Self-Regulatory Organizations; The Depository Trust Company; Notice of Filing of Proposed Rule Change Relating to Processing of Transactions in Money Market Instruments, 70200-70205 [2016-24499]
Download as PDF
<![CDATA[
70200
Federal Register / Vol. 81, No. 196 / Tuesday, October 11, 2016 / Notices
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 such
filing also will be available for
inspection and copying at the principal
office of the Exchange. 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–
BatsEDGX–2016–53, and should be
submitted on or before November 1,
2016.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.11
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016–24426 Filed 10–7–16; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–79046; File No. SR–DTC–
2016–008]
Self-Regulatory Organizations; The
Depository Trust Company; Notice of
Filing of Proposed Rule Change
Relating to Processing of Transactions
in Money Market Instruments
October 5, 2016.
asabaliauskas on DSK3SPTVN1PROD with NOTICES
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’) 1 and Rule 19b–4,2 notice is
hereby given that on September 23,
2016, The Depository Trust Company
(‘‘DTC’’) filed with the Securities and
Exchange Commission (‘‘Commission’’)
the proposed rule change as described
in Items I and II below, which Items
have been prepared by DTC.3 The
11 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 On September 23, 2016, DTC filed this proposed
rule change as an advance notice (SR–DTC–2016–
802) with the Commission pursuant to Section
806(e)(1) of the Dodd-Frank Wall Street Reform and
Consumer Protection Act entitled the Payment,
Clearing, and Settlement Supervision Act of 2010,
12 U.S.C. 5465(e)(1), and Rule 19b–4(n)(1)(i) of the
1 15
VerDate Sep<11>2014
20:12 Oct 07, 2016
Jkt 241001
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
I. Clearing Agency’s Statement of the
Terms of Substance of the Proposed
Rule Change
The proposed rule change would
establish a change in the processing of
transactions in money market
instruments (‘‘MMI’’) that are processed
in DTC’s MMI Program (‘‘MMI
Securities’’) by modifying (i) the DTC
Rules, By-laws and Organization
Certificate (‘‘Rules’’),4 (ii) the DTC
Settlement Service Guide (‘‘Settlement
Guide’’),5 and (iii) the DTC Distributions
Service Guide (‘‘Distributions Guide’’),6
as described below.7 The proposed rule
change would affect DTC’s processing of
issuances of MMI Securities
(‘‘Issuances’’) by issuers of MMI
Securities (‘‘Issuers’’) as well as
Maturity Presentments, Income
Presentments, Principal Presentments,
and Reorganization Presentments
(collectively, ‘‘Presentments’’)
(Issuances and Presentments,
collectively ‘‘MMI Obligations’’). The
proposed rule change would amend the
Rules and Settlement Guide to (i)
eliminate intra-day reversals of
processed but not yet settled MMI
Obligations resulting from an Issuing
and Paying Agent (‘‘IPA’’) notifying DTC
of its refusal to pay (‘‘RTP’’) for
Presentments of an Issuer’s maturing
MMI Securities for a designated
Acronym; 8 (ii) eliminate the Largest
Act, 17 CFR 240.19b–4(n)(1)(i). A copy of the
advance notice is available at https://www.dtcc.com/
legal/sec-rule-filings.aspx.
4 Available at https://www.dtcc.com/legal/rulesand-procedures.aspx.
5 Available at https://www.dtcc.com/∼/media/
Files/Downloads/legal/service-guides/
Settlement.pdf.
6 Available at https://www.dtcc.com/∼/media/
Files/Downloads/legal/service-guides/
Distributions%20Service%20Guide%20FINAL%20
November%202014.pdf.
7 Eligibility for inclusion in the MMI Program
covers MMI, which are short-term debt Securities
that generally mature 1 to 270 days from their
original issuance date. MMI include, but are not
limited to, commercial paper, banker’s acceptances
and short-term bank notes and are issued by
financial institutions, large corporations, or state
and local governments. Most MMI trade in large
denominations (typically, $250,000 to $50 million)
and are purchased by institutional investors.
Eligibility for inclusion in the MMI Program also
covers medium term notes that mature over a longer
term.
8 Rule 1, supra note 4. MMI of an Issuer are
designated by DTC using unique four-character
identifiers employed by DTC referred to as
Acronyms. An MMI Issuer can have multiple
Acronyms representing its Securities. MMI
Transactions and other functions relating to MMI
(e.g., confirmations and RTP) instructed and/or
performed by IPAs, Participants and/or DTC as
described herein are performed on an ‘‘Acronymby-Acronym’’ basis.
PO 00000
Frm 00116
Fmt 4703
Sfmt 4703
Provisional Net Credit (‘‘LPNC’’) risk
management control; (iii) provide that
the IPA must acknowledge its funding
obligations for Presentments and that
Receivers of Issuances must approve
their receipt of those Issuances in DTC’s
Receiver Authorized Delivery (‘‘RAD’’)
system before DTC would process MMI
Presentments; (iv) implement an
enhanced process to test risk
management controls under certain
conditions with respect to an Acronym
(to be referred to as MMI Optimization,
as defined below); (v) make updates and
revisions to the Settlement Processing
Schedule in the Settlement Guide
(‘‘Processing Schedule’’), as described
below, (vi) eliminate the ‘‘receive versus
payment NA’’ control (‘‘RVPNA’’), as
described below, and (vii) make other
technical and clarifying changes to the
text, as more fully described below. In
addition, the proposed rule change
would amend the Distributions Guide to
make changes to text relating to the
processing of Income Presentments so
that it is consistent with the changes
proposed in the Settlement Guide in
that regard, as more fully described
below.9
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 purpose of this proposed rule
change is to (i) mitigate risk to DTC and
Participants relating to intra-day
reversals of processed MMI Obligations
in the event of an IPA’s RTP with
respect to maturing obligations
(‘‘Maturing Obligations’’) 10 for an
Acronym and/or income payments 11
9 Capitalized terms not otherwise defined herein
have the respective meanings set forth in the Rules,
the Settlement Guide, and the Distributions Guide.
10 A Maturing Obligation is a payment owed in
settlement by the IPA to the Participant on whose
behalf DTC presents the matured MMI Securities.
11 Principal and income for an Acronym are
distributed by an IPA according to a cycle
determined by the terms of the issue (e.g., monthly,
quarterly, and semi-annually). Such distributions
E:\FR\FM\11OCN1.SGM
11OCN1
Federal Register / Vol. 81, No. 196 / Tuesday, October 11, 2016 / Notices
relating to Presentments for an
Acronym, and (ii) reduce blockage for
the completion of MMI Obligations by
eliminating the LPNC control, as more
fully described below.
Background
asabaliauskas on DSK3SPTVN1PROD with NOTICES
When an Issuer issues MMI Securities
at DTC, the IPA for that Issuer sends
issuance instructions to DTC
electronically, which results in crediting
the applicable MMI Securities to the
DTC Account of the IPA. These MMI
Securities are then Delivered to the
Accounts of applicable Participants that
are purchasing the Issuance in
accordance with their purchase
amounts. These purchasing Participants
typically include broker/dealers or
banks, acting as custodians for
institutional investors. The IPA Delivery
instructions may be free of payment or,
most often, Delivery Versus Payment.
Deliveries of MMI are processed
pursuant to the same Rules and the
applicable Procedures 12 set forth in the
Settlement Guide, as are Deliveries
generally, whether free or versus
payment. Delivery Versus Payment
transactions are subject to risk
management controls of the IPA and
Receiving Participants for Net Debit Cap
and Collateral Monitor sufficiency,13
and payment for Delivery Versus
Payment transactions is due from the
receiving Participants through DTC’s net
settlement process. To the extent, if any,
that the Participant has a Net Debit
Balance in its Settlement Account at
may be for interest only, principal only, or interest
and principal.
12 Pursuant to the Rules, the term ‘‘Procedures’’
means the Procedures, service guides, and
regulations of the Corporation adopted pursuant to
Rule 27, as amended from time to time. See Rule
1, Section 1, supra note 4, at 15. The Procedures
applicable to MMI settlement processing are set
forth in the Settlement Guide. Supra note 5.
13 Delivery Versus Payment transfers at DTC are
structured so that the completion of Delivery of
Securities to a Participant in end-of-day settlement
is contingent on the receiving Participant satisfying
its end-of-day net settlement obligation, if any. The
risk of Participant failure to settle is managed
through risk management controls, structured so
that DTC may complete settlement despite the
failure to settle of the Participant, or Affiliated
Family of Participants, with the largest net
settlement obligation. The two principal controls
are the Net Debit Cap and Collateral Monitor. The
largest net settlement obligation of a Participant or
Affiliated Family of Participants cannot exceed DTC
liquidity resources, based on the Net Debit Cap, and
must be fully collateralized, based on the Collateral
Monitor. This structure is designed so that DTC
may pledge or liquidate Collateral of the defaulting
Participant in order to fund settlement among nondefaulting Participants. Liquidity resources,
including the Participants Fund and a committed
line of credit with a consortium of lenders, are
available to complete settlement among nondefaulting Participants.
VerDate Sep<11>2014
20:12 Oct 07, 2016
Jkt 241001
end-of-day, payment of that amount is
due to DTC.
When MMI Securities mature, the
Maturity Presentment process is
initiated automatically by DTC on
maturity date, starting at approximately
6:00 a.m. Eastern Time (‘‘ET’’), for
Delivery of matured MMI Securities
from the applicable DTC Participants’
Accounts to the applicable IPA
Accounts. This automated process
electronically sweeps all maturing
positions of MMI Securities from
Participant Accounts and debits the
Settlement Account of the applicable
IPA for the amount of the Maturing
Obligations for Presentments for the
Acronym and credits the Settlement
Accounts of the Deliverers. In
accordance with the Rules, payment is
due from the IPA for settlement to the
extent, if any, that the IPA has a Net
Debit Balance in its Settlement Account
at end-of-day.
With regard to DTC net settlement,
MMI Issuers and IPAs commonly
consider the primary source of
payments for Maturing Obligations of
MMI Securities to be funded by the
proceeds of Issuances of the same
Acronym by that Issuer on the same
Business Day. Because Presentments are
currently processed automatically at
DTC, IPAs have the option to refuse to
pay for Maturing Obligations to protect
against the possibility that an IPA may
not be able to fund settlement because
it has not received funds from the
relevant Issuer. An IPA that refuses
payment for a Presentment (i.e., refuses
to make payment for the Delivery of
matured MMI Securities for which it is
the designated IPA and/or pay interest
or dividend income on an MMI Security
for which it is the designated IPA) must
notify DTC of its RTP in the DTC
Settlement User Interface. An IPA may
enter an RTP until 3:00 p.m. ET on the
date of the affected Presentment.
Under the current Rules, the effect of
an RTP is to instruct DTC to reverse all
processed Deliveries of that Acronym,
including Issuances, related funds
credits and debits, and Presentments.
This late day reversal of processed (but
not yet settled) transactions may
override DTC’s risk management
controls (i.e., Collateral Monitor and Net
Debit Cap) and force a presenting
Participant into a Net Debit Balance;
this situation poses systemic risk with
respect to the Participant’s ability to
fund its settlement and, hence, DTC’s
ability to complete end-of-day net funds
settlement. Also, the possibility of intraday reversals of processed MMI
Obligations creates uncertainty for
Participants.
PO 00000
Frm 00117
Fmt 4703
Sfmt 4703
70201
Currently, to mitigate the risks
associated with an RTP, DTC Rules and
the Settlement Guide provide for the
LPNC risk management control. DTC
withholds credit intra-day from each
Participant that has a Presentment in the
amount of the aggregate of the two
largest credits with respect to an
Acronym. The LPNC is not included in
the calculation of the Participant’s
Collateral Monitor or its Net Debit
Balance. This provides protection in the
event that MMI Obligations are reversed
by DTC as a result of an RTP.14
DTC’s Rules and Procedures relating
to settlement processing for the MMI
Program 15 were designed to limit credit,
liquidity, and operational risk for DTC
and Participants. In connection with
ongoing efforts by DTC to evaluate the
risk associated with the processing of
MMI Obligations, DTC has determined
that the risks presented by intra-day
reversals of processed MMI Obligations
should be eliminated to prevent the
possibility that a reversal could override
risk controls and heighten liquidity and
settlement risk. Eliminating intra-day
reversals of processed MMI Obligations
would also enhance intra-day finality
and allow for the elimination of the
LPNC which creates intra-day blockage
and affects liquidity through the
withholding of settlement credits.
Proposal
The proposed rule change would
amend the Rules and the Settlement
Guide to eliminate provisions for intraday reversals of processed MMI
Obligations based on an IPA’s RTP or
Issuer insolvency. In addition, the
proposed rule change would amend the
Distributions Guide to make changes to
text relating to the processing of Income
Presentments so that it is consistent
with the changes proposed in the
Settlement Guide in that regard, as more
fully described below.
Pursuant to the proposed rule change,
DTC would no longer automatically
process Presentments (and Issuances
and related deliveries). Rather, except as
noted below, DTC would only process
these transactions after an
acknowledgment (‘‘MMI Funding
Acknowledgment’’) is made by the IPA
to DTC whereby either: (i) The value of
14 See Securities Exchange Act Release No. 71888
(April 7, 2014), 79 FR 20285 (April 11, 2014) (SR–
DTC–2014–02) (clarifying the LPNC Procedures in
the Settlement Guide) and Securities Exchange Act
Release No. 68983 (February 25, 2013), 78 FR 13924
(March 1, 2013) (SR–DTC–2012–10) (updating the
Rules related to LPNC).
15 The Procedures applicable to MMI settlement
processing are set forth in the Settlement Guide.
Supra note 5.
E:\FR\FM\11OCN1.SGM
11OCN1
70202
Federal Register / Vol. 81, No. 196 / Tuesday, October 11, 2016 / Notices
asabaliauskas on DSK3SPTVN1PROD with NOTICES
receiver-approved 16 Issuances alone,17
or a combination of receiver-approved
Issuances plus an amount the IPA(s) has
acknowledged has been funded by the
Issuer, exceeds the Acronym’s
Presentments; or (ii) the IPA
acknowledges it has been funded for the
entire amount of the gross value of an
Acronym, regardless of Issuances.18
DTC anticipates that the proposed
rule change would generally maintain
the volume of transactions processed
today in terms of the total number and
value of transactions that have passed
position and risk controls throughout
the processing day. However, because of
the requirement for the IPA to provide
an MMI Funding Acknowledgement
prior to processing of an Acronym, the
reason why transactions do not
complete during the processing day
would shift. It is expected that the value
and volume of MMI transactions
recycling for risk management controls
during the late morning and afternoon
time periods would be reduced as a
result of MMI transactions being held
outside of the processing system
awaiting an MMI Funding
Acknowledgement decision. The nonMMI transactions and fully funded MMI
transactions would also likely have a
reduction in blockage from risk
management controls as a result of the
elimination of the LPNC control. The
elimination of the LPNC control would
no longer withhold billions of dollars of
settlement credits until 3:05 p.m. ET as
it does today, which would in turn
permit these transactions to complete
earlier in the day.
An IPA would make an MMI Funding
Acknowledgment using a new Decision
16 DTC subjects certain transactions to receiver
approval in its RAD system.
17 An affirmative MMI Funding
Acknowledgement by the IPA would not be
required in the case that the aggregate amount of
RAD approved Issuances of an Acronym exceeds
the aggregate amount of Presentments since these
Issuances would provide the funding of the
maturing obligations versus an Issuer having to
fund the IPA. The proposed rule change would
provide that in this instance, the IPA is deemed to
provide a standing instruction to process
transactions in the Acronym, subject to risk
management controls. Any such instruction or
deemed instruction by the IPA would be irrevocable
once given.
18 In the case where an affirmative MMI Funding
Acknowledgment by the IPA would be required for
Presentments to be processed, the MMI Funding
Acknowledgement would be a notification provided
by an IPA to DTC with respect to an Acronym that
the IPA acknowledges and affirms its funding
obligation for a maturing Acronym either (i) in the
entire amount of the Acronym or (ii) for an amount
at least equal to the difference between the value
of Issuances and the value of the Presentments. In
the case of (ii) above, the IPA may (later that day)
increase the funding amount it acknowledges, but
in no event may the IPA reduce the amount of its
obligation previously acknowledged that day.
VerDate Sep<11>2014
20:12 Oct 07, 2016
Jkt 241001
Making Application (‘‘DMA’’). When an
MMI Funding Acknowledgement has
occurred, it would constitute the IPA’s
instruction to DTC to attempt to process
transactions in the Acronym. At this
point, if the IPA has acknowledged that
it would fully fund the Acronym, then
the transactions would be sent to the
processing system and attempted
against position and risk management
controls. If the IPA provides an MMI
Funding Acknowledgement for only
partial funding of the entire amount of
Presentments for an Acronym, DTC
would test risk management controls of
Deliverers and Receivers with respect to
that Acronym to determine whether risk
management controls would be satisfied
by all Deliverers and Receivers of the
Acronym and determine whether all
parties maintain adequate position to
complete the applicable transactions,
i.e., ‘‘MMI Optimization’’. In the case
that the aggregate amount of RAD
approved Issuances of an Acronym
exceeds the aggregate amount of
Presentments, and thus an affirmative
acknowledgment by the IPA would not
be required, risk management controls
for all Deliverers and Receivers would
be tested using MMI Optimization as
well.
As indicated above, if partial funding
from the IPA is necessary, then
transactions would be routed to MMI
Optimization. Generally, in MMI
Optimization, all Deliverers and
Receivers of the Acronym must satisfy
risk management controls and
delivering Participants must hold
sufficient position, in order for the
transactions in that Acronym to be
processed. However, as long as the
Issuances that can satisfy Deliverer and
Receiver risk controls for that Acronym
are equal to or greater than the Maturing
Presentments of that Acronym, the
applicable transactions (i.e., those that
pass risk controls) would be processed.
If there are multiple IPAs for an
Acronym, DTC would determine
funding based on the satisfaction of
conditions for all Receivers and
Deliverers with respect to all
Presentments, Issuances and applicable
DOs in the Acronym and MMI Funding
Acknowledgements for all IPAs with
Issuances and Presentments in the
Acronym. No instruction of an IPA to
DTC to process the subject MMI
transactions shall be effective until MMI
Optimization is satisfied with respect to
all transactions in the Acronym.
If there is no MMI Funding
Acknowledgment for the IPA for an
Acronym for which Maturing
Obligations are due by 3:00 p.m. ET on
that day and/or DTC is aware that the
Issuer of an Acronym is insolvent
PO 00000
Frm 00118
Fmt 4703
Sfmt 4703
(‘‘Acronym Payment Failure’’), then
DTC would not process transactions in
the Acronym.19
In the event of an Acronym Payment
Failure, DTC would (i) prevent further
issuance and maturity activity for the
Acronym in DTC’s system, (ii) prevent
Deliveries of MMI Securities of the
Acronym on failure date and halt all
activity in that Acronym, (iii) set the
Collateral Value of the MMI Securities
in the Acronym to zero for purposes of
calculating the Collateral Monitor of any
affected Participant, and (iv) notify
Participants of the Acronym Payment
Failure. Notification would be made
through a DTC broadcast through the
current process.
Notwithstanding the occurrence of an
Acronym Payment Failure, the IPA
would remain liable for funding
pursuant to any MMI Funding
Acknowledgment previously provided
for that Business Day.
A ‘‘Temporary Acronym Payment
Failure’’ with respect to Income
Presentments would occur when an IPA
notifies DTC that it temporarily refuses
to pay Income Presentments for the
Acronym (typically due to an Issuer’s
inability to fund Income Presentments
on that day). A Temporary Acronym
Payment Failure would only be initiated
if there are no Maturity Presentments,
Principal Presentments and/or
Reorganization Presentments on that
Business Day. DTC expects the Issuer
and/or IPA to resolve such a situation
by the next Business Day. In the event
of a Temporary Acronym Payment
Failure, DTC would (i) temporarily
devalue to zero all of the Issuer’s MMI
Securities for purposes of calculating
the Collateral Monitor, unless and until
the IPA acknowledges funding with
respect to the Income Payments on the
following Business Day, (ii) notify
Participants of the delayed payment
through a DTC broadcast as is the
current process today, and (iii) block
from DTC’s systems all further Issuances
and maturities by that Issuer for the
remainder of the Business Day on which
notification of the Temporary Payment
Failure was received by DTC.
An IPA would not be able to avail
itself of a Temporary Acronym Payment
Failure for the same Acronym on
consecutive Business Days.
Also, in light of the proposed
elimination of intra-day reversals of
processed MMI Obligations, DTC would
also eliminate the RVPNA control. The
RVPNA control is provided for in the
19 DTC would automatically consider an
Acronym Payment Failure occurring due to an
IPA’s failure to provide timely MMI Funding
Acknowledgement (i.e., provide the
acknowledgment by 3:00 p.m. ET) as an RTP.
E:\FR\FM\11OCN1.SGM
11OCN1
Federal Register / Vol. 81, No. 196 / Tuesday, October 11, 2016 / Notices
Settlement Guide and implements
current Section 1(c) of Rule 9(B).
RVPNA is used to prevent a Participant
from Delivering free of value or
undervalued any MMI Securities
received versus payment on the same
Business Day.20 This protects DTC
against being unable to reverse
transactions for Deliveries Versus
Payment of MMI Securities in the event
of an RTP by the IPA.21 The elimination
of reversals of processed MMI
Obligations would eliminate the need
for the RVPNA control.
asabaliauskas on DSK3SPTVN1PROD with NOTICES
Proposed Rule Changes to the Rules,
Settlement Guide, and Distributions
Guide
DTC would amend the text of Rule 1
(Definitions), Rule 9(A) (Transactions in
Securities and Money Payments), Rule
9(B) (Transactions in Eligible
Securities), Rule 9(C) (Transactions in
MMI Securities), the Settlement Guide
and the Distributions Guide to reflect
the proposed changes described above.
Specifically:
(i) Rule 1 would be amended to:
a. Delete the definition of LPNC; and
b. Add a cross-reference to indicate
that the terms MMI Funding
Acknowledgment and MMI
Optimization would be defined in
Section 1 of Rule 9(C).
(ii) Rule 9(A) would be amended to
add text providing that an instruction to
DTC from a Participant for Delivery
Versus Payment of MMI Securities
pursuant to Rule 9(C) shall not be
effective unless and until applicable
conditions specified in Rule 9(C) as set
forth below have been satisfied.
(iii) Rule 9(B) would be amended to:
a. Eliminate text referencing the
LPNC;
b. Eliminate the provision precluding
DTC from acting on an instruction for
Delivery of MMI Securities subject of an
Incomplete Transaction if the
instruction involves a Free Delivery,
Pledge or Release of Securities or a
Delivery, Pledge or Release of Securities
substantially undervalued; and
c. Add text providing that an
instruction to DTC from a Participant for
Delivery Versus Payment of MMI
Securities pursuant to Rule 9(C) shall
not be effective unless and until the
20 For purposes of RVPNA, MMI Securities are
considered undervalued if they are Delivered
Versus Payment for less than 10 percent below
market value.
21 For example, if A Delivers MMI Securities to
B versus payment and B Delivers the same MMI
Securities to C free of payment (subject to risk
management controls), under Rule 9(B), Section 1,
the Delivery to C is final when the securities are
credited to C. DTC would therefore be unable to
reverse the Delivery to C and thus it cannot reverse
the Delivery from B to A.
VerDate Sep<11>2014
20:12 Oct 07, 2016
Jkt 241001
applicable conditions specified in Rule
9(C) described below have been
satisfied.
(iv) Rule 9(C) would be amended to:
a. Add the definitions of MMI
Funding Acknowledgment and MMI
Optimization to reflect the meaning of
these terms as described above;
b. Add text that Delivery Versus
Payment of MMI Securities would be
affected in accordance with Rules 9(A),
9(B) and the Settlement Guide in
addition to Rule 9(C);
c. Add text indicating that
instructions by a Presenting Participant
for a Presentment or Delivery of MMI
Securities would be deemed to be given
only when any applicable MMI Funding
Acknowledgment has been received by
DTC;
d. Remove conditions and references
relating to reversals of processed MMI
Obligations;
e. Set forth conditions for the
processing of Presentments, including:
i. The requirement for the IPA to
provide an MMI Funding
Acknowledgment, except in the case
where the aggregate amount of Issuances
exceeds Presentments;
ii. Satisfaction of risk management
controls and RAD;
iii. That an instruction to DTC with
respect to an Issuance or Presentment
shall become effective upon satisfaction
of the provisions described in i. and ii.
immediately above;
iv. That DTC shall comply with an
effective instruction;
v. That the IPA acknowledges and
agrees that DTC would process
instructions with respect to Issuances
and Presentments as described above
and that the IPA’s obligations in this
regard are irrevocable; and
vi. That if the IPA notifies DTC in
writing of its insolvency, or if DTC
otherwise has notice, or if the IPA issues
a Payment Refusal for the Acronym,
then the IPA would not be required to
acknowledge its obligations and DTC
would not be required to process any
further instructions with respect to the
applicable Acronym;
f. Eliminate references to MMI
Securities being devalued in the event
of an RTP because in the event of any
payment failure by the IPA, DTC would
then revert to the Acronym Payment
Failure Process described below; and
g. Delete a reference indicating that
DTC’s Failure to Settle Procedure
includes special provisions for MMI
Securities.
(v) The Settlement Guide would be
amended to:
a. Delete the description of, and all
references and provisions related to,
LPNC;
PO 00000
Frm 00119
Fmt 4703
Sfmt 4703
70203
b. Delete: (A) The definition of
RVPNA, (B) a provision that
transactions for MMI Securities that are
deemed RVPNA would recycle pending
release of the LPNC control at 3:05 p.m.
ET, and (C) a note that MMI Securities
received versus payment are not
allowed to be freely moved until the
LPNC control is released;
c. Add a description of ‘‘Unknown
Rate’’ to provide for a placeholder in the
Settlement Guide for references to an
interest rate where payment of interest
by an IPA to Receivers is scheduled but
the interest rate to be paid is not known
at the time;
d. Change the heading of the section
currently named ‘‘Establishing Your Net
Debit Cap’’ to ‘‘Limitation of Participant
Net Debit Caps by Settling Banks’’ to
reflect the context of that section more
specifically;
e. Revise the Settlement Processing
Schedule to:
i. Add a cutoff time of 2:30 p.m. ET
for an IPA to replace the Unknown Rate
with a final interest rate and state that
the IPA must successfully transmit the
final rate to DTC before 2:30 p.m. ET;
ii. Add a cutoff time of 2:55 p.m. ET
after which Issuances and Presentments
cannot be processed on the given
Business Day because the conditions
described above for processing of MMI
Obligations have not been met;
iii. Remove a reference for a cutoff
relating to reversals of MMI Obligations
since reversals would no longer occur as
described above;
iv. Define 3 p.m. ET as the cutoff time
for any required MMI Funding
Acknowledgements to be received in
order for DTC to be able to process for
a given Acronym that day;
v. Add at cutoff time of 3 p.m. ET for
an IPA to notify DTC of a Temporary
Acronym Payment Failure;
vi. Delete a reference to the release of
LPNC controls as LPNC would no longer
exist; and
vii. Clarify that a 3:10 p.m. ET cutoff
after which CNS transactions that
cannot be completed would be dropped
from the system, also applies to valued
transactions in non-MMI Securities and
fully paid for and secondary MMI
Deliveries or Maturity Presentments;
f. Add a section describing MMI
Processing to include a description of
MMI Funding Acknowledgments and
the MMI Optimization process as
described above;
g. Revise the section referencing
provisions for ‘‘Issuer Failure
Processing’’ to instead describe
Acronym Payment Failure Processing
and Temporary Acronym Payment
Failure Process, as these processes are
described above, since the contingencies
E:\FR\FM\11OCN1.SGM
11OCN1
70204
Federal Register / Vol. 81, No. 196 / Tuesday, October 11, 2016 / Notices
for processing a payment failure hinge
on the failure of payment on an
Acronym by an IPA regardless of
whether it is ultimately caused by an
Issuer insolvency or otherwise;
h. Remove a duplicate reference to the
DTC contact number for Participants/
IPAs to call in the event of an Acronym
Payment Failure;
i. Remove the description of the
‘‘MMI IPA MP Pend’’ process which
was designed to allow IPAs to minimize
the impact of potential reversals of
processed MMI Obligations; as such
reversals would no longer occur; and
j. Change the name of the section
named ‘‘Calculating Your Net Debit
Cap’’ to ‘‘Calculation of Participant Net
Debit Caps’’.
(vi) The Distributions Guide would be
amended to (i) delete language reflecting
that Income Presentments are processed
at the start-of-day, and (ii) add a brief
description of the processing of
Presentments as proposed above and
provide a cross-reference to the
Settlement Guide relating to MMI
settlement processing.
(vii) The proposed rule change would
also make technical and clarifying
changes to the texts of the Rules and
Settlement Guide for consistency
throughout the texts in describing the
concepts and terms set forth above,
make corrections to grammar and
spacing and edit text to provide for
enhanced readability.
asabaliauskas on DSK3SPTVN1PROD with NOTICES
Implementation
The proposed rule change would be
implemented in phases whereby
Acronyms would be migrated to be
processed in accordance with the
proposed rule change over a period of
five months beginning in November
2016 and with all Acronyms expected to
be implemented by the end of March
2017, except for the implementation of
the elimination of the Rule and
Settlement Guide provisions relating to
RVPNA which elimination would not
occur until all other aspects of the
proposed rule change are implemented
with respect to all Acronyms. DTC
would announce phased
implementation dates for proposed rule
change via Important Notice upon all
applicable regulatory approval by
Commission.
2. Statutory Basis
Section 17A(b)(3)(F) of the Act 22
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
22 15
U.S.C. 78q–1(b)(3)(F).
VerDate Sep<11>2014
20:12 Oct 07, 2016
proposed rule change is consistent with
this provision of the Act because (i) the
elimination of intra-day reversals of
processed MMI Obligations would
promote the intra-day finality of those
MMI Obligations, (ii) the deletion of the
LPNC control would make available
settlement credits to reduce blockage
from Net Debit Caps, (iii)
implementation of the MMI
Optimization process would provide
increased efficiency in testing risk
controls in order to facilitate timely
processing of transactions under the
proposal, (iv) elimination of the RVPNA
control would allow intraday processing
of Free Deliveries of MMI Securities
received for value, (v) the proposed
updates and revisions to the Processing
Schedule would accommodate the
processing changes required to
implement the proposal to promote
intra-day finality, and (vi) the proposed
technical changes to texts of the Rules
and Settlement Guide, as described
above, would simplify and clarify terms
and concepts in the Rules and
Settlement Guide text for Participants
with respect to MMI transaction
processing at DTC. Therefore, as
applicable, by (i) promoting intra-day
finality of MMI transactions, (ii)
reducing potential blockages in
transaction processing, (iii) facilitating
more efficient application of risk
management controls to allow
processing of pending transactions, (iv)
allowing intraday processing of Free
Deliveries of MMI Securities received
for value, (v) updating the Processing
Schedule in order to accommodate the
proposed changes that would promote
intra-day finality, and (vi) clarifying and
updating terms and concepts in the
Rules and the Settlement Guide related
to processing of MMI transactions, the
proposal would promote the prompt
and accurate clearance and settlement of
MMI Securities processed through DTC
consistent with the Act, in particular
Section 17A(b)(3)(F) cited above.
Rule 17Ad–22(d)(12) promulgated
under the Act 23 requires (i) that each
registered clearing agency shall
establish, implement, maintain and
enforce written policies and procedures
reasonably designed to, as applicable,
ensure that final settlement occurs no
later than the end of the settlement day,
and (ii) that intraday or real-time
finality be provided where necessary to
reduce risks. DTC believes that the
proposed rule change is consistent with
Rule 17Ad–22(d)(12) because the
elimination of intraday reversals of MMI
transactions would promote settlement
finality of processed MMI Obligations
23 17
Jkt 241001
PO 00000
CFR 240.1717Ad–22(d)(12)
Frm 00120
Fmt 4703
Sfmt 4703
and prevent the possibility that a
reversal could override risk controls and
heighten liquidity and settlement risk.
(B) Clearing Agency’s Statement on
Burden on Competition
DTC does not believe that the
proposed rule change would have any
adverse impact, or impose any burden,
on competition. Moreover, because the
proposed rule change improves the
efficiency of intraday processing and
settlement finality at DTC, for MMI
transactions and others, the proposed
rule change may have a positive effect
on competition among DTC
Participants, including IPAs.
Although the proposed rule change
imposes a new requirement on IPAs, to
provide an MMI Funding
Acknowledgment under the proposed
rule, any burden on the IPAs in making
these determinations and taking these
actions is justified by the elimination of
late day reversals, improving settlement
finality for all Participants engaged in
MMI transactions. Moreover, the change
was requested by the IPA community
and DTC believes, based upon
discussion with its IPA Participants,
that there is no differential effect among
IPA Participants due to his additional
requirement, thus imposing no burden
on competition.
The elimination of the LPNC further
improves efficiency of intraday
processing at DTC for all transactions,
including MMI transactions, by
eliminating liquidity blockages due to
the withholding of credits under the
LPNC control; this improved efficiency
should also foster competition.
(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
the extent DTC receives written
comments on the proposed rule change,
DTC will forward such comments to the
Commission. DTC has conducted
industry outreach with respect to the
proposal including discussion with
industry associations and IPAs.
III. Date of Effectiveness of the
Proposed Rule Change, and Timing for
Commission Action
Within 45 days of the date of
publication of this notice in the Federal
Register or within such longer period
up to 90 days (i) as the Commission may
designate if it finds such longer period
to be appropriate and publishes its
E:\FR\FM\11OCN1.SGM
11OCN1
Federal Register / Vol. 81, No. 196 / Tuesday, October 11, 2016 / Notices
reasons for so finding or (ii) as to which
the self-regulatory organization
consents, the Commission will:
(A) By order approve or disapprove
such proposed rule change, or
(B) institute proceedings to determine
whether the proposed rule change
should be disapproved.
The proposal shall not take effect
until all regulatory actions required
with respect to the proposal are
completed.24
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:
asabaliauskas on DSK3SPTVN1PROD with NOTICES
Electronic Comments
• Use the Commission’s Internet
comment form
(https://www.sec.gov/rules/sro.shtml);
or
• Send an email to rule-comments@
sec.gov. Please include File Number SR–
DTC–2016–008 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–2016–008. 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 (https://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
(https://dtcc.com/legal/sec-rulefilings.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–
2016–008 and should be submitted on
or before November 1, 2016.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.25
Brent J. Fields,
Secretary.
[FR Doc. 2016–24499 Filed 10–7–16; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–79039; File No. SR–
BatsBZX–2016–62]
Self-Regulatory Organizations; Bats
BZX Exchange, Inc.; Notice of Filing
and Immediate Effectiveness of a
Proposed Rule Change to Rule 22.3,
Continuing Options Market Maker
Registration
October 4, 2016.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’) 1 and Rule 19b–4 thereunder,2
notice is hereby given that on
September 28, 2016, Bats BZX
Exchange, Inc. (‘‘BZX’’ or the
‘‘Exchange’’) 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 Exchange. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange filed a proposal to
make a modification to Exchange Rule
22.3, Continuing Options Market Maker
Registration, to remove the provision of
the rule that requires termination of a
Member’s Options Market Maker
registration in an option series if the
Options Market Maker fails to enter
quotations in the series within five
business days after the Options Market
Maker’s registration in the series
becomes effective.
25 17
24 See
supra note 3 (regarding filing of related
advance notice).
VerDate Sep<11>2014
20:12 Oct 07, 2016
Jkt 241001
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
PO 00000
Frm 00121
Fmt 4703
Sfmt 4703
70205
The text of the proposed rule change
is available at the Exchange’s Web site
at www.batstrading.com, at the
principal office of the Exchange, and at
the Commission’s Public Reference
Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
Exchange 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
Exchange has prepared summaries, set
forth in Sections A, B, and C below, of
the most significant parts of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange proposes to amend
Exchange Rule 22.3 to remove
subparagraph (c), which currently
requires the Exchange to terminate a
firm’s Options Market Maker
registration if it does not enter
quotations in an option series in which
it is registered within five business days
after the Options Market Maker’s
registration in the series becomes
effective. Currently, the Exchange
surveils whether a newly registered
Options Market Maker enters quotations
in the series within five business days
of registration. If an Options Market
Maker does not, the Exchange is
required by Exchange Rule 22.3(c) to
automatically deregister the Options
Market Maker in that series. The
Exchange views Exchange Rule 22.3(c)
as largely duplicative of other Exchange
Rules and excessively rigid in view of
other Exchange Rules that allow the
Exchange discretion and flexibility in
determining an appropriate remedy.
Exchange Rule 22.5(a)(6) provides
that Options Market Makers are
expected to ‘‘maintain active markets’’
in all series in which they are registered.
Both Rule 22.3(c) and Rule 22.5(a)(6)
impose an obligation upon registered
Options Market Maker to maintain
active markets. The main difference is
that Exchange Rule 22.3(c) applies only
to the first five days that an Options
Market Maker is registered, whereas
Exchange Rule 22.5(a)(6) applies during
the first five days and continues for as
long as the Options Market Maker is
E:\FR\FM\11OCN1.SGM
11OCN1
]]>Agencies
[Federal Register Volume 81, Number 196 (Tuesday, October 11, 2016)]
[Notices]
[Pages 70200-70205]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-24499]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-79046; File No. SR-DTC-2016-008]
Self-Regulatory Organizations; The Depository Trust Company;
Notice of Filing of Proposed Rule Change Relating to Processing of
Transactions in Money Market Instruments
October 5, 2016.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'') \1\ and Rule 19b-4,\2\ notice is hereby given that on
September 23, 2016, The Depository Trust Company (``DTC'') filed with
the Securities and Exchange Commission (``Commission'') the proposed
rule change as described in Items I and II below, which Items have been
prepared by DTC.\3\ 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\ On September 23, 2016, DTC filed this proposed rule change
as an advance notice (SR-DTC-2016-802) with the Commission pursuant
to Section 806(e)(1) of the Dodd-Frank Wall Street Reform and
Consumer Protection Act entitled the Payment, Clearing, and
Settlement Supervision Act of 2010, 12 U.S.C. 5465(e)(1), and Rule
19b-4(n)(1)(i) of the Act, 17 CFR 240.19b-4(n)(1)(i). A copy of the
advance notice is available at https://www.dtcc.com/legal/sec-rule-filings.aspx.
---------------------------------------------------------------------------
I. Clearing Agency's Statement of the Terms of Substance of the
Proposed Rule Change
The proposed rule change would establish a change in the processing
of transactions in money market instruments (``MMI'') that are
processed in DTC's MMI Program (``MMI Securities'') by modifying (i)
the DTC Rules, By-laws and Organization Certificate (``Rules''),\4\
(ii) the DTC Settlement Service Guide (``Settlement Guide''),\5\ and
(iii) the DTC Distributions Service Guide (``Distributions Guide''),\6\
as described below.\7\ The proposed rule change would affect DTC's
processing of issuances of MMI Securities (``Issuances'') by issuers of
MMI Securities (``Issuers'') as well as Maturity Presentments, Income
Presentments, Principal Presentments, and Reorganization Presentments
(collectively, ``Presentments'') (Issuances and Presentments,
collectively ``MMI Obligations''). The proposed rule change would amend
the Rules and Settlement Guide to (i) eliminate intra-day reversals of
processed but not yet settled MMI Obligations resulting from an Issuing
and Paying Agent (``IPA'') notifying DTC of its refusal to pay
(``RTP'') for Presentments of an Issuer's maturing MMI Securities for a
designated Acronym; \8\ (ii) eliminate the Largest Provisional Net
Credit (``LPNC'') risk management control; (iii) provide that the IPA
must acknowledge its funding obligations for Presentments and that
Receivers of Issuances must approve their receipt of those Issuances in
DTC's Receiver Authorized Delivery (``RAD'') system before DTC would
process MMI Presentments; (iv) implement an enhanced process to test
risk management controls under certain conditions with respect to an
Acronym (to be referred to as MMI Optimization, as defined below); (v)
make updates and revisions to the Settlement Processing Schedule in the
Settlement Guide (``Processing Schedule''), as described below, (vi)
eliminate the ``receive versus payment NA'' control (``RVPNA''), as
described below, and (vii) make other technical and clarifying changes
to the text, as more fully described below. In addition, the proposed
rule change would amend the Distributions Guide to make changes to text
relating to the processing of Income Presentments so that it is
consistent with the changes proposed in the Settlement Guide in that
regard, as more fully described below.\9\
---------------------------------------------------------------------------
\4\ Available at https://www.dtcc.com/legal/rules-and-procedures.aspx.
\5\ Available at https://www.dtcc.com/~/media/Files/Downloads/
legal/service-guides/Settlement.pdf.
\6\ Available at https://www.dtcc.com/~/media/Files/Downloads/
legal/service-guides/
Distributions%20Service%20Guide%20FINAL%20November%202014.pdf.
\7\ Eligibility for inclusion in the MMI Program covers MMI,
which are short-term debt Securities that generally mature 1 to 270
days from their original issuance date. MMI include, but are not
limited to, commercial paper, banker's acceptances and short-term
bank notes and are issued by financial institutions, large
corporations, or state and local governments. Most MMI trade in
large denominations (typically, $250,000 to $50 million) and are
purchased by institutional investors. Eligibility for inclusion in
the MMI Program also covers medium term notes that mature over a
longer term.
\8\ Rule 1, supra note 4. MMI of an Issuer are designated by DTC
using unique four-character identifiers employed by DTC referred to
as Acronyms. An MMI Issuer can have multiple Acronyms representing
its Securities. MMI Transactions and other functions relating to MMI
(e.g., confirmations and RTP) instructed and/or performed by IPAs,
Participants and/or DTC as described herein are performed on an
``Acronym-by-Acronym'' basis.
\9\ Capitalized terms not otherwise defined herein have the
respective meanings set forth in the Rules, the Settlement Guide,
and the Distributions Guide.
---------------------------------------------------------------------------
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 purpose of this proposed rule change is to (i) mitigate risk to
DTC and Participants relating to intra-day reversals of processed MMI
Obligations in the event of an IPA's RTP with respect to maturing
obligations (``Maturing Obligations'') \10\ for an Acronym and/or
income payments \11\
[[Page 70201]]
relating to Presentments for an Acronym, and (ii) reduce blockage for
the completion of MMI Obligations by eliminating the LPNC control, as
more fully described below.
---------------------------------------------------------------------------
\10\ A Maturing Obligation is a payment owed in settlement by
the IPA to the Participant on whose behalf DTC presents the matured
MMI Securities.
\11\ Principal and income for an Acronym are distributed by an
IPA according to a cycle determined by the terms of the issue (e.g.,
monthly, quarterly, and semi-annually). Such distributions may be
for interest only, principal only, or interest and principal.
---------------------------------------------------------------------------
Background
When an Issuer issues MMI Securities at DTC, the IPA for that
Issuer sends issuance instructions to DTC electronically, which results
in crediting the applicable MMI Securities to the DTC Account of the
IPA. These MMI Securities are then Delivered to the Accounts of
applicable Participants that are purchasing the Issuance in accordance
with their purchase amounts. These purchasing Participants typically
include broker/dealers or banks, acting as custodians for institutional
investors. The IPA Delivery instructions may be free of payment or,
most often, Delivery Versus Payment. Deliveries of MMI are processed
pursuant to the same Rules and the applicable Procedures \12\ set forth
in the Settlement Guide, as are Deliveries generally, whether free or
versus payment. Delivery Versus Payment transactions are subject to
risk management controls of the IPA and Receiving Participants for Net
Debit Cap and Collateral Monitor sufficiency,\13\ and payment for
Delivery Versus Payment transactions is due from the receiving
Participants through DTC's net settlement process. To the extent, if
any, that the Participant has a Net Debit Balance in its Settlement
Account at end-of-day, payment of that amount is due to DTC.
---------------------------------------------------------------------------
\12\ Pursuant to the Rules, the term ``Procedures'' means the
Procedures, service guides, and regulations of the Corporation
adopted pursuant to Rule 27, as amended from time to time. See Rule
1, Section 1, supra note 4, at 15. The Procedures applicable to MMI
settlement processing are set forth in the Settlement Guide. Supra
note 5.
\13\ Delivery Versus Payment transfers at DTC are structured so
that the completion of Delivery of Securities to a Participant in
end-of-day settlement is contingent on the receiving Participant
satisfying its end-of-day net settlement obligation, if any. The
risk of Participant failure to settle is managed through risk
management controls, structured so that DTC may complete settlement
despite the failure to settle of the Participant, or Affiliated
Family of Participants, with the largest net settlement obligation.
The two principal controls are the Net Debit Cap and Collateral
Monitor. The largest net settlement obligation of a Participant or
Affiliated Family of Participants cannot exceed DTC liquidity
resources, based on the Net Debit Cap, and must be fully
collateralized, based on the Collateral Monitor. This structure is
designed so that DTC may pledge or liquidate Collateral of the
defaulting Participant in order to fund settlement among non-
defaulting Participants. Liquidity resources, including the
Participants Fund and a committed line of credit with a consortium
of lenders, are available to complete settlement among non-
defaulting Participants.
---------------------------------------------------------------------------
When MMI Securities mature, the Maturity Presentment process is
initiated automatically by DTC on maturity date, starting at
approximately 6:00 a.m. Eastern Time (``ET''), for Delivery of matured
MMI Securities from the applicable DTC Participants' Accounts to the
applicable IPA Accounts. This automated process electronically sweeps
all maturing positions of MMI Securities from Participant Accounts and
debits the Settlement Account of the applicable IPA for the amount of
the Maturing Obligations for Presentments for the Acronym and credits
the Settlement Accounts of the Deliverers. In accordance with the
Rules, payment is due from the IPA for settlement to the extent, if
any, that the IPA has a Net Debit Balance in its Settlement Account at
end-of-day.
With regard to DTC net settlement, MMI Issuers and IPAs commonly
consider the primary source of payments for Maturing Obligations of MMI
Securities to be funded by the proceeds of Issuances of the same
Acronym by that Issuer on the same Business Day. Because Presentments
are currently processed automatically at DTC, IPAs have the option to
refuse to pay for Maturing Obligations to protect against the
possibility that an IPA may not be able to fund settlement because it
has not received funds from the relevant Issuer. An IPA that refuses
payment for a Presentment (i.e., refuses to make payment for the
Delivery of matured MMI Securities for which it is the designated IPA
and/or pay interest or dividend income on an MMI Security for which it
is the designated IPA) must notify DTC of its RTP in the DTC Settlement
User Interface. An IPA may enter an RTP until 3:00 p.m. ET on the date
of the affected Presentment.
Under the current Rules, the effect of an RTP is to instruct DTC to
reverse all processed Deliveries of that Acronym, including Issuances,
related funds credits and debits, and Presentments. This late day
reversal of processed (but not yet settled) transactions may override
DTC's risk management controls (i.e., Collateral Monitor and Net Debit
Cap) and force a presenting Participant into a Net Debit Balance; this
situation poses systemic risk with respect to the Participant's ability
to fund its settlement and, hence, DTC's ability to complete end-of-day
net funds settlement. Also, the possibility of intra-day reversals of
processed MMI Obligations creates uncertainty for Participants.
Currently, to mitigate the risks associated with an RTP, DTC Rules
and the Settlement Guide provide for the LPNC risk management control.
DTC withholds credit intra-day from each Participant that has a
Presentment in the amount of the aggregate of the two largest credits
with respect to an Acronym. The LPNC is not included in the calculation
of the Participant's Collateral Monitor or its Net Debit Balance. This
provides protection in the event that MMI Obligations are reversed by
DTC as a result of an RTP.\14\
---------------------------------------------------------------------------
\14\ See Securities Exchange Act Release No. 71888 (April 7,
2014), 79 FR 20285 (April 11, 2014) (SR-DTC-2014-02) (clarifying the
LPNC Procedures in the Settlement Guide) and Securities Exchange Act
Release No. 68983 (February 25, 2013), 78 FR 13924 (March 1, 2013)
(SR-DTC-2012-10) (updating the Rules related to LPNC).
---------------------------------------------------------------------------
DTC's Rules and Procedures relating to settlement processing for
the MMI Program \15\ were designed to limit credit, liquidity, and
operational risk for DTC and Participants. In connection with ongoing
efforts by DTC to evaluate the risk associated with the processing of
MMI Obligations, DTC has determined that the risks presented by intra-
day reversals of processed MMI Obligations should be eliminated to
prevent the possibility that a reversal could override risk controls
and heighten liquidity and settlement risk. Eliminating intra-day
reversals of processed MMI Obligations would also enhance intra-day
finality and allow for the elimination of the LPNC which creates intra-
day blockage and affects liquidity through the withholding of
settlement credits.
---------------------------------------------------------------------------
\15\ The Procedures applicable to MMI settlement processing are
set forth in the Settlement Guide. Supra note 5.
---------------------------------------------------------------------------
Proposal
The proposed rule change would amend the Rules and the Settlement
Guide to eliminate provisions for intra-day reversals of processed MMI
Obligations based on an IPA's RTP or Issuer insolvency. In addition,
the proposed rule change would amend the Distributions Guide to make
changes to text relating to the processing of Income Presentments so
that it is consistent with the changes proposed in the Settlement Guide
in that regard, as more fully described below.
Pursuant to the proposed rule change, DTC would no longer
automatically process Presentments (and Issuances and related
deliveries). Rather, except as noted below, DTC would only process
these transactions after an acknowledgment (``MMI Funding
Acknowledgment'') is made by the IPA to DTC whereby either: (i) The
value of
[[Page 70202]]
receiver-approved \16\ Issuances alone,\17\ or a combination of
receiver-approved Issuances plus an amount the IPA(s) has acknowledged
has been funded by the Issuer, exceeds the Acronym's Presentments; or
(ii) the IPA acknowledges it has been funded for the entire amount of
the gross value of an Acronym, regardless of Issuances.\18\
---------------------------------------------------------------------------
\16\ DTC subjects certain transactions to receiver approval in
its RAD system.
\17\ An affirmative MMI Funding Acknowledgement by the IPA would
not be required in the case that the aggregate amount of RAD
approved Issuances of an Acronym exceeds the aggregate amount of
Presentments since these Issuances would provide the funding of the
maturing obligations versus an Issuer having to fund the IPA. The
proposed rule change would provide that in this instance, the IPA is
deemed to provide a standing instruction to process transactions in
the Acronym, subject to risk management controls. Any such
instruction or deemed instruction by the IPA would be irrevocable
once given.
\18\ In the case where an affirmative MMI Funding Acknowledgment
by the IPA would be required for Presentments to be processed, the
MMI Funding Acknowledgement would be a notification provided by an
IPA to DTC with respect to an Acronym that the IPA acknowledges and
affirms its funding obligation for a maturing Acronym either (i) in
the entire amount of the Acronym or (ii) for an amount at least
equal to the difference between the value of Issuances and the value
of the Presentments. In the case of (ii) above, the IPA may (later
that day) increase the funding amount it acknowledges, but in no
event may the IPA reduce the amount of its obligation previously
acknowledged that day.
---------------------------------------------------------------------------
DTC anticipates that the proposed rule change would generally
maintain the volume of transactions processed today in terms of the
total number and value of transactions that have passed position and
risk controls throughout the processing day. However, because of the
requirement for the IPA to provide an MMI Funding Acknowledgement prior
to processing of an Acronym, the reason why transactions do not
complete during the processing day would shift. It is expected that the
value and volume of MMI transactions recycling for risk management
controls during the late morning and afternoon time periods would be
reduced as a result of MMI transactions being held outside of the
processing system awaiting an MMI Funding Acknowledgement decision. The
non-MMI transactions and fully funded MMI transactions would also
likely have a reduction in blockage from risk management controls as a
result of the elimination of the LPNC control. The elimination of the
LPNC control would no longer withhold billions of dollars of settlement
credits until 3:05 p.m. ET as it does today, which would in turn permit
these transactions to complete earlier in the day.
An IPA would make an MMI Funding Acknowledgment using a new
Decision Making Application (``DMA''). When an MMI Funding
Acknowledgement has occurred, it would constitute the IPA's instruction
to DTC to attempt to process transactions in the Acronym. At this
point, if the IPA has acknowledged that it would fully fund the
Acronym, then the transactions would be sent to the processing system
and attempted against position and risk management controls. If the IPA
provides an MMI Funding Acknowledgement for only partial funding of the
entire amount of Presentments for an Acronym, DTC would test risk
management controls of Deliverers and Receivers with respect to that
Acronym to determine whether risk management controls would be
satisfied by all Deliverers and Receivers of the Acronym and determine
whether all parties maintain adequate position to complete the
applicable transactions, i.e., ``MMI Optimization''. In the case that
the aggregate amount of RAD approved Issuances of an Acronym exceeds
the aggregate amount of Presentments, and thus an affirmative
acknowledgment by the IPA would not be required, risk management
controls for all Deliverers and Receivers would be tested using MMI
Optimization as well.
As indicated above, if partial funding from the IPA is necessary,
then transactions would be routed to MMI Optimization. Generally, in
MMI Optimization, all Deliverers and Receivers of the Acronym must
satisfy risk management controls and delivering Participants must hold
sufficient position, in order for the transactions in that Acronym to
be processed. However, as long as the Issuances that can satisfy
Deliverer and Receiver risk controls for that Acronym are equal to or
greater than the Maturing Presentments of that Acronym, the applicable
transactions (i.e., those that pass risk controls) would be processed.
If there are multiple IPAs for an Acronym, DTC would determine funding
based on the satisfaction of conditions for all Receivers and
Deliverers with respect to all Presentments, Issuances and applicable
DOs in the Acronym and MMI Funding Acknowledgements for all IPAs with
Issuances and Presentments in the Acronym. No instruction of an IPA to
DTC to process the subject MMI transactions shall be effective until
MMI Optimization is satisfied with respect to all transactions in the
Acronym.
If there is no MMI Funding Acknowledgment for the IPA for an
Acronym for which Maturing Obligations are due by 3:00 p.m. ET on that
day and/or DTC is aware that the Issuer of an Acronym is insolvent
(``Acronym Payment Failure''), then DTC would not process transactions
in the Acronym.\19\
---------------------------------------------------------------------------
\19\ DTC would automatically consider an Acronym Payment Failure
occurring due to an IPA's failure to provide timely MMI Funding
Acknowledgement (i.e., provide the acknowledgment by 3:00 p.m. ET)
as an RTP.
---------------------------------------------------------------------------
In the event of an Acronym Payment Failure, DTC would (i) prevent
further issuance and maturity activity for the Acronym in DTC's system,
(ii) prevent Deliveries of MMI Securities of the Acronym on failure
date and halt all activity in that Acronym, (iii) set the Collateral
Value of the MMI Securities in the Acronym to zero for purposes of
calculating the Collateral Monitor of any affected Participant, and
(iv) notify Participants of the Acronym Payment Failure. Notification
would be made through a DTC broadcast through the current process.
Notwithstanding the occurrence of an Acronym Payment Failure, the
IPA would remain liable for funding pursuant to any MMI Funding
Acknowledgment previously provided for that Business Day.
A ``Temporary Acronym Payment Failure'' with respect to Income
Presentments would occur when an IPA notifies DTC that it temporarily
refuses to pay Income Presentments for the Acronym (typically due to an
Issuer's inability to fund Income Presentments on that day). A
Temporary Acronym Payment Failure would only be initiated if there are
no Maturity Presentments, Principal Presentments and/or Reorganization
Presentments on that Business Day. DTC expects the Issuer and/or IPA to
resolve such a situation by the next Business Day. In the event of a
Temporary Acronym Payment Failure, DTC would (i) temporarily devalue to
zero all of the Issuer's MMI Securities for purposes of calculating the
Collateral Monitor, unless and until the IPA acknowledges funding with
respect to the Income Payments on the following Business Day, (ii)
notify Participants of the delayed payment through a DTC broadcast as
is the current process today, and (iii) block from DTC's systems all
further Issuances and maturities by that Issuer for the remainder of
the Business Day on which notification of the Temporary Payment Failure
was received by DTC.
An IPA would not be able to avail itself of a Temporary Acronym
Payment Failure for the same Acronym on consecutive Business Days.
Also, in light of the proposed elimination of intra-day reversals
of processed MMI Obligations, DTC would also eliminate the RVPNA
control. The RVPNA control is provided for in the
[[Page 70203]]
Settlement Guide and implements current Section 1(c) of Rule 9(B).
RVPNA is used to prevent a Participant from Delivering free of value or
undervalued any MMI Securities received versus payment on the same
Business Day.\20\ This protects DTC against being unable to reverse
transactions for Deliveries Versus Payment of MMI Securities in the
event of an RTP by the IPA.\21\ The elimination of reversals of
processed MMI Obligations would eliminate the need for the RVPNA
control.
---------------------------------------------------------------------------
\20\ For purposes of RVPNA, MMI Securities are considered
undervalued if they are Delivered Versus Payment for less than 10
percent below market value.
\21\ For example, if A Delivers MMI Securities to B versus
payment and B Delivers the same MMI Securities to C free of payment
(subject to risk management controls), under Rule 9(B), Section 1,
the Delivery to C is final when the securities are credited to C.
DTC would therefore be unable to reverse the Delivery to C and thus
it cannot reverse the Delivery from B to A.
---------------------------------------------------------------------------
Proposed Rule Changes to the Rules, Settlement Guide, and Distributions
Guide
DTC would amend the text of Rule 1 (Definitions), Rule 9(A)
(Transactions in Securities and Money Payments), Rule 9(B)
(Transactions in Eligible Securities), Rule 9(C) (Transactions in MMI
Securities), the Settlement Guide and the Distributions Guide to
reflect the proposed changes described above. Specifically:
(i) Rule 1 would be amended to:
a. Delete the definition of LPNC; and
b. Add a cross-reference to indicate that the terms MMI Funding
Acknowledgment and MMI Optimization would be defined in Section 1 of
Rule 9(C).
(ii) Rule 9(A) would be amended to add text providing that an
instruction to DTC from a Participant for Delivery Versus Payment of
MMI Securities pursuant to Rule 9(C) shall not be effective unless and
until applicable conditions specified in Rule 9(C) as set forth below
have been satisfied.
(iii) Rule 9(B) would be amended to:
a. Eliminate text referencing the LPNC;
b. Eliminate the provision precluding DTC from acting on an
instruction for Delivery of MMI Securities subject of an Incomplete
Transaction if the instruction involves a Free Delivery, Pledge or
Release of Securities or a Delivery, Pledge or Release of Securities
substantially undervalued; and
c. Add text providing that an instruction to DTC from a Participant
for Delivery Versus Payment of MMI Securities pursuant to Rule 9(C)
shall not be effective unless and until the applicable conditions
specified in Rule 9(C) described below have been satisfied.
(iv) Rule 9(C) would be amended to:
a. Add the definitions of MMI Funding Acknowledgment and MMI
Optimization to reflect the meaning of these terms as described above;
b. Add text that Delivery Versus Payment of MMI Securities would be
affected in accordance with Rules 9(A), 9(B) and the Settlement Guide
in addition to Rule 9(C);
c. Add text indicating that instructions by a Presenting
Participant for a Presentment or Delivery of MMI Securities would be
deemed to be given only when any applicable MMI Funding Acknowledgment
has been received by DTC;
d. Remove conditions and references relating to reversals of
processed MMI Obligations;
e. Set forth conditions for the processing of Presentments,
including:
i. The requirement for the IPA to provide an MMI Funding
Acknowledgment, except in the case where the aggregate amount of
Issuances exceeds Presentments;
ii. Satisfaction of risk management controls and RAD;
iii. That an instruction to DTC with respect to an Issuance or
Presentment shall become effective upon satisfaction of the provisions
described in i. and ii. immediately above;
iv. That DTC shall comply with an effective instruction;
v. That the IPA acknowledges and agrees that DTC would process
instructions with respect to Issuances and Presentments as described
above and that the IPA's obligations in this regard are irrevocable;
and
vi. That if the IPA notifies DTC in writing of its insolvency, or
if DTC otherwise has notice, or if the IPA issues a Payment Refusal for
the Acronym, then the IPA would not be required to acknowledge its
obligations and DTC would not be required to process any further
instructions with respect to the applicable Acronym;
f. Eliminate references to MMI Securities being devalued in the
event of an RTP because in the event of any payment failure by the IPA,
DTC would then revert to the Acronym Payment Failure Process described
below; and
g. Delete a reference indicating that DTC's Failure to Settle
Procedure includes special provisions for MMI Securities.
(v) The Settlement Guide would be amended to:
a. Delete the description of, and all references and provisions
related to, LPNC;
b. Delete: (A) The definition of RVPNA, (B) a provision that
transactions for MMI Securities that are deemed RVPNA would recycle
pending release of the LPNC control at 3:05 p.m. ET, and (C) a note
that MMI Securities received versus payment are not allowed to be
freely moved until the LPNC control is released;
c. Add a description of ``Unknown Rate'' to provide for a
placeholder in the Settlement Guide for references to an interest rate
where payment of interest by an IPA to Receivers is scheduled but the
interest rate to be paid is not known at the time;
d. Change the heading of the section currently named ``Establishing
Your Net Debit Cap'' to ``Limitation of Participant Net Debit Caps by
Settling Banks'' to reflect the context of that section more
specifically;
e. Revise the Settlement Processing Schedule to:
i. Add a cutoff time of 2:30 p.m. ET for an IPA to replace the
Unknown Rate with a final interest rate and state that the IPA must
successfully transmit the final rate to DTC before 2:30 p.m. ET;
ii. Add a cutoff time of 2:55 p.m. ET after which Issuances and
Presentments cannot be processed on the given Business Day because the
conditions described above for processing of MMI Obligations have not
been met;
iii. Remove a reference for a cutoff relating to reversals of MMI
Obligations since reversals would no longer occur as described above;
iv. Define 3 p.m. ET as the cutoff time for any required MMI
Funding Acknowledgements to be received in order for DTC to be able to
process for a given Acronym that day;
v. Add at cutoff time of 3 p.m. ET for an IPA to notify DTC of a
Temporary Acronym Payment Failure;
vi. Delete a reference to the release of LPNC controls as LPNC
would no longer exist; and
vii. Clarify that a 3:10 p.m. ET cutoff after which CNS
transactions that cannot be completed would be dropped from the system,
also applies to valued transactions in non-MMI Securities and fully
paid for and secondary MMI Deliveries or Maturity Presentments;
f. Add a section describing MMI Processing to include a description
of MMI Funding Acknowledgments and the MMI Optimization process as
described above;
g. Revise the section referencing provisions for ``Issuer Failure
Processing'' to instead describe Acronym Payment Failure Processing and
Temporary Acronym Payment Failure Process, as these processes are
described above, since the contingencies
[[Page 70204]]
for processing a payment failure hinge on the failure of payment on an
Acronym by an IPA regardless of whether it is ultimately caused by an
Issuer insolvency or otherwise;
h. Remove a duplicate reference to the DTC contact number for
Participants/IPAs to call in the event of an Acronym Payment Failure;
i. Remove the description of the ``MMI IPA MP Pend'' process which
was designed to allow IPAs to minimize the impact of potential
reversals of processed MMI Obligations; as such reversals would no
longer occur; and
j. Change the name of the section named ``Calculating Your Net
Debit Cap'' to ``Calculation of Participant Net Debit Caps''.
(vi) The Distributions Guide would be amended to (i) delete
language reflecting that Income Presentments are processed at the
start-of-day, and (ii) add a brief description of the processing of
Presentments as proposed above and provide a cross-reference to the
Settlement Guide relating to MMI settlement processing.
(vii) The proposed rule change would also make technical and
clarifying changes to the texts of the Rules and Settlement Guide for
consistency throughout the texts in describing the concepts and terms
set forth above, make corrections to grammar and spacing and edit text
to provide for enhanced readability.
Implementation
The proposed rule change would be implemented in phases whereby
Acronyms would be migrated to be processed in accordance with the
proposed rule change over a period of five months beginning in November
2016 and with all Acronyms expected to be implemented by the end of
March 2017, except for the implementation of the elimination of the
Rule and Settlement Guide provisions relating to RVPNA which
elimination would not occur until all other aspects of the proposed
rule change are implemented with respect to all Acronyms. DTC would
announce phased implementation dates for proposed rule change via
Important Notice upon all applicable regulatory approval by Commission.
2. Statutory Basis
Section 17A(b)(3)(F) of the Act \22\ 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 of the Act because (i) the elimination of intra-day reversals
of processed MMI Obligations would promote the intra-day finality of
those MMI Obligations, (ii) the deletion of the LPNC control would make
available settlement credits to reduce blockage from Net Debit Caps,
(iii) implementation of the MMI Optimization process would provide
increased efficiency in testing risk controls in order to facilitate
timely processing of transactions under the proposal, (iv) elimination
of the RVPNA control would allow intraday processing of Free Deliveries
of MMI Securities received for value, (v) the proposed updates and
revisions to the Processing Schedule would accommodate the processing
changes required to implement the proposal to promote intra-day
finality, and (vi) the proposed technical changes to texts of the Rules
and Settlement Guide, as described above, would simplify and clarify
terms and concepts in the Rules and Settlement Guide text for
Participants with respect to MMI transaction processing at DTC.
Therefore, as applicable, by (i) promoting intra-day finality of MMI
transactions, (ii) reducing potential blockages in transaction
processing, (iii) facilitating more efficient application of risk
management controls to allow processing of pending transactions, (iv)
allowing intraday processing of Free Deliveries of MMI Securities
received for value, (v) updating the Processing Schedule in order to
accommodate the proposed changes that would promote intra-day finality,
and (vi) clarifying and updating terms and concepts in the Rules and
the Settlement Guide related to processing of MMI transactions, the
proposal would promote the prompt and accurate clearance and settlement
of MMI Securities processed through DTC consistent with the Act, in
particular Section 17A(b)(3)(F) cited above.
---------------------------------------------------------------------------
\22\ 15 U.S.C. 78q-1(b)(3)(F).
---------------------------------------------------------------------------
Rule 17Ad-22(d)(12) promulgated under the Act \23\ requires (i)
that each registered clearing agency shall establish, implement,
maintain and enforce written policies and procedures reasonably
designed to, as applicable, ensure that final settlement occurs no
later than the end of the settlement day, and (ii) that intraday or
real-time finality be provided where necessary to reduce risks. DTC
believes that the proposed rule change is consistent with Rule 17Ad-
22(d)(12) because the elimination of intraday reversals of MMI
transactions would promote settlement finality of processed MMI
Obligations and prevent the possibility that a reversal could override
risk controls and heighten liquidity and settlement risk.
---------------------------------------------------------------------------
\23\ 17 CFR 240.1717Ad-22(d)(12)
---------------------------------------------------------------------------
(B) Clearing Agency's Statement on Burden on Competition
DTC does not believe that the proposed rule change would have any
adverse impact, or impose any burden, on competition. Moreover, because
the proposed rule change improves the efficiency of intraday processing
and settlement finality at DTC, for MMI transactions and others, the
proposed rule change may have a positive effect on competition among
DTC Participants, including IPAs.
Although the proposed rule change imposes a new requirement on
IPAs, to provide an MMI Funding Acknowledgment under the proposed rule,
any burden on the IPAs in making these determinations and taking these
actions is justified by the elimination of late day reversals,
improving settlement finality for all Participants engaged in MMI
transactions. Moreover, the change was requested by the IPA community
and DTC believes, based upon discussion with its IPA Participants, that
there is no differential effect among IPA Participants due to his
additional requirement, thus imposing no burden on competition.
The elimination of the LPNC further improves efficiency of intraday
processing at DTC for all transactions, including MMI transactions, by
eliminating liquidity blockages due to the withholding of credits under
the LPNC control; this improved efficiency should also foster
competition.
(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 the extent DTC
receives written comments on the proposed rule change, DTC will forward
such comments to the Commission. DTC has conducted industry outreach
with respect to the proposal including discussion with industry
associations and IPAs.
III. Date of Effectiveness of the Proposed Rule Change, and Timing for
Commission Action
Within 45 days of the date of publication of this notice in the
Federal Register or within such longer period up to 90 days (i) as the
Commission may designate if it finds such longer period to be
appropriate and publishes its
[[Page 70205]]
reasons for so finding or (ii) as to which the self-regulatory
organization consents, the Commission will:
(A) By order approve or disapprove such proposed rule change, or
(B) institute proceedings to determine whether the proposed rule
change should be disapproved.
The proposal shall not take effect until all regulatory actions
required with respect to the proposal are completed.\24\
---------------------------------------------------------------------------
\24\ See supra note 3 (regarding filing of related advance
notice).
---------------------------------------------------------------------------
IV. Solicitation of Comments
Interested persons are invited to submit written data, views and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's Internet comment form
(https://www.sec.gov/rules/sro.shtml); or
Send an email to rule-comments@sec.gov. Please include
File Number SR-DTC-2016-008 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-2016-008. 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 (https://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 (https://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-2016-008 and should be
submitted on or before November 1, 2016.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\25\
---------------------------------------------------------------------------
\25\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Brent J. Fields,
Secretary.
[FR Doc. 2016-24499 Filed 10-7-16; 8:45 am]
BILLING CODE 8011-01-P
