Self-Regulatory Organizations; The Depository Trust Company; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend the Operational Arrangements Relating to Transfer Agent and Trustee Notices, 28867-28871 [2019-13074]
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Federal Register / Vol. 84, No. 119 / Thursday, June 20, 2019 / Notices
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–86111; File No. SR–
NYSEAMER–2018–39]
Self-Regulatory Organizations; NYSE
American LLC; Notice of Withdrawal of
Proposed Rule Change, as Modified by
Amendment No. 2, To Allow Flexible
Exchange Equity Options To Be Cash
Settled Where the Underlying Security
Is a Specified Exchange-Traded Fund
June 14, 2019.
On September 20, 2018, NYSE
American LLC (‘‘NYSE American’’ or
the ‘‘Exchange’’) filed with the
Securities and Exchange Commission
(‘‘Commission’’), pursuant to Section
19(b)(1) of the Securities Exchange Act
of 1934 (‘‘Act’’) 1 and Rule 19b–4
thereunder,2 a proposed rule change to
modify the rules related to Flexible
Exchange (‘‘FLEX’’) Options to allow
cash settlement for certain FLEX Equity
Options. The proposal, as modified by
Amendment No. 2, would allow FLEX
Equity Options to be cash settled where
the underlying security is one of 25
specified Exchange-Traded Funds
(‘‘ETF’’).
The proposed rule change was
published for comment in the Federal
Register on October 11, 2018.3 On
November 19, 2018, pursuant to Section
19(b)(2) of the Act,4 the Commission
designated a longer period within which
to either approve the proposed rule
change, disapprove the proposed rule
change, or institute proceedings to
determine whether to disapprove the
proposed rule change.5 The Commission
received one comment in response to
the Original Notice.6
On December 19, 2018, the
Commission instituted proceedings
under Section 19(b)(2)(B) of the Act 7 to
determine whether to approve or
disapprove the proposed rule change.8
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 See Securities Exchange Act Release No. 84364
(October 4, 2018), 83 FR 51535 (October 11, 2018)
(‘‘Original Notice’’).
4 15 U.S.C. 78s(b)(2).
5 See Securities Exchange Act Release No. 84616
(November 19, 2018), 83 FR 60519 (November 26,
2018). The Commission designated January 9, 2019,
as the date by which it should approve, disapprove,
or institute proceedings to determine whether to
disapprove the proposed rule change.
6 See Letter to Brent J. Fields, Secretary,
Commission, from Samara Cohen, Head of ETF
Global Markets, BlackRock, dated November 27,
2018 (‘‘BlackRock Letter’’).
7 15 U.S.C. 78s(b)(2)(B).
8 See Securities Exchange Act Release No. 84870
(December 19, 2018), 83 FR 66779 (December 27,
2018) (‘‘Order Instituting Proceedings’’). The
Commission designated April 9, 2019, as the date
by which the Commission shall approve or
disapprove the proposed rule change.
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On March 11, 2019, the Exchange filed
Amendment No. 1 to the proposed rule
change. On March 25, 2019, the
Exchange withdrew Amendment No. 1
and filed Amendment No. 2 to the
proposed rule change, which
superseded and replaced the proposed
rule change in its entirety.9 On April 5,
2019, the Commission designated a
longer period for Commission action on
the proceedings to determine whether to
approve or disapprove the proposed
rule change.10 The Commission
published Amendment No. 2 for
comment in the Federal Register on
April 17, 2019.11 The Commission
received no comments in response to
this solicitation for comments. On May
31, 2019, the Exchange withdrew the
proposed rule change (SR–NYSEAMER–
2018–39).
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.12
Vanessa A. Countryman,
Acting Secretary.
[FR Doc. 2019–13072 Filed 6–19–19; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–86113; File No. SR–DTC–
2019–001]
Self-Regulatory Organizations; The
Depository Trust Company; Notice of
Filing and Immediate Effectiveness of
a Proposed Rule Change To Amend
the Operational Arrangements Relating
to Transfer Agent and Trustee Notices
June 14, 2019.
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 June 13,
2019, 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)
9 See Notice, infra note 11, at n.10, which
describes the changes proposed in Amendment No.
2 from the original proposal.
10 See Securities Exchange Act Release No. 85531
(April 5, 2019), 84 FR 14703 (April 11, 2019). The
Commission extended the date by which the
Commission shall approve or disapprove the
proposed rule change to June 8, 2019.
11 See Securities Exchange Act Release No. 85628
(April 11, 2019), 84 FR 16102 (April 17, 2019)
(‘‘Notice’’).
12 17 CFR 200.30–3(a)(12).
1 15 U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
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of the Act 3 and Rule 19b–4(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 of DTC 5
consists of modifications to the DTC
Operational Arrangements (Necessary
for Securities to Become and Remain
Eligible for DTC Services) (‘‘OA’’) 6 in
order to amend DTC’s Procedures 7
regarding (i) the available methods for a
transfer agent 8 or trustee 9 to notify DTC
of a change relating to ceasing to
perform or assumption of transfer agent
services on behalf of an Issuer of
Securities (‘‘Issuer’’) or when the
transfer agent or trustee is changing its
name or address, (ii) the deadline by
which a transfer agent must provide
such a notice, (iii) the required
timeframe for DTC to make such notices
from transfer agents available to
Participants, and (iv) other clarifying
and technical changes, as described
below.
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.
3 15
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(4).
5 Capitalized terms not defined herein are defined
in the Rules, By-Laws and Organization Certificate
of DTC (the ‘‘Rules’’), available at https://
www.dtcc.com/∼/media/Files/Downloads/legal/
rules/dtc_rules.pdf.
6 Available at https://www.dtcc.com/∼/media/
Files/Downloads/legal/issue-eligibility/eligibility/
operational-arrangements.pdf.
7 Pursuant to the Rules, the term ‘‘Procedures’’
means the Procedures, service guides, and
regulations of DTC adopted pursuant to Rule 27, as
amended from time to time. See Rule 1, Section 1,
supra note 5.
8 Transfer agents record changes of ownership,
maintain the issuer’s security holder records, cancel
and issue certificates, and distribute dividends.
Because transfer agents stand between issuing
companies and security holders, efficient transfer
agent operations are critical to the successful
completion of secondary trades. See https://
www.sec.gov/divisions/marketreg/mrtransfer.shtml.
(describing transfer agents and related information).
9 A trustee is hired by an issuer of debt securities
and is responsible for registration, transfer and
payment of the securities.
4 17
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Federal Register / Vol. 84, No. 119 / Thursday, June 20, 2019 / Notices
(A) Clearing Agency’s Statement of the
Purpose of, and Statutory Basis for, the
Proposed Rule Change
1. Purpose
The proposed rule change consists of
modifications to the OA 10 in order to
amend DTC’s Procedures regarding (i)
the available methods for a transfer
agent or trustee to notify DTC of a
change relating to ceasing to perform or
assumption of transfer agent services on
behalf of an Issuer or when the transfer
agent or trustee is changing its name or
address, (ii) the deadline by which a
transfer agent must provide such a
notice, (iii) the required timeframe for
DTC to make such notices from transfer
agents available to Participants, and (iv)
other clarifying and technical changes,
as described below.
Background
In 1995, the Securities and Exchange
Commission (‘‘Commission’’) approved
a DTC rule filing (‘‘1995 Rule Filing’’) 11
for DTC to be designated as the
‘‘appropriate qualified registered
securities depository’’ to receive notices
of transfer agent changes (‘‘17Ad–16
Notice’’) pursuant to Rule 17Ad–16 12
(‘‘Rule 17Ad–16’’) of the Securities
Exchange Act of 1934, as amended
(‘‘Act’’).13 Rule 17Ad–16 is designed to
address transfer delays due to
unannounced transfer agent changes,
including the termination of the transfer
agent services for a particular issue and
the change of the name or address of a
transfer agent.14 Rule 17Ad–16 requires
a registered transfer agent to send a
17Ad–16 Notice to the ‘‘appropriate
qualified registered securities
depository’’ (a) on or before the later of
ten calendar days prior to the effective
date of such termination or the day the
transfer agent is notified of the effective
date of such termination 15 and (b) on or
before the later of ten calendar days
prior to the effective date of a change in
the transfer agent’s name or address or
when that transfer agent assumes
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10 Supra
note 6.
11 See Securities Exchange Act Release No. 35378
(February 15, 1995), 60 FR 9875 (February 22, 1995)
(File No. SR–DTC–95–02).
12 17 CFR 240.17Ad–16. Pursuant to Rule 17Ad–
16, an ‘‘appropriate qualified registered securities
depository’’ shall mean the qualified registered
securities depository that the Commission so
designates by order or, in the absence of such
designation, the qualified registered securities
depository that is the largest holder of record of all
qualified registered securities depositories as of the
most recent record date. 17 CFR 240.17Ad–16(f).
13 15 U.S.C. 78q–1.
14 See Securities Exchange Act Release No. 35039
(December 1, 1994), 59 FR 63656 (December 8,
1994) (File No. S7–1–92).
15 17 CFR 240.17Ad–16(a).
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transfer agent services on behalf of an
issuer of securities.16
For purposes of submitting a 17Ad–16
Notice to DTC, the OA provides that a
transfer agent should (i) use the
template Notice of Assumption or
Termination of Transfer Agent Services
Form 17Ad–16 (‘‘17Ad–16 Change
Form’’) designated for this purpose that
is made available by DTC on DTCC’s
website,17 and (ii) send the completed
form, signed by the transfer agent, in a
portable document format to a
designated email address,18 by the
effective date of the change being
reported on the form.19
The OA also provides that in the
event of a change in trustee with respect
to an issue of Securities, DTC requires
that the new and prior trustee update
the trustee information previously
provided to DTC by the trustee for the
issue using the 17Ad–16 Change Form
and sending the form, signed by the
trustee, in portable document format, to
a designated email address.20
Once received, DTC would make the
form submitted by the transfer agent or
trustee available to its Participants by
posting it to DTC’s Legal Notice System
(‘‘LENS’’).21
Proposed Rule Change
Electronic Submission of 17Ad–16
Change Forms
Pursuant to the proposed rule change,
to facilitate the reduction of costs and
administrative burdens associated with
the processing of transfer agent and
trustee notices, DTC would modify the
OA to allow transfer agents and trustees
to provide the applicable notices
electronically through a designated link
on the DTCC website,22 as described
below. In this regard, the proposed
16 17
CFR 240.17Ad–16(b).
at https://dtcc.com/matchingsettlement-and-asset-services/agent-services/dtceligible-agent.
18 The address designated for this purpose is
TAServices@dtcc.com. See OA, supra note 6, at 17.
19 OA, supra note 6, at 17.
20 OA, supra note 6, at 18.
21 LENS enables Participants to choose from a
menu on a secure interface with DTC certain
notices received by DTC which they order. The
Commission issued an order approving LENS on
June 12, 1991. See Securities Exchange Act Release
No. 29291 (June 12, 1991), 56 FR 28190 (June 19,
1991) (File No. SR–DTC–91–08). LENS was
originally accessible through the DTC Participant
Terminal System (‘‘PTS’’). Id. DTC subsequently
implemented a web-based LENS interface. See
Securities Exchange Act Release No. 43964
(February 14, 2001), 66 FR 11190 (February 22,
2001) (SR–DTC–00–18). The LENS PTS function
was retired effective August 27, 2010, and
Participants may access LENS via the web-based
functionality mentioned above. See Securities
Exchange Act Release No. 62686 (August 10, 2010),
75 FR 50032 (August 16, 2010) (SR–DTC–2010–10).
22 Supra note 17.
17 Available
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method would allow for the submission
of a notice that follows the template of
the 17Ad–16 Change Form that is
electronically signed 23 and submitted
by the transfer agent or trustee, as
applicable, using the designated link.
The OA would still allow for
submission of such notices via email, as
described above. However, DTC believes
that also allowing for a whollyelectronic method for the completion,
signing and submission of the 17Ad–16
Change Form would reduce costs and
administrative burdens for transfer
agents and trustees by eliminating the
manual processing otherwise entailed
with an email submission.24
Notification Timeframe for Transfer
Agents To Provide Notices
The OA currently states that a transfer
agent should notify DTC of the transfer
agent’s termination of services for an
Issuer by the effective date and does not
provide a deadline for notifications to
DTC of other events that are reportable
by the transfer agent to DTC pursuant to
Rule 17Ad–16. Pursuant to the proposed
rule change, in order to harmonize the
timeframe stated in the OA in this
regard with the requirements of Rule
17Ad–16,25 discussed above, DTC
would amend the OA to require that a
transfer agent must notify DTC when
terminating or assuming transfer agent
services on behalf of an Issuer, or when
the transfer agent is changing its name
or address, before the later of (a) 10
calendar days prior to the effective date
or (b) in the case of a termination or
assumption, the date the transfer agent
is (1) notified of the effective date, or (2)
becomes aware of, the termination or
assumption date, as applicable.
DTC believes that the proposed
amendment to the timeframes for
transfer agents to provide 17Ad–16
Notices, as set forth above, would
promote the prompt and accurate
clearance and settlement of securities by
facilitating DTC’s ability to distribute to
its Participants via LENS, a transfer
23 Pursuant to Rule 26, DTC may, at its option, in
lieu of relying on an original signature, rely on a
signature as if it were (and the signature shall be
considered and have the same effect as) a valid and
binding signature in the following circumstances: If
such signature is transmitted, recorded or stored by
an electronic, optical, or similar means (including
but not limited to telecopy, imaging, xeroxing,
electronic mail, electronic data interchange,
telegram or telex). Rule 26, supra note 5.
24 The manual processing that may be necessary
for a transfer agent or trustee to make an email
submission of a notice, which would be eliminated
by instead using the proposed electronic method to
submit the form, includes the transfer agent or
trustee printing, completing, manually signing the
notice and converting it to the portable document
format currently required by the OA.
25 17 CFR 240.17Ad–16(a).
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Federal Register / Vol. 84, No. 119 / Thursday, June 20, 2019 / Notices
agent’s notification made by it pursuant
to Rule 17Ad–16 prior to the effective
date, to the extent the notice is timely
provided by the transfer agent, thus
reducing the potential for transfer
delays due to unannounced transfer
agent changes.
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Posting 17Ad–16 Notices to LENS
The 1995 Rule Filing stated that DTC
would make 17Ad–16 Notices available
to Participants via LENS no later than
the Business Day 26 following DTC’s
receipt of such notice from the transfer
agent.27 Rule 17Ad–16 states that a
qualified registered securities
depository that receives notice pursuant
to the requirements noted above, ‘‘shall
deliver a copy of such notices to its own
participants within 24 hours.’’ 28
In order to provide enhanced
transparency with regard to the
timeframe for DTC to post notices
consistent with 1995 Rule Filing, and
reflecting the underlying requirement of
Rule 17Ad–16 in this regard, DTC
would add text to the OA to clarify that
DTC would make each 17Ad–16 Notice
available to Participants within 24 hours
of DTC’s receipt of a 17Ad–16 Notice
from the transfer agent, not including
weekends and holidays (i.e., nonBusiness Days). For example, if DTC
receives a 17Ad–16 Notice through the
designated email or electronic methods
described above at 6:00 p.m. Eastern
Time (‘‘ET’’) on a Monday (that is not
a holiday), DTC would make the 17Ad–
16 Notice available for viewing by
Participants on LENS no later than 5:59
p.m. ET on Tuesday. For weekends, if
DTC receives a notice at or after 6:00
p.m. ET on a Friday, DTC would make
the 17Ad–16 Notice available for
viewing by Participants on LENS no
later than 5:59 p.m. ET on Monday.
Proposed Changes to the Text of the OA
Pursuant to the proposed rule change,
DTC would amend Section II (B)(4) of
the OA to (i) provide for the electronic
submission of applicable notices/forms
by transfer agents, as described above,
(ii) amend the OA to require that a
transfer agent must notify DTC when
terminating or assuming transfer agent
services on behalf of an Issuer, or when
the transfer agent is changing its name
or address, before the later of (a) 10
calendar days prior to the effective date
or (b) the date the transfer agent is (1)
notified of the effective date, or (2), in
the case of a termination or assumption,
becomes aware of, the termination or
26 Pursuant to Rule 1, the term Business Day
means any day on which DTC is open for business.
Rule 1, supra note 5.
27 See supra note 11.
28 17 CFR 240.17Ad–16(d)(1).
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assumption date, as applicable, and (iii)
add a new subsection (f) that would
state that DTC would make each 17Ad–
16 Notice available to Participants
within 24 hours of DTC’s receipt of a
17Ad–16 Notice from the transfer agent,
not including weekends and holidays
(i.e., non-Business Days), as described
above. The text would also include an
example illustrating the timeline
pursuant to which the notices would be
made available on LENS that is
consistent with the example provided
under ‘‘Posting 17Ad–16 Notices to
LENS’’ above.
The proposed rule change would also
amend the text of Section II (B)(4) of the
OA to (i) correct a typographical error
where the Act is not referred to by its
full name, (ii) allow transfer agents to
submit the 17Ad–16 Change Form in
Word format, (iii) update the
information that should be included on
transfer agent notices to include the
agent name, address, contact name,
contact phone, contact email, and agent
number, (iv) add a defined term for
17Ad–16 Notices, (v) note that notices
sent to DTC, as described above, will be
made available to Participants for
viewing on LENS, (vi) modify text in
two places that refer to the requirements
of Rule 17Ad–16 to conform the OA text
to the terminology in the rule regarding
a transfer agent ‘‘ceasing to perform’’ 29
services on behalf of an issuer rather
than referring to the transfer agent
‘‘terminating’’ such services as currently
stated in the OA, (vii) conform the title
of the 17Ad–16 Change Form as set
forth in the OA to the title which
appears on DTCC’s website which is
‘‘Notice of Assumption or Termination
of Transfer Agent Services Form 17Ad–
16’’ followed by ‘‘also known as 17Ad–
16 Change Form’’ (viii) clarify the
location and name of the link where a
template of the 17Ad–16 Change Form
is available,30 and (ix) make technical
and clarifying changes to the text for
enhanced flow and readability.
The proposed rule change would
amend Section II (B)(5) to (i) conform
the title of the 17Ad–16 Change Form as
set forth in the OA to the title which
appears on DTCC’s website which is
‘‘Notice of Assumption or Termination
of Transfer Agent Services Form 17Ad–
16’’ followed by ‘‘also known as 17Ad–
16 Change Form’’ (ii) clarify the location
29 17
CFR 240.17Ad–16(a).
revised OA text would state that a template
of the Notice of Assumption or Termination of
Transfer Agent Services Form 17Ad–16 can be
obtained from DTCC’s website at: https://dtcc.com/
matching-settlement-and-asset-services/agentservices/dtc-eligible-agent and by clicking on the
link titled ‘‘Notice of Assumption or Termination of
Transfer Agent Services Form 17Ad–16.’’
30 The
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and name of the link where a template
of the 17Ad–16 Change Form is
available,31 (iii) add a clarifying
statement that DTC would make notices
from trustees received pursuant to this
section available for viewing by
Participants on LENS, and (iv) make
technical and clarifying changes to the
text for enhanced flow and readability.
The proposed rule change would also
add a note to the sections relating to
posting of 17Ad–16 Notices and trustee
notices (the new Section II (B)(4)(f) and
Section II (B)(5), respectively) to state
that (1) DTC does not screen the 17Ad–
16 Notices for confidential information,
and (2) it is the full and sole
responsibility of the transfer agent or
trustee, as applicable, submitting a
17Ad–16 Notice to ensure that the
information contained in the 17Ad–16
Notice is correct and does not include
any information that would otherwise
be deemed as confidential or material
non-public information.
The proposed rule change would
revise text that indicates to the effect
that a transfer agent or trustee, as
applicable, ‘‘should’’ use or is required
to use the template of the 17Ad–16
Change Form made available by DTC to
notify DTC of a change relating to a
transfer agent or trustee, as applicable,
to instead state that the transfer agent or
trustee, as applicable, ‘‘may’’ use the
DTC template 17Ad–16 Change Form
for this purpose. This change to the text
reflects that Rule 17Ad–16 states the
information that a transfer agent should
include on a notice, but it does not
mandate the use of a template of a
qualified registered securities
depository.32
In addition, DTC would make a
technical change to Sections VI (E)(1)(a)
and (b) to change the email address for
Issuers and agents to submit notices
submitted to DTC in accordance with
those sections from lensnotices@
dtcc.com to LegalandTaxNotices@
dtcc.com.33
Effective Date
The proposed rule change would
become effective upon filing with the
Commission.
31 Id.
32 See
17 CFR 240.17Ad–16(a) and (b).
sections relate to the submission of
consent notices and certain legal notices
respectively. Consent notices are submitted by an
issuer or agent via email to provide notices of
record dates for the purpose of facilitating the
solicitation of consents from or voting by beneficial
owners of Securities. See OA, supra note 6, at 52.
The legal notices to be submitted to DTC via email
in accordance with Section VI (E)(1)(b) include
notices to security holders of bankruptcies,
litigation/class actions and defaults. Id.
33 These
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2. Statutory Basis
Section 17A(b)(3)(F) 34 of the Act
requires that the rules of the clearing
agency be designed, inter alia, to
promote the prompt and accurate
clearance and settlement of securities
transactions. DTC believes that the
proposed rule change is consistent with
this provision of the Act because, by
amending DTC’s Procedures regarding
(i) the available methods for a transfer
agent or trustee to notify DTC of a
change relating to ceasing to perform or
assumption of transfer agent services on
behalf of an Issuer or when the transfer
agent or trustee is changing its name or
address, (ii) the deadline by which a
transfer agent must provide such a
notice, and (iii) the required timeframe
for DTC to make such notices from
transfer agents available to Participants,
it would facilitate the prompt and
accurate clearance and settlement of
securities transactions by facilitating
timely and efficient distribution of
changes to information for transfer
agents and trustees to DTC and
Participants, as described above, and
therefore promote the ability of DTC and
Participants to interface with transfer
agents and trustees with respect to
functions performed by them, including
the registration, transfer and payment of
the securities.
DTC also believes that the proposed
rule changes are consistent with Section
17A(b)(3)(F), cited above, because by
making technical and clarifying changes
to the text within the Procedures set
forth in the OA regarding the (i)
amendment to Section II (B) of the OA
to (a) correct a typographical error
where the Act is not referred to by its
full name, (b) allow transfer agents and
trustees to submit the 17Ad–16 Change
Form in Word format, (c) update
information that should be included on
transfer agent notices to include the
agent name, address, contact name,
contact phone, contact email, and agent
number, (d) add a defined term for
17Ad–16 Notices, (e) add a note that
transfer agent notices and trustee
notices provided by transfer agents and
trustees, respectively, to DTC, as
described above, are made available for
viewing by Participants on LENS, and
(f) add a note to the sections relating to
responsibilities of transfer agents and
trustees with respect to accuracy and
confidentiality considerations relating
to 17Ad–16 Notices and trustee notices
(Sections II (B)(4)(f) and II (B)(5),
respectively), as described above, and
by (ii) providing a change in email
address for issuers and agents to submit
34 15
U.S.C. 78q–1(b)(3)(F).
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notices submitted to DTC in accordance
with Sections VI (E)(1)(a) and (b) of the
OA, as described above, the proposed
rule change would provide enhanced
transparency for transfer agents, trustees
and Issuers with respect to the
Procedures relating to submission and
processing of notices that may be
submitted by them, as applicable, in
accordance with the sections of the OA
mentioned above. Therefore, by
providing transfer agents, trustees and
Issuers with enhanced transparency
with regard to the Procedures relating to
the submission and processing of
notices, and therefore facilitating the
prompt posting of notices and
distribution of information on LENS to
Participants related to Securities held by
the Participants, and that may be the
subject of transactions processed
through the DTC system, DTC believes
that the proposed rule change would
promote the prompt and accurate
clearance and settlement of securities
transactions consistent with the Act.
Rule 17Ad–16(d)(1) 35 requires that,
inter alia, the appropriate qualified
registered securities depository that
receives 17Ad–16 Notices shall deliver
a copy of such notices to its own
participants within 24 hours. Rule
17Ad–16(d)(2) 36 provides that a
qualified registered securities
depository may comply with its notice
requirements under Rule 17Ad–
16(d)(1) 37 by making available the
notice of all material information from
the notice within 24 hours in a manner
set forth in the rules of the qualified
registered securities depository. DTC
believes that the proposed rule change
is consistent with Rule 17Ad–16(d)(1)
because it would amend the text of the
OA, as described above, to provide that
DTC would make 17Ad–16 Notices that
it receives available to Participants via
LENS within 24 hours of receipt, not
including weekends and holidays (i.e.,
non-Business Days).38 DTC believes the
proposed rule change is consistent with
Rule 17Ad–16(d)(2) because, as
described above, the proposed rule
change would add the text described in
the sentence immediately above to the
OA, which are Procedures filed as rules
with the Commission.
(B) Clearing Agency’s Statement on
Burden on Competition
DTC does not believe that the
proposed rule change would have any
impact, or impose any burden, on
competition. The proposed rule change
35 17
CFR 240.17Ad–16(d)(1).
CFR 240.17Ad–16(d)(2).
37 17 CFR 240.17Ad–16(d)(1).
38 Supra note 26.
would, (i) with respect to the proposed
rule changes to amend the OA regarding
notification timeframes relating to
transfer agent notifications to DTC and
the distribution of those notifications by
DTC to its Participants, merely align and
clarify the text of the OA in accordance
with the applicable requirements
relating to such notifications set forth in
Rule 17Ad–16 and the provisions of the
1995 Rule Filing as described above,
and (ii) with respect to the addition of
an electronic method for the submission
of notices by transfer agents and
trustees, merely allow for an additional
means for such notices to be submitted
and not impact the existing email
option, as described above. Therefore,
the proposed rule change would not
impact, or impose any burden on,
competition.
(C) Clearing Agency’s Statement on
Comments on the Proposed Rule
Change Received From Members,
Participants, or Others
DTC has not received or solicited any
written comments relating to this
proposal. 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 39 and paragraph (f) of Rule
19b–4 thereunder.40 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–2019–001 on the subject line.
36 17
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40 17
E:\FR\FM\20JNN1.SGM
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f).
20JNN1
Federal Register / Vol. 84, No. 119 / Thursday, June 20, 2019 / Notices
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–2019–001. 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–
2019–001 and should be submitted on
or before July 11, 2019.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.41
Vanessa A. Countryman,
Acting Secretary.
[FR Doc. 2019–13074 Filed 6–19–19; 8:45 am]
jbell on DSK3GLQ082PROD with NOTICES
BILLING CODE 8011–01–P
41 17
CFR 200.30–3(a)(12).
VerDate Sep<11>2014
17:47 Jun 19, 2019
Jkt 247001
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–86112; File No. SR–
NYSEArca–2019–28]
Self-Regulatory Organizations; NYSE
Arca, Inc.; Order Granting Approval of
a Proposed Rule Change, as Modified
by Amendment No. 3, To List and
Trade Shares of the Virtus WMC RiskManaged Alternative Equity ETF Under
NYSE Arca Rule 8.600–E
June 14, 2019.
I. Introduction
On April 15, 2019, NYSE Arca, Inc.
(‘‘NYSE Arca’’ or ‘‘Exchange’’) filed
with the Securities and Exchange
Commission (‘‘Commission’’), pursuant
to Section 19(b)(1) of the Securities
Exchange Act of 1934 (‘‘Act’’) 1 and Rule
19b–4 thereunder,2 a proposed rule
change to list and trade shares
(‘‘Shares’’) of the Virtus WMC RiskManaged Alternative Equity ETF
(‘‘Fund’’) under NYSE Arca Rule 8.600–
E. The proposed rule change was
published for comment in the Federal
Register on May 3, 2019.3 On May 14,
2019, the Exchange filed Amendment
No. 1 to the proposed rule change. On
May 16, 2019, the Exchange filed
Amendment No. 2 to the proposed rule
change, which amended and replaced
the proposed rule change as modified by
Amendment No. 1. On June 10, 2019,
the Exchange filed Amendment No. 3 to
the proposed rule change, which
amended and replaced the proposed
rule change as modified by Amendment
No. 2.4 The Commission has received no
comments on the proposed rule change.
This order approves the proposed rule
change, as modified by Amendment No.
3.
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 See Securities Exchange Act Release No. 85751
(April 30, 2019), 84 FR 19141.
4 In Amendment No. 3, the Exchange: (a) Clarified
the permitted investments of the Fund; (b) clarified
that the only OTC derivatives that the Fund may
invest in are forward foreign currency contracts and
OTC options on U.S. and foreign exchange-listed
equity securities, U.S. and foreign exchange-listed
equity securities indices, and interest rates; (c)
stated that price information relating to currency
forwards will be available from major market data
vendors; and (d) made other clarifying, technical,
and conforming changes. Amendment No. 3 is not
subject to notice and comment because it does not
materially alter the substance of the proposed rule
change or raise unique or novel regulatory issues.
Amendment No. 3 is available at: https://
www.sec.gov/comments/sr-nysearca-2019-28/
srnysearca201928-5656834-185771.pdf.
2 17
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Sfmt 4703
28871
II. Description of the Proposal, as
Modified by Amendment No. 3 5
The Exchange proposes to list and
trade Shares of the Fund under NYSE
Arca Rule 8.600–E, which governs the
listing and trading of Managed Fund
Shares on the Exchange. The Fund is a
series of ETFis Series I (‘‘Trust’’).6
Virtus ETF Advisors LLC (‘‘Adviser’’) is
the investment adviser for the Fund.
Wellington Management Company LLP
is the sub-adviser to the Fund (‘‘SubAdviser’’).7 ETF Distributors LLC, a
registered broker-dealer, will act as the
distributor for the Fund’s Shares and the
Bank of New York Mellon will serve as
the custodian, administrator, and
transfer agent for the Fund.
A. Principal Investments of the Fund
According to the Exchange, the
investment objective of the Fund is to
seek to provide superior risk-adjusted
total returns over the long term. The
Fund will seek to achieve its investment
objective, under normal market
conditions,8 by (i) investing in a broadly
diversified portfolio of global equity
securities in both developed and
emerging markets, and (ii)
implementing a beta management
strategy by shorting futures contracts
and purchasing and selling options, as
further described below. Under normal
market conditions, the Fund will invest
at least 80% of its net assets (plus any
5 For a complete description of the Exchange’s
proposal, see Amendment No. 3, supra note 4.
6 According to the Exchange, on February 28,
2019, the Trust filed with the Commission a PostEffective Amendment to the Trust’s registration
statement on Form N–1A under the Securities Act
of 1933 and the 1940 Act relating to the Fund (File
Nos. 333–187668 and 811–22819) (‘‘Registration
Statement’’). The Exchange represents that the Trust
will file an amendment to the Registration
Statement as necessary to conform to the
representations in this filing. In addition, the
Exchange states that the Commission has issued an
order granting certain exemptive relief to the Trust
under the 1940 Act. See Investment Company Act
Release No. 30607 (July 23, 2013) (File No. 812–
14080).
7 The Exchange states that the Adviser and the
Sub-Adviser are not registered as broker-dealers but
that each is affiliated with one or more brokerdealers and has implemented and will maintain a
‘‘fire wall’’ with respect to each such broker-dealer
affiliate regarding access to information concerning
the composition of and/or changes to the Fund’s
portfolio. In addition, in the event (a) the Adviser
or the Sub-Adviser becomes registered as a brokerdealer or newly affiliated with a broker-dealer, or
(b) any new adviser or sub-adviser is a registered
broker-dealer or becomes affiliated with a brokerdealer, such entity will implement and maintain a
‘‘fire wall’’ with respect to its relevant personnel or
broker-dealer affiliate regarding access to
information concerning the composition of and/or
changes to the portfolio, and will be subject to
procedures designed to prevent the use and
dissemination of material non-public information
regarding such portfolio.
8 The term ‘‘normal market conditions’’ is defined
in NYSE Arca Rule 8.600–E(c)(5).
E:\FR\FM\20JNN1.SGM
20JNN1
]]>Agencies
[Federal Register Volume 84, Number 119 (Thursday, June 20, 2019)]
[Notices]
[Pages 28867-28871]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-13074]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-86113; File No. SR-DTC-2019-001]
Self-Regulatory Organizations; The Depository Trust Company;
Notice of Filing and Immediate Effectiveness of a Proposed Rule Change
To Amend the Operational Arrangements Relating to Transfer Agent and
Trustee Notices
June 14, 2019.
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 June 13, 2019, 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 Rule 19b-4(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)(4).
---------------------------------------------------------------------------
I. Clearing Agency's Statement of the Terms of Substance of the
Proposed Rule Change
The proposed rule change of DTC \5\ consists of modifications to
the DTC Operational Arrangements (Necessary for Securities to Become
and Remain Eligible for DTC Services) (``OA'') \6\ in order to amend
DTC's Procedures \7\ regarding (i) the available methods for a transfer
agent \8\ or trustee \9\ to notify DTC of a change relating to ceasing
to perform or assumption of transfer agent services on behalf of an
Issuer of Securities (``Issuer'') or when the transfer agent or trustee
is changing its name or address, (ii) the deadline by which a transfer
agent must provide such a notice, (iii) the required timeframe for DTC
to make such notices from transfer agents available to Participants,
and (iv) other clarifying and technical changes, as described below.
---------------------------------------------------------------------------
\5\ Capitalized terms not defined herein are defined in the
Rules, By-Laws and Organization Certificate of DTC (the ``Rules''),
available at https://www.dtcc.com/~/media/Files/Downloads/legal/
rules/dtc_rules.pdf.
\6\ Available at https://www.dtcc.com/~/media/Files/Downloads/
legal/issue-eligibility/eligibility/operational-arrangements.pdf.
\7\ Pursuant to the Rules, the term ``Procedures'' means the
Procedures, service guides, and regulations of DTC adopted pursuant
to Rule 27, as amended from time to time. See Rule 1, Section 1,
supra note 5.
\8\ Transfer agents record changes of ownership, maintain the
issuer's security holder records, cancel and issue certificates, and
distribute dividends. Because transfer agents stand between issuing
companies and security holders, efficient transfer agent operations
are critical to the successful completion of secondary trades. See
https://www.sec.gov/divisions/marketreg/mrtransfer.shtml.
(describing transfer agents and related information).
\9\ A trustee is hired by an issuer of debt securities and is
responsible for registration, transfer and payment of the
securities.
---------------------------------------------------------------------------
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.
[[Page 28868]]
(A) Clearing Agency's Statement of the Purpose of, and Statutory Basis
for, the Proposed Rule Change
1. Purpose
The proposed rule change consists of modifications to the OA \10\
in order to amend DTC's Procedures regarding (i) the available methods
for a transfer agent or trustee to notify DTC of a change relating to
ceasing to perform or assumption of transfer agent services on behalf
of an Issuer or when the transfer agent or trustee is changing its name
or address, (ii) the deadline by which a transfer agent must provide
such a notice, (iii) the required timeframe for DTC to make such
notices from transfer agents available to Participants, and (iv) other
clarifying and technical changes, as described below.
---------------------------------------------------------------------------
\10\ Supra note 6.
---------------------------------------------------------------------------
Background
In 1995, the Securities and Exchange Commission (``Commission'')
approved a DTC rule filing (``1995 Rule Filing'') \11\ for DTC to be
designated as the ``appropriate qualified registered securities
depository'' to receive notices of transfer agent changes (``17Ad-16
Notice'') pursuant to Rule 17Ad-16 \12\ (``Rule 17Ad-16'') of the
Securities Exchange Act of 1934, as amended (``Act'').\13\ Rule 17Ad-16
is designed to address transfer delays due to unannounced transfer
agent changes, including the termination of the transfer agent services
for a particular issue and the change of the name or address of a
transfer agent.\14\ Rule 17Ad-16 requires a registered transfer agent
to send a 17Ad-16 Notice to the ``appropriate qualified registered
securities depository'' (a) on or before the later of ten calendar days
prior to the effective date of such termination or the day the transfer
agent is notified of the effective date of such termination \15\ and
(b) on or before the later of ten calendar days prior to the effective
date of a change in the transfer agent's name or address or when that
transfer agent assumes transfer agent services on behalf of an issuer
of securities.\16\
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\11\ See Securities Exchange Act Release No. 35378 (February 15,
1995), 60 FR 9875 (February 22, 1995) (File No. SR-DTC-95-02).
\12\ 17 CFR 240.17Ad-16. Pursuant to Rule 17Ad-16, an
``appropriate qualified registered securities depository'' shall
mean the qualified registered securities depository that the
Commission so designates by order or, in the absence of such
designation, the qualified registered securities depository that is
the largest holder of record of all qualified registered securities
depositories as of the most recent record date. 17 CFR 240.17Ad-
16(f).
\13\ 15 U.S.C. 78q-1.
\14\ See Securities Exchange Act Release No. 35039 (December 1,
1994), 59 FR 63656 (December 8, 1994) (File No. S7-1-92).
\15\ 17 CFR 240.17Ad-16(a).
\16\ 17 CFR 240.17Ad-16(b).
---------------------------------------------------------------------------
For purposes of submitting a 17Ad-16 Notice to DTC, the OA provides
that a transfer agent should (i) use the template Notice of Assumption
or Termination of Transfer Agent Services Form 17Ad-16 (``17Ad-16
Change Form'') designated for this purpose that is made available by
DTC on DTCC's website,\17\ and (ii) send the completed form, signed by
the transfer agent, in a portable document format to a designated email
address,\18\ by the effective date of the change being reported on the
form.\19\
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\17\ Available at https://dtcc.com/matching-settlement-and-asset-services/agent-services/dtc-eligible-agent.
\18\ The address designated for this purpose is
[email protected]. See OA, supra note 6, at 17.
\19\ OA, supra note 6, at 17.
---------------------------------------------------------------------------
The OA also provides that in the event of a change in trustee with
respect to an issue of Securities, DTC requires that the new and prior
trustee update the trustee information previously provided to DTC by
the trustee for the issue using the 17Ad-16 Change Form and sending the
form, signed by the trustee, in portable document format, to a
designated email address.\20\
---------------------------------------------------------------------------
\20\ OA, supra note 6, at 18.
---------------------------------------------------------------------------
Once received, DTC would make the form submitted by the transfer
agent or trustee available to its Participants by posting it to DTC's
Legal Notice System (``LENS'').\21\
---------------------------------------------------------------------------
\21\ LENS enables Participants to choose from a menu on a secure
interface with DTC certain notices received by DTC which they order.
The Commission issued an order approving LENS on June 12, 1991. See
Securities Exchange Act Release No. 29291 (June 12, 1991), 56 FR
28190 (June 19, 1991) (File No. SR-DTC-91-08). LENS was originally
accessible through the DTC Participant Terminal System (``PTS'').
Id. DTC subsequently implemented a web-based LENS interface. See
Securities Exchange Act Release No. 43964 (February 14, 2001), 66 FR
11190 (February 22, 2001) (SR-DTC-00-18). The LENS PTS function was
retired effective August 27, 2010, and Participants may access LENS
via the web-based functionality mentioned above. See Securities
Exchange Act Release No. 62686 (August 10, 2010), 75 FR 50032
(August 16, 2010) (SR-DTC-2010-10).
---------------------------------------------------------------------------
Proposed Rule Change
Electronic Submission of 17Ad-16 Change Forms
Pursuant to the proposed rule change, to facilitate the reduction
of costs and administrative burdens associated with the processing of
transfer agent and trustee notices, DTC would modify the OA to allow
transfer agents and trustees to provide the applicable notices
electronically through a designated link on the DTCC website,\22\ as
described below. In this regard, the proposed method would allow for
the submission of a notice that follows the template of the 17Ad-16
Change Form that is electronically signed \23\ and submitted by the
transfer agent or trustee, as applicable, using the designated link.
The OA would still allow for submission of such notices via email, as
described above. However, DTC believes that also allowing for a wholly-
electronic method for the completion, signing and submission of the
17Ad-16 Change Form would reduce costs and administrative burdens for
transfer agents and trustees by eliminating the manual processing
otherwise entailed with an email submission.\24\
---------------------------------------------------------------------------
\22\ Supra note 17.
\23\ Pursuant to Rule 26, DTC may, at its option, in lieu of
relying on an original signature, rely on a signature as if it were
(and the signature shall be considered and have the same effect as)
a valid and binding signature in the following circumstances: If
such signature is transmitted, recorded or stored by an electronic,
optical, or similar means (including but not limited to telecopy,
imaging, xeroxing, electronic mail, electronic data interchange,
telegram or telex). Rule 26, supra note 5.
\24\ The manual processing that may be necessary for a transfer
agent or trustee to make an email submission of a notice, which
would be eliminated by instead using the proposed electronic method
to submit the form, includes the transfer agent or trustee printing,
completing, manually signing the notice and converting it to the
portable document format currently required by the OA.
---------------------------------------------------------------------------
Notification Timeframe for Transfer Agents To Provide Notices
The OA currently states that a transfer agent should notify DTC of
the transfer agent's termination of services for an Issuer by the
effective date and does not provide a deadline for notifications to DTC
of other events that are reportable by the transfer agent to DTC
pursuant to Rule 17Ad-16. Pursuant to the proposed rule change, in
order to harmonize the timeframe stated in the OA in this regard with
the requirements of Rule 17Ad-16,\25\ discussed above, DTC would amend
the OA to require that a transfer agent must notify DTC when
terminating or assuming transfer agent services on behalf of an Issuer,
or when the transfer agent is changing its name or address, before the
later of (a) 10 calendar days prior to the effective date or (b) in the
case of a termination or assumption, the date the transfer agent is (1)
notified of the effective date, or (2) becomes aware of, the
termination or assumption date, as applicable.
---------------------------------------------------------------------------
\25\ 17 CFR 240.17Ad-16(a).
---------------------------------------------------------------------------
DTC believes that the proposed amendment to the timeframes for
transfer agents to provide 17Ad-16 Notices, as set forth above, would
promote the prompt and accurate clearance and settlement of securities
by facilitating DTC's ability to distribute to its Participants via
LENS, a transfer
[[Page 28869]]
agent's notification made by it pursuant to Rule 17Ad-16 prior to the
effective date, to the extent the notice is timely provided by the
transfer agent, thus reducing the potential for transfer delays due to
unannounced transfer agent changes.
Posting 17Ad-16 Notices to LENS
The 1995 Rule Filing stated that DTC would make 17Ad-16 Notices
available to Participants via LENS no later than the Business Day \26\
following DTC's receipt of such notice from the transfer agent.\27\
Rule 17Ad-16 states that a qualified registered securities depository
that receives notice pursuant to the requirements noted above, ``shall
deliver a copy of such notices to its own participants within 24
hours.'' \28\
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\26\ Pursuant to Rule 1, the term Business Day means any day on
which DTC is open for business. Rule 1, supra note 5.
\27\ See supra note 11.
\28\ 17 CFR 240.17Ad-16(d)(1).
---------------------------------------------------------------------------
In order to provide enhanced transparency with regard to the
timeframe for DTC to post notices consistent with 1995 Rule Filing, and
reflecting the underlying requirement of Rule 17Ad-16 in this regard,
DTC would add text to the OA to clarify that DTC would make each 17Ad-
16 Notice available to Participants within 24 hours of DTC's receipt of
a 17Ad-16 Notice from the transfer agent, not including weekends and
holidays (i.e., non-Business Days). For example, if DTC receives a
17Ad-16 Notice through the designated email or electronic methods
described above at 6:00 p.m. Eastern Time (``ET'') on a Monday (that is
not a holiday), DTC would make the 17Ad-16 Notice available for viewing
by Participants on LENS no later than 5:59 p.m. ET on Tuesday. For
weekends, if DTC receives a notice at or after 6:00 p.m. ET on a
Friday, DTC would make the 17Ad-16 Notice available for viewing by
Participants on LENS no later than 5:59 p.m. ET on Monday.
Proposed Changes to the Text of the OA
Pursuant to the proposed rule change, DTC would amend Section II
(B)(4) of the OA to (i) provide for the electronic submission of
applicable notices/forms by transfer agents, as described above, (ii)
amend the OA to require that a transfer agent must notify DTC when
terminating or assuming transfer agent services on behalf of an Issuer,
or when the transfer agent is changing its name or address, before the
later of (a) 10 calendar days prior to the effective date or (b) the
date the transfer agent is (1) notified of the effective date, or (2),
in the case of a termination or assumption, becomes aware of, the
termination or assumption date, as applicable, and (iii) add a new
subsection (f) that would state that DTC would make each 17Ad-16 Notice
available to Participants within 24 hours of DTC's receipt of a 17Ad-16
Notice from the transfer agent, not including weekends and holidays
(i.e., non-Business Days), as described above. The text would also
include an example illustrating the timeline pursuant to which the
notices would be made available on LENS that is consistent with the
example provided under ``Posting 17Ad-16 Notices to LENS'' above.
The proposed rule change would also amend the text of Section II
(B)(4) of the OA to (i) correct a typographical error where the Act is
not referred to by its full name, (ii) allow transfer agents to submit
the 17Ad-16 Change Form in Word format, (iii) update the information
that should be included on transfer agent notices to include the agent
name, address, contact name, contact phone, contact email, and agent
number, (iv) add a defined term for 17Ad-16 Notices, (v) note that
notices sent to DTC, as described above, will be made available to
Participants for viewing on LENS, (vi) modify text in two places that
refer to the requirements of Rule 17Ad-16 to conform the OA text to the
terminology in the rule regarding a transfer agent ``ceasing to
perform'' \29\ services on behalf of an issuer rather than referring to
the transfer agent ``terminating'' such services as currently stated in
the OA, (vii) conform the title of the 17Ad-16 Change Form as set forth
in the OA to the title which appears on DTCC's website which is
``Notice of Assumption or Termination of Transfer Agent Services Form
17Ad-16'' followed by ``also known as 17Ad-16 Change Form'' (viii)
clarify the location and name of the link where a template of the 17Ad-
16 Change Form is available,\30\ and (ix) make technical and clarifying
changes to the text for enhanced flow and readability.
---------------------------------------------------------------------------
\29\ 17 CFR 240.17Ad-16(a).
\30\ The revised OA text would state that a template of the
Notice of Assumption or Termination of Transfer Agent Services Form
17Ad-16 can be obtained from DTCC's website at: https://dtcc.com/matching-settlement-and-asset-services/agent-services/dtc-eligible-agent and by clicking on the link titled ``Notice of Assumption or
Termination of Transfer Agent Services Form 17Ad-16.''
---------------------------------------------------------------------------
The proposed rule change would amend Section II (B)(5) to (i)
conform the title of the 17Ad-16 Change Form as set forth in the OA to
the title which appears on DTCC's website which is ``Notice of
Assumption or Termination of Transfer Agent Services Form 17Ad-16''
followed by ``also known as 17Ad-16 Change Form'' (ii) clarify the
location and name of the link where a template of the 17Ad-16 Change
Form is available,\31\ (iii) add a clarifying statement that DTC would
make notices from trustees received pursuant to this section available
for viewing by Participants on LENS, and (iv) make technical and
clarifying changes to the text for enhanced flow and readability.
---------------------------------------------------------------------------
\31\ Id.
---------------------------------------------------------------------------
The proposed rule change would also add a note to the sections
relating to posting of 17Ad-16 Notices and trustee notices (the new
Section II (B)(4)(f) and Section II (B)(5), respectively) to state that
(1) DTC does not screen the 17Ad-16 Notices for confidential
information, and (2) it is the full and sole responsibility of the
transfer agent or trustee, as applicable, submitting a 17Ad-16 Notice
to ensure that the information contained in the 17Ad-16 Notice is
correct and does not include any information that would otherwise be
deemed as confidential or material non-public information.
The proposed rule change would revise text that indicates to the
effect that a transfer agent or trustee, as applicable, ``should'' use
or is required to use the template of the 17Ad-16 Change Form made
available by DTC to notify DTC of a change relating to a transfer agent
or trustee, as applicable, to instead state that the transfer agent or
trustee, as applicable, ``may'' use the DTC template 17Ad-16 Change
Form for this purpose. This change to the text reflects that Rule 17Ad-
16 states the information that a transfer agent should include on a
notice, but it does not mandate the use of a template of a qualified
registered securities depository.\32\
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\32\ See 17 CFR 240.17Ad-16(a) and (b).
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In addition, DTC would make a technical change to Sections VI
(E)(1)(a) and (b) to change the email address for Issuers and agents to
submit notices submitted to DTC in accordance with those sections from
[email protected] to [email protected].\33\
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\33\ These sections relate to the submission of consent notices
and certain legal notices respectively. Consent notices are
submitted by an issuer or agent via email to provide notices of
record dates for the purpose of facilitating the solicitation of
consents from or voting by beneficial owners of Securities. See OA,
supra note 6, at 52. The legal notices to be submitted to DTC via
email in accordance with Section VI (E)(1)(b) include notices to
security holders of bankruptcies, litigation/class actions and
defaults. Id.
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Effective Date
The proposed rule change would become effective upon filing with
the Commission.
[[Page 28870]]
2. Statutory Basis
Section 17A(b)(3)(F) \34\ of the Act requires that the rules of the
clearing agency be designed, inter alia, to promote the prompt and
accurate clearance and settlement of securities transactions. DTC
believes that the proposed rule change is consistent with this
provision of the Act because, by amending DTC's Procedures regarding
(i) the available methods for a transfer agent or trustee to notify DTC
of a change relating to ceasing to perform or assumption of transfer
agent services on behalf of an Issuer or when the transfer agent or
trustee is changing its name or address, (ii) the deadline by which a
transfer agent must provide such a notice, and (iii) the required
timeframe for DTC to make such notices from transfer agents available
to Participants, it would facilitate the prompt and accurate clearance
and settlement of securities transactions by facilitating timely and
efficient distribution of changes to information for transfer agents
and trustees to DTC and Participants, as described above, and therefore
promote the ability of DTC and Participants to interface with transfer
agents and trustees with respect to functions performed by them,
including the registration, transfer and payment of the securities.
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\34\ 15 U.S.C. 78q-1(b)(3)(F).
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DTC also believes that the proposed rule changes are consistent
with Section 17A(b)(3)(F), cited above, because by making technical and
clarifying changes to the text within the Procedures set forth in the
OA regarding the (i) amendment to Section II (B) of the OA to (a)
correct a typographical error where the Act is not referred to by its
full name, (b) allow transfer agents and trustees to submit the 17Ad-16
Change Form in Word format, (c) update information that should be
included on transfer agent notices to include the agent name, address,
contact name, contact phone, contact email, and agent number, (d) add a
defined term for 17Ad-16 Notices, (e) add a note that transfer agent
notices and trustee notices provided by transfer agents and trustees,
respectively, to DTC, as described above, are made available for
viewing by Participants on LENS, and (f) add a note to the sections
relating to responsibilities of transfer agents and trustees with
respect to accuracy and confidentiality considerations relating to
17Ad-16 Notices and trustee notices (Sections II (B)(4)(f) and II
(B)(5), respectively), as described above, and by (ii) providing a
change in email address for issuers and agents to submit notices
submitted to DTC in accordance with Sections VI (E)(1)(a) and (b) of
the OA, as described above, the proposed rule change would provide
enhanced transparency for transfer agents, trustees and Issuers with
respect to the Procedures relating to submission and processing of
notices that may be submitted by them, as applicable, in accordance
with the sections of the OA mentioned above. Therefore, by providing
transfer agents, trustees and Issuers with enhanced transparency with
regard to the Procedures relating to the submission and processing of
notices, and therefore facilitating the prompt posting of notices and
distribution of information on LENS to Participants related to
Securities held by the Participants, and that may be the subject of
transactions processed through the DTC system, DTC believes that the
proposed rule change would promote the prompt and accurate clearance
and settlement of securities transactions consistent with the Act.
Rule 17Ad-16(d)(1) \35\ requires that, inter alia, the appropriate
qualified registered securities depository that receives 17Ad-16
Notices shall deliver a copy of such notices to its own participants
within 24 hours. Rule 17Ad-16(d)(2) \36\ provides that a qualified
registered securities depository may comply with its notice
requirements under Rule 17Ad-16(d)(1) \37\ by making available the
notice of all material information from the notice within 24 hours in a
manner set forth in the rules of the qualified registered securities
depository. DTC believes that the proposed rule change is consistent
with Rule 17Ad-16(d)(1) because it would amend the text of the OA, as
described above, to provide that DTC would make 17Ad-16 Notices that it
receives available to Participants via LENS within 24 hours of receipt,
not including weekends and holidays (i.e., non-Business Days).\38\ DTC
believes the proposed rule change is consistent with Rule 17Ad-16(d)(2)
because, as described above, the proposed rule change would add the
text described in the sentence immediately above to the OA, which are
Procedures filed as rules with the Commission.
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\35\ 17 CFR 240.17Ad-16(d)(1).
\36\ 17 CFR 240.17Ad-16(d)(2).
\37\ 17 CFR 240.17Ad-16(d)(1).
\38\ Supra note 26.
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(B) Clearing Agency's Statement on Burden on Competition
DTC does not believe that the proposed rule change would have any
impact, or impose any burden, on competition. The proposed rule change
would, (i) with respect to the proposed rule changes to amend the OA
regarding notification timeframes relating to transfer agent
notifications to DTC and the distribution of those notifications by DTC
to its Participants, merely align and clarify the text of the OA in
accordance with the applicable requirements relating to such
notifications set forth in Rule 17Ad-16 and the provisions of the 1995
Rule Filing as described above, and (ii) with respect to the addition
of an electronic method for the submission of notices by transfer
agents and trustees, merely allow for an additional means for such
notices to be submitted and not impact the existing email option, as
described above. Therefore, the proposed rule change would not impact,
or impose any burden on, competition.
(C) Clearing Agency's Statement on Comments on the Proposed Rule Change
Received From Members, Participants, or Others
DTC has not received or solicited any written comments relating to
this proposal. 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 \39\ and paragraph (f) of Rule 19b-4
thereunder.\40\ At any time within 60 days of the filing of the
proposed rule change, the Commission summarily may temporarily suspend
such rule change if it appears to the Commission that such action is
necessary or appropriate in the public interest, for the protection of
investors, or otherwise in furtherance of the purposes of the Act.
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\39\ 15 U.S.C. 78s(b)(3)(A).
\40\ 17 CFR 240.19b-4(f).
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IV. Solicitation of Comments
Interested persons are invited to submit written data, views and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
File Number SR-DTC-2019-001 on the subject line.
[[Page 28871]]
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-2019-001. 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-2019-001 and should be submitted on
or before July 11, 2019.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\41\
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\41\ 17 CFR 200.30-3(a)(12).
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Vanessa A. Countryman,
Acting Secretary.
[FR Doc. 2019-13074 Filed 6-19-19; 8:45 am]
BILLING CODE 8011-01-P
