Document ID: SEC-2023-1180-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: The Depository Trust Co.
Posted Date: 2023-10-12T04:00Z

[Federal Register Volume 88, Number 196 (Thursday, October 12, 2023)]
[Notices]
[Pages 70700-70719]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-21945]

[[Page 70699]]

Vol. 88

Thursday,

No. 196

October 12, 2023

Part II

 Securities and Exchange Commission

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Self-Regulatory Organizations; The Depository Trust Company; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change To Modify 
the DTC Operational Arrangements (Necessary for Securities To Become 
and Remain Eligible for DTC Services); Notice

  Federal Register / Vol. 88, No. 196 / Thursday, October 12, 2023 / 
Notices  

[[Page 70700]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-98604; File No. SR-DTC-2023-010]

Self-Regulatory Organizations; The Depository Trust Company; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Modify the DTC Operational Arrangements (Necessary for Securities To 
Become and Remain Eligible for DTC Services)

DATES: September 28, 2023.
    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 September 27, 2023, 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 primarily prepared by the clearing agency. DTC filed 
the proposed rule change pursuant to Section 19(b)(3)(A) of the Act \3\ 
and Rules 19b-4(f)(4) thereunder.\4\ The Commission is publishing this 
notice to solicit comments on the proposed rule change from interested 
persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 15 U.S.C. 78s(b)(3)(A).
    \4\ 17 CFR 240.19b-4(f)(4).
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I. Clearing Agency's Statement of the Terms of Substance of the 
Proposed Rule Change

    The proposed rule change consists of modifications to the DTC 
Operational Arrangements (Necessary for Securities to Become and Remain 
Eligible for DTC Services) (``OA'') \5\ to clarify and update 
provisions relating to the processing of securities eligibility 
requests and servicing of assets on Deposit at DTC, as described in 
greater detail below.\6\
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    \5\ Available at http://www.dtcc.com/~/media/Files/Downloads/
legal/issue-eligibility/eligibility/operational-arrangements.pdf.
    \6\ Each term not otherwise defined herein has its respective 
meaning as set forth in the Rules, By-Laws and Organization 
Certificate of DTC (the ``Rules''), available at http://www.dtcc.com/legal/rules-and-procedures.aspx and the OA, supra note 
5.
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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 OA is designed to maximize the number of issues of securities 
that may be made eligible for DTC services, providing for the orderly 
processing of such securities and timely payments to Participants. 
DTC's experience demonstrates that when Participants, Issuers, 
Underwriters, Agents (as such terms are defined in the Rules \7\ or in 
the OA),\8\ and their counsel are aware of DTC's requirements, those 
requirements can be readily met in most instances. The purpose of this 
rule change is to revise the text of the OA to update and clarify DTC's 
processes in this regard. Additionally, some ministerial changes, 
changes to methods of notification, and clarifying language have been 
introduced to provide a more concise description of OA procedures. In 
this regard, the proposed rule change would revise the text of the OA 
as set forth in the respective sections as described below:
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    \7\ See supra note 6.
    \8\ See supra note 5.

------------------------------------------------------------------------
            OA section                            Revision
------------------------------------------------------------------------
I.A.1. (Submission of an            Pursuant to Rule 5, DTC shall accept
 Eligibility Request).               a Security as an Eligible Security
                                     only, among other requirements,
                                     upon a determination by the
                                     Corporation that it has the
                                     operational capability and can
                                     obtain information regarding the
                                     Security necessary to permit it to
                                     provide its services to
                                     Participants and Pledgees when such
                                     Security is Deposited.\9\ Timely
                                     confirmation of details relating to
                                     a security is an important part of
                                     making an eligibility
                                     determination. Therefore, pursuant
                                     to the proposed rule change, the OA
                                     would be revised to add new text to
                                     this subsection that requires the
                                     agent for a security to confirm an
                                     issue's features and attributes
                                     once the underwriter of the
                                     security has submitted the issue
                                     for eligibility.
                                    In this regard, new text would be
                                     added to this subsection which
                                     would state:
                                    ``As Agent for a new security
                                     qualifying for DTC eligibility,
                                     Agent must complete the Agent
                                     Confirmation supplied by DTC's
                                     Underwriting Department to confirm
                                     a new issue's features and
                                     attributes based on the security
                                     type. The agreement of the
                                     information supplied by the
                                     underwriter, the Agent
                                     Confirmation, and the offering
                                     document ensure the accuracy of the
                                     asset servicing of the security.
                                    This confirmation must be provided
                                     by the Agent via email at least
                                     three (3) business days prior to
                                     the Closing Date of the issue.''
Section I.B.5 (Instruction Letters  The proposed rule change would
 Regarding the Expiration of a       enhance instructions relating to
 Restrictive Period).                existing forms and requirements for
                                     Issuers and Agents to request the
                                     processing of exchanges relating to
                                     CUSIPs for securities that were
                                     originally restricted pursuant to
                                     Rule 144A and/or Regulation S and
                                     which have become unrestricted. In
                                     this regard, the proposed rule
                                     change would add three subsections
                                     to respectively provide
                                     instructions for the three types of
                                     exchange processes that may occur
                                     in this regard, namely (a) an
                                     optional exchange process, (b) a
                                     voluntary exchange process, and (c)
                                     a mandatory exchange process. The
                                     processes for (a) and (b) relate to
                                     exchanges where a Participant has
                                     an option to exchange existing 144A
                                     shares to unrestricted shares, with
                                     the difference between an optional
                                     exchange and a voluntary exchange
                                     being described functionally in
                                     terms of, (i) with respect to (a),
                                     the agent for the issue
                                     facilitating the exchange through
                                     DTC's Deposit/Withdrawal at
                                     Custodian (``DWAC'') function and
                                     (ii) with respect to (b) being
                                     conducted using DTC's Automated
                                     Tender Offer Program (``ATOP'').
                                     Under a mandatory exchange, the
                                     issuer requires the Participant to
                                     receive the unrestricted shares in
                                     exchange for any144A shares the
                                     Participant holds.

[[Page 70701]]

 
                                    The text added with respect to (a)
                                     above would include a heading named
                                     ``Optional Exchange Process (Agent
                                     Facilitates via Deposit/Withdrawal
                                     at Custodian ``DWAC''))'' for a new
                                     subsection a. under I.B.5. The new
                                     subsection a. would state: ``To
                                     request DTC to provide for the
                                     ability to have the Issuer's Agent
                                     facilitate via DWAC the exchange on
                                     an optional basis for Participants
                                     to request to exchange restricted
                                     Securities represented by a
                                     restricted CUSIP number for new
                                     unrestricted Securities of the same
                                     issue represented by an
                                     unrestricted CUSIP, Issuer will
                                     complete and submit the instruction
                                     letter along with a copy of the
                                     form of each unrestricted Security
                                     (without effective restrictive
                                     legends) bearing the new
                                     unrestricted CUSIP to DTC's
                                     Underwriting Department no later
                                     than 10 business days prior to the
                                     effective date or exchange date
                                     (i.e., date of the end of the
                                     restrictive period and/or
                                     distribution compliance period
                                     imposed under such exemptions has
                                     elapsed) or the date Agent will
                                     begin acknowledging Participants'
                                     DWAC requests. Receipt of the
                                     instruction letter must be in
                                     conjunction with the DTC
                                     Participant eligibility request via
                                     UW SOURCE for the new unrestricted
                                     Securities. (Refer to Section I
                                     (A)(1), Submission of an
                                     Eligibility Request to DTC.)''
                                    Subsection a. would also incorporate
                                     existing text that provides an
                                     internet link to the applicable
                                     form for optional exchanges. This
                                     existing text also previously
                                     referred to voluntary exchanges,
                                     however, the reference to voluntary
                                     exchanges would be deleted and
                                     instead be included in a new
                                     subsection relating to voluntary
                                     exchanges as described below. The
                                     internet link would be updated to
                                     reflect that the link uses a
                                     Hypertext Transfer Protocol Secure
                                     (https:) format rather than a
                                     Hypertext Transfer Protocol (http:)
                                     format.
                                    The text added with respect to (b)
                                     above would include a heading named
                                     ``Voluntary Exchange Process (Use
                                     of DTC's Automated Tender Offer
                                     Program ``ATOP))'' for a new
                                     subsection b. under I.B.5. The new
                                     subsection b. would state: ``Issuer
                                     and Agent acknowledges that any
                                     such exchange of restricted
                                     Securities for Securities of a
                                     CUSIP that is unrestricted will be
                                     made in accordance with the rules
                                     and procedures of DTC's Automated
                                     Tender Offer Program (``ATOP'')
                                     including that Agent is required to
                                     approve and adhere to all
                                     requirements represented in the
                                     Letter of Agreement (``LOA'') for
                                     each exchange processed through
                                     ATOP, (Refer to Section
                                     VI(D)(5)(a), Tender/Exchange
                                     Processing). To request DTC to
                                     process a voluntary exchange of
                                     restricted Securities represented
                                     by a restricted CUSIP number for
                                     new unrestricted Securities of the
                                     same issue represented by an
                                     unrestricted CUSIP, Issuer will
                                     complete and submit the instruction
                                     letter along with a copy of the
                                     form of each unrestricted Security
                                     (without effective restrictive
                                     legends) bearing the new
                                     unrestricted CUSIP no later than 10
                                     business days prior to the
                                     effective date or exchange date
                                     (i.e., date of the end of the
                                     restrictive period and/or
                                     distribution compliance period
                                     imposed under such exemptions has
                                     elapsed) to both DTC's Underwriting
                                     Department and Reorganization
                                     Voluntary Announcements Department
                                     by email at [email protected] and
                                     [email protected].
                                    The form of instruction letter and
                                     related requirements for Issuers
                                     and Agents with respect to such
                                     exchanges to be made voluntary for
                                     Participants are available at:
                                     https://www.dtcc.com/~/media/Files/
                                     Downloads/legal/issue-eligibility/
                                     special-letters/Optional-Process-
                                     Instruction-Letter.pdf.''
                                    The text added with respect to (c)
                                     above would include a heading named
                                     ``Mandatory Exchange Process'' for
                                     a new subsection b. under I.B.5.
                                     The new subsection c. would state:
                                     ``To request DTC to process a
                                     mandatory exchange of restricted
                                     Securities represented by a
                                     restricted CUSIP number for new
                                     unrestricted Securities of the same
                                     issue represented by an
                                     unrestricted CUSIP, Issuer will
                                     complete and submit the instruction
                                     letter along with a copy of the
                                     form of each unrestricted Security
                                     (without effective restrictive
                                     legends) bearing the new
                                     unrestricted CUSIP no later than 10
                                     business days prior to the
                                     effective date or exchange date
                                     (i.e., date of the end of the
                                     restrictive period and/or
                                     distribution compliance period
                                     imposed under such exemptions has
                                     elapsed) to both DTC's Underwriting
                                     Department and Reorganization
                                     Mandatory Announcements Department
                                     by email at [email protected] and
                                     [email protected]. Issuer and Agent acknowledges
                                     that any such exchange of
                                     restricted Securities for
                                     Securities of a CUSIP that is
                                     unrestricted will be made in
                                     accordance with the DTC Rules
                                     concerning mandatory exchanges.''
                                    The new subsection c. would also
                                     incorporate existing text that
                                     provides internet links for
                                     documentation relating to mandatory
                                     exchanges. However, these links
                                     would be updated to indicate that
                                     they utilize a Hypertext Transfer
                                     Protocol Secure (https:) format
                                     rather than a Hypertext Transfer
                                     Protocol (http:) format.
Section I.C.6. (Certificated        This subsection provides in its
 Securities with Short-Term          first of two paragraphs that DTC,
 Maturities).                        at its sole discretion, may make
                                     eligible a certificated security
                                     maturing within 60 calendar days of
                                     its closing date, on an exception
                                     basis subject to processing
                                     considerations. However, this
                                     provision relates to securities
                                     that are not in DTC's money market
                                     instrument program (``MMI
                                     Program'') and the MMI Program does
                                     facilitate the eligibility and
                                     processing of such short-term
                                     securities.\10\ The MMI Program
                                     operates using an automated
                                     platform providing MMI Issuing and
                                     Paying Agents \11\ (each, an
                                     ``IPA'') with the ability to issue,
                                     service, and settle Securities that
                                     are money market instruments (``MMI
                                     Securities'') that are processed in
                                     the MMI Program \12\ that they
                                     introduce into the marketplace
                                     through DTC.

[[Page 70702]]

 
                                    DTC believes that, given
                                     efficiencies for the processing of
                                     short-term securities that have
                                     been built into the MMI Program,
                                     directing short term securities to
                                     the MMI Program would promote the
                                     prompt and accurate processing of
                                     such securities. In addition,
                                     pursuant to the Rules, DTC
                                     maintains sole discretion with
                                     respect to accepting any security
                                     as eligible for DTC services on a
                                     non-discriminatory basis; \13\ and
                                     therefore the existing text
                                     relating to DTC's exercise
                                     discretion in this regard is
                                     redundant. Therefore, DTC would
                                     revise the OA text to delete the
                                     substance of the text reflecting
                                     the provision described above
                                     relating to DTC's discretion with
                                     regard to accepting for eligibility
                                     a security maturing within 60 days
                                     of its closing date and replace it
                                     with text that would state that a
                                     security that is scheduled to
                                     mature in 30 calendar days or less
                                     from the issuance date or DTC
                                     eligibility date will not be made
                                     eligible as a Non-MMI Security. The
                                     added text would also include a
                                     cross-reference to the OA Section
                                     I(A)(2) (Special Rules and
                                     Processes for Money Market
                                     Instruments) for more information
                                     relating to special rules and
                                     processes for MMI Securities. Also,
                                     a reference to referring to a short-
                                     term security as a ``bond'' would
                                     be changed to ``security'' to make
                                     the reference consistent with DTC's
                                     terminology for MMI whereby MMI are
                                     referred to as MMI Securities in
                                     its Rules.\14\
                                    In addition, the second paragraph of
                                     this subsection which relates
                                     specifically to monthly optional
                                     redemptions would be designated as
                                     a new subsection I.C.7., as
                                     described below.
I.C.7. Monthly Optional             The proposed rule change would break
 Redemptions (New Subsection).       out the last paragraph of
                                     subsection I.C.6. into a separate
                                     subsection under the heading
                                     ``Monthly Optional Redemptions.''
                                     The paragraph describes eligibility
                                     requirements for debt securities
                                     that have provisions allowing an
                                     issuer the option to make monthly
                                     redemptions of securities. The
                                     paragraph is broken out as the
                                     requirements are not specific to
                                     short-term securities. The text of
                                     the newly broken out subsection
                                     would be revised for technical
                                     changes, including (i) clarifying
                                     that the securities subject to the
                                     subsection are debt securities,
                                     (ii) change references to ``issue''
                                     and ``issuance'' to ``security, and
                                     (iii) remove text that the security
                                     will be considered for eligibility
                                     if it is a new issuance that is
                                     registered under the Securities Act
                                     of 1933 (``Securities Act'') and
                                     replace it with a cross-reference
                                     to the OA's eligibility
                                     requirements.
II.A.1. (CUSIP Number Assignment).  This subsection describes DTC's
                                     requirements for issuers to obtain
                                     CUSIP Numbers as part of the
                                     eligibility process.
                                    The second paragraph states that
                                     certain corporate actions on
                                     existing securities may require the
                                     issuer to obtain a new CUSIP
                                     Number. This paragraph will be
                                     revised for technical wording
                                     changes.
                                    In this regard, the text currently
                                     states: ``DTC may require the
                                     Issuer or Agent to obtain a new
                                     CUSIP number from Standard & Poor's
                                     CUSIP Service Bureau to facilitate
                                     the adequate processing of a
                                     corporate action events, (e.g.,
                                     reverse stock split, interest
                                     payment). An example of such a
                                     requirement for a new CUSIP for an
                                     interest payment is when the
                                     additional issuance of debt
                                     securities carries an interest
                                     accrual date or period that is
                                     different than the original
                                     issuance.'' Pursuant to the
                                     proposed rule change (i) ``in order
                                     to'' would be shortened to ``to'',
                                     (ii) the ``a'' between ``processing
                                     of'' and ``corporate action'' will
                                     be deleted and replaced with
                                     ``certain'', and (iii) and the word
                                     ``event'' will be changed to the
                                     plural ``events'' and a comma will
                                     be added after the word.
                                    In addition, ``Standard & Poor's
                                     CUSIP Service Bureau'' would be
                                     shortened to ``CUSIP Service
                                     Bureau''. Standard & Poor's
                                     recently transferred the CUSIP
                                     Service Bureau to a different
                                     entity and therefore the reference
                                     to Standard & Poor's is outdated.
                                     However, since there is only one
                                     CUSIP Service Bureau, DTC believes
                                     it is unnecessary for the OA to
                                     include the name of the owner of
                                     the CUSIP Service Bureau in the OA.
II.B.2. (Balancing Securities)....  This section contains several
                                     subsections that describe DTC's
                                     FAST program of which balancing,
                                     referred to in the current title of
                                     the section, is a component. The
                                     title of the section will be
                                     changed from ``Balancing
                                     Securities'' to ``FAST Program'' to
                                     better reflect the nature of the
                                     content.
II.B.2.b. FRAC....................  This subsection describes
                                     requirements relating to the use of
                                     the FRAC function by issuers'
                                     agents for confirmation or
                                     rejection of balances or transfers
                                     of securities in DTC's FAST
                                     program.\15\ Pursuant to the OA,
                                     FAST Agents shall reconcile and
                                     confirm to DTC the amount of the
                                     Securities reflected by such
                                     Balance Certificate and recorded in
                                     the name of Cede & Co. daily, or
                                     other periodic basis as DTC may
                                     reasonably request. The subsection
                                     that describes the FRAC process
                                     provides details on confirmation
                                     and rejection requirements relating
                                     to the closing date of a new
                                     issuance or secondary offering. DTC
                                     would like to clarify the process
                                     requiring a FAST Agent to confirm
                                     or reject balance transfers
                                     associated with the presentation,
                                     by adding the following text to
                                     this subsection:
                                    ``FRAC is to also be used by the
                                     FAST Agent to confirm or reject
                                     balances or transfers associated
                                     with the presentation, by DTC, of
                                     securities for a corporate action
                                     event for the drawdown of the FAST
                                     position on the target security and/
                                     or an add-to-balance of position
                                     when the entitlement security will
                                     be FAST. Balances are to be
                                     confirmed by the FAST Agent upon
                                     receipt of the SCL instruction from
                                     DTC on the effective date or the
                                     DTC allocation date of the
                                     corporate action or as soon as
                                     practicable thereafter. It is the
                                     obligation of the FAST Agent to use
                                     FRAC to confirm the Cede &Co. FAST
                                     Balance and process the event
                                     according to the electronic SCL
                                     instructions presented.'' \16\

[[Page 70703]]

 
                                    In addition, a sentence in the first
                                     paragraph of this subsection would
                                     be revised for clarity. The
                                     sentence states: ``Under no
                                     circumstances will a Participant's
                                     account be credited unless DTC's
                                     Underwriting Department receives
                                     closing information from the
                                     underwriter and the Agent.'' Alt
                                     text: It is necessary that the
                                     closing information provided to
                                     DTC, by each the issuer and the
                                     agent, agree. In this regard, the
                                     following text would be added to
                                     the end of the sentence (after
                                     ``Agent'' and before the period):
                                     ``, and the closing information is
                                     in agreement''.
II.B.2.c. DWAC....................  The text of this section will be
                                     revised to create a defined term to
                                     clarify that the term ``ADRs''
                                     refers to American Depositary
                                     Receipts.
II.B.4.c. (Termination of Transfer  In compliance with Rule 17Ad-16 of
 Agent Services).                    the Act, all registered transfer
                                     agents are required to provide
                                     written notice (``17Ad-16 Notice'')
                                     to DTC when ceasing to perform or
                                     assuming transfer agent services on
                                     behalf of an Issuer or when the
                                     transfer agent is changing its name
                                     or address. Subsection II.B.4.c.
                                     lists information to be included on
                                     termination notices, as required by
                                     DTC. Pursuant to the proposed rule
                                     change, the OA would be revised for
                                     technical and clarifying changes to
                                     (i) change references to ``Transfer
                                     Agent'' to ``transfer agent,'' (ii)
                                     remove text indicating that the
                                     agent must list issues for which
                                     the transfer agent will no longer
                                     be responsible, and replace the
                                     text with a more succinct statement
                                     that the notice include the
                                     issuer's name, (iii) modify text
                                     stating ``The name of each issuer .
                                     . .'' to instead state ``The name
                                     and description of each Issuer's
                                     Security . . .''.
II.B.4.g. (Other Notices Delivered  This subsection describes the
 by Transfer Agents for Posting to   delivery requirements for certain
 LENS).                              notices that an Agent forwards to
                                     DTC to post to LENS. Two existing
                                     sentences will be revised for
                                     clarity. These sentences state:
                                     ``In order to be posted to LENS,
                                     the notice must be sent to
                                     [email protected]. Hard copy
                                     notices will not be posted to
                                     LENS.'' In order to clarify the
                                     text which is intended to describe
                                     how notices must be sent by email,
                                     these sentences would be revised
                                     to: (i) delete ``In order for'' and
                                     replace it with ``For a notice'',
                                     (ii) add ``an email with'' between
                                     ``LENS,'' and ``the notice'', (iii)
                                     add ``attached as a PDF file''
                                     between ``the notice attached as a
                                     PDF file'' and ``must'' and (iv)
                                     add ``and/or notices embedded in
                                     the body of the email'' between
                                     ``Hard copy notices'' and ``will
                                     not be posted''.
III.B. (Notices)..................  This section sets forth requirements
                                     for Issuers and Agents provision of
                                     notices to DTC for distribution to
                                     Participants. In addition to
                                     describing the information required
                                     to be included in a notice, it
                                     provides that the information may
                                     be delivered to DTC by secure means
                                     such as registered or certified
                                     mail, overnight delivery, or email.
                                     DTC believes that due to the time
                                     sensitive nature of such notices
                                     and risks of delay in delivery and
                                     transmittal via hard copy, for
                                     purposes of timeliness and
                                     processing efficiency relating to
                                     such notices, all such notices
                                     should be sent to DTC
                                     electronically. Therefore, the
                                     proposed rule change would delete
                                     provisions for hard copy delivery
                                     and instead provide that such
                                     notices should be sent via email or
                                     other electronic transmission
                                     (i.e., BMA5 or REDCAL) and remove
                                     all references to transmittal by
                                     telecopy.\17\
                                    DTC would also revise a sentence
                                     that states: ``If the party sending
                                     the notice by telecopy or email
                                     does not receive a telecopy or
                                     email receipt from DTC confirming
                                     that the notice has been received,
                                     such party shall telephone the
                                     respective DTC department to
                                     confirm their receipt of the
                                     notice.'' The proposed change would
                                     change ``shall'' after ``party''
                                     and before ``telephone'' with ``may
                                     (in addition to removing references
                                     to telecopy notice as mentioned
                                     above).''
                                    The proposed rule change would also
                                     delete a parenthetical cross-
                                     reference at the end of this
                                     subsection that states: ``(See
                                     Exhibit C for a summary of
                                     important notices and required time
                                     frames for income, redemption and
                                     maturity, and reorganization
                                     payments.)'' Exhibit C does not
                                     exist, and any applicable
                                     timeframes are included within the
                                     main text of the OA.
III.C. (Payment Instructions).....  This section states, among other
                                     things, that all payments must be
                                     received by DTC in immediately
                                     available funds and must equal the
                                     full amount due on payable date.
                                     However, occasionally payments are
                                     tied to an ``effective date.''
                                     Also, for Reorganization events, a
                                     payment date or effective date may
                                     not be specified, but the funds are
                                     made available for payment at a
                                     certain time in accordance with the
                                     timing of a specific transaction.
                                     To account for such varying
                                     terminology and timing of payments,
                                     the proposed rule change would
                                     clarify this section to add text
                                     to, in addition to requiring
                                     immediate payment on ``payable
                                     date'', payments should be made in
                                     immediately available funds on the
                                     full amount due on the ``effective
                                     date'' or the date on which funds
                                     are first made available for
                                     payment for Reorganization events,
                                     as applicable.
III.C.1. (Income Payment            This subsection describes how income
 Standards).                         payments must be made to DTC. The
                                     section would be revised for
                                     technical and grammatical changes.
                                     It would also be revised to (i)
                                     change a reference to ``same day
                                     funds'' to ``immediately available
                                     funds'' as part of the description
                                     on how income payments must be
                                     made, for consistency with
                                     terminology used in III.C. (Payment
                                     Instructions) and (ii) remove text
                                     indicating that DTC may allow for
                                     special arrangements in exception
                                     to the requirement to make payment
                                     in immediate available funds via
                                     Fedwire. DTC believes that
                                     accepting a special arrangement in
                                     exception to these standards, such
                                     as payment by check, would
                                     introduce risk to DTC's ability to
                                     timely pass income through to its
                                     Participants.
III.C.2. (Redemption and Maturity   Redemption and maturity payments
 Payment Standards).                 include cash payments of principal
                                     proceeds due to redemptions and
                                     maturities (``Redemption and
                                     Maturity Payments''). Such payments
                                     must be made to DTC's Redemption
                                     Deposit Account in accordance with
                                     the Procedures set forth in this
                                     subsection.

[[Page 70704]]

 
                                    The second paragraph of this
                                     subsection includes a paragraph
                                     that states: ``DTC must receive
                                     CUSIP-specific detail of payments,
                                     no later than 2:50 p.m. ET. The
                                     dollar amount associated with such
                                     detail must correspond with the
                                     actual dollar payment received by
                                     3:00 p.m. ET. All Redemption and
                                     Maturity Payments must be paid in
                                     same-day funds prior to 3:00 p.m.
                                     ET on the payable date. Failure to
                                     provide timely payment to DTC could
                                     jeopardize the same-day
                                     distribution of these payments to
                                     Participants and beneficial
                                     holders.''
                                    To clarify text relating to the
                                     required timing of payments to DTC,
                                     the proposed rule change would
                                     delete ``by'' in the second
                                     sentence after the word
                                     ``received'' and before ``3:00
                                     p.m.'' with ``prior to.''
                                    In addition, the proposed rule
                                     change would make clarifying
                                     changes to the third sentence of
                                     the paragraph. Funds paid to DTC in
                                     accordance with this subsection are
                                     paid via Fedwire. Fedwire funds are
                                     immediately available. Therefore,
                                     the third sentence as shown above
                                     would be revised to instead state:
                                     ``All Redemption and Maturity
                                     Payments must be delivered to Cede
                                     & Co., as nominee of DTC, in
                                     immediately available funds prior
                                     to 3:00 p.m. ET on the payable
                                     date.''
                                    The proposed rule change would
                                     remove text indicating that DTC may
                                     allow for special arrangements in
                                     exception to the requirement to
                                     make payment in immediate available
                                     funds via Fedwire. DTC believes
                                     that accepting a special
                                     arrangement in exception to these
                                     standards, such as payment by
                                     check, would introduce risk to
                                     DTC's ability to timely pass income
                                     through to its Participants.
                                    The proposed rule change would make
                                     technical and conforming changes to
                                     the third paragraph of the
                                     subsection by (i) replacing
                                     ``payments'' with ``Redemption and
                                     Maturity Payments,'' (ii) enhancing
                                     readability by moving the phrase
                                     ``via Fedwire'' from one place to
                                     another in a sentence describing
                                     how payments should be made and
                                     (iii) change a reference from
                                     ``same-day'' funds to ``immediately
                                     available'' funds.
                                    Finally, a reference in the final
                                     paragraph of the subsection to the
                                     ``Customer Service Hotline'' would
                                     be changed to ``Client Support
                                     Line.'' In addition, all other
                                     references to ``Customer Service
                                     Hotline'' to ``Client Support
                                     Line'' would be changed throughout
                                     the OA.
II.C.3. (Reorganization Payment     As with a change described for the
 Standards).                         subsection directly above, this
                                     subsection would be revised to
                                     change references from ``same-day''
                                     funds to ``immediately available''
                                     funds. The subsection would also be
                                     revised for other stylistic and
                                     descriptive purposes without
                                     altering the substance of the text
                                     as well as updating an email
                                     address supplied for submission of
                                     inquiries relating to wire
                                     instructions and payment
                                     information.
                                    The proposed change would also
                                     remove text indicating that DTC may
                                     allow for special arrangements in
                                     exception to the requirement to
                                     make payment in immediate available
                                     funds via Fedwire. DTC believes
                                     that accepting a special
                                     arrangement in exception to these
                                     standards, such as payment by
                                     check, would introduce risk to
                                     DTC's ability to timely pass income
                                     through to its Participants.
III.D. (Additional Payment          This subsection includes a statement
 Arrangements/Policies/Procedures).  that ``no fees, such as wire fees,
                                     may be deducted from any payment
                                     due to DTC, its nominee, Cede &
                                     Co., or its assigns.'' Because such
                                     payments are passed through to the
                                     beneficial owners that are entitled
                                     to the entirety of the payment, it
                                     is not appropriate for an agent to
                                     charge DTC any fee in this regard.
                                     Therefore, DTC would clarify this
                                     provision by replacing the word
                                     ``deducted'' with ``charged to DTC;
                                     this includes invoicing DTC a fee
                                     or deducting a fee.''
                                    Also, text relating to making
                                     inquiries directs the reader to
                                     email addresses further above in
                                     the OA text. However, the
                                     referenced text also includes phone
                                     information. Therefore, the
                                     proposed rule change would revise
                                     the reference to email addresses to
                                     instead refer to ``contact
                                     information.''
III.D.3. (Post-Payable Income       This would be added as a new
 Adjustments).                       subsection to describe DTC's
                                     existing practices regarding post-
                                     payable income adjustments.
                                     Adjustments can result from (but
                                     are not limited to) changes in
                                     rate, record date, accrual period
                                     or payable date and any activity
                                     tracking for stock loans, repos and
                                     due bill fail tracking.
                                    The subsection would provide that
                                     DTC will agree to Agents' requests
                                     for the reallocation of certain
                                     misapplied, misdirected, or
                                     miscalculated income payments
                                     resulting in post-payable
                                     adjustment to DTC Participants
                                     under the following conditions:
                                        Agent's notice to DTC
                                        where the adjustment request
                                        will result in a credit to DTC
                                        Participants must be received by
                                        DTC no later than one calendar
                                        year from the initial payment
                                        date;
                                        Agent's notice to DTC
                                        for any adjustment request which
                                        will cause a debit-only, or
                                        there is a portion of the
                                        adjustment that will result in a
                                        debit, must be received by DTC
                                        no later than 90 calendar days
                                        from the initial payment date;
                                        Agent's notice to DTC
                                        for the adjustment request is to
                                        include the root cause
                                        adjustment code and information
                                        identifying issuance date,
                                        instrument, issuer, servicer,
                                        and calculating agent. DTC will
                                        not process any post-payable
                                        adjustments missing these key
                                        details; and
                                        In the event the Agent's
                                        adjustment request (e.g., rate
                                        change) resulted in an
                                        overpayment of funds and
                                        requires DTC to charge back
                                        funds from DTC Participants'
                                        accounts, in order to receive
                                        the collect funds the Agent is
                                        to refer to Section III(D)(4)(b)
                                        Processing Errors, and contact
                                        DTC's P&I Event Reconciliation
                                        and Support (PIERS) Department
                                        via email at
                                        [email protected]
                                        for further details.

[[Page 70705]]

 
                                    Issuers and/or Agents wishing to
                                     modify certain income payments
                                     beyond the time period that DTC
                                     will process the adjustments may do
                                     so by obtaining a ``P&I Allocation
                                     Register'' by emailing
                                     [email protected] and making payment
                                     arrangements directly with the
                                     affected DTC participants.
                                    For adjustments resulting from
                                     Agent's requests to DTC to revise
                                     rates, record dates, or payable
                                     dates, DTC will notify Participants
                                     at least one day prior to
                                     processing the adjustment to
                                     Participants' accounts when the
                                     adjustment will be processed within
                                     30 days of the original allocation,
                                     and DTC will notify Participants at
                                     least three days prior to
                                     processing the adjustment to
                                     Participants' accounts when the
                                     adjustment will be processed 30
                                     days or more after the original
                                     allocation.
III.D.4. (Requests for Return-of    This subsection provides
 Funds).                             introductory text for provisions
                                     that apply to instances where the
                                     Paying Agent and/or Issuer request
                                     the return of funds made to DTC.
                                     The proposed rule change would
                                     clarify that this subsection
                                     applies to such requests as they
                                     relate to income, redemption, or
                                     maturity payments, as applicable. A
                                     cross-reference to related text in
                                     Section VI.E. (Chargeback of
                                     Reorganization Payments) would also
                                     be added.
III.D.4.b. (Processing Errors)....  This subsection provides
                                     instructions for agents and issuers
                                     on how to request returns of
                                     erroneous payments made to DTC. The
                                     proposed rule change would clarify
                                     that in addition to erroneous
                                     payments, the instructions also
                                     apply to overpayments made to DTC.
                                     The subsection states that a return
                                     of payment will only be made to the
                                     account from which the payment was
                                     received. While this provision is
                                     intended to prevent the return of a
                                     payment to the wrong location,
                                     occasionally, an issuer or agent
                                     may request that the payment be
                                     returned to an account other than
                                     the one that originally sent the
                                     payment. In these instances, DTC
                                     will send the payment to an account
                                     designated by the agent or issuer
                                     in a signed ``Account Designation
                                     Letter.'' For security reasons, DTC
                                     believes it should receive such a
                                     signed letter with respect to all
                                     such accounts to which payments are
                                     sent to an issuer or agent.
                                     Therefore, DTC would replace the
                                     reference to payments being sent
                                     only to the account from which the
                                     payment was originally made, to
                                     state that the payment will be sent
                                     to the account named in the Account
                                     Designation Letter from the issuer
                                     or agent that DTC has on file.
                                    In addition, it is DTC's experience
                                     that the return of payments under
                                     $100 is not cost effective for DTC
                                     or the applicable issuer or agent,
                                     as the cost of processing the
                                     return could be equal to or exceed
                                     the amount of the erroneous
                                     payment. Therefore, DTC would add
                                     text to this subsection to state
                                     that DTC will only process claims
                                     of $100.00 or greater.
III.d.4.c. (DWAC Deposit and        A new subsection III.D.4.c. (DWAC
 Income Payments).                   Deposit Income Payments) will be
                                     added to clarify to Agents' their
                                     existing responsibilities relating
                                     to DWAC deposits made between a
                                     record date and payment date.
                                     Failure by Agents to fulfill these
                                     responsibilities may cause
                                     processing errors requiring
                                     remediation in accordance with
                                     III.d.4.b.
                                    In this regard, the text of this new
                                     subsection would read as follows:
                                    ``Agent is to pay DTC income
                                     payments on payment date for record
                                     date position. Agent is responsible
                                     when approving a DWAC deposit after
                                     a record date and before the
                                     payment date to ensure the
                                     deposited position is not included
                                     in the Cede & Co. captured record
                                     date position when funding DTC on
                                     the payment date, and Agent will
                                     make the income payment due the
                                     depositing participant directly to
                                     the participant. DTC has no
                                     responsibility to make the payment
                                     to the participant.
                                    Agent is responsible when approving
                                     a DWAC deposit to ensure the
                                     deposited position has all the same
                                     attributes of the security into
                                     which the deposit is being made,
                                     (e.g., accrual date or period,
                                     record date, payment date, payment
                                     cycle, interest rate, call feature,
                                     put feature, maturity date). Refer
                                     to Section II A. 1. CUSIP Number
                                     Assignment.
                                    Failure by Agent to follow the above
                                     procedures could result in an
                                     overpayment by Agent to DTC and
                                     jeopardize the timely and accurate
                                     payment to DTC and the same-day
                                     distribution of these payments to
                                     Participants and beneficial
                                     holders. See also Section b.,
                                     Processing Errors, above.''
IV.A. (Dividend and Income Payment  The title of this section will be
 Details).                           revised to remove the words
                                     ``Dividend and'', so that the
                                     section will be named ``Income
                                     Payment Details'', because
                                     dividends are a form of income and
                                     including ``Dividend'' in the title
                                     is redundant. A reference to the
                                     text of the section to dividends
                                     and income would also be revised to
                                     delete the word ``dividends.''.
                                    Text would also be added to describe
                                     that income payments include cash
                                     dividends, interest, and periodic
                                     principal distributions paid to
                                     holders of record.
                                    The section text provides that an
                                     Issuer or Agent shall provide a
                                     notice of dividend and income
                                     payment information to DTC
                                     electronically, as previously
                                     arranged by Issuer or Agent and
                                     DTC, as soon as the information is
                                     available. However, if DTC does not
                                     receive such information by a
                                     certain time prior to when the
                                     payment is to be made it is
                                     possible that that payment will not
                                     be processed within the timeframe
                                     requested by the Issuer or Agent.
                                     Therefore, DTC would revise the
                                     text to remove the reference that
                                     the notice should be provided as
                                     soon as the information is
                                     available, and instead include a
                                     specific timeframe such that the
                                     notice must be provided to
                                     facilitate timely processing.
                                     Specifically, the changed text
                                     would state that the notice should
                                     be received by DTC prior to the
                                     payable date, but in no event later
                                     than 3 a.m. on the payable date,
                                     which is consistent with a
                                     timeframe already noted in IV.A.1
                                     of the OA with respect to notices
                                     relating to structured securities.
                                    In addition, DTC will add text
                                     requiring that the electronic
                                     notification mentioned above must
                                     be provided either via automated
                                     files (DCN/BMA/RedCal) or the
                                     standard spreadsheet files (DCNLite/
                                     BMALite/RedCalLite).

[[Page 70706]]

 
                                    In addition, because the text
                                     requires that notice be sent via
                                     electronic submission, DTC would
                                     remove outdated references to an
                                     email address and a physical
                                     mailing address.
IV.A.1. (Structured Securities)...  This subsection includes the
                                     specific information DTC requires
                                     to be in a notice for DTC to
                                     process a payment relating to
                                     structured securities. The
                                     specified information would be
                                     revised to delete ``coupon rate,
                                     expressed as a percentage'' as this
                                     information is not needed by DTC to
                                     process the payment. Also, an item
                                     requiring the notice to include the
                                     payment classification (e.g.,
                                     Interest, Principal, Premium, and
                                     Special Distribution) would be
                                     added as this information is
                                     necessary to accurately designate
                                     the payment type in DTC's system.
IV.A.3. (Defaulted Issues)........  DTC would add a new subsection to
                                     describe information needed to
                                     process payments on issues that are
                                     currently in a defaulted payment
                                     status. The additional text would
                                     read as follows:
                                    ``3. Defaulted Issues
                                    Agent shall provide DTC with a
                                     notice of payments on defaulted
                                     issues. After establishing the
                                     amount of any payment to be made on
                                     such Securities, Agent shall send
                                     such notice to DTC's Announcements
                                     Department via email to
                                     [email protected],
                                     preferably five but no fewer than
                                     two business days prior to the
                                     payable or distribution date. Such
                                     notice shall include the following
                                     information:
                                        Security description and
                                        CUSIP number;
                                        record date;
                                        payable date; and
                                        dividend (rate per
                                        share) or interest rate (per
                                        $1,000 principal amount) and the
                                        potential tax liability,
                                        including but not limited to
                                        capital gains, liquidations, and
                                        any cash liquidating
                                        distributions.''
IV.B. (Currency Payment             This section describes requirements
 Provisions).                        relating to currency payments,
                                     including that all income payments
                                     must be made in U.S. dollars or
                                     Canadian dollars, as applicable.
                                     The section also states that
                                     payments in other currencies must
                                     be made directly by the Agent. The
                                     proposed rule change would clarify
                                     that such payments must be made
                                     directly by the Agent to the DTC
                                     Participants.
IV.B.2.a. (Securities Denominated   This subsection provides terms for
 in a Non-U.S. Currency with an      Issues and Agents making payments
 Option for U.S Dollar Payments).    in currencies other than U.S.
                                     dollars. The proposed rule change
                                     clarifies that any payment in non-
                                     U.S. currency should be made in the
                                     currency designated in an offering
                                     document provided to DTC. The non-
                                     U.S. currency would be defined as
                                     the ``Initial Currency and/or
                                     Designated Currency.''
                                    Because this subsection is intended
                                     to apply to payments relating to
                                     equity and debt instruments, DTC
                                     would change references to such
                                     payments from describing them as
                                     income, redemption and maturity,
                                     and reorganization payments and
                                     instead refer to them as principal,
                                     interest and dividends payments, as
                                     the latter more broadly captures
                                     both payment types.
                                    The text currently provides that the
                                     Agent is authorized by the Issuer
                                     to make payments on its behalf. For
                                     the purpose of confirming that the
                                     Issuer is fully authorized to act
                                     on behalf of the Agent in this
                                     regard, DTC would add text to this
                                     subsection whereby the Agent
                                     represents that it has been
                                     appointed by Issuer to receive and
                                     convert designated portions of
                                     payments into U.S. dollars.
                                    The subsection provides, among other
                                     things, that (i) absent any other
                                     arrangements, any beneficial owners
                                     that do not elect payments in a non-
                                     US currency shall receive U.S.
                                     dollar payments by DTC payment to
                                     the Participants holding on their
                                     behalf and, (ii) unless the Agent
                                     is notified by DTC of any election
                                     to receive non-U.S. currency
                                     payments, all payments will be made
                                     in U.S. dollars. To provide for
                                     enhanced clarity in this regard,
                                     DTC would revise the text to move
                                     the latter statement (ii) so that
                                     it appears in a sentence directly
                                     after the former statement (i) as
                                     opposed to further down the text as
                                     is currently the case.
                                    If payments are made by the Agent
                                     outside of DTC, then DTC is not
                                     part of such payment process and is
                                     unable to confirm if the applicable
                                     Participants have been paid. To
                                     provide for enhanced clarity, the
                                     proposed rule change would add the
                                     following text in this regard:
                                     ``Agent accepts responsibility for
                                     the Non-U.S. currency payment made
                                     to DTC Participants, including
                                     confirming directly to the DTC
                                     Participants that payment has been
                                     made. The Agent acknowledges that
                                     DTC is unable to, and will not,
                                     confirm whether such payments were
                                     made to or received by DTC
                                     Participants.''
                                    The proposed rule change would also
                                     make changes related to updating
                                     terminology to align defined terms
                                     and modify text for grammar and
                                     readability.
IV.B.2.b. (Securities with          This subsection relates to
 Payments Made in Canadian Dollars   Securities that may make payments
 and/or U.S. Dollars).               in Canadian and/or U.S. Dollars.
                                     DTC accepts and passes through
                                     income payments in U.S. Dollars and
                                     will also process payments in
                                     Canadian Dollars to the extent the
                                     Security is eligible for DTC's
                                     Canadian-Link Service. The proposed
                                     rule change would revise the text
                                     of this subsection to consolidate
                                     language relating to the
                                     responsibilities of DTC, Issuers
                                     and Agents in this regard, as well
                                     as the acceptable denominations for
                                     payment on applicable Securities,
                                     namely U.S. Dollars and Canadian
                                     Dollars. The proposed rule change
                                     also provides clarification
                                     relating to the form and method of
                                     payments made to DTC (depending on
                                     whether payments are to be made in
                                     Canadian Dollars or U.S. Dollars),
                                     details on tax withholding to
                                     reflect existing arrangements where
                                     CDS serves as DTC's Tax Withholding
                                     Agent, and notifications and
                                     related deadlines.

[[Page 70707]]

 
                                    DTC maintains an account at the CDS
                                     Clearing and Depository Services
                                     Inc. (``CDS'') in Canada and
                                     Securities credited to DTC by CDS
                                     are onward credited by DTC to
                                     Participants. As Securities may
                                     transfer between CDS and DTC
                                     regularly, it is necessary that the
                                     records of the Agent and DTC agree
                                     on record date so that the DTC
                                     position in the Security is in
                                     balance with the records of the
                                     Agent. In this regard, the proposed
                                     rule change would add text relating
                                     to the applicable process necessary
                                     for such balancing to occur timely.
                                     Specifically, the added text would
                                     state that the Agent must confirm
                                     via FRAC the Securities Control
                                     Listing (SCL) by 6:00 p.m. ET on
                                     the record date or the date
                                     requested by DTC.
IV.B.2.b.3. (Securities             DTC does not process non-U.S.
 Denominated in a Non-U.S.           currency (other than Canadian).
 Currency without an Option for      This subsection provides
 U.S. Dollar Payments).              requirements on how such payments
                                     should be made by the Agent outside
                                     of DTC. The proposed rule change
                                     would clarify the text relating to
                                     the obligations for the Agent in
                                     this regard and clarifying that the
                                     Agent is solely responsible to
                                     ensure such payments are made to
                                     Participants. This proposed change
                                     would provide that DTC shall bear
                                     no responsibility with respect to
                                     such Non-U.S. currency payments,
                                     and note that DTC is unable to
                                     confirm whether such payments were
                                     made to or received by DTC
                                     Participants.
IV.C.2. (Reduction of Payment on    This subsection provides that a
 Treasury Shares or Repurchased      Participant that holds treasury
 Debt Securities (for Cash           shares or repurchased debt
 Dividend or Interest Payment).      securities (i.e., issuer buy-back)
                                     at DTC on the record date for a
                                     cash dividend or interest payment
                                     shall submit an instruction through
                                     the Corporate Actions Web (``CA
                                     Web'') to reduce its entitlement to
                                     the payment by the amount
                                     attributable to such treasury
                                     shares or repurchased securities.
                                     If the Participant does not submit
                                     such instruction within a
                                     designated timeframe, then the
                                     Agent shall provide to DTC a notice
                                     of reduction in the dividend or
                                     interest payment amount due DTC
                                     because of treasury shares or
                                     repurchased debt securities held on
                                     deposit by DTC on the record date.
                                     With respect to each Participant
                                     with a reduced entitlement, the
                                     Agent is responsible to ensure that
                                     the applicable Participants submit
                                     a confirmation letter providing
                                     details relating to the reduction.
                                     The proposed rule change would
                                     clarify, that while it is the
                                     Agent's responsibility to ensure
                                     that each Participant submits a
                                     confirmation letter, it is the
                                     responsibility of the Participant
                                     to provide the letter to DTC. For
                                     the sake of clarity, the proposed
                                     rule change would also consolidate
                                     a list of the contents and
                                     requirements that relate to the
                                     required letter.
IV.D.1.a. (Voluntary Dividend       This subsection describes conditions
 Reinvestment and Securities with    for an Issuer's securities to
 an Automatic Dividend               participate in the DTC Dividend
 Reinvestment (with an option to     Reinvestment Program. The DTC
 elect a cash dividend).             Dividend Reinvestment Program
                                     allows Participants to reinvest
                                     income payments for additional
                                     securities. The DTC Dividend
                                     Reinvestment Program also includes
                                     an opt-out feature, where income
                                     payments on certain issues have
                                     been automatically reinvested into
                                     securities and Participants could
                                     instruct to receive cash instead.
                                     For an issue to participate, the
                                     Issuer's Agent, acting as the
                                     Issuer's Dividend Reinvestment Plan
                                     Administrator, must complete and
                                     sign DTC's Dividend Reinvestment
                                     Letter of Agreement (reprinted on
                                     Agent's letterhead). This Dividend
                                     Reinvestment Letter of Agreement
                                     details the terms agreed upon by
                                     the Agent for the processing of
                                     reinvestment instructions through
                                     DTC. The subsection includes the
                                     following statement: ``The Agent
                                     must provide a written request to
                                     DTC for all Securities to be
                                     included in DTC's DRP. DTC may
                                     refuse to make eligible certain
                                     issues if Agent has a record of
                                     failing to comply with such
                                     arrangements.'' DTC proposes to
                                     delete this statement as it is
                                     redundant because the provision of
                                     the letter of agreement constitutes
                                     the writing, and it is intuitive
                                     that an Agent would need to comply
                                     with the agreement for its issues
                                     to be added to the program.
                                    The text would also be modified to
                                     remove a reference to right fax as
                                     a method for Agents to submit
                                     dividend reinvestment instructions.
IV.D.2. (Stock/Pay-in-Kind          This subsection contains information
 (``PIK'') Distributions to          and requirements relating to a PIK,
 Holders of Record).                 which is a distribution that pays
                                     additional shares of a security
                                     that the payment relates to. Text
                                     in this subsection relating to
                                     stock distributions would be
                                     revised for technical and
                                     clarifying changes for readability
                                     without altering its substance or
                                     meaning.
                                    A sentence in the text relating to a
                                     PIK on a bond issue currently
                                     states: ``If the new denomination
                                     of the new bond is different from
                                     the denomination of the Original
                                     Bond (i.e., the minimum
                                     denomination and/or the increment),
                                     then the Original Bond denomination
                                     (e.g., $1,000 by $1,000) is to be
                                     changed to reflect the denomination
                                     of the new bonds (e.g., $1000 by
                                     $1.00) for the remainder of the
                                     Original Bond's term.'' The
                                     proposed rule change would modify
                                     this sentence to add the following
                                     words at the end of this sentence
                                     before the period: ``or until all
                                     baby bond positions are
                                     eliminated.'' This sentence will
                                     also be moved to another paragraph
                                     in the text for enhanced clarity
                                     and flow. In addition, text will be
                                     modified for consistency with
                                     respect to defined terms.

[[Page 70708]]

 
IV.D.2.a. (Fractional Entitlements  This subsection discusses the
 in Cash or Additional Roundup       processing of fractional
 Shares).                            entitlements on a stock
                                     distribution such as a stock split,
                                     stock dividend, or pay-in-kind
                                     distribution. The section states
                                     that DTC does not support the
                                     distribution of fractional shares
                                     of securities and lists the
                                     acceptable forms of fractional
                                     entitlements that may be processed
                                     through DTC, namely cash-in-lieu of
                                     fractions (``CIL'') and roundup
                                     shares. CIL pays the cash value of
                                     fractional shares that would
                                     otherwise be distributed. Roundup
                                     shares provide for issuers and
                                     their agents to round the amounts
                                     of shares distributed to the next
                                     whole number. The section provides
                                     those fractional entitlements are
                                     to be computed by the agent at the
                                     Participant level or beneficial
                                     owner level and provides
                                     instructions relating to providing
                                     DTC with such payments. Pursuant to
                                     the proposed rule change, the OA
                                     text would add a clarification that
                                     such information on fractional
                                     entitlements should not be
                                     calculated at the Cede & Co. level
                                     only. An issuer and their Issuer
                                     and their Agent when paying CIL of
                                     fractions or additional roundup
                                     shares are to calculate and pay
                                     such entitlement down to the
                                     beneficial owner level when the
                                     event notification specifically
                                     refers to fractional entitlements
                                     being calculated at the shareholder/
                                     beneficial owners level, however,
                                     if the timing of the event
                                     precludes providing the opportunity
                                     for participants to identify and
                                     receive payment calculated at the
                                     beneficial owner level, or it is
                                     not specified in the event, then
                                     calculations can be done at the DTC
                                     participant level. Fractional
                                     entitlements should not be
                                     calculated at the Cede & Co. level
                                     only.
                                    The proposed rule change would also
                                     make technical and clarifying
                                     changes to the text of this
                                     subsection relating to Participant
                                     instructions collected at the
                                     beneficial owner level and update a
                                     mailing address.
IV.D.2.b. (Restricted Distribution  This subsection would be modified to
 Shares Issued).                     remove a cross-reference to
                                     ``Section VI(A), Standards for
                                     Voluntary and Mandatory
                                     Reorganizations Notices for notice
                                     instructions.)'' This reference is
                                     misplaced and not relevant to the
                                     subsection.
IV.D.3. (Reduction of Payment on    Treasury shares are owned by the
 Treasury Shares (for Stock          issuer and not entitled to receive
 Dividend Payments).                 distributions. If a Participant
                                     holds any Treasury shares, the
                                     Participant must notify DTC via a
                                     confirmation letter regarding the
                                     treasury shares it holds so that
                                     the Participant's entitlement will
                                     be reduced in relation to the
                                     treasury shares it holds. The
                                     proposed rule change would revise
                                     the text to clarify that the
                                     confirmation letter is only
                                     required of ``applicable
                                     Participants'' and that an agent
                                     will facilitate obtaining the
                                     letter from Participants. The
                                     proposed change would also
                                     consolidate a list of information
                                     required to be included in such
                                     letters so that all the elements of
                                     the letter are included in one list
                                     rather than two, as the OA
                                     currently reads.
                                    The change would also remove a
                                     requirement that the Participant
                                     affix its medallion signature
                                     guarantee stamp to the letter.
                                    Text would also be added to refer
                                     the reader to an email address to
                                     contact to obtain a template of the
                                     confirmation letter.
V.A. (Redemptions, Advance          This section sets forth certain
 Refundings, and Calls Inclusive     requirements relating to
 of Sinking Funds and Mandatory      redemptions of securities. An
 Redemptions).                       issuer may conduct its redemptions
                                     pro-rata (distributed as an equal
                                     percentage across all holders) or
                                     by lottery (whereby DTC randomly
                                     selects holders whose securities
                                     will be redeemed). Once an issuer
                                     uses either a pro-rata process or
                                     the lottery process, future
                                     redemptions must be made using the
                                     same process. Pursuant to the
                                     proposed rule change, this section
                                     would be clarified by adding the
                                     following text after a sentence
                                     that states that DTC cannot support
                                     pro-rata lottery redemptions: ``In
                                     addition, once a security starts
                                     paying principal via lottery or pro-
                                     rata pass-through of principal,
                                     future principal payments must be
                                     made using the same payment method.
                                     Securities must not use both
                                     lottery and pro-rata pass through
                                     methods of paying principal. Pro-
                                     rata pass-through of principal must
                                     not be used for securities that
                                     offer ``pay-in-kind''
                                     distributions.''
                                    The proposed rule change would move
                                     text relating to eligibility of new
                                     issues that contain provisions for
                                     monthly optional redemptions from
                                     this Section to a new subsection
                                     I.C.7. (Monthly Optional
                                     Redemptions). The specific text to
                                     be moved states: ``DTC will
                                     consider for eligibility a new
                                     issue of securities where the
                                     issuance is registered under the
                                     Securities Act and containing
                                     provisions for monthly optional
                                     redemptions by the Issuer only if
                                     the issue is in book-entry ``BEO''
                                     format and DTC has received an
                                     executed LOR prior to closing. (See
                                     Section (I)(B), Documentation).''
                                     This text is a more logical fit to
                                     be included under Section I. of the
                                     OA as Section I. covers securities
                                     eligibility.
                                    Text would also be revised to delete
                                     a provision relating to
                                     notifications under this subsection
                                     that states that a ``second''
                                     redemption notice shall be sent to
                                     DTC in a secure fashion within 60
                                     calendar days if action is required
                                     and if DTC has not acted on the
                                     first notice, as it would be
                                     redundant to require such a second
                                     notice to be sent.
                                    The text would also be revised to
                                     delete text that states that an
                                     Agent's receipt of securities and
                                     redemption presentment
                                     documentation from DTC may be
                                     confirmed to DTC by using DTC's
                                     Participant Browser Service
                                     (``PBS'') function Redemption
                                     Payment Summary Return. Paying
                                     agents on the PWP program shall
                                     send their confirmations via email
                                     at [email protected] using the
                                     format provided by DTC. This
                                     confirmation verifies receipt of
                                     the redemption presentment and
                                     confirms intent to pay DTC, on the
                                     payable date by 3:00 p.m. ET, the
                                     value stated in the presentment
                                     documentation, provided the item is
                                     funded. Agent shall notify DTC
                                     immediately via email at
                                     [email protected] when
                                     discrepancies between the
                                     securities and redemption
                                     presentment documentation and the
                                     Agent's records are identified.
                                     This text is unnecessary as such
                                     information is delivered
                                     electronically and as such a
                                     confirmation would not be required.

[[Page 70709]]

 
                                    The proposed rule change would also
                                     clarify that in addition to other
                                     methods described in this section,
                                     instructions relating to
                                     redemptions may be sent to DTC
                                     using a supported automated feed,
                                     such as REDCAL, DCN or BMA, or
                                     using an appropriate DTC formatted
                                     Microsoft Excel spreadsheet.\18\
                                    Finally, the subsection would be
                                     revised to for other technical and
                                     clarifying changes to the text.
V.A.1. (Notice of Recission)......  From time to time, an issuer will
                                     seek to rescind a redemption event.
                                     DTC requests information and
                                     documentation to process the
                                     recission. To enhance clarity
                                     relating to this process, DTC would
                                     add a new subsection V.A.1. (Notice
                                     of Recission) that sets forth the
                                     information and documentation that
                                     DTC needs to be able to process the
                                     recission. In this regard, the new
                                     subsection would state:
                                    ``To notify DTC of a rescinded
                                     redemption event, Issuer or Agent
                                     must utilize DTC's automated file
                                     or email all related documents to
                                     [email protected],
                                     and the notice shall include the
                                     following:
                                        Security description and
                                        CUSIP number(s)
                                        statement that the
                                        redemption/refunding is rescind/
                                        cancel;
                                        amount of the redemption
                                        or refunding being rescinded;
                                        Publication Date of any
                                        related notices;
                                        Redemption date of event
                                        being rescinded;
                                        Redemption Agent's name
                                        and address; and
                                        Administrator's contact
                                        information.
                                    Recission notice requests to DTC 30
                                     days or more after the Redemption
                                     Date will only be accepted and
                                     processed when the Agent has
                                     provided a DTC debit request letter
                                     from each DTC Participant paid in
                                     the redemption. The letter is to
                                     include the DTC indemnification
                                     statement and medallion stamp.
                                     (Note: The authorized signer of the
                                     medallion stamp must be a different
                                     party than the signer of the
                                     letter.) To request a letter
                                     template, please contact
                                     [email protected].''
V.A.2. (Notice of Revision).......  From time to time, an issuer may
                                     seek to revise a pending redemption
                                     event. DTC requests information and
                                     documentation to process the
                                     revision. To enhance clarity
                                     relating to this process, DTC would
                                     add a new subsection V.A.2. (Notice
                                     of Revision) that sets forth the
                                     information and documentation that
                                     DTC needs to be able to process the
                                     revision. In this regard, the new
                                     subsection would state:
                                    ``To notify DTC of a revision to a
                                     redemption announcement, such as
                                     called amount, redemption date, or
                                     publication date, Issuer or Agent
                                     shall send a notice to DTC
                                     specifying:
                                        Security description and
                                        CUSIP number(s);
                                        the redemption notice is
                                        revised from the prior notice
                                        and clearly indicates the
                                        revised information (e.g.,
                                        called amount, redemption date,
                                        pub date);
                                        Amount of the redemption
                                        or refunding being revised;
                                        Publication date of the
                                        notice;
                                        Redemption date of event
                                        being revised;
                                        Redemption Agent's name
                                        and address; and
                                        Administrator's contact
                                        information.
                                    Revision notices requests to DTC 30
                                     days or more after the Redemption
                                     Date which increase the called
                                     amount will not be accepted. A new
                                     notice with a current Redemption
                                     Date will be required. Interest
                                     must be paid up to the new
                                     Redemption Date.
                                    Revision notice requests to DTC 30
                                     days or more after the Redemption
                                     Date which decrease the called
                                     amount will only be accepted and
                                     processed when the Agent has
                                     provided a DTC debit request letter
                                     from each DTC Participant paid in
                                     the redemption. The letter is to
                                     include the DTC indemnification
                                     statement and medallion stamp.
                                     Note: The authorized signer of the
                                     medallion stamp must be a different
                                     party than the signer of the
                                     letter.) To request a letter
                                     template, please contact
                                     [email protected].''
V.A.3. (Notice of a Security        DTC's Null/Void Worthless Letter
 Declared ``Null, Void and           template provides agents with the
 Worthless'').                       required verbiage to initiate a
                                     mandatory corporate action that
                                     authorizes DTCC to delete/cancel a
                                     participant position on its books
                                     and records.\19\ The letter \20\ is
                                     available for download on DTCC's
                                     website and contains the required
                                     indemnification language to confirm
                                     that the securities are deemed
                                     null, void, and worthless, and that
                                     there will be no future payments.
                                    Pursuant to the proposed rule
                                     change, DTC would add a new
                                     subsection V.A.3. to clarify that
                                     the template letter should be used
                                     if a Security will not make a final
                                     paydown/redemption and the agent or
                                     issuer/agent intends to have the
                                     Security removed from the books and
                                     records. The new subsection would
                                     state the following:
                                    ``In the event a security will not
                                     make a final paydown/redemption, as
                                     may be the case with a structured
                                     security, or in the event that a
                                     security is being or has been
                                     cancelled pursuant to a bankruptcy,
                                     court order, or other similar
                                     circumstance and is therefore
                                     worthless, the Issuer, Trustee or
                                     Agent must instruct DTC to remove
                                     the position from DTC's books and
                                     records on the basis that the
                                     security is null, void, and
                                     worthless, that all interests in
                                     the security have been cancelled,
                                     and that there will be no further
                                     payments. The Issuer, Trustee or
                                     Agent instruction to DTC must be in
                                     the form of the ``Null, Void, and
                                     Worthless'' (``NVW'') letter
                                     template available on the DTCC's
                                     website at https://www.dtcc.com/settlement-and-asset-services/agent-services/corporate-action-information-for-agents and must be
                                     emailed to the applicable email
                                     address as set forth in the
                                     following paragraph. The letter,
                                     including an indemnification of
                                     DTC, must not be altered or edited.

[[Page 70710]]

 
                                    Issuer, Trustee or Agent shall email
                                     the completed and signed NVW letter
                                     for a security not making a final
                                     paydown/redemption to
                                     [email protected].
                                     Issuer, Trustee or Agent shall send
                                     the completed and signed NVW letter
                                     to DTC for convertible securities,
                                     warrant or rights deemed null,
                                     void, and worthless to
                                     [email protected]. Issuer, Trustee or Agent
                                     shall send the completed and signed
                                     NVW letter to DTC for other event
                                     types to
                                     [email protected].
                                    DTC reserves the right to request
                                     revised or additional documentation
                                     from the Agent, Issuer or Trustee
                                     as DTC deems necessary or
                                     appropriate.''
V.A.4. (to be renumbered from       Considering the proposal to add the
 V.A.1.) (Pro Rata Pass-Through      new subsections under Section V.A.,
 Distributions of Principal).        as described above, current Section
                                     V.A.1. will be renumbered as V.A.4.
                                     This subsection provides
                                     requirements for notification to
                                     DTC and processing for pro rata
                                     pass-through distributions of
                                     principal. The subsection will be
                                     updated to clarify that such a pass-
                                     through is referred to as a ``final
                                     pay-down'' as opposed to a ``pay-
                                     down'' and adjust a related
                                     reference accordingly. The text of
                                     the subsection would also be
                                     revised for clarity and readability
                                     and to add that in addition to
                                     email, notification of a final pay-
                                     down can be provided to DTC via
                                     BMA5.
V.A.5. (to be renumbered from       Considering the proposal to add the
 V.A.2.) (Partial Redemptions for    new subsections under Section V.A.,
 Auction Rate Securities (``ARS'')   as described above, current Section
 and Requests for ARS Lottery        V.A.2. will be renumbered as V.A.5.
 Results.                            Also, a reference to the DTCC
                                     Customer Service Hotline, which can
                                     be called for further information
                                     regarding instructions on
                                     processing requirements, would be
                                     updated to reflect the current name
                                     of this customer support line,
                                     which is referred to as the
                                     ``Client Support Line.''
V.A.6. (to be renumbered from       Considering the proposal to add the
 V.A.3.) (Redemption Notification    new subsections under Section V.A.,
 Exceptions).                        as described above, current Section
                                     V.A.3. will be renumbered as V.A.6.
V.B.1. (Standards for Put           Text would be removed that states
 Notifications).                     ``DTC requires Agents to meet
                                     standards for put notifications as
                                     they apply to notifications to
                                     depositories and to the extent that
                                     this OA or related LOR does not
                                     supersede them.'' This text is
                                     redundant as the specific
                                     provisions relating to such put
                                     notifications are described in
                                     detail directly below the text to
                                     be deleted.
V.B.1.a. (Initial Notices of Puts)  The text would be clarified to
                                     indicate that email addresses must
                                     be provided to DTC for the delivery
                                     of put exercise instructions.
V.B.1.b. (Timing).................  This subsection on the timing of
                                     notices to DTC would be modified to
                                     add that DTC should be notified no
                                     fewer than 10 days prior to payment
                                     date for mandatory puts. This is in
                                     addition to a stated requirement
                                     that the notice should be sent to
                                     DTC no fewer than 10 days prior to
                                     the expiration of the applicable
                                     tender period for puts with
                                     instruction windows. Mandatory puts
                                     would not necessarily involve an
                                     instruction window and therefore
                                     the existing text would not apply
                                     to mandatory puts.
V.B.1.c. (Additional Notices).....  This subsection states a notice
                                     requirement relating to partial
                                     redemptions and information that
                                     should be included in a notice. The
                                     proposed rule change deletes a
                                     provision that such notices should
                                     be sent by the Issuer or Agent to
                                     one or more nationally recognized
                                     information services that
                                     disseminate put notices. This is a
                                     provision relating to a
                                     notification that would occur
                                     outside DTC and is not required for
                                     DTC to process the partial
                                     redemption.
V.B.1.d. (Warning on Envelope for   This subsection contains a provision
 Physical Notice Delivery).          relating to notice relating to the
                                     circumstance where a bond indenture
                                     requires a physical notice to be
                                     sent in connection with a
                                     redemption. The subsection contains
                                     a requirement that a warning should
                                     be printed on envelopes provided to
                                     DTC in this regard and provides an
                                     example of such a warning and
                                     instructions for delivery of the
                                     notice. This subsection will be
                                     deleted as this relates to an
                                     obligation between an agent/issuer
                                     and the indenture trustee for the
                                     issue, and such notice is not
                                     necessary to be provided to DTC for
                                     DTC to process the event.
V.B.2.b. (Collateralized Mortgage   This subsection contains a provision
 Obligations (``CMOs'') and Asset-   that is currently misplaced
 Backed Securities (``ABSs'').       relating to death redemptions,
                                     which is an estate feature of some
                                     bonds that provides that the bond
                                     may be put back to the issuer as a
                                     type of early redemption in the
                                     event of the death of a bondholder.
                                     The provision is misplaced and has
                                     been moved to the section relating
                                     to early Certificate of Deposit
                                     (``CD'') redemption/Survivor
                                     Options.
                                    The proposed rule change also makes
                                     a grammatical change to enhance
                                     readability.
V.B.2.c. (Put ``Extendible''        This subsection sets forth notice
 Issues'').                          requirements for issues that may be
                                     subject to a ``put'' provision that
                                     allows the security to be exchanged
                                     into a new security in accordance
                                     with the terms of the issuance. The
                                     proposed rule change will make
                                     technical and clarifying changes
                                     relating to an example of such a
                                     put (i) to modify terminology in a
                                     parenthetical used to refer to an
                                     extendible bond, from being
                                     referred to as ``Extendible'' to
                                     instead refer to it as ``the
                                     extendible bond'' and (ii) modify
                                     text in the example to refer to the
                                     new bond as having a ``shortened''
                                     maturity rather than a ``new''
                                     maturity. The word ``as'' would
                                     also be added to the text for the
                                     example before modified text ``with
                                     a shortened maturity date.''
                                    In this regard, the existing text
                                     subject to these modifications
                                     currently states:
                                    ``A security subject to a ``put''
                                     provision may be exchanged for a
                                     new security, in accordance with
                                     the terms and conditions of such
                                     put, with a new maturity date
                                     (i.e., ``Extendible'') if a holder
                                     does not elect to retain the
                                     position.''
                                    The modified text would state:
                                    ``A security subject to a ``put''
                                     provision may be exchanged for a
                                     new security, in accordance with
                                     the terms and conditions of such
                                     put, as with a shortened maturity
                                     date if a holder does not elect to
                                     retain the position (i.e., the
                                     extendible bond).''
                                    The subsection would also be
                                     modified to add an additional email
                                     to which related confirmations must
                                     be sent to. In addition to
                                     [email protected], the text will
                                     provide that
                                     [email protected] could also
                                     be used for this purpose.

[[Page 70711]]

 
V.B.2.d. (Put Bonds (Repayment      The proposed rule change would shift
 Options)).                          the location of text within the
                                     subsection, relating to certain
                                     notice requirements and related
                                     late fees for put bonds, to enhance
                                     clarity and readability. The
                                     proposed rule change also amends
                                     the notice requirements to remove
                                     the option to deliver notices to
                                     DTC using physical delivery methods
                                     in the event email transmission is
                                     unavailable. The proposed change
                                     would also modify text for accuracy
                                     of terminology.
V.B.2.e. (Early CD Redemptions/     This subsection contains provisions
 Survivor Options).                  contained in the terms of certain
                                     Securities relating to survivor
                                     options which permit early
                                     redemption of a security in the
                                     event of the death of a bondholder
                                     or if the bondholder is adjudicated
                                     as incompetent.
                                    This section is focused on the early
                                     redemption of certificates of
                                     deposit and MMI Survivor Options.
                                     In this regard, the heading of this
                                     subsection would be clarified to
                                     reflect this focus by adding a
                                     reference to early CD redemptions
                                     in addition to survivor options, as
                                     well as adding ``MMI'' before
                                     ``Survivor Options''. In this
                                     regard, the heading reads as
                                     ``Survivor Options'' and the
                                     modified title would read ``Early
                                     CD Redemptions/MMI Survivor
                                     Options''.
                                    The text would be revised to clarify
                                     the system functions and procedures
                                     used for the early redemptions of
                                     certificates of deposit that are
                                     issued in DTC's MMI Program and
                                     those that are not issued in the
                                     program.
                                    In this regard, the text would state
                                     that Participants should use the CD
                                     Early Redemption Request (``CERR'')
                                     function on PTS/PBS for non-MMI CDs
                                     to notify DTC in this regard, and
                                     Participants should use the
                                     ``PUTS'' function on PTS for CDs
                                     issued in the MMI program to notify
                                     the Issuing and Paying Agent
                                     (``IPA''). (In the MMI program,
                                     redemptions are initiated directly
                                     between a Participant and an IPA on
                                     DTC's MMI platform, whereas the
                                     Participant provides instructions
                                     directly to DTC for other
                                     redemption types and DTC
                                     communicates those instructions to
                                     the agent.
                                    Text be updated and clarified
                                     relating to information actions
                                     required for Participants and
                                     Agents to instruct and process
                                     early redemptions.
                                    As such the following deletions and
                                     additions would be made.
                                    The following text would be deleted:
                                    ``When submitting instruction via
                                     CERR functions, hard copy
                                     supporting documentation is not
                                     required to be delivered to DTC
                                     concurrently with instructions from
                                     Participants for certain put
                                     exercise instructions, for example,
                                     a bond issue with a ``death put''
                                     provision does not require the
                                     submission of a death certificate
                                     concurrently with an exercise
                                     instruction, however, hard copy
                                     documentation must follow promptly.
                                     The presentment of the supporting
                                     documentation to the Agent is not
                                     monitored by DTC.
                                    Agent shall receive the specified
                                     Securities in accordance with DTC's
                                     CERR procedures. Upon receipt of
                                     payment, DTC will credit
                                     Participant, and the Participant
                                     shall forward the payment to the
                                     legal representative of the named
                                     beneficial owner.
                                    If such Securities are structured so
                                     that the redemption option (i.e.,
                                     ``death put'') pays holders accrued
                                     interest, Agent must include such
                                     accrued interest with the principal
                                     payment which shall be calculated
                                     from the day prior to the regular
                                     interest payment date to and
                                     including the day the funds are
                                     wired to DTC. Such funds shall be
                                     sent to the account in the manner
                                     set forth in Section III(C)(2),
                                     Redemption and Maturity Payment
                                     Standards.''
                                    The deleted text would be replaced
                                     with the following:
                                    ``(1) Early CD Redemptions (Non-MMI)
                                        Instruction Processing
                                        (with supporting documentation):
                                        For early CD redemption
                                        instructions submitted through
                                        CERR, DTC will provide the Agent
                                        the instructions from
                                        Participants, and if in addition
                                        to the instruction the Agent
                                        requires the Participant to
                                        present the beneficial-owner
                                        supporting documentation, (e.g.,
                                        death certificate), DTC will
                                        electronically provide to the
                                        Agent (unless otherwise notified
                                        by DTC) the supporting
                                        documentation received from
                                        Participants on the condition
                                        the Agent meets the following
                                        requirements:
                                         [cir] Agent agrees to accept
                                          the beneficial owner
                                          documentation via email from
                                          DTC and further agrees it
                                          fulfills the documentation
                                          requirement of the submission
                                          to make the payment;
                                         [cir] Agent can accept the DTC
                                          email delivery in the form of
                                          a password-protected/encrypted
                                          email; and
                                         [cir] Agent provides DTC a
                                          group/business unit email
                                          address (as opposed to an
                                          individual employee's email
                                          address) for the delivery of
                                          the documentation.
                                    If any of the above conditions
                                     cannot be met, DTC will not provide
                                     the Agent the supporting
                                     documentation and Agent will be
                                     responsible to obtain the
                                     documentation directly from
                                     Participants as may be needed.
                                        Instruction Processing
                                        (without supporting
                                        documentation): For early CD
                                        redemption instructions
                                        submitted through CERR where the
                                        event indicates supporting
                                        documentation is not required to
                                        complete the submission for
                                        payment, DTC will provide the
                                        Agent the instructions from
                                        Participants including contact
                                        information at the Participant
                                        should the Agent want to obtain
                                        the documentation at a later
                                        time. When the event indicates
                                        that documentation is not
                                        required, Participants
                                        submitting instructions will
                                        certify that they will retain
                                        the documentation for 30 months
                                        from the submission should the
                                        Agent want to obtain such
                                        documentation.

[[Page 70712]]

 
                                        Early CD Redemption
                                        Instruction Confirmation: Agent
                                        is required to notify DTC of any
                                        issues with instructions
                                        submitted to Agent, (e.g.,
                                        invalid documentation, annual or
                                        quarterly cap reached, lifetime
                                        cap reached) within 5 business
                                        days of receipt by emailing
                                        [email protected]. For
                                        requests in good order, Agent
                                        will promptly inform DTC of the
                                        anticipated payment date for
                                        each instruction submitted to
                                        the Agent by emailing
                                        [email protected].
                                        Early CD Redemption
                                        Payments: The Agent shall remit
                                        wire payment of early CD
                                        Redemption to DTC and include
                                        the CUSIP number, (e.g., CUSIP
                                        123654AA0), and the CERR
                                        transaction ID, (e.g.,
                                        Transaction ID E@PF0101171216),
                                        on the wire. For all payments,
                                        Agent must email wire payment
                                        details in an Excel file listing
                                        the CUSIPs, CERR transaction
                                        ID's, and amount to be paid. The
                                        email should be sent to
                                        [email protected] with the
                                        subject of the email containing
                                        the same transaction ID (e.g.,
                                        Transaction ID E@PF0101171216)
                                        contained in the wire. The
                                        amount to be paid in the email
                                        attached Excel file must match
                                        the wire amount sent to DTC. If
                                        such Securities are structured
                                        so that the redemption option
                                        (i.e., ``death put'') pays
                                        holders accrued interest, (as
                                        payment is not occurring on a
                                        scheduled interest payment
                                        date), Agent must include such
                                        accrued interest with the
                                        principal payment which shall be
                                        calculated from the day prior to
                                        the regular interest payment
                                        date to and including the day
                                        the funds are wired to DTC. Such
                                        funds shall be sent to the
                                        account in the manner set forth
                                        in Section III(C)(3),
                                        Reorganization Payment
                                        Standards.
                                    (2) MMI Survivor Options: IPA is to
                                     refer to the ``Survivor Options
                                     Puts User Guide for Agents'' for
                                     instructions on viewing
                                     instructions, accepting/rejecting
                                     instructions, and responding to
                                     withdrawal requests, and selecting
                                     instructions for payments.''
VI.A. (Standards for Voluntary and  This section provides notice
 Mandatory Reorganizations           standards, including timeframes and
 Notices).                           other requirements, for the
                                     processing of voluntary and
                                     mandatory reorganization events.
                                     The proposed rule change will
                                     revise the text of this section as
                                     follows:
                                       1. The text of this section
                                        currently provides in its
                                        introductory paragraphs that
                                        notices for mandatory
                                        reorganization events must be
                                        sent to DTC no fewer than five
                                        business days prior to the
                                        transaction (event). Voluntary
                                        events require more time for
                                        processing than mandatory
                                        events, because under a
                                        voluntary event Participants
                                        need to submit instructions to
                                        DTC on how the event should be
                                        processed on their or their
                                        customers' behalf. For a
                                        mandatory event, such
                                        instructions are not applicable.
                                        This subsection currently
                                        provides for a 10-day notice
                                        period for voluntary events by
                                        stating that final source
                                        documentation must be provided
                                        to DTC at least 10 business days
                                        prior to the expiration of the
                                        voluntary event, but it resides
                                        further down in the section. The
                                        proposed rule change would move
                                        the text for the 10-day notice
                                        for voluntary events to be
                                        closer to the description of the
                                        five-day notice period (for
                                        mandatory events) to make it
                                        clearer to the reader as to
                                        which notice period applies to a
                                        mandatory or voluntary event. In
                                        the regard, revision would also
                                        add text to clarify that the
                                        five-business day requirement
                                        set forth in this section for
                                        notice applies with respect to
                                        mandatory events. Text
                                        referencing provision of
                                        preliminary source documentation
                                        and late notification fees that
                                        are charged for late
                                        notifications for voluntary
                                        events would be moved further up
                                        in the section for improved flow
                                        of the text.
                                       2. The proposed rule change would
                                        delete the word ``distribution''
                                        from text relating to processing
                                        of cash in lieu of fractional
                                        shares because this paragraph is
                                        referring to reorganization
                                        events, which currently states:
                                        ``the rate of distribution
                                        (e.g., stock rate and exchange
                                        rate), including the rate for
                                        CIL fractions or roundup
                                        entitlements . . .'' This is
                                        because reorganization events do
                                        not result in distributions, but
                                        instead provide for entitlements
                                        to cash or securities. In
                                        addition, the referenced text
                                        above would be revised to
                                        clarify that the ``rate'' is a
                                        ``payment rate'' and clarify how
                                        the rates are expressed for debt
                                        and equity.
                                       3. The proposed rule change would
                                        add text noting that DTC does
                                        not support the distribution of
                                        fractional shares of
                                        securities.\21\
                                       4. The following note would be
                                        added to the text:
                                       ``Important Note: If there is a
                                        change in terms, a revised
                                        notice must be provided to DTC
                                        immediately upon publication.
                                        Agent is to confirm that DTC
                                        took the appropriate action with
                                        the information provided, (e.g.,
                                        extended/revised the DTC
                                        expiration date when given a new
                                        expiration date).''
                                       5. The proposed rule change would
                                        add that a notice should include
                                        information on whether shares
                                        issued as the result of exercise
                                        of dissenter rights would be
                                        issued as a certificate or in
                                        Direct Registration Statement
                                        format.
                                       6. The subsection provides an
                                        email address for submission of
                                        notices of voluntary events. The
                                        proposed rule change would
                                        clarify that notices for three
                                        of the event types listed,
                                        namely conversions, right
                                        exercises, and warrant exercises
                                        should be sent to a different
                                        email box than the email box
                                        currently listed for all
                                        voluntary reorganization events.
                                        The email address currently
                                        listed for all such events is
                                        [email protected]. This will continue to be
                                        a valid address for all events
                                        listed therein except for the
                                        three mentioned above, for which
                                        notices should be sent to
                                        [email protected]. In addition, text
                                        would be added stating that
                                        notifications pertaining to Put
                                        events should be sent to
                                        [email protected]. Also, a
                                        reference to ``dutch auctions''
                                        will be changed to ``Dutch
                                        auctions'' to capitalize
                                        ``Dutch'' to reflect that it is
                                        referring to a specific type of
                                        auction.

[[Page 70713]]

 
                                       7. The proposed rule change would
                                        revise text that describes
                                        requirements relating to events
                                        that DTC is unable to process
                                        and that must be paid outside of
                                        DTC. For these events, the OA
                                        states that details of the
                                        related entitlement must be
                                        provided. The revision would
                                        modify a clause that currently
                                        states ``Agents will accept
                                        responsibility to make payment
                                        directly to DTC Participants and
                                        agree to provide DTC details of
                                        the entitlement being allocated
                                        to DTC Participants, including
                                        calculations at the instruction
                                        level at the time of the
                                        allocation to DTC Participants
                                        and to notify DTC that
                                        instructed positions can be
                                        drawn down from the DTC balance
                                        as DTC has no ability to confirm
                                        whether such payments were made
                                        to or received by DTC
                                        Participants'' to add ``if
                                        applicable between ``including''
                                        and ``calculations.''
                                       8. The proposed rule change would
                                        add wording in a sentence
                                        relating to issues listed on an
                                        exchange, to make a reference to
                                        the plural ``securities'' to
                                        also refer to the singular
                                        ``security'' so that the
                                        applicable text would reflect
                                        ``the security or securities.''
                                        In addition, ``cash and/or stock
                                        merger'' would be added to
                                        examples of transactions that
                                        are corporate actions.
                                       9. Pursuant to the DTC Fee
                                        Schedule, DTC may assess fees
                                        for the processing of a
                                        corporate action whose structure
                                        does not conform to DTC's
                                        processing standards.\22\
                                        Pursuant to the proposed rule
                                        change, DTC would move text
                                        describing these fees from
                                        subsection VI.D.4. to this
                                        section, with clarifying
                                        modifications to clarify DTC's
                                        discretion to establish an
                                        appropriate fee for a given
                                        event once notice is received by
                                        DTC. The proposed text would
                                        read: ``Upon receipt of a notice
                                        and evaluation of the event/
                                        offer details DTC may assess non-
                                        standard corporate action
                                        processing fees as DTC deems
                                        appropriate to announce and
                                        process the corporate action
                                        event through DTC. Approval of
                                        the fee will be required prior
                                        to DTC committing to handling
                                        the offer/event as well as
                                        agreement to provide DTC with
                                        allocation information in a
                                        specified format (e.g.,
                                        spreadsheet). Payment of fees is
                                        due upon receipt of an invoice
                                        from DTC.''
                                       10. Revisions to this section
                                        would also include technical
                                        changes to clarify the text.
VI.B. (Fractional Entitlements in   Section IV.D.2., described above,
 Cash or Additional Roundup          sets forth requirements relating to
 Shares).                            the handling of distributions that
                                     may result in fractional
                                     entitlements. Reorganizations can
                                     also result in the distribution of
                                     fractional entitlements. The
                                     proposed rule change would add a
                                     new section VI.B. (Fractional
                                     Entitlements in Cash or Additional
                                     Roundup Shares). Such distributions
                                     are processed similarly as
                                     distributions that are not
                                     associated with reorganizations.
                                    To provide clarity in this regard,
                                     the proposed rule change will add
                                     the following text to this new
                                     subsection that is like that stated
                                     in Section IV.D.2.
                                    Specifically, the new text would
                                     state:
                                    ``In the event the corporate action
                                     rate of distribution results in
                                     fractional entitlements, Issuer
                                     shall provide DTC one of the
                                     following:
                                       (a) cash in lieu (``CIL'') of
                                        fractions or;
                                       (b) additional roundup shares,
                                        or;
                                       (c) written notification to DTC
                                        that fractional shares will be
                                        dropped.
                                    Important Note: DTC does not support
                                     the distribution of fractional
                                     shares of securities.
                                    Fractional entitlements should not
                                     be calculated at the Cede & Co.
                                     level only. For mandatory corporate
                                     action events, Issuer and their
                                     Agent when paying CIL of fractions
                                     or additional roundup shares are to
                                     calculate and pay such entitlement
                                     down to the beneficial owner level
                                     when the event notification
                                     specifically refers to fractional
                                     entitlements being calculated at
                                     the shareholder/beneficial owners
                                     level, however, if the timing of
                                     the event precludes providing the
                                     opportunity for participants to
                                     identify and receive payment
                                     calculated at the beneficial owner
                                     level, or it is not specified in
                                     the event, then calculations can be
                                     done at the DTC participant level.
                                    For voluntary corporate action
                                     events, the treatment of fractional
                                     entitlements (CIL, roundup, or
                                     dropped) must be calculated at the
                                     Voluntary Offering Instruction
                                     (``VOI'') level.
                                    For CIL or additional round-up
                                     shares, Issuer or Agent must:
                                    (1) accept instructions from DTC to
                                     liquidate a designated quantity of
                                     full shares or issue additional
                                     roundup shares to satisfy
                                     Participant CIL/roundup
                                     entitlements down to the beneficial
                                     owner level. Such instructions will
                                     be presented to Issuer or Agent on
                                     the date agreed upon by DTC and
                                     Issuer or Agent. Issuer or Agent
                                     must provide DTC ample time
                                     (preferably 5 business days after
                                     the distribution) to collect
                                     Participant instructions;
                                    (2) include additional roundup
                                     shares to DTC's overall share
                                     entitlement;
                                    (3) provide the CIL price to DTC on
                                     the date the price is established.
                                     Such price shall be provided to DTC
                                     by email in accordance with the
                                     type of corporate action to
                                     [email protected],
                                     [email protected], or
                                     [email protected].
                                    (4) wire funds for the payment of
                                     CIL of fractional entitlements to
                                     DTC's Reorg Deposit Account via
                                     Fedwire using the Originator
                                     Beneficiary Instruction ``Vol.
                                     CIL,'' or ``Mand CIL'', as
                                     applicable, (absent any other
                                     arrangement between paying agent
                                     and DTC); and
                                    (5) upon issuance of additional
                                     roundup shares, for securities held
                                     in the DTC FAST program, reconcile
                                     and confirm to DTC the FAST balance
                                     or for Non-FAST issues deliver
                                     physical Securities to DTC. Such
                                     Securities shall be delivered to
                                     DTC at: Registered Corporate Vault,
                                     The Depository Trust Company, 570
                                     Washington Blvd., 5th Floor, Jersey
                                     City, NJ 07310''.
VI.C. (Processing of Specific       This subsection will be renumbered
 Mandatory Reorganizations).         from IV. B. to IV. C. The
                                     subsection describes processing
                                     requirements for specific types of
                                     mandatory corporate actions,
                                     including an Item 1 for ``Reduction
                                     of Payment on Treasury Shares or
                                     Repurchased Debt Securities'' and
                                     Item 2 for ``Mandatory Separation
                                     of a Unit After the Closing Date.''

[[Page 70714]]

 
                                    The proposed rule change would
                                     renumber the above two items as 3
                                     and 4, respectively and add three
                                     additional items, including a new
                                     Item 1 for ``Standards for
                                     Restricted to Unrestricted
                                     Exchanges,'' a new Item 2 for
                                     ``Standards for Maturity-for-Stock
                                     Events,'' and Item 5 for ``MMI to
                                     Non-MMI Exchanges.''
                                    Item 1
                                    The new Item 1 (Standards for
                                     Restricted to Unrestricted
                                     Exchanges) would provide a cross-
                                     reference for notice and
                                     documentation requirements relating
                                     to exchanges of restricted shares
                                     for unrestricted shares, including
                                     securities that are eligible for
                                     resale pursuant to Rule 144(b)1, in
                                     the case of former 144A securities,
                                     or pursuant to Section 4(1) of the
                                     Securities Act, in the case of
                                     former Regulation S restricted
                                     securities. In this regard this
                                     subsection would refer the reader
                                     to Section I(B)(5), Instruction
                                     Letters Regarding the Expiration of
                                     a Restrictive Period, for the
                                     notice and documentation
                                     requirements.
                                    Item 2
                                    It is DTC's practice to require
                                     certain notices and information
                                     relating to mandatory events where
                                     a security is being exchanged for
                                     stock (as opposed to cash) in order
                                     that it may be able to make the
                                     entitlement security eligible and
                                     timely facilitate the exchange. In
                                     order to enhance clarity relating
                                     to the notices and information
                                     required by DTC in this regard, the
                                     new Item 2 (Standards for Maturity-
                                     for-Stock Events) would delineate
                                     these standards and read as
                                     follows:
                                    ``Issuer or Agent shall provide to
                                     DTC notice as soon as possible but
                                     no later than three business days
                                     prior to the maturity date for a
                                     Security which will make payment of
                                     a Security or Securities upon
                                     maturity in lieu of all or part of
                                     the cash payment. Notice shall be
                                     on Issuer or Agent's letterhead and
                                     sent to DTC's Reorganization
                                     Announcements Department by email
                                     at
                                     [email protected]. The email subject line shall
                                     state the maturing CUSIP number,
                                     the maturity date, and that the
                                     maturity is for stock (e.g., CUSIP
                                     123456AB, due xx/xx/xx, maturity
                                     for stock). The notice shall
                                     include the following:
                                        Issuer/Security
                                        description and CUSIP number of
                                        the maturing security, the
                                        maturity date, and that it is a
                                        maturity-for-stock event;
                                        Issuer name and CUSIP
                                        number of the entitlement stock,
                                        total number of shares to be
                                        paid to DTC, and the rate of
                                        payment. (Note: When the
                                        maturing security is denominated
                                        in shares, the rate of payment
                                        is to be calculated per share,
                                        and when the maturing security
                                        is denominated in principal
                                        amount, the rate of payment is
                                        to be calculated per $1,000
                                        principal amount.);
                                        Participant account name
                                        and number holding the
                                        entitlement shares at DTC;
                                        If a cash component is
                                        applicable, provide the total
                                        cash payment amount to be paid
                                        to DTC and the cash rate; and
                                        If an accrued interest
                                        payment is applicable, provide
                                        the total interest payment
                                        amount to be paid to DTC, the
                                        interest rate, and the number of
                                        days of accrued interest.
                                    In addition to the notice, (when the
                                     entitlement Security will be
                                     provided to DTC by a debit to a DTC
                                     Participant's account), DTC must
                                     receive the holding Participant's
                                     letter authorizing DTC to reduce
                                     their DTC position in the
                                     entitlement security by the total
                                     quantity of shares to which DTC's
                                     nominee name, Cede & Co., is
                                     entitled. In the event the
                                     Participant's letter is sent
                                     separately from the notice, it must
                                     be emailed to DTC no later than
                                     3:00 p.m. ET on the business day
                                     prior to the maturity date to the
                                     following email addresses:
                                     [email protected], and [email protected].
                                     Such letter must be on the DTC
                                     participant's letterhead, and
                                     include the following:
                                        Issuer/Security
                                        description and CUSIP number of
                                        the maturing security;
                                        Participant account name
                                        and number;
                                        Issuer/Security
                                        description and CUSIP number of
                                        the entitlement shares to be
                                        reduced (i.e., debited) from the
                                        Participant's account;
                                        total number of
                                        entitlement shares to be
                                        debited;
                                        Participant contact name
                                        and telephone number;
                                        Participant officer-
                                        level signature authorizing the
                                        number of shares to be reduced
                                        from the Participant's account;
                                        DTC indemnification
                                        statement; and
                                        medallion signature
                                        guarantee stamp affixed to such
                                        letter. (Note: The authorized
                                        signer of the medallion stamp
                                        must be a different party than
                                        the signer of the letter)
                                    Important: The holding DTC
                                     Participant must ensure that the
                                     total quantity of shares to which
                                     DTC's nominee name, Cede & Co., is
                                     entitled and needed to fund the
                                     distribution is on deposit in the
                                     holding DTC Participant's General
                                     Free Account no later than 10:00
                                     a.m. ET on the maturity date.
                                    The template of the DTC Participant
                                     (debit) letter can be obtained
                                     contacting DTC's Reorganization
                                     Announcement Department at
                                     [email protected].
                                    Further note, in the event DTC will
                                     not be funded the total quantity of
                                     entitlement shares due DTC, Agent
                                     shall provide to DTC a notice of
                                     the reduction in the shares (and if
                                     applicable the cash component) due
                                     to DTC by no later than 3:00 p.m.
                                     ET on the business day prior to the
                                     maturity date to the following
                                     email addresses:
                                     [email protected], and [email protected]. The
                                     notice shall include the
                                     information from the Agent and the
                                     Participant(s) as described in
                                     Section VI(C)(3), Reduction of
                                     Payment on Treasury or Repurchased
                                     Securities.
                                    Delivery of the notices to an email
                                     address other than the email
                                     addresses set forth above does not
                                     constitute a valid notification.
                                    Failure to comply with any of the
                                     notification requirements could
                                     result in DTC being unable to
                                     support the processing of the
                                     event.''

[[Page 70715]]

 
                                    Item 3
                                    Renumbered Item 3 (formerly Item 1)
                                     relates to the reduction of payment
                                     on Treasury Shares or Repurchased
                                     Debt Securities. This item would be
                                     revised for to clarify and
                                     consolidate text relating to
                                     requirements for a confirmation
                                     letter that the Agent must ensure
                                     that each Participant provides to
                                     DTC in order for DTC to timely
                                     process the event using the
                                     appropriate payment amount.
                                    Item 4
                                    Renumbered Item 4 (formerly Item 2)
                                     relates to the mandatory separation
                                     of a unit from an eligible security
                                     after the closing date. The section
                                     would be clarified by adding a note
                                     that the unit must be DTC eligible
                                     at the time the Unit Security was
                                     made DTC eligible, or the unit must
                                     become eligible in accordance with
                                     the provisions of the OA.
                                    Item 5
                                    From time to time, an issuer and/or
                                     agent may request that a security
                                     be made eligible for DTC's Money
                                     Market Instrument (``MMI'') Program
                                     but later determine that it should
                                     have been placed in DTC's non-MMI
                                     services. DTC requires certain
                                     documentation and information from
                                     the Issuer and Issuing and Paying
                                     Agent for the MMI issue in order
                                     for it to be exchanged for a non-
                                     MMI CUSIP.
                                    In order to enhance clarity relating
                                     to notices, documentation and
                                     information required by DTC in this
                                     regard, a new Item 5 (MMI to Non-
                                     MMI Exchanges) would be added to
                                     this subsection and read as
                                     follows:
                                    ``For DTC to agree to announce and
                                     process an MMI (CUSIP) to Non-MMI
                                     (CUSIP) exchange the following
                                     conditions must be met.
                                    DTC will not make a Non-MMI CUSIP
                                     eligible which will mature 30 days
                                     or less from the eligibility date
                                     nor perform an exchange from a
                                     CUSIP that will mature 30 days or
                                     less from the exchange date. (See I
                                     (C) 6 Short-Term Maturities)
                                    The Issuing Paying Agent (``IPA'')
                                     must provide notice to DTC on IPA
                                     letterhead by email to
                                     [email protected] by no later than 5 business days
                                     prior to the exchange date
                                     acknowledging the reason for the
                                     exchange, (i.e., security was
                                     incorrectly issued as an MMI
                                     CUSIP), the MMI CUSIP and the Non-
                                     MMI CUSIP, security description,
                                     and the rate of exchange. In
                                     addition to the exchange notice,
                                     the following must be provided:
                                       [cir] notice from the Issuer
                                        which includes the DTC
                                        indemnification language
                                        acknowledging the listed
                                        CUSIP(s) were issued incorrectly
                                        as MMI securities.
                                       [cir] written acknowledgment from
                                        the IPA to be billed all
                                        eligibility and exception
                                        processing fees for each
                                        exchange per CUSIP
                                       [cir] the Non-MMI CUSIP obtained
                                        from the CUSIP Service Bureau
                                        for each exchange and a copy of
                                        the prospectus, offering
                                        document, or offering statement
                                        describing terms of the Non-MMI
                                        security to make the new CUSIP
                                        DTC eligible.
                                       [cir] other documentation that
                                        may be required by DTC's
                                        Underwriting Dept. to determine
                                        the eligibility of the NON-MMI
                                        security (e.g., new Letter of
                                        Representations for BEO issues;
                                        and,
                                       [cir] Dependent upon the review
                                        of the information provided, DTC
                                        reserves the right to request
                                        revised or additional
                                        documentation from the Agent and/
                                        or Issuer as DTC deems necessary
                                        to process the requested
                                        exchanges.''
VI.D. (Processing for Specific      This section will be renumbered from
 Voluntary Reorganizations).         IV. C. to become IV. D.
                                    In addition, the proposed rule
                                     change would clarify the timing by
                                     which a Participant's submission of
                                     an instruction relating to a
                                     voluntary reorganization is
                                     effective. In this regard, the
                                     following note would be added to
                                     the text of this section.
                                    ``Note to Agents and Issuers
                                     regarding Participant instructions
                                     for events processed through a DTC
                                     instruction processor (i.e., ATOP,
                                     ASOP, or APUT): By processing an
                                     event through a DTC instruction
                                     processor (``Instruction
                                     Processor''), including, but not
                                     limited to, ATOP, ASOP, or APUT,
                                     the Agent and Issuer acknowledge
                                     and agree that the date and time of
                                     a Participant's submission of its
                                     instruction to DTC (as reflected in
                                     the Transaction ID of the completed
                                     transaction) is deemed to be the
                                     date and time of the Agent's
                                     receipt of the instruction and, if
                                     applicable, the tendered
                                     securities. By way of example, but
                                     without limitation, for purposes of
                                     determining the timeliness of a
                                     Participant's instruction and
                                     tender in connection with an event,
                                     the Participant's instruction is
                                     deemed to have been timely received
                                     by, and, if applicable, the
                                     securities timely tendered to, the
                                     Agent when the date and time of the
                                     submission of a Participant's
                                     instruction to DTC (as reflected in
                                     the Transaction ID of the completed
                                     transaction) is prior to the
                                     applicable cutoff/expiration date
                                     and time, even if the transaction
                                     does not complete until after the
                                     applicable cutoff/expiration date
                                     and time for the event.''
VI.D.2. (Mortgage-Backed            This subsection would be removed
 Securities with Monthly Early       from the OA as it is redundant to
 Redemption Features).               language already included relating
                                     to Puts.
VI.D.2. (Rights Offers (Use of      This subsection would be renumbered
 DTC's Automated Subscription        from IV.D.3 to IV.D.2.
 Offer Program (``ASOP'')).         This subsection would also be
                                     modified to modify the sentence
                                     that states: ``In the case of
                                     rights offers, DTC's ASOP
                                     procedures and systems must be
                                     utilized to process subscription
                                     exercise activities, including the
                                     submission of instructions for
                                     basic subscriptions, the exercise
                                     of step-up and oversubscriptions,
                                     sales of rights, and notices of
                                     guaranteed deliveries, and all
                                     related activities.'' The change
                                     would remove the words ``step-up
                                     and'' from this sentence.
VI.D.3.a. (Convertible Issues/      This subsection would be renumbered
 Warrants/Rights Notifications).     from IV.D.4.a to IV.D.3.a.
                                    The text of this subsection would be
                                     revised as follows:

[[Page 70716]]

 
                                       1. A reference to ``company/
                                        agent'' would be revised to
                                        ``Issuer/Agent'' for consistency
                                        with the term as used in the OA;
                                       2. Text relating to notice
                                        provisions relating to the
                                        alteration of terms for
                                        conversions and warrants would
                                        be revised to move text up from
                                        further down in the section that
                                        reflects timeframes by which
                                        notice to DTC is required. This
                                        text states that DTC must be
                                        notified in accordance with the
                                        terms of the offering document,
                                        to instead state that DTC must
                                        be notified no fewer than 10
                                        business days prior to the
                                        effective date of such change,
                                        or to the extent an event
                                        ``triggers'' the change (i.e.,
                                        on short notice) then notice
                                        must be provided to DTC
                                        immediately, but, in any event,
                                        no later than 24 hours after the
                                        triggering event, and that the
                                        Agent is to confirm receipt of
                                        such notice to DTC. This
                                        proposed rule change would
                                        facilitate the provision of
                                        information to DTC in sufficient
                                        time for DTC to process any such
                                        alteration in terms.
                                       3. The email address to which
                                        such notices should be sent
                                        would be revised to
                                        [email protected] to
                                        [email protected]. The provision
                                        would also be revised to require
                                        such notices to be delivered by
                                        email as opposed to email or to
                                        a physical mailbox.
                                       4. Text would also be revised for
                                        clarity relating requirements
                                        for information that must be
                                        included in a notice provided to
                                        DTC under this subsection and
                                        certain notification
                                        requirements for variable rate
                                        entitlements would be moved to
                                        further down in the text of the
                                        OA to a renumbered Section
                                        IV.D.4.c, as described below.
                                       5. Text would be added to clarify
                                        the requirements for an Agent to
                                        notify DTC relating to a change
                                        in terms affecting an expiration
                                        date.
                                       6. The proposed rule change would
                                        make other technical and
                                        clarifying changes to this
                                        subsection with respect to
                                        updating cross-references as
                                        well as grammatical changes.
VI.D.3.b. (Convertible Issues/      This subsection would be renumbered
 Warrants/Rights Processing).        from IV.D.4.b to IV.D.3.b.
                                    The subsection would be modified:
                                       1. To add text moved from
                                        IV.D.4.a. relating to
                                        conversions with variable rate
                                        entitlements, as described
                                        above, and move and condense
                                        text from further below in the
                                        subsection that such
                                        notification include information
                                        as to whether a CIL entitlement
                                        is to be paid per the
                                        instruction with the method of
                                        calculation and provide an
                                        example stating ``market price
                                        or the Volume Weighted Average
                                        Price.''
                                       2. To separate text in a bullet
                                        relating to processing of a
                                        conversion through a DTC
                                        voluntary program so that text
                                        relating to an agreement of an
                                        issuer and agent relating to a
                                        delivery instruction to debit
                                        the balance of a security
                                        certificate in connection with a
                                        conversion, is separated from
                                        text setting forth the agreement
                                        of the issuer and agent agreeing
                                        that any new securities
                                        resulting from a conversion,
                                        warrant or right exercise shall
                                        (i) be issued as of the date on
                                        which the conversion, warrant,
                                        or right instruction is entered
                                        into the DTC system and (ii)
                                        follow with issuance occurring
                                        no more than two business days
                                        from the date of receipt by DTC
                                        of the instructions and the
                                        Agent is required to notify DTC
                                        by 12:00 noon ET the following
                                        day of any instructions that
                                        have been rejected.
                                       3. To delete text relating to CIL
                                        entitlements, as described above
                                        and which are replaced by the
                                        applicable bullet described in 1
                                        above and
                                       4. Modify a sentence that states
                                        ``For rights offering with
                                        oversubscriptions, proration and
                                        rounding, Agent must agree to
                                        utilize DTC's template for
                                        providing payment details for
                                        oversubscription, proration and
                                        rounding, to add the reference
                                        ``as well as guaranteed delivery
                                        (protect) submissions and cover
                                        of protects'' between
                                        ``rounding,'' and ``Agent''.
VI.D.4.a. (Tender/Exchange          This subsection would be renumbered
 Processing).                        from IV.D.5.a to IV.D.4.a.
                                    This section describes tender and
                                     exchange processing and processing
                                     of mergers with elections. It
                                     requires the use of DTC's ATOP
                                     system for such processing. The
                                     subsection would be modified to
                                     clarify that DTC will not process
                                     the event if the agent is not an
                                     ``ATOP agent'' by adding the
                                     following text:
                                    ``For DTC to support the processing
                                     of the offer/event, Issuer's (or
                                     Offeror's) Agent must be an
                                     established ATOP agent with DTC
                                     (i.e., has an on-line connection to
                                     DTC's ATOP-automated tender offer
                                     platform) at the time of the
                                     announcement submission to DTC.''
                                    Examples provided with respect to
                                     other transaction types that ATOP
                                     may be utilized for (at DTC's
                                     discretion) would be modified to
                                     expand the text from referring only
                                     to consent solicitations (with a
                                     fee), collection of tax withholding
                                     rate or exemption, conversion
                                     events where the entitlement can be
                                     cash and collection of CIL
                                     entitlements to also include (a)
                                     conversion events where the
                                     entitlement can be securities and
                                     are subject to an extended
                                     settlement period (which could be
                                     in addition to or in the
                                     alternative to conversion events
                                     where the entitlement can be cash),
                                     and (b) cashless warrants. The
                                     qualification that a consent
                                     limitation be ``with a fee'' would
                                     also be removed, to indicate that
                                     any collection of a consent
                                     solicitation could be processed by
                                     ATOP (with or without a fee (but
                                     processing of such an event would
                                     still subject to DTC's discretion
                                     as previously mentioned)).
                                    A provision stating that a Letter of
                                     agreement (LOA) approval by an
                                     Agent is required within 24 hours
                                     of DTC posting to ATOP, and a
                                     reference to applicability of
                                     ``late notification fees'' relating
                                     to processing delays stemming from
                                     a late approval of a LOA, would be
                                     moved from the end of this
                                     subsection to text higher up where
                                     the LOA is first referenced in this
                                     section, so that it appears in the
                                     context of other stated
                                     requirements relating to the LOA.
                                     Also, the reference to ``within 24
                                     hours'' would be modified to
                                     instead reference ``1 business
                                     day'' to take into consideration
                                     instances where a deadline for an
                                     agent's approval might otherwise
                                     fall on a non-business day.

[[Page 70717]]

 
                                    Text would also be added to clarify
                                     the timing by which DTC must
                                     receive certain information and
                                     documentation relating to an
                                     entitlement to facilitate timely
                                     processing. In this regard, the
                                     added text will state that the
                                     entitlement must have a CUSIP
                                     number and the Agent must notify
                                     DTC of such CUSIP number assigned
                                     to the new Securities no less than
                                     3 business days prior to allocation
                                     of the entitlement if security is
                                     already DTC eligible. The added
                                     text would also state that if the
                                     security is not DTC eligible, the
                                     Agent must provide all required
                                     documentation no later than 5
                                     business days prior to allocation
                                     of the entitlement security for DTC
                                     to complete the eligibility process
                                     prior to allocation. The text would
                                     also state that additional
                                     eligibility processing time could
                                     be required dependent upon the
                                     determination of the eligibility
                                     review and the requirement for
                                     additional documentation, (e.g.,
                                     legal opinion for a Non-US
                                     security) and Issuer and Agent
                                     shall plan accordingly.
                                    The subsection would also be
                                     modified to make technical and
                                     clarifying changes to the text.
VI.D.4.c. (Altering the Terms of    This subsection would be renumbered
 an Offer).                          from IV.D.5.c. to IV.D.4.c.
                                    This subsection provides
                                     requirements for communication to
                                     DTC of a change in the terms of an
                                     offer.
                                    The text includes that all
                                     extensions to an offer must be
                                     provided to DTC via email ``by noon
                                     on the day following the expiration
                                     date of the event and if
                                     applicable, shall include any and
                                     all changes to terms of the
                                     offer.'' This provision would be
                                     revised to add emphasis to the
                                     timing of this deadline to add ``no
                                     later than'' in front of ``noon.''
                                    It is important that the Agent
                                     confirm that its extension of an
                                     expiration date of an offer is
                                     accurately reflected on DTC's
                                     records. The subsection includes
                                     text indicating the need for an
                                     Agent to confirm DTC's receipt of
                                     the applicable notice via email or
                                     by phone. Pursuant to the proposed
                                     rule change, this text would be
                                     clarified to state that the agent
                                     may make this confirmation by
                                     viewing the ``Transaction Entry End
                                     Date'' field in ATOP. If the
                                     information is not shown as
                                     updated, then the Agent should
                                     notify DTC via email or phone.
                                    This subsection would also be
                                     revised for technical and
                                     grammatical changes.
VI.D.4.f. (Consents)..............  This subsection would be revised for
                                     technical and grammatical changes.
VI.E. (Chargeback of                This subsection would be revised to
 Reorganization Payments).           add examples of the type of refunds
                                     of payments covered by this
                                     section.
VI.F.1. (Consents and Legal         This subsection would be revised to
 Notices).                           make technical changes, including
                                     updating to reflect the elimination
                                     of hard copy delivery of notices.
VI.F.2. (Security Position Reports  This section describes how issuers,
 (``SPRs'').                         trustees and authorized third
                                     parties may access security
                                     position reports (``SPRs''). This
                                     subsection would be revised to
                                     clarify and consolidate text and
                                     make technical changes relating to
                                     the requirements relating SPRs,
                                     including with respect to how SPRs
                                     are accessed and how third parties
                                     may be authorized to obtain and
                                     maintain access reports. The
                                     proposed rule change would also add
                                     contact information for support
                                     resources relating to SPRs.
VI.F.3. (Shareholder Meetings)....  This subsection describes processes
                                     relating to the announcement of
                                     shareholder meetings and issuance
                                     of omnibus proxies.
                                    The following text would be added to
                                     this subsection:
                                    ``Issuers and Agents are advised
                                     that in the event a voluntary offer
                                     (e.g., tender) at DTC is active on
                                     the record date of the meeting
                                     announcement and a Participant's
                                     instructed position is in the
                                     contra-CUSIP on record date, it
                                     will be added to that Participant's
                                     record date position in the target
                                     CUSIP (i.e., issuer's security) for
                                     purposes of the omnibus proxy and
                                     the accompanying SPR. If the active
                                     voluntary offer is being made by
                                     the Issuer (as opposed to a third-
                                     party) and the Issuer, in
                                     accordance with the terms of its
                                     voluntary offer, wants DTC to
                                     exclude the instructed positions of
                                     Participants in the contra-CUSIP
                                     from the omnibus proxy and
                                     accompanying SPR, the Issuer or
                                     their Agent must contact DTC, at
                                     least 5 business days before the
                                     record date for the meeting by
                                     emailing DTC at
                                     [email protected]. DTC
                                     can require indemnification from
                                     the Issuer to take such action.''
                                    The text would be updated to include
                                     that a shareholder meeting
                                     announcement should include the
                                     ``CUSIP number of the issuer's
                                     security'' in addition to other
                                     information fields already listed.
                                     Text saying that the ``company
                                     name'' field would also be updated
                                     to read ``issuer/company name''.
                                    This subsection would also be
                                     revised to make technical changes,
                                     including, but not limited to,
                                     relating to language hardcopy
                                     delivery and move text within the
                                     subsection for enhanced
                                     readability.
VII. Additional Operational         This section would be revised to
 Requirements for Variable-Rate      reflect that delivery of
 Demand Obligations (``VRDOs'').     instructions and notices should be
                                     sent to DTC electronically rather
                                     than via physical delivery.
------------------------------------------------------------------------

     
---------------------------------------------------------------------------

    \9\ See Rule 5, supra note 6.
    \10\ Pursuant to the Rules, the term MMI Program means the 
Program for transactions in MMI Securities, as provided in Rule 9(C) 
and as specified in the Procedures. See Rule 1, Section 1, supra 
note 6.
    \11\ Pursuant to the Rules, the term (i) ``MMI Issuing Agent'' 
means a Participant, acting as an issuing agent for an issuer with 
respect to a particular issue for MMI Securities of that issuer, 
that has executed such agreements as the Corporation shall require 
in connection with the participation of such Participant in the MMI 
Program in that capacity, and (ii) ``MMI Paying Agent'' means a 
Participant, acting as a paying agent for an issuer with respect to 
a particular issue of MMI Securities of that issuer, that has 
executed such agreements as the Corporation shall require in 
connection with the participation of such Participant in the MMI 
Program in that capacity. See Rule 1, supra note 6.
    \12\ Eligibility for inclusion in the MMI Program covers 
Securities that are money market instruments, which are short-term 
debt Securities that generally mature 1 to 270 days from their 
original issuance date. MMI Securities include, but are not limited 
to, commercial paper, banker's acceptances and short-term bank notes 
and are issued by financial institutions, large corporations, or 
state and local governments. Most MMI Securities trade in large 
denominations (typically, $250,000 to $50 million) and are purchased 
by institutional investors. Eligibility for inclusion in the MMI 
Program also covers medium term notes that mature over a longer 
term.
    \13\ See Rule 5, supra note 6.
    \14\ See Rule 1, supra note 6.
    \15\ DTC's FAST program allows an Agent which is an approved 
FAST Agent to act as custodian for DTC and increase or decrease the 
amounts of a balance certificate representing Securities eligible 
for DTC book-entry services. See OA Section II.B.a. (FAST), supra 
note 5.
    \16\ A SCL, or Shipment Control List, is a form generated by DTC 
that lists identifying information about a shipped security 
certificate, including the number of shares or other interests, 
CUSIP number, and dollar value. An SCL serves as a manifest for a 
transfer agent receiving security certificates from DTC. See OA 
Section II.B.a. (FAST), supra note 5.
    \17\ The BMA5 and REDCAL are automated system to system files 
provided by agents that contain rate and announcement information 
for distributions and redemptions.
    \18\ The BMA, DCN and REDCAL are automated system to system 
files provided by agents that contain rate and announcement 
information for distributions and redemptions.
    \19\ See DTCC's website at https://www.dtcc.com/settlement-and-asset-services/agent-services/corporate-action-information-for-agents.
    \20\ See Null/Void/Worthless Letter temple, available at https://www.dtcc.com/-/media/Files/Downloads/Settlement-Asset-Services/agent-services/Null-Void-Worthless-Letter-Temp.docx.
    \21\ See Securities Exchange Act Release No. 75094 (June 2, 
2015), 80 FR 32425 (June 8, 2015) (SR-DTC-2015-007).
    \22\ See Guide to the DTC Fee Schedule, available at https://www.dtcc.com/-/media/Files/Downloads/legal/fee-guides/DTC-Fee-Schedule.pdf at 7.

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[[Page 70718]]

2. Statutory Basis
    Section 17A(b)(3)(F) of the Act \23\ requires that the rules of the 
clearing agency be designed, inter alia, to promote the prompt and 
accurate clearance and settlement of securities transactions. DTC 
believes that the proposed rule change is consistent with this 
provision because it would update the OA to clarify text, provide 
additional detail on existing processes, update DTC's contact 
information and therefore provide Participants, Issuers and Agents with 
transparency with respect to DTC's eligibility and asset servicing 
processes. By providing such transparency, the proposed rule change 
would allow each of these parties' greater transparency on processing 
of transactions in their Securities and, therefore, would promote the 
prompt and accurate clearance and settlement of securities 
transactions.
---------------------------------------------------------------------------

    \23\ 15 U.S.C. 78q-1(b)(3)(F).
---------------------------------------------------------------------------

    The proposed rule changes are also designed to be consistent with 
Rule 17Ad-22(e)(23) of the Act,\24\ which was recently adopted by the 
Commission.\25\ Rule 17Ad-22(e)(23) requires DTC, inter alia, to 
establish, implement, maintain and enforce written policies and 
procedures reasonably designed to (i) publicly disclose all relevant 
rules and material procedures, including key aspects of its default 
rules and procedures, and (ii) provide sufficient information to enable 
participants to identify and evaluate the risks, fees, and other 
material costs they incur by participating in the covered clearing 
agency. The proposed rule changes, as described above, would update 
DTC's OA with respect to rules, material procedures and certain fee-
related provisions relating to DTC's securities eligibility and asset 
servicing processes. As such, DTC believes that the proposed changes 
would promote disclosure of relevant rules and material procedures and 
provide sufficient information to enable participants and other users 
of DTC's services to evaluate fees and other material costs of 
utilizing DTC's services, in accordance with the requirements of Rule 
17Ad-22(e)(23), promulgated under the Act, cited above.
---------------------------------------------------------------------------

    \24\ 17 CFR 240.17Ad-22(e)(23).
    \25\ The Commission adopted amendments to Rule 17ad-22, 
including the addition of new subsection 17ad-22(e), on September 
28, 2016. See Securities Exchange Act Release No. 78961 (September 
28, 2016), 81 FR 70786 (October 13, 2016) (S7-03-14). DTC is a 
``covered clearing agency'' as defined by new Rule 17ad-22(a)(5) and 
must comply with subsection (e) of Rule 17Ad-22. Id.
---------------------------------------------------------------------------

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

    DTC does not believe that the proposed rule change would have any 
impact on competition because the proposed changes merely relate to 
updates and clarifications of the OA which would not significantly 
affect the rights and obligations of users of DTC's services and would 
not disproportionally impact any users.

(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. If any written comments are received, they would be 
publicly filed as an Exhibit 2 to this filing, as required by Form 19b-
4 and the General Instructions thereto.
    Persons submitting 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

    The foregoing rule change has become effective pursuant to Section 
19(b)(3)(A) \26\ of the Act and paragraph (f) \27\ of Rule 19b-4 
thereunder. At any time within 60 days of the filing of the proposed 
rule change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act.
---------------------------------------------------------------------------

    \26\ 15 U.S.C. 78s(b)(3)(A).
    \27\ 17 CFR 240.19b-4(f).
---------------------------------------------------------------------------

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 (https://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
file number SR-DTC-2023-010 on the subject line.

Paper Comments

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

All submissions should refer to file number SR-DTC-2023-010. This file 
number should be included on the subject line if email is used. To help 
the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's internet website (https://www.sec.gov/rules/sro.shtml). Copies of the

[[Page 70719]]

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 a.m. and 3 p.m. 
Copies of the filing also will be available for inspection and copying 
at the principal office of DTC and on DTCC's website (http://dtcc.com/legal/sec-rule-filings.aspx). Do not include personal identifiable 
information in submissions; you should submit only information that you 
wish to make available publicly. We may redact in part or withhold 
entirely from publication submitted material that is obscene or subject 
to copyright protection. All submissions should refer to File Number 
SR-DTC-2023-010 and should be submitted on or before November 2, 2023.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\28\
---------------------------------------------------------------------------

    \28\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-21945 Filed 10-11-23; 8:45 am]
BILLING CODE 8011-01-P