82 FR 36057 - Self-Regulatory Organizations; The Depository Trust Company; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Modify the DTC Operational Arrangements Necessary for Securities To Become and Remain Eligible for DTC Services in Order To Clarify and Update Provisions Relating to the Processing of Eligibility Requests and Servicing of Assets on Deposit at DTC
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 82, Issue 147 (August 2, 2017)
Federal Register Volume 82, Issue 147 (August 2, 2017)
| Page Range | 36057-36064 | |
| FR Document | 2017-16269 |
[Federal Register Volume 82, Number 147 (Wednesday, August 2, 2017)] [Notices] [Pages 36057-36064] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2017-16269] [[Page 36057]] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-81249; File No. SR-DTC-2017-010] Self-Regulatory Organizations; The Depository Trust Company; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Modify the DTC Operational Arrangements Necessary for Securities To Become and Remain Eligible for DTC Services in Order To Clarify and Update Provisions Relating to the Processing of Eligibility Requests and Servicing of Assets on Deposit at DTC July 28, 2017. 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 July 17, 2017, The Depository Trust Company (``DTC'') filed with the Securities and Exchange Commission (``Commission'') the proposed rule change as described in Items I, II and III below, which Items have been prepared by the clearing agency. DTC filed the proposed rule change pursuant to Section 19(b)(3)(A) \3\ of the Act and subparagraphs (f)(2) and (f)(4) of Rule 19b-4 \4\ thereunder. 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 modifications to the DTC Operational Arrangements (Necessary for Securities to Become and Remain Eligible for DTC Services) (``OA'') \5\ proposed in order to clarify and update provisions relating to the processing of eligibility requests and servicing of securities on Deposit at DTC, as more fully described below.\6\ --------------------------------------------------------------------------- \5\ Available at http://www.dtcc.com/~/media/Files/Downloads/ legal/issue-eligibility/eligibility/operational-arrangements.pdf. \6\ Each term not otherwise defined herein has its respective meaning as set forth in the Rules, By-Laws and Organization Certificate of DTC (the ``Rules''), available at http://www.dtcc.com/legal/rules-and-procedures.aspx and the OA, supra note 5. --------------------------------------------------------------------------- II. Clearing Agency's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the clearing agency included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The clearing agency has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements. (A) Clearing Agency's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The OA was first published by DTC in June 1987. It was then updated in June 1988, February 1992, December 1994, January 1998, May, 2002, January 2009, December 2011 and most recently in 2016.\7\ The OA is designed to maximize the number of issues of securities that may be made eligible for DTC services, providing for the orderly processing of such securities and timely payments to Participants. DTC's experience demonstrates that when Participants, Issuers, Underwriters, Agents (as such terms are defined in the Rules \8\ or in the OA \9\), and their counsel are aware of DTC's requirements, those requirements can be readily met in most instances. The purpose of this rule change is to revise the text of the OA in order to update and clarify DTC's processes in this regard. Additionally, some ministerial changes, changes to methods of notification, and clarifying language have been introduced, to provide a more concise description of OA procedures. In this regard, the proposed rule change would revise the text of the OA as set forth in the respective sections as described below: --------------------------------------------------------------------------- \7\ See Securities Exchange Act Release Nos. 24818 (August 19, 1987), 52 FR 31833 (August 24, 1987) (SR-DTC-87-10); 25948 (July 27, 1988), 53 FR 29294 (August 3, 1988) (SR-DTC-88-13); 30625 (April 30, 1992), 57 FR 18534 (April 30, 1992) (SR-DTC-92-06); 35649 (April 26, 1995), 60 FR 21576 (May 2, 1995) (SR-DTC-94-19); 39894 (April 21, 1998), 63 FR 23310 (April 28, 1998) (SR-DTC-97-23); 45994 (May 29, 2002), 68 FR 35037 (June 11, 2003) (SR-DTC-2002-02); 59199 (January 6, 2009), 74 FR 1266 (January 12, 2009) (SR-DTC-2008-14); 65901 (December 6, 2011), 76 FR 77281 (December 12, 2011) (SR-DTC-2011- 10); 77043 (February 3, 2016), 81 FR 6913 (February 9, 2016) (SR- DTC-2016-002); and 79122 (October 19, 2016), 81 FR 73450 (October 25, 2016) (SR-DTC-2016-010). A proposed change to amend the OA that was filed with the Commission on July 7, 2017, SR-DTC-2017-011 (``ATOP Rule Filing''), is pending implementation. See Securities Exchange Act Release No. 81096 (July 7, 2017), 82 FR 32406 (July 13, 2017) (SR-DTC-2017-011). The ATOP Rule Filing and its pending implementation date are discussed more fully below. See infra note 31. \8\ See supra note 6. \9\ See supra note 5. ------------------------------------------------------------------------ OA Section Revision ------------------------------------------------------------------------ Important Legal Information.. The proposed change would (i) update the most recent copyright date of the OA from 2016 to 2017 and (ii) make grammatical corrections and revise text for readability. Section I.A.2. (Securities The proposed rule change would (i) update Eligible for DTC's Services). a reference to a link for DTC securities eligibility documentation (ii) revise the defined term for Money Market Instruments from ``MMIs'' to ``MMI'' for consistency with the Rules and the DTC Settlement Service Guide \10\ and (iii) revise a cross-reference to a footnote regarding the DTC Custody Service to refer to the section number the footnote appears in, rather than just the page number the footnote appears on. Section I.A.4. (Standard Time The proposed rule change would revise Frames for Providing text (i) for consistency with language Underwriting Information to in DTC's Fee Schedule,\11\ to describe DTC). charges made to underwriters that fail to meet the requirements of this subsection as ``surcharges'' rather than ``fines,'' (ii) to move a reference to related standard time frames to earlier in the section for reference purposes and (iii) remove a link to the Underwriting Service Guide in respect to a reference to DTC's eligibility requirements, since the OA is the primary source for these requirements. Section I.A.6. (Signature)... Change word usage in a sentence relating to methods of transmission, recording or storage of signatures, by replacing ``xeroxing'' with ``photocopying.'' [[Page 36058]] Section I.B.1.b. (Required The proposed rule change would (i) revise Riders to LOR). text for readability, (ii) update a reference to a link for DTC securities eligibility documentation that includes various DTC forms Letters of Representation (``LOR'') and riders to the LOR, (iii) delete references to Exhibit C and Exhibit D of the OA that contain forms of the Blanket Letter of Representations (``BLOR'') and Issuer Letter of Representations (``ILOR''), respectively, which exhibits would be removed from the OA, as discussed below, and (iv) replace the deleted references to Exhibits C and D with links to the BLOR and ILOR. The proposed rule change would also add text noting that sample offering document language is available in the form of BLOR and ILOR. Section I.B.1.d. (LOR The proposed rule change would remove a Requirements for provision stating that DTC may be Certificated Securities). require an Agent to sign a ``Tender LOR'' for certificated issues with put features. The Tender LOR is used by DTC to obtain the Agent's agreement for DTC to use its procedures applicable to the processing of tenders for Securities with put features. However, DTC already maintains authority to use its procedures in this regard pursuant to the OA as set forth in Section V.B.2. (Put Features with Special Processing Requirements). Therefore, it is unnecessary for DTC to separately obtain a signed Tender LOR from Agents in this regard. Section I.B.4.a. (Ownership The proposed rule change would (i) revise Thresholds). the text to update links to documentation referenced by this section and (ii) revise the defined term for Segregation Account 100 service from ``SEG 100'' to ``Seg 100'' for consistency with other references to this service in the OA. Section I.B.4.b. (Revisions The proposed rule change would update a to Eligible Securities). cross-reference relating to information on altering the terms of an offer from referencing Section VI(A)(2)(d) to instead reference Section VI(C)(5)(c). Section I.B.5. (Instruction The proposed rule change would (i) Letters Regarding the correct the text of this section to add Expiration of a Restrictive ``the Securities'' after ``Issuer of'' Period). and (ii) add links to existing forms and requirements for Issuers and Agents to request the processing of exchanges relating to CUSIPs for securities that were originally restricted pursuant to Rule 144A and/or Regulation S and which have become unrestricted. Section I.C.1. (Retail The proposed rule change would make a Certificates of Deposit). grammatical change to the text of this section to improve readability. Section I.C.2. (Unit The proposed rule change would add Securities). clarifying language in this section relating to additional eligibility requirements for unit securities \12\ for improved readability, including with respect to (i) CUSIP requirements for immediately separable Units versus Units separable after their initial closing date \13\ and (ii) requirements as stated in this section relating to Units for which are separable into their components on a voluntary basis versus on a mandatory basis. Section I.C.3. (New Issue The proposed rule change would revise Eligibility Requirements for this section to update the link to a Municipal Securities). list of NIIDS Data Elements and related procedures. Section I.C.5. (Non-U.S. The proposed rule change would revise Currency Denominated this section to update a cross-reference Securities). to Section IV.B.3. by changing the referenced title of that section from ``Securities without an Option for U.S. Dollar Payment'' to ``Securities Denominated in a Non-U.S. Currency without an Option for U.S. Dollar Payment.'' Section I.D. (Compliance with The proposed rule change would make a Regulations). technical correction to remove unnecessary numbering within the section. Section I.E. (DTC Fee The proposed rule change would add this Schedule). subsection to include the link to the DTC Fee Schedule \14\ for transparency with respect to current exception processing fees, late fees and surcharges referred to in the OA. Section II.A.1 (CUSIP Number The proposed rule change would make Assignment). changes to the text of this section for clarity and improved readability with respect to an example provided within. Section II.B.1. (Possession The proposed rule change would (i) add and Inspection). text to this section \15\ to insert a cross-reference to a related process concerning confirmation of FAST balances by an Agent and (ii) update the address for delivery of security certificates to the DTC Securities Processing Department. Section II.B.2.a. (FAST)..... The proposed rule change would add a link as a reference for additional information for Agents interested in becoming FAST Agents. Section II.B.2.c. (DWAC)..... The proposed rule change would add text to this section to clarify that DTC may require a FAST Agent to use the DWAC process for the separation of a Unit into its components. Section II.B.3. (Transfer The proposed rule change delete text in Turnaround Times). regard to monitoring by DTC of transfer turnaround times for Agents and preventing eligibility of an Agent that fails to comply. It is not practical for DTC to monitor transfer turnaround times since transfer turnaround times are established outside of DTC pursuant to Rule 17Ad-2 under the Act \16\ and, pursuant to that rule, Agent reporting on compliance is required to be made to the SEC and the Agent's ``appropriate regulatory agency,'' if applicable.\17\ Section II.B.4.b. (Transfer The proposed rule change would revise the Agent Required Notices). text of this section (i) to state that Agents should notify DTC by the effective date of the Agent's assuming or terminating services as Agent for an Issuer, or the Agent's change of name or address, by the effective date of the change, rather than at least 10 calendar days in advance, because receipt of such notice on the effective date is sufficient for DTC to timely update its records to reflect the applicable change and (ii) to update references to the form Agents use to notify DTC of such changes, including updating the applicable link to the form and inserting the DTC e-mail address that a completed form should be delivered to. Subsections within Section II.B.4.b. numbered and titled, respectively, ``(1) Termination of Transfer Agent Services,'' ``(2) Assumption of Transfer Agent Services'' and ``(3) Transfer Agent's Change of Name or Address,'' would become separate sections and would renumbered to an alphabetical format sequentially numbered with the other Sections of II.B.4.b. The section that would be renumbered Section II.B.4.c., (``Termination of Transfer Agent Services''), as mentioned above, would be revised for readability and clarity. [[Page 36059]] Section II.B.4.c. (Business The proposed rule change would delete Contingency). this subsection which relates to connectivity testing by transfer agents and paying agents that are Participants, because this subsection is duplicative of the Rules and unnecessary for inclusion in the OA.\18\ Section II.B.5. (Trustee The proposed rule change would clarify Required Notices). and update text from original Section VI.B.4 (Trustee Requirements) and reposition the text to new Section II.B.5. (Trustee Required Notices). Section III.A. (Record Date The proposed rule change would (i) revise Requirements). the text of this section to clarify text relating to the option for Securities to pay distributions in one or more currencies and (ii) delete outmoded language regarding establishment of record dates by securities exchanges, since the establishment of the record date by the Issuer is not dependent on the date of an ex-date established by a securities exchange. Section III.B. (Notices)..... The proposed rule change would clarify this section to state that where an Issuer or Agent provides information or notice to DTC for distribution to Participants, the notice should include the terms of the event in addition to other relevant information as stated therein, including CUSIP numbers, payment information and any relevant instructions. The proposed rule change would also change a cross reference from Exhibit E to Exhibit C to reflect the deletion of certain exhibits, as described herein. Section III.C. (Payment The proposed rule change would modify the Instructions). text of this section to clarify that the prohibition against Agents deducting fees from distribution payments to DTC includes a prohibition against invoicing DTC for such fees. Section III.C.1. (Income The proposed rule change would delete a Payment Standards). paragraph from this section in regard to instructing Issuers to fund their Agents by 1 p.m. on a payable date since DTC has no visibility on the transfer of funds between Issuers and Agents and is therefore unable to enforce such a requirement. Section III.C.2. (Redemption The proposed rule change would (i) delete and Maturity Payment a paragraph from this section in regard Standards). to instructing Issuers to fund their Agents for redemption and maturity payments by 1 p.m. on a payable date since DTC has no visibility on the transfer of funds between Issuers and Agents and is therefore unable to enforce such a requirement, (ii) update a link referring to information about DTC principal and income processing, and (iii) delete a reference to a defunct email address for informational inquiries and replace it with contact information for DTC's client support team. Section III.C.3. The proposed rule change would add e-mail (Reorganization Payment addresses for DTC's reorganization Standards). department and a phone number to the DTCC customer service hotline to promote accessibility to DTC staff for questions regarding wire instructions and payment arrangements. The text of this section would also be revised to change ``pm'' to ``p.m.'' in connection with timeframe references appearing in two places. Section III.D. (Additional The proposed rule change would revise the Payment Arrangements/ text of this section (i) to clarify Policies/Procedures). language for improved readability and scope and (ii) update references to DTC contact information. Section III.D.1. (Redemption The proposed rule change would revise Payments with Presentation this section to correct capitalization (``PWP'')). of a defined term. Section III.D.2. The proposed rule change would add text (Compensation Claims Policy for clarity and simplification to state and Related Procedures). DTC's policy with respect to DTC's ability to claim Paying Agents and Issuers that fail to pay DTC for a payment event on the scheduled payment date, rather than referring to a separate procedure in this regard. In addition, text regarding Agents ability to submit a claim to DTC for erroneous payments made to DTC would be deleted from this section as it is duplicative of information provided in Section III.D.3. of the OA--``Requests for Return of Funds.'' \19\ In addition, Section III.D.2. would be renamed from ``Compensation Claims Policy and Related Procedures'' to ``Compensation Claims Policy.'' Section III.D.3. (Requests The proposed rule change would delete for Return of Funds). references to the ``Return of Funds Procedure'' and contact information to obtain a copy of such procedure. The procedure is no longer separately provided because it was duplicative of this Section III.D.3. The proposed rule change would clarify the text of this section in subsection a. with respect to DTC's practice for the return of funds to Agents with regard to payments for which the Issuer has not paid the Agent and where the Agent has made erroneous payments to DTC. In addition, subsection a., currently titled ``Issuer Default/ Bankruptcy Considerations'' would be changed to ``Issuer Default/Bankruptcy Considerations/Agent Not Funded by Issuer'' in order to clarify the scope of the subsection. The proposed rule change would revise subsection b. (Processing Errors) to add contact information for an Agent or Issuer to notify DTC in the event an Agent or Issuer makes an erroneous payment to DTC, and clarify DTC's existing practice of returning funds only to the bank account from which the erroneous payment was received. The purpose of this provision would be to ensure that funds are sent back only to the party that sent them to DTC and reduce the possibility of error or fraud in the transmission of the return of funds. The proposed rule change would also revise the text of this subsection for a grammatical change and readability. [[Page 36060]] Section IV.A. (Dividend and The proposed rule change would (i) revise Income Notification the title and text of this section, Procedures). which relates to payment notice information required from Agents, to (a) add the word ``Payment'' to the title so that the section would be named ``Dividend and Income Payment Notification Procedures,'' (b) remove a requirement that information provided to DTC under this section must include any income related to a corporate action, because DTC is able to determine this information from dividend and interest rate information that is required to be provided by an Issuer or Agent pursuant to this section and (c) clarify that payment notices for exchange traded funds (``ETFs'') are generally not required, unless specifically requested by DTC, because this information is sourced from securities exchanges on which the applicable ETF is listed, (ii) remove the requirement for parties that send an e-mail to DTC's Announcements Department to telephone DTC if an e-mail receipt is not received by them from DTC within an hour to confirm such notice was received and (iii) change the physical delivery address used for transmission of notices to DTC in the event electronic transmission is not available. Section IV.A.1. (Structured The proposed rule change would clarify Securities). that ``record date'' and ``payable date'' are required information that must be provided to DTC in connection with minimal notification of structured security rate information. In addition, the proposed rule change would remove the text ``preferably two business days'' from the description of the required timeframe to for minimum notification. Section IV.A.1.a. (Non- The proposed rule change would revise the Conforming Structured text of this section to provide a link Securities). to a copy of the Non-Conforming Structured Securities Attestation Letter. Section IV.A.1.c. (Remittance The proposed rule change would delete Reporting to DTC for this section as it is outdated and no Structured Securities). longer applicable. Section IV.A.2. (American/ The proposed rule change would revise Global Depositary Receipts this section to update an email address (``ADR/GDR'')). provided to contact the DTC Announcements Department. The text of this section would also be revised to clarify that a notice of payment information for an American or Global Depository Receipt must include the record date in addition to other information as provided in the text of this section. The text of this section would also be revised to remove a reference to a preferred timeframe for submission of a notice of payment information. The text would also be revised to move the placement of ``payable date,'' which appears in a list of notice requirements, from below to above ``payment amount per share.'' Section IV.A.3. (Unit This section describes notice Investment Trust (``UIT'') requirements for record date and other Securities). information that must be provided to DTC for distributions and payments on UITs. The proposed rule change would delete this section because it is no longer accurate. Securities Exchanges rather than Agents provide the information required by this Section to DTC. Section IV.B. (Currency The proposed rule change would update Payment Provisions). headings of subsections within this section to clarify their scope in relation Securities in Non-U.S. denominated currencies. Section IV.C.1. (Dividend or The proposed rule change would revise Interest Rate Change). this section to provide updated delivery information for notices by Issuers and Agents to DTC with respect to changes in dividend or interest rates, and replace a reference to ``Publication Date'' with ``payment date'' to reflect currently used terminology. Section IV.C.2. (Reduction of This section describes the process by Payment on Treasury or which an Agent may inform DTC that Repurchased Securities (for payment to a Participant of cash Cash Dividend or Interest dividend and interest payments for a Payment)). particular distribution on Securities the Participant is holding should be adjusted. The proposed rule change would revise this section to reflect an existing requirement for the Agent to provide a confirmation letter signed by the Participant that holds the subject shares whereby the Participant authorizes the adjustment in payment and includes an indemnification statement indemnifying DTC with respect to processing the adjustment.\20\ The proposed rule change would also amend the text to update (i) this section with respect to information the Agent must provide to DTC with regard to the adjustment which DTC needs to process the adjustment promptly and accurately and (ii) contact information for the delivery of such information by the Agent to DTC. In addition, the proposed rule change would remove a provision from this section that states that instructions submitted to DTC in accordance with this section that are submitted outside of required timeframes will subject the responsible Participant to a disincentive fee. The disincentive fee is not necessary because it is in the best interest for the applicable responsible parties to submit these instructions timely to allow same-day distribution of applicable principal and income payments to Participants and beneficial owners, and the disincentive fee is not necessary for this purpose. Section IV.D. (Additional The proposed rule change would update the Dividend Policies). title of this section to reflect that the requirements constitute procedures of DTC. Therefore, the section would be retitled ``Additional Dividend Procedures.'' Section IV.D.1.a. (Voluntary The proposed rule change would revise Dividend Reinvestment and this section to re-order an existing Securities with an Automatic list of Agent requirements and add Dividend Reinvestment (with clarifying terms regarding (i) the an option to elect a cash timing of the Agent's acceptance of dividend)). dividend reinvestment-related instructions from DTC, (ii) the agreement of the Agent that shares reinvested through DTC's Dividend Reinvestment Program (``DRP'') shall of the same Security as the issue paying the dividend, and (iii) a requirement, consistent with DTC's eligibility requirements, that reinvestment shares must carry transfer or ownership restrictions. The proposed rule change would also make changes to the text (i) for enhanced readability on the purpose and function of the DRP and (ii) update email and mailing address information for the delivery of instructions and security certificates to DTC. [[Page 36061]] Section IV.D.1.b. (Automatic The proposed rule change would delete Dividend Reinvestment). text stating that DTC may not make an issue from an Agent eligible if the Agent has a record of not complying with the provisions of this section as this is not a criterion for determining eligibility of an issue for a reinvestment program. DTC reviews issues for eligibility for inclusion in a reinvestment program by applying the criteria set forth in the OA on an issue- by-issue basis. Section IV.D.2. (Stock The proposed rule change would revise the Distributions to Holders of text of this section to (i) rename the Record). subsection from ``Stock Distributions to Holders of Record'' to become ``Stock/ Pay-in-Kind (``PIK'') Distributions to Holders of Record'' and (ii) reflect the required information flow of notices for stock distributions to record date holders. The proposed text would also include a statement on the processing of bond-related ``Paid-in-kind distributions'' and variations. Section IV.D.2.a. (Fractional The proposed rule change would (i) revise Entitlements in Cash or the text of this section to reflect that Additional Roundup Shares). DTC no longer supports distribution of fractional shares; per SEC filing No. SR- DTC-2015-007,\21\ (ii) revise language stating the timing by which an Issuer or Agent must provide DTC with the information DTC needs to collect Participant instructions (regarding liquidation or issuance of shares to satisfy Participant cash-in-lieu (``CIL'')/roundup entitlements) \22\ and (iii) update an address for the delivery of physical securities to DTC. Section IV.D.2.b. The proposed rule change would clarify (Restriction Distribution text relating to a requirement to send a Shares Issued). notice to DTC and the information on such notice. Section IV.D.3. (Reduction of The proposed rule change would revise Payment on Treasury or this section to clarify Participant Repurchased Securities (for authorization requirements with regard Stock Dividend Payments)). to reductions of payment on treasury or repurchased shares for stock dividend payments, to add that the confirmation letter required pursuant to this section must contain an officer-level authorization for the applicable reduction.\23\ In addition, the proposed rule change would remove a provision from this section that states that instructions submitted to DTC outside of required timeframes will subject the responsible Participants to a disincentive fee. The disincentive fee is not necessary because it is in the best interest for the applicable responsible parties to submit these instructions timely to allow same-day distribution of stock to Participants and beneficial owners, and the disincentive fee is not necessary for this purpose. Section V.A. (Redemptions, The proposed rule change would (i) delete Advance Refundings and Calls a need to call DTC to confirm hardcopy/ Inclusive of Sinking Funds email notice receipt, (ii) clarify the and Mandatory Redemptions). need for the Agent to contact DTC the first time they use the spreadsheet submission process and (iii) conform the usage of the defined term ``PWP'' (i.e., Payment Without Presentation) with its initial definition in Section III.D.1. Section V.A.2. Partial The proposed rule change would revise Redemptions for Auction Rate this section to (i) delete references to Securities (``ARS'') and discretionary processing fees, relating Requests for ARS Lottery to the release of lottery results, that Results. are not charged, (ii) update contact information with respect to information on ARS processing and (iii) make grammatical changes to text for improved readability. Section V.B.1. (Standards for This section relates to instructions from Put Notifications). Issuers and Agents and information for the processing of optional puts and mandatory tenders.\24\ The proposed rule change would revise this section and clarify text for purposes of completeness with regard to processing timeframes and information DTC requires to timely process optional puts and mandatory tenders. The proposed rule change would also revise the text to update DTC contact information. Section V.B.2.b. The proposed rule change would revise the (Collateralized Mortgage text of this section to clarify the Obligations (``CMOs'') and scope and indicate that mortgage backed Asset-Backed Securities securities, in addition to CMOs and ABSs (``ABSs'')). are covered by this section. The text of this section would also be revised to update DTC contact information, Web site references and revise wording for improved readability. Section V.B.2.c. (Put The proposed rule change would clarify ``Extendible'' Issues) \25\. the text of this section to reflect the process as it has been established in practice in conjunction with Agents on this type of put. The proposed rule change would also revise the text of this section for enhanced readability and to update DTC contact and mailing information. Section V.B.2.d. (Put Bonds The proposed rule change would revise the (Repayment Options)). text to (i) clarify that late notification may result in late notification fees in accordance with the DTC Fee Schedule and (ii) update DTC contact and mailing information. Section V.B.2.e. (Survivor The proposed rule change would revise the Options) \26\. text of this section to add the Web site location of the DTC Reorganizations Service Guide for further information on processing. The proposed rule change would also clarify that DTC does not monitor presentment of supporting documentation to an Agent for processing of survivor options. Section VI.A. (Standards for The proposed rule change would update the Voluntary and Mandatory text of this section to clarify the Reorganizations). notice and timing requirements for Issuers and Agents to allow DTC to timely process voluntary and mandatory corporate actions and update the title of the section to reflect that it pertains to notices. The proposed rule change would also add a cross reference to the DTC Fee Schedule for applicable fees. Section VI.B.1. (Reduction of The proposed rule change would shorten Payment on Treasury or the amount of time in advance that Repurchased Securities). Agents must provide to DTC (i) information as required by this section \27\ and (ii) confirmation letters \28\ to DTC, prior to the processing of adjustments to Participant accounts reflecting a reduced payment/ distribution amount, in accordance with this section, from five business days to no later than three business days prior to the payment/distribution date of the entitlement. The change would more accurately reflect the amount of time required by DTC to receive the necessary information and confirmation letters in order to timely process such adjustments. The proposed rule change would revise the list of information DTC requires in connection with processing such adjustments in order to specify the information that DTC needs in order to promptly and accurately process an adjustment.\29\ The proposed rule change would also revise DTC's contact information to reflect that the information should no longer be send to DTC via fax, but only via email.\30\ [[Page 36062]] Section VI.B.2. (Mandatory The proposed rule change would move the Separation of a Unit After text of former Section VI.A.2.i. to this the Closing Date). newly numbered section. Section VI.C. (Processing for The proposed rule change would change the Specific Voluntary numbering of former Section VI.A.2 to Reorganizations). VI.C.\31\ and rename it from ``Processing for Specific Voluntary Reorganization Features'' to ``Processing for Specific Voluntary Reorganizations.'' The proposed rule change would divide the content of the newly numbered section into 5 subsections reflecting, and separating for enhanced readability, the existing content of former Section VI.A.2.: 1. Unit Investment Trust. 2. Mortgage-Backed Securities with Monthly Early Redemption Features. 3. Rights Offers (Use of DTC's Automated Subscription Offer Program (``ASOP''). 4. Standards for Convertible Issues/ Warrants/Rights; and 5. Voluntary Tenders/Exchanges/Mergers with Elections (Use of DTC's Automated Tender Offer Program (``ATOP''). Each of these subsections would be revised to clarify the text for enhanced readability and to provide enhanced detail on relevant notice and information requirements. The proposed rule change would also update DTC contact information and mailing addresses. Former subsection h (under form Section VI.A.2.) would be deleted and relevant text moved above in the new Section VI.C. to consolidate text regarding unit investment trusts within the section. The proposed rule change would also add text relating to processing of payment of cash for convertible securities setting forth existing requirements for processing such payments. Section VI.D. (Chargeback of The proposed rule change would renumber Reorganization Payments). subsection VI.A.2.j. to become its own subsection VI.D. Section VI.E. (Proxy Related The proposed rule change would renumber Procedures). former subsection VI.B. to become subsection VI.E. The content of this subsection would be revised to update DTC contact information and addresses and provide enhanced detail on consent and legal notices to be submitted by Issuers, Agents, trustees or other third parties to DTC. Accurate delivery of such notices to DTC facilitates the ability of DTC to process proxy-related requests and to make applicable notice information available to the industry. Section VII.A. (Partial The proposed rule change would change the Redemption Exclusions). name of the ``Call Notification Department'' to ``Redemption Notification Department'' to reflect the updated name of the department. Section VII.B. (VRDO Interest The proposed rule change would (i) delete Payment Information). the text regarding use of vendor/service bureaus that are obsolete and (ii) simplify notice requirements and related details and conform such requirements to existing practice. Section VII.C. (Optional The proposed rule change would update the Tender Provisions). link to information regarding DTC deliver orders and update DTC's contact information. Section VII.D. (Mandatory The proposed rule change would change the Tender Provisions). name of the ``Announcements Department'' to reflect the updated name of the department and update DTC's contact information. Section VII.E. (Use of Credit The proposed rule change would update the Facilities). text of this section to update DTC's mailing address. Section VII.F. (Mandatory The proposed rule change would update the Tender Retention/Exclusion text of this section to add an email Provisions). address for DTC's Reorganization Department to submit requests relating to DTC's mandatory exclusion procedures. Section VIII. (Additional The proposed rule change would delete Operational Requirements for Section VIII. as it is obsolete and the Cross-Currency and Other remaining provisions of the OA shall Warrants). apply to the securities covered by this Section. Exhibit B. (Underwriting This exhibit contains the timeframes, Standard Time Frames). referred to in Section I.A.4. of the OA, for information and/or materials needed by DTC to process an underwriting transaction and notify Participants in a timely fashion. The proposed rule change would update Exhibit B to: (i) Revise text to indicate that that materials and information for underwriting transactions are submitted to DTC via UW SOURCE, consistent with current practice as set forth in Section I.A.1., (ii) consolidate, for consistency, time frames for the submission of offering documentation and certain information submitted via UW SOURCE,\32\ (iii) reduce the number of days in advance of a closing date for an underwriting transaction that a BLOR or ILOR, as applicable, of a U.S. Issuer must be submitted,\33\ (iv) clarify that an Underwriter's failure to timely submit final offering documents would result in a surcharge in accordance with the Fee Schedule and (v) conform and clarify text within the exhibit for consistency and enhanced readability. Exhibit C (BLOR)............. The proposed rule change would remove this exhibit from the OA and move the document to the DTCC Web site. The link would be provided under Section I.B.1.b. of the OA. Exhibit D (ILOR)............. The proposed rule change would remove this exhibit from the OA and move the document to the DTCC Web site. The link would be provided under Section I.B.1.b. of the OA. Exhibit E (Payments Time The proposed rule change would remove Frame chart). Exhibit E which contains a chart outlining payment and notification timeframes. The timeframes in the chart are outdated and redundant of information provided in the body of the OA. Exhibit F (Non-Conforming The proposed rule change would remove Structured Securities this exhibit from the OA and move the Attestation letter). document to the DTCC Web site. The link to this document would be provided under Section IV.A.1.a. of the OA.\34\ Throughout OA................ The proposed rule change would revise phone numbers, e-mail addresses, Web site locations of documents, mailing addresses throughout the OA generally to the extent not mentioned above. The proposed rule change would also generally revise text to, update and clarify processing timeframes, improve readability, correct grammar and update cross-references to the extent not already mentioned above. The proposed rule change would conform usage of the defined term ``Closing Date,'' as defined in Section I.A.5., throughout the OA. ------------------------------------------------------------------------ [[Page 36063]] Effective Date of Proposed Rule Change --------------------------------------------------------------------------- \10\ Available at http://www.dtcc.com/~/media/Files/Downloads/ legal/service-guides/Settlement.pdf. \11\ Available at http://www.dtcc.com/~/media/Files/Downloads/ legal/fee-guides/dtcfeeguide.pdf. \12\ Unit securities or ``Units'' are securities comprised of two or more separate components. A Unit may be comprised of debt Securities, equity Securities and/or warrants. Units may separate into their component parts on or after the closing date of their issuance. See Section I.C.2. of the OA, supra note 5. \13\ For immediately separable Units, DTC requires CUSIPs only for each the components of the Unit, but not for the Unit itself. For Units that are not immediately separable, DTC requires a CUSIP for the Unit itself and each of the individual components of the Unit. See Section I.C.2. of the OA, supra note 5. \14\ See supra note 11. \15\ This section describes conditions that must be met for DTC to support distribution of securities issued on a closing date. See Section II.B.1 of the OA, supra note 5. \16\ 17 CFR 240.17Ad-2. \17\ See 17 CFR 240.17Ad-2. \18\ See Rule 2, supra note 6 at 22. \19\ See OA, supra note 5. \20\ The confirmation letter acts as the Participant's instruction to DTC pursuant to Rule 6 (Services) in this regard. See Rule 6, supra note 6. Pursuant to Rule 6 the Participant providing an instruction to DTC indemnifies DTC against any loss, liability or expense as a result of (a) any act done in reliance upon the authenticity of the instruction, (b) the inaccuracy of the information contained therein or (c) effecting transactions in reliance upon such information or instruction, so long as the transaction is effected in accordance with such information and instructions. Id. \21\ Securities Exchange Act Release No. 75487 (July 20, 2015), 80 FR 44178 (July 24, 2015) (SR-DTC-2015-007). \22\ The revised language would require such information be provided to DTC at least five business days prior to the processing of a stock distribution with a fractional entitlement, rather than ``approximately one to two weeks,'' as currently stated, because (a) the timeframe as currently stated may create uncertainty for responsible parties as to their obligations under this provision and (b) in DTC's experience, five business days is sufficient time to allow for timely processing in this regard. \23\ Pursuant to Rule 6, DTC acts for a Participant, subject to the Rules, on duly authorized instructions from the Participant. See Rule 6, supra note 6. \24\ An optional put is a provision under which the holder of securities may elect to have the securities repaid at the stated put price after giving notice to the tender agent within the required notification period. Persons not giving notice retain the securities. A mandatory tender is a provision under which all holders of the securities are ``cashed out'' at the stated put price on the payable date. Holders may have the right to retain their securities. \25\ An extendible put is relates to a Security subject to a ``put'' provision that may be exchanged for a new security, in accordance with the terms and conditions of such put, with a new maturity date. \26\ Survivor options relate to certain securities, which by their terms, may contain early redemption provisions in certain eventualities, such as the death of a beneficial owner. \27\ The list of information would also be revised, as discussed below. \28\ The confirmation letter acts as the Participant's instruction to DTC pursuant to Rule 6 (Services) in with respect to the processing of the adjustments processed pursuant to this section of the OA. See Rule 6, supra note 6. \29\ Pursuant to this section, information currently required includes (i) Security description and CUSIP number(s), (ii) total number of treasury or repurchased shares, and (iii) Participant(s) account name(s) and number(s) holding such share positions. For the reason discussed above, the proposed rule change would delete (ii) above and add to the list of required information (a) total number of shares/principal value and (b) number of shares/principal value per Participant. The proposed rule change would also modify (iii) above to add ``/principal'' without a space after ``share.'' \30\ The purpose of this change is to enhance efficiency and security of the processing of information in this regard by having it transmitted only to a secure DTC email account rather than by fax which requires additional physical processing to retrieve and maintain a record of the information. The proposed rule change would also eliminate the requirement for a sender to confirm DTC's receipt of the information. \31\ On July 7, 2017, DTC submitted the ATOP Rule Filing to the Commission pursuant to subparagraph (f)(6) of Rule 19b-4 under the Act, 17 CFR 240.19b-4(f)(6), to amend former Section VI.A.2. in the subsection titled ``Consents'' thereunder, in order to require Agents to use DTC's Automated Tender Offer Program to process consent solicitations for book-entry securities. See Securities Exchange Act Release No. 81096 (July 7, 2017), 82 FR 32406 (July 13, 2017) (SR-DTC-2017-011). By its terms, the ATOP Rule Filing would be implemented 30 days after the date of its filing date, or such shorter time as the Commission may designate (``ATOP Rule Filing Implementation Date''). See Id. Pursuant to the proposed rule change, as of the ATOP Rule Filing Implementation Date, the changes proposed under the ATOP Rule Filing would be incorporated into the corresponding subsection titled ``Consents'' under the renumbered Section VI.C. described herein. \32\ The number of days in advance of the closing date of an underwriting transaction that DTC must receive applicable offering documentation, as well as certain identifying information with respect to underwriters and securities relating to the transaction would be reduced to more accurately reflect the amount of lead time necessary for DTC to timely process an underwriting transaction. \33\ The related timeframe for non-U.S. Issuers to submit a BLOR or ILOR, as applicable, prior to a closing date of a transaction would not change due to the amount of time necessary to complete existing physical processing requirements for BLORS and ILORS of non-U.S. Issuers. \34\ See Section IV.A.1.a. of the OA, supra note 5. --------------------------------------------------------------------------- The proposed rule change would be effective immediately. 2. Statutory Basis Section 17A(b)(3)(F) of the Act \35\ requires that the rules of the clearing agency be designed, inter alia, to promote the prompt and accurate clearance and settlement of securities transactions. DTC believes that the proposed rule change is consistent with this provision because it would update the OA to clarify text, provide additional detail on existing processes, update DTC's contact information and therefore provide Participants, Issuers and Agents with transparency with respect to DTC's eligibility and asset servicing processes. By providing such transparency, the proposed rule change would allow each of these parties greater transparency on processing of transactions in their Securities and, therefore, would promote the prompt and accurate clearance and settlement of securities transactions. --------------------------------------------------------------------------- \35\ 15 U.S.C. 78q-1(b)(3)(F). --------------------------------------------------------------------------- The proposed rule changes are also designed to be consistent with Rule 17Ad-22(e)(23) of the Act,\36\ which was recently adopted by the Commission.\37\ Rule 17Ad-22(e)(23) requires DTC, inter alia, to establish, implement, maintain and enforce written policies and procedures reasonably designed to (i) publicly disclose all relevant rules and material procedures, including key aspects of its default rules and procedures, and (ii) provide sufficient information to enable participants to identify and evaluate the risks, fees, and other material costs they incur by participating in the covered clearing agency. The proposed rule changes, as described above, would update DTC's OA with respect to rules, material procedures and certain fee provisions relating to DTC's securities eligibility and asset servicing processes. As such, DTC believes that the proposed changes would promote disclosure of relevant rules and material procedures and provide sufficient information to enable participants and other users of DTC's services to evaluate fees and other material costs of utilizing DTC's services, in accordance with the requirements of Rule 17Ad-22(e)(23), promulgated under the Act, cited above. --------------------------------------------------------------------------- \36\ 17 CFR 240.17Ad-22(e)(23). \37\ The Commission adopted amendments to Rule 17ad-22, including the addition of new subsection 17ad-22(e), on September 28, 2016. See Securities Exchange Act Release No. 78961 (September 28, 2016), 81 FR 70786 (October 13, 2016) (S7-03-14). DTC is a ``covered clearing agency'' as defined by new Rule 17ad-22(a)(5) and must comply with subsection (e) of Rule 17Ad-22. Id. --------------------------------------------------------------------------- (B) Clearing Agency's Statement on Burden on Competition DTC does not believe that the proposed rule change would have any impact on competition because the proposed changes merely relate to updates and clarifications of the OA which would not significantly affect the rights and obligations of users of DTC's services, and would not disproportionally impact any users. (C) Clearing Agency's Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others DTC has not solicited and does not intend to solicit comments regarding the proposed rule change. DTC has not received any unsolicited written comments from interested parties. To [[Page 36064]] the extent DTC receives written comments on the proposed rule change, DTC will forward such comments to the Commission. 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) \38\ of the Act and paragraph (f) of Rule 19b-4 \39\ thereunder. At any time within 60 days of the filing of the proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. --------------------------------------------------------------------------- \38\ 15 U.S.C. 78s(b)(3)(A). \39\ 17 CFR 240.19b-4(f). --------------------------------------------------------------------------- IV. Solicitation of Comments Interested persons are invited to submit written data, views and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic CommentsUse 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-2017-010 on the subject line. Paper Comments Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090. All submissions should refer to File Number SR-DTC-2017-010. This file number should be included on the subject line if email is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's Internet 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-2017-010 and should be submitted on or before August 23, 2017. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\40\ --------------------------------------------------------------------------- \40\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2017-16269 Filed 8-1-17; 8:45 am] BILLING CODE 8011-01-P
![Federal Register / Vol. 82, No. 147 / Wednesday, August 2, 2017 / Notices 36057
SECURITIES AND EXCHANGE Commission is publishing this notice to (A) Clearing Agency’s Statement of the
COMMISSION solicit comments on the proposed rule Purpose of, and Statutory Basis for, the
change from interested persons. Proposed Rule Change
[Release No. 34–81249; File No. SR–DTC–
2017–010] I. Clearing Agency’s Statement of the 1. Purpose
Terms of Substance of the Proposed The OA was first published by DTC
Self-Regulatory Organizations; The
Rule Change in June 1987. It was then updated in
Depository Trust Company; Notice of
Filing and Immediate Effectiveness of June 1988, February 1992, December
The proposed rule change consists of
a Proposed Rule Change To Modify the 1994, January 1998, May, 2002, January
modifications to the DTC Operational
DTC Operational Arrangements 2009, December 2011 and most recently
Arrangements (Necessary for Securities in 2016.7 The OA is designed to
Necessary for Securities To Become to Become and Remain Eligible for DTC
and Remain Eligible for DTC Services maximize the number of issues of
Services) (‘‘OA’’) 5 proposed in order to securities that may be made eligible for
in Order To Clarify and Update clarify and update provisions relating to
Provisions Relating to the Processing DTC services, providing for the orderly
the processing of eligibility requests and processing of such securities and timely
of Eligibility Requests and Servicing of
servicing of securities on Deposit at payments to Participants. DTC’s
Assets on Deposit at DTC
DTC, as more fully described below.6 experience demonstrates that when
July 28, 2017. Participants, Issuers, Underwriters,
II. Clearing Agency’s Statement of the
Pursuant to Section 19(b)(1) of the Purpose of, and Statutory Basis for, the Agents (as such terms are defined in the
Securities Exchange Act of 1934 Rules 8 or in the OA 9), and their counsel
Proposed Rule Change
(‘‘Act’’) 1 and Rule 19b–4 thereunder,2 are aware of DTC’s requirements, those
notice is hereby given that on July 17, In its filing with the Commission, the requirements can be readily met in most
2017, The Depository Trust Company clearing agency included statements instances. The purpose of this rule
(‘‘DTC’’) filed with the Securities and concerning the purpose of and basis for change is to revise the text of the OA in
Exchange Commission (‘‘Commission’’) the proposed rule change and discussed order to update and clarify DTC’s
the proposed rule change as described any comments it received on the processes in this regard. Additionally,
in Items I, II and III below, which Items proposed rule change. The text of these some ministerial changes, changes to
have been prepared by the clearing statements may be examined at the methods of notification, and clarifying
agency. DTC filed the proposed rule language have been introduced, to
places specified in Item IV below. The
change pursuant to Section 19(b)(3)(A) 3 provide a more concise description of
clearing agency has prepared
of the Act and subparagraphs (f)(2) and OA procedures. In this regard, the
(f)(4) of Rule 19b–4 4 thereunder. The summaries, set forth in sections A, B, proposed rule change would revise the
proposed rule change was effective and C below, of the most significant text of the OA as set forth in the
upon filing with the Commission. The aspects of such statements. respective sections as described below:
OA Section Revision
Important Legal Information ................................ The proposed change would (i) update the most recent copyright date of the OA from 2016 to
2017 and (ii) make grammatical corrections and revise text for readability.
Section I.A.2. (Securities Eligible for DTC’s The proposed rule change would (i) update a reference to a link for DTC securities eligibility
Services). documentation (ii) revise the defined term for Money Market Instruments from ‘‘MMIs’’ to
‘‘MMI’’ for consistency with the Rules and the DTC Settlement Service Guide 10 and (iii) re-
vise a cross-reference to a footnote regarding the DTC Custody Service to refer to the sec-
tion number the footnote appears in, rather than just the page number the footnote appears
on.
Section I.A.4. (Standard Time Frames for Pro- The proposed rule change would revise text (i) for consistency with language in DTC’s Fee
viding Underwriting Information to DTC). Schedule,11 to describe charges made to underwriters that fail to meet the requirements of
this subsection as ‘‘surcharges’’ rather than ‘‘fines,’’ (ii) to move a reference to related stand-
ard time frames to earlier in the section for reference purposes and (iii) remove a link to the
Underwriting Service Guide in respect to a reference to DTC’s eligibility requirements, since
the OA is the primary source for these requirements.
Section I.A.6. (Signature) ................................... Change word usage in a sentence relating to methods of transmission, recording or storage of
signatures, by replacing ‘‘xeroxing’’ with ‘‘photocopying.’’
1 15 U.S.C. 78s(b)(1). 7 See Securities Exchange Act Release Nos. 24818 2016), 81 FR 6913 (February 9, 2016) (SR–DTC–
2 17 CFR 240.19b–4. (August 19, 1987), 52 FR 31833 (August 24, 1987) 2016–002); and 79122 (October 19, 2016), 81 FR
3 15 U.S.C. 78s(b)(3)(A). (SR–DTC–87–10); 25948 (July 27, 1988), 53 FR 73450 (October 25, 2016) (SR–DTC–2016–010). A
4 17 CFR 240.19b–4(f)(2) and (f)(4). 29294 (August 3, 1988) (SR–DTC–88–13); 30625 proposed change to amend the OA that was filed
sradovich on DSKBCFCHB2PROD with NOTICES
5 Available at http://www.dtcc.com/∼/media/ (April 30, 1992), 57 FR 18534 (April 30, 1992) (SR– with the Commission on July 7, 2017, SR–DTC–
Files/Downloads/legal/issue-eligibility/eligibility/ DTC–92–06); 35649 (April 26, 1995), 60 FR 21576 2017–011 (‘‘ATOP Rule Filing’’), is pending
operational-arrangements.pdf. (May 2, 1995) (SR–DTC–94–19); 39894 (April 21, implementation. See Securities Exchange Act
6 Each term not otherwise defined herein has its 1998), 63 FR 23310 (April 28, 1998) (SR–DTC–97– Release No. 81096 (July 7, 2017), 82 FR 32406 (July
respective meaning as set forth in the Rules, By- 23); 45994 (May 29, 2002), 68 FR 35037 (June 11, 13, 2017) (SR–DTC–2017–011). The ATOP Rule
Laws and Organization Certificate of DTC (the 2003) (SR–DTC–2002–02); 59199 (January 6, 2009), Filing and its pending implementation date are
‘‘Rules’’), available at http://www.dtcc.com/legal/ 74 FR 1266 (January 12, 2009) (SR–DTC–2008–14); discussed more fully below. See infra note 31.
8 See supra note 6.
rules-and-procedures.aspx and the OA, supra note 65901 (December 6, 2011), 76 FR 77281 (December
5. 12, 2011) (SR–DTC–2011–10); 77043 (February 3, 9 See supra note 5.
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![36064 Federal Register / Vol. 82, No. 147 / Wednesday, August 2, 2017 / Notices
the extent DTC receives written printing in the Commission’s Public risk disclosure document. The amended
comments on the proposed rule change, Reference Room, 100 F Street NE., rule also requires broker-dealers to
DTC will forward such comments to the Washington, DC 20549 on official maintain a copy of the customer’s
Commission. business days between the hours of written acknowledgement for at least
10:00 a.m. and 3:00 p.m. Copies of the three years following the date on which
III. Date of Effectiveness of the filing also will be available for the risk disclosure document was
Proposed Rule Change and Timing for inspection and copying at the principal provided to the customer, the first two
Commission Action office of DTC and on DTCC’s Web site years in an accessible place. Rule 15g–
The foregoing rule change has become (http://dtcc.com/legal/sec-rule- 2 also requires a broker-dealer, upon
effective pursuant to Section filings.aspx). All comments received request of a customer, to furnish the
19(b)(3)(A) 38 of the Act and paragraph will be posted without change; the customer with a copy of certain
(f) of Rule 19b–4 39 thereunder. At any Commission does not edit personal information set forth on the
time within 60 days of the filing of the identifying information from Commission’s Web site.
proposed rule change, the Commission submissions. You should submit only The risk disclosure documents are for
summarily may temporarily suspend information that you wish to make the benefit of the customers, to assure
such rule change if it appears to the available publicly. All submissions that they are aware of the risks of
Commission that such action is should refer to File Number SR–DTC– trading in ‘‘penny stocks’’ before they
necessary or appropriate in the public 2017–010 and should be submitted on enter into a transaction. The risk
interest, for the protection of investors, or before August 23, 2017. disclosure documents are maintained by
or otherwise in furtherance of the the broker-dealers and may be reviewed
For the Commission, by the Division of
purposes of the Act. Trading and Markets, pursuant to delegated during the course of an examination by
authority.40 the Commission.
IV. Solicitation of Comments There are approximately 198 broker-
Eduardo A. Aleman,
Interested persons are invited to dealers that could potentially be subject
Assistant Secretary.
submit written data, views and to current Rule 15g–2. The Commission
[FR Doc. 2017–16269 Filed 8–1–17; 8:45 am]
arguments concerning the foregoing, estimates that approximately 5% of
BILLING CODE 8011–01–P registered broker-dealers are engaged in
including whether the proposed rule
change is consistent with the Act. penny stock transactions, and thereby
Comments may be submitted by any of subject to the Rule (5% × approximately
SECURITIES AND EXCHANGE
the following methods: 3,969 registered broker-dealers = 198
COMMISSION broker-dealers). The Commission
Electronic Comments [SEC File No. 270–381, OMB Control No. estimates that each one of these firms
• Use the Commission’s Internet 3235–0434] processes an average of three new
comment form (http://www.sec.gov/ customers for penny stocks per week.
rules/sro.shtml); or Proposed Collection; Comment Thus, each respondent processes
• Send an email to rule-comments@ Request approximately 156 penny stock
sec.gov. Please include File Number SR– Upon Written Request, Copies Available disclosure documents per year. If
DTC–2017–010 on the subject line. From: U.S. Securities and Exchange communications in tangible form alone
Paper Comments Commission, Office of FOIA Services, are used to satisfy the requirements of
100 F Street NE., Washington, DC Rule 15g–2, then the copying and
• Send paper comments in triplicate mailing of the penny stock disclosure
20549–2736.
to Secretary, Securities and Exchange document takes no more than two
Commission, 100 F Street NE., Extension: Rule 15g–2.
minutes. Thus, the total associated
Washington, DC 20549–1090. Notice is hereby given that pursuant burden is approximately 2 minutes per
All submissions should refer to File to the Paperwork Reduction Act of 1995 response, or an aggregate total of 312
Number SR–DTC–2017–010. This file (44 U.S.C. 3501 et seq.) (‘‘PRA’’), the minutes per respondent. Since there are
number should be included on the Securities and Exchange Commission 198 respondents, the current annual
subject line if email is used. To help the (‘‘Commission’’) is soliciting comments burden is 61,776 minutes (312 minutes
Commission process and review your on the collection of information per each of the 198 respondents) or
comments more efficiently, please use provided for in Rule 15g–2 (17 CFR 1,030 hours for this third party
only one method. The Commission will 240.15g–2) under the Securities disclosure burden. In addition, broker-
post all comments on the Commission’s Exchange Act of 1934 (15 U.S.C. 78a et dealers incur a recordkeeping burden of
Internet Web site (http://www.sec.gov/ seq.) (‘‘Exchange Act’’). The approximately two minutes per
rules/sro.shtml). Copies of the Commission plans to submit this response when filing the completed
submission, all subsequent existing collection of information to the penny stock disclosure documents as
amendments, all written statements Office of Management and Budget required pursuant to the Rule
with respect to the proposed rule (‘‘OMB’’) for extension and approval. 15(g)(2)(c), which requires a broker-
change that are filed with the Rule 15g–2 (The ‘‘Penny Stock dealer to preserve a copy of the written
Commission, and all written Disclosure Rule’’) requires broker- acknowledgement pursuant to Rule
communications relating to the dealers to provide their customers with 17a–4(b) of the Exchange Act. Since
proposed rule change between the a risk disclosure document, as set forth there are approximately 156 responses
sradovich on DSKBCFCHB2PROD with NOTICES
Commission and any person, other than in Schedule 15G, prior to their first non- for each respondent, the respondents
those that may be withheld from the exempt transaction in a ‘‘penny stock.’’ incur an aggregate recordkeeping
public in accordance with the As amended, the rule requires broker- burden of 61,776 minutes (198
provisions of 5 U.S.C. 552, will be dealers to obtain written respondents × 156 responses for each ×
available for Web site viewing and acknowledgement from the customer 2 minutes per response) or 1,030 hours,
that he or she has received the required under Rule 15g–2. Accordingly, the
38 15 U.S.C. 78s(b)(3)(A). current aggregate annual hour burden
39 17 CFR 240.19b–4(f). 40 17 CFR 200.30–3(a)(12). associated with Rule 15g–2 (assuming
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Document Created: 2017-08-02 07:09:31
Document Modified: 2017-08-02 07:09:31
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| sudoc Class | AE 2.7: GS 4.107: AE 2.106: | |
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| FR Citation | 82 FR 36057 |
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