Document ID: SEC-2023-1436-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: The Depository Trust Co.
Posted Date: 2023-12-13T05:00Z

[Federal Register Volume 88, Number 238 (Wednesday, December 13, 2023)]
[Notices]
[Pages 86430-86432]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-27267]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-99108; File No. SR-DTC-2023-012]

Self-Regulatory Organizations; The Depository Trust Company; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Amend the Clearing Agency Risk Management Framework

December 7, 2023.
    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 1, 2023, 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 proposed rule change of The Depository Trust Company (``DTC'') 
is provided hereto [sic] as Exhibit 5 and amends the Clearing Agency 
Risk Management Framework (``Risk Management Framework'', or 
``Framework'') of DTC and its affiliates, Fixed Income Clearing 
Corporation (``FICC'') and National Securities Clearing Corporation 
(``NSCC,'' and together with FICC and DTC, the ``Clearing 
Agencies'').\5\ The proposed rule change would amend the Risk 
Management Framework to clarify and revise the descriptions of certain 
matters within the Framework, as further described below. The proposed 
changes would update and clarify the Risk Management Framework but do 
not reflect changes to how the Clearing Agencies comply with the 
applicable requirements of Rule 17Ad-22(e), as described in greater 
detail below.
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    \5\ See Securities Exchange Act Release Nos. 81635 (September 
15, 2017), 82 FR 44224 (September 21, 2017) (SR-DTC-2017-013; SR-
FICC-2017-016; SR-NSCC-2017-012) (``Initial Filing'') and Securities 
Exchange Act Release Nos. 89271 (July 09, 2020), 85 FR 42933 (July 
15, 2020) (SR-NSCC-2020-012); Securities Exchange Act Release No. 
89269 (July 09, 2020), 85 FR 42954 (July 15, 2020) (SR-DTC-2020-
009); and Securities Exchange Act Release No. 89270 (July 09, 2020), 
85 FR 42927 (July 15, 2020) (SR-FICC-2020-007) (together with the 
Initial Filing, the ``Framework Filings'')
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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 Clearing Agencies adopted the Risk Management Framework \6\ to 
provide an outline for how each of the Clearing Agencies (i) maintains 
a well-founded, clear, transparent and enforceable legal basis for each 
aspect of its activities; (ii) comprehensively manages legal, credit, 
liquidity, operational, general business, investment, custody, and 
other risks that arise in or are borne by it; (iii) identifies, 
monitors, and manages risks related to links it establishes with one or 
more clearing agencies, financial market utilities, or trading markets; 
(iv) meets the requirements of its participants and the markets it 
serves efficiently and effectively; (v) uses, or at a minimum 
accommodates, relevant internationally accepted communication 
procedures and standards in order to facilitate efficient payment, 
clearing and settlement; and (vi) publicly discloses certain 
information, including market data. In this way, the Risk Management 
Framework currently supports the Clearing Agencies' compliance with 
Rules 17Ad-22(e)(1), (3), (20), (21), (22) and (23) of the 
Standards,\7\ as described in the Framework Filings. In addition to 
setting forth the way each of the Clearing Agencies addresses these 
requirements, the Risk Management Framework also contains a section 
titled ``Framework Ownership and Change Management'' that, among other 
matters, describes the Framework ownership and the required governance 
process for review and approval of changes to the Framework. In 
connection with the annual review and approval of the Framework by the 
Board of Directors of NSCC, DTC and FICC (each a ``Board'' and 
collectively, the ``Boards''), the Clearing Agencies are proposing to 
make certain revisions to the Framework.
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    \6\ Supra note 5.
    \7\ 17 CFR 240.17Ad-22(e)(1), (3), (20), (21), (22) and (23).
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    The proposed changes would clarify and enhance the descriptions in 
the Risk Management Framework, for example, (i) clarify the cadence of 
publication of disclosure frameworks; (ii) clarify the description of 
the Clearing Agencies recovery and wind-down processes and procedures; 
and (iii) make other non-substantive clarifying and clean-up changes to 
the Framework. Each of these categories of changes are discussed in 
further detail below.
i. Proposed Amendment To Clarify the Cadence of Publication of 
Disclosure Frameworks
    Section 4.1 of the Framework describes certain tools provided to 
Clearing Agency participants to assist participants in understanding 
the Clearing Agencies' products and services and their use. One such 
tool is the publication of disclosure frameworks to the DTCC website. 
The proposed change would enhance the description in the third bullet 
of Section 4.1, to add that although each of the Clearing Agencies 
publish to the DTCC website disclosure frameworks that are updated on a 
biennial basis, such frameworks are also updated more frequently for 
material changes.
ii. Proposed Amendment To Clarify the Description of Recovery and Wind-
Down
    Section 5 of the Framework describes the Clearing Agencies 
identification of scenarios that may potentially prevent them from 
being able to provide critical operations and services, and assessment 
of options for recovery and orderly wind-down, and maintenance of 
appropriate plans for recovery and orderly wind-down. The proposed 
changes to Section 5 are primarily rephrasing and grammatical choices 
that clarify the Framework and conform the language in the Framework to 
the Clearing Agencies' stand-alone Recovery and Wind-Down Plans.

[[Page 86431]]

iii. Proposed Amendment To Make Other Non-Substantive Clarifying 
Changes
    These proposed changes consist of rephrasing for clarity and 
removal of unnecessary language in the Framework. These changes 
include: (i) changes to Section 1 to simplify the description of other 
documentation of the Clearing Agencies that support the activities 
described in the Framework by removing statements regarding the 
maintenance of those documents that are not relevant to the operation 
of this Framework and removing redundant sentences; (ii) add ``and'' 
for grammatical purposes in the second sentence of the last paragraph 
of Section 3.2 as well as the words ``when required'' as clarifying 
language; (3) remove the words ``Market Risk'' from the heading 
``Clearing Agency Stress Testing Framework'' in Section 3.3.3 and add 
``liquidity resources'' to align with other documentation of the 
Clearing Agencies; (4) deletion of the word ``all'' in various 
sentences in Section 4.2.2, as unnecessary.
2. Statutory Basis
    The Clearing Agencies believe that the proposed changes are 
consistent with section 17A(b)(3)(F) of the Act \8\ for the reasons 
described below. Section 17A(b)(3)(F) of the Act requires, in part, 
that the rules of a registered clearing agency be designed to promote 
the prompt and accurate clearance and settlement of securities 
transactions, and to assure the safeguarding of securities and funds 
which are in the custody or control of the clearing agency or for which 
it is responsible.\9\ The proposed changes would clarify the 
descriptions of certain matters within the Framework to improve 
comprehensiveness and align with other documentation of the Clearing 
Agencies, as described above. By creating clearer, updated 
descriptions, the Clearing Agencies believe that the proposed changes 
would make the Risk Management Framework more effective in providing an 
overview of the important risk management activities of the Clearing 
Agencies, as described therein.
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    \8\ 15 U.S.C. 78q-1(b)(3)(F).
    \9\ Id.
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    As described in the Framework Filings, the risk management 
functions described in the Risk Management Framework allow the Clearing 
Agencies to continue to promote the prompt and accurate clearance and 
settlement of securities transactions and continue to assure the 
safeguarding of securities and funds which are in their custody or 
control or for which they are responsible notwithstanding the default 
of a member of an affiliated family. The proposed changes to improve 
the clarity and accuracy of the descriptions of risk management 
functions within the Framework would assist the Clearing Agencies in 
carrying out these risk management functions. Therefore, the Clearing 
Agencies believe these proposed changes are consistent with the 
requirements of section 17A(b)(3)(F) of the Act.\10\
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    \10\ Id.
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(B) Clearing Agency's Statement on Burden on Competition

    The Clearing Agencies do not believe that the proposed changes to 
the Framework described above would have any impact, or impose any 
burden, on competition. As described above, the proposed rule changes 
would improve the comprehensiveness of the Framework by creating 
clearer, updated descriptions, thereby making the Risk Management 
Framework more effective in providing an overview of the important risk 
management activities of the Clearing Agencies. As such, the Clearing 
Agencies do not believe that the proposed rule changes would have any 
impact on competition.

(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-submitcomments. 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 [email protected] 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

    The foregoing rule change has become effective pursuant to section 
19(b)(3)(A) \11\ of the Act and paragraph (f) \12\ 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 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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    \11\ 15 U.S.C. 78s(b)(3)(A).
    \12\ 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 (https://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
file number SR-DTC-2023-012 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-2023-012. 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 (https://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

[[Page 86432]]

printing in the Commission's Public Reference Room, 100 F Street NE, 
Washington, DC 20549 on official business days between the hours of 10 
a.m. and 3 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 (https://dtcc.com/legal/sec-rule-filings.aspx). Do not include 
personal identifiable information in submissions; you should submit 
only information that you wish to make available publicly. We may 
redact in part or withhold entirely from publication submitted material 
that is obscene or subject to copyright protection. All submissions 
should refer to file number SR-DTC-2023-012 and should be submitted on 
or before January 3, 2024.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\13\
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    \13\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-27267 Filed 12-12-23; 8:45 am]
BILLING CODE 8011-01-P