Self-Regulatory Organizations; The Depository Trust Company; Order Approving a Proposed Rule Change To Amend the Redemptions Guide Relating to the Call Lottery Process for Partial Redemptions, 751-752 [2020-00031]
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Federal Register / Vol. 85, No. 4 / Tuesday, January 7, 2020 / Notices
forced to connect to (and purchase
market data from) all options exchanges,
as shown by the number of Members of
the Exchange as compared to the much
greater number of members at other
options exchanges (as described above).
Not only does MIAX Emerald have less
than half the number of members as
certain other options exchanges, but
there are also a number of the
Exchange’s Members that do not
connect directly to MIAX Emerald.
There are a number of large market
makers and broker-dealers that are
members of other options exchange but
not Members of MIAX Emerald.
Additionally, other exchanges have
similar connectivity alternatives for
their participants, including similar
low-latency connectivity, but with
much higher rates to connect.53 The
Exchange is also unaware of any
assertion that its existing fee levels or
the Proposed Fees would somehow
unduly impair its competition with
other options exchanges. To the
contrary, if the fees charged are deemed
too high by market participants, they
can simply disconnect.
While the Exchange recognizes the
distinction between connecting to an
exchange and trading at the exchange,
the Exchange notes that it operates in a
highly competitive options market in
which market participants can readily
connect and trade with venues they
desire. In such an environment, the
Exchange must continually adjust its
fees to remain competitive with other
exchanges. The Exchange believes that
the proposed changes reflect this
competitive environment.
khammond on DSKJM1Z7X2PROD with NOTICES
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
Written comments were neither
solicited nor received.
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)(ii) of the Act,54 and Rule
19b–4(f)(2) 55 thereunder. At any time
within 60 days of the filing of the
proposed rule change, the Commission
summarily may temporarily suspend
such rule change if it appears to the
Commission that such action is
necessary or appropriate in the public
interest, for the protection of investors,
or otherwise in furtherance of the
53 See
supra note 50.
U.S.C. 78s(b)(3)(A)(ii).
55 17 CFR 240.19b–4(f)(2).
54 15
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purposes of the Act. If the Commission
takes such action, the Commission shall
institute proceedings to determine
whether the proposed rule should be
approved or disapproved.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
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–
EMERALD–2019–39 on the subject line.
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE,
Washington, DC 20549–1090.
All submissions should refer to File
Number SR–EMERALD–2019–39. 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–EMERALD–2019–39 and
should be submitted on or before
January 28, 2020.
PO 00000
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751
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.56
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2019–28537 Filed 1–6–20; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–87879; File No. SR–DTC–
2019–009]
Self-Regulatory Organizations; The
Depository Trust Company; Order
Approving a Proposed Rule Change To
Amend the Redemptions Guide
Relating to the Call Lottery Process for
Partial Redemptions
January 2, 2020.
I. Introduction
On October 31, 2019, The Depository
Trust Company (‘‘DTC’’) 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 proposed rule change SR–
DTC–2019–009. The proposed rule
change was published for comment in
the Federal Register on November 19,
2019.3 The Commission did not receive
any comment letters on the proposed
rule change. For the reasons discussed
below, the Commission is approving the
proposed rule change.
II. Description of the Proposed Rule
Change
DTC proposes to modify its
Procedures 4 set forth in the DTC
Corporate Actions Redemptions Service
Guide (‘‘Redemptions Guide’’) 5 in order
to amend its call lottery process relating
to the processing of partial redemptions
(‘‘Partial Calls’’) with respect to
allocations made for odd lot positions in
a called Security held by a Participant.
56 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 Securities Exchange Act Release No. 87526
(November 13, 2019), 84 FR 63915 (November 19,
2019) (SR–DTC–2019–009) (‘‘Notice’’).
4 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.
5 Available at https://www.dtcc.com/∼/media/
Files/Downloads/legal/service-guides/
Redemptions.pdf.
1 15
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752
Federal Register / Vol. 85, No. 4 / Tuesday, January 7, 2020 / Notices
A. Background
Partial Calls and the Call Lottery
An issuer of a Security may be
allowed under the terms of the issue to
call a portion of the par value of the
issue outstanding for redemption at
certain times during the life of the issue,
i.e., a Partial Call.6 In such case, some
investors may have all or a portion of
their position redeemed by the issuer,
while others may not have any portion
of their position redeemed.
When an issuer initiates a Partial Call,
DTC’s Procedures require the trustee for
the issue to publish notice of such event
or mail notice of the event, including
the specific amount to be redeemed, to
the registered holders.7 After DTC
receives or collects notice of the Partial
Call, DTC creates an announcement
through its redemptions service,8 and
preliminary call notice information is
made available to Participants.9
Under DTC’s Procedures set forth in
the Redemptions Guide relating to a
Partial Call, DTC allocates the called
Securities among Participants that hold
the applicable Security by means of an
impartial lottery, based upon
Participants’ net long positions as of the
close of business on the day prior to the
publication of the call notice.10 Upon
performing the call lottery, DTC reports
the results to Participants.11
Odd Lots
An odd lot occurs when a Participant
holds a position in a Security that is not
within the stated increments of the
Security, i.e., the par value at which,
pursuant to the terms of the issue, the
Security can be purchased and traded.
For example, a bond contract for a
Security may provide that all purchases
must be made in authorized
denominations equal to a multiple of
$5,000, the minimum incremental
value. Therefore, any amount held by a
Participant that is not a multiple of
$5,000, such as a position with a value
of $5,001, would be an odd lot.12 DTC
6 See
id. at 19.
id.
8 DTC’s redemptions service includes
announcing, collecting, allocating, and reporting
redemption and maturity payments on behalf of its
Participants holding Eligible Securities. See id. at 7.
9 See id. at 19.
10 See id.
11 See id. at 21.
12 An odd lot position may be created, for
example, as a result of a beneficial holder’s account
at a Participant being split into two accounts as a
result of divorce or the administration of the estate
of the beneficial holder. If the division of the assets
in the beneficial holder’s account at the Participant
ultimately results in a portion of the beneficial
holder’s position in the subject Security being
transferred to another Participant, and the
remaining balance of the Security in the beneficial
khammond on DSKJM1Z7X2PROD with NOTICES
7 See
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16:15 Jan 06, 2020
Jkt 250001
states that running the lottery with the
odd lot position intact could result in
another Participant being driven into an
odd lot position.13
B. Proposed Change
DTC proposes to amend its
Redemptions Guide to revise its call
lottery process such that, for issues
where the incremental value is $5,000
or less, Participants with odd lot
positions would have their positions
adjusted down to the nearest value that
is divisible by the minimum
incremental value for purposes of the
lottery. However, the Participant would
continue to hold the Securities reduced
from its position for this purpose in its
Account. Thus, the Participant with the
initial odd lot for issues where the
incremental value is $5,000 or less
would continue to maintain an odd lot
position after the lottery is run, and no
new odd lot positions would be created.
In addition, a copyright date in the
text of the Redemptions Guide is
currently shown as 1999–2014. DTC
proposes to revise the text of the
Redemptions Guide to reflect a
copyright date of 1999–2019.
III. Discussion and Commission
Findings
Section 19(b)(2)(C) of the Act 14
directs the Commission to approve a
proposed rule change of a selfregulatory organization if it finds that
such proposed rule change is consistent
with the requirements of the Act and
rules and regulations thereunder
applicable to such organization. After
carefully considering the proposed rule
change, the Commission finds that the
proposed rule change is consistent with
the requirements of the Act and the
rules and regulations thereunder
applicable to DTC. In particular, the
Commission finds that the proposed
rule change is consistent with Section
17A(b)(3)(F) of the Act.15
Section 17A(b)(3)(F) of the Act
requires that the rules of a clearing
agency be designed to, among other
things, promote the prompt and
accurate clearance and settlement of
securities transactions and assure the
safeguarding of securities and funds
which are in the custody or control of
holder’s account at the Participant that held the full
position prior to the split is not in a par value
amount that is a multiple of the authorized
denomination, then an odd lot amount could be
created in the Participant’s DTC account.
13 DTC states that odd lot positions are more
difficult to trade due to the terms of the issue
requiring trades to be made only in multiples of the
incremental value. Supra note 3, at 4.
14 15 U.S.C. 78s(b)(2)(C).
15 15 U.S.C. 78q–1(b)(3)(F).
PO 00000
Frm 00084
Fmt 4703
Sfmt 4703
the clearing agency or for which it is
responsible.16
As described above, the proposal
would prevent the creation of new odd
lot positions during the lottery process
for issues where the incremental value
is $5,000 or less, which would facilitate
the allocation of positions that are more
amenable to trading for transactions that
are processed and settled through DTC’s
system. Therefore, the proposal should
promote the prompt and accurate
clearance and settlement of securities
transactions that are processed and
settled through DTC’s system.
IV. Conclusion
On the basis of the foregoing, the
Commission finds that the proposed
rule change is consistent with the
requirements of the Act and, in
particular, with the requirements of
Section 17A of the Act 17 and the rules
and regulations promulgated
thereunder.
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act 18 that
proposed rule change SR–DTC–2019–
009, be, and hereby is, approved.19
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.20
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020–00031 Filed 1–6–20; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–87880; File No. SR–ICEEU–
2019–029]
Self-Regulatory Organizations; ICE
Clear Europe Limited; Notice of Filing
and Immediate Effectiveness of
Proposed Rule Changes Relating to
Clearing Member Charges and Rates of
Return on Cash and Collateral in
Relation to Margin Deposits and
Guaranty Fund Contributions for All
Clearing Member House and Customer
Accounts
January 2, 2020.
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 December
16 Id.
17 15
U.S.C. 78q–1.
U.S.C. 78s(b)(2).
19 In approving the proposed rule change, the
Commission considered the proposals’ impact on
efficiency, competition, and capital formation. 15
U.S.C. 78c(f).
20 17 CFR 200.30–3(a)(12).
1 15 U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
18 15
E:\FR\FM\07JAN1.SGM
07JAN1
]]>Agencies
[Federal Register Volume 85, Number 4 (Tuesday, January 7, 2020)]
[Notices]
[Pages 751-752]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-00031]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-87879; File No. SR-DTC-2019-009]
Self-Regulatory Organizations; The Depository Trust Company;
Order Approving a Proposed Rule Change To Amend the Redemptions Guide
Relating to the Call Lottery Process for Partial Redemptions
January 2, 2020.
I. Introduction
On October 31, 2019, The Depository Trust Company (``DTC'') 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\ proposed rule change SR-DTC-2019-009.
The proposed rule change was published for comment in the Federal
Register on November 19, 2019.\3\ The Commission did not receive any
comment letters on the proposed rule change. For the reasons discussed
below, the Commission is approving the proposed rule change.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ Securities Exchange Act Release No. 87526 (November 13,
2019), 84 FR 63915 (November 19, 2019) (SR-DTC-2019-009)
(``Notice'').
---------------------------------------------------------------------------
II. Description of the Proposed Rule Change
DTC proposes to modify its Procedures \4\ set forth in the DTC
Corporate Actions Redemptions Service Guide (``Redemptions Guide'') \5\
in order to amend its call lottery process relating to the processing
of partial redemptions (``Partial Calls'') with respect to allocations
made for odd lot positions in a called Security held by a Participant.
---------------------------------------------------------------------------
\4\ 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.
\5\ Available at https://www.dtcc.com/~/media/Files/Downloads/
legal/service-guides/Redemptions.pdf.
---------------------------------------------------------------------------
[[Page 752]]
A. Background
Partial Calls and the Call Lottery
An issuer of a Security may be allowed under the terms of the issue
to call a portion of the par value of the issue outstanding for
redemption at certain times during the life of the issue, i.e., a
Partial Call.\6\ In such case, some investors may have all or a portion
of their position redeemed by the issuer, while others may not have any
portion of their position redeemed.
---------------------------------------------------------------------------
\6\ See id. at 19.
---------------------------------------------------------------------------
When an issuer initiates a Partial Call, DTC's Procedures require
the trustee for the issue to publish notice of such event or mail
notice of the event, including the specific amount to be redeemed, to
the registered holders.\7\ After DTC receives or collects notice of the
Partial Call, DTC creates an announcement through its redemptions
service,\8\ and preliminary call notice information is made available
to Participants.\9\
---------------------------------------------------------------------------
\7\ See id.
\8\ DTC's redemptions service includes announcing, collecting,
allocating, and reporting redemption and maturity payments on behalf
of its Participants holding Eligible Securities. See id. at 7.
\9\ See id. at 19.
---------------------------------------------------------------------------
Under DTC's Procedures set forth in the Redemptions Guide relating
to a Partial Call, DTC allocates the called Securities among
Participants that hold the applicable Security by means of an impartial
lottery, based upon Participants' net long positions as of the close of
business on the day prior to the publication of the call notice.\10\
Upon performing the call lottery, DTC reports the results to
Participants.\11\
---------------------------------------------------------------------------
\10\ See id.
\11\ See id. at 21.
---------------------------------------------------------------------------
Odd Lots
An odd lot occurs when a Participant holds a position in a Security
that is not within the stated increments of the Security, i.e., the par
value at which, pursuant to the terms of the issue, the Security can be
purchased and traded. For example, a bond contract for a Security may
provide that all purchases must be made in authorized denominations
equal to a multiple of $5,000, the minimum incremental value.
Therefore, any amount held by a Participant that is not a multiple of
$5,000, such as a position with a value of $5,001, would be an odd
lot.\12\ DTC states that running the lottery with the odd lot position
intact could result in another Participant being driven into an odd lot
position.\13\
---------------------------------------------------------------------------
\12\ An odd lot position may be created, for example, as a
result of a beneficial holder's account at a Participant being split
into two accounts as a result of divorce or the administration of
the estate of the beneficial holder. If the division of the assets
in the beneficial holder's account at the Participant ultimately
results in a portion of the beneficial holder's position in the
subject Security being transferred to another Participant, and the
remaining balance of the Security in the beneficial holder's account
at the Participant that held the full position prior to the split is
not in a par value amount that is a multiple of the authorized
denomination, then an odd lot amount could be created in the
Participant's DTC account.
\13\ DTC states that odd lot positions are more difficult to
trade due to the terms of the issue requiring trades to be made only
in multiples of the incremental value. Supra note 3, at 4.
---------------------------------------------------------------------------
B. Proposed Change
DTC proposes to amend its Redemptions Guide to revise its call
lottery process such that, for issues where the incremental value is
$5,000 or less, Participants with odd lot positions would have their
positions adjusted down to the nearest value that is divisible by the
minimum incremental value for purposes of the lottery. However, the
Participant would continue to hold the Securities reduced from its
position for this purpose in its Account. Thus, the Participant with
the initial odd lot for issues where the incremental value is $5,000 or
less would continue to maintain an odd lot position after the lottery
is run, and no new odd lot positions would be created.
In addition, a copyright date in the text of the Redemptions Guide
is currently shown as 1999-2014. DTC proposes to revise the text of the
Redemptions Guide to reflect a copyright date of 1999-2019.
III. Discussion and Commission Findings
Section 19(b)(2)(C) of the Act \14\ directs the Commission to
approve a proposed rule change of a self-regulatory organization if it
finds that such proposed rule change is consistent with the
requirements of the Act and rules and regulations thereunder applicable
to such organization. After carefully considering the proposed rule
change, the Commission finds that the proposed rule change is
consistent with the requirements of the Act and the rules and
regulations thereunder applicable to DTC. In particular, the Commission
finds that the proposed rule change is consistent with Section
17A(b)(3)(F) of the Act.\15\
---------------------------------------------------------------------------
\14\ 15 U.S.C. 78s(b)(2)(C).
\15\ 15 U.S.C. 78q-1(b)(3)(F).
---------------------------------------------------------------------------
Section 17A(b)(3)(F) of the Act requires that the rules of a
clearing agency be designed to, among other things, promote the prompt
and accurate clearance and settlement of securities transactions and
assure the safeguarding of securities and funds which are in the
custody or control of the clearing agency or for which it is
responsible.\16\
---------------------------------------------------------------------------
\16\ Id.
---------------------------------------------------------------------------
As described above, the proposal would prevent the creation of new
odd lot positions during the lottery process for issues where the
incremental value is $5,000 or less, which would facilitate the
allocation of positions that are more amenable to trading for
transactions that are processed and settled through DTC's system.
Therefore, the proposal should promote the prompt and accurate
clearance and settlement of securities transactions that are processed
and settled through DTC's system.
IV. Conclusion
On the basis of the foregoing, the Commission finds that the
proposed rule change is consistent with the requirements of the Act
and, in particular, with the requirements of Section 17A of the Act
\17\ and the rules and regulations promulgated thereunder.
---------------------------------------------------------------------------
\17\ 15 U.S.C. 78q-1.
---------------------------------------------------------------------------
It is therefore ordered, pursuant to Section 19(b)(2) of the Act
\18\ that proposed rule change SR-DTC-2019-009, be, and hereby is,
approved.\19\
---------------------------------------------------------------------------
\18\ 15 U.S.C. 78s(b)(2).
\19\ In approving the proposed rule change, the Commission
considered the proposals' impact on efficiency, competition, and
capital formation. 15 U.S.C. 78c(f).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\20\
---------------------------------------------------------------------------
\20\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-00031 Filed 1-6-20; 8:45 am]
BILLING CODE 8011-01-P
