Self-Regulatory Organizations; The Depository Trust Company; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend the Guide to the DTC Fee Schedule, 64401-64412 [2018-27078]
Download as PDF
<![CDATA[
Federal Register / Vol. 83, No. 240 / Friday, December 14, 2018 / Notices
Act 28 and Rule 19b–4(f)(6)
thereunder.29
A proposed rule change filed
pursuant to Rule 19b–4(f)(6) under the
Act 30 normally does not become
operative for 30 days after the date of its
filing. However, Rule 19b–4(f)(6)(iii) 31
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 asked
the Commission to waive the 30-day
operative delay to provide Members
with additional tools and greater
flexibility for managing their potential
risk as soon as possible. Accordingly,
the Commission believes that waiver of
the 30-day operative delay is consistent
with the protection of investors and the
public interest. Therefore, the
Commission hereby waives the
operative delay and designates the
proposal as operative upon filing.32
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. If the
Commission takes such action, the
Commission shall institute proceedings
to determine whether the proposed rule
change 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:
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–
CboeBZX–2018–086 on the subject line.
28 15
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(6). In addition, Rule 19b–
4(f)(6)(iii) requires a self-regulatory organization to
give the Commission written notice of its 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.
30 17 CFR 240.19b–4(f)(6).
31 17 CFR 240.19b–4(f)(6)(iii).
32 For purposes only of waiving the 30-day
operative delay, the Commission also has
considered the proposed rule’s impact on
efficiency, competition, and capital formation. See
15 U.S.C. 78c(f).
amozie on DSK3GDR082PROD with NOTICES1
29 17
VerDate Sep<11>2014
16:57 Dec 13, 2018
Jkt 247001
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–CboeBZX–2018–086. 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–CboeBZX–2018–086 and
should be submitted on or before
January 4, 2019.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.33
Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2018–27085 Filed 12–13–18; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–84768; File No. SR–DTC–
2018–011]
Self-Regulatory Organizations; The
Depository Trust Company; Notice of
Filing and Immediate Effectiveness of
a Proposed Rule Change To Amend
the Guide to the DTC Fee Schedule
December 10, 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 November
26, 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. DTC filed the
proposed rule change pursuant to
Section 19(b)(3)(A) of the Act 3 and
Rules 19b–4(f)(2) and (f)(4) thereunder.4
The 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 consists of
amendments to the Guide to the DTC
Fee Schedule (‘‘Fee Guide’’) 5 in order to
(i) simplify the pricing structure, (ii)
align fees with the costs of services
provided by DTC, and (iii) encourage
Participant practices that promote
efficient market behavior. The proposed
changes would include: (A) Grouping
certain fee line items for related or
similar services under one fee line item,
(B) deleting fees with little or no
activity, (C) updating certain fees to
reflect DTC’s costs in relation to the
service, (D) decreasing certain fees in
order to incentivize Participants to
utilize certain DTC services that
promote efficiency, both in the servicing
of physical securities in the Custody
Service and for the settlement of
securities transactions at DTC, and (E)
increasing a surcharge to discourage the
late submission of certain underwriting
documentation. In addition, the
proposed rule change would also make
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 15 U.S.C. 78s(b)(3)(A).
4 17 CFR 240.19b–4(f)(2) and (f)(4).
5 Each capitalized term not otherwise defined
herein has its respective meaning as set forth in the
Fee Guide and the Rules, By-Laws and Organization
Certificate of DTC (the ‘‘Rules’’), available at https://
www.dtcc.com/legal/rules-and-procedures.aspx.
2 17
33 17
PO 00000
CFR 200.30–3(a)(12).
Frm 00091
Fmt 4703
Sfmt 4703
64401
E:\FR\FM\14DEN1.SGM
14DEN1
64402
Federal Register / Vol. 83, No. 240 / Friday, December 14, 2018 / Notices
clarifying changes to the Fee Guide, as
described in greater detail below.
Participant practices that promote
efficient market behavior.6
II. Clearing Agency’s Statement of the
Purpose of, and Statutory Basis for, the
Proposed Rule Change
A. Simplify the Pricing Structure
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 would
amend the Fee Guide in order to (i)
simplify the pricing structure, (ii) align
fees with the costs of services provided
by DTC, and (iii) encourage Participant
practices that promote efficient market
behavior. The proposed changes will
include: (A) Grouping certain fee line
items for related or similar services
under one fee line item, (B) deleting fees
with little or no activity, (C) updating
certain fees to reflect DTC’s costs in
relation to the service, (D) decreasing
certain fees in order to incentivize
Participants to utilize certain DTC
services that promote efficiency, both in
the servicing of physical securities in
the Custody Service and for the
settlement of securities transactions at
DTC, and (E) increasing a surcharge to
discourage the late submission of
certain underwriting documentation. In
addition, the proposed rule change
would also make clarifying changes to
the Fee Guide, as described in greater
detail below.
amozie on DSK3GDR082PROD with NOTICES1
(i) Background
Participants are charged fees in
accordance with the Fee Guide, based
upon their activities and the services
that they utilize. The Fee Guide lists
approximately 283 individual fees.
Certain fees need to be updated in order
to better align with the costs incurred by
DTC in providing those services.
In response to feedback from
Participants that the pricing structure is
complex, DTC has undertaken a
strategic review of its pricing and its
pricing structure. As a result of the
review, DTC developed an enhanced
pricing strategy with the goals of
reducing pricing complexity, aligning
fees with costs, and encouraging
VerDate Sep<11>2014
16:57 Dec 13, 2018
Jkt 247001
(1) Fee Groupings
As discussed above, Participants have
indicated that the DTC pricing structure
is complex. In response to this feedback,
the proposed rule change would reduce
the number of individual fee line items
by creating new fee groupings that
would consolidate separate fee line
items for similar services or
transactions. These fee line items would
be grouped together into one line item
with a standard fee, and the related fee
condition may be modified to conform
to the fee grouping. The standard fee
would apply to each of the grouped
services or transactions. In most cases,
the proposed rule change would not
change the amount charged to a
Participant for each service or
transaction within the fee grouping.
However, in a few circumstances, the
proposed standard fee may reflect an
increase or decrease relative to the
amount currently charged in order to
either (i) align fees with costs or (ii)
encourage Participant practices that
promote efficient market behavior.
(2) Removing Fees With Little or No
Activity
The proposed rule change would
remove fees for certain services that
have little or no activity.7 Pursuant to
the proposed rule change, DTC would
delete these fees in order to further
simplify the pricing structure by
reducing the number of line items in the
Fee Guide.
B. Fee Realignment
Pursuant to the proposed rule change,
DTC would update certain fees in the
Fee Guide to more closely reflect the
costs incurred by DTC in providing the
services. DTC believes that it is
reasonable and appropriate to charge
fees that properly align with DTC’s
costs. Aligning fees with costs adds
efficiency to the market by allowing a
Participant to more accurately evaluate
the value of a service and to make
business decisions accordingly. The
primary goal of DTC with respect to the
proposed realignment of fees is to
reduce, where appropriate, the fees
charged to Participants for services.
Certain of the proposed fees that relate
to services with declining volumes have
6 DTC’s affiliates, National Securities Clearing
Corporation (‘‘NSCC’’) and Fixed Income Clearing
Corporation (‘‘FICC’’) have undertaken similar
reviews and are proposing changes to their
respective fees.
7 DTC examined how often all fees were charged
over a period of no less than two years.
PO 00000
Frm 00092
Fmt 4703
Sfmt 4703
been reduced because they consume
fewer DTC resources. Other proposed
fees have been reduced because certain
streamlined processes have resulted in
the reduction of processing costs for
DTC. In both cases, pursuant to the
proposed rule change, DTC, through
these fee reductions, would be passing
along its cost savings to Participants.
Finally, a few proposed fees would
result in fee increases in order to align
with the costs incurred by DTC in
providing the relevant services.
Increasing a fee to align with the costs
incurred by DTC in providing the
service would allow DTC to efficiently
offer the particular service, as well as
continue to appropriately manage its
resources for all its services, thereby
enabling DTC to efficiently provide
dependable and stable services to its
Participants.
C. Promote Efficient Market Behavior
DTC believes the proposed changes to
reduce certain fees would encourage
Participant use of certain DTC services
that offer efficiencies that are designed
to promote the prompt and accurate
clearance and settlement of securities
transactions (‘‘efficient market
behavior’’). Pursuant to the proposed
rule change, DTC would reduce certain
fees for its Custody Service in order to
encourage Participants to centralize the
servicing of their physical securities at
DTC, which already services the
securities deposited at DTC by
Participants for book-entry services. The
Custody Service allows a Participant to
outsource to DTC servicing of physical
securities by depositing, among other
things, securities not eligible for DTC
book-entry services, including securities
such as customer-registered custodial
assets, restricted shares, and other DTCineligible securities such as certificated
money market instruments (MMIs),
private placements, and limited
partnership interests.8 A Participant that
does not use the Custody Service would
otherwise need to secure its own
physical securities as well as
independently handle certain
transactions, such as the transfer of
physical securities and the handling of
reorganization events. By utilizing the
Custody Service, a Participant is able to
benefit from, among other things, cost
savings from the economies of scale
offered by DTC, and the added
efficiency of the limited depository
services offered by DTC with respect to
8 For further information about the Custody
Service, see the Custody Service Guide, available at
https://www.dtcc.com/∼/media/Files/Downloads/
legal/service-guides/Custody.pdf.
E:\FR\FM\14DEN1.SGM
14DEN1
Federal Register / Vol. 83, No. 240 / Friday, December 14, 2018 / Notices
securities held in its Custody Service.9
In addition, pursuant to the proposed
rule change, DTC would also reduce or
eliminate fees for certain settlement
services in order to encourage
Participants to submit their transactions
earlier in day. The earlier submission of
transactions by Participants results in
more efficient settlement processing by
increasing the volume of transactions
processed in the night-cycle, which, in
turn, enhances intraday settlement
processing.
Finally, pursuant to the proposed rule
change, DTC would increase an
underwriting surcharge charged to a
Participant for the late submission of a
letter of representations (‘‘LOR’’) or
blanket letter of representations
(‘‘BLOR’’) 10 in order to increase the
incentive for a Participant to submit its
underwriting documentation in a timely
manner. Failure of a Participant to
submit a LOR or BLOR with respect to
a security on time could delay the
clearance and settlement of transactions
in that security.
D. Clarify the Fee Guide
Pursuant to the proposed rule change,
DTC would amend certain headings, fee
names, and fee conditions to add clarity
and conformity to the Fee Guide.
(ii) Proposed Fee Changes
Pursuant to the proposed rule change,
DTC would amend the Fee Guide as
follows:
A. Simplify the Pricing Structure
(x) Fee Groupings With No Change to
Fee Amount
amozie on DSK3GDR082PROD with NOTICES1
Custody and Securities Processing/
Securities Processing/Maintenance of
Long Position (Registered Securities)
(1) Frozen Letter. Currently, there are
separate identified fees for (i) ‘‘deliver,’’
(ii) ‘‘receive,’’ and (iii) ‘‘reject’’ frozen
letter transactions, each with a fee of
$10.00. Pursuant to the proposed rule
change, these fees would be
consolidated and charged as a ‘‘Frozen
letter deliver, receive or reject’’ fee. The
proposed rule change would not change
the current amount of the fee. DTC
9 The limited depository services may include
physical processing for the security on a
Participant’s behalf, such as facilitating the transfer
of security certificates, and providing custody
reorganization services.
10 In order to make a book-entry only (‘‘BEO’’)
issue eligible at DTC, the issuer must submit to DTC
a LOR or BLOR prior to such issue being
determined to be eligible. For more information on
LORs and BLORs, see The DTC Operational
Arrangements (Necessary for Securities to Become
and Remain Eligible for DTC Services) at 4–6,
available at https://www.dtcc.com/∼/media/Files/
Downloads/legal/issue-eligibility/eligibility/
operational-arrangements.pdf.
VerDate Sep<11>2014
16:57 Dec 13, 2018
Jkt 247001
believes that it would be appropriate to
consolidate these fees because it would
simplify the pricing structure by having
one standard fee for frozen letter
transactions.
Custody and Securities Processing/
Securities Processing/General Asset
Services
(2) Researching of aged and other
special items; Extraordinary processing/
research fee for ICSR; Paying agent
research. Pursuant to the proposed rule
change, ‘‘Researching of aged and other
special items,’’ ‘‘Extraordinary
processing/research fee for ICSR,’’ and
‘‘Paying agent research’’ line items
would be consolidated and charged as a
‘‘Researching fee.’’ 11 The proposed
condition would read, ‘‘per hour or per
CUSIP, depending on the nature of the
research.’’ The proposed rule change
would not affect the current fee of
$100.00 per hour or CUSIP, as
applicable. DTC believes that it would
be appropriate to consolidate these fees
because it would simplify the pricing
structure by having one standard fee for
these research activities.
Custody and Securities Processing/
Corporate Actions/Instruction
Processing Fee
(3) EDS/DRIP Election; Voluntary
Corporate Action Base Election;
Voluntary Corporate Action Election.
These separate fees all relate to
voluntary corporate action instructions.
Pursuant to the proposed rule change,
these fees would be consolidated and
charged as a ‘‘Corporate Action
Instruction Fee.’’ The proposed rule
change would not affect the amount of
the fee. Pursuant to the proposed rule
change, the condition for the fee would
read: ‘‘Per voluntary and elective EDS/
DRP instruction, up to 50 instructions
per offer’’ in order to reflect the
consolidation of the fees for each
instruction type. DTC believes that it
would be appropriate to consolidate
these fees because it would simplify the
pricing structure by having one standard
fee for transactions relating to
instruction processing for voluntary
corporate action events.
Custody and Securities Processing/
Custody Services/Custody (Non-Core
Services)
(4) Custody inventory swing
withdrawal; Custody inventory swing
deposit. Pursuant to the proposed rule
change, these fees would be
consolidated and charged as a ‘‘Custody
11 As discussed below, certain other research fees
with respect to Deposit Automation Management
and New York Window Services would also be
consolidated into the proposed ‘‘Researching fee.’’
PO 00000
Frm 00093
Fmt 4703
Sfmt 4703
64403
inventory swing deposit or withdrawal’’
fee. The condition for the fee would be
modified to read: ‘‘Per deposit or
withdrawal.’’ The proposed rule change
would not affect the current fee. DTC
believes that it would be appropriate to
consolidate these fees because it would
simplify the pricing structure by having
one standard fee for these related
activities.
Custody and Securities Processing/
Custody Services/Custody (Exception
Processing)
(5) Rejects. There are currently
separate identified fees of $125.00 for (i)
‘‘Transfer,’’ (ii) ‘‘Reorg,’’ and (iii)
‘‘Front-end reorg reject.’’ 12 Pursuant to
the proposed rule change, these fees
would be consolidated and charged as a
‘‘Transfer, Reorg or Front-end reorg
rejects’’ fee. The proposed rule change
would not affect the amount of the fee.
DTC believes that it would be
appropriate to consolidate the fees
because it would simplify the pricing
structure by having one standard fee for
custody rejects.
Custody and Securities Processing/
Deposit Services/Branch Deposits (Core
Services)
(6) Regular deposit received from a
branch; Deposit of bearer securities
received from a branch. Pursuant to the
proposed rule change, these fees would
be consolidated and charged as a
‘‘Regular or bearer deposit received from
a branch’’ fee. The proposed rule change
would not affect the current fee of
$18.00 for each activity. DTC believes
that it would be appropriate to
consolidate the fees because it would
simplify the pricing structure by having
one standard fee for branch deposits.
Custody and Securities Processing/
Deposit Services/Branch Deposits
(Exception Processing),13 and Custody
and Securities Processing/Deposit
Services/Deposit Automation
Management (DAM)
(7) BDS TA deposit reject; Rejected
deposit; Rejected reorg deposit.
Pursuant to the proposed rule change,
these fees would be consolidated and
charged as a ‘‘Rejected BDS TA deposit,
Rejected DAM or Rejected Reorg
deposits’’ fee. The proposed rule change
would not affect the current fee of
$125.00 for each activity. DTC believes
12 There is also a $75.00 ‘‘Custody Deposit’’ fee,
which would not be affected by the proposed rule
change.
13 To conform with the proposed fee groupings,
the subheading ‘‘Branch Deposits (Exception
Processing)’’ would be modified to read ‘‘Branch
Deposits and Deposit Automation Management
(DAM) (Exception Processing).
E:\FR\FM\14DEN1.SGM
14DEN1
64404
Federal Register / Vol. 83, No. 240 / Friday, December 14, 2018 / Notices
amozie on DSK3GDR082PROD with NOTICES1
that it would be appropriate to
consolidate the fees because it would
simplify the pricing structure by having
one standard fee for branch deposit
rejections.
(8) Registered certificate deposit;
Previous reverse split. Pursuant to the
proposed rule change, these fees would
be consolidated and charged as a
‘‘Registered certificate deposit or
Previous reverse split’’ fee. The
proposed rule change would not affect
the current fee of $12.00 for each
activity. DTC believes that it would be
appropriate to consolidate the fees
because it would simplify the pricing
structure by having one standard fee for
these DAM activities.
(9) Research fee. Pursuant to the
proposed rule change, this fee would be
consolidated into the proposed
‘‘Researching fee,’’ as discussed above.14
For clarity and transparency, the
‘‘Researching fee’’ line item would also
appear in this section. Pursuant to the
proposed rule change, the proposed
condition would read: ‘‘per hour or per
CUSIP, depending on the nature of the
research.’’
Custody and Securities Processing/New
York Window Services/Deliveries, and
Custody and Securities Processing/New
York Window Services/Receives 15
(10) ESS or FOSS delivery; ESS or
FOSS reclaim delivery; ESS or FOSS
receive; ESS or FOSS reclaim receive.
Pursuant to the proposed rule change,
each of these activities would be
consolidated and charged as an ‘‘ESS or
FOSS delivery, receive or reclaim’’ fee.
The condition for the fee would be
modified to read: ‘‘Per delivery, per
receive or per item for reclaim.’’ The
proposed rule change would not affect
the current fee of $25.00. DTC believes
that it would be appropriate to
consolidate the fees because it would
simplify the pricing structure by having
one standard fee for these related and
similar activities.
(11) Internal cross-delivery; Internal
cross-receive. Pursuant to the proposed
rule change, these activities would be
consolidated and charged as an
‘‘Internal cross-delivery or receive’’ fee.
The condition for the proposed fee
grouping would read: ‘‘Per delivery or
receive.’’ The proposed rule change
would not affect the current fee of
$20.00 for each activity. DTC believes
that it would be appropriate to
consolidate the fees because it would
14 See
supra note 11.
conform with the proposed fee groupings,
the subheading ‘‘Deliveries’’ that appears under the
New York Window Services heading would be
amended to ‘‘Deliveries and Receives.’’ The current
subheading ‘‘Receives’’ would be deleted.
15 To
VerDate Sep<11>2014
16:57 Dec 13, 2018
Jkt 247001
simplify the pricing structure by having
one standard fee for the service.
delete the current subheading of
‘‘Withdrawals by Transfer.’’
Custody and Securities Processing/New
York Window Services/Other Services
(12) Research. Pursuant to the
proposed rule change, this fee would be
consolidated into the proposed
‘‘Researching fee,’’ as discussed above.16
For clarity and transparency, the
‘‘Researching fee’’ line item would also
appear in this section. Pursuant to the
proposed rule change, the proposed
condition would read: ‘‘per hour or per
CUSIP, depending on the nature of the
research.’’
Settlement Services/Book-Entry
Delivery, Excluding MMIs
Custody and Securities Processing/
Withdrawal Services/Direct Registration
System (DRS)
(13) Initiation of DRS Profile
transaction; Cancellation of DRS Profile
change. Pursuant to the proposed rule
change, these fee line items would be
consolidated and charged as an
‘‘Initiation or cancellation of DRS
Profile transaction’’ fee. The condition
for the fee grouping would read: ‘‘Per
transaction submitted or transaction
cancelled before a Limited Participant
Account action.’’ The proposed rule
change would not affect the current fee
of $0.31 for each activity.
Custody and Securities Processing/
Withdrawal Services/Municipal Bearer
Bond Service, and Custody and
Securities Processing/Withdrawal
Services/Urgent Withdrawal, or
Certificates-on-Demand, and Custody
and Securities Processing/Withdrawal
Services/Withdrawals-by-Transfer
(14) Critical withdrawal request;
Generation of WT (interface or window
pickup); Direct mail by transfer agent
(DMA)—Certificate. Pursuant to the
proposed rule change, the fees for these
activities would be consolidated and
charged as a ‘‘Physical Certificate:
Critical withdrawal, WT (interface or
window pick-up) or DMA withdrawal
request’’ fee. The condition for the fee
would be modified to read: ‘‘Per request
or assignment; special costs and TA fees
additional.’’ The proposed rule change
would not affect the current fee of
$500.00 per request or assignment. DTC
believes that it would be appropriate to
consolidate the fees because it would
simplify the pricing structure by having
one standard fee for the service. In order
to reflect the proposed consolidation,
DTC is proposing to (i) modify the
subheading of ‘‘Urgent Withdrawal, or
Certificates-on-Demand’’ to ‘‘Urgent
Withdrawal, Certificates-on-Demand, or
Withdrawals by Transfer,’’ and (ii)
16 See
PO 00000
supra note 11.
Frm 00094
Fmt 4703
Sfmt 4703
(15) Stock loans and returns. In the
current Fee Guide, there is a ‘‘Stock
loans and returns’’ fee of $0.25 per item;
charged to the deliverer. The receiver of
a stock loan or return is currently
charged $0.11 under the fee ‘‘Receive,
regardless of time.’’ Pursuant to the
proposed rule change, both the deliverer
and receiver would be charged a Stock
loans and returns fee of $0.18, the
average of the respective current fees.
The proposed rule change would
modify the condition of ‘‘Stock loans
and returns’’ fee to read: ‘‘Per item;
charged to deliverer and receiver.’’ The
purpose of the proposed rule change
would be to simplify the pricing
structure by having one standard fee for
both sides of the transaction.
(16) Receive, regardless of time.
Pursuant to the proposed rule change,
the fee name would be amended to
reflect the proposed exclusion of stock
loan receives and reclaim receives from
this fee, in order to align with the
proposed changes to the ‘‘Stock loans
and returns’’ and ‘‘Reclaim’’ fees. As
such, DTC is proposing to amend the fee
name to ‘‘Receive, regardless of time
(excluding reclaims and stock loans and
returns).’’
(17) Reclaim. In the current Fee
Guide, there is a ‘‘Reclaim’’ fee of $0.45
per item; charged per delivery.
Currently, the receive of a reclaim is
charged $0.11 as a ‘‘Receive, regardless
of time’’ fee. Pursuant to the proposed
rule change, both a delivery and receive
of a reclaim would be charged as a
‘‘Reclaims’’ 17 fee of $0.26, the average
of the respective current fees. The
proposed rule change would modify the
condition of ‘‘Reclaims’’ fee to read:
‘‘Per delivery or receive.’’ The purpose
of the proposed rule change would be to
simplify the pricing structure by having
one standard fee for both sides of the
transaction.
Settlement Services/Money Market
Instruments (MMI) by Book-Entry Only
(18) MMI DO; Maturity or
reorganization presentment; Issuance
instruction, both directly placed and
dealer placed; Issuance deposit; MMI
issuance receiver. Pursuant to the
proposed rule change, these fees would
be consolidated and charged as an
‘‘MMI Transaction’’ fee. The proposed
rule change would not affect the current
17 For conformity with other fee names in this
section, DTC is proposing to change the fee name
to ‘‘Reclaims.’’
E:\FR\FM\14DEN1.SGM
14DEN1
Federal Register / Vol. 83, No. 240 / Friday, December 14, 2018 / Notices
fee of $1.00 for each transaction. To
reflect the consolidation, DTC is
proposing to modify the condition to
read: ‘‘Per item delivered, or received,
issued or maturing.’’ DTC believes that
it would be appropriate to consolidate
the fees because it would simplify the
pricing structure by having one standard
fee for these MMI transactions.
(y) Deletion of Fees With Little or No
Volume
The following fees have minimal or
no activity. Pursuant to the proposed
rule change, these fees would be deleted
in order to simplify the pricing
structure.
Custody and Securities Processing/
General Asset Services
(19) Transmission of image of deposit
by fax or email, additional recipient.
(20) Photocopying of statement or
certificate.
(21) Recording of certificate numbers.
Custody and Securities Processing/
Municipal Bearer Bond Service
(22) BEO issue.
Custody and Securities Processing/
Corporate Actions/Instruction
Processing Fees
(23) Voluntary Corporate Action Bulk
Election.
Custody and Securities Processing/
Custody Services/Custody (Core
Services)
(24) Certified Mailing.
(25) Photocopying and sending
certificate or other document copies.
Custody and Securities Processing/
Custody Services/Custody (Exception
Processing)
(26) Box-to-box audit count.
(27) Customer audit count.
amozie on DSK3GDR082PROD with NOTICES1
Custody and Securities Processing/
Deposit Services/Branch Deposits
(Exception Processing), and Custody
and Securities Processing/Deposit
Services/Deposit Automation
Management (DAM)
(28) Incorrect/no PDF-generated DAM
deposit ticket attached.
(29) Depository Facilities: Facility
usage fee.
(30) Depository Facilities: Facility
deposit.
Custody and Securities Processing/
Deposit Services/Restricted Deposits
(31) Processing of trailing documents.
Custody and Securities Processing/New
York Window Services/Other Services
(32) Pass-through fees.
(33) Long position.
VerDate Sep<11>2014
16:57 Dec 13, 2018
Jkt 247001
Custody and Securities Processing/
Reorganization Services/Reorganization
(34) Photocopy.
Custody and Securities Processing/
Withdrawal Services/Direct Registration
System (DRS)
(35) Establishment of DRS account
and subsequent mailing transaction.
(36) Initiation of DRS Profile change
using DRST via PTS or PBS.
(37) Cancellation of DRS Profile
change using DRST via PTS or PBS.
Custody and Securities Processing/
Withdrawal Services/Interface
Department
(38) Sorting.
Forms
(39) Forms provided by DTC.18
B. Simplify the Pricing Structure/
Realignment of Fee (Fee Groupings With
a Fee Realignment)
Custody and Securities Processing/
Securities Processing/Maintenance of
Long Position (Registered Securities)
(40) Less active issue. Currently, there
are separate fees for registered corporate
issues ($0.70) and registered municipal
issues ($1.29). Pursuant to the proposed
rule change, the fee would be $0.70 for
either type of security. The proposed
rule change would result in a fee
decrease of $0.59 for registered
municipal issues, which would better
align the fee with declining volumes of
less active registered municipal
securities. As discussed above, certain
fees that relate to services with
declining volumes would be reduced
because they consume fewer DTC
resources. Pursuant to the proposed rule
change, the new fee condition would
read: ‘‘For registered corporate issues,
when a daily average of 15 or fewer
participants have position or registered
municipal issues, when a daily average
of 1 or 2 participants have position.’’
The purpose of the proposed rule
change would be to (i) simplify the
pricing structure by having one standard
fee for the service and (ii) more closely
align to DTC’s decreased cost of
providing the service for registered
municipal securities.
18 To
conform with this change, the entire
‘‘Forms’’ section of the Fee Guide would be
removed.
PO 00000
Frm 00095
Fmt 4703
Sfmt 4703
64405
Custody and Securities Processing/
Withdrawal Services/Municipal Bearer
Bond Service, and Custody and
Securities Processing/Withdrawal
Services/Urgent Withdrawal, or
Certificates-on-Demand
(41) COD 19 (Municipal Bearer Bond
Service); COD (Urgent Withdrawal, or
Certificates-on-Demand). Currently, a
COD under the Municipal Bearer Bond
Service is charged a fee of $300.00, and
other CODs are charged a fee of $240.00.
Pursuant to the proposed rule change,
the COD (Municipal Bearer Bond
Service) fee line item would be
consolidated with the COD (Urgent
Withdrawal, or Certificates-on-Demand)
fee line item and charged as a ‘‘COD’’
fee, in the amount of $300.00. The
proposed rule change would result in a
fee increase of $60.00 for non-Municipal
Bearer Bond Service CODs. The
condition for the fee would be amended
to read: ‘‘Per withdrawal/COD.’’ The
purpose of the proposed rule change
with respect to consolidating the fees
would be to simplify the pricing
structure by having one standard fee for
these COD transactions. The purpose of
the proposed rule change with respect
to the fee increase would be to align to
DTC’s cost of providing the COD
service, whether under the Municipal
Bearer Bond Service or otherwise.
Finally, in order to reflect the proposed
consolidation, DTC is proposing to
delete the subheading ‘‘Municipal
Bearer Bond Service.’’
Settlement Services/Book-Entry
Delivery, Excluding MMIs
(42) Book-entry deliveries through
CNS: Delivery to CNS; Receive from
CNS. Currently, a Participant that
delivers securities to the NSCC CNS 20
account at DTC is charged $0.09 per
item delivered; charged to both sides. A
Participant that receives securities from
the CNS account is charged $0.035 per
item received, charged to both sides.
Pursuant to the proposed rule change,
each of these activities would be
charged as a ‘‘Delivery to/from CNS’’ fee
of $0.08, charged to both sides. To
reflect the consolidation, DTC is
proposing to delete the verbiage ‘‘Bookentry deliveries through CNS.’’ The
purpose of the proposed rule change
with respect to consolidating the fees
would be to simplify the pricing
structure by charging a standard fee to
both a deliverer and receiver in a CNS
transaction. The purpose of the
proposed rule change (with respect to
19 COD is an acronym for ‘‘certificate on
demand.’’
20 CNS is an acronym for the NSCC ‘‘Continuous
Net Settlement’’ system.
E:\FR\FM\14DEN1.SGM
14DEN1
64406
Federal Register / Vol. 83, No. 240 / Friday, December 14, 2018 / Notices
establishing a new fee for the fee
grouping) would be to update the fee to
better reflect the operational
complexity, increased capacity, and
system supports that are required to
process CNS transactions at DTC.
(43) Deliver order exception
processing: Hold or release of pending
DO that is recycling for insufficient
position; Cancellation of pending DO.
Currently, a Participant is charged $0.40
per item for ‘‘Hold or release of a
pending DO that is recycling for
insufficient position.’’ A Participant is
currently charged $0.20 per item for
‘‘Cancellation of pending DO.’’ Pursuant
to the proposed rule change, the hold or
release of a pending DO and the
cancellation of a pending DO would
each be charged a fee of $0.24 per item,
a weighted average that is based on the
volume of each activity, under the fee
name ‘‘Hold, cancel or release of
pending DO that is recycling for
insufficient position.’’ The purpose of
the proposed rule change would be to (i)
simplify the pricing structure by having
one standard fee for similar activities
and (ii) more closely align to DTC’s
costs incurred in relation to providing
the service for each type of DO
exception processing.
C. Simplify the Pricing Structure/
Promote Efficient Market Behavior (Fee
Groupings With a Fee Change To
Promote Efficient Market Behavior)
amozie on DSK3GDR082PROD with NOTICES1
Custody and Securities Processing/
Deposit Services/Reorganization
Deposits
(44) Mandatory (regular or legal);
Redemption or call (regular or legal).
Currently, each of these reorganization
deposit fees is $90.00 per deposit.
Pursuant to the proposed rule change,
these fees would be consolidated and
charged as a ‘‘Mandatory, Redemption
or Call Deposits (regular or legal)’’ fee.
Pursuant to the proposed rule change,
the fee for ‘‘Mandatory, Redemption or
Call Deposits (regular or legal)’’ would
be $60.00, a $30.00 decrease from the
current fees. The purpose of the
proposed rule change would be to (i)
simplify the pricing structure by having
one standard fee for these related
activities and (ii) incentivize
Participants to utilize DTC to centralize,
and enhance the efficiency of, the
servicing of their securities.
Custody and Securities Processing/New
York Window Services/Deliveries, and
Custody and Securities Processing/New
York Window Services/Receives
(45) OTW 21 delivery (including
government securities); OTW reclaim
21 OTW
is an acronym for ‘‘over-the-window.’’
VerDate Sep<11>2014
16:57 Dec 13, 2018
Jkt 247001
delivery; OTW receive (including
government receives); OTW reclaim
receive. Pursuant to the proposed rule
change, these fees would be
consolidated and charged as an ‘‘OTW
delivery, receive or reclaim (including
government securities)’’ fee. The
condition for the proposed fee grouping
would be modified to read: ‘‘Per
delivery, per receive or per item for
reclaim.’’ Pursuant to the proposed rule
change, the fee for the new fee grouping
would be reduced to $40.00, a decrease
of $10.00 from the current fees. The
purpose of the proposed rule change
with respect to consolidating the fees
would be to simplify the pricing
structure by having one standard fee for
these related activities. The purpose of
the proposed rule change with respect
to the reduction of the fee would be to
encourage Participants to utilize the
OTW services, by incentivizing the
presentation of more physical securities
to DTC’s central facility, and thereby
promote processing efficiency.
Underwriting Services/Late Surcharges
(46) Late receipt of LOR or BLOR (on
closing date); Late closing (after 2:00
p.m. eastern time). Currently, a
Participant is charged a $300.00
surcharge for a ‘‘Late receipt of LOR or
BLOR (on closing date),’’ and is charged
a $400.00 surcharge for a ‘‘Late closing
(after 2:00 p.m. eastern time).’’ Pursuant
to the proposed rule change, these
surcharges would be consolidated and
charged as a ‘‘Late receipt of LOR or
BLOR (on closing date) or Late Closing
(after 2:00 p.m. eastern time)’’ surcharge
of $400. These surcharges are intended
to align with DTC’s cost in relation to
a late submission or closing, as well as
to incentivize Participants to move
through the underwriting process in a
timely manner. As such, DTC is
proposing a $400.00 surcharge for this
fee grouping, which would result in a
surcharge increase of $100.00 for late
submissions of LORs and BLORs. DTC
is proposing the amount of $400 for the
standard surcharge in order to
standardize the amount of the
surcharge, and to further encourage
Participants to submit underwriting
documentation in a timely manner.
D. Fee Realignment
Custody and Securities Processing/
Corporate Actions/Allocation Fees
(47) Mandatory Corporate Actions.
Pursuant to the proposed rule change,
the fee would be reduced from $80.00
to $75.00. The purpose of the proposed
rule change would be to align the fee
with the costs of providing the service.
The costs incurred by DTC are
PO 00000
Frm 00096
Fmt 4703
Sfmt 4703
decreasing because of certain
streamlined processes that have resulted
in the reduction of processing costs for
this service.
Custody and Securities Processing/
Corporate Actions/Voluntary Event
Handling Fee
(48) Voluntary Corporate Action
Handling. Pursuant to the proposed rule
change, the fee would be reduced from
$95.00 to $90.00. The purpose of the
proposed rule change would be to align
the fee with the costs of providing the
service. The costs incurred by DTC are
decreasing because of certain
streamlined processes that have resulted
in the reduction of processing costs for
this service.
Settlement Services/Book-Entry
Delivery, Excluding MMIs
(49) Institutional receive or delivery
(ID). Pursuant to the proposed rule
change, this fee would be reduced from
$0.05 per receive or delivery to $0.04
per receive or delivery. The purpose of
the proposed reduction would be to
more closely align the fee with DTC’s
decreased cost of providing the service,
which is primarily handled as straightthrough processing.
(50) ID Net receive or delivery.
Pursuant to the proposed rule change,
this fee would be reduced from $0.025
per receive or delivery to $0.02 per
receive or delivery. The purpose of the
proposed reduction would be to more
closely align the fee with DTC’s
decreased cost of providing the service,
which is primarily handled as straightthrough processing.
(51) Fed DO. Pursuant to the proposed
rule change, this fee would be reduced
from $2.25 per item delivered or
received to $1.50 per item delivered or
received. The purpose of the proposed
reduction is to more closely align the fee
with DTC’s cost of providing the
service.
E. Promote Efficient Market Behavior
Custody and Securities Processing/
Custody Services/Custody (Core
Services)
(52) Withdrawal and pickup (COD)
between 8:30 a.m.–2:00 p.m. Pursuant to
the proposed rule change, the fee would
be reduced from $60.00 to $50.00. The
purpose of the proposed rule change
would be to incentivize Participants to
utilize DTC to centralize, and enhance
the efficiency of, the servicing of their
physical securities.
(53) Withdrawal and pickup (COD)
between 2:00 p.m.–4:30 p.m. Pursuant to
the proposed rule change, the fee would
be reduced from $100.00 to $75.00. The
purpose of the proposed rule change
E:\FR\FM\14DEN1.SGM
14DEN1
Federal Register / Vol. 83, No. 240 / Friday, December 14, 2018 / Notices
would be to incentivize Participants to
utilize DTC to centralize, and enhance
the efficiency of, the servicing of their
physical securities.
(54) Withdrawal and subsequent
deposit. Pursuant to the proposed rule
change, the fee would be reduced from
$20.00 to $15.00. The purpose of the
proposed rule change would be to
incentivize Participants to utilize DTC
to centralize, and enhance the efficiency
of, the servicing of their physical
securities.
(55) Withdrawal and shipment
between 8:30 a.m.–2:00 p.m. Pursuant to
the proposed rule change, the fee would
be reduced from $70.00 to $55.00. The
purpose of the proposed rule change
would be to incentivize Participants to
utilize DTC to centralize, and enhance
the efficiency of, the servicing of their
physical securities.
(56) Withdrawal and shipment
between 2:00 p.m.–4:30 p.m. Pursuant to
the proposed rule change, the fee would
be reduced from $110.00 to $80.00. The
purpose of the proposed rule change
would be to incentivize Participants to
utilize DTC to centralize, and enhance
the efficiency of, the servicing of their
physical securities.
(57) Custody reorg deposit. Pursuant
to the proposed rule change, the fee
would be reduced from $90.00 to
$60.00. The purpose of the proposed
rule change would be to incentivize
Participants to utilize DTC to centralize,
and enhance the efficiency of, the
servicing of their physical securities.
amozie on DSK3GDR082PROD with NOTICES1
Custody and Securities Processing/
Custody Services/Custody (Exception
Processing)
(58) Reorg research. Pursuant to the
proposed rule change, the fee would be
reduced from $110.00 to $80.00. The
purpose of the proposed rule change
would be to incentivize Participants to
utilize DTC to centralize, and enhance
the efficiency of, the servicing of their
physical securities.
Custody and Securities Processing/
Deposit Services/Restricted Deposits
(59) Restricted Deposit: Before 2:00
p.m. Pursuant to the proposed rule
change, the fee would be reduced from
$90.00 to $60.00. The purpose of the
proposed rule change would be to
incentivize Participants to utilize the
restricted deposit services to centralize,
and enhance the efficiency of, the
servicing of their physical securities.
(60) Restricted Deposit: After 2:00
p.m. eastern time. Pursuant to the
proposed rule change, the fee would be
reduced from $110.00 to $80.00. The
purpose of the proposed rule change
would be to incentivize Participants to
VerDate Sep<11>2014
16:57 Dec 13, 2018
Jkt 247001
utilize the restricted deposit services to
centralize, and enhance the efficiency
of, the servicing of their physical
securities.
(61) Reject of restricted deposit.
Pursuant to the proposed rule change,
this disincentive fee for rejections of
restricted deposits would be eliminated.
The purpose of the proposed rule
change would be to remove any
disincentive for Participants to utilize
the restricted deposit service, and
instead encourage Participants to utilize
the restricted deposit service to
centralize, and enhance the efficiency
of, the servicing of their physical
securities.
Settlement Services/Book-Entry
Delivery, Excluding MMIs
(62) Night deliver order. Pursuant to
the proposed rule change, the fee would
be reduced from $0.20 to $0.17 per item;
charged to deliverer; applies to each DO
submitted. DTC is proposing to reduce
this fee in order to encourage
Participants to submit their transactions
earlier in day. The earlier submission of
transactions by Participants results in
more efficient settlement processing by
increasing the volume of transactions
processed in the night-cycle, which, in
turn, enhances intraday settlement
processing.
(63) Deliver order exception
processing: Dropped DO not completed
because of insufficient deliverer position
or collateral. Since the fee for ‘‘Dropped
DO not completed because of
insufficient deliverer position or
collateral’’ may cause a Participant to
delay making a particular delivery, the
proposed rule change would eliminate
the fee in order to encourage
Participants to submit their transactions
earlier in the day. The earlier
submission of transactions by
Participants results in more efficient
settlement processing by increasing the
volume of transactions processed in the
night-cycle, which, in turn, enhances
intraday settlement processing.
(64) Deliver order exception
processing: Insufficient receiver
collateral or net debit cap. Since the fee
for ‘‘Insufficient receiver collateral or
net debit cap’’ may cause a Participant
to delay making a particular delivery,
the proposed rule change would
eliminate the fee in order to encourage
Participants to submit their transactions
earlier in the day. The earlier
submission of transactions by
Participants results in more efficient
settlement processing by increasing the
volume of transactions processed in the
night-cycle, which, in turn, enhances
intraday settlement processing.
PO 00000
Frm 00097
Fmt 4703
Sfmt 4703
64407
F. Clarify the Fee Guide
DTC is proposing to amend the
following provisions to clarify the Fee
Guide:
Custody and Securities Processing/
Securities Processing/Maintenance of
Long Position (Registered Securities)
(65) Average daily number of shares,
rounded up to a multiple of 100 shares.
For clarity and transparency, the
proposed rule change would amend the
fee name to: ‘‘Average daily number of
shares (stocks, bonds and registered
muni), rounded up to a multiple of 100
shares.’’ The purpose of the proposed
rule change is to clarify the types of
securities that are included in the
service.
(66) BEO issue. For clarity and
transparency, the proposed rule change
would amend the fee name to: ‘‘BEO
issue (stocks, bonds and registered
muni).’’ The purpose of the proposed
rule change is to clarify the types of
securities that are included in the
service.
(67) Medium-term note, money
market instrument, and commercial
paper. For clarity and transparency, the
proposed rule change would amend the
fee name to: ‘‘Medium-term note, money
market instrument, registered muni and
commercial paper.’’ The purpose of the
proposed rule change is to clarify the
types of securities that are included in
the service.
(68) Issue that has been
nontransferable for up to 6 years
(surcharge). For clarity and
transparency, the proposed rule change
would amend the fee name to: ‘‘Stock,
bond, registered and bearer muni that
have been nontransferable for up to 6
years (surcharge).’’ The purpose of the
proposed rule change is to clarify the
types of securities that are included in
the service.
(69) Issue that remains
nontransferable after 6 years
(surcharge). For clarity and
transparency, the fee name would be
amended to: ‘‘Stock, bonds, registered
and bearer muni that remain
nontransferable after 6 years
(surcharge).’’ The purpose of the
proposed rule change is to clarify the
types of securities that are included in
the service.
(70) Swing of security position
(receive or deliver). For clarity and
transparency, the fee name would be
amended to: ‘‘Swing of security position
(receive, or deliver (including stock
dividend deliver)).’’ The purpose of the
proposed rule change is to clarify the
types of securities that are included in
the service.
E:\FR\FM\14DEN1.SGM
14DEN1
64408
Federal Register / Vol. 83, No. 240 / Friday, December 14, 2018 / Notices
Underwriting Services/Eligibility Fees
(71) Equity Eligibility—Additional
CUSIP Fee. For clarity and
transparency, the first line of the fee
condition would be modified to read:
‘‘Per additional CUSIP;’’. The purpose of
the proposed rule change is to
accurately reflect the existing
underwriting fee-per-CUSIP structure,
which consists of an initial fixed fee for
the first CUSIP and an incremental fee
for each additional CUSIP.22
(72) Debt Eligibility—Additional
CUSIP Fee. For clarity and
transparency, the first line of the fee
condition would be modified to read:
‘‘Per additional CUSIP;’’. The purpose of
the proposed rule change is to
accurately reflect the existing
underwriting fee-per-CUSIP structure,
which consists of an initial fixed fee for
the first CUSIP and an incremental fee
for each additional CUSIP.23
Expected Participant Impact
In general, DTC anticipates that the
proposed rule change would (i) have no
impact on approximately 30% of
Participants, (ii) result in fee reductions
for approximately 49% of Participants,
and (iii) result in fee increases for
approximately 21% of Participants.
These estimates were calculated against
2017 volume figures. In terms of the
estimated fee increases, approximately
38% would have an increase of less
than $1,000 per year, approximately
22% would have an increase between
$1,000 and $10,000 per year,
approximately 38% would have an
increase between $10,000 and $75,000
per year, and approximately 2% would
have an increase between $100,000 and
$200,000 per year. These estimated
impacts correlate to a Participant’s
business model and its use of the
services affected by the proposed rule
change. Taken collectively, the
proposed rule change would reduce
DTC’s revenue by approximately 1%.
amozie on DSK3GDR082PROD with NOTICES1
Participant Outreach
Beginning in June 2018, DTC has
conducted outreach to Participants in
order to provide them with notice of the
proposed changes to the affected fees.
As of the date of this filing, no written
comments relating to the proposed
changes have been received in response
to this outreach. The Commission will
be notified of any written comments
received.
22 Securities Exchange Act Release No. 71206
(December 30, 2013), 79 FR 690 (January 6, 2014)
(SR–DTC–2013–12).
23 Id.
VerDate Sep<11>2014
16:57 Dec 13, 2018
Jkt 247001
Implementation Timeframe
DTC would implement this proposal
on January 1, 2019. As proposed, a
legend would be added to the Fee Guide
stating there are changes that became
effective upon filing with the
Commission but have not yet been
implemented. The proposed legend also
would include a date on which such
changes would be implemented and the
file number of this proposal, and state
that, once this proposal is implemented,
the legend would automatically be
removed from the Fee Guide.
2. Statutory Basis
DTC believes that this proposal is
consistent with the requirements of the
Act and the rules and regulations
thereunder applicable to a registered
clearing agency. Specifically, DTC
believes that this proposal is consistent
with Sections 17A(b)(3)(D) 24 and
17A(b)(3)(F) 25 of the Act and Rule
17Ad–22(e)(23)(ii),26 as promulgated
under the Act, for the reasons described
below.
(i) Section 17A(b)(3)(D) of the Act
requires, inter alia, that the Rules
provide for the equitable allocation of
reasonable dues, fees, and other charges
among participants.27 For the reasons
set forth below, DTC believes that each
of the proposed rule changes described
above in Items II(A)1(ii)A–F would
provide for the equitable allocation of
reasonable dues, fees, and other charges
among participants.
A. Simplify the Pricing Structure
DTC believes that each of the
proposed rule changes described in
Items II(A)1(ii)A(x) (Simplify the Pricing
Structure: Fee Groupings) and
II(A)1(ii)A(y) (Simplify the Pricing
Structure: Deletion of Fees with Little or
No Volume) would provide for the
equitable allocation of reasonable fees.
Each of the proposed rule changes
described in Item II(A)1(ii)A(x) would
consolidate individual fee line items
into a single fee line item. Each of the
proposed rule changes described in Item
II(A)1(ii)A(y) would delete a fee with
little or no volume. Each fee for a
service as described in Items
II(A)1(ii)A(x) and II(A)1(ii)A(y) would
continue to be charged (or not charged,
with respect to the proposed fee
deletions) to a Participant in accordance
with (i) its utilization of the service, and
(ii) the fee condition set forth in the Fee
Guide, and would therefore be equitably
allocated. In addition, the proposed rule
24 15
U.S.C. 78q–1(b)(3)(D).
U.S.C. 78q–1(b)(3)(F).
26 17 CFR 240.17Ad–22(e)(23)(ii).
27 15 U.S.C. 78q–1(b)(3)(D).
25 15
PO 00000
Frm 00098
Fmt 4703
Sfmt 4703
changes described in Item II(A)1(ii)A(x)
would not affect current fees, and would
therefore continue to provide for
reasonable fees. Further, the proposed
rule changes described in Item
II(A)1(ii)A(y), which would delete fees
that have little or no volume, would be
commensurate with DTC’s minimal cost
of providing the relevant service.
Therefore, DTC believes that each of the
proposed rule changes described in
Items II(A)1(ii)A(x) and II(A)1(ii)A(y)
would not affect the allocation or
amount of fees, and would thereby
continue to provide for the equitable
allocation of reasonable fees, consistent
with Section 17A(b)(3)(D) of the Act.28
B. Fee Realignment
DTC believes that each of the
proposed rule changes with respect to
the proposed realignment of fees, as
described in Items II(A)1(ii)B (Simplify
the Pricing Structure/Fee
Realignment) 29 and II(A)1(ii)D (Fee
Realignment), would provide for the
equitable allocation of reasonable fees.
Each proposed fee for a service as
described in Items II(A)1(ii)B and D
would continue to be charged to a
Participant in accordance with (i) its
utilization of the service, and (ii) the fee
condition set forth in the Fee Guide.
DTC believes that, pursuant to the
proposed rule changes described in
Items II(A)1(ii)B and D, the proposed
fees would continue to be equitably
allocated because all Participants that
utilize a particular service would be
treated equally with respect to these fees
under the proposal.30
DTC believes that each of the
proposed rule changes described in
Items II(A)1(ii)B (Simplify the Pricing
Structure/Fee Realignment) and
II(A)1(ii)D (Fee Realignment) would
provide for reasonable fees. First, as
discussed above, most of the proposed
fee realignments described in Items
II(A)1(ii)B and D would result in a fee
reduction for a service. As described
above, these fee reductions are being
28 Id.
29 DTC believes that the consolidation of fee line
items, in and of itself, would not affect the
allocation or amount of fees. Therefore, to the
extent that a proposed rule change described in
Item II(A)1(ii)B (Simplify the Pricing Structure/Fee
Realignment) addresses the consolidation of fee line
items, DTC believes that such proposed rule change
would continue to provide for the equitable
allocation of reasonable fees. See supra Item
II(A)2(i)A.
30 As discussed above in the section titled
‘‘Expected Participant Impact,’’ the proposed rule
change may result in fee increases or fee decreases
for some Participants. A Participant may be
impacted differently than another Participant due to
its use of the various services with fees that would
be affected by the proposed rule change, pursuant
to its own particular business structure.
E:\FR\FM\14DEN1.SGM
14DEN1
Federal Register / Vol. 83, No. 240 / Friday, December 14, 2018 / Notices
proposed due to (i) declining volumes
in connection with the service requiring
fewer DTC resources and/or (ii) certain
streamlined processes having resulted
in the reduction of processing costs for
DTC in connection with the service. In
both cases, DTC, through the proposed
fee reductions, would be passing along
its cost savings to Participants.
Therefore, DTC believes that such
proposed fee reductions would continue
to provide for the allocation of
reasonable fees among Participants.
Second, as discussed above, a few
proposed fee realignments, as described
in Items II(A)1(ii)B(41)–(43),31 would
result in an increase to a fee for a
service. Such proposed fee increases
would allow those fees to remain
commensurate with the costs of
resources allocated by DTC in
connection with the relevant services.
The proposed fee increases to align with
the costs incurred by DTC in providing
the service would allow DTC to
efficiently offer the service. Therefore,
DTC believes that the proposed rule
changes described in Items II(A)1(ii)B
and D, would provide for the equitable
allocation of reasonable fees, consistent
with Section 17A(b)(3)(D) of the Act.32
amozie on DSK3GDR082PROD with NOTICES1
C. Promote Efficient Market Behavior
DTC believes that each of the
proposed rule changes described in
Items II(A)1(ii)C (Simplify the Pricing
Structure/Promote Efficient Market
Behavior) 33 and II(A)1(ii)E (Promote
Efficient Market Behavior) would
provide for the equitable allocation of
reasonable fees. Each proposed fee for a
service as described in Items II(A)1(ii)C
and E would continue to be charged to
a Participant in accordance with (i) its
utilization of the service, and (ii) the fee
condition set forth in the Fee Guide.
DTC believes that, pursuant to the
proposed rule changes described in
Items II(A)1(ii)C and E, the proposed
fees would continue to be equitably
allocated because all Participants that
utilize a particular service (or submit a
late BLOR or LOR) would be treated
equally with respect to these fees under
the proposal.34
31 Per email instruction from DTC’s legal staff on
December 4, 2018, Commission staff revised this
reference to correct a typographical error, changing
‘‘B(43)–(45)’’ to ‘‘B(41)–(43).’’
32 15 U.S.C. 78q–1(b)(3)(D).
33 DTC believes that the consolidation of fee line
items, in and of itself, would not affect the
allocation or amount of fees. Therefore, to the
extent that a proposed rule change described in
Item II(A)1(ii)C (Simplify the Pricing Structure/
Promote Efficient Market Behavior) addresses the
consolidation of fee line items, DTC believes that
such proposed rule change would continue to
provide for the equitable allocation of reasonable
fees. See supra Items II(A)2(i)A and B.
34 See supra note 30.
VerDate Sep<11>2014
16:57 Dec 13, 2018
Jkt 247001
DTC believes that the each of the
proposed rule changes described in
Items II(A)1(ii)C (Simplify the Pricing
Structure/Promote Efficient Market
Behavior) and II(A)1(ii)E (Promote
Efficient Market Behavior) would
provide for reasonable fees. First, with
the exception of the surcharge for the
late submission of a LOR or BLOR, the
proposed fee changes described in Items
II(A)1(ii)C and E would reduce fees to
encourage Participant use of certain
DTC services that promote efficiency in
the handling of physical securities or
the processing of securities transactions
for settlement. As such, DTC believes
that these proposed fee reductions
would result in reasonable fees because
the use of these efficiencies offered by
DTC could result in future decreased
processing costs for Participants and for
DTC, which, in turn, could be passed
along to Participants. Second, DTC is
proposing to increase the surcharge for
the late submission of a LOR or BLOR
from $300 to $400 in order to increase
the incentive for a Participant to submit
its underwriting documentation in a
timely manner. DTC believes that the
increase of this surcharge would be
reasonable because Participants are
already accustomed to the $400.00
surcharge for late closings, which is
being consolidated into one line item
with the late submission of LORs and
BLORs surcharge. DTC also believes that
the proposed fee would be reasonable
because (i) the increase would be a
modest amount ($100) that would only
apply when a Participant submits a late
LOR or BLOR, and (ii) a Participant can
avoid the surcharge by submitting the
LOR or BLOR on time. Therefore, DTC
believes that each of the proposed rule
changes described in Items II(A)1(ii)C
and E would provide for the equitable
allocation of reasonable fees, consistent
with Section 17A(b)(3)(D) of the Act.35
D. Clarify the Fee Guide
DTC believes that each of the
proposed rule changes described in Item
II(A)1(ii)F (Clarify the Fee Guide) would
provide for the equitable allocation of
reasonable fees among participants.
Each of the proposed rule changes
described in II(A)1(ii)F would clarify a
fee line item without affecting the
amount of the existing fee for such line
item. Each fee for a service as described
in Item II(A)1(ii)F would continue to be
charged to a Participant in accordance
with (i) its utilization of the service, and
(ii) the fee condition set forth in the Fee
Guide. Therefore, DTC believes that
each of the proposed rule changes
described in Item II(A)1(ii)F would not
affect the allocation or amount of fees,
and would thereby continue to provide
for the equitable allocation of reasonable
fees, consistent with Section
17A(b)(3)(D) of the Act.36
For the foregoing reasons, DTC
believes that each of the proposed rule
changes described in Items II(A)1(ii)A–
F would provide for the equitable
allocation of reasonable dues, fees, and
other charges among participants,
consistent with Section 17A(b)(3)(D) of
the Act.37
(ii) Section 17A(b)(3)(F) of the Act
requires, inter alia, that the Rules be
designed to promote the prompt and
accurate clearance and settlement of
securities transactions.38 For the reasons
set forth below, DTC believes that each
of the proposed rule changes described
in Items II(A)1(ii)A–F is designed to
promote the prompt and accurate
clearance and settlement of securities
transactions.
A. Simplify the Fee Guide
DTC believes that each of the
proposed rule changes with respect to
the consolidation of individual fee line
items or deletion of fees, as described in
Items II(A)1(ii)A(x) (Simplify the Pricing
Structure: Fee Groupings), II(A)1(ii)A(y)
(Simplify the Pricing Structure: Deletion
of Fees with Little or No Volume),
II(A)1(ii)B (Simplify the Pricing
Structure/Fee Realignment), and
II(A)1(ii)C (Simplify the Pricing
Structure/Promote Efficient Market
Behavior) is designed to promote the
prompt and accurate clearance and
settlement of securities transactions.
DTC is proposing changes, as described
in Items II(A)1(ii)A(x), II(A)1(ii)A(y),
II(A)1(ii)B, and II(A)1(ii)C, that are
designed to improve the accuracy and
clarity of the Fee Guide by simplifying
the Fee Guide through fee groupings or
through the deletion of fees with little
or no volume. Improving the accuracy
and clarity of the Rules and Procedures,
including the Fee Guide, would help
Participants to better understand their
rights and obligations regarding DTC
services. When Participants better
understand their rights and obligations
regarding DTC services, they can act in
accordance with the Rules and
Procedures, which DTC believes would
promote the prompt and accurate
clearance and settlement of securities
transactions by DTC. As such, DTC
believes the proposed rule changes to
simplify and clarify the Fee Guide are
36 Id.
37 Id.
35 15
PO 00000
U.S.C. 78q–1(b)(3)(D).
Frm 00099
Fmt 4703
Sfmt 4703
64409
38 15
E:\FR\FM\14DEN1.SGM
U.S.C. 78q–1(b)(3)(F).
14DEN1
64410
Federal Register / Vol. 83, No. 240 / Friday, December 14, 2018 / Notices
consistent with Section 17A(b)(3)(F) of
the Act.39
amozie on DSK3GDR082PROD with NOTICES1
B. Fee Realignment
DTC believes that each of the
proposed rule changes with respect to
the proposed realignment of fees, as
described in Items II(A)1(ii)B (Simplify
the Pricing Structure/Fee Realignment)
and II(A)1(ii)D (Fee Realignment) is
designed to promote the prompt and
accurate clearance and settlement of
securities transactions. First, most of the
proposed fee realignments described in
Items II(A)1(ii)B and D would result in
a fee reduction for a service to align
with DTC’s decreased costs in providing
the service. Second, DTC would
increase certain fees to align with the
higher costs incurred by DTC in
providing the relevant service. By
aligning fees with costs, each of the
proposed rule changes would add
efficiency to the market by allowing a
Participant to more accurately evaluate
the value of a service and to make
efficient decisions about the allocation
of its resources within its business. In
addition, the proposal to increase
certain fees to align with the higher
costs incurred by DTC in providing the
service would allow DTC to more
efficiently offer the related service and
to continue to appropriately manage its
resources for all its services. In this way,
each of the proposed rule changes with
respect to the proposed realignment of
fees, as described in Items II(A)1(ii)B
and II(A)1(ii)D would enable DTC
continue to efficiently provide prompt
and accurate clearance and settlement
services to its Participants.
C. Promote Efficient Market Behavior
DTC believes that each of the
proposed rule changes described in
Items II(A)1(ii)C (Simplify the Pricing
Structure/Promote Efficient Market
Behavior) and II(A)1(ii)E (Promote
Efficient Market Behavior) is designed
to promote the prompt and accurate
clearance and settlement of securities
transactions. First, DTC is proposing to
reduce or eliminate fees for certain
settlement services in order to
encourage Participants to submit their
transactions earlier in the day. By
encouraging the earlier submission of
securities transactions by Participants,
the proposed rule change is designed to
promote efficient settlement processing
by increasing the volume of transactions
processed in the night-cycle, which, in
turn, enhances intraday settlement
processing of securities transactions.
Therefore, by encouraging behavior that
would promote efficient settlement
39 Id.
VerDate Sep<11>2014
16:57 Dec 13, 2018
Jkt 247001
processing of securities transactions,
DTC believes that the proposed rule
changes with respect to the reduction or
elimination of fees for certain settlement
services are designed to promote the
prompt and accurate clearance and
settlement of securities transactions.
Second, DTC is proposing to reduce
certain fees for its Custody Service in
order to encourage Participants to
centralize the servicing of their physical
securities at DTC, which already
services the securities deposited at DTC
by Participants for book-entry services.
By utilizing the Custody Service, a
Participant is able to benefit from,
among other things, cost savings from
the economies of scale offered by DTC,
and the added efficiency of the limited
depository services offered by DTC with
respect to securities held in its Custody
Service. Therefore, by encouraging
behavior that would promote added
efficiency to the processing and
handling of physical securities, DTC
believes that the proposed rules changes
to reduce certain fees for its Custody
Service in order to encourage
Participants to centralize the servicing
of their physical securities at DTC are
designed to promote the prompt and
accurate clearance and settlement of
securities transactions.
Third, DTC is proposing to increase
an underwriting surcharge for the late
submission of a LOR or BLOR in order
to encourage Participants to submit
underwriting documentation in a timely
manner. In this way, the proposed rule
change is designed to deter behavior
that could delay the prompt and
accurate clearance and settlement of
transactions in that security. Therefore,
by deterring behavior that could delay
the prompt and accurate settlement of
transactions in a security, DTC believes
that the proposed rule changes are
designed to promote the prompt and
accurate clearance and settlement of
securities transactions.
D. Clarify the Fee Guide
DTC believes that each of the
proposed rule changes described in Item
II(A)1(ii)F (Clarify the Fee Guide) is
designed to promote the prompt and
accurate clearance and settlement of
securities transactions. Each of these
changes would amend certain headings,
fee names, and fee conditions to
improve the accuracy and clarity of the
Fee Guide. Improving the accuracy and
clarity of the Rules and Procedures,
including the Fee Guide, would help
Participants to better understand their
rights and obligations regarding DTC
services. When Participants better
understand their rights and obligations
regarding DTC services, they can act in
PO 00000
Frm 00100
Fmt 4703
Sfmt 4703
accordance with the Rules and
Procedures, which DTC believes would
promote the prompt and accurate
clearance and settlement of securities
transactions by DTC. As such, DTC
believes the proposed rule changes to
clarify the Fee Guide, as described in
Item II(A)1(ii)F, are consistent with
Section 17A(b)(3)(F) of the Act.40
For the foregoing reasons, DTC
believes that each of the proposed rule
changes described in Items II(A)1(ii)A–
F are designed to promote the prompt
and accurate clearance and settlement of
securities transactions, consistent with
Section 17A(b)(3)(F) of the Act.41
(iii) Rule 17Ad–22(e)(23)(ii) under the
Act requires DTC to establish,
implement, maintain and enforce
written policies and procedures
reasonably designed to provide
sufficient information to enable
participants to identify and evaluate the
risks, fees, and other material costs they
incur by participating in DTC.42
DTC believes that the proposed rule
changes with respect to (1) simplifying
the pricing structure of the Fee Guide
through (x) fee groupings, as described
in Items II(A)1(ii)A(x) (Simplify the
Pricing Structure: Fee Groupings),
II(A)1(ii)B (Simplify the Pricing
Structure/Fee Realignment), and
II(A)1(ii)C (Simplify the Pricing
Structure/Promote Efficient Market
Behavior), and (y) deleting fees with
little or no volume, as described in Item
II(A)1(ii)A(y) (Simplify the Pricing
Structure: Deletion of Fees with Little or
No Volume), and (2) clarifying the Fee
Guide, as described in Item II(A)1(ii)F,
by amending conditions and headings
and by making conforming changes,
would help ensure that the pricing
structure of the Fee Guide is welldefined and clear to Participants.
Having a well-defined and clear Fee
Guide would help Participants to better
understand the fees and help provide
Participants with increased
predictability and certainty regarding
the fees they incur in participating in
DTC. In this way, DTC believes the
proposed rule changes to simplify the
pricing structure of the Fee Guide and
to clarify the Fee Guide, as described in
Items II(A)1(ii)A(x), II(A)1(ii)A(y),
II(A)1(ii)B, II(A)1(ii)C, and II(A)1(ii)F
are consistent with Rule 17Ad–
22(e)(23)(ii) under the Act, cited above.
40 Id.
41 Id.
42 17
E:\FR\FM\14DEN1.SGM
CFR 240.17Ad–22(e)(23)(ii).
14DEN1
Federal Register / Vol. 83, No. 240 / Friday, December 14, 2018 / Notices
(B) Clearing Agency’s Statement on
Burden on Competition
amozie on DSK3GDR082PROD with NOTICES1
(i) Simplify the Fee Guide
No Impact on Competition. DTC
believes that each of the proposed rule
changes with respect to the
consolidation of individual fee line
items, as described in Item II(A)1(ii)A(x)
(Simplify the Pricing Structure: Fee
Groupings), would not have an impact
on competition.43 These proposed rule
changes would improve the accuracy
and clarity of the Fee Guide by
simplifying the Fee Guide through fee
groupings. Having an accurate and clear
Fee Guide would facilitate Participants’
understanding of the Fee Guide and
their obligations thereunder, and so
would not affect the rights and
obligations of any Participant or other
interested party. Therefore, DTC does
not believe that the proposed changes
with respect to the consolidation of
individual fee line items, as described
in Item II(A)1(ii)A(x), would have an
impact on competition.
Impact on Competition. DTC believes
that each of the proposed rule changes
with respect to the deletion of fees with
little or no volume, as described in Item
II(A)1(ii)A(y) (Simplify the Pricing
Structure: Deletion of Fees with Little or
No Volume), may impact competition
by potentially reducing Participants’
operating costs. Therefore, DTC believes
that the proposed rule changes with
respect to the deletion of fees with little
or no volume, as described in Item
II(A)1(ii)A(y), would not impose a
burden on competition, but may
promote competition.
(ii) Fee Realignment
Impact on Competition. DTC believes
that each of the proposed rule changes
with respect to the proposed adjustment
of fees to align with DTC’s costs, as
described in Items II(A)1(ii)B (Simplify
the Pricing Structure/Fee
Realignment)44 and II(A)1(ii)D (Fee
Realignment), may have an impact on
competition, because these changes
would result in either a fee decrease or
fee increase to Participants for the
relevant service.45
First, the proposed rule changes that
would result in a fee reduction for a
service could promote competition by
potentially reducing Participants’
operating costs. Therefore DTC believes
that the proposed rule changes to reduce
fees in order to better align with costs
would not impose a burden on
43 15
U.S.C. 78q–1(b)(3)(I).
believes that the consolidation of fee line
items, in and of itself, would not have an impact
on competition. See supra Item II(B)(i).
45 15 U.S.C. 78q–1(b)(3)(I).
44 DTC
VerDate Sep<11>2014
16:57 Dec 13, 2018
Jkt 247001
competition, but may promote
competition. Second, the proposed rule
changes that would result in a fee
increase for a service may impact
competition by creating a burden on
competition by negatively affecting such
Participants’ operating costs. However,
DTC believes that any burden on
competition that may be caused by these
proposed rule changes would not be
significant and would be necessary and
appropriate in furtherance of the
purposes of the Act, as permitted by
Section 17A(b)(3)(I) of the Act.46
Burden on Competition Would Not Be
Significant. DTC believes the burden on
competition that may be imposed by the
proposed fee increase for a nonMunicipal Bearer Bond Service COD, as
described in Item II(A)1(ii)B(41),47
would not be significant because it
would be a nominal amount ($60.00)
where Participants are already
accustomed to paying a $300.00 fee for
a similar service within the proposed
fee grouping. In addition, DTC believes
that the burden on competition that may
be imposed by the proposed fee increase
for receives from CNS, as described in
Item II(A)1(ii)B(42),48 would not be
significant. Even though the amount of
the fee increase may appear significant
relative to the current fee (a proposed
increase from $0.035 to $0.08), DTC
believes that the fee increase does not,
in and of itself, mean that the burden on
competition is significant. DTC does not
believe that the fee increase would
impose a significant burden on
competition, because the impact of the
fee increase would correlate to a
Participant’s particular business model
and how CNS fits into that model, and
therefore, Participants with similar
business models and relationships with
CNS would be similarly impacted.
Finally, DTC believes that the burden on
competition that may be imposed by the
proposed fee increase for the
cancellation of pending DO, as
described in Item II(A)1(ii)B(43),49
would not be significant because the
increase would be a nominal amount
($0.04) and the activity that triggers the
fee occurs infrequently. Therefore, DTC
believes that any burden on competition
that may be caused by the proposed rule
46 Id.
47 Per email instruction from DTC’s legal staff on
December 4, 2018, Commission staff revised this
reference to correct a typographical error, changing
‘‘B(43)’’ to ‘‘B(41).’’
48 Per email instruction from DTC’s legal staff on
December 4, 2018, Commission staff revised this
reference to correct a typographical error, changing
‘‘B(44)’’ to ‘‘B(42).’’
49 Per email instruction from DTC’s legal staff on
December 4, 2018, Commission staff revised this
reference to correct a typographical error, changing
‘‘B(45)’’ to ‘‘B(43).’’
PO 00000
Frm 00101
Fmt 4703
Sfmt 4703
64411
changes addressed immediately above
would be insignificant.
Burden on Competition Would Be
Necessary and Appropriate. DTC
believes that any insignificant burden
on competition that may be imposed by
the proposed rule changes addressed
immediately above would be necessary
and appropriate in furtherance of the
purposes of the Act, as permitted by
Section 17A(b)(3)(I) of the Act.50 As
discussed above, DTC believes that the
proposed rule changes would (1)
provide for the equitable allocation of
reasonable fees,51 as required by Section
17A(b)(3)(D) of the Act,52 and (2)
promote the prompt and accurate
clearance and settlement of securities
transactions,53 consistent with Section
17A(b)(3)(F) of the Act.54 Therefore,
DTC believes that any insignificant
burden on competition that may be
imposed by the proposed rule changes
addressed immediately above would be
necessary and appropriate in
furtherance of the purposes of the Act,
specifically Section 17A(b)(3)(D) of the
Act and Section 17A(b)(3)(F) of the Act,
respectively, as permitted by Section
17A(b)(3)(I) of the Act.55
(iii) Promote Efficient Market Behavior
Impact on Competition. DTC believes
that each of the proposed adjustments of
certain fees to encourage efficient
market behavior, as described in Items
II(A)1(ii)C (Simplify the Pricing
Structure/Promote Efficient Market
Behavior)56 and II(A)1(ii)E (Promote
Efficient Market Behavior), may have an
impact on competition, because these
proposed adjustments would result in
either a fee decrease or fee increase to
Participants for the relevant service.57
First, DTC believes that each of the
proposed fee reductions for a service
could promote competition by
potentially reducing Participants’
operating costs. Based on the foregoing,
DTC believes that each of the proposed
reduction of certain fees in order to
promote efficient market behavior, as
described in Items II(A)1(ii)C and
II(A)1(ii)E, would not impose a burden
on competition, but may promote
competition. Second, DTC believes that
the proposed increase of the surcharge
for the late submission of a LOR or
BLOR may impact competition, because
50 Id.
51 See
supra Item II(A)2(i)B.
U.S.C. 78q–1(b)(3)(D).
53 See supra Item II(A)2(ii)B.
54 15 U.S.C. 78q–1(b)(3)(F).
55 15 U.S.C. 78q–1(b)(3)(I).
56 DTC believes that the consolidation of fee line
items, in and of itself, would not have an impact
on competition. See supra Item II(B)(i).
57 15 U.S.C. 78q–1(b)(3)(I).
52 15
E:\FR\FM\14DEN1.SGM
14DEN1
64412
Federal Register / Vol. 83, No. 240 / Friday, December 14, 2018 / Notices
it could create a burden on competition
by negatively affecting such
Participants’ operating costs. However,
DTC believes that the burden on
competition would not be significant
and would be necessary and appropriate
in furtherance of the purposes of the
Act, as permitted by Section 17A(b)(3)(I)
of the Act.58
Burden on Competition Would Not Be
Significant. DTC believes that any
burden on competition that may be
imposed by the proposed increase of the
surcharge for the late submission of a
LOR or BLOR would be insignificant
because (1) the increase would be a
modest amount ($100) that would only
apply when a Participant submits a late
LOR or BLOR, and (2) a Participant can
avoid the surcharge by submitting the
LOR or BLOR on time.
Burden on Competition Would Be
Necessary and Appropriate. DTC
believes that any insignificant burden
on competition that is created by the
proposed increase of the surcharge for
the late submission of a LOR or BLOR
would be necessary and appropriate in
furtherance of the purposes of the Act,
as permitted by Section 17A(b)(3)(I) of
the Act.59 As discussed above, DTC
believes that the proposed rule changes
would (1) provide for the equitable
allocation of reasonable fees,60 as
required by Section 17A(b)(3)(D) of the
Act,61 and (2) promote the prompt and
accurate clearance and settlement of
securities transactions,62 consistent
with Section 17A(b)(3)(F) of the Act.63
Therefore, DTC believes that any
insignificant burden on competition that
may be imposed by the proposed rule
changes addressed immediately above
would be necessary and appropriate in
furtherance of the purposes of the Act,
specifically Section 17A(b)(3)(D) of the
Act and Section 17A(b)(3)(F) of the Act,
respectively, as permitted by Section
17A(b)(3)(I) of the Act.64
amozie on DSK3GDR082PROD with NOTICES1
(iv) Clarify the Fee Guide
No Impact on Competition. DTC
believes that each of the proposed
clarifications to the Fee Guide, as
described in Item II(A)1(ii)F (Clarify the
Fee Guide), would not have an impact
on competition.65 Each of these changes
would amend certain headings, fee
names, and fee conditions to improve
the accuracy and clarity of the Fee
Guide. Having an accurate and clear Fee
58 Id.
59 Id.
60 See
supra Item II(A)2(i)C.
U.S.C. 78q–1(b)(3)(D).
62 See supra Item II(A)2(ii)C.
63 15 U.S.C. 78q–1(b)(3)(F).
64 15 U.S.C. 78q–1(b)(3)(I).
65 Id.
61 15
VerDate Sep<11>2014
16:57 Dec 13, 2018
Guide would facilitate Participants’
understanding of the Fee Guide and
their obligations thereunder, and so
would not affect the rights and
obligations of any Participant or other
interested party. Therefore, DTC
believes that each of the proposed
clarifications to the Fee Guide, as
described in Item II(A)1(ii)F (Clarify the
Fee Guide), would not have an impact
on competition.
(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 66 and paragraph (f) of Rule
19b–4 thereunder.67 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–2018–011 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–2018–011. 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 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–
2018–011 and should be submitted on
or before January 4, 2019.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.68
Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2018–27078 Filed 12–13–18; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–84767; File No. SR–NYSE–
2018–59]
Self-Regulatory Organizations; New
York Stock Exchange LLC; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change To Extend the
Pilot Period for the Exchange’s Retail
Liquidity Program Until the Earlier of
Approval of the Filing To Make the
Program Permanent or June 30, 2019
December 10, 2018.
Pursuant to Section 19(b)(1) 1 of the
Securities Exchange Act of 1934
(‘‘Act’’) 2 and Rule 19b–4 thereunder,3
notice is hereby given that on November
68 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 15 U.S.C. 78a.
3 17 CFR 240.19b–4.
1 15
66 15
67 17
Jkt 247001
PO 00000
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f).
Frm 00102
Fmt 4703
Sfmt 4703
E:\FR\FM\14DEN1.SGM
14DEN1
]]>Agencies
[Federal Register Volume 83, Number 240 (Friday, December 14, 2018)]
[Notices]
[Pages 64401-64412]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-27078]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-84768; File No. SR-DTC-2018-011]
Self-Regulatory Organizations; The Depository Trust Company;
Notice of Filing and Immediate Effectiveness of a Proposed Rule Change
To Amend the Guide to the DTC Fee Schedule
December 10, 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 November 26, 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. DTC filed the proposed rule
change pursuant to Section 19(b)(3)(A) of the Act \3\ and Rules 19b-
4(f)(2) and (f)(4) thereunder.\4\ The Commission is publishing this
notice to solicit comments on the proposed rule change from interested
persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ 15 U.S.C. 78s(b)(3)(A).
\4\ 17 CFR 240.19b-4(f)(2) and (f)(4).
---------------------------------------------------------------------------
I. Clearing Agency's Statement of the Terms of Substance of the
Proposed Rule Change
The proposed rule change consists of amendments to the Guide to the
DTC Fee Schedule (``Fee Guide'') \5\ in order to (i) simplify the
pricing structure, (ii) align fees with the costs of services provided
by DTC, and (iii) encourage Participant practices that promote
efficient market behavior. The proposed changes would include: (A)
Grouping certain fee line items for related or similar services under
one fee line item, (B) deleting fees with little or no activity, (C)
updating certain fees to reflect DTC's costs in relation to the
service, (D) decreasing certain fees in order to incentivize
Participants to utilize certain DTC services that promote efficiency,
both in the servicing of physical securities in the Custody Service and
for the settlement of securities transactions at DTC, and (E)
increasing a surcharge to discourage the late submission of certain
underwriting documentation. In addition, the proposed rule change would
also make
[[Page 64402]]
clarifying changes to the Fee Guide, as described in greater detail
below.
---------------------------------------------------------------------------
\5\ Each capitalized term not otherwise defined herein has its
respective meaning as set forth in the Fee Guide and the Rules, By-
Laws and Organization Certificate of DTC (the ``Rules''), available
at https://www.dtcc.com/legal/rules-and-procedures.aspx.
---------------------------------------------------------------------------
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 would amend the Fee Guide in order to (i)
simplify the pricing structure, (ii) align fees with the costs of
services provided by DTC, and (iii) encourage Participant practices
that promote efficient market behavior. The proposed changes will
include: (A) Grouping certain fee line items for related or similar
services under one fee line item, (B) deleting fees with little or no
activity, (C) updating certain fees to reflect DTC's costs in relation
to the service, (D) decreasing certain fees in order to incentivize
Participants to utilize certain DTC services that promote efficiency,
both in the servicing of physical securities in the Custody Service and
for the settlement of securities transactions at DTC, and (E)
increasing a surcharge to discourage the late submission of certain
underwriting documentation. In addition, the proposed rule change would
also make clarifying changes to the Fee Guide, as described in greater
detail below.
(i) Background
Participants are charged fees in accordance with the Fee Guide,
based upon their activities and the services that they utilize. The Fee
Guide lists approximately 283 individual fees. Certain fees need to be
updated in order to better align with the costs incurred by DTC in
providing those services.
In response to feedback from Participants that the pricing
structure is complex, DTC has undertaken a strategic review of its
pricing and its pricing structure. As a result of the review, DTC
developed an enhanced pricing strategy with the goals of reducing
pricing complexity, aligning fees with costs, and encouraging
Participant practices that promote efficient market behavior.\6\
---------------------------------------------------------------------------
\6\ DTC's affiliates, National Securities Clearing Corporation
(``NSCC'') and Fixed Income Clearing Corporation (``FICC'') have
undertaken similar reviews and are proposing changes to their
respective fees.
---------------------------------------------------------------------------
A. Simplify the Pricing Structure
(1) Fee Groupings
As discussed above, Participants have indicated that the DTC
pricing structure is complex. In response to this feedback, the
proposed rule change would reduce the number of individual fee line
items by creating new fee groupings that would consolidate separate fee
line items for similar services or transactions. These fee line items
would be grouped together into one line item with a standard fee, and
the related fee condition may be modified to conform to the fee
grouping. The standard fee would apply to each of the grouped services
or transactions. In most cases, the proposed rule change would not
change the amount charged to a Participant for each service or
transaction within the fee grouping. However, in a few circumstances,
the proposed standard fee may reflect an increase or decrease relative
to the amount currently charged in order to either (i) align fees with
costs or (ii) encourage Participant practices that promote efficient
market behavior.
(2) Removing Fees With Little or No Activity
The proposed rule change would remove fees for certain services
that have little or no activity.\7\ Pursuant to the proposed rule
change, DTC would delete these fees in order to further simplify the
pricing structure by reducing the number of line items in the Fee
Guide.
---------------------------------------------------------------------------
\7\ DTC examined how often all fees were charged over a period
of no less than two years.
---------------------------------------------------------------------------
B. Fee Realignment
Pursuant to the proposed rule change, DTC would update certain fees
in the Fee Guide to more closely reflect the costs incurred by DTC in
providing the services. DTC believes that it is reasonable and
appropriate to charge fees that properly align with DTC's costs.
Aligning fees with costs adds efficiency to the market by allowing a
Participant to more accurately evaluate the value of a service and to
make business decisions accordingly. The primary goal of DTC with
respect to the proposed realignment of fees is to reduce, where
appropriate, the fees charged to Participants for services. Certain of
the proposed fees that relate to services with declining volumes have
been reduced because they consume fewer DTC resources. Other proposed
fees have been reduced because certain streamlined processes have
resulted in the reduction of processing costs for DTC. In both cases,
pursuant to the proposed rule change, DTC, through these fee
reductions, would be passing along its cost savings to Participants.
Finally, a few proposed fees would result in fee increases in order
to align with the costs incurred by DTC in providing the relevant
services. Increasing a fee to align with the costs incurred by DTC in
providing the service would allow DTC to efficiently offer the
particular service, as well as continue to appropriately manage its
resources for all its services, thereby enabling DTC to efficiently
provide dependable and stable services to its Participants.
C. Promote Efficient Market Behavior
DTC believes the proposed changes to reduce certain fees would
encourage Participant use of certain DTC services that offer
efficiencies that are designed to promote the prompt and accurate
clearance and settlement of securities transactions (``efficient market
behavior''). Pursuant to the proposed rule change, DTC would reduce
certain fees for its Custody Service in order to encourage Participants
to centralize the servicing of their physical securities at DTC, which
already services the securities deposited at DTC by Participants for
book-entry services. The Custody Service allows a Participant to
outsource to DTC servicing of physical securities by depositing, among
other things, securities not eligible for DTC book-entry services,
including securities such as customer-registered custodial assets,
restricted shares, and other DTC-ineligible securities such as
certificated money market instruments (MMIs), private placements, and
limited partnership interests.\8\ A Participant that does not use the
Custody Service would otherwise need to secure its own physical
securities as well as independently handle certain transactions, such
as the transfer of physical securities and the handling of
reorganization events. By utilizing the Custody Service, a Participant
is able to benefit from, among other things, cost savings from the
economies of scale offered by DTC, and the added efficiency of the
limited depository services offered by DTC with respect to
[[Page 64403]]
securities held in its Custody Service.\9\ In addition, pursuant to the
proposed rule change, DTC would also reduce or eliminate fees for
certain settlement services in order to encourage Participants to
submit their transactions earlier in day. The earlier submission of
transactions by Participants results in more efficient settlement
processing by increasing the volume of transactions processed in the
night-cycle, which, in turn, enhances intraday settlement processing.
---------------------------------------------------------------------------
\8\ For further information about the Custody Service, see the
Custody Service Guide, available at https://www.dtcc.com/~/media/
Files/Downloads/legal/service-guides/Custody.pdf.
\9\ The limited depository services may include physical
processing for the security on a Participant's behalf, such as
facilitating the transfer of security certificates, and providing
custody reorganization services.
---------------------------------------------------------------------------
Finally, pursuant to the proposed rule change, DTC would increase
an underwriting surcharge charged to a Participant for the late
submission of a letter of representations (``LOR'') or blanket letter
of representations (``BLOR'') \10\ in order to increase the incentive
for a Participant to submit its underwriting documentation in a timely
manner. Failure of a Participant to submit a LOR or BLOR with respect
to a security on time could delay the clearance and settlement of
transactions in that security.
---------------------------------------------------------------------------
\10\ In order to make a book-entry only (``BEO'') issue eligible
at DTC, the issuer must submit to DTC a LOR or BLOR prior to such
issue being determined to be eligible. For more information on LORs
and BLORs, see The DTC Operational Arrangements (Necessary for
Securities to Become and Remain Eligible for DTC Services) at 4-6,
available at https://www.dtcc.com/~/media/Files/Downloads/legal/
issue-eligibility/eligibility/operational-arrangements.pdf.
---------------------------------------------------------------------------
D. Clarify the Fee Guide
Pursuant to the proposed rule change, DTC would amend certain
headings, fee names, and fee conditions to add clarity and conformity
to the Fee Guide.
(ii) Proposed Fee Changes
Pursuant to the proposed rule change, DTC would amend the Fee Guide
as follows:
A. Simplify the Pricing Structure
(x) Fee Groupings With No Change to Fee Amount
Custody and Securities Processing/Securities Processing/Maintenance of
Long Position (Registered Securities)
(1) Frozen Letter. Currently, there are separate identified fees
for (i) ``deliver,'' (ii) ``receive,'' and (iii) ``reject'' frozen
letter transactions, each with a fee of $10.00. Pursuant to the
proposed rule change, these fees would be consolidated and charged as a
``Frozen letter deliver, receive or reject'' fee. The proposed rule
change would not change the current amount of the fee. DTC believes
that it would be appropriate to consolidate these fees because it would
simplify the pricing structure by having one standard fee for frozen
letter transactions.
Custody and Securities Processing/Securities Processing/General Asset
Services
(2) Researching of aged and other special items; Extraordinary
processing/research fee for ICSR; Paying agent research. Pursuant to
the proposed rule change, ``Researching of aged and other special
items,'' ``Extraordinary processing/research fee for ICSR,'' and
``Paying agent research'' line items would be consolidated and charged
as a ``Researching fee.'' \11\ The proposed condition would read, ``per
hour or per CUSIP, depending on the nature of the research.'' The
proposed rule change would not affect the current fee of $100.00 per
hour or CUSIP, as applicable. DTC believes that it would be appropriate
to consolidate these fees because it would simplify the pricing
structure by having one standard fee for these research activities.
---------------------------------------------------------------------------
\11\ As discussed below, certain other research fees with
respect to Deposit Automation Management and New York Window
Services would also be consolidated into the proposed ``Researching
fee.''
---------------------------------------------------------------------------
Custody and Securities Processing/Corporate Actions/Instruction
Processing Fee
(3) EDS/DRIP Election; Voluntary Corporate Action Base Election;
Voluntary Corporate Action Election. These separate fees all relate to
voluntary corporate action instructions. Pursuant to the proposed rule
change, these fees would be consolidated and charged as a ``Corporate
Action Instruction Fee.'' The proposed rule change would not affect the
amount of the fee. Pursuant to the proposed rule change, the condition
for the fee would read: ``Per voluntary and elective EDS/DRP
instruction, up to 50 instructions per offer'' in order to reflect the
consolidation of the fees for each instruction type. DTC believes that
it would be appropriate to consolidate these fees because it would
simplify the pricing structure by having one standard fee for
transactions relating to instruction processing for voluntary corporate
action events.
Custody and Securities Processing/Custody Services/Custody (Non-Core
Services)
(4) Custody inventory swing withdrawal; Custody inventory swing
deposit. Pursuant to the proposed rule change, these fees would be
consolidated and charged as a ``Custody inventory swing deposit or
withdrawal'' fee. The condition for the fee would be modified to read:
``Per deposit or withdrawal.'' The proposed rule change would not
affect the current fee. DTC believes that it would be appropriate to
consolidate these fees because it would simplify the pricing structure
by having one standard fee for these related activities.
Custody and Securities Processing/Custody Services/Custody (Exception
Processing)
(5) Rejects. There are currently separate identified fees of
$125.00 for (i) ``Transfer,'' (ii) ``Reorg,'' and (iii) ``Front-end
reorg reject.'' \12\ Pursuant to the proposed rule change, these fees
would be consolidated and charged as a ``Transfer, Reorg or Front-end
reorg rejects'' fee. The proposed rule change would not affect the
amount of the fee. DTC believes that it would be appropriate to
consolidate the fees because it would simplify the pricing structure by
having one standard fee for custody rejects.
---------------------------------------------------------------------------
\12\ There is also a $75.00 ``Custody Deposit'' fee, which would
not be affected by the proposed rule change.
---------------------------------------------------------------------------
Custody and Securities Processing/Deposit Services/Branch Deposits
(Core Services)
(6) Regular deposit received from a branch; Deposit of bearer
securities received from a branch. Pursuant to the proposed rule
change, these fees would be consolidated and charged as a ``Regular or
bearer deposit received from a branch'' fee. The proposed rule change
would not affect the current fee of $18.00 for each activity. DTC
believes that it would be appropriate to consolidate the fees because
it would simplify the pricing structure by having one standard fee for
branch deposits.
Custody and Securities Processing/Deposit Services/Branch Deposits
(Exception Processing),\13\ and Custody and Securities Processing/
Deposit Services/Deposit Automation Management (DAM)
---------------------------------------------------------------------------
\13\ To conform with the proposed fee groupings, the subheading
``Branch Deposits (Exception Processing)'' would be modified to read
``Branch Deposits and Deposit Automation Management (DAM) (Exception
Processing).
---------------------------------------------------------------------------
(7) BDS TA deposit reject; Rejected deposit; Rejected reorg
deposit. Pursuant to the proposed rule change, these fees would be
consolidated and charged as a ``Rejected BDS TA deposit, Rejected DAM
or Rejected Reorg deposits'' fee. The proposed rule change would not
affect the current fee of $125.00 for each activity. DTC believes
[[Page 64404]]
that it would be appropriate to consolidate the fees because it would
simplify the pricing structure by having one standard fee for branch
deposit rejections.
(8) Registered certificate deposit; Previous reverse split.
Pursuant to the proposed rule change, these fees would be consolidated
and charged as a ``Registered certificate deposit or Previous reverse
split'' fee. The proposed rule change would not affect the current fee
of $12.00 for each activity. DTC believes that it would be appropriate
to consolidate the fees because it would simplify the pricing structure
by having one standard fee for these DAM activities.
(9) Research fee. Pursuant to the proposed rule change, this fee
would be consolidated into the proposed ``Researching fee,'' as
discussed above.\14\ For clarity and transparency, the ``Researching
fee'' line item would also appear in this section. Pursuant to the
proposed rule change, the proposed condition would read: ``per hour or
per CUSIP, depending on the nature of the research.''
---------------------------------------------------------------------------
\14\ See supra note 11.
---------------------------------------------------------------------------
Custody and Securities Processing/New York Window Services/Deliveries,
and Custody and Securities Processing/New York Window Services/Receives
\15\
---------------------------------------------------------------------------
\15\ To conform with the proposed fee groupings, the subheading
``Deliveries'' that appears under the New York Window Services
heading would be amended to ``Deliveries and Receives.'' The current
subheading ``Receives'' would be deleted.
---------------------------------------------------------------------------
(10) ESS or FOSS delivery; ESS or FOSS reclaim delivery; ESS or
FOSS receive; ESS or FOSS reclaim receive. Pursuant to the proposed
rule change, each of these activities would be consolidated and charged
as an ``ESS or FOSS delivery, receive or reclaim'' fee. The condition
for the fee would be modified to read: ``Per delivery, per receive or
per item for reclaim.'' The proposed rule change would not affect the
current fee of $25.00. DTC believes that it would be appropriate to
consolidate the fees because it would simplify the pricing structure by
having one standard fee for these related and similar activities.
(11) Internal cross-delivery; Internal cross-receive. Pursuant to
the proposed rule change, these activities would be consolidated and
charged as an ``Internal cross-delivery or receive'' fee. The condition
for the proposed fee grouping would read: ``Per delivery or receive.''
The proposed rule change would not affect the current fee of $20.00 for
each activity. DTC believes that it would be appropriate to consolidate
the fees because it would simplify the pricing structure by having one
standard fee for the service.
Custody and Securities Processing/New York Window Services/Other
Services
(12) Research. Pursuant to the proposed rule change, this fee would
be consolidated into the proposed ``Researching fee,'' as discussed
above.\16\ For clarity and transparency, the ``Researching fee'' line
item would also appear in this section. Pursuant to the proposed rule
change, the proposed condition would read: ``per hour or per CUSIP,
depending on the nature of the research.''
---------------------------------------------------------------------------
\16\ See supra note 11.
---------------------------------------------------------------------------
Custody and Securities Processing/Withdrawal Services/Direct
Registration System (DRS)
(13) Initiation of DRS Profile transaction; Cancellation of DRS
Profile change. Pursuant to the proposed rule change, these fee line
items would be consolidated and charged as an ``Initiation or
cancellation of DRS Profile transaction'' fee. The condition for the
fee grouping would read: ``Per transaction submitted or transaction
cancelled before a Limited Participant Account action.'' The proposed
rule change would not affect the current fee of $0.31 for each
activity.
Custody and Securities Processing/Withdrawal Services/Municipal Bearer
Bond Service, and Custody and Securities Processing/Withdrawal
Services/Urgent Withdrawal, or Certificates-on-Demand, and Custody and
Securities Processing/Withdrawal Services/Withdrawals-by-Transfer
(14) Critical withdrawal request; Generation of WT (interface or
window pickup); Direct mail by transfer agent (DMA)--Certificate.
Pursuant to the proposed rule change, the fees for these activities
would be consolidated and charged as a ``Physical Certificate: Critical
withdrawal, WT (interface or window pick-up) or DMA withdrawal
request'' fee. The condition for the fee would be modified to read:
``Per request or assignment; special costs and TA fees additional.''
The proposed rule change would not affect the current fee of $500.00
per request or assignment. DTC believes that it would be appropriate to
consolidate the fees because it would simplify the pricing structure by
having one standard fee for the service. In order to reflect the
proposed consolidation, DTC is proposing to (i) modify the subheading
of ``Urgent Withdrawal, or Certificates-on-Demand'' to ``Urgent
Withdrawal, Certificates-on-Demand, or Withdrawals by Transfer,'' and
(ii) delete the current subheading of ``Withdrawals by Transfer.''
Settlement Services/Book-Entry Delivery, Excluding MMIs
(15) Stock loans and returns. In the current Fee Guide, there is a
``Stock loans and returns'' fee of $0.25 per item; charged to the
deliverer. The receiver of a stock loan or return is currently charged
$0.11 under the fee ``Receive, regardless of time.'' Pursuant to the
proposed rule change, both the deliverer and receiver would be charged
a Stock loans and returns fee of $0.18, the average of the respective
current fees. The proposed rule change would modify the condition of
``Stock loans and returns'' fee to read: ``Per item; charged to
deliverer and receiver.'' The purpose of the proposed rule change would
be to simplify the pricing structure by having one standard fee for
both sides of the transaction.
(16) Receive, regardless of time. Pursuant to the proposed rule
change, the fee name would be amended to reflect the proposed exclusion
of stock loan receives and reclaim receives from this fee, in order to
align with the proposed changes to the ``Stock loans and returns'' and
``Reclaim'' fees. As such, DTC is proposing to amend the fee name to
``Receive, regardless of time (excluding reclaims and stock loans and
returns).''
(17) Reclaim. In the current Fee Guide, there is a ``Reclaim'' fee
of $0.45 per item; charged per delivery. Currently, the receive of a
reclaim is charged $0.11 as a ``Receive, regardless of time'' fee.
Pursuant to the proposed rule change, both a delivery and receive of a
reclaim would be charged as a ``Reclaims'' \17\ fee of $0.26, the
average of the respective current fees. The proposed rule change would
modify the condition of ``Reclaims'' fee to read: ``Per delivery or
receive.'' The purpose of the proposed rule change would be to simplify
the pricing structure by having one standard fee for both sides of the
transaction.
---------------------------------------------------------------------------
\17\ For conformity with other fee names in this section, DTC is
proposing to change the fee name to ``Reclaims.''
---------------------------------------------------------------------------
Settlement Services/Money Market Instruments (MMI) by Book-Entry Only
(18) MMI DO; Maturity or reorganization presentment; Issuance
instruction, both directly placed and dealer placed; Issuance deposit;
MMI issuance receiver. Pursuant to the proposed rule change, these fees
would be consolidated and charged as an ``MMI Transaction'' fee. The
proposed rule change would not affect the current
[[Page 64405]]
fee of $1.00 for each transaction. To reflect the consolidation, DTC is
proposing to modify the condition to read: ``Per item delivered, or
received, issued or maturing.'' DTC believes that it would be
appropriate to consolidate the fees because it would simplify the
pricing structure by having one standard fee for these MMI
transactions.
(y) Deletion of Fees With Little or No Volume
The following fees have minimal or no activity. Pursuant to the
proposed rule change, these fees would be deleted in order to simplify
the pricing structure.
Custody and Securities Processing/General Asset Services
(19) Transmission of image of deposit by fax or email, additional
recipient.
(20) Photocopying of statement or certificate.
(21) Recording of certificate numbers.
Custody and Securities Processing/Municipal Bearer Bond Service
(22) BEO issue.
Custody and Securities Processing/Corporate Actions/Instruction
Processing Fees
(23) Voluntary Corporate Action Bulk Election.
Custody and Securities Processing/Custody Services/Custody (Core
Services)
(24) Certified Mailing.
(25) Photocopying and sending certificate or other document copies.
Custody and Securities Processing/Custody Services/Custody (Exception
Processing)
(26) Box-to-box audit count.
(27) Customer audit count.
Custody and Securities Processing/Deposit Services/Branch Deposits
(Exception Processing), and Custody and Securities Processing/Deposit
Services/Deposit Automation Management (DAM)
(28) Incorrect/no PDF-generated DAM deposit ticket attached.
(29) Depository Facilities: Facility usage fee.
(30) Depository Facilities: Facility deposit.
Custody and Securities Processing/Deposit Services/Restricted Deposits
(31) Processing of trailing documents.
Custody and Securities Processing/New York Window Services/Other
Services
(32) Pass-through fees.
(33) Long position.
Custody and Securities Processing/Reorganization Services/
Reorganization
(34) Photocopy.
Custody and Securities Processing/Withdrawal Services/Direct
Registration System (DRS)
(35) Establishment of DRS account and subsequent mailing
transaction.
(36) Initiation of DRS Profile change using DRST via PTS or PBS.
(37) Cancellation of DRS Profile change using DRST via PTS or PBS.
Custody and Securities Processing/Withdrawal Services/Interface
Department
(38) Sorting.
Forms
(39) Forms provided by DTC.\18\
---------------------------------------------------------------------------
\18\ To conform with this change, the entire ``Forms'' section
of the Fee Guide would be removed.
---------------------------------------------------------------------------
B. Simplify the Pricing Structure/Realignment of Fee (Fee Groupings
With a Fee Realignment)
Custody and Securities Processing/Securities Processing/Maintenance of
Long Position (Registered Securities)
(40) Less active issue. Currently, there are separate fees for
registered corporate issues ($0.70) and registered municipal issues
($1.29). Pursuant to the proposed rule change, the fee would be $0.70
for either type of security. The proposed rule change would result in a
fee decrease of $0.59 for registered municipal issues, which would
better align the fee with declining volumes of less active registered
municipal securities. As discussed above, certain fees that relate to
services with declining volumes would be reduced because they consume
fewer DTC resources. Pursuant to the proposed rule change, the new fee
condition would read: ``For registered corporate issues, when a daily
average of 15 or fewer participants have position or registered
municipal issues, when a daily average of 1 or 2 participants have
position.'' The purpose of the proposed rule change would be to (i)
simplify the pricing structure by having one standard fee for the
service and (ii) more closely align to DTC's decreased cost of
providing the service for registered municipal securities.
Custody and Securities Processing/Withdrawal Services/Municipal Bearer
Bond Service, and Custody and Securities Processing/Withdrawal
Services/Urgent Withdrawal, or Certificates-on-Demand
(41) COD \19\ (Municipal Bearer Bond Service); COD (Urgent
Withdrawal, or Certificates-on-Demand). Currently, a COD under the
Municipal Bearer Bond Service is charged a fee of $300.00, and other
CODs are charged a fee of $240.00. Pursuant to the proposed rule
change, the COD (Municipal Bearer Bond Service) fee line item would be
consolidated with the COD (Urgent Withdrawal, or Certificates-on-
Demand) fee line item and charged as a ``COD'' fee, in the amount of
$300.00. The proposed rule change would result in a fee increase of
$60.00 for non-Municipal Bearer Bond Service CODs. The condition for
the fee would be amended to read: ``Per withdrawal/COD.'' The purpose
of the proposed rule change with respect to consolidating the fees
would be to simplify the pricing structure by having one standard fee
for these COD transactions. The purpose of the proposed rule change
with respect to the fee increase would be to align to DTC's cost of
providing the COD service, whether under the Municipal Bearer Bond
Service or otherwise. Finally, in order to reflect the proposed
consolidation, DTC is proposing to delete the subheading ``Municipal
Bearer Bond Service.''
---------------------------------------------------------------------------
\19\ COD is an acronym for ``certificate on demand.''
---------------------------------------------------------------------------
Settlement Services/Book-Entry Delivery, Excluding MMIs
(42) Book-entry deliveries through CNS: Delivery to CNS; Receive
from CNS. Currently, a Participant that delivers securities to the NSCC
CNS \20\ account at DTC is charged $0.09 per item delivered; charged to
both sides. A Participant that receives securities from the CNS account
is charged $0.035 per item received, charged to both sides. Pursuant to
the proposed rule change, each of these activities would be charged as
a ``Delivery to/from CNS'' fee of $0.08, charged to both sides. To
reflect the consolidation, DTC is proposing to delete the verbiage
``Book-entry deliveries through CNS.'' The purpose of the proposed rule
change with respect to consolidating the fees would be to simplify the
pricing structure by charging a standard fee to both a deliverer and
receiver in a CNS transaction. The purpose of the proposed rule change
(with respect to
[[Page 64406]]
establishing a new fee for the fee grouping) would be to update the fee
to better reflect the operational complexity, increased capacity, and
system supports that are required to process CNS transactions at DTC.
---------------------------------------------------------------------------
\20\ CNS is an acronym for the NSCC ``Continuous Net
Settlement'' system.
---------------------------------------------------------------------------
(43) Deliver order exception processing: Hold or release of pending
DO that is recycling for insufficient position; Cancellation of pending
DO. Currently, a Participant is charged $0.40 per item for ``Hold or
release of a pending DO that is recycling for insufficient position.''
A Participant is currently charged $0.20 per item for ``Cancellation of
pending DO.'' Pursuant to the proposed rule change, the hold or release
of a pending DO and the cancellation of a pending DO would each be
charged a fee of $0.24 per item, a weighted average that is based on
the volume of each activity, under the fee name ``Hold, cancel or
release of pending DO that is recycling for insufficient position.''
The purpose of the proposed rule change would be to (i) simplify the
pricing structure by having one standard fee for similar activities and
(ii) more closely align to DTC's costs incurred in relation to
providing the service for each type of DO exception processing.
C. Simplify the Pricing Structure/Promote Efficient Market Behavior
(Fee Groupings With a Fee Change To Promote Efficient Market Behavior)
Custody and Securities Processing/Deposit Services/Reorganization
Deposits
(44) Mandatory (regular or legal); Redemption or call (regular or
legal). Currently, each of these reorganization deposit fees is $90.00
per deposit. Pursuant to the proposed rule change, these fees would be
consolidated and charged as a ``Mandatory, Redemption or Call Deposits
(regular or legal)'' fee. Pursuant to the proposed rule change, the fee
for ``Mandatory, Redemption or Call Deposits (regular or legal)'' would
be $60.00, a $30.00 decrease from the current fees. The purpose of the
proposed rule change would be to (i) simplify the pricing structure by
having one standard fee for these related activities and (ii)
incentivize Participants to utilize DTC to centralize, and enhance the
efficiency of, the servicing of their securities.
Custody and Securities Processing/New York Window Services/Deliveries,
and Custody and Securities Processing/New York Window Services/Receives
(45) OTW \21\ delivery (including government securities); OTW
reclaim delivery; OTW receive (including government receives); OTW
reclaim receive. Pursuant to the proposed rule change, these fees would
be consolidated and charged as an ``OTW delivery, receive or reclaim
(including government securities)'' fee. The condition for the proposed
fee grouping would be modified to read: ``Per delivery, per receive or
per item for reclaim.'' Pursuant to the proposed rule change, the fee
for the new fee grouping would be reduced to $40.00, a decrease of
$10.00 from the current fees. The purpose of the proposed rule change
with respect to consolidating the fees would be to simplify the pricing
structure by having one standard fee for these related activities. The
purpose of the proposed rule change with respect to the reduction of
the fee would be to encourage Participants to utilize the OTW services,
by incentivizing the presentation of more physical securities to DTC's
central facility, and thereby promote processing efficiency.
---------------------------------------------------------------------------
\21\ OTW is an acronym for ``over-the-window.''
---------------------------------------------------------------------------
Underwriting Services/Late Surcharges
(46) Late receipt of LOR or BLOR (on closing date); Late closing
(after 2:00 p.m. eastern time). Currently, a Participant is charged a
$300.00 surcharge for a ``Late receipt of LOR or BLOR (on closing
date),'' and is charged a $400.00 surcharge for a ``Late closing (after
2:00 p.m. eastern time).'' Pursuant to the proposed rule change, these
surcharges would be consolidated and charged as a ``Late receipt of LOR
or BLOR (on closing date) or Late Closing (after 2:00 p.m. eastern
time)'' surcharge of $400. These surcharges are intended to align with
DTC's cost in relation to a late submission or closing, as well as to
incentivize Participants to move through the underwriting process in a
timely manner. As such, DTC is proposing a $400.00 surcharge for this
fee grouping, which would result in a surcharge increase of $100.00 for
late submissions of LORs and BLORs. DTC is proposing the amount of $400
for the standard surcharge in order to standardize the amount of the
surcharge, and to further encourage Participants to submit underwriting
documentation in a timely manner.
D. Fee Realignment
Custody and Securities Processing/Corporate Actions/Allocation Fees
(47) Mandatory Corporate Actions. Pursuant to the proposed rule
change, the fee would be reduced from $80.00 to $75.00. The purpose of
the proposed rule change would be to align the fee with the costs of
providing the service. The costs incurred by DTC are decreasing because
of certain streamlined processes that have resulted in the reduction of
processing costs for this service.
Custody and Securities Processing/Corporate Actions/Voluntary Event
Handling Fee
(48) Voluntary Corporate Action Handling. Pursuant to the proposed
rule change, the fee would be reduced from $95.00 to $90.00. The
purpose of the proposed rule change would be to align the fee with the
costs of providing the service. The costs incurred by DTC are
decreasing because of certain streamlined processes that have resulted
in the reduction of processing costs for this service.
Settlement Services/Book-Entry Delivery, Excluding MMIs
(49) Institutional receive or delivery (ID). Pursuant to the
proposed rule change, this fee would be reduced from $0.05 per receive
or delivery to $0.04 per receive or delivery. The purpose of the
proposed reduction would be to more closely align the fee with DTC's
decreased cost of providing the service, which is primarily handled as
straight-through processing.
(50) ID Net receive or delivery. Pursuant to the proposed rule
change, this fee would be reduced from $0.025 per receive or delivery
to $0.02 per receive or delivery. The purpose of the proposed reduction
would be to more closely align the fee with DTC's decreased cost of
providing the service, which is primarily handled as straight-through
processing.
(51) Fed DO. Pursuant to the proposed rule change, this fee would
be reduced from $2.25 per item delivered or received to $1.50 per item
delivered or received. The purpose of the proposed reduction is to more
closely align the fee with DTC's cost of providing the service.
E. Promote Efficient Market Behavior
Custody and Securities Processing/Custody Services/Custody (Core
Services)
(52) Withdrawal and pickup (COD) between 8:30 a.m.-2:00 p.m.
Pursuant to the proposed rule change, the fee would be reduced from
$60.00 to $50.00. The purpose of the proposed rule change would be to
incentivize Participants to utilize DTC to centralize, and enhance the
efficiency of, the servicing of their physical securities.
(53) Withdrawal and pickup (COD) between 2:00 p.m.-4:30 p.m.
Pursuant to the proposed rule change, the fee would be reduced from
$100.00 to $75.00. The purpose of the proposed rule change
[[Page 64407]]
would be to incentivize Participants to utilize DTC to centralize, and
enhance the efficiency of, the servicing of their physical securities.
(54) Withdrawal and subsequent deposit. Pursuant to the proposed
rule change, the fee would be reduced from $20.00 to $15.00. The
purpose of the proposed rule change would be to incentivize
Participants to utilize DTC to centralize, and enhance the efficiency
of, the servicing of their physical securities.
(55) Withdrawal and shipment between 8:30 a.m.-2:00 p.m. Pursuant
to the proposed rule change, the fee would be reduced from $70.00 to
$55.00. The purpose of the proposed rule change would be to incentivize
Participants to utilize DTC to centralize, and enhance the efficiency
of, the servicing of their physical securities.
(56) Withdrawal and shipment between 2:00 p.m.-4:30 p.m. Pursuant
to the proposed rule change, the fee would be reduced from $110.00 to
$80.00. The purpose of the proposed rule change would be to incentivize
Participants to utilize DTC to centralize, and enhance the efficiency
of, the servicing of their physical securities.
(57) Custody reorg deposit. Pursuant to the proposed rule change,
the fee would be reduced from $90.00 to $60.00. The purpose of the
proposed rule change would be to incentivize Participants to utilize
DTC to centralize, and enhance the efficiency of, the servicing of
their physical securities.
Custody and Securities Processing/Custody Services/Custody (Exception
Processing)
(58) Reorg research. Pursuant to the proposed rule change, the fee
would be reduced from $110.00 to $80.00. The purpose of the proposed
rule change would be to incentivize Participants to utilize DTC to
centralize, and enhance the efficiency of, the servicing of their
physical securities.
Custody and Securities Processing/Deposit Services/Restricted Deposits
(59) Restricted Deposit: Before 2:00 p.m. Pursuant to the proposed
rule change, the fee would be reduced from $90.00 to $60.00. The
purpose of the proposed rule change would be to incentivize
Participants to utilize the restricted deposit services to centralize,
and enhance the efficiency of, the servicing of their physical
securities.
(60) Restricted Deposit: After 2:00 p.m. eastern time. Pursuant to
the proposed rule change, the fee would be reduced from $110.00 to
$80.00. The purpose of the proposed rule change would be to incentivize
Participants to utilize the restricted deposit services to centralize,
and enhance the efficiency of, the servicing of their physical
securities.
(61) Reject of restricted deposit. Pursuant to the proposed rule
change, this disincentive fee for rejections of restricted deposits
would be eliminated. The purpose of the proposed rule change would be
to remove any disincentive for Participants to utilize the restricted
deposit service, and instead encourage Participants to utilize the
restricted deposit service to centralize, and enhance the efficiency
of, the servicing of their physical securities.
Settlement Services/Book-Entry Delivery, Excluding MMIs
(62) Night deliver order. Pursuant to the proposed rule change, the
fee would be reduced from $0.20 to $0.17 per item; charged to
deliverer; applies to each DO submitted. DTC is proposing to reduce
this fee in order to encourage Participants to submit their
transactions earlier in day. The earlier submission of transactions by
Participants results in more efficient settlement processing by
increasing the volume of transactions processed in the night-cycle,
which, in turn, enhances intraday settlement processing.
(63) Deliver order exception processing: Dropped DO not completed
because of insufficient deliverer position or collateral. Since the fee
for ``Dropped DO not completed because of insufficient deliverer
position or collateral'' may cause a Participant to delay making a
particular delivery, the proposed rule change would eliminate the fee
in order to encourage Participants to submit their transactions earlier
in the day. The earlier submission of transactions by Participants
results in more efficient settlement processing by increasing the
volume of transactions processed in the night-cycle, which, in turn,
enhances intraday settlement processing.
(64) Deliver order exception processing: Insufficient receiver
collateral or net debit cap. Since the fee for ``Insufficient receiver
collateral or net debit cap'' may cause a Participant to delay making a
particular delivery, the proposed rule change would eliminate the fee
in order to encourage Participants to submit their transactions earlier
in the day. The earlier submission of transactions by Participants
results in more efficient settlement processing by increasing the
volume of transactions processed in the night-cycle, which, in turn,
enhances intraday settlement processing.
F. Clarify the Fee Guide
DTC is proposing to amend the following provisions to clarify the
Fee Guide:
Custody and Securities Processing/Securities Processing/Maintenance of
Long Position (Registered Securities)
(65) Average daily number of shares, rounded up to a multiple of
100 shares. For clarity and transparency, the proposed rule change
would amend the fee name to: ``Average daily number of shares (stocks,
bonds and registered muni), rounded up to a multiple of 100 shares.''
The purpose of the proposed rule change is to clarify the types of
securities that are included in the service.
(66) BEO issue. For clarity and transparency, the proposed rule
change would amend the fee name to: ``BEO issue (stocks, bonds and
registered muni).'' The purpose of the proposed rule change is to
clarify the types of securities that are included in the service.
(67) Medium-term note, money market instrument, and commercial
paper. For clarity and transparency, the proposed rule change would
amend the fee name to: ``Medium-term note, money market instrument,
registered muni and commercial paper.'' The purpose of the proposed
rule change is to clarify the types of securities that are included in
the service.
(68) Issue that has been nontransferable for up to 6 years
(surcharge). For clarity and transparency, the proposed rule change
would amend the fee name to: ``Stock, bond, registered and bearer muni
that have been nontransferable for up to 6 years (surcharge).'' The
purpose of the proposed rule change is to clarify the types of
securities that are included in the service.
(69) Issue that remains nontransferable after 6 years (surcharge).
For clarity and transparency, the fee name would be amended to:
``Stock, bonds, registered and bearer muni that remain nontransferable
after 6 years (surcharge).'' The purpose of the proposed rule change is
to clarify the types of securities that are included in the service.
(70) Swing of security position (receive or deliver). For clarity
and transparency, the fee name would be amended to: ``Swing of security
position (receive, or deliver (including stock dividend deliver)).''
The purpose of the proposed rule change is to clarify the types of
securities that are included in the service.
[[Page 64408]]
Underwriting Services/Eligibility Fees
(71) Equity Eligibility--Additional CUSIP Fee. For clarity and
transparency, the first line of the fee condition would be modified to
read: ``Per additional CUSIP;''. The purpose of the proposed rule
change is to accurately reflect the existing underwriting fee-per-CUSIP
structure, which consists of an initial fixed fee for the first CUSIP
and an incremental fee for each additional CUSIP.\22\
---------------------------------------------------------------------------
\22\ Securities Exchange Act Release No. 71206 (December 30,
2013), 79 FR 690 (January 6, 2014) (SR-DTC-2013-12).
---------------------------------------------------------------------------
(72) Debt Eligibility--Additional CUSIP Fee. For clarity and
transparency, the first line of the fee condition would be modified to
read: ``Per additional CUSIP;''. The purpose of the proposed rule
change is to accurately reflect the existing underwriting fee-per-CUSIP
structure, which consists of an initial fixed fee for the first CUSIP
and an incremental fee for each additional CUSIP.\23\
---------------------------------------------------------------------------
\23\ Id.
---------------------------------------------------------------------------
Expected Participant Impact
In general, DTC anticipates that the proposed rule change would (i)
have no impact on approximately 30% of Participants, (ii) result in fee
reductions for approximately 49% of Participants, and (iii) result in
fee increases for approximately 21% of Participants. These estimates
were calculated against 2017 volume figures. In terms of the estimated
fee increases, approximately 38% would have an increase of less than
$1,000 per year, approximately 22% would have an increase between
$1,000 and $10,000 per year, approximately 38% would have an increase
between $10,000 and $75,000 per year, and approximately 2% would have
an increase between $100,000 and $200,000 per year. These estimated
impacts correlate to a Participant's business model and its use of the
services affected by the proposed rule change. Taken collectively, the
proposed rule change would reduce DTC's revenue by approximately 1%.
Participant Outreach
Beginning in June 2018, DTC has conducted outreach to Participants
in order to provide them with notice of the proposed changes to the
affected fees. As of the date of this filing, no written comments
relating to the proposed changes have been received in response to this
outreach. The Commission will be notified of any written comments
received.
Implementation Timeframe
DTC would implement this proposal on January 1, 2019. As proposed,
a legend would be added to the Fee Guide stating there are changes that
became effective upon filing with the Commission but have not yet been
implemented. The proposed legend also would include a date on which
such changes would be implemented and the file number of this proposal,
and state that, once this proposal is implemented, the legend would
automatically be removed from the Fee Guide.
2. Statutory Basis
DTC believes that this proposal is consistent with the requirements
of the Act and the rules and regulations thereunder applicable to a
registered clearing agency. Specifically, DTC believes that this
proposal is consistent with Sections 17A(b)(3)(D) \24\ and 17A(b)(3)(F)
\25\ of the Act and Rule 17Ad-22(e)(23)(ii),\26\ as promulgated under
the Act, for the reasons described below.
---------------------------------------------------------------------------
\24\ 15 U.S.C. 78q-1(b)(3)(D).
\25\ 15 U.S.C. 78q-1(b)(3)(F).
\26\ 17 CFR 240.17Ad-22(e)(23)(ii).
---------------------------------------------------------------------------
(i) Section 17A(b)(3)(D) of the Act requires, inter alia, that the
Rules provide for the equitable allocation of reasonable dues, fees,
and other charges among participants.\27\ For the reasons set forth
below, DTC believes that each of the proposed rule changes described
above in Items II(A)1(ii)A-F would provide for the equitable allocation
of reasonable dues, fees, and other charges among participants.
---------------------------------------------------------------------------
\27\ 15 U.S.C. 78q-1(b)(3)(D).
---------------------------------------------------------------------------
A. Simplify the Pricing Structure
DTC believes that each of the proposed rule changes described in
Items II(A)1(ii)A(x) (Simplify the Pricing Structure: Fee Groupings)
and II(A)1(ii)A(y) (Simplify the Pricing Structure: Deletion of Fees
with Little or No Volume) would provide for the equitable allocation of
reasonable fees. Each of the proposed rule changes described in Item
II(A)1(ii)A(x) would consolidate individual fee line items into a
single fee line item. Each of the proposed rule changes described in
Item II(A)1(ii)A(y) would delete a fee with little or no volume. Each
fee for a service as described in Items II(A)1(ii)A(x) and
II(A)1(ii)A(y) would continue to be charged (or not charged, with
respect to the proposed fee deletions) to a Participant in accordance
with (i) its utilization of the service, and (ii) the fee condition set
forth in the Fee Guide, and would therefore be equitably allocated. In
addition, the proposed rule changes described in Item II(A)1(ii)A(x)
would not affect current fees, and would therefore continue to provide
for reasonable fees. Further, the proposed rule changes described in
Item II(A)1(ii)A(y), which would delete fees that have little or no
volume, would be commensurate with DTC's minimal cost of providing the
relevant service. Therefore, DTC believes that each of the proposed
rule changes described in Items II(A)1(ii)A(x) and II(A)1(ii)A(y) would
not affect the allocation or amount of fees, and would thereby continue
to provide for the equitable allocation of reasonable fees, consistent
with Section 17A(b)(3)(D) of the Act.\28\
---------------------------------------------------------------------------
\28\ Id.
---------------------------------------------------------------------------
B. Fee Realignment
DTC believes that each of the proposed rule changes with respect to
the proposed realignment of fees, as described in Items II(A)1(ii)B
(Simplify the Pricing Structure/Fee Realignment) \29\ and II(A)1(ii)D
(Fee Realignment), would provide for the equitable allocation of
reasonable fees. Each proposed fee for a service as described in Items
II(A)1(ii)B and D would continue to be charged to a Participant in
accordance with (i) its utilization of the service, and (ii) the fee
condition set forth in the Fee Guide. DTC believes that, pursuant to
the proposed rule changes described in Items II(A)1(ii)B and D, the
proposed fees would continue to be equitably allocated because all
Participants that utilize a particular service would be treated equally
with respect to these fees under the proposal.\30\
---------------------------------------------------------------------------
\29\ DTC believes that the consolidation of fee line items, in
and of itself, would not affect the allocation or amount of fees.
Therefore, to the extent that a proposed rule change described in
Item II(A)1(ii)B (Simplify the Pricing Structure/Fee Realignment)
addresses the consolidation of fee line items, DTC believes that
such proposed rule change would continue to provide for the
equitable allocation of reasonable fees. See supra Item II(A)2(i)A.
\30\ As discussed above in the section titled ``Expected
Participant Impact,'' the proposed rule change may result in fee
increases or fee decreases for some Participants. A Participant may
be impacted differently than another Participant due to its use of
the various services with fees that would be affected by the
proposed rule change, pursuant to its own particular business
structure.
---------------------------------------------------------------------------
DTC believes that each of the proposed rule changes described in
Items II(A)1(ii)B (Simplify the Pricing Structure/Fee Realignment) and
II(A)1(ii)D (Fee Realignment) would provide for reasonable fees. First,
as discussed above, most of the proposed fee realignments described in
Items II(A)1(ii)B and D would result in a fee reduction for a service.
As described above, these fee reductions are being
[[Page 64409]]
proposed due to (i) declining volumes in connection with the service
requiring fewer DTC resources and/or (ii) certain streamlined processes
having resulted in the reduction of processing costs for DTC in
connection with the service. In both cases, DTC, through the proposed
fee reductions, would be passing along its cost savings to
Participants. Therefore, DTC believes that such proposed fee reductions
would continue to provide for the allocation of reasonable fees among
Participants. Second, as discussed above, a few proposed fee
realignments, as described in Items II(A)1(ii)B(41)-(43),\31\ would
result in an increase to a fee for a service. Such proposed fee
increases would allow those fees to remain commensurate with the costs
of resources allocated by DTC in connection with the relevant services.
The proposed fee increases to align with the costs incurred by DTC in
providing the service would allow DTC to efficiently offer the service.
Therefore, DTC believes that the proposed rule changes described in
Items II(A)1(ii)B and D, would provide for the equitable allocation of
reasonable fees, consistent with Section 17A(b)(3)(D) of the Act.\32\
---------------------------------------------------------------------------
\31\ Per email instruction from DTC's legal staff on December 4,
2018, Commission staff revised this reference to correct a
typographical error, changing ``B(43)-(45)'' to ``B(41)-(43).''
\32\ 15 U.S.C. 78q-1(b)(3)(D).
---------------------------------------------------------------------------
C. Promote Efficient Market Behavior
DTC believes that each of the proposed rule changes described in
Items II(A)1(ii)C (Simplify the Pricing Structure/Promote Efficient
Market Behavior) \33\ and II(A)1(ii)E (Promote Efficient Market
Behavior) would provide for the equitable allocation of reasonable
fees. Each proposed fee for a service as described in Items II(A)1(ii)C
and E would continue to be charged to a Participant in accordance with
(i) its utilization of the service, and (ii) the fee condition set
forth in the Fee Guide. DTC believes that, pursuant to the proposed
rule changes described in Items II(A)1(ii)C and E, the proposed fees
would continue to be equitably allocated because all Participants that
utilize a particular service (or submit a late BLOR or LOR) would be
treated equally with respect to these fees under the proposal.\34\
---------------------------------------------------------------------------
\33\ DTC believes that the consolidation of fee line items, in
and of itself, would not affect the allocation or amount of fees.
Therefore, to the extent that a proposed rule change described in
Item II(A)1(ii)C (Simplify the Pricing Structure/Promote Efficient
Market Behavior) addresses the consolidation of fee line items, DTC
believes that such proposed rule change would continue to provide
for the equitable allocation of reasonable fees. See supra Items
II(A)2(i)A and B.
\34\ See supra note 30.
---------------------------------------------------------------------------
DTC believes that the each of the proposed rule changes described
in Items II(A)1(ii)C (Simplify the Pricing Structure/Promote Efficient
Market Behavior) and II(A)1(ii)E (Promote Efficient Market Behavior)
would provide for reasonable fees. First, with the exception of the
surcharge for the late submission of a LOR or BLOR, the proposed fee
changes described in Items II(A)1(ii)C and E would reduce fees to
encourage Participant use of certain DTC services that promote
efficiency in the handling of physical securities or the processing of
securities transactions for settlement. As such, DTC believes that
these proposed fee reductions would result in reasonable fees because
the use of these efficiencies offered by DTC could result in future
decreased processing costs for Participants and for DTC, which, in
turn, could be passed along to Participants. Second, DTC is proposing
to increase the surcharge for the late submission of a LOR or BLOR from
$300 to $400 in order to increase the incentive for a Participant to
submit its underwriting documentation in a timely manner. DTC believes
that the increase of this surcharge would be reasonable because
Participants are already accustomed to the $400.00 surcharge for late
closings, which is being consolidated into one line item with the late
submission of LORs and BLORs surcharge. DTC also believes that the
proposed fee would be reasonable because (i) the increase would be a
modest amount ($100) that would only apply when a Participant submits a
late LOR or BLOR, and (ii) a Participant can avoid the surcharge by
submitting the LOR or BLOR on time. Therefore, DTC believes that each
of the proposed rule changes described in Items II(A)1(ii)C and E would
provide for the equitable allocation of reasonable fees, consistent
with Section 17A(b)(3)(D) of the Act.\35\
---------------------------------------------------------------------------
\35\ 15 U.S.C. 78q-1(b)(3)(D).
---------------------------------------------------------------------------
D. Clarify the Fee Guide
DTC believes that each of the proposed rule changes described in
Item II(A)1(ii)F (Clarify the Fee Guide) would provide for the
equitable allocation of reasonable fees among participants. Each of the
proposed rule changes described in II(A)1(ii)F would clarify a fee line
item without affecting the amount of the existing fee for such line
item. Each fee for a service as described in Item II(A)1(ii)F would
continue to be charged to a Participant in accordance with (i) its
utilization of the service, and (ii) the fee condition set forth in the
Fee Guide. Therefore, DTC believes that each of the proposed rule
changes described in Item II(A)1(ii)F would not affect the allocation
or amount of fees, and would thereby continue to provide for the
equitable allocation of reasonable fees, consistent with Section
17A(b)(3)(D) of the Act.\36\
---------------------------------------------------------------------------
\36\ Id.
---------------------------------------------------------------------------
For the foregoing reasons, DTC believes that each of the proposed
rule changes described in Items II(A)1(ii)A-F would provide for the
equitable allocation of reasonable dues, fees, and other charges among
participants, consistent with Section 17A(b)(3)(D) of the Act.\37\
---------------------------------------------------------------------------
\37\ Id.
---------------------------------------------------------------------------
(ii) Section 17A(b)(3)(F) of the Act requires, inter alia, that the
Rules be designed to promote the prompt and accurate clearance and
settlement of securities transactions.\38\ For the reasons set forth
below, DTC believes that each of the proposed rule changes described in
Items II(A)1(ii)A-F is designed to promote the prompt and accurate
clearance and settlement of securities transactions.
---------------------------------------------------------------------------
\38\ 15 U.S.C. 78q-1(b)(3)(F).
---------------------------------------------------------------------------
A. Simplify the Fee Guide
DTC believes that each of the proposed rule changes with respect to
the consolidation of individual fee line items or deletion of fees, as
described in Items II(A)1(ii)A(x) (Simplify the Pricing Structure: Fee
Groupings), II(A)1(ii)A(y) (Simplify the Pricing Structure: Deletion of
Fees with Little or No Volume), II(A)1(ii)B (Simplify the Pricing
Structure/Fee Realignment), and II(A)1(ii)C (Simplify the Pricing
Structure/Promote Efficient Market Behavior) is designed to promote the
prompt and accurate clearance and settlement of securities
transactions. DTC is proposing changes, as described in Items
II(A)1(ii)A(x), II(A)1(ii)A(y), II(A)1(ii)B, and II(A)1(ii)C, that are
designed to improve the accuracy and clarity of the Fee Guide by
simplifying the Fee Guide through fee groupings or through the deletion
of fees with little or no volume. Improving the accuracy and clarity of
the Rules and Procedures, including the Fee Guide, would help
Participants to better understand their rights and obligations
regarding DTC services. When Participants better understand their
rights and obligations regarding DTC services, they can act in
accordance with the Rules and Procedures, which DTC believes would
promote the prompt and accurate clearance and settlement of securities
transactions by DTC. As such, DTC believes the proposed rule changes to
simplify and clarify the Fee Guide are
[[Page 64410]]
consistent with Section 17A(b)(3)(F) of the Act.\39\
---------------------------------------------------------------------------
\39\ Id.
---------------------------------------------------------------------------
B. Fee Realignment
DTC believes that each of the proposed rule changes with respect to
the proposed realignment of fees, as described in Items II(A)1(ii)B
(Simplify the Pricing Structure/Fee Realignment) and II(A)1(ii)D (Fee
Realignment) is designed to promote the prompt and accurate clearance
and settlement of securities transactions. First, most of the proposed
fee realignments described in Items II(A)1(ii)B and D would result in a
fee reduction for a service to align with DTC's decreased costs in
providing the service. Second, DTC would increase certain fees to align
with the higher costs incurred by DTC in providing the relevant
service. By aligning fees with costs, each of the proposed rule changes
would add efficiency to the market by allowing a Participant to more
accurately evaluate the value of a service and to make efficient
decisions about the allocation of its resources within its business. In
addition, the proposal to increase certain fees to align with the
higher costs incurred by DTC in providing the service would allow DTC
to more efficiently offer the related service and to continue to
appropriately manage its resources for all its services. In this way,
each of the proposed rule changes with respect to the proposed
realignment of fees, as described in Items II(A)1(ii)B and II(A)1(ii)D
would enable DTC continue to efficiently provide prompt and accurate
clearance and settlement services to its Participants.
C. Promote Efficient Market Behavior
DTC believes that each of the proposed rule changes described in
Items II(A)1(ii)C (Simplify the Pricing Structure/Promote Efficient
Market Behavior) and II(A)1(ii)E (Promote Efficient Market Behavior) is
designed to promote the prompt and accurate clearance and settlement of
securities transactions. First, DTC is proposing to reduce or eliminate
fees for certain settlement services in order to encourage Participants
to submit their transactions earlier in the day. By encouraging the
earlier submission of securities transactions by Participants, the
proposed rule change is designed to promote efficient settlement
processing by increasing the volume of transactions processed in the
night-cycle, which, in turn, enhances intraday settlement processing of
securities transactions. Therefore, by encouraging behavior that would
promote efficient settlement processing of securities transactions, DTC
believes that the proposed rule changes with respect to the reduction
or elimination of fees for certain settlement services are designed to
promote the prompt and accurate clearance and settlement of securities
transactions.
Second, DTC is proposing to reduce certain fees for its Custody
Service in order to encourage Participants to centralize the servicing
of their physical securities at DTC, which already services the
securities deposited at DTC by Participants for book-entry services. By
utilizing the Custody Service, a Participant is able to benefit from,
among other things, cost savings from the economies of scale offered by
DTC, and the added efficiency of the limited depository services
offered by DTC with respect to securities held in its Custody Service.
Therefore, by encouraging behavior that would promote added efficiency
to the processing and handling of physical securities, DTC believes
that the proposed rules changes to reduce certain fees for its Custody
Service in order to encourage Participants to centralize the servicing
of their physical securities at DTC are designed to promote the prompt
and accurate clearance and settlement of securities transactions.
Third, DTC is proposing to increase an underwriting surcharge for
the late submission of a LOR or BLOR in order to encourage Participants
to submit underwriting documentation in a timely manner. In this way,
the proposed rule change is designed to deter behavior that could delay
the prompt and accurate clearance and settlement of transactions in
that security. Therefore, by deterring behavior that could delay the
prompt and accurate settlement of transactions in a security, DTC
believes that the proposed rule changes are designed to promote the
prompt and accurate clearance and settlement of securities
transactions.
D. Clarify the Fee Guide
DTC believes that each of the proposed rule changes described in
Item II(A)1(ii)F (Clarify the Fee Guide) is designed to promote the
prompt and accurate clearance and settlement of securities
transactions. Each of these changes would amend certain headings, fee
names, and fee conditions to improve the accuracy and clarity of the
Fee Guide. Improving the accuracy and clarity of the Rules and
Procedures, including the Fee Guide, would help Participants to better
understand their rights and obligations regarding DTC services. When
Participants better understand their rights and obligations regarding
DTC services, they can act in accordance with the Rules and Procedures,
which DTC believes would promote the prompt and accurate clearance and
settlement of securities transactions by DTC. As such, DTC believes the
proposed rule changes to clarify the Fee Guide, as described in Item
II(A)1(ii)F, are consistent with Section 17A(b)(3)(F) of the Act.\40\
---------------------------------------------------------------------------
\40\ Id.
---------------------------------------------------------------------------
For the foregoing reasons, DTC believes that each of the proposed
rule changes described in Items II(A)1(ii)A-F are designed to promote
the prompt and accurate clearance and settlement of securities
transactions, consistent with Section 17A(b)(3)(F) of the Act.\41\
---------------------------------------------------------------------------
\41\ Id.
---------------------------------------------------------------------------
(iii) Rule 17Ad-22(e)(23)(ii) under the Act requires DTC to
establish, implement, maintain and enforce written policies and
procedures reasonably designed to provide sufficient information to
enable participants to identify and evaluate the risks, fees, and other
material costs they incur by participating in DTC.\42\
---------------------------------------------------------------------------
\42\ 17 CFR 240.17Ad-22(e)(23)(ii).
---------------------------------------------------------------------------
DTC believes that the proposed rule changes with respect to (1)
simplifying the pricing structure of the Fee Guide through (x) fee
groupings, as described in Items II(A)1(ii)A(x) (Simplify the Pricing
Structure: Fee Groupings), II(A)1(ii)B (Simplify the Pricing Structure/
Fee Realignment), and II(A)1(ii)C (Simplify the Pricing Structure/
Promote Efficient Market Behavior), and (y) deleting fees with little
or no volume, as described in Item II(A)1(ii)A(y) (Simplify the Pricing
Structure: Deletion of Fees with Little or No Volume), and (2)
clarifying the Fee Guide, as described in Item II(A)1(ii)F, by amending
conditions and headings and by making conforming changes, would help
ensure that the pricing structure of the Fee Guide is well-defined and
clear to Participants. Having a well-defined and clear Fee Guide would
help Participants to better understand the fees and help provide
Participants with increased predictability and certainty regarding the
fees they incur in participating in DTC. In this way, DTC believes the
proposed rule changes to simplify the pricing structure of the Fee
Guide and to clarify the Fee Guide, as described in Items
II(A)1(ii)A(x), II(A)1(ii)A(y), II(A)1(ii)B, II(A)1(ii)C, and
II(A)1(ii)F are consistent with Rule 17Ad-22(e)(23)(ii) under the Act,
cited above.
[[Page 64411]]
(B) Clearing Agency's Statement on Burden on Competition
(i) Simplify the Fee Guide
No Impact on Competition. DTC believes that each of the proposed
rule changes with respect to the consolidation of individual fee line
items, as described in Item II(A)1(ii)A(x) (Simplify the Pricing
Structure: Fee Groupings), would not have an impact on competition.\43\
These proposed rule changes would improve the accuracy and clarity of
the Fee Guide by simplifying the Fee Guide through fee groupings.
Having an accurate and clear Fee Guide would facilitate Participants'
understanding of the Fee Guide and their obligations thereunder, and so
would not affect the rights and obligations of any Participant or other
interested party. Therefore, DTC does not believe that the proposed
changes with respect to the consolidation of individual fee line items,
as described in Item II(A)1(ii)A(x), would have an impact on
competition.
---------------------------------------------------------------------------
\43\ 15 U.S.C. 78q-1(b)(3)(I).
---------------------------------------------------------------------------
Impact on Competition. DTC believes that each of the proposed rule
changes with respect to the deletion of fees with little or no volume,
as described in Item II(A)1(ii)A(y) (Simplify the Pricing Structure:
Deletion of Fees with Little or No Volume), may impact competition by
potentially reducing Participants' operating costs. Therefore, DTC
believes that the proposed rule changes with respect to the deletion of
fees with little or no volume, as described in Item II(A)1(ii)A(y),
would not impose a burden on competition, but may promote competition.
(ii) Fee Realignment
Impact on Competition. DTC believes that each of the proposed rule
changes with respect to the proposed adjustment of fees to align with
DTC's costs, as described in Items II(A)1(ii)B (Simplify the Pricing
Structure/Fee Realignment)\44\ and II(A)1(ii)D (Fee Realignment), may
have an impact on competition, because these changes would result in
either a fee decrease or fee increase to Participants for the relevant
service.\45\
---------------------------------------------------------------------------
\44\ DTC believes that the consolidation of fee line items, in
and of itself, would not have an impact on competition. See supra
Item II(B)(i).
\45\ 15 U.S.C. 78q-1(b)(3)(I).
---------------------------------------------------------------------------
First, the proposed rule changes that would result in a fee
reduction for a service could promote competition by potentially
reducing Participants' operating costs. Therefore DTC believes that the
proposed rule changes to reduce fees in order to better align with
costs would not impose a burden on competition, but may promote
competition. Second, the proposed rule changes that would result in a
fee increase for a service may impact competition by creating a burden
on competition by negatively affecting such Participants' operating
costs. However, DTC believes that any burden on competition that may be
caused by these proposed rule changes would not be significant and
would be necessary and appropriate in furtherance of the purposes of
the Act, as permitted by Section 17A(b)(3)(I) of the Act.\46\
---------------------------------------------------------------------------
\46\ Id.
---------------------------------------------------------------------------
Burden on Competition Would Not Be Significant. DTC believes the
burden on competition that may be imposed by the proposed fee increase
for a non-Municipal Bearer Bond Service COD, as described in Item
II(A)1(ii)B(41),\47\ would not be significant because it would be a
nominal amount ($60.00) where Participants are already accustomed to
paying a $300.00 fee for a similar service within the proposed fee
grouping. In addition, DTC believes that the burden on competition that
may be imposed by the proposed fee increase for receives from CNS, as
described in Item II(A)1(ii)B(42),\48\ would not be significant. Even
though the amount of the fee increase may appear significant relative
to the current fee (a proposed increase from $0.035 to $0.08), DTC
believes that the fee increase does not, in and of itself, mean that
the burden on competition is significant. DTC does not believe that the
fee increase would impose a significant burden on competition, because
the impact of the fee increase would correlate to a Participant's
particular business model and how CNS fits into that model, and
therefore, Participants with similar business models and relationships
with CNS would be similarly impacted. Finally, DTC believes that the
burden on competition that may be imposed by the proposed fee increase
for the cancellation of pending DO, as described in Item
II(A)1(ii)B(43),\49\ would not be significant because the increase
would be a nominal amount ($0.04) and the activity that triggers the
fee occurs infrequently. Therefore, DTC believes that any burden on
competition that may be caused by the proposed rule changes addressed
immediately above would be insignificant.
---------------------------------------------------------------------------
\47\ Per email instruction from DTC's legal staff on December 4,
2018, Commission staff revised this reference to correct a
typographical error, changing ``B(43)'' to ``B(41).''
\48\ Per email instruction from DTC's legal staff on December 4,
2018, Commission staff revised this reference to correct a
typographical error, changing ``B(44)'' to ``B(42).''
\49\ Per email instruction from DTC's legal staff on December 4,
2018, Commission staff revised this reference to correct a
typographical error, changing ``B(45)'' to ``B(43).''
---------------------------------------------------------------------------
Burden on Competition Would Be Necessary and Appropriate. DTC
believes that any insignificant burden on competition that may be
imposed by the proposed rule changes addressed immediately above would
be necessary and appropriate in furtherance of the purposes of the Act,
as permitted by Section 17A(b)(3)(I) of the Act.\50\ As discussed
above, DTC believes that the proposed rule changes would (1) provide
for the equitable allocation of reasonable fees,\51\ as required by
Section 17A(b)(3)(D) of the Act,\52\ and (2) promote the prompt and
accurate clearance and settlement of securities transactions,\53\
consistent with Section 17A(b)(3)(F) of the Act.\54\ Therefore, DTC
believes that any insignificant burden on competition that may be
imposed by the proposed rule changes addressed immediately above would
be necessary and appropriate in furtherance of the purposes of the Act,
specifically Section 17A(b)(3)(D) of the Act and Section 17A(b)(3)(F)
of the Act, respectively, as permitted by Section 17A(b)(3)(I) of the
Act.\55\
---------------------------------------------------------------------------
\50\ Id.
\51\ See supra Item II(A)2(i)B.
\52\ 15 U.S.C. 78q-1(b)(3)(D).
\53\ See supra Item II(A)2(ii)B.
\54\ 15 U.S.C. 78q-1(b)(3)(F).
\55\ 15 U.S.C. 78q-1(b)(3)(I).
---------------------------------------------------------------------------
(iii) Promote Efficient Market Behavior
Impact on Competition. DTC believes that each of the proposed
adjustments of certain fees to encourage efficient market behavior, as
described in Items II(A)1(ii)C (Simplify the Pricing Structure/Promote
Efficient Market Behavior)\56\ and II(A)1(ii)E (Promote Efficient
Market Behavior), may have an impact on competition, because these
proposed adjustments would result in either a fee decrease or fee
increase to Participants for the relevant service.\57\ First, DTC
believes that each of the proposed fee reductions for a service could
promote competition by potentially reducing Participants' operating
costs. Based on the foregoing, DTC believes that each of the proposed
reduction of certain fees in order to promote efficient market
behavior, as described in Items II(A)1(ii)C and II(A)1(ii)E, would not
impose a burden on competition, but may promote competition. Second,
DTC believes that the proposed increase of the surcharge for the late
submission of a LOR or BLOR may impact competition, because
[[Page 64412]]
it could create a burden on competition by negatively affecting such
Participants' operating costs. However, DTC believes that the burden on
competition would not be significant and would be necessary and
appropriate in furtherance of the purposes of the Act, as permitted by
Section 17A(b)(3)(I) of the Act.\58\
---------------------------------------------------------------------------
\56\ DTC believes that the consolidation of fee line items, in
and of itself, would not have an impact on competition. See supra
Item II(B)(i).
\57\ 15 U.S.C. 78q-1(b)(3)(I).
\58\ Id.
---------------------------------------------------------------------------
Burden on Competition Would Not Be Significant. DTC believes that
any burden on competition that may be imposed by the proposed increase
of the surcharge for the late submission of a LOR or BLOR would be
insignificant because (1) the increase would be a modest amount ($100)
that would only apply when a Participant submits a late LOR or BLOR,
and (2) a Participant can avoid the surcharge by submitting the LOR or
BLOR on time.
Burden on Competition Would Be Necessary and Appropriate. DTC
believes that any insignificant burden on competition that is created
by the proposed increase of the surcharge for the late submission of a
LOR or BLOR would be necessary and appropriate in furtherance of the
purposes of the Act, as permitted by Section 17A(b)(3)(I) of the
Act.\59\ As discussed above, DTC believes that the proposed rule
changes would (1) provide for the equitable allocation of reasonable
fees,\60\ as required by Section 17A(b)(3)(D) of the Act,\61\ and (2)
promote the prompt and accurate clearance and settlement of securities
transactions,\62\ consistent with Section 17A(b)(3)(F) of the Act.\63\
Therefore, DTC believes that any insignificant burden on competition
that may be imposed by the proposed rule changes addressed immediately
above would be necessary and appropriate in furtherance of the purposes
of the Act, specifically Section 17A(b)(3)(D) of the Act and Section
17A(b)(3)(F) of the Act, respectively, as permitted by Section
17A(b)(3)(I) of the Act.\64\
---------------------------------------------------------------------------
\59\ Id.
\60\ See supra Item II(A)2(i)C.
\61\ 15 U.S.C. 78q-1(b)(3)(D).
\62\ See supra Item II(A)2(ii)C.
\63\ 15 U.S.C. 78q-1(b)(3)(F).
\64\ 15 U.S.C. 78q-1(b)(3)(I).
---------------------------------------------------------------------------
(iv) Clarify the Fee Guide
No Impact on Competition. DTC believes that each of the proposed
clarifications to the Fee Guide, as described in Item II(A)1(ii)F
(Clarify the Fee Guide), would not have an impact on competition.\65\
Each of these changes would amend certain headings, fee names, and fee
conditions to improve the accuracy and clarity of the Fee Guide. Having
an accurate and clear Fee Guide would facilitate Participants'
understanding of the Fee Guide and their obligations thereunder, and so
would not affect the rights and obligations of any Participant or other
interested party. Therefore, DTC believes that each of the proposed
clarifications to the Fee Guide, as described in Item II(A)1(ii)F
(Clarify the Fee Guide), would not have an impact on competition.
---------------------------------------------------------------------------
\65\ Id.
---------------------------------------------------------------------------
(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 \66\ and paragraph (f) of Rule 19b-4
thereunder.\67\ 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.
---------------------------------------------------------------------------
\66\ 15 U.S.C. 78s(b)(3)(A).
\67\ 17 CFR 240.19b-4(f).
---------------------------------------------------------------------------
IV. Solicitation of Comments
Interested persons are invited to submit written data, views and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic 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-2018-011 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-2018-011. 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 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-2018-011 and should be submitted on
or before January 4, 2019.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\68\
---------------------------------------------------------------------------
\68\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2018-27078 Filed 12-13-18; 8:45 am]
BILLING CODE 8011-01-P
