Self-Regulatory Organizations; The Depository Trust Company; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend the DTC Fee Guide, 5747-5751 [2020-01785]
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Federal Register / Vol. 85, No. 21 / Friday, January 31, 2020 / Notices
staff members who have an interest in
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certified that, in his opinion, one or
more of the exemptions set forth in 5
U.S.C. 552b(c)(3), (5), (6), (7), (8), 9(B)
and (10) and 17 CFR 200.402(a)(3),
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(a)(10), permit consideration of the
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CONTACT PERSON FOR MORE INFORMATION:
For further information; please contact
Vanessa A. Countryman from the Office
of the Secretary at (202) 551–5400.
Dated: January 29, 2020.
Vanessa A. Countryman,
Secretary.
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–88049; File No. SR–DTC–
2020–001]
Self-Regulatory Organizations; The
Depository Trust Company; Notice of
Filing and Immediate Effectiveness of
a Proposed Rule Change To Amend
the DTC Fee Guide
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January 27, 2020.
U.S.C. 78s(b)(1).
CFR 240.19b–4.
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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.
1. Purpose
The proposed rule change would
amend the Guide to the Fee Schedule to
(i) eliminate certain fees within the
Corporate Actions section 10 and the
Securities Processing section 11 of the
Fee Guide, including the addition and
deletion of fees and (ii) modify the
descriptions of certain fees in the
Settlement Services section 12 of the Fee
Guide, as described below.
3 15
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(2) and (f)(4).
5 Each capitalized term not otherwise defined
herein has its respective meaning as set forth the
Rules, By-Laws and Organization Certificate of DTC
(the ‘‘Rules’’), available at https://www.dtcc.com/
legal/rules-and-procedures.aspx.
6 Available at https://www.dtcc.com/∼/media/
Files/Downloads/legal/fee-guides/dtcfeeguide.pdf.
7 See id. at 6–8.
8 See id. at 4–6.
9 See id. at 19–21.
10 See id. at 6–8.
11 See id. at 4–6.
12 See id. at 19–21.
4 17
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 January
21, 2020, The Depository Trust
Company (‘‘DTC’’) filed with the
Securities and Exchange Commission
(‘‘Commission’’) the proposed rule
2 17
I. Clearing Agency’s Statement of the
Terms of Substance of the Proposed
Rule Change
The proposed rule change 5 of DTC
would amend the Guide to the DTC Fee
Schedule 6 (‘‘Fee Guide’’) to (i) eliminate
certain fees within the Corporate
Actions section 7 and the Securities
Processing section 8 of the Fee Guide
and (ii) modify the names and
descriptions of certain fees in the
Settlement Services section 9 of the Fee
Guide, as described below.
(A) Clearing Agency’s Statement of the
Purpose of, and Statutory Basis for, the
Proposed Rule Change
[FR Doc. 2020–02018 Filed 1–29–20; 4:15 pm]
1 15
change as described in Items I, II and III
below, which Items have been prepared
by the clearing agency. DTC filed the
proposed rule change pursuant to
Section 19(b)(3)(A) of the Act 3 and
Rules 19b–4(f)(2) and (f)(4) thereunder.4
The Commission is publishing this
notice to solicit comments on the
proposed rule change from interested
persons.
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Corporate Actions Fee Eliminations
To streamline the Corporate Actions
fee schedule, DTC proposes to eliminate
certain corporate actions fees relating to
services relating to physical securities
processing, specifically, bearer bonds
and the Coupon Collection service
(‘‘CCS’’),13 as described below. The
related products have seen a substantial
decrease in volume over the years due
to increased dematerialization leading
to limited use of the services.14
A bearer bond is a corporate or
municipal debt Security for which
whoever physically holds the Security
certificate is the presumptive owner of
the instrument. Bearer bond coupons for
interest payments are physically
attached to the Security and must be
submitted to an authorized agent, in
order to receive payment. Due to
changes in the marketplace, including
the increasing move towards
dematerialization of Securities, the
issuance of bearer bonds has
significantly curtailed over the years,
and as a result, the inventory of bearer
bonds held by DTC on behalf of
Participants has significantly
diminished. In 1990, DTC had 24
million bearer bonds in its vault, the
bulk of which have matured.15 In 2010
the amount of bearer bonds held by DTC
was just over 132,800 bearer bonds.16 As
of November 2019, DTC holds
approximately 46 issues of bearer bonds
in its vault and, based on the historical
trend, the number of bearer bonds in
DTC’s vault is expected to continue to
rapidly diminish, with the final bond on
deposit scheduled to mature by 2030.
DTC charges a Participant a fee of
$4.00 per interest and principal
payment on bearer bonds. Due to the
steep drop in the amount of bearer
bonds on deposit at DTC, DTC’s need to
allocate staff and systems resources to
the processing of such payments has
diminished to an insignificant level and
DTC believes it would be appropriate to
eliminate this fee.
Under CCS, DTC provides
Participants with a method for
collecting interest payable on coupons
13 See DTC Custody Service Guide (‘‘Custody
Guide’’), available at https://www.dtcc.com/∼/
media/Files/Downloads/legal/service-guides/
Custody.pdf, at 8, 11 and 14. CCS is referred to in
the Custody Guide alternatively as the Coupon
Collection service and the Coupon Clipping service.
Id.
14 Michael Scholl, The Incredible Shrinking
Vaults, available at https://www.dtcc.com/news/
2010/march/01/the-incredible-shrinking-vaults
(March 1, 2010).
15 Edward C. Kelleher, Certificates in DTC Vaults
Drop Below 1 Million, available at https://
www.dtcc.com/news/2011/march/01/certificates-indtc-vaults-drop-below-1-million (March 1, 2011).
16 Id.
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from bearer bonds.17 The Participants
using CCS are required to deposit
coupons in a standard sealed envelope
or ‘‘shell.’’ 18 DTC submits the contents
of the shells to the appropriate issuer or
paying agent and then credits the
interest to the Participant’s account.
DTC charges a Participant a fee of
$75.00 per shell to process coupons and
payments through CCS.19 Due to the
steep decline in the amount of bearer
bonds on deposit at DTC, as described
above, DTC’s need to allocate staff and
systems resources to the processing of
coupon payments has diminished to an
insignificant level and DTC believes it
would be appropriate to eliminate this
fee.
Elimination of Audit and CD
Confirmation Fees
DTC offers confirmations of audit
information relating to Securities held at
DTC to issuers and their agents upon
request.20 DTC also offers confirmations
(‘‘CD Confirmations’’) relating to
certificates of deposit held at DTC.21
The fees charged by DTC to an issuer or
agent to process an audit confirmation
(‘‘Audit Confirmation Fee’’) or CD
Confirmation (‘‘CD Confirmation Fee’’),
which are set forth in the Securities
Processing section 22 of the Fee Guide,
are $22 for the first 5 CUSIPS included
in the confirmation request and $5 for
each additional CUSIP.23 DTC’s billing
process for audit and CD Confirmations
to issuers and agents is different from
that for Participant fees. Participant fees
are billed monthly based on activity
volumes that are generally automatically
fed into the billing system and
Participants are debited for their
monthly charges in their monthly
settlement statement. Issuers and agents
that are not Participants do not maintain
settlement accounts at DTC and the
process of billing for items such as audit
and CD Confirmations is manually
intensive. In fact, as DTC’s physical
inventory has decreased, DTC has
received fewer confirmation requests,
resulting in diminishing revenue over
time, to the point that the cost to DTC
to bill for the processing of
confirmations is greater than the amount
of revenue collected by DTC in this
regard. Therefore, to eliminate the
17 See
Custody Guide, supra note 13, at 14.
Securities Exchange Act Release No. 39955
(May 4, 1998), 63 FR 26236 (May 12, 1998) (SR–
DTC–97–17).
19 See Fee Guide, supra note 6, at 8.
20 Securities Exchange Act Release No. 53471
(March 13, 2006), 71 FR 13872 (March 17, 2006)
(SR–DTC–2005–21).
21 Id.
22 See id. at 4–6.
23 See Fee Guide, supra note 6, at 5.
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18 See
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associated billing costs to DTC that
exceed related revenue collected by
DTC for audit confirmations and CD
Confirmations, DTC proposes to amend
the Fee Schedule to eliminate the Audit
Confirmation Fee and CD Confirmation
Fee. Recognizing a need for issuers and
agents to obtain audit confirmations and
CD Confirmations for their own
regulatory and compliance purposes,
DTC would continue to process such
requests for issuers and agents free of
charge.
Settlement Fee Name and Description
Changes
The proposed rule change would
amend the Settlement Services
section 24 of the Fee Guide to change
certain fee names and descriptions of
fee amounts, as described below. The
proposed changes to this section would
not result in any change in the actual
amounts charged for the relevant fees.
Revise Fee Name for Fees for Stock Loan
Transactions
Pursuant to the proposed rule change,
the fee named ‘‘Stock loans and returns’’
would be renamed as ‘‘Repos, Stock
loans and returns.’’ The amount of this
fee is 18 cents per receive or delivery
and would not change. This fee applies
to deliver orders 25 (‘‘DO’’) of Securities
effected through DTC’s settlement
system that Participants using a reason
code designated for tracking though
DTC’s income tracking systems,
specifically, the stock loan income
tracking system 26 or the repurchase
agreement (‘‘Repo’’) tracking system.27
24 See
id. at 19–21.
deliver order is book-entry movement of
shares of a Security between two Participants. See
Settlement Service Guide (‘‘Settlement Guide’’),
available at https://www.dtcc.com/∼/media/Files/
Downloads/legal/service-guides/Settlement.pdf, at
5.
26 In a stock loan agreement, the lender of a
Security is entitled to recover from the borrower
any income distributions paid on the loaned
Security. The stock loan income tracking system
allows DTC to track the lender’s (deliverer’s)
position on these Securities. The stock loan income
tracking system tracks cash dividend and interest
payments relating to DOs submitted using certain
reason codes for stock loan transactions, as
described in the DTC Corporate Actions
Distributions Service Guide (‘‘Distributions
Guide’’). See Distributions Guide, available at
https://www.dtcc.com/∼/media/Files/Downloads/
legal/service-guides/Service%20
Guide%20Distributions.pdf, at 36–37, for additional
information relating to stock loan transactions and
the related reason codes.
27 A Repo is an agreement between two parties
that allows the seller of Securities to later
repurchase them at an agreed-upon price. The seller
usually retains the right to periodic income
distributions. However, since the Securities will not
reside in the seller’s account on record date, the
seller would not be credited the periodic principal
and income distributions paid on the Securities. To
recover these entitlements, the seller must claim the
25 A
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The word ‘‘Repos’’ would be added to
the fee name for clarity in this regard.
Revise Fee Name for Institutional
Transactions
Pursuant to the proposed rule change,
the fee named ‘‘Institutional receive or
delivery (ID)’’ would be renamed as
‘‘Matched Institutional Transactions.’’
This fee relates to the receive for
delivery of Securities associated with
the processing of an institutional
transaction submitted to DTC by a
Matching Utility on behalf of the
Participants to the transaction.28 The
amount of this fee is charged to a
Participant at a rate of 4 cents per
receive or delivery related to a
transaction submitted on its behalf by a
Matching Utility and would not change.
The fee name would be changed to
eliminate the redundancy between the
fee name and description of the amount,
which both reference that the fee
applies to a receive or delivery.
Revise Fee Name for Fees for ACATS
Transactions and Related Description of
Fee Amount
Pursuant to the proposed rule change,
the description of the fee amount named
‘‘Book Entry NSCC ACATS Long
Allocations and Short Covers’’ would be
renamed ‘‘Delivery to/from CNS
ACATS.’’ In addition, the description of
the fee which is ‘‘$0.06 Per Message’’
would be revised to ‘‘$0.12 per receive
or delivery.’’ The proposed rule change
would not change the actual amount
charged to a Participant per transaction.
In this regard, a delivering Participant is
charged for each message (or delivery
instruction): (1) For the delivery of
Securities from the account of the
Participant to the National Securities
Clearing Corporation’s (‘‘NSCC’’)
ACATS 29 system and (2) for the
associated receive of the Securities by
the NSCC account. Likewise, the
Repo buyer. DTC’s Repo Tracking System
automates claims of these entitlements by tracking
the Repo transactions (deliveries) relating to DOs
submitted with using certain reason codes
designated for Repo transactions and adjusting the
entitlement payments accordingly on payable date.
See Distributions Guide, supra note 26, at 37–38,
for additional information relating to Repo
transactions and related reason codes.
28 See Settlement Guide, supra note 25, at 36, for
additional information on the role of a Matching
Utility in the submission of an institutional
transaction on behalf of Participants to the
transactions.
29 NSCC’s Rules & Procedures, available at,
https://www.dtcc.com/∼/media/Files/Downloads/
legal/rules/nscc_rules.pdf, establish the NSCC
ACATS Settlement Accounting Operation which
interfaces with DTC’s system to move customer
Securities from the account of one Participant to
another. See Settlement Guide, supra note 25, at 18.
NSCC maintains an account at DTC with respect to
the associated securities movements. Id.
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receiving Participant is charged an equal
amount per transaction, respectively, for
the receive of the Securities to its
account and for DTC to deliver the
Securities from the NSCC account to the
Participant.
For example, for a Participant
delivering Securities to the NSCC
ACATS system, the Participant incurs a
charge of 12 cents, which is the sum of
the 6-cent cost to the Participant for
DTC to deliver the Securities to NSCC’s
account as well as for the 6-cent cost to
the Participant for the receive by the
NSCC account for the Securities.
Likewise, the receiving Participant, in
connection with the same instruction, is
charged 12 cents, which is the sum of
the cost of 6 cents for the delivery of the
Securities from NSCC to the receiving
Participant and the receive by the
Participant for those Securities.
Also, proposal would revise the fee
name to eliminate the reference to long
allocations and short covers, because
ACATS transactions have no funds
settlement obligations associated with
them.30 The change would eliminate
potential confusion that could be
created in this regard, because the
Settlement Guide refers to short covers
and long allocations as transactions that
have an associated Collateral Value.31
Description of Fee for Deliveries to and
From CNS
Like the billing of ACATS
transactions, a delivering Participant is
charged for the delivery of a Security to
the NSCC CNS account at DTC (‘‘CNS
Account’’) on the Participant’s behalf
and for the receive of the Security by the
CNS Account. Likewise, the receiving
Participant to the transaction is charged
for the delivery of the Securities from
the CNS Account to its account, and for
the receive of the Securities by its
account. The charge for each side of the
transaction is 8 cents per item. For
example, the delivering Participant is
charged a total of 16 cents, representing
8 cents for the side representing its
delivery of the Security to the CNS
Account and is charged 8 cents for the
side representing the receive of the
Security from the Participant to the CNS
Account. Likewise, the receiving
Participant is charged 16 cents for the
transaction, representing 8 cents for the
delivery of the Securities from the CNS
Account to the Participant’s account
and 8 cents for the receive of the
Securities from the CNS Account by the
Participant. In this regard, DTC believes
that clarifying the related item in the
Fee Guide to clarify the total amount a
Participant is charged for a transaction
as a whole, rather than by delivering
and receiving sides for the transfer of
Securities between the Participant’s
account and the CNS Account, would
provide clarity to Participant’s on the
total fees incurred with respect to the
processing of a movement of Securities
at DTC for a CNS transaction. Therefore,
DTC proposes to revise the Fee Guide to
change the description of the fee
amount for the related item in the Fee
Guide from ‘‘$0.08 Per item delivered,
charged to both sides’’ to ‘‘$0.16 per
delivery or receive.’’
Fee Name for Payments or Withdrawal
of Payments
Pursuant to the Settlement Guide, a
Participant may make settlement
Fee Name
Pursuant to the proposed rule change,
the following entries in the Fee Guide
4.00
75.00
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Settlement Guide, supra note 25, at 17.
32 See
33 See
id. at 63.
id. at 62.
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Pursuant to the proposed rule change,
the following entries in the Fee Guide
would be deleted from the Corporate
Actions section: 35
Conditions
Per interest and principal payment on bearer bonds.
Per shell for CUSIP numbers and Customer-assigned identifiers on a shell.
Amount ($)
Audit confirmation: 39
First five CUSIPs .................................................................
Each additional CUSIP ........................................................
CD confirmation: 40
First five CUSIPS .................................................................
Each additional CUSIP ........................................................
31 Id.
Proposed Rule Change
would be deleted from the Securities
Processing section: 38
Fee Name
30 See
progress payments (‘‘SPP’’) to DTC to
increase their Collateral balance at DTC
and/or reduce its Net Debit Balance and
the Participant also has the ability to
withdraw SPP amounts if such
withdrawal would not cause the
Participant to violate DTC’s risk
controls, including the Collateral
Monitor and Net Debit Cap.32 A
Participant may also receive principal &
interest payments on Securities
deposited in its account and withdraw
payments it has received intraday so
long as such withdrawal does not place
the Participant in a debit balance.33
A Participant is charged a fee of 70
cents per payment or withdrawal of
payment for both the making of a SPP
to DTC and the withdrawal of SPP
amounts from DTC. This fee is also
charged for the intraday withdrawal of
P&I by the Participant. Pursuant to the
Fee Guide, the related fee item is named
‘‘Payment or withdrawal of payment.’’
The Participant is not charged this 70cent fee for the intraday payment of P&I
because DTC charges a separate ‘‘Cash
Dividend’’ fee 34 for the allocation of
principal and interest. To provide
enhanced clarity on how this fee is
applied, DTC proposes to revise this fee
name to ‘‘Progress payment or
withdrawal of SPP/P&I.’’
Amount ($)
Bearer Bond 36 ............................................................................
Coupon Collection Service 37 ......................................................
Conditions
22.00
5.00
Per CUSIP.
Per CUSIP
22.00
5.00
Per CUSIP.
Per CUSIP.
34 See
38 See
35 See
Fee Guide, supra note 6, at 6.
id.
36 See id. at 7.
37 See id. at 8.
39 See
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id. at 4–6.
id. at 5.
40 Id.
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Pursuant to the proposed rule change,
DTC would modify descriptions for
Current fee name
Proposed fee name
Old amount description
New Amount Description
Change
Stock loans and returns ....
Repos, stock loans and returns.
Matched Institutional
Transactions.
Delivery to/from CNS
ACATS.
$0.18 per receive or delivery.
$0.04 per receive or delivery.
$0.06 Per Message ...........
$0.18 per receive or delivery.
$0.04 per receive or delivery.
$0.12 Per receive or delivery.
Added Repo to fee name.
Delivery to/from CNS ........
$0.08 Per item delivered;
charged to both sides.
$0.70 Per payment or
withdrawal of payment.
$0.16 per delivery or receive.
$0.70 Per payment or
withdrawal of payment.
No longer per side.
Institutional receive or delivery (ID).
Book Entry NSCC ACATS
Long Allocations and
Short Covers.
Delivery to/from CNS ........
Payment or withdrawal of
payment.
Progress payment or withdrawal of SPP/P&I.
Implementation Timeframe
The proposed rule change would
become effective upon filing with the
Commission such that the text of the
Fee Guide would be revised as
discussed above.
2. Statutory Basis
DTC believes that this proposal is
consistent with the requirements of the
Act and the rules and regulations
thereunder applicable to a registered
clearing agency. Specifically, DTC
believes that this proposal is consistent
with Sections 17A(b)(3)(D) 41 and
17A(b)(3)(F) 42 of the Act and Rule
17Ad–22(e)(23)(ii),43 as promulgated
under the Act, for the reasons described
below.
(i) Section 17A(b)(3)(D) of the Act
requires, inter alia, that the Rules
provide for the equitable allocation of
reasonable dues, fees, and other charges
among participants.44 For the reasons
set forth below, DTC believes that each
of the proposed rule changes described
above that would eliminate certain fees
would provide for the equitable
allocation of reasonable dues, fees, and
other charges among participants, as
discussed below.
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certain fees set forth in the Settlement
section as set forth below:
Fee Eliminations
DTC believes the proposed rule
change to eliminate fees set forth in the
Corporate Actions section and
Securities Processing sections of the Fee
Guide would provide for the equitable
allocation of reasonable fees. DTC
believes the proposed elimination of the
fees relating to these fees would provide
for the equitable allocation of fees
because the respective fees are rarely
charged due to the low volume of
activity in the related processes, as
described above, and if ever charged,
given the amount of each fee, any charge
41 15
U.S.C. 78q–1(b)(3)(D).
U.S.C. 78q–1(b)(3)(F).
43 17 CFR 240.17Ad–22(e)(23)(ii).
44 15 U.S.C. 78q–1(b)(3)(D).
42 15
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would be in a negligible amount. DTC
believes the elimination of these fees is
reasonable because of the lack of
activity and therefore it is unlikely that
DTC would need to charge these fees.
Also, DTC also believes that the
proposed rule change for the
elimination of the fee relating to audit
and CD confirmations is reasonable,
because it costs DTC more to administer
the charges than it collects from the
agents for this fee. Given the low
volume of activity and fees collected in
this regard, DTC does not believe it
would be reasonable to raise these fees
simply to cover the cost of billing for
them.
(ii) Section 17A(b)(3)(F) 45 of the Act
requires, inter alia, that the Rules
provide for the prompt and accurate
clearance and settlement of securities
transactions by DTC.
Changes of Fee Names and Descriptions
of Fee Amounts
DTC believes that each of the
proposed rule changes with respect to
the revision of fee names and fee
amount descriptions for certain fees set
forth in the Settlement Services section
of the Fee Guide, as described above, is
designed to promote the prompt and
accurate clearance and settlement of
securities transactions in accordance
with this section. Each of these changes
would amend certain fee names and fee
descriptions to improve the accuracy
and clarity of the Fee Guide. Improving
the accuracy and clarity of the Rules
and Procedures, including the Fee
Guide, would help Participants to better
understand their rights and obligations
regarding DTC services. When
Participants better understand their
rights and obligations regarding DTC
services, they can act in accordance
with the Rules and Procedures, which
DTC believes would promote the
prompt and accurate clearance and
settlement of securities transactions by
Changed description.
Changed description, no
longer per message.
Added P&I.
DTC. As such, DTC believes the
proposed rule changes to clarify the Fee
Guide for certain items set for in the
Settlement Services section, as
described above, are consistent with
Section 17A(b)(3)(F) 46 of the Act.
(iii) Rule 17Ad–22(e)(23)(ii) under the
Act requires DTC to establish,
implement, maintain and enforce
written policies and procedures
reasonably designed to provide
sufficient information to enable
participants to identify and evaluate the
risks, fees, and other material costs they
incur by participating in DTC.47 DTC
believes that the proposed rule changes
with respect to (1) deleting fees with
little or no volume and (2) amending fee
names and descriptions of amounts,
would help ensure that the pricing
structure of the Fee Guide is welldefined and clear to Participants.
Having a well-defined and clear Fee
Guide would help Participants to better
understand the fees and help provide
Participants with increased
predictability and certainty regarding
the fees they incur in participating in
DTC. In this way, DTC believes the
proposed rule changes to the Fee Guide,
as described above, are consistent with
Rule 17Ad–22(e)(23)(ii) under the Act,
cited above.
(B) Clearing Agency’s Statement on
Burden on Competition
Fee Eliminations
Impact on Competition. DTC believes
that each of the proposed rule changes
with respect to the deletion of fees with
little or no volume, as described above,
may impact competition by potentially
reducing Participants’ operating costs.
Therefore, DTC believes that the
proposed rule changes with respect to
the deletion of fees with little or no
volume, as described above, would not
46 Id.
45 15
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31JAN1
Federal Register / Vol. 85, No. 21 / Friday, January 31, 2020 / Notices
impose a burden on competition, but
may promote competition.
Changes of Fee Names and Descriptions
of Fee Amounts
No Impact on Competition. DTC
believes that each of the proposed
clarifications to the Settlement Services
section of the Fee Guide, as described,
would not have an impact on
competition.48 Each of these changes
would amend certain fee names and or
fee amount descriptions to improve the
accuracy and clarity of the Fee Guide.
Having an accurate and clear Fee Guide
would facilitate Participants’
understanding of the Fee Guide and
their obligations thereunder, and so
would not affect the rights and
obligations of any Participant or other
interested party. Therefore, DTC
believes that each of the proposed
clarifications to the Settlement Services
section of the Fee Guide, as described
above, would not have an impact on
competition.
(C) Clearing Agency’s Statement on
Comments on the Proposed Rule
Change Received From Members,
Participants, or Others
Written comments relating to this
proposed rule change have not been
solicited or received. DTC will notify
the Commission of any written
comments received by DTC.
III. Date of Effectiveness of the
Proposed Rule Change, and Timing for
Commission Action
The foregoing rule change has become
effective pursuant to Section 19(b)(3)(A)
of the Act 49 and paragraph (f) of Rule
19b–4 thereunder.50 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.
jbell on DSKJLSW7X2PROD with NOTICES
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–2020–001 on the subject line.
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE,
Washington, DC 20549.
All submissions should refer to File
Number SR–DTC–2020–001. 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–
2020–001 and should be submitted on
or before February 21, 2020.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.51
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020–01785 Filed 1–30–20; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–88045; File No. SR–
CboeBYX–2020–002]
Self-Regulatory Organizations; Cboe
BYX Exchange, Inc.; Notice of Filing
and Immediate Effectiveness of a
Proposed Rule Change To Delete
Partial Post Only at Limit Orders and
References to Those Orders From the
Rules
January 27, 2020.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (the
‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on January
17, 2020, Cboe BYX Exchange, Inc. (the
‘‘Exchange’’ or ‘‘BYX’’) filed with the
Securities and Exchange Commission
(the ‘‘Commission’’) the proposed rule
change as described in Items I and II
below, which Items have been prepared
by the Exchange. The Exchange filed the
proposal as a ‘‘non-controversial’’
proposed rule change pursuant to
Section 19(b)(3)(A)(iii) of the Act 3 and
Rule 19b–4(f)(6) thereunder.4 The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
Cboe BYX Exchange, Inc. (the
‘‘Exchange’’ or ‘‘BYX’’) proposes to
delete Partial Post Only at Limit Orders
and references to those orders from the
Rules. The text of the proposed rule
change is provided in Exhibit 5.
The text of the proposed rule change
is also available on the Exchange’s
website (https://markets.cboe.com/us/
equities/regulation/rule_filings/byx/), at
the Exchange’s Office of the Secretary,
and at the Commission’s Public
Reference Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
Exchange included statements
concerning the purpose of and basis for
the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of these
statements may be examined at the
places specified in Item IV below. The
Exchange has prepared summaries, set
forth in sections A, B, and C below, of
1 15
49 15
50 17
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 15 U.S.C. 78s(b)(3)(A)(iii).
4 17 CFR 240.19b–4(f)(6).
2 17
48 Id.
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f).
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17:16 Jan 30, 2020
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]]>Agencies
[Federal Register Volume 85, Number 21 (Friday, January 31, 2020)]
[Notices]
[Pages 5747-5751]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-01785]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-88049; File No. SR-DTC-2020-001]
Self-Regulatory Organizations; The Depository Trust Company;
Notice of Filing and Immediate Effectiveness of a Proposed Rule Change
To Amend the DTC Fee Guide
January 27, 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 January 21, 2020, The Depository Trust Company (``DTC'') filed with
the Securities and Exchange Commission (``Commission'') the proposed
rule change as described in Items I, II and III below, which Items have
been prepared by the clearing agency. DTC filed the proposed rule
change pursuant to Section 19(b)(3)(A) of the Act \3\ and Rules 19b-
4(f)(2) and (f)(4) thereunder.\4\ The Commission is publishing this
notice to solicit comments on the proposed rule change from interested
persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ 15 U.S.C. 78s(b)(3)(A).
\4\ 17 CFR 240.19b-4(f)(2) and (f)(4).
---------------------------------------------------------------------------
I. Clearing Agency's Statement of the Terms of Substance of the
Proposed Rule Change
The proposed rule change \5\ of DTC would amend the Guide to the
DTC Fee Schedule \6\ (``Fee Guide'') to (i) eliminate certain fees
within the Corporate Actions section \7\ and the Securities Processing
section \8\ of the Fee Guide and (ii) modify the names and descriptions
of certain fees in the Settlement Services section \9\ of the Fee
Guide, as described below.
---------------------------------------------------------------------------
\5\ Each capitalized term not otherwise defined herein has its
respective meaning as set forth the Rules, By-Laws and Organization
Certificate of DTC (the ``Rules''), available at https://www.dtcc.com/legal/rules-and-procedures.aspx.
\6\ Available at https://www.dtcc.com/~/media/Files/Downloads/
legal/fee-guides/dtcfeeguide.pdf.
\7\ See id. at 6-8.
\8\ See id. at 4-6.
\9\ See id. at 19-21.
---------------------------------------------------------------------------
II. Clearing Agency's Statement of the Purpose of, and Statutory Basis
for, the Proposed Rule Change
In its filing with the Commission, the clearing agency included
statements concerning the purpose of and basis for the proposed rule
change and discussed any comments it received on the proposed rule
change. The text of these statements may be examined at the places
specified in Item IV below. The clearing agency has prepared summaries,
set forth in sections A, B, and C below, of the most significant
aspects of such statements.
(A) Clearing Agency's Statement of the Purpose of, and Statutory Basis
for, the Proposed Rule Change
1. Purpose
The proposed rule change would amend the Guide to the Fee Schedule
to (i) eliminate certain fees within the Corporate Actions section \10\
and the Securities Processing section \11\ of the Fee Guide, including
the addition and deletion of fees and (ii) modify the descriptions of
certain fees in the Settlement Services section \12\ of the Fee Guide,
as described below.
---------------------------------------------------------------------------
\10\ See id. at 6-8.
\11\ See id. at 4-6.
\12\ See id. at 19-21.
---------------------------------------------------------------------------
Corporate Actions Fee Eliminations
To streamline the Corporate Actions fee schedule, DTC proposes to
eliminate certain corporate actions fees relating to services relating
to physical securities processing, specifically, bearer bonds and the
Coupon Collection service (``CCS''),\13\ as described below. The
related products have seen a substantial decrease in volume over the
years due to increased dematerialization leading to limited use of the
services.\14\
---------------------------------------------------------------------------
\13\ See DTC Custody Service Guide (``Custody Guide''),
available at https://www.dtcc.com/~/media/Files/Downloads/legal/
service-guides/Custody.pdf, at 8, 11 and 14. CCS is referred to in
the Custody Guide alternatively as the Coupon Collection service and
the Coupon Clipping service. Id.
\14\ Michael Scholl, The Incredible Shrinking Vaults, available
at https://www.dtcc.com/news/2010/march/01/the-incredible-shrinking-vaults (March 1, 2010).
---------------------------------------------------------------------------
A bearer bond is a corporate or municipal debt Security for which
whoever physically holds the Security certificate is the presumptive
owner of the instrument. Bearer bond coupons for interest payments are
physically attached to the Security and must be submitted to an
authorized agent, in order to receive payment. Due to changes in the
marketplace, including the increasing move towards dematerialization of
Securities, the issuance of bearer bonds has significantly curtailed
over the years, and as a result, the inventory of bearer bonds held by
DTC on behalf of Participants has significantly diminished. In 1990,
DTC had 24 million bearer bonds in its vault, the bulk of which have
matured.\15\ In 2010 the amount of bearer bonds held by DTC was just
over 132,800 bearer bonds.\16\ As of November 2019, DTC holds
approximately 46 issues of bearer bonds in its vault and, based on the
historical trend, the number of bearer bonds in DTC's vault is expected
to continue to rapidly diminish, with the final bond on deposit
scheduled to mature by 2030.
---------------------------------------------------------------------------
\15\ Edward C. Kelleher, Certificates in DTC Vaults Drop Below 1
Million, available at https://www.dtcc.com/news/2011/march/01/certificates-in-dtc-vaults-drop-below-1-million (March 1, 2011).
\16\ Id.
---------------------------------------------------------------------------
DTC charges a Participant a fee of $4.00 per interest and principal
payment on bearer bonds. Due to the steep drop in the amount of bearer
bonds on deposit at DTC, DTC's need to allocate staff and systems
resources to the processing of such payments has diminished to an
insignificant level and DTC believes it would be appropriate to
eliminate this fee.
Under CCS, DTC provides Participants with a method for collecting
interest payable on coupons
[[Page 5748]]
from bearer bonds.\17\ The Participants using CCS are required to
deposit coupons in a standard sealed envelope or ``shell.'' \18\ DTC
submits the contents of the shells to the appropriate issuer or paying
agent and then credits the interest to the Participant's account. DTC
charges a Participant a fee of $75.00 per shell to process coupons and
payments through CCS.\19\ Due to the steep decline in the amount of
bearer bonds on deposit at DTC, as described above, DTC's need to
allocate staff and systems resources to the processing of coupon
payments has diminished to an insignificant level and DTC believes it
would be appropriate to eliminate this fee.
---------------------------------------------------------------------------
\17\ See Custody Guide, supra note 13, at 14.
\18\ See Securities Exchange Act Release No. 39955 (May 4,
1998), 63 FR 26236 (May 12, 1998) (SR-DTC-97-17).
\19\ See Fee Guide, supra note 6, at 8.
---------------------------------------------------------------------------
Elimination of Audit and CD Confirmation Fees
DTC offers confirmations of audit information relating to
Securities held at DTC to issuers and their agents upon request.\20\
DTC also offers confirmations (``CD Confirmations'') relating to
certificates of deposit held at DTC.\21\ The fees charged by DTC to an
issuer or agent to process an audit confirmation (``Audit Confirmation
Fee'') or CD Confirmation (``CD Confirmation Fee''), which are set
forth in the Securities Processing section \22\ of the Fee Guide, are
$22 for the first 5 CUSIPS included in the confirmation request and $5
for each additional CUSIP.\23\ DTC's billing process for audit and CD
Confirmations to issuers and agents is different from that for
Participant fees. Participant fees are billed monthly based on activity
volumes that are generally automatically fed into the billing system
and Participants are debited for their monthly charges in their monthly
settlement statement. Issuers and agents that are not Participants do
not maintain settlement accounts at DTC and the process of billing for
items such as audit and CD Confirmations is manually intensive. In
fact, as DTC's physical inventory has decreased, DTC has received fewer
confirmation requests, resulting in diminishing revenue over time, to
the point that the cost to DTC to bill for the processing of
confirmations is greater than the amount of revenue collected by DTC in
this regard. Therefore, to eliminate the associated billing costs to
DTC that exceed related revenue collected by DTC for audit
confirmations and CD Confirmations, DTC proposes to amend the Fee
Schedule to eliminate the Audit Confirmation Fee and CD Confirmation
Fee. Recognizing a need for issuers and agents to obtain audit
confirmations and CD Confirmations for their own regulatory and
compliance purposes, DTC would continue to process such requests for
issuers and agents free of charge.
---------------------------------------------------------------------------
\20\ Securities Exchange Act Release No. 53471 (March 13, 2006),
71 FR 13872 (March 17, 2006) (SR-DTC-2005-21).
\21\ Id.
\22\ See id. at 4-6.
\23\ See Fee Guide, supra note 6, at 5.
---------------------------------------------------------------------------
Settlement Fee Name and Description Changes
The proposed rule change would amend the Settlement Services
section \24\ of the Fee Guide to change certain fee names and
descriptions of fee amounts, as described below. The proposed changes
to this section would not result in any change in the actual amounts
charged for the relevant fees.
---------------------------------------------------------------------------
\24\ See id. at 19-21.
---------------------------------------------------------------------------
Revise Fee Name for Fees for Stock Loan Transactions
Pursuant to the proposed rule change, the fee named ``Stock loans
and returns'' would be renamed as ``Repos, Stock loans and returns.''
The amount of this fee is 18 cents per receive or delivery and would
not change. This fee applies to deliver orders \25\ (``DO'') of
Securities effected through DTC's settlement system that Participants
using a reason code designated for tracking though DTC's income
tracking systems, specifically, the stock loan income tracking system
\26\ or the repurchase agreement (``Repo'') tracking system.\27\ The
word ``Repos'' would be added to the fee name for clarity in this
regard.
---------------------------------------------------------------------------
\25\ A deliver order is book-entry movement of shares of a
Security between two Participants. See Settlement Service Guide
(``Settlement Guide''), available at https://www.dtcc.com/~/media/
Files/Downloads/legal/service-guides/Settlement.pdf, at 5.
\26\ In a stock loan agreement, the lender of a Security is
entitled to recover from the borrower any income distributions paid
on the loaned Security. The stock loan income tracking system allows
DTC to track the lender's (deliverer's) position on these
Securities. The stock loan income tracking system tracks cash
dividend and interest payments relating to DOs submitted using
certain reason codes for stock loan transactions, as described in
the DTC Corporate Actions Distributions Service Guide
(``Distributions Guide''). See Distributions Guide, available at
https://www.dtcc.com/~/media/Files/Downloads/legal/service-guides/
Service%20Guide%20Distributions.pdf, at 36-37, for additional
information relating to stock loan transactions and the related
reason codes.
\27\ A Repo is an agreement between two parties that allows the
seller of Securities to later repurchase them at an agreed-upon
price. The seller usually retains the right to periodic income
distributions. However, since the Securities will not reside in the
seller's account on record date, the seller would not be credited
the periodic principal and income distributions paid on the
Securities. To recover these entitlements, the seller must claim the
Repo buyer. DTC's Repo Tracking System automates claims of these
entitlements by tracking the Repo transactions (deliveries) relating
to DOs submitted with using certain reason codes designated for Repo
transactions and adjusting the entitlement payments accordingly on
payable date. See Distributions Guide, supra note 26, at 37-38, for
additional information relating to Repo transactions and related
reason codes.
---------------------------------------------------------------------------
Revise Fee Name for Institutional Transactions
Pursuant to the proposed rule change, the fee named ``Institutional
receive or delivery (ID)'' would be renamed as ``Matched Institutional
Transactions.'' This fee relates to the receive for delivery of
Securities associated with the processing of an institutional
transaction submitted to DTC by a Matching Utility on behalf of the
Participants to the transaction.\28\ The amount of this fee is charged
to a Participant at a rate of 4 cents per receive or delivery related
to a transaction submitted on its behalf by a Matching Utility and
would not change. The fee name would be changed to eliminate the
redundancy between the fee name and description of the amount, which
both reference that the fee applies to a receive or delivery.
---------------------------------------------------------------------------
\28\ See Settlement Guide, supra note 25, at 36, for additional
information on the role of a Matching Utility in the submission of
an institutional transaction on behalf of Participants to the
transactions.
---------------------------------------------------------------------------
Revise Fee Name for Fees for ACATS Transactions and Related Description
of Fee Amount
Pursuant to the proposed rule change, the description of the fee
amount named ``Book Entry NSCC ACATS Long Allocations and Short
Covers'' would be renamed ``Delivery to/from CNS ACATS.'' In addition,
the description of the fee which is ``$0.06 Per Message'' would be
revised to ``$0.12 per receive or delivery.'' The proposed rule change
would not change the actual amount charged to a Participant per
transaction. In this regard, a delivering Participant is charged for
each message (or delivery instruction): (1) For the delivery of
Securities from the account of the Participant to the National
Securities Clearing Corporation's (``NSCC'') ACATS \29\ system and (2)
for the associated receive of the Securities by the NSCC account.
Likewise, the
[[Page 5749]]
receiving Participant is charged an equal amount per transaction,
respectively, for the receive of the Securities to its account and for
DTC to deliver the Securities from the NSCC account to the Participant.
---------------------------------------------------------------------------
\29\ NSCC's Rules & Procedures, available at, https://
www.dtcc.com/~/media/Files/Downloads/legal/rules/nscc_rules.pdf,
establish the NSCC ACATS Settlement Accounting Operation which
interfaces with DTC's system to move customer Securities from the
account of one Participant to another. See Settlement Guide, supra
note 25, at 18. NSCC maintains an account at DTC with respect to the
associated securities movements. Id.
---------------------------------------------------------------------------
For example, for a Participant delivering Securities to the NSCC
ACATS system, the Participant incurs a charge of 12 cents, which is the
sum of the 6-cent cost to the Participant for DTC to deliver the
Securities to NSCC's account as well as for the 6-cent cost to the
Participant for the receive by the NSCC account for the Securities.
Likewise, the receiving Participant, in connection with the same
instruction, is charged 12 cents, which is the sum of the cost of 6
cents for the delivery of the Securities from NSCC to the receiving
Participant and the receive by the Participant for those Securities.
Also, proposal would revise the fee name to eliminate the reference
to long allocations and short covers, because ACATS transactions have
no funds settlement obligations associated with them.\30\ The change
would eliminate potential confusion that could be created in this
regard, because the Settlement Guide refers to short covers and long
allocations as transactions that have an associated Collateral
Value.\31\
---------------------------------------------------------------------------
\30\ See Settlement Guide, supra note 25, at 17.
\31\ Id.
---------------------------------------------------------------------------
Description of Fee for Deliveries to and From CNS
Like the billing of ACATS transactions, a delivering Participant is
charged for the delivery of a Security to the NSCC CNS account at DTC
(``CNS Account'') on the Participant's behalf and for the receive of
the Security by the CNS Account. Likewise, the receiving Participant to
the transaction is charged for the delivery of the Securities from the
CNS Account to its account, and for the receive of the Securities by
its account. The charge for each side of the transaction is 8 cents per
item. For example, the delivering Participant is charged a total of 16
cents, representing 8 cents for the side representing its delivery of
the Security to the CNS Account and is charged 8 cents for the side
representing the receive of the Security from the Participant to the
CNS Account. Likewise, the receiving Participant is charged 16 cents
for the transaction, representing 8 cents for the delivery of the
Securities from the CNS Account to the Participant's account and 8
cents for the receive of the Securities from the CNS Account by the
Participant. In this regard, DTC believes that clarifying the related
item in the Fee Guide to clarify the total amount a Participant is
charged for a transaction as a whole, rather than by delivering and
receiving sides for the transfer of Securities between the
Participant's account and the CNS Account, would provide clarity to
Participant's on the total fees incurred with respect to the processing
of a movement of Securities at DTC for a CNS transaction. Therefore,
DTC proposes to revise the Fee Guide to change the description of the
fee amount for the related item in the Fee Guide from ``$0.08 Per item
delivered, charged to both sides'' to ``$0.16 per delivery or
receive.''
Fee Name for Payments or Withdrawal of Payments
Pursuant to the Settlement Guide, a Participant may make settlement
progress payments (``SPP'') to DTC to increase their Collateral balance
at DTC and/or reduce its Net Debit Balance and the Participant also has
the ability to withdraw SPP amounts if such withdrawal would not cause
the Participant to violate DTC's risk controls, including the
Collateral Monitor and Net Debit Cap.\32\ A Participant may also
receive principal & interest payments on Securities deposited in its
account and withdraw payments it has received intraday so long as such
withdrawal does not place the Participant in a debit balance.\33\
---------------------------------------------------------------------------
\32\ See id. at 63.
\33\ See id. at 62.
---------------------------------------------------------------------------
A Participant is charged a fee of 70 cents per payment or
withdrawal of payment for both the making of a SPP to DTC and the
withdrawal of SPP amounts from DTC. This fee is also charged for the
intraday withdrawal of P&I by the Participant. Pursuant to the Fee
Guide, the related fee item is named ``Payment or withdrawal of
payment.'' The Participant is not charged this 70-cent fee for the
intraday payment of P&I because DTC charges a separate ``Cash
Dividend'' fee \34\ for the allocation of principal and interest. To
provide enhanced clarity on how this fee is applied, DTC proposes to
revise this fee name to ``Progress payment or withdrawal of SPP/P&I.''
---------------------------------------------------------------------------
\34\ See Fee Guide, supra note 6, at 6.
---------------------------------------------------------------------------
Proposed Rule Change
Pursuant to the proposed rule change, the following entries in the
Fee Guide would be deleted from the Corporate Actions section: \35\
---------------------------------------------------------------------------
\35\ See id.
------------------------------------------------------------------------
Fee Name Amount ($) Conditions
------------------------------------------------------------------------
Bearer Bond \36\............... 4.00 Per interest and
principal payment on
bearer bonds.
Coupon Collection Service \37\. 75.00 Per shell for CUSIP
numbers and Customer-
assigned identifiers
on a shell.
------------------------------------------------------------------------
Pursuant to the proposed rule change, the following entries in the
Fee Guide would be deleted from the Securities Processing section: \38\
---------------------------------------------------------------------------
\36\ See id. at 7.
\37\ See id. at 8.
\38\ See id. at 4-6.
\39\ See id. at 5.
\40\ Id.
------------------------------------------------------------------------
Fee Name Amount ($) Conditions
------------------------------------------------------------------------
Audit confirmation: \39\
First five CUSIPs.......... 22.00 Per CUSIP.
Each additional CUSIP...... 5.00 Per CUSIP
CD confirmation: \40\
First five CUSIPS.......... 22.00 Per CUSIP.
Each additional CUSIP...... 5.00 Per CUSIP.
------------------------------------------------------------------------
[[Page 5750]]
Pursuant to the proposed rule change, DTC would modify descriptions
for certain fees set forth in the Settlement section as set forth
below:
----------------------------------------------------------------------------------------------------------------
Old amount New Amount
Current fee name Proposed fee name description Description Change
----------------------------------------------------------------------------------------------------------------
Stock loans and returns......... Repos, stock loans $0.18 per receive $0.18 per receive Added Repo to fee
and returns. or delivery. or delivery. name.
Institutional receive or Matched $0.04 per receive $0.04 per receive Changed
delivery (ID). Institutional or delivery. or delivery. description.
Transactions.
Book Entry NSCC ACATS Long Delivery to/from $0.06 Per Message. $0.12 Per receive Changed
Allocations and Short Covers. CNS ACATS. or delivery. description, no
longer per
message.
Delivery to/from CNS............ Delivery to/from $0.08 Per item $0.16 per delivery No longer per
CNS. delivered; or receive. side.
charged to both
sides.
Payment or withdrawal of payment Progress payment $0.70 Per payment $0.70 Per payment Added P&I.
or withdrawal of or withdrawal of or withdrawal of
SPP/P&I. payment. payment.
----------------------------------------------------------------------------------------------------------------
Implementation Timeframe
The proposed rule change would become effective upon filing with
the Commission such that the text of the Fee Guide would be revised as
discussed above.
2. Statutory Basis
DTC believes that this proposal is consistent with the requirements
of the Act and the rules and regulations thereunder applicable to a
registered clearing agency. Specifically, DTC believes that this
proposal is consistent with Sections 17A(b)(3)(D) \41\ and 17A(b)(3)(F)
\42\ of the Act and Rule 17Ad-22(e)(23)(ii),\43\ as promulgated under
the Act, for the reasons described below.
---------------------------------------------------------------------------
\41\ 15 U.S.C. 78q-1(b)(3)(D).
\42\ 15 U.S.C. 78q-1(b)(3)(F).
\43\ 17 CFR 240.17Ad-22(e)(23)(ii).
---------------------------------------------------------------------------
(i) Section 17A(b)(3)(D) of the Act requires, inter alia, that the
Rules provide for the equitable allocation of reasonable dues, fees,
and other charges among participants.\44\ For the reasons set forth
below, DTC believes that each of the proposed rule changes described
above that would eliminate certain fees would provide for the equitable
allocation of reasonable dues, fees, and other charges among
participants, as discussed below.
---------------------------------------------------------------------------
\44\ 15 U.S.C. 78q-1(b)(3)(D).
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Fee Eliminations
DTC believes the proposed rule change to eliminate fees set forth
in the Corporate Actions section and Securities Processing sections of
the Fee Guide would provide for the equitable allocation of reasonable
fees. DTC believes the proposed elimination of the fees relating to
these fees would provide for the equitable allocation of fees because
the respective fees are rarely charged due to the low volume of
activity in the related processes, as described above, and if ever
charged, given the amount of each fee, any charge would be in a
negligible amount. DTC believes the elimination of these fees is
reasonable because of the lack of activity and therefore it is unlikely
that DTC would need to charge these fees. Also, DTC also believes that
the proposed rule change for the elimination of the fee relating to
audit and CD confirmations is reasonable, because it costs DTC more to
administer the charges than it collects from the agents for this fee.
Given the low volume of activity and fees collected in this regard, DTC
does not believe it would be reasonable to raise these fees simply to
cover the cost of billing for them.
(ii) Section 17A(b)(3)(F) \45\ of the Act requires, inter alia,
that the Rules provide for the prompt and accurate clearance and
settlement of securities transactions by DTC.
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\45\ 15 U.S.C. 78q-1(b)(3)(F).
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Changes of Fee Names and Descriptions of Fee Amounts
DTC believes that each of the proposed rule changes with respect to
the revision of fee names and fee amount descriptions for certain fees
set forth in the Settlement Services section of the Fee Guide, as
described above, is designed to promote the prompt and accurate
clearance and settlement of securities transactions in accordance with
this section. Each of these changes would amend certain fee names and
fee descriptions to improve the accuracy and clarity of the Fee Guide.
Improving the accuracy and clarity of the Rules and Procedures,
including the Fee Guide, would help Participants to better understand
their rights and obligations regarding DTC services. When Participants
better understand their rights and obligations regarding DTC services,
they can act in accordance with the Rules and Procedures, which DTC
believes would promote the prompt and accurate clearance and settlement
of securities transactions by DTC. As such, DTC believes the proposed
rule changes to clarify the Fee Guide for certain items set for in the
Settlement Services section, as described above, are consistent with
Section 17A(b)(3)(F) \46\ of the Act.
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\46\ Id.
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(iii) Rule 17Ad-22(e)(23)(ii) under the Act requires DTC to
establish, implement, maintain and enforce written policies and
procedures reasonably designed to provide sufficient information to
enable participants to identify and evaluate the risks, fees, and other
material costs they incur by participating in DTC.\47\ DTC believes
that the proposed rule changes with respect to (1) deleting fees with
little or no volume and (2) amending fee names and descriptions of
amounts, would help ensure that the pricing structure of the Fee Guide
is well-defined and clear to Participants. Having a well-defined and
clear Fee Guide would help Participants to better understand the fees
and help provide Participants with increased predictability and
certainty regarding the fees they incur in participating in DTC. In
this way, DTC believes the proposed rule changes to the Fee Guide, as
described above, are consistent with Rule 17Ad-22(e)(23)(ii) under the
Act, cited above.
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\47\ 17 CFR 240.17Ad-22(e)(23)(ii).
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(B) Clearing Agency's Statement on Burden on Competition
Fee Eliminations
Impact on Competition. DTC believes that each of the proposed rule
changes with respect to the deletion of fees with little or no volume,
as described above, may impact competition by potentially reducing
Participants' operating costs. Therefore, DTC believes that the
proposed rule changes with respect to the deletion of fees with little
or no volume, as described above, would not
[[Page 5751]]
impose a burden on competition, but may promote competition.
Changes of Fee Names and Descriptions of Fee Amounts
No Impact on Competition. DTC believes that each of the proposed
clarifications to the Settlement Services section of the Fee Guide, as
described, would not have an impact on competition.\48\ Each of these
changes would amend certain fee names and or fee amount descriptions to
improve the accuracy and clarity of the Fee Guide. Having an accurate
and clear Fee Guide would facilitate Participants' understanding of the
Fee Guide and their obligations thereunder, and so would not affect the
rights and obligations of any Participant or other interested party.
Therefore, DTC believes that each of the proposed clarifications to the
Settlement Services section of the Fee Guide, as described above, would
not have an impact on competition.
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\48\ Id.
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(C) Clearing Agency's Statement on Comments on the Proposed Rule Change
Received From Members, Participants, or Others
Written comments relating to this proposed rule change have not
been solicited or received. DTC will notify the Commission of any
written comments received by DTC.
III. Date of Effectiveness of the Proposed Rule Change, and Timing for
Commission Action
The foregoing rule change has become effective pursuant to Section
19(b)(3)(A) of the Act \49\ and paragraph (f) of Rule 19b-4
thereunder.\50\ 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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\49\ 15 U.S.C. 78s(b)(3)(A).
\50\ 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-2020-001 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE, Washington, DC 20549.
All submissions should refer to File Number SR-DTC-2020-001. 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-2020-001 and should be submitted on
or before February 21, 2020.
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\51\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\51\
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-01785 Filed 1-30-20; 8:45 am]
BILLING CODE 8011-01-P
