Document ID: SEC-2016-0209-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Depository Trust Co.
Posted Date: 2016-02-09T05:00Z

[Federal Register Volume 81, Number 26 (Tuesday, February 9, 2016)]
[Notices]
[Pages 6913-6915]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-02438]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-77043; File No. SR-DTC-2016-002]

Self-Regulatory Organizations; The Depository Trust Company; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change 
Regarding the Discontinuance of the Facsimile and Hardcopy Delivery 
Methods of Security Position Reports

February 3, 2016.
    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 February 1, 2016, The Depository Trust Company (``DTC'') filed with 
the Securities and Exchange Commission (``Commission'') the proposed 
rule change as described in Items I and II 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 Rule 19b-4(f)(6) 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)(6).
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I. Clearing Agency's Statement of the Terms of Substance of the 
Proposed Rule Change

    The proposed rule change by DTC would discontinue the options for 
Users (as defined below) to receive facsimile or hardcopy delivery of 
Security Position Reports (``SPRs''), as more fully described below.\5\ 
Users could continue to access SPRs using the other currently available 
methods that DTC makes available for all Users, namely either directly 
through the secure DTC Web site dedicated to SPR processing (``SPR 
Site'') \6\ or by using DTC's Computer-to-Computer Facility 
(``CCF'').\7\ Consistent with the elimination of the facsimile and 
hardcopy methods described above, DTC would eliminate the provision in 
the DTC SPR Pricing Schedule (``Pricing Schedule'') \8\ relating to a 
special charge for facsimile delivery of SPRs by DTC and make technical 
changes to text in the DTC Operational Arrangements (``OA''),\9\ as 
described below.
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    \5\ Terms not otherwise defined herein have the meaning set 
forth in the DTC Rules, By-laws and Organization Certificate (``DTC 
Rules''), available at http://www.dtcc.com/legal/rules-and-procedures.aspx.
    \6\ Users choosing to access an SPR directly through the SPR 
Site could select to view the SPR in either a web browser format 
(``Browser'') or in a downloadable spreadsheet format 
(``Spreadsheet'').
    \7\ CCF is a transmission system for input and output based on 
various protocols between the mainframe computer facility of a user 
of DTC's services and DTC's mainframe computer facility.
    \8\ Available at http://www.dtcc.com/asset-services/issuer-services/spr-pricing.
    \9\ Available at http://www.dtcc.com/~/media/Files/Downloads/
legal/issue-eligibility/eligibility/operational-arrangements.pdf.
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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, 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
Background
    DTC may provide to Issuers, Trustees, and third party Agents 
authorized by the Issuer (collectively, ``Users''), listings of 
Participants' holdings of Issuer Securities on a specific date for 
specific Securities, by CUSIP number. These listings are known as SPRs 
or Security Position Listings.\10\ DTC charges fees for providing SPRs, 
as set forth in the Pricing Schedule.
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    \10\ Users need access to SPRs to identify Participants holding 
securities in order to conduct functions they perform relating to 
security holders, including but not limited to proxy and record date 
functions.
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    All Users must be registered for the SPR Site and all requests for 
subscriptions or individual copies of SPRs must be made through the SPR 
Site. A User may request that the delivery of an SPR be made directly 
through the SPR Site in either Browser or Spreadsheet formats, by 
CCF,\11\ or by facsimile. Hardcopy delivery is also available for 
certain Users upon request.\12\ For reports covered by SPR 
subscriptions, Users do not pay an additional delivery fee regardless 
of delivery method. However, for reports not covered by SPR 
subscriptions, i.e., special requests and meeting record date requests, 
Users must pay an additional $25.00 charge for facsimile and 
spreadsheet delivery.
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    \11\ CCF delivery of SPRs may be requested by Users who have set 
up a link to interface with DTC through CCF. DTC does not charge 
Users for the establishment or maintenance of links to CCF.
    \12\ Hardcopy delivery is utilized by a small number of Users on 
a ``grandfathered'' basis and is not currently available as an 
option for new Users. Upon implementation of the proposed rule 
change these grandfathered Users would be required to migrate to 
another available delivery method.
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    DTC is proposing to eliminate the facsimile and hardcopy methods of 
SPR delivery for a number of reasons. First, doing so would improve 
efficiencies in terms of streamlining SPR processing away from more 
manually intensive delivery methods and thus lower costs to DTC. 
Second, eliminating physical delivery methods in favor of access to 
SPRs through electronic interface or transmission methods provides a 
higher level of security.\13\ Third, the elimination of these two 
delivery methods should not have a significant impact on Users because 
delivery of SPRs through facsimile and hardcopy delivery represents 
less than one percent of SPRs delivered. Fourth, there is no additional 
delivery-related charge to a User for access to SPRs via Browser or 
CCF, thus making those delivery options less costly for non-
subscription Users that currently pay an additional charge of $25.00 
for facsimile delivery per report.\14\
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    \13\ As mentioned above, all Users have the ability to obtain 
SPRs directly through the SPR Site.
    \14\ See the Pricing Schedule, supra note 8.
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    Although Users that have SPR subscriptions would no longer have the 
option to receive SPRs by facsimile or hardcopy, the cost savings to 
DTC of eliminating these delivery methods is ultimately cost savings to 
the Users. The elimination of the facsimile and hardcopy methods would 
balance the costs to DTC and obviate the need for DTC to raise its SPR 
subscription fees.
Proposed Revisions to the Pricing Schedule and OA
    In connection with this proposal to no longer offer facsimile and 
hard copy [sic] delivery methods, DTC would update its Pricing Schedule 
to remove the $25.00 additional charge per report when facsimile 
service is specifically

[[Page 6914]]

requested for special requests and record date meeting requests.\15\
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    \15\ This proposed rule change does not change the additional 
$25.00 charge that applies to Spreadsheet delivery of special 
requests and record date meeting requests for SPRs.
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    The OA would also be amended in the section relating to SPRs to:

    (i) update references to the link to the DTC public Web page 
that provides information on SPR service options, pricing, and 
guidance on use of the SPR service,\16\ and
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    \16\ Available at http://www.dtcc.com/spr.
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    (ii) remove text stating that SPRs may reflect Participant 
holdings in Securities of Trustees or third party Agents because an 
SPR reflects Participant holdings in the Security of an Issuer.
Implementation
    The effective date of the proposed rule change would be February 4, 
2016.
2. Statutory Basis
    Section 17A(b)(3)(F) \17\ of the Act requires that the rules of the 
clearing agency be designed, inter alia, in general, to protect 
investors and the public interest. DTC believes the proposed rule 
change is consistent with this provision because (i) no longer offering 
facsimile and hardcopy delivery would promote efficiency and enhance 
security with respect to the delivery of SPRs to Users that are needed 
by Users to identify Participants holding Securities on the books of 
DTC and perform security holder-related functions, and (ii) the 
technical changes to the OA text described above would facilitate 
enhanced transparency for Users with respect to their use of the SPR 
service. Thus, by (i) facilitating efficient and secure delivery of SPR 
reports, and (ii) providing for enhanced transparency in the OA text 
relating to use of the SPR Service in this regard, the proposed rule 
change would protect investors and the public interest.
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    \17\ 15 U.S.C. 78q-1(b)(3)(F).
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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 it would not have a 
material effect on User access to SPRs. All Users would continue to be 
required to register for the SPR Site in order to gain access to SPRs, 
as described above, and each User would have the same ability as other 
Users to obtain SPRs that it is authorized to access.

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

    DTC has not solicited and does not intend to solicit comments 
regarding the proposed rule change. DTC has not received any 
unsolicited written comments from interested parties. To the extent DTC 
receives written comments on the proposed rule change, DTC will forward 
such comments to the Commission. DTC has discussed the proposed 
discontinuance of facsimile and hardcopy delivery of SPRs with Users 
that have used those methods of delivery to receive SPRs.

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

    Because the foregoing proposed rule change does not:
    (i) Significantly affect the protection of investors or the public 
interest;
    (ii) impose any significant burden on competition; and
    (iii) become operative for 30 days from the date on which it was 
filed, or such shorter time as the Commission may designate, it has 
become effective pursuant to Section 19(b)(3)(A) \18\ of the Act and 
Rule 19b-4(f)(6) thereunder.\19\
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    \18\ 15 U.S.C. 78s(b)(3)(A).
    \19\ 17 CFR 240.19b-4(f)(6).
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    A proposed rule change filed under Rule 19b-4(f)(6) \20\ normally 
does not become operative for 30 days after the date of filing. 
However, pursuant to Rule 19b-4(f)(6)(iii) \21\ the Commission may 
designate a shorter time if such action is consistent with the 
protection of investors and the public interest.
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    \20\ Id.
    \21\ 17 CFR 240.19b-4(f)(6)(iii).
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    DTC has asked the Commission to waive the 30-day operative delay so 
that the proposal may become operative immediately upon filing. 
According to DTC, the proposed rule change does not present any novel 
or controversial issues. Rather, DTC is merely enhancing its process 
for delivery of SPRs to Users to facilitate efficiency and security in 
DTC's processing of SPR requests in a way that would not have a 
material effect on User access to SPRs. Accordingly, the Commission 
believes that waiving the 30-day operative delay is consistent with the 
protection of investors and the public interest as it will allow DTC to 
facilitate efficiency and security in processing SPRs. Therefore, the 
Commission designates the proposed rule change to be operative upon 
filing.\22\
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    \22\ For purposes only of waiving the 30-day operative delay, 
the Commission has also considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
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    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.

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-2016-002 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-DTC-2016-002. 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

[[Page 6915]]

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-
2016-002 and should be submitted on or before March 1, 2016.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\23\
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    \23\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-02438 Filed 2-8-16; 8:45 am]
BILLING CODE 8011-01-P