Document ID: SEC-2016-0026-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Depository Trust Co.
Posted Date: 2016-01-06T05:00Z

[Federal Register Volume 81, Number 3 (Wednesday, January 6, 2016)]
[Notices]
[Pages 535-536]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-33218]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-76802; File No. SR-DTC-2015-012]

Self-Regulatory Organizations; The Depository Trust Company; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Add a Fee To Be Charged To Transfer Agents of DTC-Eligible Issues 
Subject to a Corporate Action

December 30, 2015.
    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 December 24, 2015, The Depository Trust Company (``DTC'') filed with 
the Securities and Exchange Commission (``Commission'') the proposed 
rule change as described in Items I, II and III below, which Items have 
been prepared by DTC. DTC filed the proposed rule change pursuant to 
section 19(b)(3)(A) of the Act \3\ and Rule 19b-4(f)(2) thereunder.\4\ 
The proposed rule change was effective upon filing with the Commission. 
The Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 15 U.S.C. 78s(b)(3)(A).
    \4\ 17 CFR 240.19b-4(f)(2).
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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 a change to DTC's Fee Schedule 
(``Fee Schedule'') \5\ to add a new fee that would be charged to the 
transfer agent of any DTC-eligible issue when the transfer agent 
notifies DTC of a corporate action event (``Corporate Action'') that 
requires a new CUSIP to be made DTC-eligible,\6\ as more fully 
described below.\7\
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    \5\ Available at http://www.dtcc.com/~/media/Files/Downloads/
legal/fee-guides/dtcfeeguide.pdf?la=en.
    \6\ Corporate Actions processed by DTC include but are not 
limited to the restructuring of DTC-eligible securities resulting 
from mergers, acquisitions, and reverse splits. DTC performs 
Corporate Actions processing primarily through its Mandatory and 
Voluntary Reorganization Services by the DTC Reorganization 
Department (``Reorganization''). Additionally, with respect to any 
Corporate Action that requires DTC to make a new CUSIP(s) DTC-
eligible DTC's Underwriting Department (``Underwriting'') must also 
process the eligibility component of the Corporate Action. DTC 
processes the new CUSIP(s) for eligibility pursuant to the transfer 
agent's notification to DTC of the Corporate Action and related 
instructions and information detailing the issuance of the new 
CUSIP(s) provided by the transfer agent. See generally, the DTC 
Operational Arrangements (``OA''), available at http://www.dtcc.com/
~/media/Files/Downloads/legal/issue-eligibility/eligibility/
operational-arrangements.pdf.
    \7\ 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.
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II. Clearing Agency's Statement of the Purpose of, and Statutory Basis 
for, the Proposed Rule Change

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

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

1. Purpose
    The proposed rule change would add a fee to the Fee Schedule that 
would be charged to the transfer agent of a DTC-eligible security when 
DTC is notified by the transfer agent to process a Corporate Action 
with respect to the security that requires DTC to make a new CUSIP 
eligible for DTC services.
Background
    Securities may become eligible for deposit at DTC through initial 
offerings,\8\ the Older Issue Eligibility Request process,\9\ and 
Corporate Actions processing.\10\ Through ongoing efforts to evaluate 
its fees and align them with operating costs, DTC has identified that 
it is not recovering costs that it incurs in connection with making 
securities eligible for DTC services through its Corporate Actions 
process.\11\
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    \8\ An initial offering is made eligible for deposit at DTC 
pursuant to an eligibility request to Underwriting from a sponsoring 
Participant. See OA, supra note 6, pp. 1-2 (Submission of an 
Eligibility Request to DTC).
    \9\ Older issues (i.e., issues on the secondary market) may be 
made eligible for deposit pursuant to an Older Issue Eligibility 
Request of a DTC Participant to Underwriting. See id [sic] at p. 2.
    \10\ See supra text accompanying note 6.
    \11\ Eligibility fees for initial offerings and older issues are 
charged to the Participants that sponsor the issues for DTC 
eligibility. DTC does not currently charge an eligibility fee with 
respect to CUSIPS [sic] made eligible in connection with a Corporate 
Action. See Fee Schedule, supra note 5, at pp. 25-26.
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Proposal
    Pursuant to the proposed rule change, in order to align DTC's fees 
with the costs it incurs in making securities eligible for DTC services 
through its processing of Corporate Actions, DTC would implement a new 
fee, to be known as the Corporate Actions Eligibility Fee (``New 
Fee''), which would be charged to the transfer agent of any DTC-
eligible security when the transfer agent notifies DTC of a Corporate 
Action that requires DTC to make a new CUSIP eligible for DTC services. 
The amount of the New Fee would be $1,000 per new CUSIP for any 
security that is made eligible at DTC in connection with a Corporate 
Action.\12\

[[Page 536]]

The New Fee takes into account the allocation of resources required and 
more manually intensive processing performed by Reorganization and 
Underwriting in order for DTC to provide the services necessary to make 
new CUSIPs DTC-eligible when they are issued as a result of Corporate 
Actions.
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    \12\ For example, in the case of an issue of DTC-eligible common 
stock under CUSIP W which undergoes a reverse split, with the newly-
denominated common stock issued under CUSIP X, the transfer agent 
for that security would incur a charge of $1,000 for the processing 
of the reverse split. If the same issuer subsequently undergoes a 
reorganization involving the exchange of the common stock under 
CUSIP X for common and preferred stock under CUSIPs Y and Z, 
respectively, the transfer agent would be charged $2,000 in 
connection with the exchange reflecting the sum of a $1,000 fee 
relating to the issuance of CUSIP Y and a $1,000 fee relating to the 
issuance of CUSIP Z).
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Implementation Date
    The implementation date of the proposed rule change would be 
January 1, 2016.
2. Statutory Basis
    Section 17A(b)(3)(F) \13\ of the Act 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 the New Fee would offset costs incurred by DTC in its 
allocation of resources necessary for making CUSIPs eligible in 
connection with Corporate Actions. The New Fee is designed to 
facilitate allocation of resources necessary for the continued offering 
of this service, thus the proposed rule change would promote the prompt 
and accurate clearance and settlement of securities transactions.
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    \13\ 15 U.S.C. 78q-1(b)(3)(F).
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(B) Clearing Agency's Statement on Burden on Competition

    DTC does not believe that the proposed rule change would have any 
impact or impose any burden on competition because the proposed rule 
change equally applies (on a per CUSIP basis) to all issues made 
eligible for DTC services as the result of a Corporate Action.

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

    Written comments relating to the proposed rule change have not been 
solicited or received. DTC will notify the Commission of any written 
comments received by DTC. DTC management has discussed its intent to 
implement the New Fee with members of the Securities Transfer 
Association at industry meetings.

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) of the Act \14\ and paragraph (f) of Rule 19b-4 
thereunder.\15\ 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.
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    \14\ 15 U.S.C. 78s(b)(3)(A).
    \15\ 17 CFR 240.19b-4(f).
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IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to rule-comments@sec.gov. Please include 
File Number SR-DTC-2015-012 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-DTC-2015-012. This file 
number should be included on the subject line if email is used. To help 
the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all 
written statements with respect to the proposed rule change that are 
filed with the Commission, and all written communications relating to 
the proposed rule change between the Commission and any person, other 
than those that may be withheld from the public in accordance with the 
provisions of 5 U.S.C. 552, will be available for Web site viewing and 
printing in the Commission's Public Reference Room, 100 F Street NE., 
Washington, DC 20549 on official business days between the hours of 
10:00 a.m. and 3:00 p.m. Copies of the filing also will be available 
for inspection and copying at the principal office of DTC and on DTCC's 
Web site (http://dtcc.com/legal/sec-rule-filings.aspx). All comments 
received will be posted without change; the Commission does not edit 
personal identifying information from submissions. You should submit 
only information that you wish to make available publicly. All 
submissions should refer to File Number SR-DTC-2015-012 and should be 
submitted on or before January 27, 2016.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\16\
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    \16\ 17 CFR 200.30-3(a)(12).
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Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2015-33218 Filed 1-5-16; 8:45 am]
 BILLING CODE 8011-01-P