81_FR_67596 81 FR 67406 - Self-Regulatory Organizations; The Depository Trust Company; Notice of Filing of Amendment No. 1 and Order Granting Accelerated Approval of a Proposed Rule Change, as Modified by Amendment No. 1, Regarding the Implementation of Functionality To Submit a Cover of Protect on Behalf of Another Participant and the Removal of the Option To Cover of Protect Directly With Agent

81 FR 67406 - Self-Regulatory Organizations; The Depository Trust Company; Notice of Filing of Amendment No. 1 and Order Granting Accelerated Approval of a Proposed Rule Change, as Modified by Amendment No. 1, Regarding the Implementation of Functionality To Submit a Cover of Protect on Behalf of Another Participant and the Removal of the Option To Cover of Protect Directly With Agent

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 81, Issue 190 (September 30, 2016)

Page Range67406-67408
FR Document2016-23615

Federal Register, Volume 81 Issue 190 (Friday, September 30, 2016)
[Federal Register Volume 81, Number 190 (Friday, September 30, 2016)]
[Notices]
[Pages 67406-67408]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2016-23615]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-78935; File No. SR-DTC-2016-005]


Self-Regulatory Organizations; The Depository Trust Company; 
Notice of Filing of Amendment No. 1 and Order Granting Accelerated 
Approval of a Proposed Rule Change, as Modified by Amendment No. 1, 
Regarding the Implementation of Functionality To Submit a Cover of 
Protect on Behalf of Another Participant and the Removal of the Option 
To Cover of Protect Directly With Agent

September 26, 2016.
    On July 29, 2016, The Depository Trust Company (``DTC'') filed with 
the Securities and Exchange Commission (``Commission'') proposed rule 
change SR-DTC-2016-005 pursuant to Section 19(b)(1) of the Securities 
Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder.\2\ The 
proposed rule change was published for comment in the Federal Register 
on August 15, 2016.\3\ The Commission did not receive any comment 
letters on the proposed rule change. On September 14, 2016, DTC filed 
Amendment No. 1 to the proposed rule change, as discussed below. The 
Commission is publishing this notice to solicit comments on Amendment 
No. 1 from interested persons and is approving on an accelerated basis 
the proposed rule change, as modified by Amendment No. 1.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 78520 (August 9, 
2016), 81 FR 54170 (August 15, 2016) (SR-DTC-2016-005) (``Notice'').
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I. Description of the Proposed Rule Change and Notice of Filing 
Amendment No. 1

    The proposed rule change by DTC, as modified by Amendment No. 1, 
would update its Procedures \4\ set forth in the Guide to make changes 
to certain options within its Participant Subscription Offer Program 
(``PSOP'') \5\ and Participant Tender Offer Program (``PTOP'') 
functions.\6\ Specifically, DTC proposes to add an option called 
``Cover of Protect on Behalf of Another Participant'' (``CPAP'') to 
both PSOP and PTOP (``PSOP/PTOP'') that would allow a Participant to 
tender subscription rights (``Rights'') or Securities through DTC to an 
agent (``Offer Agent''),\7\ on behalf of another Participant that needs 
to tender such Rights or Securities in order to receive the shares and/
or consideration from (i) a subscription rights offering (a ``Rights 
Offer''); or (ii) a cash tender offer or exchange offer (collectively, 
a ``Tender/Exchange Offer'') (together with Rights Offer, ``Offer''). 
DTC would also eliminate an option called ``Cover of Protect Submitted 
Directly to Agent'' (``CPDA'') from PSOP/PTOP that has allowed a 
Participant to tender Rights or Securities through DTC to be eligible 
to receive the shares and/or consideration from an Offer, when such 
Participant submitted its initial acceptance directly to the Offer 
Agent outside of DTC. In addition, DTC proposes to make ministerial 
changes to the text of the Guide, as more fully described below.\8\
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    \4\ Capitalized terms not otherwise defined herein have the 
meaning 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 Reorganizations Service Guide (the 
``Guide''), available at http://www.dtcc.com/~/media/Files/
Downloads/legal/service-guides/Reorganizations.pdf.
    \5\ References in this notice and order to ``PSOP'' refer to 
both the PSOP function within the DTC Participant Terminal System 
(``PTS'') interface and the equivalent ``Rights Subscription'' 
function within the Participant Browser System (``PBS'') interface. 
PSOP is a function that is used by Participants to submit 
instructions including oversubscriptions, submit protects, submit 
cover of protects, submit cover of protects on behalf of another 
Participant, and submit Rights sell instructions on Rights 
Subscription events. PTS and PBS are user interfaces for DTC's 
Settlement and Asset Services functions. PTS is mainframe-based and 
PBS is web-based with a mainframe back-end. Participants may use 
either PTS or PBS, as they are functionally equivalent.
    \6\ References in this notice and order to ``PTOP'' refer to 
both the PTOP function within the PTS interface and the equivalent 
``Voluntary Tenders and Exchanges'' function within the PBS 
interface. PTOP is a function that is used by Participants to submit 
instructions, submit protects, submit cover of protects, submit 
cover of protects on behalf of another Participant, and submit 
withdrawals on various Voluntary Reorganization events.
    \7\ The Offer Agent is the fiscal agent of the offeror, 
typically a bank or trust company that is designated to coordinate 
the process of the Offer.
    \8\ The description of the proposed rule change herein is based 
on the statements prepared by DTC in the Notice. Notice, supra note 
3, 81 FR at 54170-72.
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A. Proposal

    As DTC describes in the Notice, there are times when a Participant 
that submitted a Protect \9\ (the ``Protecting Participant'') may need 
to have another Participant (the ``Covering Participant'')

[[Page 67407]]

Cover the Protect.\10\ Currently, neither PSOP nor PTOP has the 
specific functionality for a Covering Participant to submit a Cover on 
behalf of a Protecting Participant.
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    \9\ DTC states that an investor or its broker (``Investor'') may 
want to accept an Offer but will not have the necessary Rights or 
Securities, as the case may be, before the expiration date of the 
Offer. If permitted by the terms of the Offer, the Investor may 
submit to the Offer Agent the notice of guaranteed delivery for such 
Offer (``Notice of Guaranteed Delivery'') which serves as (i) 
protection of the Investor's acceptance of the Offer (the 
``Protect''), and sets forth the number of shares being subscribed 
to or the amount of Securities being tendered, and (ii) a guarantee 
that the Rights or Securities (the ``Cover'') will be delivered to 
the Offer Agent within the period prescribed by the Offer (the 
``Protect Period''). Notice, supra note 3, 81 FR at 54171.
    \10\ Notice, supra note 3, 81 FR at 54171.
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    In order to address directly a Participant's need to submit a Cover 
of another Participant's Protect, DTC proposes to add the CPAP option 
to PSOP/PTOP. With this enhancement, the Protecting Participant would 
submit a Protect through PSOP/PTOP, and the Covering Participant would 
be able to submit a Cover through PSOP/PTOP by providing the Protecting 
Participant's Protect ID, Protect Sequence Number, and Protect 
Participant ID. DTC explains that this enhanced functionality would 
automate the matching of Covers to corresponding Protects, as well as 
automatically allocate the applicable credits for Securities and/or 
payments directly to the Protecting Participant, rather than to the 
Covering Participant. The CPAP option would eliminate the need for 
Participants to utilize CPDA for the unintended purpose of Covering 
another Participant's Protect.\11\
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    \11\ As DTC explains in the Notice, it is aware that Covering 
Participants frequently utilize the PSOP/PTOP CPDA option in order 
to submit a Cover on behalf of another Participant, which is not the 
intended purpose of the CPDA function. The intended purpose of the 
CPDA function is to enable a Participant that submitted a Protect 
directly to an Offer Agent outside of DTC to later submit the 
corresponding Cover through DTC. Notice, supra note 3, 81 FR at 
54172.
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    In addition, to further reduce the risks, burden, and costs to DTC 
associated with the manual processing of the CPDA option in PSOP/PTOP, 
DTC is proposing to eliminate that option. When a Participant uses CPDA 
to submit a Cover for another Participant's Protect, DTC must manually 
process the Cover and use manual exception processing to match the 
Cover to the corresponding Protect. In addition, DTC must allocate the 
credits for Securities and/or payment from the Offer to the Covering 
Participant. Even when a Participant uses CPDA for its intended 
purpose, which is infrequent, it is a labor intensive process for DTC, 
as it must manually process the Cover and return the allocation to the 
Offer Agent within a narrow timeframe. Therefore, as clarified by 
Amendment No. 1, DTC proposes that, when a Participant submits a 
Protect directly to the Offer Agent (i.e., not through DTC), such 
Participant would need to (a) submit the Cover directly to the Offer 
Agent (i.e., again, not through DTC), or (b) request that DTC process 
the Cover, but not through PSOP/PTOP.

B. Technical Changes

    The proposed rule change would revise the Guide to make ministerial 
updates to reflect current terminology and practices, as set forth 
below. The Guide would be updated to:
     Correct the text of the Guide to accurately reflect names 
of functions accessible through PTS, and to accurately reflect the 
names of the corresponding functions that are accessible through PBS. 
Presently, the Guide assigns PTS functions to PBS, and does not provide 
the names of the corresponding PBS functions.
     Correct the timeframes within which a Participant can 
submit a Notice of Guaranteed Delivery on the expiration date of a 
Rights Offer. Generally, a Participant may submit a Notice of 
Guaranteed Delivery through PSOP/PTOP from 8:00 a.m. to 2:15 p.m., at 
which time the window closes to allow for settlement of cash 
activities. However, DTC would re-open the window from 3:30 p.m. to 
5:00 p.m. on the expiration date of the Offer to allow Participants 
extra time to submit a Notice of Guaranteed Delivery before the Offer 
expires, provided that the Offer Agent agrees to accept deferred 
subscription payments. The text of the Guide incorrectly reflects an 
open window from 8:00 a.m. to 5:00 p.m., which is not the practice. The 
text would be corrected to reflect the correct 8:00 a.m. to 2:15 p.m. 
and 3:30 p.m. to 5:00 p.m. windows.
     Pursuant to Participant requests, expand the availability 
of PTOP for a Participant to submit a Cover of Protect, on the dates 
specified in the notice of an Offer. The current availability is until 
4:15 p.m. or 12:00 p.m., depending on the type of Offer, and the 
proposed rule change, as modified by Amendment No. 1, would revise the 
text to reflect availability until 5:00 p.m. or 1:00 p.m., as 
applicable.
     Remove references to the UNIT Swingovers service. Several 
years ago, the UNIT Swingovers service was discontinued, and instead, 
voluntary unit separations and recombinations \12\ began to be 
processed under the FAST program.\13\
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    \12\ A unit is a Security comprised of more than one class of 
Securities, e.g., common stock and warrants (the components). In a 
voluntary unit separation, the separation and recombination between 
the security component and the security is done by the Participant 
and transfer agent using DTC's Deposit and Withdrawal at Custodian 
system.
    \13\ Securities Exchange Act Release No. 59199 (January 6, 
2009), 74 FR 1266 (January 12, 2009) (SR-DTC-2008-14).
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     Clarify information regarding available reports and 
methods of submission and receipt.
     Replace reference to `NASDAQ' with `FINRA'.
     Replace reference to `AMEX' with `NASDAQ'.
     Add the title of the Guide, delete `Copyright,' and update 
the `Important Legal Information' to align with other DTC service 
guides.
     Correct spelling, grammatical, capitalization, numbering, 
and typographical errors throughout.
     Update other text, including address, phone numbers, Web 
site information, and methods of communication.

C. Notice of Filing of Amendment No. 1

    In Amendment No.1, DTC clarifies that when a Participant submits a 
Protect directly to the Offer Agent (i.e., not through DTC), such 
Participant could still request that DTC process the Cover, but just 
not through PSOP/PTOP. Therefore, Amendment No. 1 proposes to set forth 
in the Guide that, once a Participant has accepted an Offer through the 
Offer Agent via a hard copy Notice of Guaranteed Delivery submitted 
directly to the Offer Agent, a Participant would need to either (a) 
submit the Cover directly to the Offer Agent, or (b) request that DTC 
manually process the Cover, but not through PSOP/PTOP.
Implementation Date
    DTC would announce the effective date via Important Notice upon the 
Commission's approval of the proposed rule change, as modified by 
Amendment No. 1.

II. Discussion and Commission Findings

    Section 19(b)(2)(C) of the Act \14\ directs the Commission to 
approve a proposed rule change of a self-regulatory organization if it 
finds that such proposed rule change is consistent with the 
requirements of the Act and rules and regulations thereunder applicable 
to such organization. The Commission believes the proposal, as modified 
by Amendment No. 1, is consistent with Section 17A(b)(3)(F) of the 
Act,\15\ as described in detail below.
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    \14\ 15 U.S.C. 78s(b)(2)(C).
    \15\ 15 U.S.C. 78q-1(b)(3)(F).
---------------------------------------------------------------------------

    Section 17A(b)(3)(F) of the Act \16\ requires that the rules of the 
clearing agency be designed, inter alia, to promote the prompt and 
accurate clearance and settlement of securities transactions. By adding 
the CPAP option, through which a Participant can properly submit a 
Cover through PSOP/PTOP on behalf of another Participant,

[[Page 67408]]

and by removing the CPDA option, the proposed rule change, as modified 
by Amendment No. 1, will establish a process that will streamline Cover 
of Protect transactions, allocations, and recordkeeping for 
Participants. Further, as DTC explains in the Notice, the proposed rule 
change, as modified by Amendment No. 1, will reduce for DTC the risks, 
burdens, and costs associated with its current processing of such 
transactions. Therefore, adding the CPAP option and removing the CPDA 
option will promote the prompt and accurate clearance and settlement of 
securities, consistent with the requirements of the Act, in particular 
Section 17A(b)(3)(F), cited above.
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    \16\ Id.
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    As the proposed rule change pertains to technical changes to the 
Procedures, the Commission finds the technical changes also consistent 
with Section 17A(b)(3)(F) of the Act \17\ because technical updates to 
the Procedures to make them more clear, consistent, and current for 
Participants that rely on the Procedures support the prompt and 
accurate clearance and settlement of securities transactions.
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    \17\ Id.
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III. Solicitation of Comments on Amendment No. 1

    Interested persons are invited to submit written data, views, and 
arguments concerning Amendment No. 1 to File Number SR-DTC-2016-005, 
including whether Amendment No. 1 is consistent with the Act. Comments 
may be submitted by any of the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File Number SR-DTC-2016-005 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-2016-005. 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-2016-005 and should be 
submitted on or before October 21, 2016.

IV. Accelerated Approval of the Proposed Rule Change, as Modified by 
Amendment No. 1

    The Commission, pursuant to Section 19(b)(2) of the Act,\18\ finds 
good cause to approve the proposed rule change, as modified by 
Amendment No. 1, prior to the thirtieth day after the date of 
publication of Amendment No. 1 in the Federal Register. In Amendment 
No.1, DTC clarifies that when a Participant submits a Protect directly 
to the Offer Agent, such Participant could still request that DTC 
process the Cover. As such, Amendment No. 1 proposes to set forth in 
the Guide that, once a Participant has accepted an Offer through the 
Offer Agent via a hard copy Notice of Guaranteed Delivery submitted 
directly to the Offer Agent, a Participant would need to either (a) 
submit the Cover directly to the Offer Agent, or (b) request that DTC 
manually process the Cover, but not through PTOP/PSOP.
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    \18\ 15 U.S.C. 78s(b)(2).
---------------------------------------------------------------------------

    As discussed more fully above, the Commission finds that the 
proposed rule change, as modified by Amendment No. 1, will streamline 
DTC's processing of Cover of Protect transactions and reduce for DTC 
the risks, burdens, and costs associated with its current processing of 
such transactions, thereby promoting the prompt and accurate clearance 
and settlement of securities, consistent with Section 17A(b)(3)(F), 
cited above. Accordingly, the Commission finds good cause for approving 
the proposed rule change, as modified by Amendment No. 1, on an 
accelerated basis, pursuant to Section 19(b)(2) of the Act.\19\
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    \19\ Id.
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V. Conclusion

    On the basis of the foregoing, the Commission finds that the 
proposal, as modified by Amendment No. 1, is consistent with the 
requirements of the Act and in particular with the requirements of 
Section 17A of the Act \20\ and the rules and regulations thereunder.
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    \20\ 15 U.S.C. 78q-1.
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    It is therefore ordered, pursuant to Section 19(b)(2) of the Act, 
that proposed rule change SR-DTC-2016-005, as modified by Amendment No. 
1, be, and hereby is, APPROVED on an accelerated basis.\21\
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    \21\ In approving the proposed rule change, the Commission 
considered the proposal's impact on efficiency, competition, and 
capital formation. 15 U.S.C. 78c(f).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\22\
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    \22\ 17 CFR 200.30-3(a)(12).
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Brent J. Fields,
Secretary.
[FR Doc. 2016-23615 Filed 9-29-16; 8:45 am]
 BILLING CODE 8011-01-P



                                                  67406                       Federal Register / Vol. 81, No. 190 / Friday, September 30, 2016 / Notices

                                                  the Funds. Applicants also seek relief                  SECURITIES AND EXCHANGE                                and Participant Tender Offer Program
                                                  from the prohibitions on affiliated                     COMMISSION                                             (‘‘PTOP’’) functions.6 Specifically, DTC
                                                  transactions in section 17(a) to permit a                                                                      proposes to add an option called ‘‘Cover
                                                                                                          [Release No. 34–78935; File No. SR–DTC–
                                                  Fund to sell its shares to and redeem its               2016–005]
                                                                                                                                                                 of Protect on Behalf of Another
                                                  shares from a Fund of Funds, and to                                                                            Participant’’ (‘‘CPAP’’) to both PSOP
                                                  engage in the accompanying in-kind                      Self-Regulatory Organizations; The                     and PTOP (‘‘PSOP/PTOP’’) that would
                                                  transactions with the Fund of Funds.3                   Depository Trust Company; Notice of                    allow a Participant to tender
                                                  The purchase of Creation Units by a                     Filing of Amendment No. 1 and Order                    subscription rights (‘‘Rights’’) or
                                                  Fund of Funds directly from a Fund will                 Granting Accelerated Approval of a                     Securities through DTC to an agent
                                                                                                          Proposed Rule Change, as Modified by                   (‘‘Offer Agent’’),7 on behalf of another
                                                  be accomplished in accordance with the
                                                                                                          Amendment No. 1, Regarding the                         Participant that needs to tender such
                                                  policies of the Fund of Funds and will
                                                                                                          Implementation of Functionality To                     Rights or Securities in order to receive
                                                  be based on the NAVs of the Funds.                                                                             the shares and/or consideration from (i)
                                                                                                          Submit a Cover of Protect on Behalf of
                                                     9. Section 6(c) of the Act permits the               Another Participant and the Removal                    a subscription rights offering (a ‘‘Rights
                                                  Commission to exempt any persons or                     of the Option To Cover of Protect                      Offer’’); or (ii) a cash tender offer or
                                                  transactions from any provision of the                  Directly With Agent                                    exchange offer (collectively, a ‘‘Tender/
                                                  Act if such exemption is necessary or                                                                          Exchange Offer’’) (together with Rights
                                                  appropriate in the public interest and                  September 26, 2016.                                    Offer, ‘‘Offer’’). DTC would also
                                                  consistent with the protection of                          On July 29, 2016, The Depository                    eliminate an option called ‘‘Cover of
                                                  investors and the purposes fairly                       Trust Company (‘‘DTC’’) filed with the                 Protect Submitted Directly to Agent’’
                                                  intended by the policy and provisions of                Securities and Exchange Commission                     (‘‘CPDA’’) from PSOP/PTOP that has
                                                  the Act. Section 12(d)(1)(J) of the Act                 (‘‘Commission’’) proposed rule change                  allowed a Participant to tender Rights or
                                                                                                          SR–DTC–2016–005 pursuant to Section                    Securities through DTC to be eligible to
                                                  provides that the Commission may
                                                                                                          19(b)(1) of the Securities Exchange Act                receive the shares and/or consideration
                                                  exempt any person, security, or
                                                                                                          of 1934 (‘‘Act’’) 1 and Rule 19b–4                     from an Offer, when such Participant
                                                  transaction, or any class or classes of                 thereunder.2 The proposed rule change                  submitted its initial acceptance directly
                                                  persons, securities, or transactions, from              was published for comment in the                       to the Offer Agent outside of DTC. In
                                                  any provision of section 12(d)(1) if the                Federal Register on August 15, 2016.3                  addition, DTC proposes to make
                                                  exemption is consistent with the public                 The Commission did not receive any                     ministerial changes to the text of the
                                                  interest and the protection of investors.               comment letters on the proposed rule                   Guide, as more fully described below.8
                                                  Section 17(b) of the Act authorizes the                 change. On September 14, 2016, DTC
                                                  Commission to grant an order                            filed Amendment No. 1 to the proposed                  A. Proposal
                                                  permitting a transaction otherwise                      rule change, as discussed below. The                     As DTC describes in the Notice, there
                                                  prohibited by section 17(a) if it finds                 Commission is publishing this notice to                are times when a Participant that
                                                  that (a) the terms of the proposed                      solicit comments on Amendment No. 1                    submitted a Protect 9 (the ‘‘Protecting
                                                  transaction are fair and reasonable and                 from interested persons and is                         Participant’’) may need to have another
                                                  do not involve overreaching on the part                 approving on an accelerated basis the                  Participant (the ‘‘Covering Participant’’)
                                                  of any person concerned; (b) the                        proposed rule change, as modified by
                                                  proposed transaction is consistent with                 Amendment No. 1.                                       instructions on Rights Subscription events. PTS and
                                                                                                                                                                 PBS are user interfaces for DTC’s Settlement and
                                                  the policies of each registered                         I. Description of the Proposed Rule                    Asset Services functions. PTS is mainframe-based
                                                  investment company involved; and (c)                    Change and Notice of Filing                            and PBS is web-based with a mainframe back-end.
                                                  the proposed transaction is consistent                                                                         Participants may use either PTS or PBS, as they are
                                                                                                          Amendment No. 1                                        functionally equivalent.
                                                  with the general purposes of the Act.                      The proposed rule change by DTC, as                    6 References in this notice and order to ‘‘PTOP’’

                                                    For the Commission, by the Division of                modified by Amendment No. 1, would                     refer to both the PTOP function within the PTS
                                                                                                                                                                 interface and the equivalent ‘‘Voluntary Tenders
                                                  Investment Management, under delegated                  update its Procedures 4 set forth in the               and Exchanges’’ function within the PBS interface.
                                                  authority.                                              Guide to make changes to certain                       PTOP is a function that is used by Participants to
                                                  Brent J. Fields,                                        options within its Participant                         submit instructions, submit protects, submit cover
                                                                                                          Subscription Offer Program (‘‘PSOP’’) 5                of protects, submit cover of protects on behalf of
                                                  Secretary.                                                                                                     another Participant, and submit withdrawals on
                                                  [FR Doc. 2016–23611 Filed 9–29–16; 8:45 am]                                                                    various Voluntary Reorganization events.
                                                                                                            1 15 U.S.C. 78s(b)(1).                                  7 The Offer Agent is the fiscal agent of the offeror,
                                                  BILLING CODE 8011–01–P                                    2 17 CFR 240.19b–4.                                  typically a bank or trust company that is designated
                                                                                                            3 See Securities Exchange Act Release No. 78520
                                                                                                                                                                 to coordinate the process of the Offer.
                                                                                                          (August 9, 2016), 81 FR 54170 (August 15, 2016)           8 The description of the proposed rule change
                                                                                                          (SR–DTC–2016–005) (‘‘Notice’’).                        herein is based on the statements prepared by DTC
                                                                                                            4 Capitalized terms not otherwise defined herein     in the Notice. Notice, supra note 3, 81 FR at 54170–
                                                                                                          have the meaning set forth in the Rules, By-Laws       72.
                                                                                                          and Organization Certificate of DTC (the ‘‘Rules’’),      9 DTC states that an investor or its broker
                                                                                                          available at http://www.dtcc.com/legal/rules-and-      (‘‘Investor’’) may want to accept an Offer but will
                                                                                                          procedures.aspx and the Reorganizations Service        not have the necessary Rights or Securities, as the
                                                                                                          Guide (the ‘‘Guide’’), available at http://            case may be, before the expiration date of the Offer.
                                                     3 The requested relief would apply to direct sales   www.dtcc.com/∼/media/Files/Downloads/legal/            If permitted by the terms of the Offer, the Investor
                                                  of shares in Creation Units by a Fund to a Fund of      service-guides/Reorganizations.pdf.                    may submit to the Offer Agent the notice of
                                                                                                            5 References in this notice and order to ‘‘PSOP’’    guaranteed delivery for such Offer (‘‘Notice of
mstockstill on DSK3G9T082PROD with NOTICES




                                                  Funds and redemptions of those shares. Applicants,
                                                  moreover, are not seeking relief from section 17(a)     refer to both the PSOP function within the DTC         Guaranteed Delivery’’) which serves as (i)
                                                  for, and the requested relief will not apply to,        Participant Terminal System (‘‘PTS’’) interface and    protection of the Investor’s acceptance of the Offer
                                                                                                          the equivalent ‘‘Rights Subscription’’ function        (the ‘‘Protect’’), and sets forth the number of shares
                                                  transactions where a Fund could be deemed an
                                                                                                          within the Participant Browser System (‘‘PBS’’)        being subscribed to or the amount of Securities
                                                  Affiliated Person, or a Second-Tier Affiliate, of a     interface. PSOP is a function that is used by          being tendered, and (ii) a guarantee that the Rights
                                                  Fund of Funds because an Adviser or an entity           Participants to submit instructions including          or Securities (the ‘‘Cover’’) will be delivered to the
                                                  controlling, controlled by or under common control      oversubscriptions, submit protects, submit cover of    Offer Agent within the period prescribed by the
                                                  with an Adviser provides investment advisory            protects, submit cover of protects on behalf of        Offer (the ‘‘Protect Period’’). Notice, supra note 3,
                                                  services to that Fund of Funds.                         another Participant, and submit Rights sell            81 FR at 54171.



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                                                                              Federal Register / Vol. 81, No. 190 / Friday, September 30, 2016 / Notices                                            67407

                                                  Cover the Protect.10 Currently, neither                 B. Technical Changes                                    • Replace reference to ‘NASDAQ’
                                                  PSOP nor PTOP has the specific                             The proposed rule change would                     with ‘FINRA’.
                                                  functionality for a Covering Participant                revise the Guide to make ministerial                    • Replace reference to ‘AMEX’ with
                                                  to submit a Cover on behalf of a                        updates to reflect current terminology                ‘NASDAQ’.
                                                  Protecting Participant.                                 and practices, as set forth below. The                  • Add the title of the Guide, delete
                                                     In order to address directly a                       Guide would be updated to:                            ‘Copyright,’ and update the ‘Important
                                                  Participant’s need to submit a Cover of                    • Correct the text of the Guide to                 Legal Information’ to align with other
                                                  another Participant’s Protect, DTC                      accurately reflect names of functions                 DTC service guides.
                                                  proposes to add the CPAP option to                      accessible through PTS, and to                          • Correct spelling, grammatical,
                                                  PSOP/PTOP. With this enhancement,                       accurately reflect the names of the                   capitalization, numbering, and
                                                  the Protecting Participant would submit                 corresponding functions that are                      typographical errors throughout.
                                                  a Protect through PSOP/PTOP, and the                    accessible through PBS. Presently, the                  • Update other text, including
                                                  Covering Participant would be able to                   Guide assigns PTS functions to PBS,                   address, phone numbers, Web site
                                                  submit a Cover through PSOP/PTOP by                     and does not provide the names of the                 information, and methods of
                                                  providing the Protecting Participant’s                  corresponding PBS functions.                          communication.
                                                  Protect ID, Protect Sequence Number,                       • Correct the timeframes within                    C. Notice of Filing of Amendment No. 1
                                                  and Protect Participant ID. DTC explains                which a Participant can submit a Notice
                                                  that this enhanced functionality would                  of Guaranteed Delivery on the                           In Amendment No.1, DTC clarifies
                                                  automate the matching of Covers to                      expiration date of a Rights Offer.                    that when a Participant submits a
                                                  corresponding Protects, as well as                      Generally, a Participant may submit a                 Protect directly to the Offer Agent (i.e.,
                                                  automatically allocate the applicable                   Notice of Guaranteed Delivery through                 not through DTC), such Participant
                                                  credits for Securities and/or payments                  PSOP/PTOP from 8:00 a.m. to 2:15 p.m.,                could still request that DTC process the
                                                  directly to the Protecting Participant,                 at which time the window closes to                    Cover, but just not through PSOP/PTOP.
                                                  rather than to the Covering Participant.                allow for settlement of cash activities.              Therefore, Amendment No. 1 proposes
                                                  The CPAP option would eliminate the                     However, DTC would re-open the                        to set forth in the Guide that, once a
                                                  need for Participants to utilize CPDA for               window from 3:30 p.m. to 5:00 p.m. on                 Participant has accepted an Offer
                                                  the unintended purpose of Covering                      the expiration date of the Offer to allow             through the Offer Agent via a hard copy
                                                  another Participant’s Protect.11                        Participants extra time to submit a                   Notice of Guaranteed Delivery
                                                     In addition, to further reduce the                   Notice of Guaranteed Delivery before                  submitted directly to the Offer Agent, a
                                                  risks, burden, and costs to DTC                         the Offer expires, provided that the                  Participant would need to either (a)
                                                  associated with the manual processing                   Offer Agent agrees to accept deferred                 submit the Cover directly to the Offer
                                                  of the CPDA option in PSOP/PTOP,                        subscription payments. The text of the                Agent, or (b) request that DTC manually
                                                  DTC is proposing to eliminate that                      Guide incorrectly reflects an open                    process the Cover, but not through
                                                  option. When a Participant uses CPDA                    window from 8:00 a.m. to 5:00 p.m.,                   PSOP/PTOP.
                                                  to submit a Cover for another                           which is not the practice. The text                   Implementation Date
                                                  Participant’s Protect, DTC must                         would be corrected to reflect the correct
                                                  manually process the Cover and use                      8:00 a.m. to 2:15 p.m. and 3:30 p.m. to                 DTC would announce the effective
                                                  manual exception processing to match                    5:00 p.m. windows.                                    date via Important Notice upon the
                                                  the Cover to the corresponding Protect.                    • Pursuant to Participant requests,                Commission’s approval of the proposed
                                                  In addition, DTC must allocate the                      expand the availability of PTOP for a                 rule change, as modified by Amendment
                                                  credits for Securities and/or payment                   Participant to submit a Cover of Protect,             No. 1.
                                                  from the Offer to the Covering                          on the dates specified in the notice of               II. Discussion and Commission
                                                  Participant. Even when a Participant                    an Offer. The current availability is until           Findings
                                                  uses CPDA for its intended purpose,                     4:15 p.m. or 12:00 p.m., depending on
                                                                                                          the type of Offer, and the proposed rule                 Section 19(b)(2)(C) of the Act 14
                                                  which is infrequent, it is a labor
                                                                                                          change, as modified by Amendment No.                  directs the Commission to approve a
                                                  intensive process for DTC, as it must
                                                                                                          1, would revise the text to reflect                   proposed rule change of a self-
                                                  manually process the Cover and return
                                                                                                          availability until 5:00 p.m. or 1:00 p.m.,            regulatory organization if it finds that
                                                  the allocation to the Offer Agent within
                                                                                                          as applicable.                                        such proposed rule change is consistent
                                                  a narrow timeframe. Therefore, as
                                                  clarified by Amendment No. 1, DTC                          • Remove references to the UNIT                    with the requirements of the Act and
                                                                                                          Swingovers service. Several years ago,                rules and regulations thereunder
                                                  proposes that, when a Participant
                                                                                                          the UNIT Swingovers service was                       applicable to such organization. The
                                                  submits a Protect directly to the Offer
                                                                                                          discontinued, and instead, voluntary                  Commission believes the proposal, as
                                                  Agent (i.e., not through DTC), such
                                                                                                          unit separations and recombinations 12                modified by Amendment No. 1, is
                                                  Participant would need to (a) submit the
                                                                                                          began to be processed under the FAST                  consistent with Section 17A(b)(3)(F) of
                                                  Cover directly to the Offer Agent (i.e.,
                                                                                                          program.13                                            the Act,15 as described in detail below.
                                                  again, not through DTC), or (b) request                    • Clarify information regarding                       Section 17A(b)(3)(F) of the Act 16
                                                  that DTC process the Cover, but not                     available reports and methods of                      requires that the rules of the clearing
                                                  through PSOP/PTOP.                                      submission and receipt.                               agency be designed, inter alia, to
                                                                                                                                                                promote the prompt and accurate
                                                    10 Notice,supra note 3, 81 FR at 54171.                  12 A unit is a Security comprised of more than
                                                    11 As
                                                                                                                                                                clearance and settlement of securities
                                                          DTC explains in the Notice, it is aware that    one class of Securities, e.g., common stock and
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                                                  Covering Participants frequently utilize the PSOP/      warrants (the components). In a voluntary unit
                                                                                                                                                                transactions. By adding the CPAP
                                                  PTOP CPDA option in order to submit a Cover on          separation, the separation and recombination          option, through which a Participant can
                                                  behalf of another Participant, which is not the         between the security component and the security is    properly submit a Cover through PSOP/
                                                  intended purpose of the CPDA function. The              done by the Participant and transfer agent using      PTOP on behalf of another Participant,
                                                  intended purpose of the CPDA function is to enable      DTC’s Deposit and Withdrawal at Custodian
                                                  a Participant that submitted a Protect directly to an   system.
                                                                                                                                                                  14 15    U.S.C. 78s(b)(2)(C).
                                                  Offer Agent outside of DTC to later submit the             13 Securities Exchange Act Release No. 59199
                                                                                                                                                                  15 15    U.S.C. 78q–1(b)(3)(F).
                                                  corresponding Cover through DTC. Notice, supra          (January 6, 2009), 74 FR 1266 (January 12, 2009)
                                                  note 3, 81 FR at 54172.                                 (SR–DTC–2008–14).                                       16 Id.




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                                                  67408                       Federal Register / Vol. 81, No. 190 / Friday, September 30, 2016 / Notices

                                                  and by removing the CPDA option, the                    change that are filed with the                          approving the proposed rule change, as
                                                  proposed rule change, as modified by                    Commission, and all written                             modified by Amendment No. 1, on an
                                                  Amendment No. 1, will establish a                       communications relating to the                          accelerated basis, pursuant to Section
                                                  process that will streamline Cover of                   proposed rule change between the                        19(b)(2) of the Act.19
                                                  Protect transactions, allocations, and                  Commission and any person, other than
                                                  recordkeeping for Participants. Further,                those that may be withheld from the                     V. Conclusion
                                                  as DTC explains in the Notice, the                      public in accordance with the                             On the basis of the foregoing, the
                                                  proposed rule change, as modified by                    provisions of 5 U.S.C. 552, will be                     Commission finds that the proposal, as
                                                  Amendment No. 1, will reduce for DTC                    available for Web site viewing and                      modified by Amendment No. 1, is
                                                  the risks, burdens, and costs associated                printing in the Commission’s Public                     consistent with the requirements of the
                                                  with its current processing of such                     Reference Room, 100 F Street NE.,                       Act and in particular with the
                                                  transactions. Therefore, adding the                     Washington, DC 20549 on official                        requirements of Section 17A of the
                                                  CPAP option and removing the CPDA                       business days between the hours of                      Act 20 and the rules and regulations
                                                  option will promote the prompt and                      10:00 a.m. and 3:00 p.m. Copies of the                  thereunder.
                                                  accurate clearance and settlement of                    filing also will be available for
                                                  securities, consistent with the                         inspection and copying at the principal                   It is therefore ordered, pursuant to
                                                  requirements of the Act, in particular                  office of DTC and on DTCC’s Web site                    Section 19(b)(2) of the Act, that
                                                  Section 17A(b)(3)(F), cited above.                      (http://dtcc.com/legal/sec-rule-                        proposed rule change SR–DTC–2016–
                                                     As the proposed rule change pertains                 filings.aspx). All comments received                    005, as modified by Amendment No. 1,
                                                  to technical changes to the Procedures,                 will be posted without change; the                      be, and hereby is, APPROVED on an
                                                  the Commission finds the technical                      Commission does not edit personal                       accelerated basis.21
                                                  changes also consistent with Section                    identifying information from                              For the Commission, by the Division of
                                                  17A(b)(3)(F) of the Act 17 because                      submissions. You should submit only                     Trading and Markets, pursuant to delegated
                                                  technical updates to the Procedures to                  information that you wish to make                       authority.22
                                                  make them more clear, consistent, and                   available publicly. All submissions                     Brent J. Fields,
                                                  current for Participants that rely on the               should refer to File Number SR–DTC–                     Secretary.
                                                  Procedures support the prompt and                       2016–005 and should be submitted on                     [FR Doc. 2016–23615 Filed 9–29–16; 8:45 am]
                                                  accurate clearance and settlement of                    or before October 21, 2016.
                                                                                                                                                                  BILLING CODE 8011–01–P
                                                  securities transactions.                                IV. Accelerated Approval of the
                                                  III. Solicitation of Comments on                        Proposed Rule Change, as Modified by
                                                  Amendment No. 1                                         Amendment No. 1                                         SECURITIES AND EXCHANGE
                                                                                                             The Commission, pursuant to Section                  COMMISSION
                                                     Interested persons are invited to
                                                  submit written data, views, and                         19(b)(2) of the Act,18 finds good cause
                                                  arguments concerning Amendment No.                      to approve the proposed rule change, as                 [Release No. 34–78930; File No. SR–CBOE–
                                                  1 to File Number SR–DTC–2016–005,                       modified by Amendment No. 1, prior to                   2016–070]
                                                  including whether Amendment No. 1 is                    the thirtieth day after the date of
                                                                                                          publication of Amendment No. 1 in the                   Self-Regulatory Organizations;
                                                  consistent with the Act. Comments may
                                                                                                          Federal Register. In Amendment No.1,                    Chicago Board Options Exchange,
                                                  be submitted by any of the following
                                                                                                          DTC clarifies that when a Participant                   Incorporated; Notice of Filing and
                                                  methods:
                                                                                                          submits a Protect directly to the Offer                 Immediate Effectiveness of a Proposed
                                                  Electronic Comments                                     Agent, such Participant could still                     Rule Change Relating to the Fees
                                                    • Use the Commission’s Internet                       request that DTC process the Cover. As                  Schedule
                                                  comment form (http://www.sec.gov/                       such, Amendment No. 1 proposes to set                   September 26, 2016.
                                                  rules/sro.shtml); or                                    forth in the Guide that, once a
                                                    • Send an email to rule-comments@                     Participant has accepted an Offer                          Pursuant to Section 19(b)(1) of the
                                                  sec.gov. Please include File Number SR–                 through the Offer Agent via a hard copy                 Securities Exchange Act of 1934 (the
                                                  DTC–2016–005 on the subject line.                       Notice of Guaranteed Delivery                           ‘‘Act’’),1 and Rule 19b–4 thereunder,2
                                                                                                          submitted directly to the Offer Agent, a                notice is hereby given that on
                                                  Paper Comments                                                                                                  September 22, 2016, Chicago Board
                                                                                                          Participant would need to either (a)
                                                    • Send paper comments in triplicate                   submit the Cover directly to the Offer                  Options Exchange, Incorporated (the
                                                  to Secretary, Securities and Exchange                   Agent, or (b) request that DTC manually                 ‘‘Exchange’’ or ‘‘CBOE’’) filed with the
                                                  Commission, 100 F Street NE.,                           process the Cover, but not through                      Securities and Exchange Commission
                                                  Washington, DC 20549.                                   PTOP/PSOP.                                              (the ‘‘Commission’’) the proposed rule
                                                  All submissions should refer to File                       As discussed more fully above, the                   change as described in Items I, II, and
                                                  Number SR–DTC–2016–005. This file                       Commission finds that the proposed                      III below, which Items have been
                                                  number should be included on the                        rule change, as modified by Amendment                   prepared by the Exchange. The
                                                  subject line if email is used. To help the              No. 1, will streamline DTC’s processing                 Commission is publishing this notice to
                                                  Commission process and review your                      of Cover of Protect transactions and                    solicit comments on the proposed rule
                                                  comments more efficiently, please use                   reduce for DTC the risks, burdens, and                  change from interested persons.
                                                  only one method. The Commission will                    costs associated with its current
                                                  post all comments on the Commission’s                   processing of such transactions, thereby
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                                                                                                                                                                    19 Id.

                                                  Internet Web site (http://www.sec.gov/                  promoting the prompt and accurate                         20 15  U.S.C. 78q–1.
                                                                                                                                                                    21 In approving the proposed rule change, the
                                                  rules/sro.shtml). Copies of the                         clearance and settlement of securities,
                                                                                                                                                                  Commission considered the proposal’s impact on
                                                  submission, all subsequent                              consistent with Section 17A(b)(3)(F),                   efficiency, competition, and capital formation. 15
                                                  amendments, all written statements                      cited above. Accordingly, the                           U.S.C. 78c(f).
                                                  with respect to the proposed rule                       Commission finds good cause for                            22 17 CFR 200.30–3(a)(12).
                                                                                                                                                                     1 15 U.S.C. 78s(b)(1).
                                                    17 Id.                                                  18 15   U.S.C. 78s(b)(2).                                2 17 CFR 240.19b–4.




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Document Created: 2018-02-09 13:34:16
Document Modified: 2018-02-09 13:34:16
CategoryRegulatory Information
CollectionFederal Register
sudoc ClassAE 2.7:
GS 4.107:
AE 2.106:
PublisherOffice of the Federal Register, National Archives and Records Administration
SectionNotices
FR Citation81 FR 67406 

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