82 FR 199 pgs. 48287-48289 - Self-Regulatory Organizations; The Depository Trust Company; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Eliminate a Surcharge for Eligibility Requests Submitted to DTC Two Days Prior to Closing Date
Type: NOTICEVolume: 82Number: 199Pages: 48287 - 48289
Pages: 48287, 48288, 48289Docket number: [Release No. 34-81854; File No. SR-DTC-2017-019]
FR document: [FR Doc. 2017-22391 Filed 10-16-17; 8:45 am]
Agency: Securities and Exchange Commission
Official PDF Version: PDF Version
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-81854; File No. SR-DTC-2017-019]
Self-Regulatory Organizations; The Depository Trust Company; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Eliminate a Surcharge for Eligibility Requests Submitted to DTC Two Days Prior to Closing Date
October 11, 2017.
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 October 2, 2017, 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)(2) thereunder.4 The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons.
Footnotes:
1 ?15 U.S.C. 78s(b)(1).
2 ?17 CFR 240.19b-4.
3 ?15 U.S.C. 78s(b)(3)(A).
4 ?17 CFR 240.19b-4(f)(2).
I. Clearing Agency's Statement of the Terms of Substance of the Proposed Rule Change
The proposed rule change?5 would revise the DTC Fee Schedule ("Fee Schedule")?6 to eliminate a fee charged to Participants that submit an eligibility request or required offering documents for a new issue ("Issue") of Securities two business days prior to the Closing Date ("Two-Day Surcharge"), as discussed below.
Footnotes:
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"), available at http://www.dtcc.com/legal/rules-and-procedures.aspx, and the DTC Operational Arrangements (Necessary for Securities to Become and Remain Eligible for DTC Services) ("OA"), available at http://www.dtcc.com/~/media/Files/Downloads/legal/issue-eligibility/eligibility/operational-arrangements.pdf .
6 ? Available at http://www.dtcc.com/~/media/Files/Downloads/legal/fee-guides/dtcfeeguide.pdf?la=en .
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
Background
The proposed rule change would revise the Fee Schedule?7 to eliminate the Two-Day Surcharge, as discussed below.
Footnotes:
7 ? Supra note 6.
[top] Participants?8 are required to provide an eligibility request for specified
Footnotes:
8 ?Only (i) Participants and (ii) underwriters with an approved correspondent relationship with a Participant, may request DTC eligibility for a new security being offered and distributed. It is therefore incumbent on an Issuer to have a relationship with an underwriter or other financial institution that is a Participant or is directly associated with a Participant that is willing to sponsor the eligibility process for the Issuer's securities. See OA, supra note 5 at 1-2.
9 ?"Issuer" is defined as an issuer of Securities deposited at DTC. See OA, supra note 5 at 1.
10 ?The eligibility request must contain the (i) identity of the lead underwriter, (ii) CUSIP number(s), (iii) principal/share amount, as applicable per CUSIP, and interest rates and maturity dates, as applicable per CUSIP. The preliminary offering document must be submitted and ( e.g., official statement, prospectus, offering memorandum) provide relevant information necessary for DTC to process the Issue ( e.g., Issuer name, description of the Security, denominations, name of the trustee, paying agent, transfer agent, and if applicable, other features of the Security, such as an early redemption). See Exhibit B of OA, supra note 5.
11 ? See OA, supra note 5 at 1-2.
12 ? See Exhibit B of OA, supra note 5.
13 ? See Fee Schedule, supra note 6 at 28.
Proposed Rule Change
After reviewing its cost structure relating to eligibility processing, DTC has determined that due to the development of enhanced systemic and processing efficiencies over time, the Two-Day Surcharge is no longer necessary to be charged in order to cover the cost of processing an eligibility request for a new Issue submitted two days prior to Closing Date. Therefore, DTC proposes to eliminate the Two-Day Surcharge and revise the Fee Schedule accordingly. The Closing Date and One-Day Surcharges would remain unchanged and continue to be charged to Participants to offset costs associated with more manually intensive processing associated with the timely processing of eligibility requests submitted on or one day before Closing Date, as applicable.
Effective Date of Proposed Rule Change
The proposed rule change would be effective on October 2, 2017.
2. Statutory Basis
Section 17A(b)(3)(D) of the Act?14 requires, in part, that the Rules provide for the equitable allocation of reasonable dues, fees, and other charges among its participants. DTC believes that the proposed rule change provides for the equitable allocation of fees charged to Participants, because elimination of the Two-Day Surcharge would apply to all Participants. In addition, DTC believes that the proposed change is reasonable, because the Two-Day Surcharge is no longer necessary to balance DTC revenue with its costs associated with processing of the applicable eligibility requests, as discussed above. Therefore, DTC believes that the proposed rule change is consistent with the requirements of Section 17A(b)(3)(D) of the Act.15
Footnotes:
14 ?15 U.S.C. 78q-1(b)(3)(D).
15 ? Id.
The proposed rule change is also designed to be consistent with Rule 17Ad-22(e)(23) of the Act.16 Rule 17Ad-22(e)(23) requires DTC, inter alia, to establish, implement, maintain and enforce written policies and procedures reasonably designed to provide sufficient information to enable participants to identify and evaluate the risks, fees, and other material costs they incur by participating in the covered clearing agency. The proposed rule change, as described above, would update the Fee Schedule to reflect the proposed elimination of the Two-Day Surcharge. As such, DTC believes that the proposed change would promote disclosure of relevant rules and material procedures and provide sufficient information to enable participants and other users of DTC's services to evaluate fees and other material costs of utilizing DTC's services, in accordance with the requirements of Rule 17Ad-22(e)(23), promulgated under the Act, cited above.
Footnotes:
16 ?17 CFR 240.17Ad-22(e)(23).
(B) Clearing Agency's Statement on Burden on Competition
DTC does not believe that the proposed rule change would have any impact on competition, because the Two-Day Surcharge is a minimal amount and its elimination should not have a material effect on (i) a determination by an underwriter on whether to submit an eligibility request for a new Issue or (ii) costs incurred by Participants in using DTC's eligibility services.
(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. 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?17 and paragraph (f) of Rule 19b-4 thereunder.18 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.
Footnotes:
17 ?15 U.S.C. 78s(b)(3)(A).
18 ?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 Submissions
• Use the Commission's Internet comment form ( http://www.sec.gov/rules/sro.shtml ); or
• Use the Commission's Internet comment form ( http://www.sec.gov/rules/sro.shtml ); or
• Send an email to rule-comments@sec.gov . Please include File Number SR-DTC-2017-019 on the subject line.
Paper Comments
• Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.
[top] All submissions should refer to File Number SR-DTC-2017-019. This file
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.19
Footnotes:
19 ?17 CFR 200.30-3(a)(12).
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-22391 Filed 10-16-17; 8:45 am]
BILLING CODE 8011-01-P