, by providing Participants with the 
opportunity to minimize potential business disruption in this manner, 
DTC believes that the proposed rule change is designed to promote the 
prompt and accurate clearance and settlement of securities transactions 
related to Reorganizations, consistent with Section 17A(b)(3)(F) of the 
Act.\15\
---------------------------------------------------------------------------

    \14\ Id.
    \15\ Id.
---------------------------------------------------------------------------

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

    DTC believes that the proposed rule change with respect to 
postponing the date for the retirement of the RIPS function from PTS/
PBS may impact competition by potentially reducing business 
interruption in Participants' processing of reorganization events.\16\ 
The proposed rule change would afford Participants additional time to 
test the Reorganizations Announcements function on CA Web prior to the 
retirement of RIPS, thereby providing Participants the opportunity to 
minimize potential business interruption in their processing of 
reorganization events when the RIPS function is retired. Therefore, DTC 
believes that the proposed rule change with respect to postponing the 
date for the retirement of the RIPS function from PTS/PBS would not 
impose a burden on competition, but may promote competition.\17\
---------------------------------------------------------------------------

    \16\ 15 U.S.C. 78q-1(b)(3)(I).
    \17\ Id.
---------------------------------------------------------------------------

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

    Written comments relating to the proposed rule change have not been 
solicited or received. DTC will notify the Commission of any written 
comments received by DTC.

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

    The foregoing rule change has become effective pursuant to Section 
19(b)(3)(A) of the Act \18\ and paragraph (f) of Rule 19b-4 
thereunder.\19\ At any time within 60 days of the filing of the 
proposed rule change, the Commission summarily may temporarily suspend 
such rule change if it appears to the Commission that such action is 
necessary or appropriate in the public interest, for the protection of 
investors, or otherwise in furtherance of the purposes of the Act.
---------------------------------------------------------------------------

    \18\ 15 U.S.C. 78s(b)(3)(A).
    \19\ 17 CFR 240.19b-4(f).
---------------------------------------------------------------------------

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-2019-004 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-2019-004. 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,

[[Page 32510]]

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://www.dtcc.com/legal/sec-rule-filings.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-2019-004 and should be submitted on 
or before July 29, 2019.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\20\
---------------------------------------------------------------------------

    \20\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2019-14400 Filed 7-5-19; 8:45 am]
 BILLING CODE 8011-01-P