Self-Regulatory Organizations; The Depository Trust Company; Notice of Filing and Immediate Effectiveness of Proposed Rule To Amend the DTC Operational Arrangements (Necessary for Securities To Become and Remain Eligible for DTC Services), 66921-66923 [2023-21137]
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Federal Register / Vol. 88, No. 187 / Thursday, September 28, 2023 / Notices
Comments may be submitted by any of
the following methods:
SECURITIES AND EXCHANGE
COMMISSION
Electronic Comments
[Release No. 34–98490; File No. SR–DTC–
2023–009]
• 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–
NYSEAMER–2023–45 on the subject
line.
Paper Comments
ddrumheller on DSK120RN23PROD with NOTICES1
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE,
Washington, DC 20549–1090.
All submissions should refer to file
number SR–NYSEAMER–2023–45. 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
a.m. and 3 p.m. Copies of the filing also
will be available for inspection and
copying at the principal office of the
Exchange. Do not include personal
identifiable information in submissions;
you should submit only information
that you wish to make available
publicly. We may redact in part or
withhold entirely from publication
submitted material that is obscene or
subject to copyright protection. All
submissions should refer to file number
SR–NYSEAMER–2023–45 and should
be submitted on or before October 19,
2023.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.16
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023–21134 Filed 9–27–23; 8:45 am]
BILLING CODE 8011–01–P
16 17
CFR 200.30–3(a)(12).
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18:09 Sep 27, 2023
Jkt 259001
Self-Regulatory Organizations; The
Depository Trust Company; Notice of
Filing and Immediate Effectiveness of
Proposed Rule To Amend the DTC
Operational Arrangements (Necessary
for Securities To Become and Remain
Eligible for DTC Services)
September 22, 2023.
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
September 14, 2023, 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)(6) thereunder.4 The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
I. Clearing Agency’s Statement of the
Terms of Substance of the Proposed
Rule Change
The proposed rule change consists of
amendments to the DTC Operational
Arrangements (Necessary for Securities
to Become and Remain Eligible for DTC
Services) (the ‘‘OA’’) 5 to (i) allow DTC
to delete the Participant positions and
dispose of the underlying certificates, if
any, for a warrant 6 or right 7 that is past
its expiration date as reflected on DTC
books and records (‘‘Expiration Date’’),
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)(6).
5 Available at www.dtcc.com/∼/media/Files/
Downloads/legal/issue-eligibility/eligibility/
operational-arrangements.pdf. Each term not
otherwise defined herein has its respective meaning
as set forth in the OA and in the Rules, By-Laws
and Organization Certificate of DTC (the ‘‘Rules’’),
available at www.dtcc.com/legal/rules-andprocedures.aspx.
6 A warrant generally represents the right of the
holder to acquire common stock of an issuer at
some future date at a specified price. Warrants, by
their terms, have an expiration date, i.e., the date
after which a holder can no longer exercise its
rights under the warrant, thereby rendering the
warrant worthless.
7 A right generally represents an opportunity for
stockholders to buy new securities issued by a
corporation in proportion to the number of shares
they own before the new shares are offered to the
public. Rights, by their terms, have an expiration
date, i.e., the date on which the subscription period
under the rights offering expires, thereby rendering
the right worthless.
2 17
PO 00000
Frm 00126
Fmt 4703
Sfmt 4703
66921
provided that DTC did not receive a
notice of extension of the Expiration
Date from the Agent or Issuer within the
applicable timeframe (‘‘Notice Period’’)
set forth in the OA; and (ii) make
technical and clarifying changes relating
to expired warrants/rights, as described
in greater detail below.
II. Clearing Agency’s Statement of the
Purpose of, and Statutory Basis for, the
Proposed Rule Change
In its filing with the Commission, the
clearing agency included statements
concerning the purpose of and basis for
the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of these
statements may be examined at the
places specified in Item IV below. The
clearing agency has prepared
summaries, set forth in sections A, B,
and C below, of the most significant
aspects of such statements.
(A) Clearing Agency’s Statement of the
Purpose of, and Statutory Basis for, the
Proposed Rule Change
1. Purpose
On November 21, 1990, DTC filed a
rule change providing for the deletion
and disposal of a warrant/right whose
Expiration Date had passed (‘‘Expired
Warrant/Right’’).8 The rule change
provided that DTC be permitted to
delete and dispose of an Expired
Warrant/Right after DTC (i) obtains
written confirmation from the Issuer or
Agent that the Expired Warrant/Right
has expired and is null, void, and
worthless (the ‘‘Confirmation’’), and (ii)
provides Participants with thirty days’
notice of the proposed deletion and
disposal of the Expired Warrant/Right.
After thirty days, DTC is permitted to
delete the positions in the Expired
Warrant/Right from Participants’
accounts and to dispose of the
underlying certificates.
Over the years, DTC has encountered
difficulties in contacting the Issuers or
Agents of Expired Warrants/Rights and/
or obtaining the Confirmation from the
Issuers or Agents. In addition to the
administrative burden on DTC to
follow-up with Issuers and Agents, if
DTC does not receive the Confirmation
from the Issuer or Agent of an Expired
Warrant/Right (i) the DTC books and
records continue to reflect the expired
security, and (ii) the underlying
certificates, if any,9 continue to be
8 Securities Exchange Act Release No. 28642
(Nov. 21, 1990), 55 FR 49725 (Nov. 30, 1990) (SR–
DTC–90–11).
9 Currently, warrants/rights are required to be part
of the FAST program (Fast Automated Securities
E:\FR\FM\28SEN1.SGM
Continued
28SEN1
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Federal Register / Vol. 88, No. 187 / Thursday, September 28, 2023 / Notices
maintained in the DTC vault. This
exposes DTC to the unnecessary risks
and costs associated with the ongoing
monitoring of positions and the custody
of certificates for worthless securities. In
addition, the positions in the Expired
Warrant/Right remain credited to
Participant accounts and the
Participants continue to be charged for
their positions in the Expired Warrant/
Right.
At the time of this filing, DTC
maintains approximately 16,700
certificates in the vault and the
associated Participant positions
representing approximately 890 CUSIPs
of Expired Warrants/Rights for which
DTC did not obtain a Confirmation. DTC
is also maintaining Participant positions
in certain Expired Warrants/Rights in
the FAST program for which DTC did
not obtain a Confirmation.
ddrumheller on DSK120RN23PROD with NOTICES1
(i) Proposed Rule Change
In order to reduce the burden, costs,
and risks presented to DTC,
Participants, Agents and Issuers by
requiring DTC to obtain a Confirmation
from the Issuer or Agent of an Expired
Warrant/Right prior to deletion and
disposal, DTC is proposing to amend the
OA to make the following changes:
Notice of Extension of Expiration Date
of Warrants/Rights: DTC is proposing to
amend the OA to revise the Notice
Period from 15 (fifteen) business days
after the Expiration Date to ten (10)
business days after the Expiration Date
for a warrant, and two (2) business days
after the Expiration Date for rights.10
Further, pursuant to the proposed rule
change, DTC would change the email
address to which such notice is required
to be sent from voluntaryreorg
announcements@dtcc.com to
conversionsandwarrants
announcements@dtcc.com.
Deletion and Disposal of Expired
Warrants/Rights: DTC is proposing to
amend the OA to advise Issuers and
Agents that if DTC has not received a
notice of extension for an Expired
Warrant/Right within ten (10) business
days after the Expiration Date for a
Transfer) program. This means that the Agent for a
warrant/right, and not DTC, is responsible for
maintaining the physical certificates representing
the warrant/right. See OA, supra note 1, at 65.
10 The fifteen (15) business day timeframe was
established on or around 2002, when notices of
extension were required to be physically mailed or
telecopied to DTC. Given the technological
advances in the intervening years, and the current
requirement that an Issuer or Agent email a notice
of extension to DTC, DTC believes that a shorter
Notice Period for warrants is appropriate. DTC
believes that a two (2) business day Notice Period
for rights is appropriate because the payment and
allocation on exercised rights typically occurs two
business days after expiration date, after which the
rights offer can no longer be amended or extended.
VerDate Sep<11>2014
18:09 Sep 27, 2023
Jkt 259001
warrant or within two (2) business days
after the Expiration Date for rights, DTC
may delete all Participant positions and
dispose of any underlying certificates
for the Expired Warrant/Right, without
further instruction or notice. In
addition, DTC is proposing to insert an
asterisked footnote stating that with
respect to expired warrants/rights with
an expiration date prior to August 1,
2023 (‘‘aged expired warrants/rights’’),
DTC will issue an Important Notice at
least thirty (30) days prior to deleting
and disposing of an aged Expired
Warrant/Right, and the footnote will be
automatically be deleted after DTC
issues such Important Notice(s) for all of
the aged expired warrants/rights.
Finally, DTC is proposing to remove the
language referencing the requirement for
the Issuer or Agent to provide a null,
void, and worthless declaration for
Expired Warrants/Rights.
Reactivation of Expired Warrants/
Rights: DTC is proposing to amend the
OA to replace and revise the language
relating to reactivation of Expired
Warrants/Rights to (i) enhance the
readability of the requirements and (ii)
change the email address to which a
notice of reactivation is required to be
sent from voluntaryreorg
announcements@dtcc.com to
conversionsandwarrants
announcements@dtcc.com.
2. Statutory Basis
Section 17A(b)(3)(F) of the Act
requires, in part, that the Rules be
designed to promote the prompt and
accurate clearance and settlement of
securities transactions.11 DTC believes
that by amending the OA to (i) permit
DTC to delete the Participant positions
and dispose of the underlying
certificates, if any, for an Expired
Warrant/Right, provided that DTC did
not receive a notice of extension within
the ten (10) business days’ Notice Period
for a warrant or the two (2) business
days’ Notice Period for rights, as
applicable; and (ii) make technical and
clarifying changes to the OA with
respect to Expired Warrants/Rights, the
proposed rule change would facilitate
the ability of Issuers, Agents, and
Participants to understand their rights
and obligations relating to Expired
Warrants/Rights and activity relating
thereto. Therefore, DTC believes that the
proposed rule change is designed to
promote the prompt and accurate
clearance and settlement of securities
transactions, consistent with section
17A(b)(3)(F) of the Act, cited above.
Rule 17Ad–22(e)(11) under the Act 12
requires, in part, that DTC establish,
implement, maintain and enforce
written policies and procedures
reasonably designed to maintain
securities in an immobilized or
dematerialized form for their transfer by
book entry, ensure the integrity of
securities issues, and minimize and
manage the risks associated with the
safekeeping and transfer of securities.
DTC believes that by amending the OA
to permit DTC to delete all Participant
positions and dispose of any underlying
certificates for an Expired Warrant/
Right, without further instruction or
notice, provided that DTC has not
received a notice of extension for the
Expired Warrant/Right from the Issuer
or Agent within the applicable Notice
Period, the proposed rule change would
reduce the burden, costs, and risks
associated with the administration of
the Confirmation process, the
recordkeeping of Participant positions
in Expired Warrants/Rights, and the
custody of the physical certificates for
Expired Warrants/Rights. Based on the
foregoing, DTC believes that the
proposed rule change is designed to
enhance DTC’s maintenance of
Participants’ book-entry positions in
warrants and rights, and its management
and reduction of the risks associated
with the safekeeping of its physical
securities inventory, consistent with
Rule 17Ad–22(e)(11) under the Act,
cited above.
(B) Clearing Agency’s Statement on
Burden on Competition
DTC believes that the proposed rule
change to amend the OA to (i) permit
DTC to delete the Participant positions
and dispose of the underlying
certificates, if any, for an Expired
Warrant/Right, provided that DTC did
not receive a notice of extension within
the ten (10) business days’ Notice Period
for a warrant or the two (2) business
days’ Notice Period for rights, as
applicable; and (ii) make technical and
clarifying changes to the OA with
respect to Expired Warrants/Rights
procedures, would not have any impact
on competition.13 The proposed rule
change would merely streamline the
processing of Expired Warrants/Rights
and would apply to all Issuers and
Agents of Expired Warrants/Rights and
to all holders of Expired Warrants/
Rights. In light of the foregoing, DTC
does not believe that the proposed rule
change would impose a burden on
competition.14
12 17
13 15
11 15
PO 00000
U.S.C. 78q–1(b)(3)(F).
Frm 00127
Fmt 4703
Sfmt 4703
CFR 240.17Ad–22(e)(11).
U.S.C. 78q–1(b)(3)(I).
14 Id.
E:\FR\FM\28SEN1.SGM
28SEN1
Federal Register / Vol. 88, No. 187 / Thursday, September 28, 2023 / Notices
ddrumheller on DSK120RN23PROD with NOTICES1
(C) Clearing Agency’s Statement on
Comments on the Proposed Rule
Change Received From Members,
Participants, or Others
DTC has not received or solicited any
written comments relating to this
proposal. If any written comments are
received, they would be publicly filed
as an Exhibit 2 to this filing, as required
by Form 19b–4 and the General
Instructions thereto.
Persons submitting comments are
cautioned that, according to Section IV
(Solicitation of Comments) of the
Exhibit 1A in the General Instructions to
Form 19b–4, the Commission does not
edit personal identifying information
from comment submissions.
Commenters should submit only
information that they wish to make
available publicly, including their
name, email address, and any other
identifying information.
All prospective commenters should
follow the Commission’s instructions on
how to submit comments, available at
www.sec.gov/regulatory-actions/how-tosubmit-comments. General questions
regarding the rule filing process or
logistical questions regarding this filing
should be directed to the Main Office of
the Commission’s Division of Trading
and Markets at tradingandmarkets@
sec.gov or 202–551–5777.
DTC reserves the right to not respond
to any comments received.
III. Date of Effectiveness of the
Proposed Rule Change, and Timing for
Commission Action
Because the foregoing proposed rule
change does not:
(i) significantly affect the protection of
investors or the public interest;
(ii) impose any significant burden on
competition; and
(iii) become operative for 30 days
from the date on which it was filed, or
such shorter time as the Commission
may designate, it has become effective
pursuant to section 19(b)(3)(A) of the
Act 15 and Rule 19b–4(f)(6)
thereunder.16
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
15 15
16 17
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:
18:09 Sep 27, 2023
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.17
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023–21137 Filed 9–27–23; 8:45 am]
Electronic Comments
BILLING CODE 8011–01–P
• 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–2023–009 on the subject line.
SECURITIES AND EXCHANGE
COMMISSION
[SEC File No. S7–05–22, OMB Control No.
3235–XXXX]
Submission for OMB Review;
Comment Request: Rule 15c6–2
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–2023–009. 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
a.m. and 3 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). Do
not include personal identifiable
information in submissions; you should
submit only information that you wish
to make available publicly. We may
redact in part or withhold entirely from
publication submitted material that is
obscene or subject to copyright
protection. All submissions should refer
to File Number SR–DTC–2023–009 and
should be submitted on or before
October 19, 2023.
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(6).
VerDate Sep<11>2014
Upon Written Request, Copies Available
From: Securities and Exchange
Commission, Office of FOIA Services,
100 F Street NE, Washington, DC
20549–2736
Notice is hereby given that pursuant
to the Paperwork Reduction Act of 1995
(‘‘PRA’’) (44 U.S.C. 3501 et seq.), the
Securities and Exchange Commission
(‘‘Commission’’) is soliciting comments
on the collection of information
provided for 17 CFR 240.15c6–2 (‘‘Rule
15c6–2’’) under the Securities Exchange
Act of 1934 (‘‘Exchange Act’’) (15 U.S.C.
78a et seq.). The Commission has
submitted this collection of information
to the Office of Management and Budget
(‘‘OMB’’) for approval. The title of the
information collection is ‘‘Rule 15c6–2.’’
An agency may not conduct or sponsor,
and a person is not required to respond
to, a collection of information under the
PRA unless it displays a currently valid
OMB control number.
Rule 15c6–2 was adopted as part of
the final rules to shorten the standard
settlement cycle for securities
transactions from two business days
after the transaction date to one
business day following the transaction
date. The compliance date for adopted
Rule 15c6–2 is May 28, 2024. Certain
provisions of Rule 15c6–2 contain
‘‘collection of information’’
requirements within the meaning of the
PRA.1 The requirements for this
collection of information is mandatory
for any broker or dealer (‘‘brokerdealer’’) engaging in the allocation,
confirmation, or affirmation process
with another party or parties to achieve
settlement of a securities transaction
that is subject to the requirements of
§ 240.15c6–1(a) to either enter into
written agreements as specified in the
rule or establish, maintain, and enforce
written policies and procedures
reasonably designed to address certain
objectives related to completing
17 17
1 See
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Frm 00128
Fmt 4703
66923
Sfmt 4703
E:\FR\FM\28SEN1.SGM
CFR 200.30–3(a)(12).
44 U.S.C. 3501 et seq.
28SEN1
]]>Agencies
[Federal Register Volume 88, Number 187 (Thursday, September 28, 2023)]
[Notices]
[Pages 66921-66923]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-21137]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-98490; File No. SR-DTC-2023-009]
Self-Regulatory Organizations; The Depository Trust Company;
Notice of Filing and Immediate Effectiveness of Proposed Rule To Amend
the DTC Operational Arrangements (Necessary for Securities To Become
and Remain Eligible for DTC Services)
September 22, 2023.
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 September 14, 2023, 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)(6) thereunder.\4\ The Commission is publishing this notice to
solicit comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ 15 U.S.C. 78s(b)(3)(A).
\4\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------
I. Clearing Agency's Statement of the Terms of Substance of the
Proposed Rule Change
The proposed rule change consists of amendments to the DTC
Operational Arrangements (Necessary for Securities to Become and Remain
Eligible for DTC Services) (the ``OA'') \5\ to (i) allow DTC to delete
the Participant positions and dispose of the underlying certificates,
if any, for a warrant \6\ or right \7\ that is past its expiration date
as reflected on DTC books and records (``Expiration Date''), provided
that DTC did not receive a notice of extension of the Expiration Date
from the Agent or Issuer within the applicable timeframe (``Notice
Period'') set forth in the OA; and (ii) make technical and clarifying
changes relating to expired warrants/rights, as described in greater
detail below.
---------------------------------------------------------------------------
\5\ Available at www.dtcc.com/~/media/Files/Downloads/legal/
issue-eligibility/eligibility/operational-arrangements.pdf. Each
term not otherwise defined herein has its respective meaning as set
forth in the OA and in the Rules, By-Laws and Organization
Certificate of DTC (the ``Rules''), available at www.dtcc.com/legal/rules-and-procedures.aspx.
\6\ A warrant generally represents the right of the holder to
acquire common stock of an issuer at some future date at a specified
price. Warrants, by their terms, have an expiration date, i.e., the
date after which a holder can no longer exercise its rights under
the warrant, thereby rendering the warrant worthless.
\7\ A right generally represents an opportunity for stockholders
to buy new securities issued by a corporation in proportion to the
number of shares they own before the new shares are offered to the
public. Rights, by their terms, have an expiration date, i.e., the
date on which the subscription period under the rights offering
expires, thereby rendering the right worthless.
---------------------------------------------------------------------------
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
On November 21, 1990, DTC filed a rule change providing for the
deletion and disposal of a warrant/right whose Expiration Date had
passed (``Expired Warrant/Right'').\8\ The rule change provided that
DTC be permitted to delete and dispose of an Expired Warrant/Right
after DTC (i) obtains written confirmation from the Issuer or Agent
that the Expired Warrant/Right has expired and is null, void, and
worthless (the ``Confirmation''), and (ii) provides Participants with
thirty days' notice of the proposed deletion and disposal of the
Expired Warrant/Right. After thirty days, DTC is permitted to delete
the positions in the Expired Warrant/Right from Participants' accounts
and to dispose of the underlying certificates.
---------------------------------------------------------------------------
\8\ Securities Exchange Act Release No. 28642 (Nov. 21, 1990),
55 FR 49725 (Nov. 30, 1990) (SR-DTC-90-11).
---------------------------------------------------------------------------
Over the years, DTC has encountered difficulties in contacting the
Issuers or Agents of Expired Warrants/Rights and/or obtaining the
Confirmation from the Issuers or Agents. In addition to the
administrative burden on DTC to follow-up with Issuers and Agents, if
DTC does not receive the Confirmation from the Issuer or Agent of an
Expired Warrant/Right (i) the DTC books and records continue to reflect
the expired security, and (ii) the underlying certificates, if any,\9\
continue to be
[[Page 66922]]
maintained in the DTC vault. This exposes DTC to the unnecessary risks
and costs associated with the ongoing monitoring of positions and the
custody of certificates for worthless securities. In addition, the
positions in the Expired Warrant/Right remain credited to Participant
accounts and the Participants continue to be charged for their
positions in the Expired Warrant/Right.
---------------------------------------------------------------------------
\9\ Currently, warrants/rights are required to be part of the
FAST program (Fast Automated Securities Transfer) program. This
means that the Agent for a warrant/right, and not DTC, is
responsible for maintaining the physical certificates representing
the warrant/right. See OA, supra note 1, at 65.
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At the time of this filing, DTC maintains approximately 16,700
certificates in the vault and the associated Participant positions
representing approximately 890 CUSIPs of Expired Warrants/Rights for
which DTC did not obtain a Confirmation. DTC is also maintaining
Participant positions in certain Expired Warrants/Rights in the FAST
program for which DTC did not obtain a Confirmation.
(i) Proposed Rule Change
In order to reduce the burden, costs, and risks presented to DTC,
Participants, Agents and Issuers by requiring DTC to obtain a
Confirmation from the Issuer or Agent of an Expired Warrant/Right prior
to deletion and disposal, DTC is proposing to amend the OA to make the
following changes:
Notice of Extension of Expiration Date of Warrants/Rights: DTC is
proposing to amend the OA to revise the Notice Period from 15 (fifteen)
business days after the Expiration Date to ten (10) business days after
the Expiration Date for a warrant, and two (2) business days after the
Expiration Date for rights.\10\
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\10\ The fifteen (15) business day timeframe was established on
or around 2002, when notices of extension were required to be
physically mailed or telecopied to DTC. Given the technological
advances in the intervening years, and the current requirement that
an Issuer or Agent email a notice of extension to DTC, DTC believes
that a shorter Notice Period for warrants is appropriate. DTC
believes that a two (2) business day Notice Period for rights is
appropriate because the payment and allocation on exercised rights
typically occurs two business days after expiration date, after
which the rights offer can no longer be amended or extended.
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Further, pursuant to the proposed rule change, DTC would change the
email address to which such notice is required to be sent from
[email protected] to
[email protected].
Deletion and Disposal of Expired Warrants/Rights: DTC is proposing
to amend the OA to advise Issuers and Agents that if DTC has not
received a notice of extension for an Expired Warrant/Right within ten
(10) business days after the Expiration Date for a warrant or within
two (2) business days after the Expiration Date for rights, DTC may
delete all Participant positions and dispose of any underlying
certificates for the Expired Warrant/Right, without further instruction
or notice. In addition, DTC is proposing to insert an asterisked
footnote stating that with respect to expired warrants/rights with an
expiration date prior to August 1, 2023 (``aged expired warrants/
rights''), DTC will issue an Important Notice at least thirty (30) days
prior to deleting and disposing of an aged Expired Warrant/Right, and
the footnote will be automatically be deleted after DTC issues such
Important Notice(s) for all of the aged expired warrants/rights.
Finally, DTC is proposing to remove the language referencing the
requirement for the Issuer or Agent to provide a null, void, and
worthless declaration for Expired Warrants/Rights.
Reactivation of Expired Warrants/Rights: DTC is proposing to amend
the OA to replace and revise the language relating to reactivation of
Expired Warrants/Rights to (i) enhance the readability of the
requirements and (ii) change the email address to which a notice of
reactivation is required to be sent from
[email protected] to
[email protected].
2. Statutory Basis
Section 17A(b)(3)(F) of the Act requires, in part, that the Rules
be designed to promote the prompt and accurate clearance and settlement
of securities transactions.\11\ DTC believes that by amending the OA to
(i) permit DTC to delete the Participant positions and dispose of the
underlying certificates, if any, for an Expired Warrant/Right, provided
that DTC did not receive a notice of extension within the ten (10)
business days' Notice Period for a warrant or the two (2) business
days' Notice Period for rights, as applicable; and (ii) make technical
and clarifying changes to the OA with respect to Expired Warrants/
Rights, the proposed rule change would facilitate the ability of
Issuers, Agents, and Participants to understand their rights and
obligations relating to Expired Warrants/Rights and activity relating
thereto. Therefore, DTC believes that the proposed rule change is
designed to promote the prompt and accurate clearance and settlement of
securities transactions, consistent with section 17A(b)(3)(F) of the
Act, cited above.
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\11\ 15 U.S.C. 78q-1(b)(3)(F).
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Rule 17Ad-22(e)(11) under the Act \12\ requires, in part, that DTC
establish, implement, maintain and enforce written policies and
procedures reasonably designed to maintain securities in an immobilized
or dematerialized form for their transfer by book entry, ensure the
integrity of securities issues, and minimize and manage the risks
associated with the safekeeping and transfer of securities. DTC
believes that by amending the OA to permit DTC to delete all
Participant positions and dispose of any underlying certificates for an
Expired Warrant/Right, without further instruction or notice, provided
that DTC has not received a notice of extension for the Expired
Warrant/Right from the Issuer or Agent within the applicable Notice
Period, the proposed rule change would reduce the burden, costs, and
risks associated with the administration of the Confirmation process,
the recordkeeping of Participant positions in Expired Warrants/Rights,
and the custody of the physical certificates for Expired Warrants/
Rights. Based on the foregoing, DTC believes that the proposed rule
change is designed to enhance DTC's maintenance of Participants' book-
entry positions in warrants and rights, and its management and
reduction of the risks associated with the safekeeping of its physical
securities inventory, consistent with Rule 17Ad-22(e)(11) under the
Act, cited above.
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\12\ 17 CFR 240.17Ad-22(e)(11).
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(B) Clearing Agency's Statement on Burden on Competition
DTC believes that the proposed rule change to amend the OA to (i)
permit DTC to delete the Participant positions and dispose of the
underlying certificates, if any, for an Expired Warrant/Right, provided
that DTC did not receive a notice of extension within the ten (10)
business days' Notice Period for a warrant or the two (2) business
days' Notice Period for rights, as applicable; and (ii) make technical
and clarifying changes to the OA with respect to Expired Warrants/
Rights procedures, would not have any impact on competition.\13\ The
proposed rule change would merely streamline the processing of Expired
Warrants/Rights and would apply to all Issuers and Agents of Expired
Warrants/Rights and to all holders of Expired Warrants/Rights. In light
of the foregoing, DTC does not believe that the proposed rule change
would impose a burden on competition.\14\
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\13\ 15 U.S.C. 78q-1(b)(3)(I).
\14\ Id.
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[[Page 66923]]
(C) Clearing Agency's Statement on Comments on the Proposed Rule Change
Received From Members, Participants, or Others
DTC has not received or solicited any written comments relating to
this proposal. If any written comments are received, they would be
publicly filed as an Exhibit 2 to this filing, as required by Form 19b-
4 and the General Instructions thereto.
Persons submitting comments are cautioned that, according to
Section IV (Solicitation of Comments) of the Exhibit 1A in the General
Instructions to Form 19b-4, the Commission does not edit personal
identifying information from comment submissions. Commenters should
submit only information that they wish to make available publicly,
including their name, email address, and any other identifying
information.
All prospective commenters should follow the Commission's
instructions on how to submit comments, available at www.sec.gov/regulatory-actions/how-to-submit-comments. General questions regarding
the rule filing process or logistical questions regarding this filing
should be directed to the Main Office of the Commission's Division of
Trading and Markets at [email protected] or 202-551-5777.
DTC reserves the right to not respond to any comments received.
III. Date of Effectiveness of the Proposed Rule Change, and Timing for
Commission Action
Because the foregoing proposed rule change does not:
(i) significantly affect the protection of investors or the public
interest;
(ii) impose any significant burden on competition; and
(iii) become operative for 30 days from the date on which it was
filed, or such shorter time as the Commission may designate, it has
become effective pursuant to section 19(b)(3)(A) of the Act \15\ and
Rule 19b-4(f)(6) thereunder.\16\
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\15\ 15 U.S.C. 78s(b)(3)(A).
\16\ 17 CFR 240.19b-4(f)(6).
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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 [email protected]. Please include
file number SR-DTC-2023-009 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-2023-009. 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
a.m. and 3 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). Do not include
personal identifiable information in submissions; you should submit
only information that you wish to make available publicly. We may
redact in part or withhold entirely from publication submitted material
that is obscene or subject to copyright protection. All submissions
should refer to File Number SR-DTC-2023-009 and should be submitted on
or before October 19, 2023.
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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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-21137 Filed 9-27-23; 8:45 am]
BILLING CODE 8011-01-P
