Document ID: SEC-2018-0281-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Depository Trust Co.
Posted Date: 2018-02-14T05:00Z

[Federal Register Volume 83, Number 31 (Wednesday, February 14, 2018)]
[Notices]
[Pages 6639-6646]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-02984]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-82671; File No. SR-DTC-2018-001]

Self-Regulatory Organizations; The Depository Trust Company; 
Notice of Filing of Proposed Rule Change To Amend the By-Laws

February 8, 2018.
    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 2, 2018, 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. 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.
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I. Clearing Agency's Statement of the Terms of Substance of the 
Proposed Rule Change

    The proposed rule change would amend the DTC By-Laws (``By-Laws'') 
\3\ to (i) make changes to DTC's governance procedures, (ii) revise 
certain DTC Board of Directors (``Board'') and designated officer 
titles or offices and update the related powers and duties, (iii) 
revise the section describing the compensation of officers, and (iv) 
make certain other technical changes and corrections.
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    \3\ The By-Laws are included in the Rules, By-Laws and 
Organization Certificate of DTC (``Rules''), available at http://www.dtcc.com/legal/rules-and-procedures.
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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

[[Page 6640]]

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
    In DTC's review of the By-Laws, DTC has identified and is proposing 
the following changes to the By-Laws: (i) Changing its internal 
governance procedures, (ii) revising certain Board and designated 
officer titles or offices and updating the related powers and duties, 
(iii) revising the section describing the compensation of officers, and 
(iv) making certain technical changes and corrections. Specifically, 
regarding the proposed changes to the Board and designated officer 
titles or offices and updating the related powers and duties, DTC is 
proposing to: (1) Change the title of Chairman of the Board to Non-
Executive Chairman of the Board and update the related powers and 
duties associated with that role due to personnel changes in DTC's 
management, (2) add the office of the Chief Executive Officer 
(``CEO''), combine the office of the President and the office of the 
Chief Executive Officer into one office (President and Chief Executive 
Officer) and update the related powers and duties to reflect that the 
two positions are now combined and are held by one individual, (3) add 
the office of the Chief Financial Officer (``CFO'') and delete the 
office of the Comptroller, (4) delete the office of the Chief Operating 
Officer (``COO''), (5) change the title of Vice President to Executive 
Director and update the related powers and duties, and (6) make other 
changes related to certain powers and duties of the Board and various 
officers, including Managing Directors, the Vice Chairman of the 
Corporation, the Treasurer and the Assistant Treasurer, as described in 
greater detail below. DTC is proposing to make these changes to the By-
Laws so that the By-Laws remain consistent and accurate and DTC's 
governance documents accurately reflect its management and 
organizational structure and the responsibilities within the purview of 
certain roles. DTC believes these changes would facilitate the 
efficient governance and operation of DTC.
Proposed Changes to the By-Laws \4\
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    \4\ DTC last submitted a rule filing regarding changes to the 
By-Laws in 2006. See Securities Exchange Act Release No. 54173 (July 
19, 2006), 71 FR 42890 (July 28, 2006) (SR-DTC-2006-10, SR-FICC-
2006-09, and SR-NSCC-2006-08).
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A. Changes to DTC's Governance Procedures
    DTC would revise the By-Laws to (1) change the frequency with which 
each of the Board and the Executive Committee is required to meet, (2) 
permit the Board to act by unanimous written consent, and (3) make a 
technical change by removing the word ``monthly'' from the phrase 
``regular monthly meetings'' when describing Board meetings. DTC 
proposes to make the changes to the By-Laws that are described below.
1. Changes to the Frequency of Board Meetings and Executive Committee 
Meetings; Technical Change to the Description of Regular Meetings of 
the Board
    Currently, the By-Laws require (1) the Board to meet for ten 
meetings per year with at least two meetings during any three-month 
period and (2) the Executive Committee to meet at least once in each 
30-day period during which the Board does not meet. DTC is proposing to 
reduce the required frequency of its Board meetings and Executive 
Committee meetings to better align the frequency of DTC's Board 
meetings with those of Fixed Income Clearing Corporation and National 
Securities Clearing Corporation. DTC believes that reducing the 
frequency of DTC's Board meetings to better align the occurrence of 
these meetings would facilitate the efficient use of corporate 
resources. Specifically, DTC proposes to make the following changes to 
current Section 2.6 (Meetings) of the By-Laws to (1) reduce the 
required number of Board meetings and (2) eliminate the requirement 
that the Executive Committee meet at least once in each thirty-day 
period during which the Board does not meet:
    a. The minimum required number of meetings of the Board in current 
Section 2.6 (Meetings) would be reduced from ten meetings per year with 
at least two meetings during any three-month period to six meetings per 
year with at least one meeting during any three-month period.
    b. The provision in current Section 2.6 (Meetings) requiring the 
Executive Committee to meet during each 30-day period in which the 
Board does not meet would be deleted.
    In addition, DTC proposes to make a technical change in current 
Section 2.6 (Meetings) by removing the word ``monthly'' from the phrase 
``regular monthly meetings'' when describing that the Board may fix 
times and places for such meetings of the Board. The current provision 
refers to regular monthly meetings but also states that such meetings 
shall be held at least ten times a year. As such, DTC believes that the 
proposed language, which would state that the Board may fix times and 
places for regular meetings of the Board and no notice of such meetings 
need to be given, would improve clarity and consistency.
2. Unanimous Written Consent
    DTC proposes to add proposed Section 2.9 (Action by Unanimous 
Written Consent), permitting the Board to act by unanimous written 
consent in lieu of a meeting. The Board would be permitted to take all 
actions that are required to or may be taken at a meeting by unanimous 
written consent. The provision would require that the written consent 
set forth the action to be taken, be signed by all of the directors, 
and be filed with the minutes of the proceedings of the Board. DTC has 
determined that the unanimous written consent provision would 
facilitate the efficient operation of DTC by permitting the Board to 
make necessary decisions in a timely and efficient manner.
B. Changes to Certain DTC Board and Designated Officer Titles or 
Offices and Updates to the Related Powers and Duties
    DTC proposes to revise the titles or offices and update the related 
powers and duties of various designated officers and the Board, as 
further described below, and for the reasons described below.
1. Change the Title of Chairman of the Board to Non-Executive Chairman 
of the Board; Update the Powers and Duties of the Non-Executive 
Chairman of the Board
    DTC proposes to replace the title of Chairman of the Board with the 
title Non-Executive Chairman of the Board (``Non-Executive Chairman of 
the Board''). This change in title reflects that this position is now 
held by an individual who is not part of DTC's management (i.e., a non-
executive). In 2016, DTC made personnel changes. As part of these 
personnel changes, the individual who was serving as Chairman of the 
Board and who was part of DTC's management at that time became a non-
executive. DTC believed that it would be beneficial and desirable to 
continue to have this individual serve as chairman of the Board even 
though he is no longer part of DTC's management. Therefore, DTC 
proposes

[[Page 6641]]

to change the title of this position in the By-Laws to Non-Executive 
Chairman of the Board to reflect that this position is held by a non-
executive. DTC believes this proposed change would accurately reflect 
this organizational change. Furthermore, DTC proposes to revise the By-
Laws to enumerate the powers and duties of the Non-Executive Chairman 
of the Board. To implement this proposed change, DTC would revise the 
By-Laws as described below.
    Certain references to either Chairman or Chairman of the Board 
would be revised to Non-Executive Chairman of the Board in the sections 
of the By-Laws that would continue to apply to the Non-Executive 
Chairman of the Board. Specifically, the following changes would be 
made:
    a. In current Section 1.2 (Special Meetings), current Section 1.8 
(Presiding Officer and Secretary), current Section 2.6 (Meetings), and 
current Section 6.1 (Certificates for Shares), the word ``Non-
Executive'' would be added before each reference to the Chairman of the 
Board.
    Certain references to Chairman of the Board in the By-Laws would be 
deleted because such references are in the sections of the By-Laws that 
only apply to members of DTC management. Because the Non-Executive 
Chairman of the Board would not be a management position, such sections 
of the By-Laws would no longer be applicable. Specifically, the 
following changes would be made:
    a. In current Section 3.1 (General Provisions), Chairman of the 
Board would be removed from the list of designated officers of DTC.
    b. In current Section 3.12 (Compensation of Officers), the 
references to the Chairman of the Board would also be deleted because 
the Non-Executive Chairman of the Board does not receive compensation 
and because, as further described below, this section would be revised 
to only address the setting of compensation for the President and CEO.
    Current Section 3.2 (Powers and Duties of the Chairman of the 
Board) would be deleted and replaced by proposed Section 2.8 (Non-
Executive Chairman of the Board). Specifically, the following changes 
would be made:
    a. Certain powers and duties prescribed to the Chairman of the 
Board in current Section 3.2 (Powers and Duties of the Chairman of the 
Board) would remain with the Non-Executive Chairman of the Board. Such 
powers and duties include: (i) Presiding over the meetings of the 
stockholders and of the Board at which he is present and (ii) such 
other powers and duties as the Board may designate. This would be set 
forth in proposed Section 2.8 (Non-Executive Chairman of the Board). 
Furthermore, as is similarly stated in current Section 3.2 (Powers and 
Duties of the Chairman of the Board), proposed Section 2.8 (Non-
Executive Chairman of the Board) would state that the ``performance of 
any such duty by the Non-Executive Chairman of the Board shall be 
conclusive evidence of his power to act.''
    b. DTC would also expressly include in proposed Section 2.8 (Non-
Executive Chairman of the Board) that the Non-Executive Chairman of the 
Board has general supervision over the Board and its activities and 
would provide overall leadership to the Board. Consistent with his 
authority to supervise and lead the Board, DTC proposes to assign the 
responsibility for carrying out the policies of the Board of Directors 
to the Non-Executive Chairman of the Board rather than the President 
(as is provided in current Section 3.3 (Powers and Duties of the 
President)). Furthermore, in current Section 3.6 (Powers and Duties of 
the Secretary), the power to assign additional powers and duties to the 
Secretary would be revised to replace the reference to President with 
Non-Executive Chairman of the Board. DTC believes this is an 
appropriate responsibility for the Non-Executive Chairman of the Board 
to have as part of his general supervision of the Board.
    c. In addition, proposed Section 2.8 (Non-Executive Chairman of the 
Board) would state that, in the absence of the Non-Executive Chairman 
of the Board, the presiding director, as elected by the Board, shall 
preside at all meetings of the stockholders and of the Board at which 
he or she is present. Current Section 3.3 (Powers and Duties of the 
President) provides that, in the absence or in ability of the Chairman 
of the Board, the President shall preside at all meetings of 
shareholders and all meetings of the Board of Directors at which he is 
present. Pursuant to the Board of Directors of The Depository Trust & 
Clearing Corporation (``DTCC''), DTC, Fixed Income Clearing Corporation 
(``FICC'') and National Securities Clearing Corporation (``NSCC'') 
Mission Statement and Charter (``Board Mission Statement and 
Charter''), DTC annually elects a presiding director to preside at 
meetings when the Non-Executive Chairman of the Board is absent. As 
such, DTC believes the proposed language described above would enhance 
accuracy by correcting the inconsistency between the By-Laws and the 
Board Mission Statement and Charter.
    d. As further described below, in proposed Section 3.2 (Powers and 
Duties of the President and Chief Executive Officer), the Non-Executive 
Chairman of the Board would have the authority to designate powers and 
duties to the President and CEO. DTC believes this authority to 
designate powers and duties to the President and CEO is within the 
scope of the supervisory role of the Non-Executive Chairman of the 
Board and therefore proposes to revise the By-Laws to expressly state 
that the Non-Executive Chairman has this authority.
    e. In current Section 3.5 (Powers and Duties of Vice Presidents and 
Managing Directors), DTC would add the Non-Executive Chairman of the 
Board to the list of individuals who have the power to assign powers 
and duties to Managing Directors as well as make conforming changes. 
DTC believes this is an appropriate responsibility for the Non-
Executive Chairman of the Board to have because he has general 
supervision over the Board.
2. Add the Office of the CEO and Combine the Office of the President 
and the Office of the CEO into the Office of the President and CEO; 
Update the Related Powers and Duties
    DTC proposes to add the office of the CEO and combine the office of 
the President and the office of the CEO into one office (President and 
CEO) because one individual is the President and CEO. DTC proposes to 
revise the By-Laws to reflect that one individual holds the office of 
the President and CEO, including revising the list of designated 
officers in current Section 3.1 (General Provisions) to include the 
President and CEO. While current Section 3.3 (Powers and Duties of the 
President) provides that the President shall be the chief executive 
officer, current Section 3.1 (General Provisions) does not include CEO 
in the list of designated officer positions (President is currently 
included in this list). As such, DTC would revise certain references in 
the By-Laws from President to President and Chief Executive Officer. 
Specifically, DTC proposes to make the changes to the By-Laws that are 
described below.
    a. In current Section 1.2 (Special Meetings), current Section 1.8 
(Presiding Officer and Secretary), current Section 2.6 (Meetings), 
current Section 3.1 (General Provisions), current Section 3.5 (Powers 
and Duties of Vice Presidents and Managing Directors), current Section 
3.7 (Powers and Duties of the Treasurer), and current Section 3.12 
(Compensation of Officers), the words ``and Chief Executive Officer''

[[Page 6642]]

would be added after each reference to President.
    b. In current Section 6.1 (Certificates for Shares), the words 
``the President'' would be deleted and replaced by the words 
``President and Chief Executive Officer.''
    Furthermore, except as otherwise described below, the 
responsibilities, duties and powers granted to the President that are 
currently described in the By-Laws would continue to remain with the 
President and CEO. DTC proposes to make the following changes to the 
By-Laws to reflect the updated responsibilities and powers and duties 
that are granted to the President and CEO:
    a. A portion of current Section 3.3 (Powers and Duties of the 
President) would be deleted and replaced with proposed Section 3.2 
(Powers and Duties of the President and Chief Executive Officer). The 
remaining portion of current Section 3.3 (Powers and Duties of the 
President) would be included in proposed Section 3.2 (Powers and Duties 
of the President and Chief Executive Officer).
    b. Current Section 3.3 (Powers and Duties of the President) states 
that the President will have general supervision over the business and 
affairs of DTC subject to the direction of the Board. Additionally, 
current Section 3.3 (Powers and Duties of the President) states that 
the President may employ and discharge employees and agents of DTC, 
except such as shall be elected or appointed by the Board, and he may 
delegate these powers. Similarly, proposed Section 3.2 (Powers and 
Duties of the President and Chief Executive Officer) would state that 
the President and Chief Executive Officer would have general 
supervision over the overall business strategy, business operations, 
systems, customer outreach, and risk management, control and staff 
functions, subject to the direction of the Board and the Non-Executive 
Chairman of the Board. DTC believes the additional detail provided in 
proposed Section 3.2 (Powers and Duties of the President and CEO) would 
add clarity to the powers and duties associated with the role of 
President and Chief Executive Officer and would be consistent with the 
combined role. In addition, because the office of the COO would be 
eliminated (as described further below), the responsibility of general 
supervision over the operations of DTC, which is designated to the COO 
role in current Section 3.4 (Powers and Duties of the Chief Operating 
Officer), would be assigned to the President and CEO.
    c. Proposed Section 3.2 (Powers and Duties of the President and 
CEO) would state that the President and CEO would have such other 
powers and perform such other duties as the Board or the Non-Executive 
Chairman of the Board may designate. DTC believes this generally aligns 
with current Section 3.3 (Powers and Duties of the President). DTC 
believes that providing the Non-Executive Chairman of the Board with 
this additional authority to designate powers and duties to the 
President and CEO is within the scope of the supervisory role of the 
Non-Executive Chairman of the Board.
    d. As noted above, certain powers and duties listed in current 
Section 3.3 (Powers and Duties of the President) would be removed or 
assigned to another position. Specifically, as noted above, the 
responsibility for carrying out the policies of the Board would be 
assigned to the Non-Executive Chairman of the Board rather than to the 
President and CEO. Additionally, the statement that ``performance of 
any such duty by the President shall be conclusive evidence of his 
power to act'' that appears in current Section 3.3 (Powers and Duties 
of the President) would be removed as DTC believes it would be best 
practice to document specific designation of powers and/or duties made 
by the Board or Non-Executive Chairman of the Board to the President 
and CEO. Furthermore, as noted above, the language stating that, in the 
absence of the Non-Executive Chairman, the President and CEO shall 
preside at all meetings of shareholders and all meetings of the Board 
of Directors at which he is present would be deleted because, pursuant 
to the Board Mission Statement and Charter, that power resides with the 
presiding director who is elected annually by the DTC Board. DTC 
believes deleting this language would enhance accuracy by correcting 
the inconsistency between the By-Laws and the Board Mission Statement 
and Charter.
    e. As described above, in current Section 3.6 (Powers and Duties of 
the Secretary), the power to assign additional powers and duties to the 
Secretary would be removed from the President and granted to the Non-
Executive Chairman of the Board. DTC believes this is an appropriate 
responsibility for the Non-Executive Chairman of the Board to have as 
part of his general supervision of the Board.
    f. As described below, the President and Board currently have the 
authority to assign powers and duties to the Comptroller in current 
Section 3.8 (Powers and Duties of the Comptroller). Similarly, proposed 
Section 3.5 (Powers and Duties of the Chief Financial Officer) would 
provide that the CFO would perform such other duties as he may agree 
with the President and CEO and the Board.
3. Add the Office of the CFO; Delete of the Office of the Comptroller
    DTC would add the office of the CFO and assign to the CFO all of 
the powers and duties of the office of the chief financial officer. The 
CFO would, in general, have overall supervision of the financial 
operations of DTC. Furthermore, references to the office of the 
Comptroller would be deleted. DTC does not currently have a Comptroller 
nor does DTC plan to appoint one. Therefore, DTC believes it would be 
more accurate to remove all references to such position in the By-Laws. 
Specifically, DTC would revise the By-Laws as described below.
    a. In current Section 3.1 (General Provisions), CFO would be added 
to and Comptroller would be removed from the list of designated 
officers of DTC.
    b. DTC would add proposed Section 3.5 (Powers and Duties of the 
Chief Financial Officer). This proposed section would enumerate the 
powers and duties of the CFO. It would state that the CFO would have 
overall supervision of the financial operations of DTC and upon 
request, would counsel and advise other officers of DTC and perform 
other duties as agreed with the President and CEO or as determined by 
the Board. DTC believes these powers and duties are appropriate for the 
newly created role of CFO. Proposed Section 3.5 (Powers and Duties of 
the Chief Financial Officer) would also state that the CFO would report 
directly to the President and CEO. DTC believes it is appropriate for 
the CFO to report to the President and CEO and to specify this clear 
line of responsibility in the By-Laws.
    c. Furthermore, proposed Section 3.6 (Powers and Duties of the 
Treasurer) would also be revised to state that the Treasurer shall have 
all such powers and duties as generally are incident to the position of 
Treasurer or as the CFO (in addition to the President and CEO and the 
Board) may assign to him. Because the Treasurer directly reports to the 
CFO, DTC believes it is appropriate for the CFO to assign powers and 
duties to the Treasurer.
    d. DTC would delete current Section 3.8 (Powers and Duties of the 
Comptroller), which, with the elimination of the office of the 
Comptroller, would no longer be necessary.

[[Page 6643]]

4. Delete the Office of the COO
    DTC would also delete references to the designated office of the 
COO in the By-Laws. DTC believes this change is necessary because DTC 
no longer has a COO nor does DTC plan to appoint one. Specifically, DTC 
would make the changes to the By-Laws described below.
    a. In current Section 3.1 (General Provisions), the COO would be 
removed from the list of designated officers of DTC.
    b. Current Section 3.4 (Powers and Duties of the Chief Operating 
Officer) would be deleted, which, with the elimination of the office of 
the COO, would no longer be necessary. The power and duty prescribed to 
this position (general supervision over the operations of DTC) would be 
assigned to the President and CEO in proposed Section 3.2 (Powers and 
Duties of the President and Chief Executive Officer), as described 
above.
5. Change the Title of Vice President to Executive Director; Update the 
Related Powers and Duties
    DTC proposes to change the title of Vice President to Executive 
Director and update the related powers and duties. DTC believes these 
changes are necessary because DTC has decided that the title of 
Executive Director is more widely used in the financial services 
industry for roles similar to those designated as Vice Presidents. In 
DTC's organizational structure, Executive Directors report to Managing 
Directors. As such, it was decided that Executive Directors do not have 
sufficient seniority to call special meetings of shareholders, to 
preside over shareholder meetings unless specifically designated to do 
so by the Board, or to sign share certificates. DTC proposes to make 
the following changes to the By-Laws to reflect the change in the title 
from Vice President to Executive Director and to update the related 
powers and duties.
    a. In current Section 1.2 (Special Meetings), the proposed rule 
change would remove Vice Presidents from the list of officers 
authorized to call special meetings of shareholders. DTC believes that 
Vice Presidents do not have sufficient seniority to call special 
meetings of shareholders.
    b. In current Section 1.8 (Presiding Officer and Secretary), Vice 
President would removed. DTC believes that a Vice President should not 
preside over a shareholder meeting unless specifically designated to do 
so by the Board.
    c. In current Section 3.1 (General Provisions), Vice Presidents 
would be removed from the list of designated officers of DTC. As 
described below, a parenthetical phrase would be added explaining that 
the Board's power to appoint other officers includes the power to 
appoint one or more Executive Directors.
    d. In current Section 3.5 (Powers and Duties of Vice Presidents and 
Managing Directors), all references to Vice President would be deleted. 
Section 3.5 (Powers and Duties of Vice Presidents and Managing 
Directors) currently states that Vice Presidents and Managing Directors 
have such powers and perform such duties as the Board or the President 
may assign to them.\5\ Because individuals with the title of Executive 
Director report to Managing Directors, DTC believes the reference to 
Vice President in this section would not be necessary.
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    \5\ With this proposal, this reference to President would be 
revised to President and CEO, and the Non-Executive Chairman of the 
Board would be added so the Non-Executive Chairman of the Board 
would also be able to assign powers and duties to the Managing 
Directors.
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6. Other Changes to the Powers and Duties of the Board and Certain 
Other Designated Officers
Managing Directors
    a. In Section 1.2 (Special Meetings), the reference to the Managing 
Director would be added to the list of officers authorized to call 
special meetings of the stockholders to provide DTC's management with 
more flexibility by enabling additional persons within senior 
management to call special meetings of the Board.
    b. In current Section 2.6 (Meetings), the proposal would add 
Managing Directors to the list of officers authorized to call special 
meetings of the Board. DTC believes this proposed change would provide 
DTC's management with additional flexibility by enabling additional 
persons within senior management to call special meetings of the Board.
    c. In current Section 6.1 (Certificates for Shares), Managing 
Directors would be removed from the list of officers authorized to sign 
certificates for shares. By removing Managing Directors, DTC would be 
able to limit the authorized signatories of certificates for shares of 
DTC to a smaller number of individuals within senior management.
Vice Chairman of the Corporation
    As described below, a parenthetical phrase would be added in 
current Section 3.1 (General Provisions) explaining that the Board's 
power to appoint other offices includes, but is not limited to, the 
power to appoint a Vice Chairman of the Corporation.
Board
    a. In current Section 3.1 (General Provisions), DTC proposes to add 
a parenthetical phrase explaining that the Board's power to appoint 
other offices includes, but is not limited to, the power to appoint a 
Vice Chairman of the Corporation and one or more Executive Directors to 
enhance clarity.
    b. Additionally, in current Section 3.1 (General Provisions), 
regarding the ability of any one person to hold more than one office, 
DTC proposes to enhance and clarify the exception by specifying that 
neither the Secretary nor any Assistant Secretary can hold the 
following offices: (1) Vice Chairman of the Corporation or (2) 
President and CEO. DTC believes this proposed change is necessary to 
ensure that the Secretary and any Assistant Secretary would not hold 
those positions.
Treasurer
    In current Section 6.1 (Certificates of Shares), DTC proposes to 
delete the reference to Treasurer from the list of authorized 
signatories because DTC expects the Secretary or an Assistant Secretary 
(who are each currently listed as authorized signatories) to sign any 
share certificates.
Assistant Treasurer
    In current Section 6.1 (Certificates of Shares), DTC proposes to 
delete the reference to Assistant Treasurer from the list of authorized 
signatories because DTC expects the Secretary or the Assistant 
Secretary (who are each currently listed as authorized signatories) to 
sign any share certificates.
7. Revise Compensation of Officers to Compensation of the President and 
Chief Executive Officer
    Current Section 3.12 (Compensation of Officers) would be revised to 
accurately reflect DTC's compensation setting practices. Current 
Section 3.12 states that: (i) The compensation, if any, of the Chairman 
of the Board, and the President shall be fixed by a majority (which 
shall not include the Chairman of the Board or the President) of the 
entire Board of Directors and (ii) salaries of all other officers shall 
be fixed by the President with the approval of the Board and no officer 
shall be precluded from receiving a salary because he is also a 
director. Current Section 3.12 would be revised to state that the 
Compensation Committee of the Corporation will recommend the 
compensation for the President and Chief Executive Officer to

[[Page 6644]]

the Board of Directors for approval because, pursuant to the DTCC/DTC/
FICC/NSCC Compensation and Human Resources Committee Charter 
(``Compensation Committee Charter''), this is the process that is 
followed. In addition, DTC also proposes to delete the language stating 
that salaries of all other officers shall be fixed by the President 
with approval of the Board and no officer shall be precluded from 
receiving a salary because he is also a director. DTC believes the 
proposed changes are appropriate because they no longer reflect DTC's 
compensation setting procedures. In addition, as noted above, 
references to Chairman of the Board would be deleted because the Non-
Executive Chairman of the Board does not receive compensation. 
Furthermore, the title of this section would be revised from 
Compensation of Officers to Compensation of the President and Chief 
Executive Officer because this section would no longer speak to the 
compensation of officers other than the President and CEO.
C. Technical Changes and Corrections
    DTC has identified the following technical changes and/or 
corrections that it proposes to make to the By-Laws to enhance the 
clarity and readability of the By-Laws.
1. Delete Direct Reference to Statutes and Statutory Requirements
    DTC would delete direct statutory references from the By-Laws as 
set forth below so that the By-Laws remain consistent and accurate 
despite any changes to a specifically cited statute. DTC believes this 
proposed change would also provide DTC with a broad base to act in 
accordance with relevant law without violating the By-Laws and thereby 
also provide DTC with more flexibility. Specifically, DTC proposes to 
make the following changes to the By-Laws:
    a. In current Section 1.2 (Special Meetings), regarding 
stockholders' ability to compel the Secretary to call a special meeting 
of the stockholders for the election of directors, the reference to the 
provisions of Section 6003 of the New York Banking Law would be 
deleted.
    b. In current Section 1.4 (Notice of Meetings), regarding the 
composition of notices for stockholder meetings, the reference to the 
specific provisions and requirements of Section 6022 of the New York 
Banking Law would be deleted.
    c. In current Section 2.2 (Election and Term of Directors), 
regarding the directors' oath of office, the specific citation to 
Section 7015 would be removed. DTC also would clarify that the Banking 
Law is in fact referring to the New York Banking Law.
2. Technical Changes to Section Describing Audit Committee
    DTC proposes to revise proposed Section 2.11 (Audit Committee) to 
conform the description of the composition of the Audit Committee to 
the description of the Audit Committee in the by-laws of FICC because 
the composition of such committee is the same for DTC, FICC and NSCC 
and therefore, DTC believes the description of such committee should be 
consistent. Specifically, DTC proposes to revise proposed Section 2.11 
(Audit Committee) to state that the Board of Directors may appoint an 
Audit Committee consisting of three or more directors other than 
officers of DTC or DTCC. Furthermore, language stating that the Audit 
Committee will review the progress of all internal audits conducted by 
the Auditor (if there be one) and all periodic reports of such audits 
submitted to it by the Auditor pursuant to Section 3.9 and shall 
supervise, and cooperate and coordinate with, the Auditor in the 
performance of his duties would be deleted as a conforming change and 
for consistency with the by-Laws of FICC.
3. Other Technical Changes and Corrections
    In addition to the technical changes proposed above, DTC proposes 
to make the additional technical and grammatical changes described 
below.
    a. In the heading for current Article I, DTC proposes to delete 
``STOCKHOLDERS'' and replace it with ``Stockholders'' and in the 
heading for current Article II, delete ``BOARD OF DIRECTORS'' and 
replace it with ``Board of Directors'' to be consistent with the 
headings of the other Articles in the By-Laws.
    b. In current Section 1.2 (Special Meetings), current Section 1.3 
(Record Date for Meetings and Other Purposes), current Section 1.8 
(Presiding Officer and Secretary), current Section 2.6 (Meetings), 
current Section 3.1 (General Provisions), current Section 3.5 (Powers 
and Duties of Vice Presidents and Managing Directors), current Section 
3.6 (Powers and Duties of the Treasurer), current Section 3.12 
(Compensation of Officers), and current Section 6.1 (Certificates for 
Shares), conforming grammatical corrections would be made.
    c. In current Section 1.10 (Inspectors of Election), each use of 
the word ``corporation'' would be capitalized so that it would read 
``Corporation'' and the word ``such'' would be replaced with the word 
``the'' before the word ``Corporation'' in the last sentence to correct 
typographical errors and enhance consistency and readability.
    d. In current Section 2.3 (Newly Created Directorships and 
Vacancies), the extra space before and after the word ``of'' in the 
first sentence would be deleted.
    e. In addition, additional spaces between the section number and 
the section title would be added in current Section 1.1 (Annual 
Meeting) through Section 1.12 (Written Consent of Stockholders Without 
a Meeting), in current Section 2.1 (Number of Directors) through 
current Section 2.7 (Quorum and Voting), proposed Section 2.8 (Non-
Executive Chairman of the Board), proposed Section 2.10 (Executive 
Committee) through proposed Section 2.13 (Compensation of Directors), 
current Section 3.1 (General Provisions), proposed Section 3.3 (Powers 
and Duties of Managing Directors), proposed Section 3.4 (Powers and 
Duties of the Secretary), proposed Section 3.6 (Powers and Duties of 
the Treasurer), proposed Section 3.7 (Powers and Duties of the Auditor) 
through proposed Section 3.10 (Compensation of Officers), and current 
Section 6.1 (Certificates for Shares) through current Section 6.4 
(Lost, Stolen or Destroyed Certificates).
    f. In current Section 2.6 (Meetings), each use of the word 
``board'' in the second paragraph would be capitalized to correct 
typographical errors and enhance consistency.
    g. Current Section 2.8 (Executive Committee) through current 
Section 2.11 (Compensation of Directors) would be renumbered to reflect 
the addition of proposed Section 2.8 (Non-Executive Chairman of the 
Board) and proposed Section 2.9 (Action by Unanimous Written Consent).
    h. Current Section 3.5 (Powers and Duties of Vice Presidents and 
Managing Directors) through current Section 3.12 (Compensation of 
Officers) would be renumbered to reflect the addition of proposed 
Section 3.2 (Powers and Duties of the President and Chief Executive 
Officer) and proposed Section 3.5 (Powers and Duties of the Chief 
Financial Officer) and the deletion of current Section 3.2 (Powers and 
Duties of the Chairman of the Board), current Section 3.3 (Powers and 
Duties of the President), current Section 3.4 (Powers and Duties of the 
Chief Operating Officer) and current Section 3.8 (Powers and Duties of 
the Comptroller).
    i. Proposed Article X (Gender References) would be added to clarify 
that the By-Laws are intended to be

[[Page 6645]]

gender neutral with any reference to one gender deemed to include the 
other.
2. Statutory Basis
    Section 17A(b)(3)(A) of the Act requires, among other things, that 
a clearing agency is so organized to be able to facilitate the prompt 
and accurate clearance and settlement of securities transactions for 
which it is responsible.\6\ DTC believes the proposed changes to the 
By-Laws described above are consistent with this provision. 
Specifically, DTC believes that the (1) change of title from Chairman 
of the Board to Non-Executive Chairman of the Board and changes to the 
related powers and duties, (2) addition of the office of the CEO, the 
combination of the offices of the President and CEO and changes to the 
related powers and duties, (3) addition of the office of the CFO and 
deletion of the office of the Comptroller, (4) change of title from 
Vice President to Executive Director and changes to the related powers 
and duties, (5) deletion of the office of the COO, (6) changes to the 
powers and duties of the Board, (7) changes to the powers and duties of 
Managing Directors, (8) changes to the powers and duties of Vice 
Chairman of the Corporation, (9) changes to the powers and duties of 
the Treasurer, and (10) changes to the powers and duties of the 
Assistant Treasurer are designed to facilitate the effective and 
efficient governance and operation of DTC and accurately reflect DTC's 
current Board and management structure. DTC also believes the changes 
to the powers and duties of the Board and designated officer positions 
are appropriate and aligned with each role. Furthermore, these proposed 
changes are intended to promote additional clarity as to the 
responsibilities of the Board and certain designated officers. DTC 
believes the proposed changes to the section describing the 
compensation of officers are designed to accurately reflect: (1) The 
process that is followed for setting compensation pursuant to the 
Compensation Committee Charter and (2) that the Non-Executive Chairman 
of the Board does not receive compensation and would promote additional 
clarity as to the setting of compensation of the President and CEO and 
Non-Executive Chairman of the Board. DTC also believes the technical 
changes and corrections to the By-Laws would enhance clarity and 
transparency in DTC's organizational documents. DTC also believes that 
the proposed changes that would: (1) Reduce the minimum number of 
required Board meetings, (2) eliminate the requirement that the 
Executive Committee meet during each 30-day period in which the Board 
does not meet, and (3) authorize the Board to act by unanimous written 
consent in lieu of a meeting would facilitate the efficient operation 
of DTC by permitting the Board to make necessary decisions in a timely 
and efficient manner. DTC also believes that removing the word 
``monthly'' when describing that the Board may fix times and places of 
regular meetings of the Board would enhance clarity and consistency 
regarding the requirements associated with such meetings. Therefore, 
DTC believes these proposed changes are consistent with the requirement 
that DTC is so organized to facilitate the prompt and accurate 
clearance and settlement of securities transactions for which it is 
responsible.
---------------------------------------------------------------------------

    \6\ 15 U.S.C. 78q-1(b)(3)(A).
---------------------------------------------------------------------------

    Rule 17Ad-22(e)(1) under the Act requires a covered clearing agency 
to establish, implement, maintain and enforce written policies and 
procedures reasonably designed to provide for a well-founded, 
transparent and enforceable legal basis for each aspect of its 
activities in all relevant jurisdictions.\7\ DTC believes the (1) 
proposed changes to the titles or offices and the related powers and 
duties of the Board and certain officers and (2) proposed technical 
changes and corrections to the By-Laws are designed to ensure that 
DTC's organizational documents accurately describe DTC's organizational 
structure and that such organizational documents remain clear, 
transparent, and consistent. Therefore, DTC believes these proposed 
changes are consistent with Rule 17Ad-22(e)(1) because they are 
designed to ensure that DTC's organizational documents remain well-
founded, transparent and enforceable in all relevant jurisdictions.\8\
---------------------------------------------------------------------------

    \7\ 17 CFR 240.17Ad-22(e)(1).
    \8\ Id.
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    Rule 17Ad-22(e)(2) under the Act requires that DTC establish, 
implement, maintain and enforce written policies and procedures to 
provide for governance arrangements that, among other things, (1) are 
clear and transparent, (2) support the public interest requirements in 
Section 17A of the Act (15 U.S.C. 78q-1) applicable to clearing 
agencies, and the objectives of owners and participants; and (3) 
specify clear and direct lines of responsibility.\9\ DTC believes the 
proposed changes to the By-Laws described above are designed to be 
consistent with Rule 17Ad-22(e)(2).\10\ Specifically, DTC believes the 
proposed changes to the By-Laws regarding the titles or offices and the 
related powers and duties of various officers and the Board would 
enhance clarity and transparency because they would clearly and 
accurately set forth the organizational structure of DTC, including the 
roles and lines of responsibility of various officers and the Board. 
DTC also believes that the proposed changes that would: (1) Reduce the 
minimum number of required Board meetings, (2) eliminate the 
requirement that the Executive Committee meet during each 30-day period 
in which the Board does not meet, and (3) authorize the Board to act by 
unanimous written consent in lieu of a meeting would facilitate the 
efficient operation of DTC by permitting the Board to make necessary 
decisions in a timely and efficient manner. DTC also believes that 
removing the word ``monthly'' when describing that the Board may fix 
times and places of regular meetings would enhance clarity and 
consistency regarding the requirements associated with such meetings. 
DTC also believes the proposed changes relating to the compensation of 
officers would enhance clarity and transparency regarding its 
compensation setting procedures by (1) accurately reflecting the 
process that is followed pursuant to the Compensation Committee Charter 
and (2) clarifying that the Non-Executive Chairman of the Board does 
not receive compensation. In addition, the proposed technical changes 
and corrections to the By-Laws are also designed to enhance the 
clarity, transparency, and readability of the By-Laws. DTC believes 
that, taken together, these proposed changes would facilitate the 
effective and efficient governance and operation of DTC, and therefore 
would enable DTC to better serve its Participants. As such, DTC 
believes these proposed changes would also support the public interest 
requirements in Section 17A of the Act (15 U.S.C. 78q-1) applicable to 
clearing agencies, and the objectives of its owners and participants. 
Therefore, DTC believes these proposed rule changes are consistent with 
Rule 17Ad-22(e)(2) because they are designed to enhance clarity and 
transparency in DTC's governance arrangements, support the public 
interest requirements in Section 17A of the Act (15 U.S.C. 78q-1) 
applicable to clearing agencies, and the objectives of owners and 
participants, and specify clear and direct lines of responsibility for 
various officer positions and the Board within DTC's organizational 
structure.\11\
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    \9\ 17 CFR 240.17Ad-22(e)(2).
    \10\ Id.
    \11\ Id.

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[[Page 6646]]

(B) Clearing Agency's Statement on Burden on Competition

    DTC does not believe that the proposed rule change would have any 
impact on competition. The proposed rule change would amend the By-Laws 
to: (1) Accurately reflect DTC's organizational structure and reflect 
changes to titles or offices and the related powers and duties of the 
Board and various designated officers, (2) accurately reflect (a) the 
process that is followed for setting compensation pursuant to the 
Compensation Committee Charter and (b) that the Non-Executive Chairman 
of the Board does not receive compensation, (3) permit the Board to 
continue to make necessary decisions in a timely and efficient manner 
by reducing the minimum number of required Board meetings, authorizing 
the Board to act by unanimous written consent in lieu of meetings, and 
make other related changes, and (4) enhance the clarity, transparency, 
and readability of the By-Laws by making technical changes and 
corrections. DTC does not believe that this proposal would affect any 
of its current practices regarding the rights or obligations of its 
Participants. Therefore, DTC believes that the proposal would not have 
any effect on its Participants and thus, would not have any impact or 
burden on competition.

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

    DTC has not received any written comments relating to this 
proposal. DTC will notify the Commission of any written comments 
received by it.

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

    Within 45 days of the date of publication of this notice in the 
Federal Register or within such longer period up to 90 days (i) as the 
Commission may designate if it finds such longer period to be 
appropriate and publishes its reasons for so finding or (ii) as to 
which the self-regulatory organization consents, the Commission will:
    (A) By order approve or disapprove such proposed rule change, or
    (B) institute proceedings to determine whether the proposed rule 
change should be disapproved.

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 [email protected]. Please include 
File Number SR-DTC-2018-001 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-2018-001. 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-2018-001 and should be submitted on 
or before March 7, 2018.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\12\
Eduardo A. Aleman,
Assistant Secretary.
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    \12\ 17 CFR 200.30-3(a)(12).
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[FR Doc. 2018-02984 Filed 2-13-18; 8:45 am]
 BILLING CODE 8011-01-P