| Page Range | 826-828 | |
| FR Document | 2015-33310 |
[Federal Register Volume 81, Number 4 (Thursday, January 7, 2016)] [Notices] [Pages 826-828] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2015-33310] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-76811; File No. SR-DTC-2015-013] Self-Regulatory Organizations; The Depository Trust Company; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Postponing the Date for Retirement of Computer to Computer Facility Corporate Action Announcement Files, and Implementing a Fee Associated With Its Use December 31, 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 Rules 19b-4(f)(2) and (f)(4) 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. --------------------------------------------------------------------------- \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) and (f)(4). --------------------------------------------------------------------------- I. Clearing Agency's Statement of the Terms of Substance of the Proposed Rule Change The proposed rule change consists of (i) the postponement of the date for the retirement of DTC's proprietary computer to computer facility (``CCF'') files for corporate action announcements (``CCF Announcement Files'') until further notice; and (ii) the implementation of a fee associated with the use of CCF Announcement Files. 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 (i) postpone the date for the retirement of CCF Announcement Files until further notice, and (ii) implement a fee associated with the use of CCF Announcement Files, as described below.\5\ --------------------------------------------------------------------------- \5\ 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 Guide to the 2015 DTC Fee Schedule (``Fee Schedule''), available at http:// www.dtcc.com/~/media/Files/Downloads/legal/fee-guides/ dtcfeeguide.pdf?la=en. --------------------------------------------------------------------------- Background DTC handles essential aspects of processing corporate action \6\ events by routinely receiving and distributing information to its Participants using CCF Announcement Files. There are three corporate action event groups for which CCF files are available: Distributions, Redemptions, and Reorganizations. Participants subscribe to the CCF files for each event group separately. --------------------------------------------------------------------------- \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 through its Mandatory and Voluntary Reorganization Services. See DTC Operational Arrangements (``OA''), available at http://www.dtcc.com/~/media/Files/Downloads/legal/ issue-eligibility/eligibility/operational-arrangements.pdf. --------------------------------------------------------------------------- Postponement of the Date for Retirement Since 2011, DTC has informed Participants that CCF Announcement Files will be retired in 2015, and has been supporting Participant efforts to migrate to the ISO 20022 standard by providing a robust online learning center, hosting ISO specific monthly [[Page 827]] calls and offering a dedicated email box for client inquiries.\7\ --------------------------------------------------------------------------- \7\ See Securities Exchange Act Release No. 63886 (February 10, 2011), 76 FR 9070 (February 16, 2011) (File No. SR-DTC-2011-02); Securities Exchange Act Release No. 68114 (October 26, 2012), 77 FR 66497 (November 5, 2011) (File No. SR-DTC-2012-08). --------------------------------------------------------------------------- The use of the ISO 20022 standard reduces risk and improves transparency in the announcement and processing of corporate actions. ISO 20022 is a standard that provides the financial industry with a common language to capture business transactions and associated message flows. ISO 20022 is a business-model-based standard for the development of messages for the international financial services industry and can support different messaging syntaxes, including XML. In contrast, CCF files use proprietary function and activity codes which differ from the market standard codes. With the ISO 20022 standard, corporate action announcements are identified by a unique corporate action ID and are event based. ISO 20022 standard messages provide more data elements than the CCF files and they are available in near real-time throughout the day. Certain Participants nevertheless have inquired whether DTC could continue supporting CCF Announcement Files while they prepare to transition to the ISO 20022 standard, which is provided to Participants free of charge. Some Participants suggested that they were willing to pay for continued use of CCF Announcement Files while they prepare to migrate to ISO 20022 standard. In response to these Participant requests, with this proposed rule change, DTC would postpone the date for the retirement of CCF Announcement Files and implement a fee for a Participant's continued receipt of the CCF Announcement Files. A new retirement date would be announced, subject to a future proposed rule change and Important Notice issued by DTC. Implementation of a CCF File Fee To encourage full adoption of the ISO 20022 standard, DTC is proposing to implement a fee for each event group of CCF Announcement Files that a Participant receives (the ``CCF File Fee''). The CCF File Fee would be $50,000 per event group, per twelve month period as set forth below for each event group (the ``Fee Period''). The CCF File Fee would be charged to the Account of the Participant, upon the Participant's first receipt of CCF Announcement Files for a particular event group during the Fee Period. The CCF File Fee would cover all CCF Announcement Files within that event group during the Fee Period. In addition, once a Participant that is part of an Affiliated Family \8\ is charged the CCF File Fee for a particular event group, the other Participants that are part of the Affiliated Family will not be charged the CCF File Fee for such event group during that Fee Period. The amount of the CCF File Fee is based on DTC's analysis of industry- standard pricing for equivalent data. --------------------------------------------------------------------------- \8\ An Affiliated Family means each Participant that controls or is controlled by another Participant and each Participant that is under the common control of any Person. For purposes of this definition, ``control'' means the direct or indirect ownership of more than 50% of the voting securities or other voting interests of any Person. Rule 1, supra note 1 [sic]. --------------------------------------------------------------------------- DTC has communicated with its Participants about the CCF File Fee through several outreach efforts, including Important Notices \9\ and customer surveys regarding the December 2015 date and the amount of the CCF File Fee. DTC did not receive any objections during its outreach. --------------------------------------------------------------------------- \9\ See, e.g., Important Notice B#0354-15, available at http:// dtcc.com/~/media/Files/pdf/2015/3/25/0354-15.pdf; Important Notice B# 1946-15, available at http://www.dtcc.com/globals/pdfs/2015/october/22/1946-15. --------------------------------------------------------------------------- Implementation Schedule DTC would implement the CFF File Fee in three phases, divided by event group. The timeline for the implementation of the fees would be as follows:CCF Announcement Files for the Distributions event group would be subject to a CCF File Fee beginning on January 1, 2016. The Fee Period would run from January through December.\10\ --------------------------------------------------------------------------- \10\ On December 30, 2015, staff of the Commission's Division of Trading and Markets had a conversation with DTC's legal counsel to confirm that the Fee Period for the Distributions event group would run from January 1 through December 31, as provided in the proposed rule text. --------------------------------------------------------------------------- CCF Announcement Files for the Redemptions event group would be subject to a CCF File Fee beginning on July 1, 2016. The Fee Period would run from July through June.\11\ --------------------------------------------------------------------------- \11\ On December 30, 2015, staff of the Commission's Division of Trading and Markets had a conversation with DTC's legal counsel to confirm that the Fee Period for the Redemptions event group would run from July 1 through June 30, as provided in the proposed rule text. --------------------------------------------------------------------------- CCF Announcement Files for the Reorganizations event group would be subject to a CCF File Fee at a future date to be announced by Important Notice. The Fee Period would be announced by Important Notice. Implementation Date The proposed rule change would take effect on January 1, 2016. 2. Statutory Basis Section 17(A)(b)(3)(F) of the Act, requires, inter alia, that DTC's Rules be designed to promote the prompt and accurate clearance and settlement of securities transactions.\12\ By postponing the date for the retirement of CCF Announcement Files until further notice, the proposed rule change would allow Participants to minimize potential business interruption by undertaking an orderly and organized migration from CCF files to the ISO 20022 standard. The proposed rule change thereby facilitates the transition to the ISO 20022 standard without disrupting the announcement of corporate actions and the clearance and settlement activities related thereto. In addition, by revising the Fee Schedule to implement a fee for Participants that continue to receive the CCF Announcement Files, the proposed rule change encourages efficiencies in communicating information about corporate action events and in Participants' transition to the industry-standard ISO 20022. Therefore, DTC believes that the proposed rule change would promote the prompt and accurate clearance and settlement of securities transactions and is consistent with the requirements of the Act, in particular Section 17(A)(b)(3)(F) of the Act, cited above. --------------------------------------------------------------------------- \12\ 15 U.S.C. 78q-1(b)(3)(F). --------------------------------------------------------------------------- Section 17A(b)(3)(D) of the Act requires that DTC's Rules provide for the equitable allocation of reasonable dues, fees, and other charges among its Participants.\13\ DTC believes that the proposed fee would be consistent with this provision because it would apply equally in accordance with Participant use of the CCF Announcement Files, and is therefore equitable, and is based on industry-standard pricing, and therefore, reasonable. --------------------------------------------------------------------------- \13\ 15 U.S.C. 78q-1(b)(3)(D). --------------------------------------------------------------------------- (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 postponement of the date for the retirement of CCF Announcement Files would apply equally to all Participants, and the proposed fee would apply equally in accordance with Participant use of the CCF Announcement Files. (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 [[Page 828]] solicited or received. DTC will notify the Commission of any written comments received by DTC. 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 subparagraphs (f)(2) and (f)(4) 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. --------------------------------------------------------------------------- \14\ 15 U.S.C. 78s(b)(3)(A). \15\ 17 CFR 240.19b-4(f)(2) and (f)(4). --------------------------------------------------------------------------- IV. Solicitation of Comments Interested persons are invited to submit written data, views and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or Send an email to [email protected]. Please include File Number SR-DTC-2015-013 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-2015-013. 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-2015-013 and should be submitted on or before January 28, 2016. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\16\ Jill M. Peterson, Assistant Secretary. --------------------------------------------------------------------------- \16\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- [FR Doc. 2015-33310 Filed 1-6-16; 8:45 am] BILLING CODE 8011-01-P
| Category | Regulatory Information | |
| Collection | Federal Register | |
| sudoc Class | AE 2.7: GS 4.107: AE 2.106: | |
| Publisher | Office of the Federal Register, National Archives and Records Administration | |
| Section | Notices | |
| FR Citation | 81 FR 826 |