Self-Regulatory Organizations; The Depository Trust Company; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend the Reorganizations Service Guide, 73819-73822 [2020-25502]

Download as PDF Federal Register / Vol. 85, No. 224 / Thursday, November 19, 2020 / Notices SECURITIES AND EXCHANGE COMMISSION [Release No. 34–90431/November 13, 2020] Securities Exchange Act of 1934; In the Matter of: NYSE Area, Inc., 11 Wall St., New York, NY 10005, File No. SR– NYSEArca–2019–01; Order Setting Aside the Order by Delegated Authority Disapproving SR– NYSEArca–2019–01 On January 28, 2019, NYSE Arca, Inc. (‘‘NYSE Arca’’) filed with the Securities and Exchange Commission (‘‘Commission’’), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Exchange Act’’) 1 and Rule 19b–4 thereunder,2 a proposed rule change to list and trade shares of the Bitwise Bitcoin ETF Trust under NYSE Arca Rule 8.201–E. The proposed rule change was published for comment in the Federal Register on February 15, 2019.3 On March 29, 2019, pursuant to Section 19(b)(2) of the Exchange Act,4 the Division of Trading and Markets (‘‘Division’’), for the Commission pursuant to delegated authority, designated a longer period within which to approve the proposed rule change, disapprove the proposed rule change, or institute proceedings to determine whether to approve or disapprove the proposed rule change.5 On May 7, 2019, NYSE Arca filed Amendment No. 1 to the proposed rule change, which replaced and superseded the proposed rule change as originally filed, and on May 14, 2019, the Division, for the Commission pursuant to delegated authority, published the proposed rule change, as modified by Amendment No. 1, for notice and comment and instituted proceedings under Section 19(b)(2)(B) of the Exchange Act 6 to determine whether to approve or disapprove the proposed rule change, as modified by Amendment No. 1.7 On August 12, 2019, the Division, for the Commission pursuant to delegated authority, extended the period for consideration of the proposed rule change, as modified by Amendment No. 1.8 On October 9, 2019, the Division, for the Commission pursuant to delegated 1 15 U.S.C. 78s(b)(1). CFR 240.19b–4. 3 See Securities Exchange Act Release No. 85093 (Feb. 11, 2019), 84 FR 4589. 4 15 U.S.C. 78s(b)(2). 5 See Securities Exchange Act Release No. 85461, 84 FR 13339 (Apr. 4, 2019). 6 15 U.S.C. 78s(b)(2)(B). 7 See Securities Exchange Act Release No. 85854, 84 FR 23125 (May 21, 2019). 8 See Securities Exchange Act Release No. 86629, 84 FR 42036 (Aug. 16, 2019). 2 17 VerDate Sep<11>2014 19:40 Nov 18, 2020 Jkt 253001 authority,9 disapproved the proposed rule change, as modified by Amendment No. 1.10 On October 15, 2019, the Secretary of the Commission notified NYSE Arca that, pursuant to Commission Rule of Practice 431,11 the Commission would review the Division’s action pursuant to delegated authority and that the Division’s action pursuant to delegated authority was stayed until the Commission orders otherwise.12 On November 12, 2019, the Commission issued a scheduling order allowing the filing of additional statements.13 On January 13, 2020, NYSE Arca withdrew the proposed rule change (SR–NYSEArca–2019–01).14 Under Commission Rule of Practice 431(a), the Commission may ‘‘affirm, reverse, modify, set aside or remand for further proceedings, in whole or in part, any action made pursuant to’’ delegated authority.15 We find that, in light of the NYSE Arca’s withdrawal of the proposed rule change, it is appropriate to set aside the Delegated Order. Accordingly, it is ordered that the October 9, 2019, order disapproving by delegated authority NYSE Arca’s proposed rule change number SR– NYSEArca–2019–01, be, and it hereby is, set aside. By the Commission. J. Matthew DeLesDernier, Assistant Secretary. [FR Doc. 2020–25504 Filed 11–18–20; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–90415; File No. SR–DTC– 2020–013] Self-Regulatory Organizations; The Depository Trust Company; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend the Reorganizations Service Guide November 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 November 12, 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 Rule 19b–4(f)(4) thereunder.4 The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. I. Clearing Agency’s Statement of the Terms of Substance of the Proposed Rule Change The purpose of the proposed rule change 5 is to amend the Reorganizations Guide to (1) establish November 16, 2020 as the date for the retirement of the Reorganization Inquiry for Participants (‘‘RIPS’’) 6 function for mandatory corporate action events,7 and (2) make clarifying and technical changes, as more fully described below. 1 15 U.S.C. 78s(b)(1). CFR 240.19b–4. 3 15 U.S.C. 78s(b)(3)(A). 4 17 CFR 240.19b–4(f)(4). 5 Each term not otherwise defined herein has its respective meaning as set forth in the Rules, ByLaws and Organization Certificate of DTC (the ‘‘Rules’’) and the Reorganizations Service Guide (‘‘Reorganizations Guide’’), available at https:// www.dtcc.com/legal/rules-and-procedures.aspx. 6 The RIPS function on the Participant Terminal System (‘‘PTS’’) is the functional equivalent of the Reorganizations and Redemptions function on the Participant Browser Service System (‘‘PBS’’). The PBS Reorganizations and Redemptions function will be retired concurrently with the RIPS function for mandatory reorganizations events. PTS and PBS are user interfaces for DTC’s settlement and asset services functions. PTS is mainframe-based and PBS is web-based with a mainframe back-end. Participants may use either PTS or PBS, as they are functionally equivalent. References to a particular PTS function in this rule filing include the corresponding PBS function. 7 RIPS will continue to be available for voluntary reorganizations events. See Important Notice 13116–20 (August 3, 2020), available at https:// www.dtcc.com/legal/important-notices. 2 17 9 17 CFR 200.30–3(a)(12). Securities Exchange Act Release No. 87267, 84 FR 55382 (Oct. 16, 2019) (‘‘Delegated Order’’). 11 17 CFR 201.431. 12 See Letter from Secretary, Commission, to Michael Cavalier, Counsel, and David De Gregorio Senior Counsel, Intercontinental Exchange/NYSE (Oct. 15, 2019), available at https://www.sec.gov/ rules/sro/nysearca/2019/34/87267-letter.pdf. 13 See Securities Exchange Act Release No. 87503, 84 FR 63699 (Nov. 18, 2019). 14 See letter from David De Gregorio, Senior Counsel, NYSE Arca, to Secretary, Commission, dated Jan. 13, 2020, available at https:// www.sec.gov/rules/sro/nysearca/2019/34/87267nysearca-withdrawal.pdf. 15 17 CFR 201.431(a). 10 See PO 00000 Frm 00150 Fmt 4703 Sfmt 4703 73819 E:\FR\FM\19NON1.SGM 19NON1 73820 Federal Register / Vol. 85, No. 224 / Thursday, November 19, 2020 / Notices 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 purpose of the proposed rule change is to amend the Reorganizations Guide to (1) establish November 16, 2020 as the date for the retirement of the RIPS function for mandatory corporate action events, and (2) make clarifying and technical changes, as more fully described below. (i) RIPS (Reorganization Inquiry for Participants) Retirement On May 21, 2019, DTC filed with the Commission a proposed rule change to, among other things, update its corporate action service by transitioning certain corporate action functions on PTS and PBS for the processing of Reorganizations to the Corporate Action Web (‘‘CA Web’’) 8 system.9 The rule change provided that, at the conclusion of the pilot test phase in Q2 of 2019, Reorganizations activity within the ADJI (Adjustment Inquiries) function, the RIPS function for mandatory reorganizations, and the SDAR Dept. C (Reorg/Redemptions/Dividend Allocations) function would be retired from PTS/PBS and the equivalent functionality would only be available on CA Web. Subsequent to the May 21, 2019 rule filing, DTC had received feedback from Participants indicating that they needed 8 In PTS/PBS, corporate actions are announced using DTC proprietary codes to signify event types. CA Web replaces DTC’s proprietary codes with market standard language. For example, a cash dividend payment that PTS/PBS identifies as a ‘‘08’’ function code is identified in CA Web as a ‘‘Cash Dividend’’ event. Additionally, CA Web incorporates the entire lifecycle of an event into one platform with a unique corporate action identifier that follows the event through its lifecycle. CA Web gives Participants the ability to customize screen displays and offers flexible methods for event search, neither of which is available in the PTS/PBS systems. 9 See Securities Exchange Act Release No. 85986 (May 31, 2019), 84 FR 26466 (June 6, 2019) (SR– DTC–2019–003). VerDate Sep<11>2014 19:40 Nov 18, 2020 Jkt 253001 additional time to test the parallel RIPS functionality on CA Web, the ‘‘Reorganizations Announcements’’ function. DTC postponed the retirement of the RIPS function for mandatory corporate actions events from PTS to an unspecified future date in order to provide Participants with the additional time for testing.10 DTC understands that the Participants have completed their testing. Thus, pursuant to this proposed rule change, DTC would retire the RIPS function for mandatory corporate actions events from PTS on November 16, 2020. In addition, DTC would amend the Reorganizations Guide to reference the retirement and to remove references to RIPS for mandatory corporate actions events. (ii) Clarifying and Technical Changes Pursuant to the proposed rule change, DTC would make other technical and clarifying changes to the Reorganizations Guide, as described below. 1. ‘‘Important Legal Information’’ Section Pursuant to the proposed rule change, DTC would update the copyright date from 2019 to 2020. 2. ‘‘About Reorganization Services’’ Section In the ‘‘Preparing to Use the Services’’ subsection, DTC is proposing to remove the chart of PTS/PBS functions that were retired in 2019. These functions have since been replaced by CA Web functionality. In the ‘‘How Reorganizations Work’’ subsection, DTC is proposing to delete ‘‘Participant Terminal System (PTS) functions’’ and ‘‘Participant Browser Service (PBS)’’ from the list of delivery mechanism that DTC uses to provide Participants with information pertaining to their entitlements. The PTS/PBS functions that had been used for this purpose were retired. In the ‘‘Associated PTS/PBS and CA Web Functions’’ subsection, DTC is proposing to delete the ART, POS, SDAR, ADJI rows from the table, as these functions were retired in 2019.11 In addition, DTC is proposing to delete the row for LENP, which was replaced by the Legal Notice System (LENS).12 Further, pursuant to the proposed rule 10 See Securities Exchange Act Release No. 86255 (July 1, 2019), 84 FR 32508 (July 8, 2019) (SR–DTC– 2019–004). 11 See Securities Exchange Act Release No. 85986 (May 31, 2019), 84 FR 26466 (June 6, 2019) (SR– DTC–2019–003). 12 See Important Notice 6525–10 (March 31, 2010), supra note 7. PO 00000 Frm 00151 Fmt 4703 Sfmt 4703 change, DTC would delete the ‘‘X’’ in the Mand column for the RIPS row, to reflect the retirement of RIPS for mandatory reorganizations. DTC would also delete the ‘‘X’’ in the PXY column for RIPS because Proxy announcements are not viewed in RIPS, but rather are viewed in PTS PXY and announced in PTS PANS. 3. ‘‘Announcements’’ Section In the ‘‘How the Announcement Service Works’’ subsection, DTC is proposing to update the final sentence in the subsection to reflect that announcement information is also delivered electronically via ISO 20022 messaging. In the ‘‘How to View Mandatory and Voluntary Reorganization Announcements’’ subsection, DTC is proposing to amend the first sentence and insert a footnote to reflect that, after the RIPS function for mandatory reorganizations announcements is retired on November 16, 2020, the RIPS function would only be available for voluntary reorganizations announcements. 4. ‘‘Processing’’ Section In the ‘‘Mandatory Reorganizations’’ subsection, in the ‘‘Various Types of Mandatory Reorganizations’’ table, DTC is proposing to edit the description for the Liquidation event by deleting ‘‘securities and/or.’’ The reference to securities is incorrect because DTC does not distribute securities under a Liquidation event type. Securities are distributed under a plan of reorganization. In the ‘‘Reorganization (RRG) Segregated Account’’ subsection, for consistency, DTC is proposing to move the sentence ‘‘Contra-CUSIP numbers are used to segregate your position (representing instructions submitted) for voluntary offers and put bond options.’’ to the ‘‘About Contra-CUSIPs’’ subsection. In the ‘‘About Contra-CUSIPs’’ subsection, DTC is proposing to streamline the description of contraCUSIPs to enhance readability, and, for accuracy, to update the description to reflect that a contra-CUSIP contains the same first three digits of the issuer number assigned to the subject security. Further, DTC is proposing to simplify the description of a contra-CUSIP by removing text and examples that address the specific numerical construction of a contra-CUSIP. In addition to the three issuer digits, DTC generates the other digits of a contraCUSIP on the basis of multiple factors, including, but not limited to, security characteristics, event types, and E:\FR\FM\19NON1.SGM 19NON1 Federal Register / Vol. 85, No. 224 / Thursday, November 19, 2020 / Notices currency. These other digits are used by DTC for internal tracking and accounting purposes and are not intended to provide information to Participants about the offer or event. The current language of the Reorganizations Guide does not reflect the full scope of the DTC process. In addition, because it is an internal DTC process for internal DTC use, DTC believes that Participants do not need, and may be confused by, information about how DTC generates the specific digits in a contra-CUSIP. 5. ‘‘Instructions/Expirations’’ Section In the second paragraph of the ‘‘Accepting an ATOP-Eligible Offer’’ subsection, DTC is proposing to insert ‘‘ISO 20022’’ in the list of interfaces through which a Participant can view a notice of a tender offer. In the ‘‘Submitting a Protect for an ATOP-Eligible Offer’’ subsection, DTC is proposing to insert additional language into the Warning! paragraph to clarify that DTC will only accept cover of protect instructions outside of PTS PTOP or PBS Voluntary Tenders and Exchanges when the window for submitting instructions through PTS PTOP or PBS Voluntary Tenders and Exchanges has closed, and only if the Participant contacted the agent before the offer had actually expired. If the offer expired prior to the Participant contacting the agent, any agreements to handle the protect will be required to be completed outside DTC. Further, DTC is proposing to clarify that if the Participant contacts the agent before the actual expiration of the offer and the agent agrees to accept an email submission directly, the agent will notify DTC and the Participant should email a Protect Submission Form to DTC. Once the communication from both the agent and Participant has been received by DTC, with each having provided the appropriate indemnification language, DTC will then input the protect submission on behalf of the Participant. In the ‘‘Submitting a Cover of Protect via PTS PTOP or PBS Voluntary Tenders and Exchanges for an ATOPEligible Offer’’ subsection, DTC is proposing to insert additional language into the Warning! paragraph to clarify that DTC will not accept cover of protect instructions outside of PTS PTOP or PBS Voluntary Tenders and Exchanges (i) if the window for submitting instructions through PTS PTOP or PBS Voluntary Tenders and Exchanges is still open, or (ii) if the original protect was not accepted in PTS PTOP or PBS Voluntary Tenders and Exchanges. In the paragraph below the Warning! VerDate Sep<11>2014 19:40 Nov 18, 2020 Jkt 253001 paragraph, DTC is proposing to insert ‘‘ISO 20022 message’’ in the lists of interfaces through which a Participant can view the notice of a tender offer. In the ‘‘Submitting a Cover of Protect via PTS PTOP or PBS Voluntary Tenders and Exchanges on Behalf of Another Participant’’ subsection, DTC is proposing to insert additional language into the Warning! paragraph to clarify that in order for one Participant to cover a protect on behalf of a second Participant, the second Participant must have either (i) submitted its protect via PTS/PBS, or (ii) submitted a protect to the agent via email that was subsequently communicated to DTC and input into PTS PTOP by DTC. In the ‘‘Procedures for Submitting Instructions Outside of PTS/PBS’’/ ’’Submitting the Instruction’’ subsection, in the fifth Warning! paragraph, DTC is proposing to insert ‘‘CA Web and ISO 20022 messages’’ as interfaces through which a Participant can view information about a tender offer. 2. Statutory Basis Section 17A(b)(3)(F) of the Act requires, inter alia, that the Rules be designed to promote the prompt and accurate clearance and settlement of securities transactions.13 DTC believes that the proposed rule change with respect to establishing November 16, 2020 as the date for the retirement of the RIPS function for mandatory corporate actions events is consistent with Section 17(A)(b)(3)(F) of the Act referenced above. By requiring Participants to utilize the more flexible and robust CA Web interface, DTC would be promoting more efficient access to reorganization services and a broader view of a reorganization event for Participants. Therefore, DTC believes that the proposed rule change would promote the prompt and accurate clearance and settlement of securities transactions relating to mandatory corporate actions events, consistent with Section 17A(b)(3)(F) of the Act, cited above. DTC believes that the proposed rule change to amend the Reorganizations Guide to make technical and clarifying changes is consistent with Section 17(A)(b)(3)(F) of the Act referenced above because it would enhance the clarity and transparency of the Reorganizations Guide. By enhancing the clarity and transparency of the Reorganizations Guide, the proposed rule change would allow Participants to more efficiently and effectively conduct their business in connection with processing reorganization events and settling related securities transactions. Therefore, DTC believes that the proposed rule change is designed to promote the prompt and accurate clearance and settlement of securities transactions related to Reorganizations, consistent with Section 17A(b)(3)(F) of the Act, cited above. (B) Clearing Agency’s Statement on Burden on Competition DTC believes that the proposed rule change with respect to amending the Reorganizations Guide to establish November 16, 2020 as the date for the retirement of the RIPS function for mandatory corporate actions events would not have any impact on competition. As discussed above, DTC had originally postponed the retirement date to allow Participants additional time to test the parallel functionality on CA Web. As Participants’ testing is now complete, the retirement of RIPS for mandatory corporate actions, which applies to all Participants equally, can proceed. Therefore, DTC believes that the proposed rule change with respect to amending the Reorganizations Guide to establish November 16, 2020 as the date for the retirement of the RIPS function for mandatory corporate actions events would not have any impact on competition.14 DTC believes that the proposed rule change to amend the Reorganizations Guide to make technical and clarifying changes would not have any impact on competition because it merely would enhance the clarity and transparency of the Reorganizations Guide, and therefore would not affect the rights and obligations of any party. (C) Clearing Agency’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others Written comments relating to the 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) 15 of the Act and paragraph (f) 16 of Rule 19b–4 thereunder. At any time within 60 days of the filing of the proposed rule change, the Commission summarily may temporarily suspend 14 15 U.S.C. 78q–1(b)(3)(I). U.S.C. 78s(b)(3)(A). 16 17 CFR 240.19b–4(f). 15 15 13 15 PO 00000 U.S.C. 78q–1(b)(3)(F). Frm 00152 Fmt 4703 Sfmt 4703 73821 E:\FR\FM\19NON1.SGM 19NON1 73822 Federal Register / Vol. 85, No. 224 / Thursday, November 19, 2020 / Notices 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–2020–013 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–2020–013. 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– VerDate Sep<11>2014 19:40 Nov 18, 2020 Jkt 253001 2020–013 and should be submitted on or before December 10, 2020. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.17 J. Matthew DeLesDernier, Assistant Secretary. [FR Doc. 2020–25502 Filed 11–18–20; 8:45 am] BILLING CODE 8011–01–P [Release No. 34–90423; File No. SR– NASDAQ–2020–074) Self-Regulatory Organizations; The Nasdaq Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend the Exchange’s Transaction Credits at Equity 7, Section 118 November 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 November 2, 2020, The Nasdaq Stock Market LLC (‘‘Nasdaq’’ or ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘SEC’’ or ‘‘Commission’’) the proposed rule change as described in Items I, II, and III below, which Items have been prepared by the Exchange. 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 The Exchange proposes to amend the Exchange’s transaction credits at Equity 7, Section 118, as described further below. The text of the proposed rule change is available on the Exchange’s website at https://listingcenter.nasdaq.com/ rulebook/nasdaq/rules, at the principal office of the Exchange, 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 17 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 1 15 Frm 00153 Fmt 4703 A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose SECURITIES AND EXCHANGE COMMISSION PO 00000 Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements. Sfmt 4703 The Exchange proposes to amend its schedule of credits at Equity 7, Section 118, to add a new credit for executing orders in securities in all three Tapes. Presently, the Exchange offers its members a credit of $0.00295 per share of displayed orders/quotes (other than Supplemental Orders or Designated Retail Orders) that provide liquidity to the extent such members (i) have shares of liquidity provided in all securities through one or more of its Nasdaq Market Center MPIDs that represent 0.70% or more of Consolidated Volume 3 during the month; (ii) execute 0.20% or more of Consolidated Volume during the month through providing midpoint orders and through MELO; and (iii) remove at least 1.10% of Consolidated Volume during the month of Consolidated Volume during the month through one or more of their Nasdaq Market Center MPIDs [sic]. The purpose of this credit is to incent members to engage in substantial volumes of liquidity adding and removal activity on the Exchange during a month and, in particular, to execute a substantial percentage of such volume through the provision of midpoint and Midpoint Extended Life Orders, or ‘‘M– ELOs.’’ The Exchange now proposes to add a new, higher credit for members that meet similar criteria, albeit with higher volume requirements. Specifically, the Exchange proposes to provide a new credit of $0.00305 per share of displayed orders/quotes (other than Supplemental Orders or Designated Retail Orders) that provide liquidity to the extent such members (i) have shares of liquidity provided in all securities through one or more of its Nasdaq Market Center MPIDs that represent 1.20% or more of Consolidated 3 Pursuant to Equity 7, Section 118(a), the term ‘‘Consolidated Volume’’ means the total consolidated volume reported to all consolidated transaction reporting plans by all exchanges and trade reporting facilities during a month in equity securities, excluding executed orders with a size of less than one round lot. For purposes of calculating Consolidated Volume and the extent of a member’s trading activity the date of the annual reconstitution of the Russell Investments Indexes is excluded from both total Consolidated Volume and the member’s trading activity. E:\FR\FM\19NON1.SGM 19NON1

Agencies

[Federal Register Volume 85, Number 224 (Thursday, November 19, 2020)]
[Notices]
[Pages 73819-73822]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-25502]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-90415; File No. SR-DTC-2020-013]


Self-Regulatory Organizations; The Depository Trust Company; 
Notice of Filing and Immediate Effectiveness of a Proposed Rule Change 
To Amend the Reorganizations Service Guide

November 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 November 12, 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 Rule 19b-
4(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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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 15 U.S.C. 78s(b)(3)(A).
    \4\ 17 CFR 240.19b-4(f)(4).
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I. Clearing Agency's Statement of the Terms of Substance of the 
Proposed Rule Change

    The purpose of the proposed rule change \5\ is to amend the 
Reorganizations Guide to (1) establish November 16, 2020 as the date 
for the retirement of the Reorganization Inquiry for Participants 
(``RIPS'') \6\ function for mandatory corporate action events,\7\ and 
(2) make clarifying and technical changes, as more fully described 
below.
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    \5\ Each term not otherwise defined herein has its respective 
meaning as set forth in the Rules, By-Laws and Organization 
Certificate of DTC (the ``Rules'') and the Reorganizations Service 
Guide (``Reorganizations Guide''), available at https://www.dtcc.com/legal/rules-and-procedures.aspx.
    \6\ The RIPS function on the Participant Terminal System 
(``PTS'') is the functional equivalent of the Reorganizations and 
Redemptions function on the Participant Browser Service System 
(``PBS''). The PBS Reorganizations and Redemptions function will be 
retired concurrently with the RIPS function for mandatory 
reorganizations events. PTS and PBS are user interfaces for DTC's 
settlement and asset services functions. PTS is mainframe-based and 
PBS is web-based with a mainframe back-end. Participants may use 
either PTS or PBS, as they are functionally equivalent. References 
to a particular PTS function in this rule filing include the 
corresponding PBS function.
    \7\ RIPS will continue to be available for voluntary 
reorganizations events. See Important Notice 13116-20 (August 3, 
2020), available at https://www.dtcc.com/legal/important-notices.

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[[Page 73820]]

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 purpose of the proposed rule change is to amend the 
Reorganizations Guide to (1) establish November 16, 2020 as the date 
for the retirement of the RIPS function for mandatory corporate action 
events, and (2) make clarifying and technical changes, as more fully 
described below.
(i) RIPS (Reorganization Inquiry for Participants) Retirement
    On May 21, 2019, DTC filed with the Commission a proposed rule 
change to, among other things, update its corporate action service by 
transitioning certain corporate action functions on PTS and PBS for the 
processing of Reorganizations to the Corporate Action Web (``CA Web'') 
\8\ system.\9\ The rule change provided that, at the conclusion of the 
pilot test phase in Q2 of 2019, Reorganizations activity within the 
ADJI (Adjustment Inquiries) function, the RIPS function for mandatory 
reorganizations, and the SDAR Dept. C (Reorg/Redemptions/Dividend 
Allocations) function would be retired from PTS/PBS and the equivalent 
functionality would only be available on CA Web.
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    \8\ In PTS/PBS, corporate actions are announced using DTC 
proprietary codes to signify event types. CA Web replaces DTC's 
proprietary codes with market standard language. For example, a cash 
dividend payment that PTS/PBS identifies as a ``08'' function code 
is identified in CA Web as a ``Cash Dividend'' event. Additionally, 
CA Web incorporates the entire lifecycle of an event into one 
platform with a unique corporate action identifier that follows the 
event through its lifecycle. CA Web gives Participants the ability 
to customize screen displays and offers flexible methods for event 
search, neither of which is available in the PTS/PBS systems.
    \9\ See Securities Exchange Act Release No. 85986 (May 31, 
2019), 84 FR 26466 (June 6, 2019) (SR-DTC-2019-003).
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    Subsequent to the May 21, 2019 rule filing, DTC had received 
feedback from Participants indicating that they needed additional time 
to test the parallel RIPS functionality on CA Web, the 
``Reorganizations Announcements'' function. DTC postponed the 
retirement of the RIPS function for mandatory corporate actions events 
from PTS to an unspecified future date in order to provide Participants 
with the additional time for testing.\10\
---------------------------------------------------------------------------

    \10\ See Securities Exchange Act Release No. 86255 (July 1, 
2019), 84 FR 32508 (July 8, 2019) (SR-DTC-2019-004).
---------------------------------------------------------------------------

    DTC understands that the Participants have completed their testing. 
Thus, pursuant to this proposed rule change, DTC would retire the RIPS 
function for mandatory corporate actions events from PTS on November 
16, 2020. In addition, DTC would amend the Reorganizations Guide to 
reference the retirement and to remove references to RIPS for mandatory 
corporate actions events.
(ii) Clarifying and Technical Changes
    Pursuant to the proposed rule change, DTC would make other 
technical and clarifying changes to the Reorganizations Guide, as 
described below.
1. ``Important Legal Information'' Section
    Pursuant to the proposed rule change, DTC would update the 
copyright date from 2019 to 2020.
2. ``About Reorganization Services'' Section
    In the ``Preparing to Use the Services'' subsection, DTC is 
proposing to remove the chart of PTS/PBS functions that were retired in 
2019. These functions have since been replaced by CA Web functionality.
    In the ``How Reorganizations Work'' subsection, DTC is proposing to 
delete ``Participant Terminal System (PTS) functions'' and 
``Participant Browser Service (PBS)'' from the list of delivery 
mechanism that DTC uses to provide Participants with information 
pertaining to their entitlements. The PTS/PBS functions that had been 
used for this purpose were retired.
    In the ``Associated PTS/PBS and CA Web Functions'' subsection, DTC 
is proposing to delete the ART, POS, SDAR, ADJI rows from the table, as 
these functions were retired in 2019.\11\ In addition, DTC is proposing 
to delete the row for LENP, which was replaced by the Legal Notice 
System (LENS).\12\ Further, pursuant to the proposed rule change, DTC 
would delete the ``X'' in the Mand column for the RIPS row, to reflect 
the retirement of RIPS for mandatory reorganizations. DTC would also 
delete the ``X'' in the PXY column for RIPS because Proxy announcements 
are not viewed in RIPS, but rather are viewed in PTS PXY and announced 
in PTS PANS.
---------------------------------------------------------------------------

    \11\ See Securities Exchange Act Release No. 85986 (May 31, 
2019), 84 FR 26466 (June 6, 2019) (SR-DTC-2019-003).
    \12\ See Important Notice 6525-10 (March 31, 2010), supra note 
7.
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3. ``Announcements'' Section
    In the ``How the Announcement Service Works'' subsection, DTC is 
proposing to update the final sentence in the subsection to reflect 
that announcement information is also delivered electronically via ISO 
20022 messaging.
    In the ``How to View Mandatory and Voluntary Reorganization 
Announcements'' subsection, DTC is proposing to amend the first 
sentence and insert a footnote to reflect that, after the RIPS function 
for mandatory reorganizations announcements is retired on November 16, 
2020, the RIPS function would only be available for voluntary 
reorganizations announcements.
4. ``Processing'' Section
    In the ``Mandatory Reorganizations'' subsection, in the ``Various 
Types of Mandatory Reorganizations'' table, DTC is proposing to edit 
the description for the Liquidation event by deleting ``securities and/
or.'' The reference to securities is incorrect because DTC does not 
distribute securities under a Liquidation event type. Securities are 
distributed under a plan of reorganization.
    In the ``Reorganization (RRG) Segregated Account'' subsection, for 
consistency, DTC is proposing to move the sentence ``Contra-CUSIP 
numbers are used to segregate your position (representing instructions 
submitted) for voluntary offers and put bond options.'' to the ``About 
Contra-CUSIPs'' subsection.
    In the ``About Contra-CUSIPs'' subsection, DTC is proposing to 
streamline the description of contra-CUSIPs to enhance readability, 
and, for accuracy, to update the description to reflect that a contra-
CUSIP contains the same first three digits of the issuer number 
assigned to the subject security. Further, DTC is proposing to simplify 
the description of a contra-CUSIP by removing text and examples that 
address the specific numerical construction of a contra-CUSIP. In 
addition to the three issuer digits, DTC generates the other digits of 
a contra-CUSIP on the basis of multiple factors, including, but not 
limited to, security characteristics, event types, and

[[Page 73821]]

currency. These other digits are used by DTC for internal tracking and 
accounting purposes and are not intended to provide information to 
Participants about the offer or event. The current language of the 
Reorganizations Guide does not reflect the full scope of the DTC 
process. In addition, because it is an internal DTC process for 
internal DTC use, DTC believes that Participants do not need, and may 
be confused by, information about how DTC generates the specific digits 
in a contra-CUSIP.
5. ``Instructions/Expirations'' Section
    In the second paragraph of the ``Accepting an ATOP-Eligible Offer'' 
subsection, DTC is proposing to insert ``ISO 20022'' in the list of 
interfaces through which a Participant can view a notice of a tender 
offer.-
    In the ``Submitting a Protect for an ATOP-Eligible Offer'' 
subsection, DTC is proposing to insert additional language into the 
Warning! paragraph to clarify that DTC will only accept cover of 
protect instructions outside of PTS PTOP or PBS Voluntary Tenders and 
Exchanges when the window for submitting instructions through PTS PTOP 
or PBS Voluntary Tenders and Exchanges has closed, and only if the 
Participant contacted the agent before the offer had actually expired. 
If the offer expired prior to the Participant contacting the agent, any 
agreements to handle the protect will be required to be completed 
outside DTC. Further, DTC is proposing to clarify that if the 
Participant contacts the agent before the actual expiration of the 
offer and the agent agrees to accept an email submission directly, the 
agent will notify DTC and the Participant should email a Protect 
Submission Form to DTC. Once the communication from both the agent and 
Participant has been received by DTC, with each having provided the 
appropriate indemnification language, DTC will then input the protect 
submission on behalf of the Participant.
    In the ``Submitting a Cover of Protect via PTS PTOP or PBS 
Voluntary Tenders and Exchanges for an ATOP-Eligible Offer'' 
subsection, DTC is proposing to insert additional language into the 
Warning! paragraph to clarify that DTC will not accept cover of protect 
instructions outside of PTS PTOP or PBS Voluntary Tenders and Exchanges 
(i) if the window for submitting instructions through PTS PTOP or PBS 
Voluntary Tenders and Exchanges is still open, or (ii) if the original 
protect was not accepted in PTS PTOP or PBS Voluntary Tenders and 
Exchanges. In the paragraph below the Warning! paragraph, DTC is 
proposing to insert ``ISO 20022 message'' in the lists of interfaces 
through which a Participant can view the notice of a tender offer.
    In the ``Submitting a Cover of Protect via PTS PTOP or PBS 
Voluntary Tenders and Exchanges on Behalf of Another Participant'' 
subsection, DTC is proposing to insert additional language into the 
Warning! paragraph to clarify that in order for one Participant to 
cover a protect on behalf of a second Participant, the second 
Participant must have either (i) submitted its protect via PTS/PBS, or 
(ii) submitted a protect to the agent via email that was subsequently 
communicated to DTC and input into PTS PTOP by DTC.
    In the ``Procedures for Submitting Instructions Outside of PTS/
PBS''/''Submitting the Instruction'' subsection, in the fifth Warning! 
paragraph, DTC is proposing to insert ``CA Web and ISO 20022 messages'' 
as interfaces through which a Participant can view information about a 
tender offer.
2. Statutory Basis
    Section 17A(b)(3)(F) of the Act requires, inter alia, that the 
Rules be designed to promote the prompt and accurate clearance and 
settlement of securities transactions.\13\
---------------------------------------------------------------------------

    \13\ 15 U.S.C. 78q-1(b)(3)(F).
---------------------------------------------------------------------------

    DTC believes that the proposed rule change with respect to 
establishing November 16, 2020 as the date for the retirement of the 
RIPS function for mandatory corporate actions events is consistent with 
Section 17(A)(b)(3)(F) of the Act referenced above. By requiring 
Participants to utilize the more flexible and robust CA Web interface, 
DTC would be promoting more efficient access to reorganization services 
and a broader view of a reorganization event for Participants. 
Therefore, DTC believes that the proposed rule change would promote the 
prompt and accurate clearance and settlement of securities transactions 
relating to mandatory corporate actions events, consistent with Section 
17A(b)(3)(F) of the Act, cited above.
    DTC believes that the proposed rule change to amend the 
Reorganizations Guide to make technical and clarifying changes is 
consistent with Section 17(A)(b)(3)(F) of the Act referenced above 
because it would enhance the clarity and transparency of the 
Reorganizations Guide. By enhancing the clarity and transparency of the 
Reorganizations Guide, the proposed rule change would allow 
Participants to more efficiently and effectively conduct their business 
in connection with processing reorganization events and settling 
related securities transactions. Therefore, DTC believes that the 
proposed rule change is designed to promote the prompt and accurate 
clearance and settlement of securities transactions related to 
Reorganizations, consistent with Section 17A(b)(3)(F) of the Act, cited 
above.

(B) Clearing Agency's Statement on Burden on Competition

    DTC believes that the proposed rule change with respect to amending 
the Reorganizations Guide to establish November 16, 2020 as the date 
for the retirement of the RIPS function for mandatory corporate actions 
events would not have any impact on competition. As discussed above, 
DTC had originally postponed the retirement date to allow Participants 
additional time to test the parallel functionality on CA Web. As 
Participants' testing is now complete, the retirement of RIPS for 
mandatory corporate actions, which applies to all Participants equally, 
can proceed. Therefore, DTC believes that the proposed rule change with 
respect to amending the Reorganizations Guide to establish November 16, 
2020 as the date for the retirement of the RIPS function for mandatory 
corporate actions events would not have any impact on competition.\14\
---------------------------------------------------------------------------

    \14\ 15 U.S.C. 78q-1(b)(3)(I).
---------------------------------------------------------------------------

    DTC believes that the proposed rule change to amend the 
Reorganizations Guide to make technical and clarifying changes would 
not have any impact on competition because it merely would enhance the 
clarity and transparency of the Reorganizations Guide, and therefore 
would not affect the rights and obligations of any party.

(C) Clearing Agency's Statement on Comments on the Proposed Rule Change 
Received From Members, Participants, or Others

    Written comments relating to the 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) \15\ of the Act and paragraph (f) \16\ of Rule 19b-4 
thereunder. At any time within 60 days of the filing of the proposed 
rule change, the Commission summarily may temporarily suspend

[[Page 73822]]

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.
---------------------------------------------------------------------------

    \15\ 15 U.S.C. 78s(b)(3)(A).
    \16\ 17 CFR 240.19b-4(f).
---------------------------------------------------------------------------

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File Number SR-DTC-2020-013 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-2020-013. 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-2020-013 and should be submitted on 
or before December 10, 2020.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\17\
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    \17\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-25502 Filed 11-18-20; 8:45 am]
BILLING CODE 8011-01-P
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