Self-Regulatory Organizations; The Depository Trust Company; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend the DTC Redemptions Service Guide and the DTC Reorganizations Service Guide To Add Clarifying Text Relating to the Processing of MMI Securities, 17691-17694 [2018-08355]
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Federal Register / Vol. 83, No. 78 / Monday, April 23, 2018 / Notices
subparagraph (f)(6) of Rule 19b–4
thereunder.8
A proposed rule change filed under
Rule 19b–4(f)(6) 9 normally does not
become operative prior to 30 days after
the date of the filing. However, Rule
19b–4(f)(6)(iii) 10 permits the
Commission to designate a shorter time
if such action is consistent with the
protection of investors and the public
interest. The Exchange has requested
that the Commission to waive the 30day operative delay so that the proposal
will become operative upon filing. The
Exchange stated that removing the
duplicative CAT Rules, as discussed
above, will bring greater clarity to its
rulebook and will eliminate any
potential confusion to the benefit of its
members and investors. Therefore, the
Commission believes that waiver of the
30-day operative delay is consistent
with the protection of investors and the
public interest. Accordingly, the
Commission hereby waives the
operative delay and designates the
proposed rule change as operative upon
filing.11
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: (i) Necessary or appropriate in
the public interest; (ii) for the protection
of investors; or (iii) otherwise in
furtherance of the purposes of the Act.
If the Commission takes such action, the
Commission shall institute proceedings
to determine whether the proposed rule
should be approved or disapproved.
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:
amozie on DSK30RV082PROD with NOTICES
Electronic Comments
• Use the Commission’s internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
8 17 CFR 240.19b–4(f)(6). In addition, Rule 19b–
4(f)(6)(iii) requires the Exchange to give the
Commission written notice of the Exchange’s intent
to file the proposed rule change, along with a brief
description and text of the proposed rule change,
at least five business days prior to the date of filing
of the proposed rule change, or such shorter time
as designated by the Commission. The Exchange
has satisfied this requirement.
9 17 CFR 240.19b–4(f)(6).
10 17 CFR 240.19b–4(f)(6)(iii).
11 For purposes only of waiving the 30-day
operative delay, the Commission has also
considered the proposed rule’s impact on
efficiency, competition, and capital formation. See
15 U.S.C. 78c(f).
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• Send an email to rule-comments@
sec.gov. Please include File Number SR–
NASDAQ–2018–027 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–NASDAQ–2018–027. 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 website (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 website 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 the Exchange. All comments
received will be posted without change.
Persons submitting comments are
cautioned that we do not redact or edit
personal identifying information from
comment submissions. You should
submit only information that you wish
to make available publicly. All
submissions should refer to File
Number SR–NASDAQ–2018–027 and
should be submitted on or before May
14, 2018.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.12
Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2018–08368 Filed 4–20–18; 8:45 am]
BILLING CODE 8011–01–P
12 17
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SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–83058; File No. SR–DTC–
2018–003]
Self-Regulatory Organizations; The
Depository Trust Company; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change To Amend the
DTC Redemptions Service Guide and
the DTC Reorganizations Service
Guide To Add Clarifying Text Relating
to the Processing of MMI Securities
April 17, 2018.
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 April 16,
2018, 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. The 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 3 consists of
proposed modifications to the DTC
Reorganizations Service Guide
(‘‘Reorganizations Guide’’) 4 and the
DTC Redemptions Service Guide
(‘‘Redemptions Guide’’) 5 to make
clarifying changes and provide
enhanced transparency within DTC’s
Procedures 6 relating to the processing
of transactions in money market
instruments (‘‘Money Market
Securities’’) in DTC’s MMI Program,7 as
described below.
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 Each capitalized term not otherwise defined
herein has its respective meaning as set forth in the
Rules, By-Laws and Organization Certificate of The
Depository Trust Company (‘‘Rules’’), available at
https://www.dtcc.com/legal/rules-andprocedures.aspx and the DTC Settlement Service
Guide (‘‘Settlement Guide’’), available at https://
www.dtcc.com/∼/media/Files/Downloads/legal/
service-guides/Settlement.pdf.
4 Available at https://www.dtcc.com/∼/media/
Files/Downloads/legal/service-guides/
Reorganization-Service-Guide.pdf.
5 Available at https://www.dtcc.com/∼/media/
Files/Downloads/legal/service-guides/
Redemptions.pdf.
6 Pursuant to the Rules, the term ‘‘Procedures’’
means the Procedures, service guides, and
regulations of DTC adopted pursuant to Rule 27, as
amended from time to time. See Rule 1, Section 1,
supra note 3, at 13.
7 Pursuant to the Rules, the term MMI Program
means the Program for transactions in MMI
Securities, as provided in Rule 9(C) and as specified
2 17
CFR 200.30–3(a)(12).
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Federal Register / Vol. 83, No. 78 / Monday, April 23, 2018 / Notices
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 proposed rule change consists of
proposed modifications to the DTC
Reorganizations Guide and the DTC
Redemptions Guide to make clarifying
changes and provide enhanced
transparency within DTC’s Procedures
relating to the processing of transactions
in MMI Securities in DTC’s MMI
Program, as discussed below.
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Background
When an issuer of MMI Securities
(‘‘Issuer’’) issues MMI Securities at DTC,
the Issuing and Paying Agent (‘‘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 of MMI Securities 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 Securities are
processed pursuant to the same Rules
and the applicable Procedures set forth
in the Settlement Guide, as are
Deliveries generally, whether free or
versus payment. Delivery Versus
in the Procedures. See Rule 1, Section 1, supra note
3, at 10. Eligibility for inclusion in the MMI
Program covers MMI Securities, which are shortterm debt Securities that generally mature 1 to 270
days from their original issuance date. MMI
Securities include, but are not limited to,
commercial paper, banker’s acceptances and shortterm bank notes and are issued by financial
institutions, large corporations, or state and local
governments. Most MMI Securities 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.
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Payment transactions are subject to risk
management controls of the IPA and
Receiving Participants for Net Debit Cap
and Collateral Monitor sufficiency,8 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.
In 2017, DTC implemented rule
changes (‘‘2017 Changes’’) relating to
the processing of MMI Securities to
improve the efficiency and reduce risks
associated with the processing of
transactions in MMI Securities, as
described in the rule filing pursuant to
which the 2017 Changes were
implemented.9 The 2017 Changes
included amendments to the Rules,
Settlement Guide 10 and DTC
Distributions Service Guide
(‘‘Distributions Guide’’) 11 in this regard.
While the Rules and Procedures
governing the processing of transactions
in MMI Securities are primarily
contained in the Rules 12 and the
Settlement Guide,13 the Distributions
Guide was amended pursuant to the
2017 Changes to make clarifying
changes to text relating to the processing
of Income Presentments,14 so that it is
8 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.
9 Securities Exchange Act Release No. 34–79764
(January 9, 2017), 82 FR 4434 (January 13, 2018)
(SR–DTC–2016–008).
10 Supra note 3.
11 Available at https://www.dtcc.com/∼/media/
Files/Downloads/legal/service-guides/
Service%20Guide%20Distributions.pdf.
12 See Rule 9(A), Rule 9(B) and Rule 9(C), supra
note 3.
13 See supra note 3 at 45–47.
14 Pursuant to the Rules, the term ‘‘Income
Presentment’’ means an instruction initiated by
DTC to credit the Account of DTC with an amount
of interest or dividend income payable to DTC by
an issuer in respect of MMI Securities (other than
an amount of interest or dividend income or other
distribution of cash or property payable to DTC by
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Fmt 4703
Sfmt 4703
consistent with the Settlement Guide in
that regard.
The proposed rule change would
make clarifying changes to the
Reorganizations Guide and
Redemptions Guide to add text similar
to that included in the Distributions
Guide 15 pursuant to the 2017 Changes
and clarify certain aspects of processing
relating more specifically to
Reorganization Presentments and
Maturity Presentments, as described
below.
Proposed Changes to the Redemptions
Guide
As mentioned above, provisions
governing the processing of transactions
in MMI Securities are primarily
contained in the Rules and Settlement
Guide. The Redemptions Guide
currently contains provisions relating to
the processing of maturity events for
non-MMI Securities and does not
contain text relating to the processing of
maturities of MMI Securities. In order to
provide (i) enhanced clarity for
Participants, and (ii) a point of reference
within the Redemptions Guide, with
respect to processing of transactions in
maturing MMI Securities, the proposed
rule change would amend the
Redemptions Guide to (a) add a brief
description of Maturity Presentments
and the processing of transactions
relating to them, (b) add a brief
description of the ‘‘Settlement User
Interface,’’ which is used by Participants
to submit input and inquiries relating to
the processing of transactions in MMI
Securities in accordance with the
Settlement Guide,16 and (c) provide a
cross-reference to the Settlement Guide
for Procedures relating to processing of
transactions in MMI Securities.
In this regard, the following text
would be added to a new section of the
Redemptions Guide that would be titled
‘‘Maturity Presentments for MMI
Issues,’’ as follows:
A ‘‘Maturity Presentment’’ is a
Delivery Versus Payment (as defined in
Rule 1) of matured money market
instruments (MMI Securities) from the
account of a presenting Participant to a
designated paying agent account for that
issue and is subject to, and is processed
in accordance with, Rule 9(A), Rule
9(B), Rule 9(C) of DTC and the
Procedures set forth in the DTC
Settlement Service Guide. Maturity
the issuer in connection with a Maturity
Presentment or a Reorganization Presentment) and
to debit the designated Paying Agent Account for
that issue with the same amount, as provided in
Rule 9(C) and as specified in the Procedures. See
Rule 1, Section 1, supra note 1, at 7.
15 See supra note 11 at 28.
16 See supra note 3 at 5.
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Presentments are not attempted for
processing until the issuer’s issuing and
paying agent (IPA) makes a funding
decision in the form of an ‘‘MMI
Funding Acknowledgment.’’ Once a
funding decision is made items will be
processed subject to risk controls and
the sufficient inventory of the relevant
Participants. IPAs and other Participants
may submit input and inquiries relating
to MMI Securities processing through
the Settlement User Interface. See the
DTC Settlement Service Guide, available
at https://www.dtcc.com/∼/media/Files/
Downloads/legal/service-guides/
Settlement.pdf, for the DTC Procedures
relating to the processing of transactions
in MMI Securities.
Proposed Changes to the
Reorganizations Guide
As mentioned above, provisions
governing the processing of transactions
in MMI Securities are primarily
contained in the Rules 17 and Settlement
Guide.18 The Reorganizations Guide
currently contains provisions relating to
the processing of reorganizations for
non-MMI Securities and does not
contain text relating to the processing of
Reorganization Presentments. In order
to provide (i) enhanced clarity and
transparency for Participants, and (ii) a
point of reference within the
Reorganizations Guide, with respect to
processing of Reorganization
Presentments, the proposed rule change
would amend the Reorganizations
Guide to (a) add a brief description of
Reorganization Presentments and the
processing of transactions relating to
them, (b) add a brief description of the
‘‘Settlement User Interface,’’ which is
used by Participants to submit input
and inquiries relating to processing of
transactions in MMI Securities in
accordance with the Settlement
Guide,19 and (c) provide a crossreference to the Settlement Guide for
Procedures relating to the processing of
transactions in MMI Securities.
In this regard, the following text
would be added to a new section of the
Reorganizations Guide that would be
titled ‘‘Reorganization Presentments for
MMI Issues,’’ as follows:
A ‘‘Reorganization Presentment’’ is a
Delivery Versus Payment (as defined in
Rule 1) of money market instruments
(MMI Securities) in response to a
reorganization action from the account
of a presenting Participant to a
designated paying agent account for that
issue, and is subject to, and is processed
in accordance with Rule 9(A), Rule 9(B),
17 See
supra note 12.
supra note 13.
19 See supra note 16.
Rule 9(C) of DTC and the Procedures set
forth in the Settlement Service Guide.
Reorganization Presentments are not
attempted for processing until the
issuer’s issuing and paying agent (IPA)
makes a funding decision in the form of
an ‘‘MMI Funding Acknowledgment.’’
Once a funding decision is made items
will be processed subject to risk controls
and the sufficient inventory of the
relevant Participants. IPAs and other
Participants may submit input and
inquiries relating to processing of
transactions in MMI Securities through
the Settlement User Interface. See the
DTC Settlement Service Guide, available
at https://www.dtcc.com/∼/media/Files/
Downloads/legal/service-guides/
Settlement.pdf, for the DTC Procedures
relating to the processing of transactions
in MMI Securities.
Effective Date
The proposed rule change would
become effective upon filing with the
Commission.
2. Statutory Basis
Section 17A(b)(3)(F) of the Act 20
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 by
adding text within the Procedures set
forth in the Redemptions Guide and
Reorganizations Guide regarding the
processing of MMI Securities, the
proposed rule change would provide
enhanced clarity and transparency for
Participants with respect to the Rules
and Procedures relating to the
processing of Maturity Presentments
and Reorganization Presentments, as
described above. Therefore, by
providing Participants with enhanced
clarity and transparency with regard to
the Procedures relating to the processing
of Maturity Presentments and
Reorganizations Presentments, DTC
believes that the proposed rule change
would promote the prompt and accurate
clearance and settlement of securities
transactions consistent with the Act.
(B) Clearing Agency’s Statement on
Burden on Competition
DTC does not believe that the
proposed rule change would have any
impact, or impose any burden, on
competition. The proposed rule change
would merely clarify and provide
enhanced transparency with respect to
the processing of transactions in MMI
Securities by adding text to the
18 See
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17:09 Apr 20, 2018
Redemptions Service Guide and the
Reorganizations Service Guide that is
consistent with existing provisions set
forth in the Rules and the Settlement
Guide, as described above.
(C) Clearing Agency’s Statement on
Comments on the Proposed Rule
Change Received From Members,
Participants, or Others
Written comments relating to this
proposed rule change have not been
solicited or received. DTC will notify
the Commission of any written
comments received by DTC.
III. Date of Effectiveness of the
Proposed Rule Change, and Timing for
Commission Action
The foregoing rule change has become
effective pursuant to Section 19(b)(3)(A)
of the Act 21 and paragraph (f) of Rule
19b–4 thereunder.22 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.
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–2018–003 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–2018–003. 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 website (https://www.sec.gov/
rules/sro.shtml). Copies of the
submission, all subsequent
21 15
20 15
Jkt 244001
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U.S.C. 78q–1(b)(3)(F).
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17693
22 17
E:\FR\FM\23APN1.SGM
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f).
23APN1
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Federal Register / Vol. 83, No. 78 / Monday, April 23, 2018 / Notices
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 website 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 website
(https://dtcc.com/legal/sec-rulefilings.aspx). All comments received
will be posted without change. Persons
submitting comments are cautioned that
we do not redact or edit personal
identifying information from comment
submissions. You should submit only
information that you wish to make
available publicly. All submissions
should refer to File Number SR–DTC–
2018–003 and should be submitted on
or before May 14, 2018.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.23
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018–08355 Filed 4–20–18; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
Dated: April 17, 2018.
Eduardo A. Aleman,
Assistant Secretary.
Submission for OMB Review;
Comment Request
Upon Written Request, Copies Available
From: Securities and Exchange
Commission, Office of FOIA Services,
100 F Street NE, Washington, DC
20549–2736
amozie on DSK30RV082PROD with NOTICES
Extension:
Rule 17g–3; SEC File No. 270–565, OMB
Control No. 3235–0626
Notice is hereby given that pursuant
to the Paperwork Reduction Act of 1995
(44 U.S.C. 3501 et seq.), the Securities
and Exchange Commission
(‘‘Commission’’) has submitted to the
Office of Management and Budget
(‘‘OMB’’) a request for approval of
extension of the previously approved
collection of information provided for in
Rule 17g–3 under the Securities
Exchange Act of 1934 (15 U.S.C. 78a et
seq.).1
23 17
1 See
CFR 200.30–3(a)(12).
17 CFR 240.17g–1 and 17 CFR 249b.300.
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17:09 Apr 20, 2018
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Rule 17g–3 contains certain reporting
requirements for NRSROs including
financial statements and information
concerning its financial condition that
the Commission, by rule, may prescribe
as necessary or appropriate in the public
interest or for the protection of
investors. Currently, there are 10 credit
rating agencies registered as NRSROs
with the Commission. The Commission
estimates that the total burden for
respondents to comply with Rule
17g–3 is 3,650 hours.
The Commission may not conduct or
sponsor a collection of information
unless it displays a currently valid OMB
control number. No person shall be
subject to any penalty for failing to
comply with a collection of information
subject to the PRA that does not display
a valid Office of Management and
Budget (OMB) control number.
Background documentation for this
information collection may be viewed at
the following website: www.reginfo.gov.
Comments should be directed to: (i)
Desk Officer for the Securities and
Exchange Commission, Office of
Information and Regulatory Affairs,
Office of Management and Budget,
Room 10102, New Executive Office
Building, Washington, DC 20503, or by
sending an email to: Shagufta_Ahmed@
omb.eop.gov; and (ii) Pamela Dyson,
Director/Chief Information Officer,
Securities and Exchange Commission,
c/o Remi Pavlik-Simon, 100 F St. NE,
Washington, DC 20549 or send an email
to: PRA_Mailbox@sec.gov. Comments
must be submitted to OMB within 30
days of this notice.
[FR Doc. 2018–08399 Filed 4–20–18; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
Proposed Collection; Comment
Request
Upon Written Request, Copies Available
From: Securities and Exchange
Commission, Office of FOIA Services,
100 F Street NE, Washington, DC
20549–2736
Extension:
Rule 17f–6; SEC File No. 270–392, OMB
Control No. 3235–0447
Notice is hereby given that, pursuant
to the Paperwork Reduction Act of 1995
(44 U.S.C. 3501–3520), the Securities
and Exchange Commission (the
‘‘Commission’’) is soliciting comments
on the collection of information
PO 00000
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summarized below. The Commission
plans to submit this existing collection
of information to the Office of
Management and Budget for extension
and approval.
Rule 17f–6 (17 CFR 270.17f–6) under
the Investment Company Act of 1940
(15 U.S.C. 80a) permits registered
investment companies (‘‘funds’’) to
maintain assets (i.e., margin) with
futures commission merchants
(‘‘FCMs’’) in connection with
commodity transactions effected on
both domestic and foreign exchanges.
Prior to the rule’s adoption, funds
generally were required to maintain
these assets in special accounts with a
custodian bank.
The rule requires a written contract
that contains certain provisions
designed to ensure important safeguards
and other benefits relating to the
custody of fund assets by FCMs. To
protect fund assets, the contract must
require that FCMs comply with the
segregation or secured amount
requirements of the Commodity
Exchange Act (‘‘CEA’’) and the rules
under that statute. The contract also
must contain a requirement that FCMs
obtain an acknowledgment from any
clearing organization that the fund’s
assets are held on behalf of the FCM’s
customers according to CEA provisions.
Because rule 17f–6 does not impose
any ongoing obligations on funds or
FCMs, Commission staff estimates there
are no costs related to existing contracts
between funds and FCMs. This estimate
does not include the time required by an
FCM to comply with the rule’s contract
requirements because, to the extent that
complying with the contract provisions
could be considered ‘‘collections of
information,’’ the burden hours for
compliance are already included in
other PRA submissions.1
Thus, Commission staff estimates that
any burden of the rule would be borne
by funds and FCMs entering into new
contracts pursuant to the rule.
Commission staff estimates that
approximately 214 fund complexes and
2,825 funds currently effect
commodities transactions and could
deposit margin with FCMs in
connection with those transactions
pursuant to rule 17f–6.2 Staff further
1 The rule requires a contract with the FCM to
contain two provisions requiring the FCM to
comply with existing requirements under the CEA
and rules adopted thereunder. Thus, to the extent
these provisions could be considered collections of
information, the hours required for compliance
would be included in the collection of information
burden hours submitted by the CFTC for its rules.
2 This estimate is based on the number of funds
that reported on Form N–SAR from June 1, 2017–
November 30, 2017, in response to sub-items E
E:\FR\FM\23APN1.SGM
23APN1
]]>Agencies
[Federal Register Volume 83, Number 78 (Monday, April 23, 2018)]
[Notices]
[Pages 17691-17694]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-08355]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-83058; File No. SR-DTC-2018-003]
Self-Regulatory Organizations; The Depository Trust Company;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Amend the DTC Redemptions Service Guide and the DTC Reorganizations
Service Guide To Add Clarifying Text Relating to the Processing of MMI
Securities
April 17, 2018.
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 April 16, 2018, 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. The Commission is publishing this
notice to solicit comments on the proposed rule change from interested
persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
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I. Clearing Agency's Statement of the Terms of Substance of the
Proposed Rule Change
The proposed rule change \3\ consists of proposed modifications to
the DTC Reorganizations Service Guide (``Reorganizations Guide'') \4\
and the DTC Redemptions Service Guide (``Redemptions Guide'') \5\ to
make clarifying changes and provide enhanced transparency within DTC's
Procedures \6\ relating to the processing of transactions in money
market instruments (``Money Market Securities'') in DTC's MMI
Program,\7\ as described below.
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\3\ Each capitalized term not otherwise defined herein has its
respective meaning as set forth in the Rules, By-Laws and
Organization Certificate of The Depository Trust Company
(``Rules''), available at https://www.dtcc.com/legal/rules-and-procedures.aspx and the DTC Settlement Service Guide (``Settlement
Guide''), available at https://www.dtcc.com/~/media/Files/Downloads/
legal/service-guides/Settlement.pdf.
\4\ Available at https://www.dtcc.com/~/media/Files/Downloads/
legal/service-guides/Reorganization-Service-Guide.pdf.
\5\ Available at https://www.dtcc.com/~/media/Files/Downloads/
legal/service-guides/Redemptions.pdf.
\6\ Pursuant to the Rules, the term ``Procedures'' means the
Procedures, service guides, and regulations of DTC adopted pursuant
to Rule 27, as amended from time to time. See Rule 1, Section 1,
supra note 3, at 13.
\7\ Pursuant to the Rules, the term MMI Program means the
Program for transactions in MMI Securities, as provided in Rule 9(C)
and as specified in the Procedures. See Rule 1, Section 1, supra
note 3, at 10. Eligibility for inclusion in the MMI Program covers
MMI Securities, which are short-term debt Securities that generally
mature 1 to 270 days from their original issuance date. MMI
Securities 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 Securities 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.
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[[Page 17692]]
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 proposed rule change consists of proposed modifications to the
DTC Reorganizations Guide and the DTC Redemptions Guide to make
clarifying changes and provide enhanced transparency within DTC's
Procedures relating to the processing of transactions in MMI Securities
in DTC's MMI Program, as discussed below.
Background
When an issuer of MMI Securities (``Issuer'') issues MMI Securities
at DTC, the Issuing and Paying Agent (``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 of MMI Securities 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
Securities are processed pursuant to the same Rules and the applicable
Procedures 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,\8\ 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.
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\8\ 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.
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In 2017, DTC implemented rule changes (``2017 Changes'') relating
to the processing of MMI Securities to improve the efficiency and
reduce risks associated with the processing of transactions in MMI
Securities, as described in the rule filing pursuant to which the 2017
Changes were implemented.\9\ The 2017 Changes included amendments to
the Rules, Settlement Guide \10\ and DTC Distributions Service Guide
(``Distributions Guide'') \11\ in this regard.
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\9\ Securities Exchange Act Release No. 34-79764 (January 9,
2017), 82 FR 4434 (January 13, 2018) (SR-DTC-2016-008).
\10\ Supra note 3.
\11\ Available at https://www.dtcc.com/~/media/Files/Downloads/
legal/service-guides/Service%20Guide%20Distributions.pdf.
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While the Rules and Procedures governing the processing of
transactions in MMI Securities are primarily contained in the Rules
\12\ and the Settlement Guide,\13\ the Distributions Guide was amended
pursuant to the 2017 Changes to make clarifying changes to text
relating to the processing of Income Presentments,\14\ so that it is
consistent with the Settlement Guide in that regard.
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\12\ See Rule 9(A), Rule 9(B) and Rule 9(C), supra note 3.
\13\ See supra note 3 at 45-47.
\14\ Pursuant to the Rules, the term ``Income Presentment''
means an instruction initiated by DTC to credit the Account of DTC
with an amount of interest or dividend income payable to DTC by an
issuer in respect of MMI Securities (other than an amount of
interest or dividend income or other distribution of cash or
property payable to DTC by the issuer in connection with a Maturity
Presentment or a Reorganization Presentment) and to debit the
designated Paying Agent Account for that issue with the same amount,
as provided in Rule 9(C) and as specified in the Procedures. See
Rule 1, Section 1, supra note 1, at 7.
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The proposed rule change would make clarifying changes to the
Reorganizations Guide and Redemptions Guide to add text similar to that
included in the Distributions Guide \15\ pursuant to the 2017 Changes
and clarify certain aspects of processing relating more specifically to
Reorganization Presentments and Maturity Presentments, as described
below.
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\15\ See supra note 11 at 28.
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Proposed Changes to the Redemptions Guide
As mentioned above, provisions governing the processing of
transactions in MMI Securities are primarily contained in the Rules and
Settlement Guide. The Redemptions Guide currently contains provisions
relating to the processing of maturity events for non-MMI Securities
and does not contain text relating to the processing of maturities of
MMI Securities. In order to provide (i) enhanced clarity for
Participants, and (ii) a point of reference within the Redemptions
Guide, with respect to processing of transactions in maturing MMI
Securities, the proposed rule change would amend the Redemptions Guide
to (a) add a brief description of Maturity Presentments and the
processing of transactions relating to them, (b) add a brief
description of the ``Settlement User Interface,'' which is used by
Participants to submit input and inquiries relating to the processing
of transactions in MMI Securities in accordance with the Settlement
Guide,\16\ and (c) provide a cross-reference to the Settlement Guide
for Procedures relating to processing of transactions in MMI
Securities.
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\16\ See supra note 3 at 5.
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In this regard, the following text would be added to a new section
of the Redemptions Guide that would be titled ``Maturity Presentments
for MMI Issues,'' as follows:
A ``Maturity Presentment'' is a Delivery Versus Payment (as defined
in Rule 1) of matured money market instruments (MMI Securities) from
the account of a presenting Participant to a designated paying agent
account for that issue and is subject to, and is processed in
accordance with, Rule 9(A), Rule 9(B), Rule 9(C) of DTC and the
Procedures set forth in the DTC Settlement Service Guide. Maturity
[[Page 17693]]
Presentments are not attempted for processing until the issuer's
issuing and paying agent (IPA) makes a funding decision in the form of
an ``MMI Funding Acknowledgment.'' Once a funding decision is made
items will be processed subject to risk controls and the sufficient
inventory of the relevant Participants. IPAs and other Participants may
submit input and inquiries relating to MMI Securities processing
through the Settlement User Interface. See the DTC Settlement Service
Guide, available at https://www.dtcc.com/~/media/Files/Downloads/legal/
service-guides/Settlement.pdf, for the DTC Procedures relating to the
processing of transactions in MMI Securities.
Proposed Changes to the Reorganizations Guide
As mentioned above, provisions governing the processing of
transactions in MMI Securities are primarily contained in the Rules
\17\ and Settlement Guide.\18\ The Reorganizations Guide currently
contains provisions relating to the processing of reorganizations for
non-MMI Securities and does not contain text relating to the processing
of Reorganization Presentments. In order to provide (i) enhanced
clarity and transparency for Participants, and (ii) a point of
reference within the Reorganizations Guide, with respect to processing
of Reorganization Presentments, the proposed rule change would amend
the Reorganizations Guide to (a) add a brief description of
Reorganization Presentments and the processing of transactions relating
to them, (b) add a brief description of the ``Settlement User
Interface,'' which is used by Participants to submit input and
inquiries relating to processing of transactions in MMI Securities in
accordance with the Settlement Guide,\19\ and (c) provide a cross-
reference to the Settlement Guide for Procedures relating to the
processing of transactions in MMI Securities.
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\17\ See supra note 12.
\18\ See supra note 13.
\19\ See supra note 16.
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In this regard, the following text would be added to a new section
of the Reorganizations Guide that would be titled ``Reorganization
Presentments for MMI Issues,'' as follows:
A ``Reorganization Presentment'' is a Delivery Versus Payment (as
defined in Rule 1) of money market instruments (MMI Securities) in
response to a reorganization action from the account of a presenting
Participant to a designated paying agent account for that issue, and is
subject to, and is processed in accordance with Rule 9(A), Rule 9(B),
Rule 9(C) of DTC and the Procedures set forth in the Settlement Service
Guide. Reorganization Presentments are not attempted for processing
until the issuer's issuing and paying agent (IPA) makes a funding
decision in the form of an ``MMI Funding Acknowledgment.'' Once a
funding decision is made items will be processed subject to risk
controls and the sufficient inventory of the relevant Participants.
IPAs and other Participants may submit input and inquiries relating to
processing of transactions in MMI Securities through the Settlement
User Interface. See the DTC Settlement Service Guide, available at
https://www.dtcc.com/~/media/Files/Downloads/legal/service-guides/
Settlement.pdf, for the DTC Procedures relating to the processing of
transactions in MMI Securities.
Effective Date
The proposed rule change would become effective upon filing with
the Commission.
2. Statutory Basis
Section 17A(b)(3)(F) of the Act \20\ 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 by adding text within the Procedures set
forth in the Redemptions Guide and Reorganizations Guide regarding the
processing of MMI Securities, the proposed rule change would provide
enhanced clarity and transparency for Participants with respect to the
Rules and Procedures relating to the processing of Maturity
Presentments and Reorganization Presentments, as described above.
Therefore, by providing Participants with enhanced clarity and
transparency with regard to the Procedures relating to the processing
of Maturity Presentments and Reorganizations Presentments, DTC believes
that the proposed rule change would promote the prompt and accurate
clearance and settlement of securities transactions consistent with the
Act.
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\20\ 15 U.S.C. 78q-1(b)(3)(F).
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(B) Clearing Agency's Statement on Burden on Competition
DTC does not believe that the proposed rule change would have any
impact, or impose any burden, on competition. The proposed rule change
would merely clarify and provide enhanced transparency with respect to
the processing of transactions in MMI Securities by adding text to the
Redemptions Service Guide and the Reorganizations Service Guide that is
consistent with existing provisions set forth in the Rules and the
Settlement Guide, as described above.
(C) Clearing Agency's Statement on Comments on the Proposed Rule Change
Received From Members, Participants, or Others
Written comments relating to this proposed rule change have not
been solicited or received. DTC will notify the Commission of any
written comments received by DTC.
III. Date of Effectiveness of the Proposed Rule Change, and Timing for
Commission Action
The foregoing rule change has become effective pursuant to Section
19(b)(3)(A) of the Act \21\ and paragraph (f) of Rule 19b-4
thereunder.\22\ At any time within 60 days of the filing of the
proposed rule change, the Commission summarily may temporarily suspend
such rule change if it appears to the Commission that such action is
necessary or appropriate in the public interest, for the protection of
investors, or otherwise in furtherance of the purposes of the Act.
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\21\ 15 U.S.C. 78s(b)(3)(A).
\22\ 17 CFR 240.19b-4(f).
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IV. Solicitation of Comments
Interested persons are invited to submit written data, views and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's internet comment form
(https://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
File Number SR-DTC-2018-003 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-2018-003. 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 website (https://www.sec.gov/rules/sro.shtml).
Copies of the submission, all subsequent
[[Page 17694]]
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 website 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 website (https://dtcc.com/legal/sec-rule-filings.aspx). All comments received will be posted without
change. Persons submitting comments are cautioned that we do not redact
or edit personal identifying information from comment submissions. You
should submit only information that you wish to make available
publicly. All submissions should refer to File Number SR-DTC-2018-003
and should be submitted on or before May 14, 2018.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\23\
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\23\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-08355 Filed 4-20-18; 8:45 am]
BILLING CODE 8011-01-P
