Document ID: SEC-2021-1817-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: The Depository Trust Co.
Posted Date: 2021-12-29T05:00Z

[Federal Register Volume 86, Number 247 (Wednesday, December 29, 2021)]
[Notices]
[Pages 74122-74130]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-28249]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-93854; File No. SR-DTC-2021-017]

Self-Regulatory Organizations; The Depository Trust Company; 
Notice of Filing of Proposed Rule Change To Enhance Capital 
Requirements and Make Other Changes

December 22, 2021.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Exchange Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby 
given that on December 13, 2021, The Depository Trust Company (``DTC'') 
filed with the Securities and Exchange Commission (``Commission'') the 
proposed rule change as described in Items I, II and III below, which 
Items have been prepared by the clearing agency. 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 consists of amendments to the Rules, By-
Laws and Organization Certificate (``Rules'') of DTC in order to (i) 
enhance DTC's capital requirements for Participants, (ii) redefine 
DTC's Watch List and eliminate DTC's enhanced surveillance list and 
(iii) make certain other clarifying, technical and supplementary 
changes in the Rules, including definitional updates, to accomplish 
items (i) and (ii), as described in greater detail below.\3\
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    \3\ Capitalized terms not defined herein are defined in the 
Rules, available at https://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 Proposed Rule Change

    In its filing with the Commission, the clearing agency included 
statements concerning the purpose of and basis for the proposed rule 
change and discussed any comments it received on the proposed rule 
change. The text of these statements may be examined at the places 
specified in Item IV below. The clearing agency has prepared summaries, 
set forth in sections A, B, and C below, of the most significant 
aspects of such statements.

(A) Clearing Agency's Statement of the Purpose of, and Statutory Basis 
for, the Proposed Rule Change

1. Purpose
    The purpose of this proposed rule change is to (i) enhance DTC's 
capital requirements for Participants, (ii) redefine DTC's Watch List 
and eliminate DTC's enhanced surveillance list and (iii) make certain 
other clarifying, technical and supplementary changes in the Rules, 
including definitional updates, to accomplish items (i) and (ii).
(i) Background
    Central securities depositories (``CSDs'') play a key role in 
financial markets by mitigating counterparty credit risk on 
transactions of their participants. As a CSD, DTC is exposed to the 
credit risks of its Participants. The credit risks borne by DTC are 
mitigated, in part, by the capital maintained by Participants, which 
serves as a loss-absorbing buffer.
    In accordance with Section 17A(b)(4)(B) of the Exchange Act,\4\ a 
registered clearing agency such as DTC may, among other things, deny 
participation to, or condition the participation of, any person on such 
person meeting such standards of financial responsibility prescribed by 
the rules of the registered clearing agency.
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    \4\ 15 U.S.C. 78q-1(b)(4)(B).
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    In furtherance of this authority, DTC requires applicants and 
Participants to meet the relevant financial responsibility standards 
prescribed by the Rules. These financial responsibility standards 
generally require Participants to have and maintain certain levels of 
capital, as more particularly described in the Rules and below.
    DTC's capital requirements for Participants have not been updated 
in over 20 years. Since that time, there have been significant changes 
to the financial markets that warrant DTC revisiting its capital 
requirements. For example, the regulatory environment within which DTC 
and its Participants operate has undergone various changes. The 
implementation of the Basel III standards,\5\ the designation of many 
banks as systemically important by the Financial Stability Board,\6\ as 
well as the designation of DTC as a systemically important financial 
market utility (``SIFMU'') by the Financial Stability Oversight 
Council,\7\ have significantly increased the regulatory requirements, 
including capital requirements, of many financial institutions and 
CSDs. Similarly, the Covered Clearing Agency Standards (``CCAS'') 
adopted by the Commission have raised the regulatory standards 
applicable to CSDs such as DTC.\8\
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    \5\ Basel Committee on Banking Supervision, The Basel Framework, 
available at https://www.bis.org/basel_framework/index.htm?export=pdf (``Basel III Standards'').
    \6\ See Financial Stability Board, 2021 list of global 
systemically important banks, available at https://www.fsb.org/wp-content/uploads/P231121.pdf.
    \7\ See U.S. Department of the Treasury, Designations, Financial 
Market Utility Designations, available at https://home.treasury.gov/policy-issues/financial-markets-financial-institutions-and-fiscal-service/fsoc/designations.
    \8\ 17 CFR 240.17Ad-22(e).
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    There also have been significant Participant changes over the past 
20 years. Numerous mergers, acquisitions, and new market entrants have 
created a diverse group of Participants that has expanded the credit-
risk profiles that DTC must manage.
    Moreover, transaction values at DTC have increased significantly 
over the years.\9\ Although the increase does not present more risk to 
DTC directly, as DTC's services are nonguaranteed and fully 
collateralized, DTC does have an interest in ensuring that its 
Participants have a certain minimum amount of capital to help support 
the increased activity.
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    \9\ See, e.g., DTCC Annual Reports, available at https://www.dtcc.com/about/annual-report. DTC is a wholly owned subsidiary 
of The Depository Trust & Clearing Corporation (``DTCC''). The DTCC 
Annual Reports highlight and track DTC transactional values year-
over-year.
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    Although these factors do not directly require DTC to increase 
capital requirements for Participants (e.g., there is no specific 
regulation or formula that prescribes a set capital requirement for 
participants of a CSD such as DTC), the overarching and collective 
focus of the regulatory changes noted above, in light of the many 
heightened risks to the financial industry, has been to increase the 
stability of the financial markets in order to reduce systemic risk. As 
a self-regulatory organization, a SIFMU, and being exposed to the new 
and increased risks over the past 20 years, DTC has a responsibility to 
do the same. Enhancing its capital requirements helps meet that 
responsibility and improve DTC's credit risk management. Enhanced 
capital requirements also help mitigate other risks posed directly or 
indirectly by Participants such as legal risk, operational risk and 
cyber risk, as better capitalized Participants have greater financial 
resources in order

[[Page 74123]]

to mitigate the effects of these and other risks.
    As for setting the specific capital requirements proposed, again, 
there is no regulation or formula that requires or calculates a 
specific amount (i.e., there is no magic number). Instead, DTC 
considered several factors, including inflation and the capital 
requirements of other Financial Market Infrastructures (``FMIs''), both 
in the U.S. and abroad, to which the proposed requirements align.\10\
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    \10\ See The Options Clearing Corporation, OCC Rules, Rule 
301(a), available at https://www.theocc.com/Company-Information/Documents-and-Archives/By-Laws-and-Rules (requiring broker-dealers 
to have initial net capital of not less than $2,500,000); Chicago 
Mercantile Exchange Inc., CME Rulebook, Rule 970.A.1, available at 
https://www.cmegroup.com/rulebook/CME/I/9/9.pdf (requiring clearing 
members to maintain capital of at least $5 million, with banks 
required to maintain minimum tier 1 capital of at least $5 billion); 
LCH SA, LCH SA Clearing Rule Book, Section 2.3.2, available at 
https://www.lch.com/resources/rulebooks/lch-sa (requiring, with 
respect to securities clearing, capital of at least EUR 10 million 
for self-clearing members and at least EUR 25 million for members 
clearing for others, subject to partial satisfaction by a letter of 
credit) (1 EUR = $0.8150 as of December 31, 2020; see https://www.fiscal.treasury.gov/reports-statements/treasury-reporting-rates-exchange/current.html (last visited January 14, 2021)).
    Although the requirements of these FMIs are greater than what 
DTC proposes, DTC is choosing not to raise the requirement further 
given that it employs a fully collateralized model, which mitigates 
the level of risk that its Participants pose to DTC.
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    In light of these and other developments described below, DTC 
proposes to enhance its capital requirements for Participants, as 
described in more detail below.
    DTC also proposes to redefine the Watch List, which is a list of 
Participants that are deemed by DTC to pose a heightened risk to it and 
its Participants based on credit ratings and other factors. As part of 
the redefinition of the Watch List, DTC proposes to eliminate the 
separate enhanced surveillance list and implement a new Watch List that 
consists of a relatively smaller group of Participants that exhibit 
heightened credit risk, as described in more detail below.
(ii) Current DTC Capital Requirements
    The current DTC capital requirements for Participants are set forth 
in DTC's Policy Statements on the Admission of Participants and 
Pledgees (the ``Policy Statement'').\11\
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    \11\ See Policy Statement, supra note 3.
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Policy Statement
    The Policy Statement is divided into three sections. Section 1 of 
the Policy Statement concerns entities organized in the U.S. (``U.S. 
entities'') applying to become Participants. Section 2 of the Policy 
Statement concerns entities organized in a country other than the U.S. 
and that are not otherwise subject to U.S. federal or state regulation 
(``non-U.S. entities'') applying to become Participants. Section 3 of 
the Policy Statement concerns fees and time limits on applications to 
become a Participant or Pledgee.
    As relevant to DTC's proposal to enhance its capital requirements 
for Participants:
Section 1
    Section 1 of the Policy Statement provides that Rules 2 
(Participants and Pledgees) and 3 (Participants Qualifications) set 
forth the basic standards for the admission of Participants, including 
that the admission of a Participant is subject to an applicant's 
demonstration that it meets reasonable standards of financial 
responsibility, operational capability, and character at the time of 
its application and on an ongoing basis thereafter.
    Section 1 of the Policy Statement provides that any applicant that 
satisfies the qualifications for eligibility to become a Participant 
set forth under subsections (d) or (h)(ii) of Section 1 of Rule 3 must 
comply with minimum financial resource requirements in order to qualify 
to be admitted, and continue in good standing, as a Participant.
    Subsection (d) of Section 1 of Rule 3 provides that a bank or trust 
company which is subject to supervision or regulation pursuant to the 
provisions of federal or state banking laws, or any subsidiary of such 
a bank or trust company or a bank holding company or any subsidiary of 
a bank holding company, is eligible to become a Participant.
    Pursuant to the Policy Statement, any applicant or Participant that 
satisfies the qualifications of subsection (d) of Section 1 of Rule 3 
is required to maintain equity capital in the amount of at least $2 
million based on the definition of equity capital provided in the form 
and instructions of the Consolidated Report of Conditions and Income 
maintained by the Federal Financial Institutions Examination Council.
    Subsection (h)(ii) of Section 1 of Rule 3 provides that a broker-
dealer registered under the Exchange Act is eligible to become a 
Participant.
    Pursuant to the Policy Statement, any applicant or Participant that 
satisfies the qualifications of subsection (h)(ii) of Section 1 of Rule 
3 is required to maintain a minimum amount of not less than $500,000 in 
excess net capital over the greater of (i) the minimum capital 
requirement imposed on it pursuant to Exchange Act Rule 15c3-1, or (ii) 
such higher minimum capital requirement imposed by the registered 
broker-dealer's designated examining authority.
Section 2
    Section 2 of the Policy Statement provides that non-U.S. entities 
are eligible to become Participants.
    Section 2 of the Policy Statement requires that non-U.S. entities 
applying to become Participants provide to DTC, for financial 
monitoring purposes, audited financial statements prepared in 
accordance with U.S. generally accepted accounting principles (``U.S. 
GAAP'') or other generally accepted accounting principles that are 
satisfactory to DTC.
    In order to address the risk presented by the acceptance of 
financial statements not prepared in accordance with U.S. GAAP, Section 
2 of the Policy Statement provides that the minimum financial 
requirements applicable to a non-U.S. entity will be subject to a 
specified premium, as follows:
    i. For financial statements prepared in accordance with 
International Financial Reporting Standards, the U.K. Companies Act of 
1985 (``U.K. GAAP''), or Canadian generally accepted accounting 
principles--a premium of 1\1/2\ times the minimum financial 
requirements;
    ii. for financial statements prepared in accordance with a European 
Union country's generally accepted accounting principles, other than 
U.K. GAAP--a premium of 5 times the minimum financial requirements; and
    iii. for financial statements prepared in accordance with any other 
type of generally accepted accounting principles--a premium of 7 times 
the minimum financial requirements.
    Accordingly, a non-U.S. entity that does not prepare its financial 
statements in accordance with U.S. GAAP is required to meet financial 
requirements between 1\1/2\ to 7 times the minimum financial 
requirements that would otherwise be applicable to the non-U.S entity. 
Given that, as noted above, the financial responsibility requirements 
generally require a Participant to have a certain level of capital, 
Section 2 of the Policy Statement has the effect of requiring a non-
U.S. entity that does not prepare its financial statements in 
accordance with U.S. GAAP to have capital between 1\1/2\ to 7 times the 
otherwise-applicable capital requirement.
    Section 2 of the Policy Statement also provides that a non-U.S. 
entity must be in compliance with the financial

[[Page 74124]]

reporting and responsibility standards of its home country regulator.
(iii) Current DTC Watch List and Enhanced Surveillance List
    DTC's Watch List is a list of Participants that are deemed by DTC 
to pose a heightened risk to it and its Participants based on credit 
ratings and other factors.\12\
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    \12\ See Rule 1 (Definitions; Governing Law), supra note 3.
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    Specifically, the Watch List is the list of Participants with 
credit ratings derived from DTC's Credit Risk Rating Matrix (``CRRM'') 
\13\ of 5, 6 or 7, as well as Participants that, based on DTC's 
consideration of relevant factors, including those set forth in Section 
10 of Rule 2 (Participants and Pledgees),\14\ are deemed by DTC to pose 
a heightened risk to it and its Participants.
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    \13\ DTC's CRRM is a matrix of credit ratings of Participants 
specified in Section 10(a) of Rule 2. The CRRM is developed by DTC 
to evaluate the credit risk Participants pose to DTC and its 
Participants and is based on factors determined to be relevant by 
DTC from time to time, which factors are designed to collectively 
reflect the financial and operational condition of a Participant. 
These factors include (i) quantitative factors, such as capital, 
assets, earnings, and liquidity, and (ii) qualitative factors, such 
as management quality, market position/environment, and capital and 
liquidity risk management. See Rule 1 (Definitions; Governing Law), 
supra note 3.
    \14\ Rule 2 (Participants and Pledgees), Section 10, supra note 
3.
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    In addition to the Watch List, DTC also maintains a separate list 
of Participants subject to enhanced surveillance in accordance with the 
provisions of Section 10(b) of Rule 2, as discussed below. The enhanced 
surveillance list is a list of Participants for which DTC has 
heightened credit concerns, which may include Participants that are 
already, or may soon be, on the Watch List. As described below, a 
Participant is subject to the same potential consequences from being 
subject to enhanced surveillance or being placed on the Watch List.
Rule 2 (Participants and Pledgees)
    Rule 2 (Participants and Pledgees) specifies the ongoing 
participation requirements and monitoring applicable to Participants 
and Pledgees.\15\
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    \15\ Rule 2 (Participants and Pledgees), supra note 3.
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    Section 10(b) of Rule 2 provides that a Participant that is (1) a 
U.S. bank or trust company that files the Consolidated Report of 
Condition and Income (``Call Report''), (2) a registered broker-dealer 
that files the Financial and Operational Combined Uniform Single Report 
(``FOCUS Report'') or the equivalent with its regulator, or (3) a non-
U.S. bank or trust company that has audited financial data that is 
publicly available, will be assigned a credit rating by DTC in 
accordance with the CRRM. A Participant's credit rating is reassessed 
each time the Participant provides DTC with requested information 
pursuant to Section 1 of Rule 2 or as may be otherwise required under 
the Rules.
    Section 10(b) further provides that because the factors used as 
part of the CRRM may not identify all risks that a Participant assigned 
a credit rating by DTC may present to DTC, DTC may, in its discretion, 
override such Participant's credit rating derived from the CRRM to 
downgrade the Participant. This downgrading may result in the 
Participant being placed on the Watch List and/or it may subject the 
Participant to enhanced surveillance based on relevant factors.
    Section 10(c) of Rule 2 provides that Participants not assigned a 
credit rating by DTC will not be assigned a credit rating by the CRRM 
but may be placed on the Watch List and/or may be subject to enhanced 
surveillance based on relevant factors.
    Section 10(d) of Rule 2 provides that the factors to be considered 
by DTC in determining whether a Participant is placed on the Watch List 
and/or subject to enhanced surveillance include (i) news reports and/or 
regulatory observations that raise reasonable concerns relating to the 
Participant, (ii) reasonable concerns around the Participant's 
liquidity arrangements, (iii) material changes to the Participant's 
organizational structure, (iv) reasonable concerns about the 
Participant's financial stability due to particular facts and 
circumstances, such as material litigation or other legal and/or 
regulatory risks, (v) failure of the Participant to demonstrate 
satisfactory financial condition or operational capability or if DTC 
has a reasonable concern regarding the Participant's ability to 
maintain applicable participation standards, and (vi) failure of the 
Participant to provide information required by DTC to assess risk 
exposure posed by the Participant's activity.
    Section 10(e) of Rule 2 provides that a Participant being subject 
to enhanced surveillance or being placed on the Watch List (1) will 
result in a more thorough monitoring of the Participant's financial 
condition and/or operational capability, including on-site visits or 
additional due diligence information requests, and (2) may be required 
make more frequent financial disclosures to DTC. Participants that are 
subject to enhanced surveillance are also reported to DTC's management 
committees and regularly reviewed by DTC senior management.
(iv) Proposed Rule Changes
A. Changes To Enhance DTC's Capital Requirements
    As noted earlier, as a CSD, DTC is exposed to the credit risks of 
its Participants. The credit risks borne by DTC are mitigated, in part, 
by the capital maintained by Participants, which serves as a loss-
absorbing buffer.
    DTC's financial responsibility standards for Participants generally 
require Participants to have and maintain certain levels of capital.
    As described in more detail below, DTC proposes to enhance its 
capital requirements for Participants as follows:
Rule 1 (Definitions; Governing Law)
    In connection with its proposal to enhance capital requirements for 
Participants, DTC proposes to add to Rule 1 new defined terms of ``CET1 
Capital,'' ``Excess Net Capital,'' ``Tier 1 RBC Ratio'' and ``Well 
Capitalized,'' as discussed below.
Policy Statement, Section 1 (Policy Statement on the Admission of U.S. 
Entities as Participants)
U.S. Banks and Trust Companies That Are Banks
    DTC proposes to (1) change the measure of capital requirements for 
U.S. banks and trust companies that are banks from equity capital to 
common equity tier 1 capital (``CET1 Capital''),\16\ (2) raise the 
minimum capital requirements for U.S. banks and trust companies that 
are banks, and (3) require U.S. banks and trust companies that are 
banks to be well capitalized (``Well Capitalized'') as defined in the 
capital adequacy rules and regulations of the Federal Deposit Insurance 
Corporation (``FDIC'').\17\
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    \16\ Under the proposal, CET1 Capital would be defined as an 
entity's common equity tier 1 capital, calculated in accordance with 
such entity's regulatory and/or statutory requirements.
    \17\ See 12 CFR 324.403(b)(1).
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    DTC proposes to change the measure of capital requirements for U.S. 
banks and trust companies that are banks from equity capital to CET1 
Capital and raise the minimum capital requirements for U.S. banks and 
trust companies that are banks in order to align DTC's capital 
requirements with banking regulators' changes to regulatory capital 
requirements over the past several years, which have standardized and 
harmonized the calculation and measurement of bank capital and leverage 
throughout the world.\18\

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Consistent with these changes by banking regulators, DTC believes that 
the appropriate capital measure for Participants that are U.S. banks 
and trust companies that are banks should be CET1 Capital and that 
DTC's capital requirements for Participants should be enhanced in light 
of these increased regulatory capital requirements.
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    \18\ Compare, e.g., 12 CFR 324.20(b) (FDIC's definition of CET1 
Capital), and Regulation (EU) No 575/2013 of the European Parliament 
and of the Council of 26 June 2013 on prudential requirements for 
credit institutions and investment firms and amending Regulation 
(EU) No 648/2012, Article 26, available at https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A32013R0575 (European 
Union's definition of CET1 Capital), with Basel Committee on Banking 
Supervision, Basel III Standards, CAP10.6, supra note 5 (Basel III 
Standards' definition of CET1 Capital).
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    In addition, requiring U.S. banks and trust companies that are 
banks to be Well Capitalized ensures that Participants are well 
capitalized while also allowing adjusted capital to be relative to 
either the risk-weighted assets or average total assets of the bank or 
trust company. DTC proposes to have the definition of Well Capitalized 
expressly tied to the FDIC's definition of ``well capitalized'' to 
ensure that the proposed requirement that U.S. banks and trust 
companies that are banks be Well Capitalized will keep pace with future 
changes to banking regulators' regulatory capital requirements.
    Under the proposal, an applicant or Participant that is a U.S. bank 
or a U.S. trust company that is a bank must have and maintain at all 
times at least $15 million in CET1 Capital and be Well Capitalized at 
all times.
U.S. Banks Trust Companies That Are Not Banks
    DTC does not propose to change the existing capital requirements 
applicable to an applicant or Participant that is a U.S. trust company 
that is not a bank, although DTC is proposing to make some clarifying 
and conforming language changes to improve the accessibility and 
transparency of these capital requirements, without substantive effect.
    DTC treats U.S. trust companies that are banks and non-banks 
differently because they present different risks based on the attendant 
risks of their business activities, with trust companies engaging in 
banking activities (e.g., receiving deposits and making loans) being 
subject to greater risks than trust companies that limit their 
activities to trust activities (e.g., acting as a trustee, other 
fiduciary or transfer agent/registrar).
U.S. Broker-Dealers
    DTC proposes to increase the minimum excess net capital (``Excess 
Net Capital'') \19\ requirements for applicants or Participants that 
are U.S. broker-dealers to $1 million. This would double the current 
Excess Net Capital requirements applicable to Participants that are 
U.S. broker-dealers.
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    \19\ Under the proposal, Excess Net Capital would be defined as 
a broker-dealer's excess net capital, calculated in accordance with 
such broker-dealer's regulatory and/or statutory requirements.
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    As described in more detail below, the proposed minimum Excess Net 
Capital increase will help ensure DTC's ongoing compliance with 
regulatory requirements and expectations related to credit risk, such 
as those addressed in CCAS Rules 17Ad-22(e)(4)(i) and (e)(18).\20\
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    \20\ 17 CFR 240.17Ad-22(e)(4)(i) and (e)(18).
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U.S. CSDs
    DTC proposes to require that an applicant or Participant that is a 
U.S. CSD have and maintain at all times at least $5 million in equity 
capital. DTC proposes that any clearing corporation would be deemed to 
be a CSD for the purposes of determining such applicant or 
Participant's minimum financial requirements. DTC proposes to create a 
standard capital requirement for Participants that are U.S. CSDs due to 
the systemic importance of these Participants and the need to hold 
these Participants to a consistent, high standard to ensure that they 
have sufficient capital to fulfill their systemically important role.
U.S. Securities Exchanges
    DTC proposes to require that an applicant or Participant that is a 
national securities exchange registered under the Exchange Act must 
have and maintain at all times at least $100 million in equity capital. 
DTC proposes to create a standard capital requirement for Participants 
that are national securities exchanges due to the systemic importance 
of these Participants and the need to hold these Participants to a 
consistent, high standard to ensure that they have sufficient capital 
to fulfill their systemically important role.
U.S. Settling Banks
    DTC proposes to require that a Settling Bank or applicant to be a 
Settling Bank that, in accordance with such entity's regulatory and/or 
statutory requirements, calculates a Tier 1 RBC Ratio must have a Tier 
1 RBC Ratio \21\ at all times equal to or greater than the Tier 1 RBC 
Ratio that would be required for such Settling Bank or applicant to be 
Well Capitalized.
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    \21\ Under the proposal, Tier 1 RBC Ratio would be defined as 
the ratio of an entity's tier 1 capital to its total risk-weighted 
assets, calculated in accordance with such entity's regulatory and/
or statutory requirements.
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Other U.S. Entities
    For any other U.S. entity applicant or Participant that is not 
otherwise addressed above, (1) such applicant or Participant must 
maintain compliance with its regulator's minimum financial requirements 
at all times and (2) DTC may, based on information provided by or 
concerning an applicant or Participant, also assign minimum financial 
requirements to such applicant or Participant based on how closely it 
resembles another Participant type and its risk profile. Any such 
assigned minimum financial requirements would be promptly communicated 
to, and discussed with, the applicant or Participant.
    At the end of Section 1 of the Policy Statement, DTC proposes to 
make explicit that, notwithstanding anything to the contrary in such 
section, an applicant or Participant must maintain compliance with its 
regulator's minimum financial requirements at all times.
Policy Statement, Section 2 (Policy Statement on the Admission of Non-
U.S. Entities as Participants)
Non-U.S. Banks and Trust Companies
    DTC proposes to require a Participant that is a non-U.S. bank or 
trust company (including a U.S. branch or agency) to (1) have and 
maintain at all times at least $15 million in CET1 Capital and comply 
at all times with the minimum capital requirements (including, but not 
limited to, any capital conservation buffer, countercyclical buffer, 
and any Domestic Systemically Important Banks (``D-SIB'') or Global 
Systemically Important Bank (``G-SIB'') buffer, if applicable) and 
capital ratios required by its home country regulator, or, if greater, 
with such minimum capital requirements or capital ratios standards 
promulgated by the Basel Committee on Banking Supervision,\22\ (2) 
provide an attestation for itself, its parent bank and its parent bank 
holding company (as applicable) detailing the minimum capital 
requirements (including, but not limited to, any capital conservation 
buffer, countercyclical buffer, and any D-SIB or G-SIB buffer, if 
applicable) and capital ratios required by their home country 
regulator, (3) provide, no less than annually and upon request by DTC, 
an attestation for the Participant, its parent bank and its parent bank 
holding company (as applicable) detailing the minimum capital

[[Page 74126]]

requirements (including, but not limited to, any capital conservation 
buffer, countercyclical buffer, and any D-SIB or G-SIB buffer, if 
applicable) and capital ratios required by their home country regulator 
and (4) notify DTC: (a) within two Business Days of any of their 
capital requirements (including, but not limited to, any capital 
conservation buffer, countercyclical buffer, and any D-SIB or G-SIB 
buffer, if applicable) or capital ratios falling below any minimum 
required by their home country regulator; and (b) within 15 calendar 
days of any such minimum capital requirement or capital ratio changing.
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    \22\ See Basel Committee on Banking Supervision, Basel III 
Standards, supra note 5.
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    As described above, pursuant to Section 2 of the Policy Statement, 
the current minimum capital requirements for a Participant that does 
not prepare its financial statements in accordance with U.S. GAAP is 
subject to a multiplier that requires such Participant to have capital 
between 1\1/2\ to 7 times the otherwise-applicable capital requirement.
    The multiplier was designed to account for the less transparent 
nature of accounting standards other than U.S. GAAP. However, 
accounting standards have converged over the years (namely IFRS and 
U.S. GAAP).\23\ As such, DTC believes the multiplier is no longer 
necessary and its retirement would be a welcomed simplification for 
both DTC and its Participants.
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    \23\ The convergence between IFRS and U.S. GAAP began with the 
2002 Norwalk Agreement. (Available at https://www.ifrs.org/content/dam/ifrs/around-the-world/mous/norwalk-agreement-2002.pdf.) Under 
that agreement, the Financial Accounting Standards Board (``FASB'') 
and the International Accounting Standards Board (``IASB'') signed a 
memorandum of understanding on the convergence of accounting 
standards. Between 2010 and 2013, FASB and IASB published several 
quarterly progress reports on their work to improve and achieve 
convergence of U.S. GAAP and IFRS. In 2013, the International 
Financial Reporting Standards Foundation established the Accounting 
Standards Advisory Forum (``ASAF'') to improve cooperation among 
worldwide standard setters and advise the IASB as it developed IFRS. 
(See https://www.ifrs.org/groups/accounting-standards-advisory-forum/.) FASB was selected as one of the ASAF's twelve members. 
FASB's membership on the ASAF helps represent U.S. interests in the 
IASB's standard-setting process and continues the process of 
improving and converging U.S. GAAP and IFRS. In February 2013, the 
Journal of Accountancy published its view of the success of the 
convergence project citing converged or partially converged 
standards, including business combinations, discontinued operations, 
fair value measurement, and share-base payments. (Available at 
https://www.journalofaccountancy.com/issues/2013/feb/20126984.html.) 
Subsequent to the publication, IASB and FASB converge on revenue 
recognition. While IASB and FASB have not achieved full convergence, 
DTC believes the accounting rules are sufficiently aligned such that 
the multiplier is no longer required.
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    Accordingly, DTC proposes to delete the language in Section 2 of 
the Policy Statement providing that the minimum capital requirements 
for a Participant that does not prepare its financial statements in 
accordance with U.S. GAAP is subject to a multiplier that requires such 
Participants to have capital between 1\1/2\ to 7 times the otherwise-
applicable capital requirement.
    As described above, DTC also proposes that non-U.S. banks be 
compliant with the minimum capital requirements and capital ratios in 
their home jurisdiction. Given the difficulty in knowing and monitoring 
compliance with various regulatory minimums for various jurisdictions, 
these Participants would be required to provide DTC with periodic 
attestations relating to the minimum capital requirements and capital 
ratios for their home jurisdiction.
Non-U.S. Broker-Dealers
    DTC proposes to impose a minimum capital requirement of $25 million 
in total equity capital for applicants or Participants that are non-
U.S. broker-dealers.
Non-U.S. CSDs
    DTC proposes to require that an applicant or Participant that is a 
non-U.S. CSD have and maintain at all times at least $5 million in 
equity capital. DTC proposes that any non-U.S. entity clearing 
corporation would be deemed to be a CSD for the purposes of determining 
such applicant or Participant's minimum financial requirements. DTC 
proposes to create a standard capital requirement for Participants that 
are non-U.S. CSDs due to the systemic importance of these Participants 
and the need to hold these Participants to a consistent, high standard 
to ensure that they have sufficient capital to fulfill their 
systemically important role.
Non-U.S. Securities Exchanges
    DTC proposes requiring that an applicant or Participant that is a 
non-U.S. securities exchange or multilateral trading facility must have 
and maintain at all times at least $100 million in equity capital. DTC 
proposes to create a standard capital requirement for Participants that 
are non-U.S. securities exchanges due to the systemic importance of 
these Participants and the need to hold these Participants to a 
consistent, high standard to ensure that they have sufficient capital 
to fulfill their systemically important role.
Other Non-U.S. Entities
    For any other non-U.S. entity applicant or Participant that is not 
otherwise addressed above, (1) such applicant or Participant must 
maintain compliance with its home country regulator's minimum financial 
requirements at all times and (2) DTC may, based on information 
provided by or concerning an applicant or Participant, also assign 
minimum financial requirements to such applicant or Participant based 
on how closely it resembles another Participant type and its risk 
profile. Any such assigned minimum financial requirements would be 
promptly communicated to, and discussed with, the applicant or 
Participant.
    At the end of Section 2 of the Policy Statement, DTC proposes to 
make explicit that, notwithstanding anything to the contrary in such 
section, an applicant or Participant must maintain compliance with its 
home country regulator's minimum financial requirements at all times.
Other Proposed Changes to the Policy Statement
Introduction and General Changes
    DTC proposes, without substantive effect, to improve the 
readability and accessibility of the Policy Statement by (i) adding 
appropriate headings and sub-headings and renumbering sections as 
appropriate, (ii) deleting undefined terms and replacing them with 
appropriate defined terms, including replacing references to ``foreign 
entities'' with references to ``non-U.S. entities'' and (iii) fixing 
typographical and other errors, in each case throughout the Policy 
Statement.
Section 1
    In Section 1 of the Policy Statement, DTC proposes to make explicit 
that following a U.S. entity applicant's admission as a Participant, it 
will be required to remain in good standing as a Participant, meeting 
the required qualifications, financial responsibility, operational 
capability and character described in the Policy Statement and in the 
Rules.
    DTC proposes to move under the newly added heading of 
``Qualifications'' in Section 1.A of the Policy Statement the existing 
language providing that in the event an organization that is not 
subject to regulatory oversight desires to become a Participant, DTC 
may review with such organization the economic and operational 
implications of direct participation in DTC as well as how its 
participation could be structured to comply with the Policy Statement.
Section 2
    DTC proposes to provide in Section 2 of the Policy Statement that a 
non-U.S. entity applicant that satisfies the

[[Page 74127]]

qualifications for eligibility to become a Participant set forth under 
Section 1 of Rule 3 must comply with minimum financial resource 
requirements in order to qualify for admission. DTC proposes to make 
explicit in Section 2 of the Policy Statement that following a non-U.S. 
entity applicant's admission as a Participant, it will be required to 
remain in good standing as a Participant, meeting the required 
qualifications, financial responsibility, operational capability and 
character described in the Policy Statement and in the Rules.

B. Changes to DTC's Watch List and Enhanced Surveillance List

    DTC proposes to redefine the Watch List and eliminate the separate 
enhanced surveillance list and instead implement a new Watch List that 
consists of a relatively smaller group of Participants that pose 
heightened risk to DTC and its Participants.
    DTC believes that the current system of having both a Watch List 
and an enhanced surveillance list has confused various DTC 
stakeholders, while the proposed approach, as DTC understands from its 
experience, will be more consistent with industry practices and 
understanding of a ``Watch List.''
    The new Watch List would include Participants with a CRRM rating of 
6 or 7, as well as Participants that are deemed by DTC to pose a 
heightened risk to it and its Participants. The separate enhanced 
surveillance list would be merged into the new Watch List, and 
references to the separate enhanced surveillance list would be deleted 
from the Rules.
    In sum, the new Watch List would consist of Participants on the 
existing enhanced surveillance list, Participants with a CRRM rating of 
6 or 7, and any other Participants that are deemed by DTC to pose a 
heightened risk to it and its Participants.
    The proposed change will mean that Participants with a CRRM rating 
of 5 would no longer automatically be included on the Watch List. 
Participants with a CRRM rating of 5 represent the largest single CRRM 
rating category, but DTC does not believe all such Participants present 
heightened credit concerns.\24\ Nevertheless, DTC would continue to 
have the authority to place a Participant on the new Watch List if it 
is deemed to pose a heightened risk to DTC and its Participants and/or 
to downgrade the CRRM rating of a Participant.
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    \24\ The majority of Participants with a CRRM rating of 5 are 
either rated ``investment grade'' by external rating agencies or, in 
the absence of external ratings, DTC believes are equivalent to 
investment grade, as many of these Participants are primary dealers 
and large foreign banks. A firm with a rating of ``investment 
grade'' is understood to be better able to make its payment 
obligations compared to a firm with a lesser rating, such as a 
rating of ``speculative.'' As such, among the total population, 
firms with investment grade ratings are generally considered good 
credit risk along a credit risk scale.
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    DTC also proposes to clarify in Section 10(e) of Rule 2 that 
Participants on the Watch List are reported to DTC's management 
committees and regularly reviewed by DTC's senior management.
Participant Outreach
    Beginning in June 2019, DTC conducted outreach to various 
Participants in order to provide them with advance notice of the 
proposed enhancements to DTC's capital requirements, the proposed 
redefinition of the Watch List, and the proposed elimination of the 
enhanced surveillance list. DTC has been in communication with all 
Participants whose current capital levels are either below the proposed 
minimum capital requirements or only slightly above the proposed 
requirements. Any such Participants have been informed of the new 
requirement that would be in effect 12 months after approval of the 
proposed changes. Following approval, DTC again would contact any 
Participants that are either below or only slightly above the new 
minimum requirement to remind them of their new capital requirement and 
the 12-month grace period in which to come into compliance with the new 
requirement.
    DTC has not conducted outreach to Participants providing them with 
advance notice of the proposed clarification changes to the Rules.
    DTC has not received any written comments from Participants on the 
proposal.\25\ The Commission will be notified of any written comments 
received.
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    \25\ DTC did receive written comments in relation to a proposal 
by one of its affiliated clearing agencies (National Securities 
Clearing Corporation) to enhance its own capital requirements; 
however, those comments do not relate to this proposal and are 
therefore not addressed in this rule filing.
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Implementation Timeframe
    Pending Commission approval, DTC would implement the proposed 
changes to enhance its capital requirements for Participants one year 
after the Commission's approval of this proposed rule change. During 
that one-year period, DTC would periodically provide Participants with 
estimates of their capital requirements, based on the approved changes, 
with more outreach expected for Participants impacted by the changes. 
The deferred implementation for all Participants and the estimated 
capital requirements for Participants are designed to give Participants 
the opportunity to assess the impact of their enhanced capital 
requirements on their business profile. All Participants would be 
advised of the implementation date of these proposed changes through 
issuance of a DTC Important Notice, posted to its website. DTC also 
would inform firms applying for participation of the new capital 
requirements. Participants and applicants should note that the 
methodology/processes used to set their initial capital requirements 
would be the same at implementation of the proposed changes as it would 
be on an ongoing basis.
    DTC expects to implement the proposed changes to redefine the Watch 
List and eliminate the enhanced surveillance list within 90 days of 
Commission approval. All Participants would be advised of such 
implementation through issuance of a DTC Important Notice, posted to 
its website.
2. Statutory Basis
    DTC believes that the proposed rule change is consistent with the 
requirements of the Exchange Act, and the rules and regulations 
thereunder applicable to a registered clearing agency. Specifically, 
DTC believes that the proposed rule change is consistent with Section 
17A(b)(3)(F) of the Exchange Act \26\ and Rules 17Ad-22(e)(4)(i) and 
(e)(18),\27\ each as promulgated under the Exchange Act, for the 
reasons described below.
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    \26\ 15 U.S.C. 78q-1(b)(3)(F).
    \27\ 17 CFR 240.17Ad-22(e)(4)(i) and (e)(18).
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    Section 17A(b)(3)(F) of the Exchange Act requires, in part, that 
the Rules be designed to promote the prompt and accurate clearance and 
settlement of securities transactions.\28\ As described above, the 
proposed rule changes would (1) enhance DTC's capital requirements for 
Participants (2) redefine the Watch List and eliminate the enhanced 
surveillance list, and (3) make clarification changes to the Rules. DTC 
believes that enhancing its capital requirements for Participants, 
including continuing to recognize and account for varying Participants 
and participation categories, would help ensure that Participants 
maintain sufficient capital to absorb losses arising out of their 
clearance and settlement activities at DTC and otherwise, and would 
help DTC more effectively manage and mitigate the credit risks posed by 
its Participants, which would in turn help DTC be better able to 
withstand such

[[Page 74128]]

credit risks and continue to meet its clearance and settlement 
obligations to its Participants. Similarly, DTC believes that 
redefining the Watch List and eliminating the enhanced surveillance 
list, as described above, would help DTC better allocate its resources 
for monitoring the credit risks posed by its Participants, which would 
in turn help DTC more effectively manage and mitigate such credit risks 
so that DTC is better able to withstand such credit risks and continue 
to meet its clearance and settlement obligations to its Participants. 
DTC believes that making clarification changes to the Rules, including 
through the use of new defined terms, would help ensure that the Rules 
remain clear and accurate, which would in turn help facilitate 
Participants' understanding of the Rules and provide Participants with 
increased predictability and certainty regarding their rights and 
obligations with respect to DTC's clearance and settlement activities. 
Therefore, DTC believes that these proposed rule changes would promote 
the prompt and accurate clearance and settlement of securities 
transactions, consistent with Section 17A(b)(3)(F) of the Exchange Act.
---------------------------------------------------------------------------

    \28\ 15 U.S.C. 78q-1(b)(3)(F).
---------------------------------------------------------------------------

    Rule 17Ad-22(e)(4)(i) under the Exchange Act requires that DTC 
establish, implement, maintain and enforce written policies and 
procedures reasonably designed to effectively identify, measure, 
monitor, and manage its credit exposures to participants and those 
arising from its payment, clearing, and settlement processes, including 
by maintaining sufficient financial resources to cover its credit 
exposure to each participant fully with a high degree of 
confidence.\29\ As described above, DTC proposes to enhance its capital 
requirements for Participants, redefine the Watch List, and eliminate 
the enhanced surveillance list. DTC believes that enhancing its capital 
requirements for Participants (including through the use of new defined 
terms), would help ensure that Participants maintain sufficient capital 
to absorb losses arising out of their clearance and settlement 
activities at DTC and otherwise, which would in turn help DTC more 
effectively manage and mitigate its credit exposures to its 
Participants and thereby help enhance the ability of DTC's financial 
resources to cover fully DTC's credit exposures to Participants with a 
high degree of confidence. DTC believes that redefining the Watch List 
and eliminating the enhanced surveillance list would help DTC better 
allocate its resources for monitoring its credit exposures to 
Participants. By helping to better allocate resources, the proposal 
would in turn help DTC more effectively manage and mitigate its credit 
exposures to its Participants, thereby helping to enhance the ability 
of DTC's financial resources to cover fully DTC's credit exposures to 
Participants with a high degree of confidence. Therefore, DTC believes 
that its proposal to enhance its capital requirements for Participants, 
redefine the Watch List, and eliminate the enhanced surveillance list 
is consistent with Rule 17Ad-22(e)(4)(i) under the Exchange Act.
---------------------------------------------------------------------------

    \29\ 17 CFR 240.17Ad-22(e)(4)(i).
---------------------------------------------------------------------------

    Rule 17Ad-22(e)(18) under the Exchange Act requires that DTC 
establish, implement, maintain and enforce written policies and 
procedures reasonably designed to establish objective, risk-based, and 
publicly disclosed criteria for participation, which permit fair and 
open access by direct and, where relevant, indirect participants and 
other financial market utilities, require participants to have 
sufficient financial resources and robust operational capacity to meet 
obligations arising from participation in the clearing agency, and 
monitor compliance with such participation requirements on an ongoing 
basis.\30\ As described above, DTC proposes to (1) enhance its capital 
requirements for Participants, (2) redefine the Watch List and 
eliminate the enhanced surveillance list, and (3) make clarification 
changes to the Rules, including through the use of new defined terms. 
DTC's proposed capital requirements would utilize objective 
measurements of Participant capital that would be fully disclosed in 
the Rules. The proposed capital requirements also would be risk-based 
and allow for fair and open access in that they would be based on the 
credit risks imposed by the Participant, such as its type of entity 
(including whether it is a non-U.S. entity). Accordingly, DTC's 
proposed capital requirements would establish objective, risk-based and 
publicly disclosed criteria for participation, which would permit fair 
and open access by Participants. The proposed capital requirements also 
would ensure that Participants maintain sufficient capital to absorb 
losses arising out of their clearance and settlement activities at DTC 
and otherwise, which would help ensure that they have sufficient 
financial resources to meet the obligations arising from their 
participation at DTC. DTC's proposed redefinition of the Watch List and 
the elimination of the enhanced surveillance list would help DTC better 
allocate its resources for monitoring the credit risks posed by its 
Participants, including their ongoing compliance with DTC's proposed 
enhancements to its capital requirements. DTC's proposed clarification 
changes to the Rules, including new defined terms, would help ensure 
that the proposed changes to the capital requirements, Watch List, and 
enhanced surveillance list are clear and accurate, which would in turn 
help facilitate Participants' understanding of DTC's participation 
requirements and information related to participation. Therefore, DTC 
believes that its proposal to enhance its capital requirements for 
Participants, redefine the Watch List, and eliminate the enhanced 
surveillance list is consistent with Rule 17Ad-22(e)(18) under the 
Exchange Act.
---------------------------------------------------------------------------

    \30\ 17 CFR 240.17Ad-22(e)(18).
---------------------------------------------------------------------------

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

    DTC does not believe the proposed changes to enhance the capital 
requirements for its Participants will have an impact on competition 
because Participants largely already meet, and in most cases exceed, 
the proposed capital requirements. Nevertheless, DTC fully appreciates 
that for the few Participants that do not already meet the proposed 
requirements, the proposed rule change could have an impact upon 
competition because those Participants could be required to maintain 
capital in excess of their current capital levels. That impact could 
impose a burden on competition on some of those Participants because 
they may bear higher costs to raise capital in order to comply with the 
enhanced capital requirements. However, DTC does not believe the burden 
on competition would be significant because, again, only a few 
Participants do not already meet the proposed requirements. In any 
event, to the extent there would be a burden on competition, DTC 
believes it would be necessary and appropriate in furtherance of the 
purposes of the Exchange Act, as permitted by Section 17A(b)(3)(I) 
thereunder.\31\
---------------------------------------------------------------------------

    \31\ 15 U.S.C. 78q-1(b)(3)(I).
---------------------------------------------------------------------------

    DTC believes the enhanced capital requirements are necessary 
because, in short, the current requirements are outdated. As noted 
above, the current minimum capital requirements for Participants have 
not been adjusted in over 20 years. Meanwhile, there have been 
significant changes to the industry (e.g., market structure, 
technology, and regulatory environment) within which DTC and all its 
Participants operate, exposing DTC and its Participants to more and 
different risks than 20 years ago.

[[Page 74129]]

    There also have been significant Participant changes over the past 
20 years. Numerous mergers, acquisitions, and new market entrants have 
created a diverse group of Participants that has expanded the credit-
risk profiles that DTC must manage.
    Moreover, as noted above, transaction values at DTC have increased 
significantly over the years.\32\ Although the increase does not 
present more risk to DTC directly, as DTC's services are nonguaranteed 
and fully collateralized, DTC does have an interest in ensuring that 
its Participants have a certain minimum amount of capital to help 
support the increased activity.
---------------------------------------------------------------------------

    \32\ See supra note 9.
---------------------------------------------------------------------------

    There also has been heightened focus on legal, operational, and 
cyber risk, given the devastating impact that they could have today. 
Appreciation of these greater risks have manifested into new regulatory 
requirements for certain industry participants,\33\ including DTC, 
requiring DTC to maintain greater capital amounts and deploy enhanced 
risk management tools.\34\
---------------------------------------------------------------------------

    \33\ See, e.g., Basel Committee on Banking Supervision, Basel 
III Standards, supra note 5; Financial Stability Board, 2020 list of 
G-SIBs, supra note 6; U.S. Department of the Treasury, Designations, 
Financial Market Utility Designations, supra note 7.
    \34\ See, e.g., CCAS, supra note 8.
---------------------------------------------------------------------------

    While DTC believes Participants must understand the risks that 
their capitalization presents to DTC and be prepared to monitor their 
capitalization and alter their behavior in order to minimize that risk, 
as necessary, DTC also appreciates and understands that Participants 
must be able to plan for their capital requirements. That is why DTC 
would not implement the proposed changes to any of the enhanced capital 
requirements until one year after the Commission's approval of the 
proposal. During that one-year period, DTC would periodically provide 
Participants with estimates of their capital requirements. The deferred 
implementation for all Participants and the estimated capital 
requirements for Participants are designed to give Participants the 
opportunity to assess the impact of their enhanced capital requirements 
on their business profile and make any changes that they deem 
necessary.
    DTC also believes the proposed changes are consistent with and 
would improve upon DTC's compliance with applicable regulatory 
requirements, as discussed above, including Section 17A(b)(3)(F) of the 
Exchange Act and Rules 17Ad-22(e)(4)(i) and (e)(18) promulgated 
thereunder.
    Therefore, DTC believes the proposed changes to enhance the capital 
requirements for its Participants are appropriate in furtherance of the 
purposes of the Exchange Act, as permitted by Section 17A(b)(3)(I) 
thereunder,\35\ as the proposed changes are purposely tailored and 
structured, provide for a one-year implementation period, and are 
consistent with applicable provisions of the Exchange Act and rules 
thereunder.
---------------------------------------------------------------------------

    \35\ 15 U.S.C. 78q-1(b)(3)(I).
---------------------------------------------------------------------------

    DTC does not believe that the proposed changes to redefine the 
Watch List and eliminate the enhanced surveillance list would impact 
competition. Redefining the Watch List and eliminating the enhanced 
surveillance list are simply intended to streamline and clarify these 
monitoring practices. If anything, by no longer automatically including 
Participants with a CRRM rating of 5 on the Watch List, as proposed, 
the change could promote competition for such Participants, as such 
Participants would no longer automatically be subject to increased 
scrutiny by DTC, including the possibility of increased financial and 
reporting obligations.

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

    DTC has not received or solicited any written comments relating to 
this proposal.\36\ If any written comments are received, DTC will amend 
this filing to publicly file such comments as an Exhibit 2 to this 
filing, as required by Form 19b-4 and the General Instructions thereto.
---------------------------------------------------------------------------

    \36\ See supra note 25.
---------------------------------------------------------------------------

    Persons submitting written comments are cautioned that, according 
to Section IV (Solicitation of Comments) of the Exhibit 1A in the 
General Instructions to Form 19b-4, the Commission does not edit 
personal identifying information from comment submissions. Commenters 
should submit only information that they wish to make available 
publicly, including their name, email address, and any other 
identifying information.
    All prospective commenters should follow the Commission's 
instructions on How to Submit Comments, available at https://www.sec.gov/regulatory-actions/how-to-submit-comments. General 
questions regarding the rule filing process or logistical questions 
regarding this filing should be directed to the Main Office of the 
Commission's Division of Trading and Markets at 
[email protected] or 202-551-5777.
    DTC reserves the right to not respond to any comments received.

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-2021-017 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-2021-017. 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

[[Page 74130]]

10:00 a.m. and 3:00 p.m. Copies of the filing also will be available 
for inspection and copying at the principal office of DTC and on DTCC's 
website (http://dtcc.com/legal/sec-rule-filings.aspx). All comments 
received will be posted without change. Persons submitting comments are 
cautioned that we do not redact or edit personal identifying 
information from comment submissions. You should submit only 
information that you wish to make available publicly. All submissions 
should refer to File Number SR-DTC-2021-017 and should be submitted on 
or before January 19, 2022.
---------------------------------------------------------------------------

    \37\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\37\
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-28249 Filed 12-28-21; 8:45 am]
BILLING CODE 8011-01-P