Document ID: SEC-2016-0032-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Depository Trust Co.
Posted Date: 2016-01-07T05:00Z

[Federal Register Volume 81, Number 4 (Thursday, January 7, 2016)]
[Notices]
[Pages 826-828]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-33310]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-76811; File No. SR-DTC-2015-013]

Self-Regulatory Organizations; The Depository Trust Company; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change 
Postponing the Date for Retirement of Computer to Computer Facility 
Corporate Action Announcement Files, and Implementing a Fee Associated 
With Its Use

December 31, 2015.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on December 24, 2015, 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 DTC. DTC filed the proposed rule change pursuant to 
Section 19(b)(3)(A) of the Act \3\ and Rules 19b-4(f)(2) and (f)(4) 
thereunder.\4\ The proposed rule change was effective upon filing with 
the Commission. 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)(2) and (f)(4).
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I. Clearing Agency's Statement of the Terms of Substance of the 
Proposed Rule Change

    The proposed rule change consists of (i) the postponement of the 
date for the retirement of DTC's proprietary computer to computer 
facility (``CCF'') files for corporate action announcements (``CCF 
Announcement Files'') until further notice; and (ii) the implementation 
of a fee associated with the use of CCF Announcement Files.

II. Clearing Agency's Statement of the Purpose of, and Statutory Basis 
for, the Proposed Rule Change

    In its filing with the Commission, DTC 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. DTC 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 (i) postpone the date for the 
retirement of CCF Announcement Files until further notice, and (ii) 
implement a fee associated with the use of CCF Announcement Files, as 
described below.\5\
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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''), available at http://www.dtcc.com/legal/rules-and-procedures.aspx and the Guide to the 
2015 DTC Fee Schedule (``Fee Schedule''), available at http://
www.dtcc.com/~/media/Files/Downloads/legal/fee-guides/
dtcfeeguide.pdf?la=en.
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Background
    DTC handles essential aspects of processing corporate action \6\ 
events by routinely receiving and distributing information to its 
Participants using CCF Announcement Files. There are three corporate 
action event groups for which CCF files are available: Distributions, 
Redemptions, and Reorganizations. Participants subscribe to the CCF 
files for each event group separately.
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    \6\ Corporate actions processed by DTC include but are not 
limited to the restructuring of DTC-eligible securities resulting 
from mergers, acquisitions, and reverse splits. DTC performs 
corporate actions processing through its Mandatory and Voluntary 
Reorganization Services. See DTC Operational Arrangements (``OA''), 
available at http://www.dtcc.com/~/media/Files/Downloads/legal/
issue-eligibility/eligibility/operational-arrangements.pdf.
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Postponement of the Date for Retirement
    Since 2011, DTC has informed Participants that CCF Announcement 
Files will be retired in 2015, and has been supporting Participant 
efforts to migrate to the ISO 20022 standard by providing a robust 
online learning center, hosting ISO specific monthly

[[Page 827]]

calls and offering a dedicated email box for client inquiries.\7\
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    \7\ See Securities Exchange Act Release No. 63886 (February 10, 
2011), 76 FR 9070 (February 16, 2011) (File No. SR-DTC-2011-02); 
Securities Exchange Act Release No. 68114 (October 26, 2012), 77 FR 
66497 (November 5, 2011) (File No. SR-DTC-2012-08).
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    The use of the ISO 20022 standard reduces risk and improves 
transparency in the announcement and processing of corporate actions. 
ISO 20022 is a standard that provides the financial industry with a 
common language to capture business transactions and associated message 
flows. ISO 20022 is a business-model-based standard for the development 
of messages for the international financial services industry and can 
support different messaging syntaxes, including XML. In contrast, CCF 
files use proprietary function and activity codes which differ from the 
market standard codes. With the ISO 20022 standard, corporate action 
announcements are identified by a unique corporate action ID and are 
event based. ISO 20022 standard messages provide more data elements 
than the CCF files and they are available in near real-time throughout 
the day.
    Certain Participants nevertheless have inquired whether DTC could 
continue supporting CCF Announcement Files while they prepare to 
transition to the ISO 20022 standard, which is provided to Participants 
free of charge. Some Participants suggested that they were willing to 
pay for continued use of CCF Announcement Files while they prepare to 
migrate to ISO 20022 standard.
    In response to these Participant requests, with this proposed rule 
change, DTC would postpone the date for the retirement of CCF 
Announcement Files and implement a fee for a Participant's continued 
receipt of the CCF Announcement Files. A new retirement date would be 
announced, subject to a future proposed rule change and Important 
Notice issued by DTC.
Implementation of a CCF File Fee
    To encourage full adoption of the ISO 20022 standard, DTC is 
proposing to implement a fee for each event group of CCF Announcement 
Files that a Participant receives (the ``CCF File Fee''). The CCF File 
Fee would be $50,000 per event group, per twelve month period as set 
forth below for each event group (the ``Fee Period''). The CCF File Fee 
would be charged to the Account of the Participant, upon the 
Participant's first receipt of CCF Announcement Files for a particular 
event group during the Fee Period. The CCF File Fee would cover all CCF 
Announcement Files within that event group during the Fee Period. In 
addition, once a Participant that is part of an Affiliated Family \8\ 
is charged the CCF File Fee for a particular event group, the other 
Participants that are part of the Affiliated Family will not be charged 
the CCF File Fee for such event group during that Fee Period. The 
amount of the CCF File Fee is based on DTC's analysis of industry-
standard pricing for equivalent data.
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    \8\ An Affiliated Family means each Participant that controls or 
is controlled by another Participant and each Participant that is 
under the common control of any Person. For purposes of this 
definition, ``control'' means the direct or indirect ownership of 
more than 50% of the voting securities or other voting interests of 
any Person. Rule 1, supra note 1 [sic].
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    DTC has communicated with its Participants about the CCF File Fee 
through several outreach efforts, including Important Notices \9\ and 
customer surveys regarding the December 2015 date and the amount of the 
CCF File Fee. DTC did not receive any objections during its outreach.
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    \9\ See, e.g., Important Notice B#0354-15, available at http://
dtcc.com/~/media/Files/pdf/2015/3/25/0354-15.pdf; Important Notice 
B# 1946-15, available at http://www.dtcc.com/globals/pdfs/2015/october/22/1946-15.
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Implementation Schedule
    DTC would implement the CFF File Fee in three phases, divided by 
event group. The timeline for the implementation of the fees would be 
as follows:
     CCF Announcement Files for the Distributions event group 
would be subject to a CCF File Fee beginning on January 1, 2016. The 
Fee Period would run from January through December.\10\
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    \10\ On December 30, 2015, staff of the Commission's Division of 
Trading and Markets had a conversation with DTC's legal counsel to 
confirm that the Fee Period for the Distributions event group would 
run from January 1 through December 31, as provided in the proposed 
rule text.
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     CCF Announcement Files for the Redemptions event group 
would be subject to a CCF File Fee beginning on July 1, 2016. The Fee 
Period would run from July through June.\11\
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    \11\ On December 30, 2015, staff of the Commission's Division of 
Trading and Markets had a conversation with DTC's legal counsel to 
confirm that the Fee Period for the Redemptions event group would 
run from July 1 through June 30, as provided in the proposed rule 
text.
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     CCF Announcement Files for the Reorganizations event group 
would be subject to a CCF File Fee at a future date to be announced by 
Important Notice. The Fee Period would be announced by Important 
Notice.
Implementation Date
    The proposed rule change would take effect on January 1, 2016.
2. Statutory Basis
    Section 17(A)(b)(3)(F) of the Act, requires, inter alia, that DTC's 
Rules be designed to promote the prompt and accurate clearance and 
settlement of securities transactions.\12\ By postponing the date for 
the retirement of CCF Announcement Files until further notice, the 
proposed rule change would allow Participants to minimize potential 
business interruption by undertaking an orderly and organized migration 
from CCF files to the ISO 20022 standard. The proposed rule change 
thereby facilitates the transition to the ISO 20022 standard without 
disrupting the announcement of corporate actions and the clearance and 
settlement activities related thereto. In addition, by revising the Fee 
Schedule to implement a fee for Participants that continue to receive 
the CCF Announcement Files, the proposed rule change encourages 
efficiencies in communicating information about corporate action events 
and in Participants' transition to the industry-standard ISO 20022. 
Therefore, DTC believes that the proposed rule change would promote the 
prompt and accurate clearance and settlement of securities transactions 
and is consistent with the requirements of the Act, in particular 
Section 17(A)(b)(3)(F) of the Act, cited above.
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    \12\ 15 U.S.C. 78q-1(b)(3)(F).
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    Section 17A(b)(3)(D) of the Act requires that DTC's Rules provide 
for the equitable allocation of reasonable dues, fees, and other 
charges among its Participants.\13\ DTC believes that the proposed fee 
would be consistent with this provision because it would apply equally 
in accordance with Participant use of the CCF Announcement Files, and 
is therefore equitable, and is based on industry-standard pricing, and 
therefore, reasonable.
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    \13\ 15 U.S.C. 78q-1(b)(3)(D).
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(B) Clearing Agency's Statement on Burden on Competition

    DTC does not believe that the proposed rule change would have any 
impact, or impose any burden, on competition, because the postponement 
of the date for the retirement of CCF Announcement Files would apply 
equally to all Participants, and the proposed fee would apply equally 
in accordance with Participant use of the CCF Announcement Files.

(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

[[Page 828]]

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 \14\ and subparagraphs (f)(2) and (f)(4) of Rule 
19b-4 thereunder.\15\ At any time within 60 days of the filing of the 
proposed rule change, the Commission summarily may temporarily suspend 
such rule change if it appears to the Commission that such action is 
necessary or appropriate in the public interest, for the protection of 
investors, or otherwise in furtherance of the purposes of the Act.
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    \14\ 15 U.S.C. 78s(b)(3)(A).
    \15\ 17 CFR 240.19b-4(f)(2) and (f)(4).
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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-2015-013 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities 
and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.

All submissions should refer to File Number SR-DTC-2015-013. 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 Web site (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 Web site 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 
Web site (http://dtcc.com/legal/sec-rule-filings.aspx). All comments 
received will be posted without change; the Commission does not edit 
personal identifying information from submissions. You should submit 
only information that you wish to make available publicly. All 
submissions should refer to File Number SR-DTC-2015-013 and should be 
submitted on or before January 28, 2016.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\16\
Jill M. Peterson,
Assistant Secretary.
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    \16\ 17 CFR 200.30-3(a)(12).
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[FR Doc. 2015-33310 Filed 1-6-16; 8:45 am]
 BILLING CODE 8011-01-P