Document ID: SEC-2021-0863-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: The Depository Trust Co.
Posted Date: 2021-06-23T04:00Z

[Federal Register Volume 86, Number 118 (Wednesday, June 23, 2021)]
[Notices]
[Pages 32987-32989]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-13103]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-92198; File No. SR-DTC-2021-009]

Self-Regulatory Organizations; The Depository Trust Company; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Provide Enhanced Clarity for Deadlines and Processing Times

June 16, 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 June 8, 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. 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 DTC is attached hereto as Exhibit 5,\5\ 
as described in greater detail below.
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    \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 (the ``Rules''), the Canadian Link 
Service Guide, ClaimConnect Service Guide, Custody Service Guide, 
Deposits Service Guide, Distributions Service Guide, Redemptions 
Service Guide, Reorganizations Service Guide, Settlement Service 
Guide, and Underwriting Service Guide (collectively, the ``Service 
Guides'') and the DTC Operational Arrangements (Necessary for 
Securities to Become and Remain Eligible for DTC Services) 
(``Operational Arrangements'' or ``OA''), available at http://www.dtcc.com/legal/rules-and-procedures.aspx.
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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 proposed rule change would amend the Service Guides and the OA 
to provide enhanced clarity around (i) deadlines, timeframes, and 
cutoffs established by DTC in connection with DTC services (``DTC-
established Stakeholder Deadlines''), and (ii) the times and timeframes 
for DTC actions and processes relating to DTC services (``DTC 
Processing Times''). In particular, the proposed rule change would 
enhance the transparency around the ability of DTC to extend DTC-
established Stakeholder Deadlines, and around DTC Processing Times, 
which are standards, rather than deadlines, as further described below.
(i) DTC-established Stakeholder Deadlines
    The Service Guides provide Participants with procedures and 
information pertaining to DTC settlement and asset services. The 
procedures and information include, among other things, descriptions of 
DTC-established Stakeholder Deadlines for Participant and stakeholder 
\6\ action relating to DTC services. The OA is designed to provide 
Participants and other stakeholders with information and procedures 
related to DTC eligibility for securities, and to provide the 
requirements for, among other things, the orderly processing of 
securities, corporate actions, and distributions. The OA includes 
descriptions of DTC-established Stakeholder Deadlines in connection 
with the requirements and services.\7\
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    \6\ Stakeholders include issuers, agents (as defined in the OA), 
underwriters (as defined in the OA), and other parties, as context 
requires.
    \7\ For example, the OA requires that, in order for DTC to make 
a same day allocation of funds, the agent must provide DTC with 
CUSIP-specific details for the payment before 2:50 p.m. on payable 
date, and that the details must match the amount of funds that are 
received by DTC no later than 3:00 p.m. See OA, supra note 5, at 27.
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    The purpose of DTC-established Stakeholder Deadlines is to help DTC 
efficiently and effectively manage its services and systems, in order 
to timely process instructions and securities transactions at DTC. 
However, there are times when, due to the facts and circumstances of a 
particular situation, DTC determines to extend a DTC-established 
Stakeholder Deadline. The situations can include, but are not limited 
to, a Participant operational issue or a change to a different deadline 
(whether DTC or external) that could affect the ability of one or more 
Participants to meet the DTC-established Stakeholder Deadline.
(ii) DTC Processing Times
    The Service Guides and the OA also describe DTC Processing Times in 
connection with certain services.\8\ The purpose of describing these 
DTC Processing Times is to provide Participants and other stakeholders 
with information about the typical timing or timeframe of a DTC action 
or process, in order to help Participants and other stakeholders to 
more efficiently and effectively use and understand DTC's services and 
processes. For example, if a Service Guide states that the processing 
time for a particular service is typically two business days, the 
Participant will understand that it is unlikely that it would get same-
day turnaround from DTC and can plan accordingly, for instance, by 
ensuring that it submits its transaction with adequate lead-time.
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    \8\ For example, the Settlement Service Guide indicates that at 
1:30 p.m. on a settlement day, DTC releases all pending delivery 
account positions and reverts to default recycle processing. See 
Settlement Service Guide, supra note 5, at 26.
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(iii) Overview of Proposed Rule Change
    DTC believes that Participants and other stakeholders benefit from 
clear information about their rights and obligations relating to DTC-
established Stakeholder Deadlines and DTC Processing Times so that they 
are able to plan and conduct their business and securities transactions 
more effectively. Recent events, such as the COVID-19 pandemic and 
market volatility, have emphasized the need for flexibility in times of 
stress and the importance of transparency with respect to deadlines and 
timeframes. Accordingly, after reviewing the Service Guides and the OA, 
DTC is proposing to enhance the transparency around the DTC-established 
Stakeholder Deadlines and DTC Processing Times that are described in 
the Service Guides and the OA.
    Therefore, DTC is proposing to amend the Service Guides and the OA 
to clarify that (i) DTC may extend any DTC-established Stakeholder 
Deadline, including, without limitation, to (x) address operational or 
other delays that could reasonably affect the ability of DTC, a 
Participant, or other stakeholder from meeting the DTC-established

[[Page 32988]]

Stakeholder Deadline or (y) allow DTC time operationally to exercise 
its existing rights under the Rules and Procedures; and (ii) the DTC 
Processing Times are standards and not deadlines; actual processing 
times may vary, based upon the circumstances. For additional 
transparency, DTC is proposing to clarify that any decision to extend a 
DTC-established Stakeholder Deadline in one instance does not establish 
any precedent for future situations that may arise.
    In addition, although the Important Legal Information page of the 
Service Guides and the OA already contain general disclaimers of 
liability, DTC is proposing to expressly state that DTC disclaims all 
liability for any losses and/or expenses incurred by a Participant, 
stakeholder, or any third-party resulting from, relating to, or arising 
from (i) any action taken by DTC with respect to an extension of a DTC-
established Stakeholder Timeframe, (ii) the determination of DTC to 
decline to take action with respect to a DTC-established Stakeholder 
Timeframe, and/or (iii) the failure of a Participant, stakeholder or 
other third-party to meet any deadline, timeframe, cutoff or 
requirement established by a party other than DTC. DTC believes that 
this express disclaimer would enhance the understanding of Participants 
and other stakeholders of their responsibilities in connection with 
DTC-established Stakeholder Deadlines and possible extensions, which 
would help them to more effectively assess the risks relating to an 
inability to meet a DTC-established Stakeholder Deadline and conduct 
their business accordingly.
(iv) Proposed Rule Change
    To effectuate the proposed changes described above, DTC would add 
the following paragraph near the beginning of each of the Service 
Guides and the OA:
    Note: DTC, as it deems appropriate, may extend any deadline, 
timeframe, or cutoff established by DTC, including, without limitation, 
to (i) address operational or other delays that could reasonably affect 
the ability of DTC, a Participant or other stakeholder from meeting the 
deadline, timeframe, or cutoff; or (ii) allow DTC time operationally to 
exercise its existing rights under the Rules and Procedures. In 
addition, times applicable to DTC are standards and not deadlines; 
actual processing times may vary, based upon the circumstances. Any 
action taken by DTC in connection with this paragraph shall not 
establish a precedent for any situation that may occur in the future 
(or otherwise bind DTC in any manner). DTC disclaims all liability for 
any losses and/or expenses incurred by a Participant, stakeholder or 
any third-party resulting from, relating to, or arising from (i) any 
action taken by DTC in connection with this paragraph, (ii) the 
determination of DTC to decline to take action pursuant to this 
paragraph, and/or (iii) the failure of a Participant, stakeholder or 
any third-party to meet any deadline, timeframe, cutoff or requirement 
established by a party other than DTC.
2. Statutory Basis
    Section 17A(b)(3)(F) of the Act requires, in part, that the rules 
of a clearing agency be designed to promote the prompt and accurate 
clearance and settlement of securities transactions.\9\
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    \9\ 15 U.S.C. 78q-1(b)(3)(F).
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    The proposed rule change would amend the Service Guides and the OA 
to clarify that DTC may extend any DTC-established Stakeholder 
Deadline, including, without limitation, to (i) address operational or 
other delays that could reasonably affect the ability of DTC, a 
Participant or other stakeholder from meeting the DTC-established 
Stakeholder Deadline; or (ii) allow DTC time operationally to exercise 
its existing rights under the Rules and Procedures. The proposed rule 
change would also clarify that the DTC Processing Times set forth in 
the Service Guides and the OA are standards and not deadlines, and that 
they may vary based upon the particular circumstances. The proposed 
rule change would also (i) clarify that any decision by DTC to extend a 
DTC-established Stakeholder Deadline in one case does not establish any 
precedent for future situations that may arise, and (ii) emphasize that 
DTC disclaims all liability for any losses or expenses incurred by a 
Participant, stakeholder or any third party relating to, or arising 
from, the above.
    Taken together, the proposed amendments to the Service Guides and 
the OA would enhance Participants' and stakeholders' understanding of 
their rights and obligations relating to DTC-established Stakeholder 
Deadlines and DTC Processing Times. By providing this enhanced clarity 
and transparency, the proposed rule change would help Participants and 
other stakeholders to appropriately plan and to conduct their business 
and securities transactions through DTC more effectively, thereby 
promoting the prompt and accurate clearance and settlement of 
securities transactions, consistent with 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

    DTC does not believe the proposed rule changes described above 
would impact competition. Rather, DTC believes that the proposed rule 
changes would simply provide enhanced clarity around the rights and 
obligations of Participants and other stakeholders with respect to DTC-
established Stakeholder Deadlines and DTC Processing Times, and would 
help them to appropriately plan and to conduct their business and 
securities transactions through DTC more effectively. As such, DTC 
believes the proposed rule changes would not have any impact on 
competition.\11\
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    \11\ 15 U.S.C. 78q-1(b)(3)(I).
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(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) \12\ of the Act and paragraph (f) \13\ 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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    \12\ 15 U.S.C. 78s(b)(3)(A).
    \13\ 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-2021-009 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities 
and Exchange

[[Page 32989]]

Commission, 100 F Street NE, Washington, DC 20549.

All submissions should refer to File Number SR-DTC-2021-009. 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-2021-009 and should be submitted on 
or before July 14, 2021.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\14\
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    \14\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-13103 Filed 6-22-21; 8:45 am]
BILLING CODE 8011-01-P