Document ID: SEC-2020-1867-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes:The Depository Trust Co.
Posted Date: 2020-11-19T05:00Z

[Federal Register Volume 85, Number 224 (Thursday, November 19, 2020)]
[Notices]
[Pages 73819-73822]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-25502]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-90415; File No. SR-DTC-2020-013]

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

November 13, 2020.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on November 12, 2020, The Depository Trust Company (``DTC'') filed with 
the Securities and Exchange Commission (``Commission'') the proposed 
rule change as described in Items I, II and III below, which Items have 
been prepared by the clearing agency. DTC filed the proposed rule 
change pursuant to Section 19(b)(3)(A) of the Act \3\ and Rule 19b-
4(f)(4) thereunder.\4\ The Commission is publishing this notice to 
solicit comments on the proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 15 U.S.C. 78s(b)(3)(A).
    \4\ 17 CFR 240.19b-4(f)(4).
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I. Clearing Agency's Statement of the Terms of Substance of the 
Proposed Rule Change

    The purpose of the proposed rule change \5\ is to amend the 
Reorganizations Guide to (1) establish November 16, 2020 as the date 
for the retirement of the Reorganization Inquiry for Participants 
(``RIPS'') \6\ function for mandatory corporate action events,\7\ and 
(2) make clarifying and technical changes, as more fully described 
below.
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    \5\ Each term not otherwise defined herein has its respective 
meaning as set forth in the Rules, By-Laws and Organization 
Certificate of DTC (the ``Rules'') and the Reorganizations Service 
Guide (``Reorganizations Guide''), available at http://www.dtcc.com/legal/rules-and-procedures.aspx.
    \6\ The RIPS function on the Participant Terminal System 
(``PTS'') is the functional equivalent of the Reorganizations and 
Redemptions function on the Participant Browser Service System 
(``PBS''). The PBS Reorganizations and Redemptions function will be 
retired concurrently with the RIPS function for mandatory 
reorganizations events. 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.
    \7\ RIPS will continue to be available for voluntary 
reorganizations events. See Important Notice 13116-20 (August 3, 
2020), available at https://www.dtcc.com/legal/important-notices.

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[[Page 73820]]

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 
Reorganizations Guide to (1) establish November 16, 2020 as the date 
for the retirement of the RIPS function for mandatory corporate action 
events, and (2) make clarifying and technical changes, as more fully 
described below.
(i) RIPS (Reorganization Inquiry for Participants) Retirement
    On May 21, 2019, DTC filed with the Commission a proposed rule 
change to, among other things, update its corporate action service by 
transitioning certain corporate action functions on PTS and PBS for the 
processing of Reorganizations to the Corporate Action Web (``CA Web'') 
\8\ system.\9\ The rule change provided that, at the conclusion of the 
pilot test phase in Q2 of 2019, Reorganizations activity within the 
ADJI (Adjustment Inquiries) function, the RIPS function for mandatory 
reorganizations, and the SDAR Dept. C (Reorg/Redemptions/Dividend 
Allocations) function would be retired from PTS/PBS and the equivalent 
functionality would only be available on CA Web.
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    \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).
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    Subsequent to the May 21, 2019 rule filing, DTC had received 
feedback from Participants indicating that they needed additional time 
to test the parallel RIPS functionality on CA Web, the 
``Reorganizations Announcements'' function. DTC postponed the 
retirement of the RIPS function for mandatory corporate actions events 
from PTS to an unspecified future date in order to provide Participants 
with the additional time for testing.\10\
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    \10\ See Securities Exchange Act Release No. 86255 (July 1, 
2019), 84 FR 32508 (July 8, 2019) (SR-DTC-2019-004).
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    DTC understands that the Participants have completed their testing. 
Thus, pursuant to this proposed rule change, DTC would retire the RIPS 
function for mandatory corporate actions events from PTS on November 
16, 2020. In addition, DTC would amend the Reorganizations Guide to 
reference the retirement and to remove references to RIPS for mandatory 
corporate actions events.
(ii) Clarifying and Technical Changes
    Pursuant to the proposed rule change, DTC would make other 
technical and clarifying changes to the Reorganizations Guide, as 
described below.
1. ``Important Legal Information'' Section
    Pursuant to the proposed rule change, DTC would update the 
copyright date from 2019 to 2020.
2. ``About Reorganization Services'' Section
    In the ``Preparing to Use the Services'' subsection, DTC is 
proposing to remove the chart of PTS/PBS functions that were retired in 
2019. These functions have since been replaced by CA Web functionality.
    In the ``How Reorganizations Work'' subsection, DTC is proposing to 
delete ``Participant Terminal System (PTS) functions'' and 
``Participant Browser Service (PBS)'' from the list of delivery 
mechanism that DTC uses to provide Participants with information 
pertaining to their entitlements. The PTS/PBS functions that had been 
used for this purpose were retired.
    In the ``Associated PTS/PBS and CA Web Functions'' subsection, DTC 
is proposing to delete the ART, POS, SDAR, ADJI rows from the table, as 
these functions were retired in 2019.\11\ In addition, DTC is proposing 
to delete the row for LENP, which was replaced by the Legal Notice 
System (LENS).\12\ Further, pursuant to the proposed rule change, DTC 
would delete the ``X'' in the Mand column for the RIPS row, to reflect 
the retirement of RIPS for mandatory reorganizations. DTC would also 
delete the ``X'' in the PXY column for RIPS because Proxy announcements 
are not viewed in RIPS, but rather are viewed in PTS PXY and announced 
in PTS PANS.
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    \11\ See Securities Exchange Act Release No. 85986 (May 31, 
2019), 84 FR 26466 (June 6, 2019) (SR-DTC-2019-003).
    \12\ See Important Notice 6525-10 (March 31, 2010), supra note 
7.
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3. ``Announcements'' Section
    In the ``How the Announcement Service Works'' subsection, DTC is 
proposing to update the final sentence in the subsection to reflect 
that announcement information is also delivered electronically via ISO 
20022 messaging.
    In the ``How to View Mandatory and Voluntary Reorganization 
Announcements'' subsection, DTC is proposing to amend the first 
sentence and insert a footnote to reflect that, after the RIPS function 
for mandatory reorganizations announcements is retired on November 16, 
2020, the RIPS function would only be available for voluntary 
reorganizations announcements.
4. ``Processing'' Section
    In the ``Mandatory Reorganizations'' subsection, in the ``Various 
Types of Mandatory Reorganizations'' table, DTC is proposing to edit 
the description for the Liquidation event by deleting ``securities and/
or.'' The reference to securities is incorrect because DTC does not 
distribute securities under a Liquidation event type. Securities are 
distributed under a plan of reorganization.
    In the ``Reorganization (RRG) Segregated Account'' subsection, for 
consistency, DTC is proposing to move the sentence ``Contra-CUSIP 
numbers are used to segregate your position (representing instructions 
submitted) for voluntary offers and put bond options.'' to the ``About 
Contra-CUSIPs'' subsection.
    In the ``About Contra-CUSIPs'' subsection, DTC is proposing to 
streamline the description of contra-CUSIPs to enhance readability, 
and, for accuracy, to update the description to reflect that a contra-
CUSIP contains the same first three digits of the issuer number 
assigned to the subject security. Further, DTC is proposing to simplify 
the description of a contra-CUSIP by removing text and examples that 
address the specific numerical construction of a contra-CUSIP. In 
addition to the three issuer digits, DTC generates the other digits of 
a contra-CUSIP on the basis of multiple factors, including, but not 
limited to, security characteristics, event types, and

[[Page 73821]]

currency. These other digits are used by DTC for internal tracking and 
accounting purposes and are not intended to provide information to 
Participants about the offer or event. The current language of the 
Reorganizations Guide does not reflect the full scope of the DTC 
process. In addition, because it is an internal DTC process for 
internal DTC use, DTC believes that Participants do not need, and may 
be confused by, information about how DTC generates the specific digits 
in a contra-CUSIP.
5. ``Instructions/Expirations'' Section
    In the second paragraph of the ``Accepting an ATOP-Eligible Offer'' 
subsection, DTC is proposing to insert ``ISO 20022'' in the list of 
interfaces through which a Participant can view a notice of a tender 
offer.-
    In the ``Submitting a Protect for an ATOP-Eligible Offer'' 
subsection, DTC is proposing to insert additional language into the 
Warning! paragraph to clarify that DTC will only accept cover of 
protect instructions outside of PTS PTOP or PBS Voluntary Tenders and 
Exchanges when the window for submitting instructions through PTS PTOP 
or PBS Voluntary Tenders and Exchanges has closed, and only if the 
Participant contacted the agent before the offer had actually expired. 
If the offer expired prior to the Participant contacting the agent, any 
agreements to handle the protect will be required to be completed 
outside DTC. Further, DTC is proposing to clarify that if the 
Participant contacts the agent before the actual expiration of the 
offer and the agent agrees to accept an email submission directly, the 
agent will notify DTC and the Participant should email a Protect 
Submission Form to DTC. Once the communication from both the agent and 
Participant has been received by DTC, with each having provided the 
appropriate indemnification language, DTC will then input the protect 
submission on behalf of the Participant.
    In the ``Submitting a Cover of Protect via PTS PTOP or PBS 
Voluntary Tenders and Exchanges for an ATOP-Eligible Offer'' 
subsection, DTC is proposing to insert additional language into the 
Warning! paragraph to clarify that DTC will not accept cover of protect 
instructions outside of PTS PTOP or PBS Voluntary Tenders and Exchanges 
(i) if the window for submitting instructions through PTS PTOP or PBS 
Voluntary Tenders and Exchanges is still open, or (ii) if the original 
protect was not accepted in PTS PTOP or PBS Voluntary Tenders and 
Exchanges. In the paragraph below the Warning! paragraph, DTC is 
proposing to insert ``ISO 20022 message'' in the lists of interfaces 
through which a Participant can view the notice of a tender offer.
    In the ``Submitting a Cover of Protect via PTS PTOP or PBS 
Voluntary Tenders and Exchanges on Behalf of Another Participant'' 
subsection, DTC is proposing to insert additional language into the 
Warning! paragraph to clarify that in order for one Participant to 
cover a protect on behalf of a second Participant, the second 
Participant must have either (i) submitted its protect via PTS/PBS, or 
(ii) submitted a protect to the agent via email that was subsequently 
communicated to DTC and input into PTS PTOP by DTC.
    In the ``Procedures for Submitting Instructions Outside of PTS/
PBS''/''Submitting the Instruction'' subsection, in the fifth Warning! 
paragraph, DTC is proposing to insert ``CA Web and ISO 20022 messages'' 
as interfaces through which a Participant can view information about a 
tender offer.
2. Statutory Basis
    Section 17A(b)(3)(F) of the Act requires, inter alia, that the 
Rules be designed to promote the prompt and accurate clearance and 
settlement of securities transactions.\13\
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    \13\ 15 U.S.C. 78q-1(b)(3)(F).
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    DTC believes that the proposed rule change with respect to 
establishing November 16, 2020 as the date for the retirement of the 
RIPS function for mandatory corporate actions events is consistent with 
Section 17(A)(b)(3)(F) of the Act referenced above. By requiring 
Participants to utilize the more flexible and robust CA Web interface, 
DTC would be promoting more efficient access to reorganization services 
and a broader view of a reorganization event for Participants. 
Therefore, DTC believes that the proposed rule change would promote the 
prompt and accurate clearance and settlement of securities transactions 
relating to mandatory corporate actions events, consistent with Section 
17A(b)(3)(F) of the Act, cited above.
    DTC believes that the proposed rule change to amend the 
Reorganizations Guide to make technical and clarifying changes is 
consistent with Section 17(A)(b)(3)(F) of the Act referenced above 
because it would enhance the clarity and transparency of the 
Reorganizations Guide. By enhancing the clarity and transparency of the 
Reorganizations Guide, the proposed rule change would allow 
Participants to more efficiently and effectively conduct their business 
in connection with processing reorganization events and settling 
related securities transactions. Therefore, 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, cited 
above.

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

    DTC believes that the proposed rule change with respect to amending 
the Reorganizations Guide to establish November 16, 2020 as the date 
for the retirement of the RIPS function for mandatory corporate actions 
events would not have any impact on competition. As discussed above, 
DTC had originally postponed the retirement date to allow Participants 
additional time to test the parallel functionality on CA Web. As 
Participants' testing is now complete, the retirement of RIPS for 
mandatory corporate actions, which applies to all Participants equally, 
can proceed. Therefore, DTC believes that the proposed rule change with 
respect to amending the Reorganizations Guide to establish November 16, 
2020 as the date for the retirement of the RIPS function for mandatory 
corporate actions events would not have any impact on competition.\14\
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    \14\ 15 U.S.C. 78q-1(b)(3)(I).
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    DTC believes that the proposed rule change to amend the 
Reorganizations Guide to make technical and clarifying changes would 
not have any impact on competition because it merely would enhance the 
clarity and transparency of the Reorganizations Guide, and therefore 
would not affect the rights and obligations of any party.

(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) \15\ of the Act and paragraph (f) \16\ of Rule 19b-4 
thereunder. At any time within 60 days of the filing of the proposed 
rule change, the Commission summarily may temporarily suspend

[[Page 73822]]

such rule change if it appears to the Commission that such action is 
necessary or appropriate in the public interest, for the protection of 
investors, or otherwise in furtherance of the purposes of the Act.
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    \15\ 15 U.S.C. 78s(b)(3)(A).
    \16\ 17 CFR 240.19b-4(f).
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IV. Solicitation of Comments

    Interested persons are invited to submit written data, views and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to rule-comments@sec.gov. Please include 
File Number SR-DTC-2020-013 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-2020-013. 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-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-2020-013 and should be submitted on 
or before December 10, 2020.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\17\
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    \17\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-25502 Filed 11-18-20; 8:45 am]
BILLING CODE 8011-01-P