Self-Regulatory Organizations; The Depository Trust Company; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend the DTC Fee Guide To Add Fees Relating to the Provision of Status Information for Institutional Transactions to a Matching Utility, 15837-15841 [2020-05679]
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Federal Register / Vol. 85, No. 54 / Thursday, March 19, 2020 / Notices
The Participants also proposed to
update certain cross-references to
exchanges rules relating to re-opening
procedures.
jbell on DSKJLSW7X2PROD with NOTICES
III. Discussion
After careful review, the Commission
finds that the Amendment is consistent
with the requirements of the Act and the
rules and regulations thereunder.13 In
particular, the Commission finds that
the Amendment is consistent with
Section 11A of the Act which provides,
among other things, that the
Commission may prescribe rules as
necessary or appropriate in the public
interest, for the protection of investors,
or otherwise in furtherance of the
purposes of the Act to assure the
prompt, accurate, reliable, and fair
collection, processing, distribution, and
publication of information with respect
to quotations for and transactions in
securities and the fairness and
usefulness of the form and content of
such information.14 The Commission
also finds that the Amendment is
consistent with Rule 608 of Regulation
NMS, which provides that the
Commission shall approve an
amendment to a Plan if it finds that
such amendment is necessary or
appropriate in the public interest, for
the protection of investors and the
maintenance of fair and orderly markets,
to remove impediments to, and perfect
the mechanisms of, a national market
system, or otherwise in furtherance of
the purposes of the Act.15
The Commission believes that the
Amendment furthers these goals by
eliminating any burden on the Processor
to determine whether a trade that is
reported to the Processor during a race
condition occurred before or after the
Participant who reported the trade had
received notice of a Regulatory Halt.
Under the Amendment, the Processor
could presume that any such trades
occurred before the Regulatory Halt,
thereby allowing the Processor to
continue publishing those trade reports
to the consolidated tape. The
Commission believes that market
observers could derive benefits from
continuing to learn about trades
occurring just before a Regulatory Halt
that, under the existing Plan provisions,
the Plan Processor might not print to the
consolidated tape.
The Commission notes that it is also
approving today a similar proposal by
the Nasdaq/UTP Plan Participants to
13 The
Commission has considered the
Amendment’s impact on efficiency, competition,
and capital formation. See 15 U.S.C. 78c(f).
14 See 15 U.S.C. 78k–1(c)(1)(B).
15 See 17 CFR 240.608(b)(2).
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eliminate an ambiguity in that Plan
regarding how the Processor handles
last-sale price reports during a
Regulatory Halt.16 As a result, both
Plans will have uniform provisions in
this regard. The Commission believes
that approving these two Plan
amendments furthers the principle set
forth in Section 11A of the Act that
‘‘[t]he linking of all markets for qualified
securities through communication and
data processing facilities will foster
efficiency, enhance competition,
increase the information available to
brokers, dealers, and investors, facilitate
the offsetting of investors’ orders, and
contribute to best execution of such
orders’’ 17 by harmonizing across the
entire national market system how lastsale price reports for all NMS stocks are
printed to the consolidated tape during
race conditions and by eliminating any
ambiguity in the duties of the Plan
Processors in this regard.
Finally, the Commission finds that
updating cross-references in the Plan is
consistent with the Act.
VI. Conclusion
It is therefore ordered, pursuant to
Section 11A of the Act and the rules
thereunder that the Amendment to the
Plan (File No. SR–CTA–2019–02) is
approved.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.18
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020–05706 Filed 3–18–20; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–88380; File No. SR–DTC–
2020–005]
Self-Regulatory Organizations; The
Depository Trust Company; Notice of
Filing and Immediate Effectiveness of
a Proposed Rule Change To Amend
the DTC Fee Guide To Add Fees
Relating to the Provision of Status
Information for Institutional
Transactions to a Matching Utility
March 13, 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 March 6,
16 See Securities Exchange Act Release No. 34–
88385 (March 13, 2020) (File No. S7–24–89).
17 15 U.S.C. 78k–1(a)(1)(D).
18 17 CFR 200.30–3(a)(29).
1 15 U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
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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 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 is
attached hereto as Exhibit 5. The
proposed rule change would amend the
Guide to the DTC Fee Schedule (‘‘Fee
Guide’’) 4 to add a fee and other charge
relating to the provision of status
information (‘‘Status Information’’) for
institutional transactions in Eligible
Securities (‘‘Institutional
Transactions’’) 5 to an entity providing a
matching service 6 (‘‘Matching Utility’’),
as described below.
Pursuant to an approved DTC rule
change (‘‘Status Information Rule
Change’’),7 DTC will implement changes
to the DTC Settlement Service Guide 8
(‘‘Settlement Guide’’) to allow DTC to
provide Status Information for an
Institutional Transaction to a Matching
Utility. Upon implementation of the
Status Information Rule Change, the
related amendment to the Settlement
Guide will allow the Matching Utility to
further provide the Status Information
to the counterparties to an Institutional
Transaction to facilitate coordination of
3 15
U.S.C. 78s(b)(3)(A).
capitalized term not otherwise defined
herein has its respective meaning as set forth in the
Fee Guide and the Rules, By-Laws and Organization
Certificate of DTC (the ‘‘Rules’’), available at https://
www.dtcc.com/legal/rules-and-procedures.aspx.
5 An Institutional Transaction is a securities
transaction between a broker-dealer and its
institutional customer (e.g., sell-side firms, buy-side
institutions, and custodians).
6 A ‘‘matching service’’ is an electronic service to
match trade information, centrally, between a
broker-dealer and its institutional customer. The
matching service intermediary matches (i.e.,
reconciles) trade information from the
counterparties to an Institutional Transaction, to
generate an affirmed transaction (‘‘Affirmed
Transaction’’) which is then used to provide
settlement instructions for the Affirmed
Transactions to the central securities depository,
such as DTC, at which the Affirmed Transaction
settles. See Securities Exchange Act Release No.
39829 (April 6, 1998), 63 FR 17943 (April 13, 1998)
at 17946 (providing interpretive guidance on types
of entities that may provide a matching service).
7 See Securities Exchange Act Release No. 86589
(August 7, 2019), 84 FR 40107 (August 13, 2018)
(SR–DTC–2018–010).
8 Available at https://www.dtcc.com/∼/media/
Files/Downloads/legal/service-guides/
Settlement.pdf.
4 Each
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the resolution of a processing exception
(‘‘Exception’’) between the
counterparties. Pursuant to the Status
Information Rule Change, the Status
Information Rule Change will become
effective upon the filing of the
amendment to the Fee Guide proposed
herein, and therefore would become
effective upon the filing of the of
proposed rule change.
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
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1. Purpose
The proposed rule change would
amend the Fee Guide to add a fee and
other charge relating to provision of
Status Information for Institutional
Transactions to a Matching Utility, as
described below.
Pursuant to the Status Information
Rule Change, DTC will implement
changes to the Settlement Guide to
allow DTC to provide Status
Information for an Institutional
Transaction to a Matching Utility. Upon
implementation of the Status
Information Rule Change, the related
amendment to the Settlement Guide
will allow the Matching Utility to
further provide the Status Information
to the counterparties to an Institutional
Transaction to facilitate coordination of
the resolution of an Exception between
the counterparties. Pursuant to the
Status Information Rule Change, the
Status Information Rule Change will
become effective upon the filing of the
amendment to the Fee Guide proposed
herein, and therefore would become
effective upon the filing of the proposed
rule change.
Background
DTC may accept Institutional
Transactions from a Matching Utility
that is (i) a clearing agency registered
pursuant to Section 17A of the Act,9 (ii)
an entity that has obtained an
exemption from such registration from
9 15
U.S.C. 78q–1.
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the Commission, or (iii) a ‘‘qualified
vendor’’ for trade confirmation/
affirmation services as defined by the
rules of a self-regulatory organization.10
The submission of an Affirmed
Transaction by the Matching Utility to
DTC, on behalf of a Participant,
constitutes the duly authorized
instruction of the Participant to DTC to
process the Affirmed Transaction in
accordance with the Rules and
Procedures.11
A transaction submitted to DTC for
processing may be subject to a
processing Exception, causing it to
recycle in the DTC system or not be
processed because the transaction does
not satisfy certain requirements and/or
controls set forth in the Rules and
Settlement Guide.12 A Matching Utility
that has submitted an Institutional
Transaction to DTC or is otherwise
involved with the matching of a
transaction, does not receive Status
Information regarding the transaction
and is therefore unable to provide
services to facilitate resolution of
processing Exceptions occurring at DTC.
Therefore, to resolve an Exception, the
Participants to an Institutional
Transaction must (i) access Status
Information directly through the DTC
Settlement User Interface and (ii), as
necessary, supply the information to
their customers that are counterparties
to the transaction on their books, to
facilitate the coordination of the
resolution of the Exception among the
counterparties. Pursuant to the Status
Information Rule Change,13 DTC will
implement changes to the Settlement
Guide to allow DTC to provide Status
Information for an Institutional
Transaction to a Matching Utility. The
proposal would allow the Matching
Utility to further provide the Status
Information to the counterparties to the
Institutional Transaction to facilitate
coordination of the resolution of
Exceptions among counterparties.14 The
10 See Settlement Guide, supra note 8 at 36,
available at https://www.dtcc.com/legal/rules-andprocedures.
11 Id.
12 See Settlement Guide, supra note 8, at 55–62
for addition information relating to recycling
processing of transactions.
13 See supra note 7.
14 DTC has been informed by its Matching Utility
affiliate, ITP Matching (US) LLC (‘‘ITP’’), that
institutional clients are expected to realize
enhanced efficiencies in terms of time for resolution
of exceptions. This is due to the ability institutional
clients would have through the matching utility to
view exceptions in a central interface rather than
having to obtain exception information separately
by each DTC Participant they engage with for the
matching of transactions. The proposed rule change
would not change or have any effect on
Participants’ ability to continue to access Status
Information directly through the DTC Settlement
User Interface.
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Status Information Rule Change would
provide that DTC may charge a fee
(‘‘Status Information Fee’’) to a
Matching Utility that receives Status
Information as set forth in the DTC Fee
Guide.15
In addition, pursuant to the Status
Information Rule Change, DTC would
develop the mechanism (‘‘NonSubmitting Matching Utility Interface’’)
necessary for DTC to directly provide
Status Information to a Matching Utility
for each transaction submitted to DTC to
which a customer of the Matching
Utility is a party to the transaction and
matched the transaction via the
Matching Utility, regardless of whether
or not that Matching Utility submitted
the transaction to DTC, subject to (i) the
agreement by the Matching Utility to
pay DTC for the reasonable cost (‘‘Status
Information Development Charge’’) to
cover the development of the
mechanism by DTC and (ii) the
Matching Utility subscribing to receive
Status Information, as described above.
To the extent that the transaction is an
interoperable transaction submitted to
DTC by another Matching Utility, then
to receive Status Information for the
interoperable transaction, the Matching
Utility would be required to submit an
indicator to DTC for notifying DTC that
a customer of the Matching Utility is a
party to the transaction.
Any Matching Utility that satisfies
requirements set forth in the Status
Information Rule Change may become a
subscriber to receive Status Information.
DTC is aware of three Matching
Utilities, specifically Bloomberg STP
LLC (‘‘Bloomberg’’), ITP and SS&C
Technologies, Inc (‘‘SS&C’’), that would
be eligible to subscribe to receive Status
Information.16
Proposed Rule Change
Pursuant to the proposed rule change,
DTC would amend the Fee Guide to
implement the following fee and other
charge, as follows:
a. To cover the cost of providing a
Matching Utility with Status
Information, DTC would amend the Fee
15 See
supra note 7.
2001, the Commission issued an order
providing for exemption from registration as a
clearing agency for ITP’s predecessor. See Securities
Exchange Act Release No. 44188 (April 17, 2001),
66 FR 20494 (April 23, 2001) (600–32) (Global Joint
Venture Matching Services—US, LLC; Order
Granting Exemption from Registration as a Clearing
Agency). In 2015, the Commission issued an order
providing for exemption from registration as a
clearing agency for both Bloomberg and SS&C. See
Securities Exchange Act Release No. 76514
(November 24, 2015), 80 FR 75387 (December 1,
2015) (600–33, 600–34) (Bloomberg STP LLC; SS&C
Technologies, Inc.; Order of the Commission
Approving Applications for an Exemption from
Registration as a Clearing Agency; Notice).
16 In
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Guide to add the Status Information Fee
in the amount of $90,000 per year. The
proposed Status Information Fee is
structured to use a flat annual fee rather
than a volume-based fee, because DTC’s
ongoing estimated support costs relating
to providing Status Information to a
Matching Utility are fixed and are not
expected to fluctuate based on message
volume. DTC expects to incur a unique
cost of $90,000 annually for each
Matching Utility that subscribes to
receive Status Information and therefore
the Status Information Fee would be
charged on an annual basis to each
Matching Utility that subscribes to
receive Status Information in
accordance with the Status Information
Proposal.17
b. DTC would amend the Fee Guide
to add the Status Information
Development Charge. The Status
Information Development Charge would
be listed in the Fee Guide as a one-time
charge, charged ‘‘At cost’’,18 and would
billed to a Matching Utility in the
amount to cover the reasonable cost to
DTC to develop a Non-Submitting
Matching Utility Interface for the
Matching Utility that agrees in writing
(‘‘Agreement’’) to pay the Status
17 As mentioned above, the proposed Status
Information Fee is structured to use a flat annual
fee rather than a volume-based fee, because DTC’s
ongoing estimated support costs relating to
providing Status Information to a Matching Utility
are fixed and are not expected to fluctuate based on
message volume. The cost assumptions used by
DTC to calculate the Status Information Fee include
direct technology costs to support the provision of
Status Information to a Matching Utility, plus
allocated costs based on anticipated indirect
support. The direct technology costs include basic
production support, as well as enhancements and
maintenance required as part of ongoing production
support. The allocated indirect costs are estimated
using the actual indirect cost attribution for the
Settlement business within DTC, including costs
relating to product support, risk management, client
support, infrastructure support and other internal
support services.
18 ‘‘At cost’’ for this purpose means that the Status
Information Development Charge would equal the
total cost for DTC to establish the interface with
respect to a given Matching Utility. In this regard,
the amount of the Status Information Development
Charge charged to a Matching Utility would be
calculated based on actual cost to DTC to establish
the interface once the total development and testing
of the interface for the Matching Utility is complete
and the actual cost to DTC is known. DTC estimates
the total cost to DTC to produce the Non-Submitting
Matching Utility Interface for the first subscriber
that requests it as approximately $300,000. This
cost estimate is based on estimated costs to DTC
related to applications development, end to end
functional testing, user acceptance testing and
performance testing. However, costs to DTC could
vary depending in part on specifications requested
by the Matching Utility and the variability in
development expenses over time. If DTC’s
calculation of the Status Information Development
Charge for any Matching Utility materially differs
in an amount greater than the estimate of $300,000
stated above, DTC would submit a proposed rule
change that includes a new estimate.
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Information Development Charge and
subscribes to receive Status Information,
as described above.19
DTC believes that the cost to DTC to
establish access to the Non-Submitting
Matching Utility Interface for a second
or subsequent Matching Utility that
subscribes once the interface has been
established may be substantially less
than the initial development cost.
Therefore, the Status Information
Development Charge charged to a
second or subsequent Matching Utility
that requests access to the interface may
be lower than the Status Information
Development Charge charged to the
initial Matching Utility that requests the
initial development of the NonSubmitting Matching Utility Interface.
This presumes that DTC would be able
to leverage prior work done by it to
establish the interface and depends in
part on specifications requested by a
Matching Utility and the variability in
development expenses over time. In this
regard, the Status Information
Development Charge charged to a
Matching Utility would reflect the
actual cost to DTC to provide that
Matching Utility with access to the NonSubmitting Matching Utility Interface,
including, but not limited to, as
applicable, taking into account available
cost reductions resulting from DTC’s
prior development of the NonSubmitting Matching Utility Interface
with respect to the initial requester and
additional development and testing
costs incurred by DTC in order to meet
specifications requested by the
Matching Utility.
Implementation Timeframe
The proposed rule change would
become effective upon filing with the
Commission.
2. Statutory Basis
Section 17A(b)(3)(F) 20 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 because the proposed fees
would offset costs incurred by DTC in
providing Status Information to
Matching Utilities. As described above,
the Status Information Fee is designed
19 The Agreement would include any related
terms and conditions as negotiated between DTC
and the Matching Utility and be accompanied by a
statement of work prepared by DTC that outlines
work to be performed by DTC to develop the
interface and includes an estimate of the related
costs used by DTC to calculate the Status
Information Development Charge.
20 15 U.S.C. 78q–1(b)(3)(F).
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15839
to cover the costs to DTC for the
continued offering of Status Information
to a Matching Utility and the Status
Information Development Charge is
designed to cover the costs to DTC for
development of the Non-Submitting
Matching Utility Interface.
By allowing DTC to cover the costs
associated with providing Status
Information to Matching Utilities, the
proposed rule change would facilitate
the distribution of information on
Exceptions to these parties. This
distribution of Status Information would
allow for enhanced communication
among the parties to an Eligible
Transaction to address an Exception so
that the Eligible Transaction may be
processed. Therefore, by allowing DTC
to cover its costs associated with its
facilitating the distribution of Status
Information to a Matching Utility, and
thereby facilitating the ability of a
Matching Utility to provide this
information to the applicable parties to
an Eligible Transaction that may address
related Exceptions and resolve related
issues so that a transaction may be
processed for settlement, DTC believes
that the proposed rule change would
promote the prompt and accurate
clearance and settlement of securities
transactions consistent with Section
17A(b)(3)(F) of the Act.21
Section 17A(b)(3)(D) 22 of the Act
requires that the rules of the clearing
agency provide for the equitable
allocation of reasonable dues, fees, and
other charges among its participants.
The Status Information Fee and Status
Information Development Charge
proposed herein are not participant fees
but rather would be charged to
Matching Utilities. Nonetheless, DTC
believes that the proposed rule change
would provide for the equitable
allocation of reasonable fees among
Matching Utilities that subscribe to
receive Status Information.
As described in Item II.(A) above, the
proposed Status Information Fee is
structured to use a flat annual fee rather
than a volume-based fee, because DTC’s
ongoing estimated support costs relating
to providing Status Information to a
Matching Utility are fixed and are not
expected to fluctuate based on message
volume. As described in Item II.(A) 1.
above, the cost assumptions used by
DTC to calculate the Status Information
Fee include direct technology costs to
support the provision of Status
Information to a Matching Utility, plus
allocated costs based on anticipated
indirect support. The direct costs are
based on required technology support
21 Id.
22 15
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for the new service. The allocated
indirect costs are estimated using the
actual indirect cost attribution for the
Settlement business within DTC. DTC
believes the proposed flat fee would be
equitably allocated because it would
require a Matching Utility to pay DTC
a fee for the cost DTC believes would be
directly attributable to the Matching
Utility’s request to receive Status
Information, as described above.23 DTC
believes the proposed Status
Information Fee is reasonable because,
as described above, it is based the actual
direct and attributed costs DTC expects
to incur by providing the information to
a Matching Utility that subscribes to
receive it consistent with Section
17(A)(b)(3)(D) of the Act.24
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(B) Clearing Agency’s Statement on
Burden on Competition
DTC believes that the proposed
changes to the Fee Schedule could
impose a burden on competition
because it would implement a new fee
and a new charge payable by a Matching
Utility that subscribes for a voluntary
service to receive Status Information
from DTC, thereby potentially creating
costs to a Matching Utility not
previously charged for a voluntary
service not previously provided.
DTC believes the primary benefit a
Matching Utility would realize from its
receipt of Status Information from DTC
would be the added value the Matching
Utility could provide in its services to
its customers through the reduction of
costs to those customers, as described
below. In this regard, if the Status
Information received by a Matching
Utility from DTC was provided by the
Matching Utility to its customers, it
would facilitate the ability of customers
of the Matching Utility to efficiently
monitor and resolve Exceptions by
accessing Status Information from a
centralized point of access as opposed
to through multiple entities. In this
regard, DTC does not believe that any
burden on competition imposed by the
proposed changes to the Fee Schedule
would be significant in relation to the
benefit a Matching Utility could realize
by receiving Status Information from
DTC. By allowing DTC to meet its costs
23 If the fee was structured differently, such as by
using a volume-based fee, it is possible that a
Matching Utility could be charged less or more than
the actual cost for DTC to provide the service to that
Matching Utility, which DTC believes would not be
equitable, because by DTC establishing the fee using
a volume-based structure, a Matching Utility could
end up paying total fees that are higher or lower
than those paid by another Matching Utility for a
product that costs DTC the same amount to provide
to the Matching Utility, regardless of the transaction
volume associated with the Matching Utility.
24 15 U.S.C. 78q-1(b)(3)(D).
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in providing Status Information to a
Matching Utility in a centralized format,
as described above, the proposed rule
change would allow DTC to provide
Status Information to a Matching Utility,
which would facilitate the Matching
Utility’s ability to provide its customers
with enhanced value in its services, by
facilitating reductions in costs incurred
by the Matching Utility’s customers
regarding the monitoring of Exceptions
by providing a centralized point of
access to Status Information rather than
receiving information through multiple
entities.
DTC believes that any burden on
competition that is created by the
proposed changes to the Fee Schedule
would be necessary and appropriate in
furtherance of the purposes of the Act,25
as described below.
Any burden on competition that is
created by the proposed rule changes
would be necessary in order to facilitate
DTC’s ability to provide Status
Information to Matching Utilities, as
described above, which would facilitate
the prompt and accurate clearance and
settlement of related transactions, as
described in Item II.(A) 2. above.
DTC believes that any burden on
competition imposed by the proposed
changes to the Fee Schedule would be
appropriate because (i) the Status
Information Fee and Status Information
Development Charge relate to the use by
a Matching Utility of a voluntary service
of DTC and (ii)(a) the Status Information
Fee would only be billed to a Matching
Utility that subscribes to receive Status
Information and (b) the Status
Information Development Charge would
only be charged to a Matching Utility
that requests that DTC develop a NonSubmitting Matching Utility Interface
for the Matching Utility and agrees in
writing to pay the charge and subscribes
to receive Status Information, as
described above.
DTC does not believe the proposed
rule change would unduly disadvantage
one Matching Utility versus another,
because if a Matching Utility does not
believe Status Information would
provide it, or its customers, with enough
benefit under its own business model, it
could choose not to subscribe and not
incur the costs of fees proposed above.
(C) Clearing Agency’s Statement on
Comments on the Proposed Rule
Change Received From Members,
Participants, or Others
Written comments relating to this
proposed rule change have not been
solicited or received. DTC will notify
the Commission of any written
comments received by DTC.
III. Date of Effectiveness of the
Proposed Rule Change, and Timing for
Commission Action
The foregoing rule change has become
effective pursuant to Section 19(b)(3)(A)
of the Act 26 and paragraph (f) of Rule
19b–4 thereunder.27 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–2020–005 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–2020–005. 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
26 15
25 15
PO 00000
U.S.C. 78q–1(b)(3)(I).
Frm 00083
Fmt 4703
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27 17
E:\FR\FM\19MRN1.SGM
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f).
19MRN1
Federal Register / Vol. 85, No. 54 / Thursday, March 19, 2020 / Notices
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–
2020–005 and should be submitted on
or before April 9, 2020.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.28
Matthew J. DeLesDernier,
Assistant Secretary.
[FR Doc. 2020–05679 Filed 3–18–20; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 33817/March 13, 2020]
jbell on DSKJLSW7X2PROD with NOTICES
Investment Company Act of 1940;
Order Under Section 6(C) and Section
38(A) of the Investment Company Act
of 1940 Granting Exemptions From
Specified Provisions of the Investment
Company Act and Certain Rules
Thereunder; Commission Statement
Regarding Prospectus Delivery
The current outbreak of coronavirus
disease 2019 (COVID–19) was first
reported on December 31, 2019. The
disease has led to disruptions to
transportation, including buses,
subways, trains and airplanes, and the
imposition of quarantines around the
world. The Commission has heard from
industry representatives that COVID–19
may present challenges for boards of
directors of registered management
investment companies and business
development companies (‘‘BDCs’’) to
travel in order to meet the in-person
voting requirements under the
Investment Company Act of 1940 (the
‘‘Investment Company Act’’ or ‘‘the
Act’’) and rules thereunder. In addition,
we recognize that registered
management investment companies and
unit investment trusts (together,
‘‘registered funds’’) may face challenges
if, as a result of COVID–19, personnel of
registered fund managers or other thirdparty service providers that are
necessary to prepare these reports
become unavailable, or only available
28 17
CFR 200.30–3(a)(12).
VerDate Sep<11>2014
17:05 Mar 18, 2020
Jkt 250001
on a limited basis, in: (i) Preparing or
transmitting annual and semi-annual
shareholder reports; and/or (ii) timely
filing Forms N–CEN and N–PORT. We
also understand that due to recent
market movements certain registered
closed-end funds (‘‘closed-end funds’’)
and BDCs may seek to call or redeem
securities and may face challenges in
providing the advance notice required
under Rule 23c–2. Finally, we
appreciate that there may be difficulties
in the timely delivery of registered fund
prospectuses. In light of the current
situation, we are issuing this Order
providing an exemption from certain
requirements of the Investment
Company Act and a statement regarding
prospectus delivery obligations of
registered funds.
Section 6(c) of the Investment
Company Act provides that the
Commission may conditionally or
unconditionally exempt any person,
security or transaction, or any class or
classes of persons, securities or
transactions, from any provision or
provisions of the Investment Company
Act, or any rule or regulation
thereunder, if and to the extent that
such exemption is necessary or
appropriate in the public interest and
consistent with the protection of
investors and the purposes fairly
intended by the policy and provisions of
the Investment Company Act. Section
38(a) of the Investment Company Act
provides that the Commission may
make, issue, amend and rescind such
rules and regulations and such orders as
are necessary or appropriate to the
exercise of the powers conferred upon
the Commission under the Investment
Company Act.
I. Time Period for the Exemptive Relief
The time period for the relief
specified in this Order is as follows:
• For the relief in Sections II and V
of this Order, the relief is limited to the
period from and including the date of
this Order to June 15, 2020.
• For the relief in Sections III and IV
of this Order, the relief is limited to
filing or transmittal obligations, as
applicable, for which the original due
date is on or after the date of this Order
but on or prior to April 30, 2020.
The Commission intends to continue
to monitor the current situation. The
time period for any or all of the relief
may, if necessary, be extended with any
additional conditions that are deemed
appropriate, and the Commission may
issue other relief as necessary or
appropriate.
PO 00000
Frm 00084
Fmt 4703
Sfmt 4703
15841
II. In-Person Board Meeting
Requirements for Registered
Management Investment Companies
and BDCs
In light of the current and potential
effects of COVID–19, the Commission
finds that the exemptions set forth
below:
are necessary and appropriate in the public
interest and consistent with the protection of
investors and the purposes fairly intended by
the policy and provisions of the Investment
Company Act; and are necessary and
appropriate to the exercise of the powers
conferred on it by the Investment Company
Act.
The necessity for prompt action of the
Commission does not permit prior
notice of the Commission’s action.
Accordingly, it is ordered, pursuant to
Sections 6(c) and 38(a) of the Act:
That for the period specified in
Section I, a registered management
investment company or BDC and any
investment adviser of or principal
underwriter for such registered
management investment company or
BDC is exempt from the requirements
imposed under sections 15(c) and 32(a)
of the Investment Company Act and
Rules 12b–1(b)(2) and 15a–4(b)(2)(ii)
under the Investment Company Act that
votes of the board of directors of either
the registered management investment
company or BDC be cast in person,
provided that:
(i) Reliance on this Order is necessary
or appropriate due to circumstances
related to current or potential effects of
COVID–19;
(ii) the votes required to be cast at an
in-person meeting are instead cast at a
meeting in which directors may
participate by any means of
communication that allows all directors
participating to hear each other
simultaneously during the meeting; and
(iii) the board of directors, including
a majority of the directors who are not
interested persons of the registered
management investment company or
BDC, ratifies the action taken pursuant
to this exemption by vote cast at the
next in-person meeting.
III. Forms N–CEN and N–PORT Filing
Requirements
Disruptions to transportation, and
limited access to facilities, personnel,
and third party service providers as a
result of COVID–19 could hamper the
efforts of registered funds with filing
obligations to meet their filing
deadlines. At the same time, investors
and the Commission have an interest in
the timely availability of required
information about their investments,
and we remind registered funds who are
E:\FR\FM\19MRN1.SGM
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]]>Agencies
[Federal Register Volume 85, Number 54 (Thursday, March 19, 2020)]
[Notices]
[Pages 15837-15841]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-05679]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-88380; File No. SR-DTC-2020-005]
Self-Regulatory Organizations; The Depository Trust Company;
Notice of Filing and Immediate Effectiveness of a Proposed Rule Change
To Amend the DTC Fee Guide To Add Fees Relating to the Provision of
Status Information for Institutional Transactions to a Matching Utility
March 13, 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 March 6, 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\ The Commission is
publishing this notice to solicit comments on the proposed rule change
from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ 15 U.S.C. 78s(b)(3)(A).
---------------------------------------------------------------------------
I. Clearing Agency's Statement of the Terms of Substance of the
Proposed Rule Change
The proposed rule change of DTC is attached hereto as Exhibit 5.
The proposed rule change would amend the Guide to the DTC Fee Schedule
(``Fee Guide'') \4\ to add a fee and other charge relating to the
provision of status information (``Status Information'') for
institutional transactions in Eligible Securities (``Institutional
Transactions'') \5\ to an entity providing a matching service \6\
(``Matching Utility''), as described below.
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\4\ Each capitalized term not otherwise defined herein has its
respective meaning as set forth in the Fee Guide and the Rules, By-
Laws and Organization Certificate of DTC (the ``Rules''), available
at https://www.dtcc.com/legal/rules-and-procedures.aspx.
\5\ An Institutional Transaction is a securities transaction
between a broker-dealer and its institutional customer (e.g., sell-
side firms, buy-side institutions, and custodians).
\6\ A ``matching service'' is an electronic service to match
trade information, centrally, between a broker-dealer and its
institutional customer. The matching service intermediary matches
(i.e., reconciles) trade information from the counterparties to an
Institutional Transaction, to generate an affirmed transaction
(``Affirmed Transaction'') which is then used to provide settlement
instructions for the Affirmed Transactions to the central securities
depository, such as DTC, at which the Affirmed Transaction settles.
See Securities Exchange Act Release No. 39829 (April 6, 1998), 63 FR
17943 (April 13, 1998) at 17946 (providing interpretive guidance on
types of entities that may provide a matching service).
---------------------------------------------------------------------------
Pursuant to an approved DTC rule change (``Status Information Rule
Change''),\7\ DTC will implement changes to the DTC Settlement Service
Guide \8\ (``Settlement Guide'') to allow DTC to provide Status
Information for an Institutional Transaction to a Matching Utility.
Upon implementation of the Status Information Rule Change, the related
amendment to the Settlement Guide will allow the Matching Utility to
further provide the Status Information to the counterparties to an
Institutional Transaction to facilitate coordination of
[[Page 15838]]
the resolution of a processing exception (``Exception'') between the
counterparties. Pursuant to the Status Information Rule Change, the
Status Information Rule Change will become effective upon the filing of
the amendment to the Fee Guide proposed herein, and therefore would
become effective upon the filing of the of proposed rule change.
---------------------------------------------------------------------------
\7\ See Securities Exchange Act Release No. 86589 (August 7,
2019), 84 FR 40107 (August 13, 2018) (SR-DTC-2018-010).
\8\ Available at https://www.dtcc.com/~/media/Files/Downloads/
legal/service-guides/Settlement.pdf.
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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.
(A) Clearing Agency's Statement of the Purpose of, and Statutory Basis
for, the Proposed Rule Change
1. Purpose
The proposed rule change would amend the Fee Guide to add a fee and
other charge relating to provision of Status Information for
Institutional Transactions to a Matching Utility, as described below.
Pursuant to the Status Information Rule Change, DTC will implement
changes to the Settlement Guide to allow DTC to provide Status
Information for an Institutional Transaction to a Matching Utility.
Upon implementation of the Status Information Rule Change, the related
amendment to the Settlement Guide will allow the Matching Utility to
further provide the Status Information to the counterparties to an
Institutional Transaction to facilitate coordination of the resolution
of an Exception between the counterparties. Pursuant to the Status
Information Rule Change, the Status Information Rule Change will become
effective upon the filing of the amendment to the Fee Guide proposed
herein, and therefore would become effective upon the filing of the
proposed rule change.
Background
DTC may accept Institutional Transactions from a Matching Utility
that is (i) a clearing agency registered pursuant to Section 17A of the
Act,\9\ (ii) an entity that has obtained an exemption from such
registration from the Commission, or (iii) a ``qualified vendor'' for
trade confirmation/affirmation services as defined by the rules of a
self-regulatory organization.\10\
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\9\ 15 U.S.C. 78q-1.
\10\ See Settlement Guide, supra note 8 at 36, available at
https://www.dtcc.com/legal/rules-and-procedures.
---------------------------------------------------------------------------
The submission of an Affirmed Transaction by the Matching Utility
to DTC, on behalf of a Participant, constitutes the duly authorized
instruction of the Participant to DTC to process the Affirmed
Transaction in accordance with the Rules and Procedures.\11\
---------------------------------------------------------------------------
\11\ Id.
---------------------------------------------------------------------------
A transaction submitted to DTC for processing may be subject to a
processing Exception, causing it to recycle in the DTC system or not be
processed because the transaction does not satisfy certain requirements
and/or controls set forth in the Rules and Settlement Guide.\12\ A
Matching Utility that has submitted an Institutional Transaction to DTC
or is otherwise involved with the matching of a transaction, does not
receive Status Information regarding the transaction and is therefore
unable to provide services to facilitate resolution of processing
Exceptions occurring at DTC. Therefore, to resolve an Exception, the
Participants to an Institutional Transaction must (i) access Status
Information directly through the DTC Settlement User Interface and
(ii), as necessary, supply the information to their customers that are
counterparties to the transaction on their books, to facilitate the
coordination of the resolution of the Exception among the
counterparties. Pursuant to the Status Information Rule Change,\13\ DTC
will implement changes to the Settlement Guide to allow DTC to provide
Status Information for an Institutional Transaction to a Matching
Utility. The proposal would allow the Matching Utility to further
provide the Status Information to the counterparties to the
Institutional Transaction to facilitate coordination of the resolution
of Exceptions among counterparties.\14\ The Status Information Rule
Change would provide that DTC may charge a fee (``Status Information
Fee'') to a Matching Utility that receives Status Information as set
forth in the DTC Fee Guide.\15\
---------------------------------------------------------------------------
\12\ See Settlement Guide, supra note 8, at 55-62 for addition
information relating to recycling processing of transactions.
\13\ See supra note 7.
\14\ DTC has been informed by its Matching Utility affiliate,
ITP Matching (US) LLC (``ITP''), that institutional clients are
expected to realize enhanced efficiencies in terms of time for
resolution of exceptions. This is due to the ability institutional
clients would have through the matching utility to view exceptions
in a central interface rather than having to obtain exception
information separately by each DTC Participant they engage with for
the matching of transactions. The proposed rule change would not
change or have any effect on Participants' ability to continue to
access Status Information directly through the DTC Settlement User
Interface.
\15\ See supra note 7.
---------------------------------------------------------------------------
In addition, pursuant to the Status Information Rule Change, DTC
would develop the mechanism (``Non-Submitting Matching Utility
Interface'') necessary for DTC to directly provide Status Information
to a Matching Utility for each transaction submitted to DTC to which a
customer of the Matching Utility is a party to the transaction and
matched the transaction via the Matching Utility, regardless of whether
or not that Matching Utility submitted the transaction to DTC, subject
to (i) the agreement by the Matching Utility to pay DTC for the
reasonable cost (``Status Information Development Charge'') to cover
the development of the mechanism by DTC and (ii) the Matching Utility
subscribing to receive Status Information, as described above. To the
extent that the transaction is an interoperable transaction submitted
to DTC by another Matching Utility, then to receive Status Information
for the interoperable transaction, the Matching Utility would be
required to submit an indicator to DTC for notifying DTC that a
customer of the Matching Utility is a party to the transaction.
Any Matching Utility that satisfies requirements set forth in the
Status Information Rule Change may become a subscriber to receive
Status Information. DTC is aware of three Matching Utilities,
specifically Bloomberg STP LLC (``Bloomberg''), ITP and SS&C
Technologies, Inc (``SS&C''), that would be eligible to subscribe to
receive Status Information.\16\
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\16\ In 2001, the Commission issued an order providing for
exemption from registration as a clearing agency for ITP's
predecessor. See Securities Exchange Act Release No. 44188 (April
17, 2001), 66 FR 20494 (April 23, 2001) (600-32) (Global Joint
Venture Matching Services--US, LLC; Order Granting Exemption from
Registration as a Clearing Agency). In 2015, the Commission issued
an order providing for exemption from registration as a clearing
agency for both Bloomberg and SS&C. See Securities Exchange Act
Release No. 76514 (November 24, 2015), 80 FR 75387 (December 1,
2015) (600-33, 600-34) (Bloomberg STP LLC; SS&C Technologies, Inc.;
Order of the Commission Approving Applications for an Exemption from
Registration as a Clearing Agency; Notice).
---------------------------------------------------------------------------
Proposed Rule Change
Pursuant to the proposed rule change, DTC would amend the Fee Guide
to implement the following fee and other charge, as follows:
a. To cover the cost of providing a Matching Utility with Status
Information, DTC would amend the Fee
[[Page 15839]]
Guide to add the Status Information Fee in the amount of $90,000 per
year. The proposed Status Information Fee is structured to use a flat
annual fee rather than a volume-based fee, because DTC's ongoing
estimated support costs relating to providing Status Information to a
Matching Utility are fixed and are not expected to fluctuate based on
message volume. DTC expects to incur a unique cost of $90,000 annually
for each Matching Utility that subscribes to receive Status Information
and therefore the Status Information Fee would be charged on an annual
basis to each Matching Utility that subscribes to receive Status
Information in accordance with the Status Information Proposal.\17\
---------------------------------------------------------------------------
\17\ As mentioned above, the proposed Status Information Fee is
structured to use a flat annual fee rather than a volume-based fee,
because DTC's ongoing estimated support costs relating to providing
Status Information to a Matching Utility are fixed and are not
expected to fluctuate based on message volume. The cost assumptions
used by DTC to calculate the Status Information Fee include direct
technology costs to support the provision of Status Information to a
Matching Utility, plus allocated costs based on anticipated indirect
support. The direct technology costs include basic production
support, as well as enhancements and maintenance required as part of
ongoing production support. The allocated indirect costs are
estimated using the actual indirect cost attribution for the
Settlement business within DTC, including costs relating to product
support, risk management, client support, infrastructure support and
other internal support services.
---------------------------------------------------------------------------
b. DTC would amend the Fee Guide to add the Status Information
Development Charge. The Status Information Development Charge would be
listed in the Fee Guide as a one-time charge, charged ``At cost'',\18\
and would billed to a Matching Utility in the amount to cover the
reasonable cost to DTC to develop a Non-Submitting Matching Utility
Interface for the Matching Utility that agrees in writing
(``Agreement'') to pay the Status Information Development Charge and
subscribes to receive Status Information, as described above.\19\
---------------------------------------------------------------------------
\18\ ``At cost'' for this purpose means that the Status
Information Development Charge would equal the total cost for DTC to
establish the interface with respect to a given Matching Utility. In
this regard, the amount of the Status Information Development Charge
charged to a Matching Utility would be calculated based on actual
cost to DTC to establish the interface once the total development
and testing of the interface for the Matching Utility is complete
and the actual cost to DTC is known. DTC estimates the total cost to
DTC to produce the Non-Submitting Matching Utility Interface for the
first subscriber that requests it as approximately $300,000. This
cost estimate is based on estimated costs to DTC related to
applications development, end to end functional testing, user
acceptance testing and performance testing. However, costs to DTC
could vary depending in part on specifications requested by the
Matching Utility and the variability in development expenses over
time. If DTC's calculation of the Status Information Development
Charge for any Matching Utility materially differs in an amount
greater than the estimate of $300,000 stated above, DTC would submit
a proposed rule change that includes a new estimate.
\19\ The Agreement would include any related terms and
conditions as negotiated between DTC and the Matching Utility and be
accompanied by a statement of work prepared by DTC that outlines
work to be performed by DTC to develop the interface and includes an
estimate of the related costs used by DTC to calculate the Status
Information Development Charge.
---------------------------------------------------------------------------
DTC believes that the cost to DTC to establish access to the Non-
Submitting Matching Utility Interface for a second or subsequent
Matching Utility that subscribes once the interface has been
established may be substantially less than the initial development
cost. Therefore, the Status Information Development Charge charged to a
second or subsequent Matching Utility that requests access to the
interface may be lower than the Status Information Development Charge
charged to the initial Matching Utility that requests the initial
development of the Non-Submitting Matching Utility Interface. This
presumes that DTC would be able to leverage prior work done by it to
establish the interface and depends in part on specifications requested
by a Matching Utility and the variability in development expenses over
time. In this regard, the Status Information Development Charge charged
to a Matching Utility would reflect the actual cost to DTC to provide
that Matching Utility with access to the Non-Submitting Matching
Utility Interface, including, but not limited to, as applicable, taking
into account available cost reductions resulting from DTC's prior
development of the Non-Submitting Matching Utility Interface with
respect to the initial requester and additional development and testing
costs incurred by DTC in order to meet specifications requested by the
Matching Utility.
Implementation Timeframe
The proposed rule change would become effective upon filing with
the Commission.
2. Statutory Basis
Section 17A(b)(3)(F) \20\ 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 because the proposed fees would offset costs incurred by DTC
in providing Status Information to Matching Utilities. As described
above, the Status Information Fee is designed to cover the costs to DTC
for the continued offering of Status Information to a Matching Utility
and the Status Information Development Charge is designed to cover the
costs to DTC for development of the Non-Submitting Matching Utility
Interface.
---------------------------------------------------------------------------
\20\ 15 U.S.C. 78q-1(b)(3)(F).
---------------------------------------------------------------------------
By allowing DTC to cover the costs associated with providing Status
Information to Matching Utilities, the proposed rule change would
facilitate the distribution of information on Exceptions to these
parties. This distribution of Status Information would allow for
enhanced communication among the parties to an Eligible Transaction to
address an Exception so that the Eligible Transaction may be processed.
Therefore, by allowing DTC to cover its costs associated with its
facilitating the distribution of Status Information to a Matching
Utility, and thereby facilitating the ability of a Matching Utility to
provide this information to the applicable parties to an Eligible
Transaction that may address related Exceptions and resolve related
issues so that a transaction may be processed for settlement, DTC
believes that the proposed rule change would promote the prompt and
accurate clearance and settlement of securities transactions consistent
with Section 17A(b)(3)(F) of the Act.\21\
---------------------------------------------------------------------------
\21\ Id.
---------------------------------------------------------------------------
Section 17A(b)(3)(D) \22\ of the Act requires that the rules of the
clearing agency provide for the equitable allocation of reasonable
dues, fees, and other charges among its participants. The Status
Information Fee and Status Information Development Charge proposed
herein are not participant fees but rather would be charged to Matching
Utilities. Nonetheless, DTC believes that the proposed rule change
would provide for the equitable allocation of reasonable fees among
Matching Utilities that subscribe to receive Status Information.
---------------------------------------------------------------------------
\22\ 15 U.S.C. 78q-1(b)(3)(D).
---------------------------------------------------------------------------
As described in Item II.(A) above, the proposed Status Information
Fee is structured to use a flat annual fee rather than a volume-based
fee, because DTC's ongoing estimated support costs relating to
providing Status Information to a Matching Utility are fixed and are
not expected to fluctuate based on message volume. As described in Item
II.(A) 1. above, the cost assumptions used by DTC to calculate the
Status Information Fee include direct technology costs to support the
provision of Status Information to a Matching Utility, plus allocated
costs based on anticipated indirect support. The direct costs are based
on required technology support
[[Page 15840]]
for the new service. The allocated indirect costs are estimated using
the actual indirect cost attribution for the Settlement business within
DTC. DTC believes the proposed flat fee would be equitably allocated
because it would require a Matching Utility to pay DTC a fee for the
cost DTC believes would be directly attributable to the Matching
Utility's request to receive Status Information, as described
above.\23\ DTC believes the proposed Status Information Fee is
reasonable because, as described above, it is based the actual direct
and attributed costs DTC expects to incur by providing the information
to a Matching Utility that subscribes to receive it consistent with
Section 17(A)(b)(3)(D) of the Act.\24\
---------------------------------------------------------------------------
\23\ If the fee was structured differently, such as by using a
volume-based fee, it is possible that a Matching Utility could be
charged less or more than the actual cost for DTC to provide the
service to that Matching Utility, which DTC believes would not be
equitable, because by DTC establishing the fee using a volume-based
structure, a Matching Utility could end up paying total fees that
are higher or lower than those paid by another Matching Utility for
a product that costs DTC the same amount to provide to the Matching
Utility, regardless of the transaction volume associated with the
Matching Utility.
\24\ 15 U.S.C. 78q-1(b)(3)(D).
---------------------------------------------------------------------------
(B) Clearing Agency's Statement on Burden on Competition
DTC believes that the proposed changes to the Fee Schedule could
impose a burden on competition because it would implement a new fee and
a new charge payable by a Matching Utility that subscribes for a
voluntary service to receive Status Information from DTC, thereby
potentially creating costs to a Matching Utility not previously charged
for a voluntary service not previously provided.
DTC believes the primary benefit a Matching Utility would realize
from its receipt of Status Information from DTC would be the added
value the Matching Utility could provide in its services to its
customers through the reduction of costs to those customers, as
described below. In this regard, if the Status Information received by
a Matching Utility from DTC was provided by the Matching Utility to its
customers, it would facilitate the ability of customers of the Matching
Utility to efficiently monitor and resolve Exceptions by accessing
Status Information from a centralized point of access as opposed to
through multiple entities. In this regard, DTC does not believe that
any burden on competition imposed by the proposed changes to the Fee
Schedule would be significant in relation to the benefit a Matching
Utility could realize by receiving Status Information from DTC. By
allowing DTC to meet its costs in providing Status Information to a
Matching Utility in a centralized format, as described above, the
proposed rule change would allow DTC to provide Status Information to a
Matching Utility, which would facilitate the Matching Utility's ability
to provide its customers with enhanced value in its services, by
facilitating reductions in costs incurred by the Matching Utility's
customers regarding the monitoring of Exceptions by providing a
centralized point of access to Status Information rather than receiving
information through multiple entities.
DTC believes that any burden on competition that is created by the
proposed changes to the Fee Schedule would be necessary and appropriate
in furtherance of the purposes of the Act,\25\ as described below.
---------------------------------------------------------------------------
\25\ 15 U.S.C. 78q-1(b)(3)(I).
---------------------------------------------------------------------------
Any burden on competition that is created by the proposed rule
changes would be necessary in order to facilitate DTC's ability to
provide Status Information to Matching Utilities, as described above,
which would facilitate the prompt and accurate clearance and settlement
of related transactions, as described in Item II.(A) 2. above.
DTC believes that any burden on competition imposed by the proposed
changes to the Fee Schedule would be appropriate because (i) the Status
Information Fee and Status Information Development Charge relate to the
use by a Matching Utility of a voluntary service of DTC and (ii)(a) the
Status Information Fee would only be billed to a Matching Utility that
subscribes to receive Status Information and (b) the Status Information
Development Charge would only be charged to a Matching Utility that
requests that DTC develop a Non-Submitting Matching Utility Interface
for the Matching Utility and agrees in writing to pay the charge and
subscribes to receive Status Information, as described above.
DTC does not believe the proposed rule change would unduly
disadvantage one Matching Utility versus another, because if a Matching
Utility does not believe Status Information would provide it, or its
customers, with enough benefit under its own business model, it could
choose not to subscribe and not incur the costs of fees proposed above.
(C) Clearing Agency's Statement on Comments on the Proposed Rule Change
Received From Members, Participants, or Others
Written comments relating to this proposed rule change have not
been solicited or received. DTC will notify the Commission of any
written comments received by DTC.
III. Date of Effectiveness of the Proposed Rule Change, and Timing for
Commission Action
The foregoing rule change has become effective pursuant to Section
19(b)(3)(A) of the Act \26\ and paragraph (f) of Rule 19b-4
thereunder.\27\ 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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\26\ 15 U.S.C. 78s(b)(3)(A).
\27\ 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-2020-005 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-2020-005. 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
[[Page 15841]]
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-2020-005
and should be submitted on or before April 9, 2020.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\28\
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\28\ 17 CFR 200.30-3(a)(12).
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Matthew J. DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-05679 Filed 3-18-20; 8:45 am]
BILLING CODE 8011-01-P
