Document ID: SEC-2023-0949-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: The Depository Trust Co.
Posted Date: 2023-08-31T04:00Z

[Federal Register Volume 88, Number 168 (Thursday, August 31, 2023)]
[Notices]
[Pages 60251-60255]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-18776]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-98227; File No. SR-DTC-2023-801]

Self-Regulatory Organizations; The Depository Trust Company; 
Notice of Filing of Advance Notice To Raise Prefunded Liquidity 
Resources Through the Periodic Issuance and Private Placement of Senior 
Notes

August 25, 2023.
    Pursuant to section 806(e)(1) of title VIII of the Dodd-Frank Wall 
Street Reform and Consumer Protection Act entitled the Payment, 
Clearing, and Settlement Supervision Act of 2010 (``Clearing 
Supervision Act'') \1\ and Rule 19b-4(n)(1)(i) under the Securities 
Exchange Act of 1934 (``Act''),\2\ notice is hereby given that on 
August 15, 2023, The Depository Trust Company (``DTC'') filed with the 
Securities and Exchange Commission (``Commission'') the advance notice 
SR-DTC-2023-801 (``Advance Notice'') as described in Items I, II and 
III below, which Items have been prepared by the clearing agency. The 
Commission is publishing this notice to solicit comments on the Advance 
Notice from interested persons.
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    \1\ 12 U.S.C. 5465(e)(1).
    \2\ 17 CFR 240.19b-4(n)(1)(i).
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I. Clearing Agency's Statement of the Terms of Substance of the Advance 
Notice

    This advance notice is filed by DTC in connection with a proposal 
to raise prefunded liquidity resources through the periodic issuance 
and private placement of senior notes (``Debt Issuance''). The proceeds 
from the Debt Issuance would supplement DTC's existing default 
liquidity risk management resources, as described in greater detail 
below.\3\
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    \3\ Capitalized terms not defined herein are defined in the 
Rules, By-Laws and Organization Certificate of DTC (``Rules'') 
available at www.dtcc.com/~/media/Files/Downloads/legal/rules/
dtc_rules.pdf.
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II. Clearing Agency's Statement of the Purpose of, and Statutory Basis 
for, the Advance Notice

    In its filing with the Commission, the clearing agency included 
statements concerning the purpose of and basis for the Advance Notice 
and discussed any comments it received on the Advance Notice. 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 and B below, of the most significant aspects of such 
statements.

(A) Clearing Agency's Statement on Comments on the Advance Notice 
Received from Members, Participants, or Others

    Written comments on the advance notice have not been solicited or 
received. DTC will notify the Commission of any written comments 
received by DTC.

(B) Advance Notice Filed Pursuant to Section 806(e) of the Clearing 
Supervision Act

Description of Proposed Change
    DTC is proposing to raise prefunded liquidity through the periodic 
issuance and private placement of senior notes to qualified 
institutional investors in an aggregate amount not to exceed $5 
billion, as described in greater detail below. The proceeds of the Debt 
Issuance would supplement DTC's qualifying liquidity resources, which 
are described in the Clearing Agency Liquidity Risk Management 
Framework (``Framework'') \4\ and include cash

[[Page 60252]]

deposits to its Participants Fund and cash that would be obtained by 
drawing upon DTC's committed 364-day credit facility with a consortium 
of banks (``Line of Credit'').\5\
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    \4\ See Securities Exchange Act Release Nos. 82377 (Dec. 21, 
2017), 82 FR 61617 (Dec. 28, 2017) (SR-DTC-2017-004; SR-FICC-2017-
008; SR-NSCC-2017-005). Following the completion of the initial 
issuance and private placement of senior notes, the Clearing 
Agencies would file a proposed rule change to amend the Framework to 
include the proceeds of the Debt Issuance as an additional 
qualifying liquidity resource of DTC.
    \5\ Capitalized terms not defined herein are defined in the 
Rules, By-Laws and Organization Certificate of DTC (``Rules'') 
available at www.dtcc.com/~/media/Files/Downloads/legal/rules/
dtc_rules.pdf. See also Securities Exchange Act Release No. 80605 
(May 5, 2017), 82 FR 21850 (May 10, 2017) (SR-DTC-2017-802; SR-NSCC-
2017-802).
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    More precisely, while the specific terms of any future Debt 
Issuance would depend on a number of factors, as described in greater 
detail below, DTC is requesting the authority to use the proceeds of 
any Debt Issuance as default liquidity.\6\
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    \6\ In addition to default liquidity, DTC may use the proceeds 
of a Debt Issuance to prepay a prior Debt Issuance before maturity 
but would not use the proceeds for any other purpose. DTC filed as a 
confidential exhibit to this filing a sample term sheet that may be 
indicative of the possible terms of any future Debt Issuance.
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    DTC, along with its affiliates, National Securities Clearing 
Corporation (``NSCC'') and Fixed Income Clearing Corporation (``FICC,'' 
and, together with NSCC and DTC, the ``Clearing Agencies''), maintain 
the Framework which sets forth the manner in which DTC measures, 
monitors and manages the liquidity risks that arise in or are borne by 
it.\7\ DTC's liquidity risk management strategy and tools are designed 
to maintain sufficient available liquid resources to complete system-
wide settlement on each business day, with a high degree of confidence 
and notwithstanding the failure to settle of the Participant, or 
affiliated family of Participants, with the largest settlement 
obligation.\8\
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    \7\ Supra note 4. Each of the Clearing Agencies is a wholly-
owned subsidiary of The Depository Trust & Clearing Corporation, 
which operates on a shared service model with respect to the 
Clearing Agencies. Most corporate functions are established and 
managed on an enterprise-wide basis pursuant to intercompany 
agreements under which it is generally DTCC that provides relevant 
services to the Clearing Agencies.
    \8\ Id.
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    The proposed Debt Issuance would provide DTC with an additional 
source of default liquidity, which would allow it to diversify its 
sources of default liquidity and mitigate risks to DTC that it is 
unable to secure default liquidity resources in an amount necessary to 
meet its liquidity needs. DTC utilizes certain rules-based tools, 
including the Net Debit Cap and the Collateral Monitor, to manage the 
liquidity risks its Participants' present to it.\9\ These two controls 
work together to protect the DTC settlement system in the event of a 
Participant default. The Collateral Monitor requires net debit 
settlement obligations, as they accrue intraday, to be fully 
collateralized and the Net Debit Cap limits the amount of any 
Participant's net debit settlement obligation to an amount that can be 
satisfied with DTC's default liquidity resources. As stated above, DTC 
currently maintains two key default liquidity resources to draw upon in 
the event of a Participant default: cash deposits to its Participants 
Fund and cash that would be obtained by drawing upon the Line of 
Credit.\10\ By allowing DTC to diversify its sources of default 
liquidity, the proposal would mitigate the risk, for example, that DTC 
is unable to renew its Line of Credit at the targeted amount by 
providing DTC with an alternative and supplemental source of default 
liquidity.
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    \9\ A description of the calculation of each Participant's Net 
Debit Cap and Collateral Monitor is available in the Settlement 
Service Guide. See DTC Settlement Service Guide, available at 
www.dtcc.com/-/media/Files/Downloads/legal/service-guides/Settlement.pdf.
    \10\ Under DTC Rule 10 (Discretionary Termination) and DTC Rule 
11 (Mandatory Termination), a Participant will be in default if it 
fails to pay any amount due to DTC within specified timeframes, 
including the failure to fund a settlement obligation, to pay 
required deposits to the Participants Fund or to pay adequate 
assurances to DTC within the required timeframes. See supra note 5.
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    Terms of the Debt Issuance. DTC does not have immediate plans to 
initiate the Debt Issuance. The timing of a Debt Issuance would depend 
on a number of factors, including, for example, market conditions for 
the issuance of senior notes and the timing of any changes to DTC's 
liquidity needs. However, when it determines to do so it would engage a 
trustee and underwriting banks to issue the senior notes to qualified 
institutional investors through a private placement and offering in 
reliance on an exemption from registration under section 4(a)(2) of the 
Securities Act of 1933.\11\ DTC would be party to certain transaction 
documents in connection with each issuance and private placement, 
including an indenture with the trustee and purchase agreements. The 
purchase agreements would each be based on the standard form of dealer 
agreement for similar debt issuances, which is published by the 
Securities Industry and Financial Markets Association.
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    \11\ 15 U.S.C. 77d(a)(2).
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    While the anticipated material terms and conditions of a future 
Debt Issuance are summarized below, the actual terms of a future Debt 
Issuance would depend on a number of factors, including DTC's liquidity 
needs and the debt market conditions at the time of issuance. 
Therefore, with the exception of the authorized aggregate amount that 
DTC may issue of $5 billion, the anticipated terms summarized below are 
reasonable estimates, but may not reflect the actual terms of a future 
Debt Issuance.
    DTC is proposing to issue up to an aggregate amount of $5 billion 
in senior notes, with an expected average amount issued and outstanding 
at any time of approximately $2-3 billion, as DTC deems reasonable, or 
as necessitated by liquidity needs. While, at the time of this filing, 
DTC would not need to issue up to the aggregate amount of $5 billion 
based on its current liquidity requirements, DTC believes that is 
advisable to authorize up to this aggregate amount in order to help 
manage its potential future liquidity needs and the potential risk that 
it is not able to obtain the requisite amounts from its other sources 
of default liquidity.
    DTC estimates that each issuance would be in an amount between 
approximately $250 million and $1.5 billion, with an initial issuance 
expected to be between approximately $500 million and $1 billion.\12\ 
DTC believes an initial issuance should be at an amount that would 
attract the attention of potential investors. Therefore, DTC believes 
that between approximately $500 million and $1 billion would be an 
appropriate amount for the initial issuance for this reason.
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    \12\ If market conditions at the time of the inaugural issuance 
are favorable, DTC may issue an initial aggregate amount of more 
than $1 billion.
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    The senior notes would be represented by unsecured, unsubordinated 
and non-convertible medium-term and long-term global notes held in the 
name of DTC (as the central securities depository) or its nominee, Cede 
& Co. The notes would be issued and transferred only through the book-
entry system of DTC. The senior notes would be interest bearing at 
either fixed or floating interest rates that are set at market rates 
customary for such type of debt and reflective of the creditworthiness 
of DTC.
    DTC expects the average maturity of the senior notes issued under 
the Debt Issuance would be no shorter than approximately two years and 
no longer than approximately ten years, which are the typical lengths 
of medium-term and long-term debt. DTC does not believe maturities over 
ten years would be suitable as debt with longer maturities are 
generally more expensive to issue and may present higher risks related 
to interest rates. DTC would time each debt issuance and stagger 
maturity dates

[[Page 60253]]

of each issuance in order to ladder the maturities. DTC would have the 
ability to make use of optional features to redeem the issued senior 
notes, in whole or in part, at any time prior to the maturity date of 
notes. More specifically, DTC would have the option to prepay any 
amount of principal owed on the issued senior notes before such payment 
is due, i.e., before the maturity date.
    DTC would hold the proceeds from the Debt Issuance in either its 
cash deposit account at the Federal Reserve Bank of New York 
(``FRBNY'') or in accounts at other creditworthy financial institutions 
in accordance with the Clearing Agency Investment Policy.\13\ These 
amounts would be available to draw to complete settlement as needed.
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    \13\ See Securities Exchange Act Release Nos. 79528 (Dec. 12, 
2016), 81 FR 91232 (Dec. 16, 2016) (SR-DTC-2016-007, SR-FICC-2016-
005, SR-NSCC-2016-003); 84949 (Dec. 21, 2018), 83 FR 67779 (Dec. 31, 
2018) (SR-DTC-2018-012, SR-FICC-2018-014, SR-NSCC-2018-013). 
Following the issuance of a Notice of No Objection by the Commission 
of this proposal, the Clearing Agencies would file a proposed rule 
change to amend the Clearing Agency Investment Policy to include the 
proceeds as default liquidity funds, within the definition of 
``Investable Funds,'' as such term is defined therein, and provide 
that such amounts would be held in bank deposits at eligible 
commercial banks or at DTC's cash deposit account at the FRBNY.
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    DTC Liquidity Risk Management. DTC's liquidity needs for settlement 
are driven by protecting DTC against the possibility that a Participant 
may fail to pay its settlement obligations on a business day. The tools 
available to DTC under its Rules (e.g., the Participants Fund, Net 
Debit Cap and Collateral Monitor) allow it to regularly test the 
sufficiency of liquid resources on an intraday and end-of-day basis and 
adjust to stressed circumstances during a settlement day to protect 
itself and Participants against liquidity exposure under normal and 
stressed market conditions.\14\ DTC calculates its liquidity needs per 
Participant (at a legal entity level) and further aggregates these 
amounts at a family level (that is, including all affiliated 
Participants, based on the assumption that all such affiliates may fail 
simultaneously). In this regard, DTC monitors settlement flows and net-
debit obligations on a daily basis, determines the appropriateness of 
each Participant's Net Debit Cap and monitors net settlement activity.
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    \14\ Supra note 4.
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    As noted above, the Framework describes DTC's liquidity risk 
management strategy, which is designed to maintain sufficient liquid 
resources to complete system-wide settlement on each business day, with 
a high degree of confidence and notwithstanding the failure to settle 
of the Participant, or affiliated family of Participants, with the 
largest settlement obligation.\15\ The Framework also describes how DTC 
meets its requirement to hold qualifying liquid resources, as such term 
is defined in Rule 17Ad-22(a)(14) under the Securities Exchange Act of 
1934 (``Act''),\16\ sufficient to meet its minimum liquidity resource 
requirement in each relevant currency for which it has payment 
obligations owed to its Participants. DTC considers each of its 
existing default liquidity resources to be qualifying liquid resources, 
and the proceeds from the Debt Issuance would also be default liquidity 
that is considered a qualifying liquid resource.
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    \15\ Supra note 5.
    \16\ 17 CFR 240.17Ad-22(a)(14).
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    The proceeds from the Debt Issuance would provide DTC with 
additional, prefunded, and readily available qualifying liquid 
resources to be used to complete system-wide settlement if a 
Participant defaults. For DTC, the Participants Fund, Net Debit Cap and 
Collateral Monitor tools work together to limit potential liquidity 
requirements in default scenarios both on an intra-day and end-of-day 
basis. So, while DTC's current available liquidity resources are 
sufficient to satisfy the single-largest family default under stressed 
but plausible conditions, the Debt Issuance would allow DTC to 
diversify its sources of default liquidity and mitigate risks to DTC 
that it is unable to secure default liquidity resources in an amount 
necessary to meet its liquidity needs. More specifically, the proposal 
would provide DTC with the flexibility to reduce its reliance on the 
Line of Credit, which is renewed annually and dependent on continued 
lender interest and meet any increased liquidity needs it may face in 
the future. As a source of prefunded, default liquidity, the Debt 
Issuance would provide additional certainty, stability, and safety to 
DTC, its Participants, and the U.S. markets that it serves.
    By diversifying DTC's sources of qualifying liquid resources, the 
Debt Issuance could also mitigate concentration risks related to its 
liquidity providers. More specifically, while DTC would not limit the 
potential qualified institutional investors that purchase senior notes 
and, therefore, is not able to ensure that the Debt Issuance would 
reduce concentration risk, the types of entities who typically invest 
in senior notes (for example, insurance companies, asset managers and 
pension funds) are generally not Participants of DTC or lenders under 
the Line of Credit. Therefore, the prospective investors in the senior 
notes are not expected to be the same firms that currently provide any 
material amount of default liquidity resources to DTC either through 
the Line of Credit, or as DTC Participants. In this way, the proposed 
Debt Issuance would reduce the concentration risk related to its 
liquidity providers, by reducing the likelihood that an impairment of a 
liquidity provider to perform under one qualifying liquid resource 
would impact DTC's ability to fully access its other qualifying liquid 
resources.
Anticipated Effect on and Management of Risk
    In connection with its role as a central securities depository 
(``CSD''), DTC provides for both the settlement of book-entry transfer 
and pledge of interests in eligible deposited securities and net funds 
settlement. A financially strong and well-managed, well-designed CSD, 
with appropriate risk management arrangements, can reduce the risk 
faced by participants, contributing to the goal of systemic financial 
stability. In order to sufficiently perform this role, it is critical 
that DTC has access to adequate liquidity resources to enable it to 
complete system-wide settlement every business day, including following 
a Participant default. DTC believes that the overall impact of the 
proposed Debt Issuance on risks presented by DTC would be to reduce the 
liquidity risks associated with DTC's net settlement obligations by 
providing it with an additional source of liquidity to complete system-
wide settlement in the event of a Participant default. DTC further 
believes that a reduction in its liquidity risk would reduce systemic 
risk and would have a positive impact on the safety and soundness of 
the wider financial system.
    While the proposed Debt Issuance, like any liquidity resource, 
would involve certain risks, most of these risks are standard in any 
debt issuance. One risk associated with the proposed Debt Issuance 
would be the risk that DTC does not have sufficient funds to repay 
issued senior notes when the notes mature. DTC believes that this risk 
is extremely remote, as the proceeds of the Debt Issuance would be used 
only in the event of a Participant default, and DTC would replenish 
that cash, as it would replenish any of its liquidity resources that 
are used to facilitate settlement in the event of a Participant 
default, with the proceeds of the close out of that defaulted 
Participant's portfolio. This notwithstanding, in the event that 
proceeds from the close out are

[[Page 60254]]

insufficient to fully repay a liquidity borrowing, then DTC would look 
to its loss waterfall to repay any outstanding liquidity 
borrowings.\17\ DTC would further mitigate this risk through the timing 
of each debt issuance and by staggering the maturity dates of the 
issued senior notes in a way that would provide DTC with time to 
complete the close out of a defaulted Participant's portfolio. A second 
risk is that DTC may be unable to issue new senior notes as issued 
notes mature due to, for example, stressed markets at the time the 
issued debt matures. This risk is mitigated by the fact that DTC 
maintains a number of different default liquidity resources, described 
above, and would not depend on the Debt Issuance as its sole source of 
liquidity.
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    \17\ See Rule 4 (Participants Fund and Participants Investment) 
of the Rules, supra note 5.
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    DTC may be exposed to interest rate risk, which is the risk that a 
change in interest rates could cause an increase to the net cost of 
carry of the Debt Issuance.\18\ DTC would mitigate this risk by issuing 
senior notes at different maturities and at both fixed interest rates 
and floating interest rates. The interest rates for the senior notes 
issued at floating interest rates would generally correlate with the 
rates on investments of those proceeds \19\ and would be expected to 
result in a largely stable net spread between the borrowing interest 
rate and the investment interest rate, mitigating this risk. For the 
senior notes issued with a fixed interest rate, DTC would consider 
interest rate swaps as a method to mitigate interest rate risk, 
depending on market environment at that time.
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    \18\ The ``net cost of carry'' generally refers to the 
difference between the interest earned on the invested proceeds of 
an issuance and the interest rate paid on that issuance.
    \19\ See supra note 12.
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    DTC could also face a related financial risk that the expense of a 
Debt Issuance exceeds DTC's income and may have a negative impact on 
DTC's financial health or its creditworthiness. DTC would mitigate this 
risk by evaluating the expected net cost of carry (discussed above) of 
a Debt Issuance prior to issuing any debt, and if the financing costs 
for the issuance of senior notes increase, such that it is not 
financially advisable to issue additional senior notes, then DTC may 
determine to use its alternative liquidity resources to meet its 
liquidity needs during those market conditions.
    DTC believes that the significant systemic risk mitigation benefits 
of providing DTC with additional, prefunded liquidity resources 
outweigh these risks.
Consistency With Clearing Supervision Act
    DTC believes that that proposal would be consistent with Title VIII 
of the Dodd-Frank Wall Street Reform and Consumer Protection Act 
entitled the Payment, Clearing, and Settlement Supervision Act of 2010 
(``Clearing Supervision Act''), specifically with the risk management 
objectives and principles of section 802(b)(1), and with certain of the 
risk management standards adopted by the Commission pursuant to section 
805(a)(2), for the reasons described below.\20\
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    \20\ 12 U.S.C. 5464(a)(2) and (b)(1).
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(i) Consistency With Section 805(b)(1) of the Clearing Supervision Act
    Although the Clearing Supervision Act does not specify a standard 
of review for an advance notice, its stated purpose is instructive: to 
mitigate systemic risk in the financial system and promote financial 
stability by, among other things, promoting uniform risk management 
standards for systemically important financial market utilities and 
strengthening the liquidity of systemically important financial market 
utilities.\21\
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    \21\ 12 U.S.C. 5464(b)(1).
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    DTC believes the proposal is consistent with section 805(b)(1) of 
the Clearing Supervision Act because it would support the mitigation of 
systemic risk in the financial system and promote financial stability 
in the event of a Participant default by strengthening DTC's liquidity. 
The proposed Debt Issuance is designed to reduce DTC's liquidity risks 
by providing it with an additional source of liquidity to complete 
system-wide settlement in the event of a Participant default. By 
supplementing DTC's existing default liquidity resources with prefunded 
liquidity, the proposal would contribute to DTC's goal of assuring that 
DTC has adequate liquidity resources to meet its settlement obligations 
notwithstanding the default of any of its Participants.
    In its critical role as a CSD, DTC provides for both the settlement 
of book-entry transfer and pledge of interests in eligible deposited 
securities and net funds settlement. In order to sufficiently perform 
this role, it is critical that DTC has access to adequate liquidity 
resources to enable it to complete system-wide settlement every 
business day, including following a Participant default. Therefore, a 
reduction in DTC's liquidity risk would reduce systemic risk and would 
have a positive impact on the safety and soundness of the wider 
financial system.
    As a result, DTC believes the proposed Debt Issuance would be 
consistent with the objectives and principles of section 805(b)(1) of 
the Clearing Supervision Act, which specify the promotion of robust 
risk management, promotion of safety and soundness, reduction of 
systemic risks and support of the stability of the broader financial 
system by, among other things, strengthening the liquidity of 
systemically important financial market utilities, such as DTC.
(ii) Consistency With Rule 17Ad-22(e)(7)(i) and (ii) Under the Act
    Section 805(a)(2) of the Clearing Supervision Act authorizes the 
Commission to prescribe risk management standards for the payment, 
clearing and settlement activities of designated clearing entities, 
like DTC, and financial institutions engaged in designated activities 
for which the Commission is the supervisory agency or the appropriate 
financial regulator.\22\ The Commission has accordingly adopted risk 
management standards under section 805(a)(2) of the Clearing 
Supervision Act \23\ and section 17A of the Act (``Covered Clearing 
Agency Standards'').\24\ The Covered Clearing Agency Standards require 
covered clearing agencies to establish, implement, maintain, and 
enforce written policies and procedures that are reasonably designed to 
meet certain minimum requirements for their operations and risk 
management practices on an ongoing basis.\25\
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    \22\ 12 U.S.C. 5464(a)(2).
    \23\ Id.
    \24\ 17 CFR 240.17Ad-22(e).
    \25\ Id.
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    DTC believes that the proposed Debt Issuance is consistent with 
Rule 17Ad-22(e)(7)(i) and (ii) of the Covered Clearing Agency Standards 
for the reasons described below.\26\
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    \26\ 17 CFR 240.17Ad-22(e)(7)(i), (ii).
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    Rule 17Ad-22(e)(7)(i) under the Act requires that DTC establish, 
implement, maintain and enforce written policies and procedures 
reasonably designed to maintain sufficient liquid resources at the 
minimum in all relevant currencies to effect same-day and, where 
appropriate, intraday and multiday settlement of payment obligations 
with a high degree of confidence under a wide range of foreseeable 
stress scenarios that includes, but is not limited to, the default of 
the participant family that would generate the largest aggregate 
payment obligation for the covered clearing agency in extreme but 
plausible market conditions.\27\ Rule

[[Page 60255]]

17Ad-22(e)(7)(ii) under the Act requires that DTC establish, implement, 
maintain and enforce written policies and procedures reasonably 
designed to hold qualifying liquid resources sufficient to meet the 
minimum liquidity resource requirement under Rule 17Ad-22(e)(7)(i) in 
each relevant currency for which DTC has payment obligations owed to 
its Participants.\28\
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    \27\ 17 CFR 240.17Ad-22(e)(7)(i).
    \28\ 17 CFR 240.17Ad-22(e)(7)(ii). For purposes of this Rule, 
``qualifying liquid resources'' are defined in Rule 17Ad-22(a)(14) 
as including, in part, cash held either at the central bank of issue 
or at creditworthy commercial banks. 17 CFR 240.17Ad-22(a)(14).
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    As described above, the proposed Debt Issuance would provide DTC 
with an additional resource of prefunded default liquidity, which it 
would use to complete system-wide settlement every business day, 
including following a Participant default. The proceeds of the Debt 
Issuance would be cash held by DTC at either its cash deposit account 
at the FRBNY or at a creditworthy commercial bank, pursuant to the 
Clearing Agency Investment Policy.\29\ Therefore, the proceeds of the 
Debt Issuance would be considered a qualifying liquid resource, as 
defined by Rule 17Ad-22(a)(14).\30\ As such, the proposed Debt Issuance 
would support DTC's ability to hold sufficient qualifying liquid 
resources to meet its minimum liquidity resource requirement under Rule 
17Ad-22(e)(7)(i).\31\
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    \29\ Supra note 13.
    \30\ 17 CFR 240.17Ad-22(a)(14).
    \31\ 17 CFR 240.17Ad-22(e)(7)(i).
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    For these reasons, DTC believes the proposal would support DTC's 
compliance with Rule 17Ad-22(e)(7)(i) and (ii) by providing it with an 
additional qualifying liquid resource.\32\
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    \32\ 17 CFR 240.17Ad-22(e)(7)(i), (ii).
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III. Date of Effectiveness of the Advance Notice, and Timing for 
Commission Action

    The proposed change may be implemented if the Commission does not 
object to the proposed change within 60 days of the later of (i) the 
date that the proposed change was filed with the Commission or (ii) the 
date that any additional information requested by the Commission is 
received. The clearing agency shall not implement the proposed change 
if the Commission has any objection to the proposed change.
    The Commission may extend the period for review by an additional 60 
days if the proposed change raises novel or complex issues, subject to 
the Commission providing the clearing agency with prompt written notice 
of the extension. A proposed change may be implemented in less than 60 
days from the date the advance notice is filed, or the date further 
information requested by the Commission is received, if the Commission 
notifies the clearing agency in writing that it does not object to the 
proposed change and authorizes the clearing agency to implement the 
proposed change on an earlier date, subject to any conditions imposed 
by the Commission.
    The clearing agency shall post notice on its website of proposed 
changes that are implemented.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views and 
arguments concerning the foregoing, including whether the Advance 
Notice is consistent with the Clearing Supervision 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-2023-801 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-2023-801. 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 Advance Notice that are filed 
with the Commission, and all written communications relating to the 
Advance Notice 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 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 (http://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-2023-801 and should 
be submitted on or before September 21, 2023.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\33\
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    \33\ 17 CFR 200.30-3(a)(91).
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J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2023-18776 Filed 8-30-23; 8:45 am]
BILLING CODE 8011-01-P