[Federal Register Volume 82, Number 108 (Wednesday, June 7, 2017)]
[Notices]
[Pages 26526-26529]
[FR Doc No: 2017-11748]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-80837; File No. SR-MIAX-2017-24]

Self-Regulatory Organizations; Miami International Securities
Exchange LLC; Notice of Filing of a Proposed Rule Change To Adopt
Exchange Rule 1713 Consolidated Audit Trail--Fee Dispute Resolution

June 1, 2017.
    Pursuant to the provisions of section 19(b)(1) of the Securities
Exchange Act of 1934 (``Act'' or the ``Exchange Act'') \1\ and Rule
19b-4 thereunder,\2\ notice is hereby given that, on May 23, 2017,
Miami International Securities Exchange, LLC (``MIAX Options'' or the
``Exchange'') filed with the Securities and Exchange Commission
(``SEC'' or the ``Commission'') a proposed rule change as described in
Items I and II 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.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change

    The Exchange is filing a proposal to adopt Exchange Rule 1713
(Consolidated Audit Trail--Fee Dispute Resolution) to establish the
procedures for resolving potential disputes related to CAT Fees charged
to Industry Members.\3\ The text of the proposed rule change is
available on the Exchange's Web site at http://www.miaxoptions.com/rule-filings, at MIAX's principal office, and at the Commission's
Public Reference Room.
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    \3\ Unless otherwise specified, capitalized terms used in this
rule filing are defined as set forth herein or in the Consolidated
Audit Trail Funding Fees Rule, the CAT Compliance Rule Series or in
the CAT NMS Plan.
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II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
sections A, B, and C below, of the most significant aspects of such
statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule Change

1. Purpose
    Bats BYX Exchange, Inc., Bats BZX Exchange, Inc., Bats EDGA
Exchange, Inc., Bats EDGX Exchange, Inc., BOX Options Exchange LLC, C2
Options Exchange, Incorporated, Chicago Board Options Exchange,
Incorporated, Chicago Stock Exchange, Inc., Financial Industry
Regulatory Authority, Inc. (``FINRA''), Investors' Exchange LLC, Miami
International Securities Exchange, LLC, MIAX PEARL, LLC, NASDAQ BX,
Inc., Nasdaq GEMX, LLC, Nasdaq ISE, LLC, Nasdaq MRX, LLC,\4\ NASDAQ
PHLX LLC, The NASDAQ Stock Market LLC, New York Stock Exchange LLC,
NYSE MKT LLC, NYSE Arca, Inc. and NYSE National, Inc.\5\ (collectively,
the ``Participants'') filed with the Commission, pursuant to section
11A of the Exchange Act \6\ and Rule 608 of Regulation NMS
thereunder,\7\ the National Market System Plan Governing the
Consolidated Audit Trail (the ``CAT NMS Plan'' or ``Plan'').\8\ The
Participants filed the Plan to comply with Rule 613 of Regulation NMS
under the Exchange Act. The Plan was published for comment in the
Federal Register on May 17, 2016,\9\ and approved by the Commission, as
modified, on November 15, 2016.\10\ The Plan is designed to create,
implement and maintain a consolidated audit trail (``CAT'') that would
capture customer and order event information for orders in NMS
Securities and OTC Equity Securities, across all markets, from the time
of order inception through routing, cancellation, modification, or
execution in a single consolidated data source. The Plan accomplishes
this by creating CAT NMS, LLC (the ``Company''), of which each
Participant is a member, to operate the CAT.\11\ Under the CAT NMS
Plan, the Operating Committee of the Company (``Operating Committee'')
has discretion to establish funding for the Company to operate the CAT,
including establishing fees that the Participants will pay, and
establishing fees for Industry Members that will be implemented by the
Participants (``CAT Fees'').\12\ The Participants are required to file
with the SEC under section 19(b) of the Exchange Act any such CAT Fees
applicable to Industry Members that the Operating Committee
approves.\13\ Accordingly, the Exchange has filed with the SEC to adopt
the Consolidated Audit Trail Funding Fees, which will require Industry
Members that are Exchange members to pay the CAT Fees determined by the
Operating Committee.\14\ The Exchange submits this rule filing to adopt
Rule 1713 (Consolidated Audit Trail--Fee Dispute Resolution) to
establish the procedures for resolving potential disputes related to
CAT Fees charged to Industry Members. Proposed Rule 1713 is described
below.
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    \4\ ISE Gemini, LLC, ISE Mercury, LLC and International
Securities Exchange, LLC have been renamed Nasdaq GEMX, LLC, Nasdaq
MRX, LLC, and Nasdaq ISE, LLC, respectively. See Securities Exchange
Act Rel. No. 80248 (Mar. 15, 2017), 82 FR 14547 (Mar. 21, 2017);
Securities Exchange Act Rel. No. 80326 (Mar. 29, 2017), 82 FR 16460
(Apr. 4, 2017); and Securities Exchange Act Rel. No. 80325 (Mar. 29,
2017), 82 FR 16445 (Apr. 4, 2017).
    \5\ National Stock Exchange, Inc. has been renamed NYSE
National, Inc. See Securities Exchange Act Rel. No. 79902 (Jan. 30,
2017), 82 FR 9258 (Feb. 3, 2017).
    \6\ 15 U.S.C. 78k-1.
    \7\ 17 CFR 242.608.
    \8\ See Letter from the Participants to Brent J. Fields,
Secretary, Commission, dated September 30, 2014; and Letter from
Participants to Brent J. Fields, Secretary, Commission, dated
February 27, 2015. On December 24, 2015, the Participants submitted
an amendment to the CAT NMS Plan. See Letter from Participants to
Brent J. Fields, Secretary, Commission, dated December 23, 2015.
    \9\ See Securities Exchange Act Rel. No. 77724 (Apr. 27, 2016),
81 FR 30614 (May 17, 2016).
    \10\ See Securities Exchange Act Rel. No. 79318 (Nov. 15, 2016),
81 FR 84696 (Nov. 23, 2016) (``Approval Order'').
    \11\ The Plan also serves as the limited liability company
agreement for the Company.
    \12\ Section 11.1(b) of the CAT NMS Plan.
    \13\ Id.
    \14\ See Securities Exchange Act Rel. No. 80675 (May 15, 2017),
82 FR 23100 (May 19, 2017) (SR-MIAX-2017-18).
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(1) Definitions
    Paragraph (a) of Proposed Rule 1713 sets forth the definitions for
Proposed Rule 1713. Paragraph (a)(1) of Proposed Rule 1713 states that,
for purposes of

Rule 1713, the terms ``CAT NMS Plan'', ``Industry Member'', ``Operating
Committee'', and ``Participant'' are defined as set forth in the Rule
1701 (Consolidated Audit Trail Compliance Rule--Definitions), and the
term ``CAT Fee'' is defined as set forth in the Consolidated Audit
Trail Funding Fees. In addition, the Exchange proposes to add paragraph
(a)(2) to Proposed Rule 1713. New paragraph (a)(2) would define the
term ``Subcommittee'' to mean a subcommittee designated by the
Operating Committee pursuant to the CAT NMS Plan. This definition is
the same substantive definition as set forth in section 1.1 of the CAT
NMS Plan.
(2) Fee Dispute Resolution
    Section 11.5 of the CAT NMS Plan requires Participants to adopt
rules requiring that disputes with respect to fees charged to Industry
Members pursuant to the CAT NMS Plan be determined by the Operating
Committee or Subcommittee. Section 11.5 of the CAT NMS Plan also states
that decisions by the Operating Committee or Subcommittee on such
matters shall be binding on Industry Members, without prejudice to the
right of any Industry Member to seek redress from the SEC pursuant to
SEC Rule 608 or in any other appropriate forum. The Exchange proposes
to adopt paragraph (b) of Proposed Rule 1713. Paragraph (b) of Proposed
Rule 1713 states that disputes initiated by an Industry Member with
respect to CAT Fees charged to such Industry Member pursuant to the
Consolidated Audit Trail Funding Fees, including disputes related to
the designated tier and the fee calculated pursuant to such tier, shall
be resolved by the Operating Committee, or a Subcommittee designated by
the Operating Committee, of the CAT NMS Plan, pursuant to the Fee
Dispute Resolution Procedures adopted pursuant to the CAT NMS Plan and
set forth in paragraph (c) of Proposed Rule 1713. Decisions on such
matters shall be binding on Industry Members, without prejudice to the
rights of any such Industry Member to seek redress from the SEC or in
any other appropriate forum.
    The Operating Committee has adopted ``Fee Dispute Resolution
Procedures'' governing the manner in which disputes regarding CAT Fees
charged pursuant to the Consolidated Audit Trail Funding Fees will be
addressed. These Fee Dispute Resolution Procedures, as they relate to
Industry Members, are set forth in paragraph (c) of Proposed Rule 1713.
Specifically, the Fee Dispute Resolution Procedures provide the
procedure for Industry Members that dispute CAT Fees charged to such
Industry Member pursuant to one or more of the Participants'
Consolidated Audit Trail Funding Fees Rules, including disputes related
to the designated tier and the fee calculated pursuant to such tier, to
apply for an opportunity to be heard and to have the CAT Fees charged
to such Industry Member reviewed. The Procedures are modeled after the
adverse action procedures adopted by various exchanges,\15\ and will be
posted on the Web site for the CAT NMS Plan Web site.\16\
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    \15\ See, e.g., Chapter X of BATS BZX Exchange, Inc. (Adverse
Action); and Chapter X of NYSE National, Inc. (Adverse Action).
    \16\ The CAT NMS Plan Web site is www.catnmsplan.com.
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    Under these Procedures, an Industry Member that disputes CAT Fees
charged to such Industry Member and that desires to have an opportunity
to be heard with respect to such disputed CAT Fees must file a written
application with the Company within 15 business days after being
notified of such disputed CAT Fees. The application must identify the
disputed CAT Fees, state the specific reasons why the applicant takes
exception to such CAT Fees, and set forth the relief sought. In
addition, if the applicant intends to submit any additional documents,
statements, arguments or other material in support of the application,
the same should be so stated and identified.
    The Company will refer applications for hearing and review promptly
to the Subcommittee designated by the Operating Committee pursuant to
section 4.12 of the CAT NMS Plan with responsibility for conducting the
reviews of CAT Fee disputes pursuant to these Procedures. This
Subcommittee will be referred to as the Fee Review Subcommittee. The
members of the Fee Review Subcommittee will be subject to the
provisions of section 4.3(d) of the CAT NMS Plan regarding recusal and
Conflicts of Interest. The Fee Review Subcommittee will keep a record
of the proceedings.
    The Fee Review Subcommittee will hold hearings promptly. The Fee
Review Subcommittee will set a hearing date. The parties to the hearing
shall furnish the Fee Review Subcommittee with all materials relevant
to the proceedings at least 72 hours prior to the date of the hearing.
Each party will have the right to inspect and copy the other party's
materials prior to the hearing.
    The parties to the hearing will consist of the applicant and a
representative of the Company who shall present the reasons for the
action taken by the Company that allegedly aggrieved the applicant. The
applicant is entitled to be accompanied, represented and advised by
counsel at all stages of the proceedings.
    The Fee Review Subcommittee will determine all questions concerning
the admissibility of evidence and will otherwise regulate the conduct
of the hearing. Each of the parties will be permitted to make an
opening statement, present witnesses and documentary evidence, cross
examine opposing witnesses and present closing arguments orally or in
writing as determined by the Fee Review Subcommittee. The Fee Review
Subcommittee also will have the right to question all parties and
witnesses to the proceeding. The Fee Review Subcommittee must keep a
record of the hearing. The formal rules of evidence will not apply.
    The Fee Review Subcommittee must set forth its decision in writing
and send the written decision to the parties to the proceeding. Such
decisions will contain the reasons supporting the conclusions of the
Fee Review Subcommittee.
    The decision of the Fee Review Subcommittee will be subject to
review by the Operating Committee either on its own motion within 20
business days after issuance of the decision or upon written request
submitted by the applicant within 15 business days after issuance of
the decision. The applicant's petition must be in writing and must
specify the findings and conclusions to which the applicant objects,
together with the reasons for such objections. Any objection to a
decision not specified in writing will be considered to have been
abandoned and may be disregarded. Parties may petition to submit a
written argument to the Operating Committee and may request an
opportunity to make an oral argument before the Operating Committee.
The Operating Committee will have sole discretion to grant or deny
either request.
    The Operating Committee will conduct the review. The review will be
made upon the record and will be made after such further proceedings,
if any, as the Operating Committee may order. Based upon such record,
the Operating Committee may affirm, reverse or modify, in whole or in
part, the decision of the Fee Review Subcommittee. The decision of the
Operating Committee will be in writing, will be sent to the parties to
the proceeding and will be final.
    The Procedures state that a final decision regarding the disputed
CAT Fees by the Operating Committee, or the

Fee Review Subcommittee (if there is no review by the Operating
Committee), must be provided within 90 days of the date on which the
Industry Member filed a written application regarding disputed CAT Fees
with the Company. The Operating Committee may extend the 90-day time
limit at its discretion.
    In addition, the Procedures state that any notices or other
documents may be served upon the applicant either personally or by
leaving the same at its, his or her place of business or by deposit in
the United States post office, postage prepaid, by registered or
certified mail, addressed to the applicant at its, his or her last
known business or residence address. The Procedures also state that any
time limits imposed under the Procedures for the submission of answers,
petitions or other materials may be extended by permission of the
Operating Committee. All papers and documents relating to review by the
Fee Review Subcommittee or the Operating Committee must be submitted to
the Fee Review Subcommittee or Operating Committee, as applicable.
    The Procedures also note that decisions on such CAT Fee disputes
made pursuant to these Procedures will be binding on Industry Members,
without prejudice to the rights of any such Industry Member to seek
redress from the SEC or in any other appropriate forum.
    Finally, an Industry Member that files a written application with
the Company regarding disputed CAT Fees in accordance with these
Procedures is not required to pay such disputed CAT Fees until the
dispute is resolved in accordance with these Procedures, including any
review by the SEC or in any other appropriate forum. For these
purposes, the disputed CAT Fees means the amount of the invoiced CAT
Fees that the Industry Member has asserted pursuant to these Procedures
that such Industry Member does not owe to the Company. The Industry
Member must pay any invoiced CAT Fees that are not disputed CAT Fees
when due as set forth in the original invoice.
    Once the dispute regarding CAT Fees is resolved pursuant to these
Procedures, if it is determined that the Industry Member owes any of
the disputed CAT Fees, then the Industry Member must pay such disputed
CAT Fees that are owed as well as interest on such disputed CAT Fees
from the original due date (that is, 30 days after receipt of the
original invoice of such CAT Fees) until such disputed CAT Fees are
paid at a per annum rate equal to the lesser of (i) the Prime Rate plus
300 basis points, or (ii) the maximum rate permitted by applicable law.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent
with section 6(b) of the Act \17\ in general, and furthers the
provisions of section 6(b)(5) of the Act \18\ in particular, in that it
is designed to prevent fraudulent and manipulative acts and practices,
to promote just and equitable principles of trade, to foster
cooperation and coordination with persons engaged in facilitating
transactions in securities, to remove impediments to and perfect the
mechanisms of a free and open market and a national market system and,
in general, to protect investors and the public interest, and is not
designed to permit unfair discrimination between customers, issuers,
brokers and dealers. The Exchange believes that the proposed rule
change is consistent with the provisions of section 6(b)(4) of the
Act,\19\ which requires that Exchange rules provide for the equitable
allocation of reasonable dues, fees, and other charges among members,
issuers and other persons using its facilities.
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    \17\ 15 U.S.C. 78f(b).
    \18\ 15 U.S.C. 78f(b)(5).
    \19\ 15 U.S.C. 78f(b)(4).
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    The Exchange believes that this proposal is consistent with the Act
because it implements, interprets or clarifies section 11.5 of the
Plan, and is designed to assist the Exchange and its Industry Members
in meeting regulatory obligations pursuant to the Plan. In approving
the Plan, the SEC noted that the Plan ``is necessary and appropriate in
the public interest, for the protection of investors and the
maintenance of fair and orderly markets, to remove impediments to, and
perfect the mechanism of a national market system, or is otherwise in
furtherance of the purposes of the Act.'' \20\ To the extent that this
proposal implements, interprets or clarifies the Plan and applies
specific requirements to Industry Members, the Exchange believes that
this proposal furthers the objectives of the Plan, as identified by the
SEC, and is therefore consistent with the Act.
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    \20\ Approval Order at 84697.
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will
result in any burden on competition that is not necessary or
appropriate in furtherance of the purposes of the Act. The Exchange
notes that the proposed rule change implements section 11.5 of the CAT
NMS Plan approved by the Commission, and is designed to assist the
Exchange in meeting its regulatory obligations pursuant to the Plan.
Similarly, all national securities exchanges and FINRA are proposing
this proposed rule to implement the requirements of the CAT NMS Plan.
Therefore, this is not a competitive rule filing, and, therefore, it
does not raise competition issues between and among the exchanges and
FINRA.

C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others

    Written comments were neither solicited nor received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action

    Within 45 days of the date of publication of this notice in the
Federal Register or within such longer period up to 90 days (i) as the
Commission may designate if it finds such longer period to be
appropriate and publishes its reasons for so finding or (ii) as to
which the Exchange consents, the Commission will:
    (A) By order approve or disapprove such proposed rule change, or
    (B) institute proceedings to determine whether the proposed rule
change should be disapproved.

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 (http://www.sec.gov/rules/sro.shtml); or
     Send an email to<EMAIL_ADDRESS>Please include
File Number SR-MIAX-2017-24 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.

All submissions should refer to File Number SR-MIAX-2017-24. 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 Web site (http://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 Web site
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 the
Exchange. All comments received will be posted without change; the
Commission does not edit personal identifying information from
submissions. You should submit only information that you wish to make
available publicly. All submissions should refer to File Number SR-
MIAX-2017-24, and should be submitted on or before June 28, 2017.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\21\
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    \21\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-11748 Filed 6-6-17; 8:45 am]
BILLING CODE 8011-01-P


[Federal Register Volume 79, Number 182 (Friday, September 19, 2014)]
[Notices]
[Page 56418]
[FR Doc No: 2014-22337]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-73101; File No. SR-BATS-2014-028]

Self-Regulatory Organizations; BATS Exchange, Inc.; Notice of
Designation of a Longer Period for Commission Action on a Proposed Rule
Change To Establish a New Market Data Product Called the BATS One Feed

September 15, 2014.
    On July 14, 2014, BATS Exchange, Inc. (``Exchange'' or ``BATS'')
filed with the Securities and Exchange Commission (``Commission''),
pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ a proposed rule change to
establish a new market data product called the BATS One Feed. The
proposed rule change was published for comment in the Federal Register
on August 1, 2014.\3\ Two comments on the proposal have been
received.\4\
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 72688 (July 28,
2014), 79 FR 44941.
    \4\ See Letter from Sal Arnuk and Joe Saluzzi, Themis Trading
LLC, to Elizabeth M. Murphy, Secretary, Commission, dated August 21,
2014; Letter from Ira D. Hammerman, General Counsel, SIFMA, to Kevin
M. O'Neill, Deputy Secretary, Commission, dated August 22, 2014.
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    Section 19(b)(2) of the Act \5\ provides that, within 45 days of
the publication of notice of the filing of a proposed rule change, or
within such longer period up to 90 days as the Commission may designate
if it finds such longer period to be appropriate and publishes its
reasons for so finding, or as to which the self-regulatory organization
consents, the Commission shall either approve the proposed rule change,
disapprove the proposed rule change, or institute proceedings to
determine whether the proposed rule change should be disapproved. The
Commission is extending this 45-day time period.
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    \5\ 15 U.S.C. 78s(b)(2).
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    The Commission finds that it is appropriate to designate a longer
period within which to take action on the proposed rule change so that
it has sufficient time to consider the proposed rule change and the
comments received. Accordingly, the Commission, pursuant to Section
19(b)(2) of the Act,\6\ designates October 30, 2014, as the date by
which the Commission shall either approve or disapprove or institute
proceedings to determine whether to disapprove the proposed rule change
(File No. SR-BATS-2014-028).
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    \6\ Id.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\7\
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    \7\ 17 CFR 200.30-3(a)(57).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-22337 Filed 9-18-14; 8:45 am]
BILLING CODE 8011-01-P


[Federal Register Volume 86, Number 33 (Monday, February 22, 2021)]
[Notices]
[Pages 10606-10608]
[FR Doc No: 2021-03455]

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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 34195; 812-15160]

Strategas Trust and Strategas Securities, LLC

February 16, 2021.
AGENCY: Securities and Exchange Commission (``Commission'').

ACTION: Notice.

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    Notice of an application under (a) section 6(c) of the Investment
Company Act of 1940 (``Act'') for an exemption from sections 2(a)(32),
2(a)(35), 14(a), 19(b), 22(d) and 26(a)(2)(C) of the Act and rules 19b-
1 and rule 22c-1 thereunder and (b) sections 11(a) and 11(c) of the Act
for approval of certain exchange and rollover privileges.

APPLICANTS: Strategas Securities, LLC (``Strategas'') and Strategas
Trust.\1\
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    \1\ Applicants also request relief for future registered unit
investment trusts (collectively, with Strategas Trust, the
``Trusts'') and series of the Trusts (``Series'') that are sponsored
by Strategas or any entity controlling, controlled by or under
common control with Strategas or any successor in interest to any
such entity (together with Strategas, the ``Depositor''). Any
existing or future entity that relies on the requested order will
comply with the terms and conditions of the application. All
existing entities that currently intend to rely on the requested
order are named as applicants.

SUMMARY OF APPLICATION: Applicants request an order to permit certain
unit investment trusts (``UIT'') to: (a) Impose sales charges on a
deferred basis and waive the deferred sales charge in certain cases;
(b) offer unitholders certain exchange and rollover options; (c)
publicly offer units without requiring the Depositor to take for its
own account $100,000 worth of units; and (d) distribute capital gains
resulting from the sale of portfolio securities within a reasonable
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time after receipt.

FILING DATES: The application was filed on September 18, 2020, and
amended on January 5, 2021.

HEARING OR NOTIFICATION OF HEARING: An order granting the requested
relief will be issued unless the Commission orders a hearing.
Interested persons may request a hearing by emailing the Commission's
exception occurred on : 2021-03455.htm
exception occurred on : 2021-03455.htm
Secretary at Secretary[email protected] and serving applicants with a
copy of the request, by mail. Hearing requests should be received by
the Commission by 5:30 p.m. on March 15, 2021, and should be
accompanied by proof of service on the applicants, in the form of an
affidavit, or, for lawyers, a certificate of service. Pursuant to rule
0-5 under the Act, hearing requests should state the nature of the
writer's interest, any facts bearing upon the desirability of a hearing
on the matter, the reason for the request, and the issues contested.
Persons who wish to be notified of a hearing may request notification
by emailing the Commission's Secretary at<EMAIL_ADDRESS>
ADDRESSES: The Commission<EMAIL_ADDRESS>Applicants: Gus
Demopolous, Strategas Trust, 52 Vanderbilt Avenue, 8th Floor, New York,
NY 10017 and Bradley Berman and Anna T. Pinedo, Mayer Brown LLP, 1221
Avenue of the Americas, New York, NY 10020-1001.

FOR FURTHER INFORMATION CONTACT: Laura L. Solomon, Senior Counsel, at
(202) 551-6915, or Kaitlin C. Bottock, Branch Chief, at<PHONE_NUMBER>
(Division of Investment Management, Chief Counsel's Office).

SUPPLEMENTARY INFORMATION: The following is a summary of the
application. The complete application may be obtained via the
Commission's website by searching for the file number, or an applicant
using the Company name box, at http://www.sec.gov/search/search.htm or
by calling<PHONE_NUMBER>.

Applicants' Representations

    1. Strategas Trust and any future Trust will be a UIT registered
under the Act. Strategas, a limited liability company, is registered
under the Securities Exchange Act of 1934 as a broker-dealer and will
be the Depositor of Strategas Trust. Each Series will be created by a
trust agreement between the Depositor, the evaluator, and a banking
institution or trust company as trustee.
    2. The Depositor acquires a portfolio of securities, which it
deposits with the series trustee (``Trustee'') in exchange for
certificates representing units of fractional undivided interest in the
Series' portfolio (``Units''). The Units are offered to the public
through the Depositor and dealers at a price which, during the initial
offering period, is based upon the aggregate market value of the
underlying securities, or, the aggregate offering side evaluation of
the underlying securities if the underlying securities are not listed
on a securities exchange, plus a front-end sales charge, a deferred
sales charge or both. The maximum sales charge may be reduced in
compliance with rule 22d-1 under the Act in certain circumstances,
which are disclosed in the Series' prospectus.
    3. The Depositor may, but is not legally obligated to, maintain a
secondary market for Units of an outstanding Series. Other broker-
dealers may or may not maintain a secondary market for Units of a
Series. If a secondary market is maintained, investors will be able to
purchase Units on the secondary market at the current public offering
price plus a front-end sales charge. If such a market is not maintained
at any time for any Series, holders of the Units (``Unitholders'') of
that Series may redeem their Units through the Trustee.

A. Deferred Sales Charge and Waiver of Deferred Sales Charge Under
Certain Circumstances

    1. Applicants request an order to the extent necessary to permit
one or more Series to impose a sales charge on a deferred basis
(``DSC''). For each Series, the Depositor would set a maximum sales
charge per Unit, a portion of which may be collected ``up front''
(i.e., at the time an investor purchases the Units). The DSC would be
collected subsequently in installments (``Installment Payments'') as
described in the application. The Depositor would not add any amount
for interest or any similar or related charge to adjust for such
deferral.
    2. When a Unitholder redeems or sells Units, the Depositor intends
to deduct any unpaid DSC from the redemption or sale proceeds. When
calculating the amount due, the Depositor will assume that Units on
which the DSC has been paid in full are redeemed or sold first. With
respect to Units on which the DSC has not been paid in full, the
Depositor will assume that the Units held for the longest time are
redeemed or sold first. Applicants represent that the DSC collected at
the time of redemption or sale, together with the Installment Payments
and any amount collected up front, will not exceed the maximum sales
charge per Unit. Under certain circumstances, the Depositor may waive
the collection of any unpaid DSC in connection with redemptions or
sales of Units. These circumstances will be disclosed in the prospectus
for the relevant Series and implemented in accordance with rule 22d-1
under the Act.
    3. Each Series offering Units subject to a DSC will state the
maximum charge

per Unit in its prospectus. In addition, the prospectus for such Series
will include the table required by Form N-1A (modified as appropriate
to reflect the difference between UITs and open-end management
investment companies) and a schedule setting forth the number and date
of each Installment Payment, along with the duration of the collection
period. The prospectus also will disclose that portfolio securities may
be sold to pay the DSC if distribution income is insufficient and that
securities will be sold pro rata, if practicable, otherwise a specific
security will be designated for sale.

B. Exchange Option and Rollover Option

    1. Applicants request an order to the extent necessary to permit
Unitholders of a Series to exchange their Units for Units of another
Series (``Exchange Option'') and Unitholders of a Series that is
terminating to exchange their Units for Units of a new Series of the
same type (``Rollover Option''). The Exchange Option and Rollover
Option would apply to all exchanges of Units sold with a front-end
sales charge, a DSC or both.
    2. A Unitholder who purchases Units under the Exchange Option or
Rollover Option would pay a lower sales charge than that which would be
paid for the Units by a new investor. The reduced sales charge will be
reasonably related to the expenses incurred in connection with the
administration of the DSC program, which may include an amount that
will fairly and adequately compensate the Depositor and participating
underwriters and brokers for their services in providing the DSC
program.

Applicants' Legal Analysis

A. DSC and Waiver of DSC

    1. Section 4(2) of the Act defines a ``unit investment trust'' as
an investment company that issues only redeemable securities. Section
2(a)(32) of the Act defines a ``redeemable security'' as a security
that, upon its presentation to the issuer, entitles the holder to
receive approximately his or her proportionate share of the issuer's
current net assets or the cash equivalent of those assets. Rule 22c-1
under the Act requires that the price of a redeemable security issued
by a registered investment company for purposes of sale, redemption or
repurchase be based on the security's current net asset value
(``NAV''). Because the collection of any unpaid DSC may cause a
redeeming Unitholder to receive an amount less than the NAV of the
redeemed Units, applicants request relief from section 2(a)(32) and
rule 22c-1.
    2. Section 22(d) of the Act and rule 22d-1 under the Act require a
registered investment company and its principal underwriter and dealers
to sell securities only at the current public offering price described
in the investment company's prospectus, with the exception of sales of
redeemable securities at prices that reflect scheduled variations in
the sales load. Section 2(a)(35) of the Act defines the term ``sales
load'' as the difference between the sales price and the portion of the
proceeds invested by the depositor or trustee. Applicants request
relief from section 2(a)(35) and section 22(d) to permit waivers,
deferrals or other scheduled variations of the sales load.
    3. Under section 6(c) of the Act, the Commission may exempt classes
of transactions, if and to the extent that such exemption is necessary
or appropriate in the public interest and consistent with the
protection of investors and the purposes fairly intended by the policy
and provisions of the Act. Applicants state that their proposal meets
the standards of section 6(c). Applicants state that the provisions of
section 22(d) are intended to prevent (a) riskless trading in
investment company securities due to backward pricing, (b) disruption
of orderly distribution by dealers selling shares at a discount, and
(c) discrimination among investors resulting from different prices
charged to different investors. Applicants assert that the proposed DSC
program will present none of these abuses. Applicants further state
that all scheduled variations in the sales load will be disclosed in
the prospectus of each Series and applied uniformly to all investors,
and that applicants will comply with all the conditions set forth in
rule 22d-1.
    4. Section 26(a)(2)(C) of the Act, in relevant part, prohibits a
trustee or custodian of a UIT from collecting from the trust as an
expense any payment to the trust's depositor or principal underwriter.
Because the Trustee's payment of the DSC to the Depositor may be deemed
to be an expense under section 26(a)(2)(C), applicants request relief
under section 6(c) from section 26(a)(2)(C) to the extent necessary to
permit the Trustee to collect Installment Payments and disburse them to
the Depositor. Applicants submit that the relief is appropriate because
the DSC is more properly characterized as a sales load.

B. Exchange Option and Rollover Option

    1. Sections 11(a) and 11(c) of the Act prohibit any offer of
exchange by a UIT for the securities of another investment company
unless the terms of the offer have been approved in advance by the
Commission. Applicants request an order under sections 11(a) and 11(c)
for Commission approval of the Exchange Option and the Rollover Option.

C. Net Worth Requirement

    1. Section 14(a) of the Act requires that a registered investment
company have $100,000 of net worth prior to making a public offering.
Applicants state that each Series will comply with this requirement
because the Depositor will deposit more than $100,000 of securities.
Applicants assert, however, that the Commission has interpreted section
14(a) as requiring that the initial capital investment in an investment
company be made without any intention to dispose of the investment.
Applicants state that, under this interpretation, a Series would not
satisfy section 14(a) because of the Depositor's intention to sell all
the Units of the Series.
    2. Rule 14a-3 under the Act exempts UITs from section 14(a) if
certain conditions are met, one of which is that the UIT invest only in
``eligible trust securities,'' as defined in the rule. Applicants state
that they may not rely on rule 14a-3 because certain Series
(collectively, ``Structured Series'') will invest all or a portion of
their assets in equity securities, debt securities, FLexible
EXchange[supreg] Options (``FLEX Options'') \2\, or other assets which
do not satisfy the definition of eligible trust securities.
---------------------------------------------------------------------------

    \2\ Applicants state that a Structured Series will invest in
FLEX Options with expiration dates that coincide with the Structured
Series' maturity date and any relief granted from the provisions of
sections 14(a) and 19(b) of the Act and rule 19b-1 under the Act
included in the requested order will not extend to any Series that
intends to hold a derivative security other than FLEX Options.
---------------------------------------------------------------------------

    3. Applicants request an exemption under section 6(c) of the Act to
the extent necessary to exempt the Structured Series from the net worth
requirement in section 14(a). Applicants state that the Series and the
Depositor will comply in all respects with the requirements of rule
14a-3, except that the Structured Series will not restrict their
portfolio investments to ``eligible trust securities.''

D. Capital Gains Distribution

    1. Section 19(b) of the Act and rule 19b-1 under the Act provide
that, except under limited circumstances, no registered investment
company may

distribute long-term gains more than once every twelve months. Rule
19b-1(c), under certain circumstances, exempts a UIT investing in
eligible trust securities (as defined in rule 14a-3) from the
requirements of rule 19b-1. Because the Structured Series do not limit
their investments to eligible trust securities, however, the Structured
Series will not qualify for the exemption in paragraph (c) of rule 19b-
1. Applicants therefore request an exemption under section 6(c) from
section 19(b) and rule 19b-1 to the extent necessary to permit capital
gains earned in connection with the sale of portfolio securities to be
distributed to Unitholders along with the Structured Series' regular
distributions. In all other respects, applicants will comply with
section 19(b) and rule 19b-1.
    2. Applicants state that their proposal meets the standards of
section 6(c). Applicants assert that any sale of portfolio securities
would be triggered by the need to meet Trust expenses, Installment
Payments, or by redemption requests, events over which the Depositor
and the Structured Series do not have control. Applicants further state
that, because principal distributions must be clearly indicated in
accompanying reports to Unitholders as a return of principal and will
be relatively small in comparison to normal dividend distributions,
there is little danger of confusion from failure to differentiate among
distributions.

Applicants' Conditions

    Applicants agree that any order granting the requested relief will
be subject to the following conditions:

A. DSC Relief and Exchange and Rollover Options

    1. Whenever the Exchange Option or Rollover Option is to be
terminated or its terms are to be amended materially, any holder of a
security subject to that privilege will be given prominent notice of
the impending termination or amendment at least 60 days prior to the
date of termination or the effective date of the amendment, provided
that: (a) No such notice need be given if the only material effect of
an amendment is to reduce or eliminate the sales charge payable at the
time of an exchange, to add one or more new Series eligible for the
Exchange Option or the Rollover Option, or to delete a Series which has
terminated; and (b) no notice need be given if, under extraordinary
circumstances, either (i) there is a suspension of the redemption of
Units of the Series under section 22(e) of the Act and the rules and
regulations promulgated thereunder, or (ii) a Series temporarily delays
or ceases the sale of its Units because it is unable to invest amounts
effectively in accordance with applicable investment objectives,
policies and restrictions.
    2. An investor who purchases Units under the Exchange Option or
Rollover Option will pay a lower sales charge than that which would be
paid for the Units by a new investor.
    3. The prospectus of each Series offering exchanges or rollovers
and any sales literature or advertising that mentions the existence of
the Exchange Option or Rollover Option will disclose that the Exchange
Option and the Rollover Option are subject to modification, termination
or suspension without notice, except in certain limited cases.
    4. Any DSC imposed on a Series' Units will comply with the
requirements of subparagraphs (1), (2) and (3) of rule 6c-10(a) under
the Act.
    5. Each Series offering Units subject to a DSC will include in its
prospectus the disclosure required by Form N-1A relating to deferred
sales charges (modified as appropriate to reflect the differences
between UITs and open-end management investment companies) and a
schedule setting forth the number and date of each Installment Payment.

B. Net Worth Requirement

    Applicants will comply in all respects with the requirements of
rule 14a-3 under the Act, except that the Structured Series will not
restrict their portfolio investments to ``eligible trust securities.''

    For the Commission, by the Division of Investment Management,
under delegated authority.

J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-03455 Filed 2-19-21; 8:45 am]
BILLING CODE 8011-01-P


[Federal Register Volume 81, Number 217 (Wednesday, November 9, 2016)]
[Notices]
[Pages 78884-78890]
[FR Doc No: 2016-27030]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-79224; File No. SR-DTC-2016-802]

Self-Regulatory Organizations; The Depository Trust Company;
Notice of Filing of and Extension of Review Period of Advance Notice
Relating to Processing of Transactions in Money Market Instruments

November 3, 2016.
    Pursuant to Section 806(e)(1) of Title VIII of the Dodd-Frank Wall
Street Reform and Consumer Protection Act entitled the Payment,
Clearing, and Settlement Supervision Act of 2010 (``Clearing
Supervision Act'') \1\ and Rule 19b-4(n)(1)(i) under the Securities
Exchange Act of 1934 (``Act''),\2\ notice is hereby given that on
September 23, 2016, The Depository Trust Company (``DTC'') filed with
the Securities and Exchange Commission (``Commission'') the advance
notice SR-DTC-2016-802 (``Advance Notice'') as described in Items I and
II below, which Items have been prepared primarily by DTC.\3\ The
Commission is publishing this notice to solicit comments on the Advance
Notice from interested persons and to extend the review period of the
Advance Notice, for an additional 60 days under Section 806(e)(1)(H) of
the Clearing Supervision Act.\4\
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    \1\ 12 U.S.C. 5465(e)(1).
    \2\ 17 CFR 240.19b-4(n)(1)(i).
    \3\ On September 23, 2016, DTC filed this Advance Notice as a
proposed rule change (SR-DTC-2016-008) with the Commission pursuant
to Section 19(b)(1) of the Act, 15 U.S.C. 78s(b)(1), and Rule 19b-4,
17 CFR 240.19b-4. Securities Exchange Act Release No. 34-79046
(October 5, 2016), 81 FR 70200 (October 11, 2016) (SR-DTC-2016-008).
    \4\ See 12 U.S.C. 5465(e)(1)(H).
---------------------------------------------------------------------------

I. Clearing Agency's Statement of the Terms of Substance of the Advance
Notice

    This Advance Notice consists of modifications to (i) the DTC Rules,
By-laws and Organization Certificate (``Rules''),\5\ (ii) the DTC
Settlement Service Guide (``Settlement Guide''),\6\ and (iii) the DTC
Distributions Service Guide (``Distributions Guide''),\7\ annexed
hereto as Exhibit 5 (``Proposal''). The Proposal would modify the
Rules, Settlement Guide, and Distributions Guide to establish a change
in the processing of transactions in money market instruments (``MMI'')
that are processed in DTC's MMI Program (``MMI Securities'').\8\ The
Proposal would affect DTC's processing of issuances of MMI Securities
(``Issuances'') by issuers of MMI Securities (``Issuers'') as well as
Maturity Presentments, Income Presentments, Principal Presentments, and
Reorganization Presentments (collectively, ``Presentments'') (Issuances
and Presentments, collectively ``MMI Obligations''). The Proposal would
amend the Rules and Settlement Guide to (i) eliminate intra-day
reversals of processed but not yet settled MMI Obligations resulting
from an Issuing and Paying Agent (``IPA'') notifying DTC of its refusal
to pay (``RTP'') for Presentments of an Issuer's maturing MMI
Securities for a designated Acronym; \9\ (ii) eliminate the Largest
Provisional Net Credit (``LPNC'') risk management control; (iii)
provide that the IPA must acknowledge its funding obligations for
Presentments and that Receivers of Issuances must approve their receipt
of those Issuances in DTC's Receiver Authorized Delivery (``RAD'')
system before DTC would process MMI Presentments; (iv) implement an
enhanced process to test risk management controls under certain
conditions with respect to an Acronym (to be referred to as MMI
Optimization, as defined below); (v) make updates and revisions to the
Settlement Processing Schedule in the Settlement Guide (``Processing
Schedule''), as described below, (vi) eliminate the ``receive versus
payment NA'' control (``RVPNA''), as described below, and (vii) make
other technical and clarifying changes to the text, as more fully
described below. In addition, the Proposal would amend the
Distributions Guide to make changes to text relating to the processing
of Income Presentments so that it is consistent with the changes
proposed in the Settlement Guide in that regard, as more fully
described below.\10\
---------------------------------------------------------------------------

    \5\ Available at http://www.dtcc.com/legal/rules-and-procedures.aspx.
    \6\ Available at http://www.dtcc.com/~/media/Files/Downloads/
legal/service-guides/Settlement.pdf.
    \7\ Available at http://www.dtcc.com/~/media/Files/Downloads/
legal/service-guides/
Distributions%20Service%20Guide%20FINAL%20November%202014.pdf.
    \8\ Eligibility for inclusion in the MMI Program covers MMI,
which are short-term debt Securities that generally mature 1 to 270
days from their original issuance date. MMI include, but are not
limited to, commercial paper, banker's acceptances and short-term
bank notes and are issued by financial institutions, large
corporations, or state and local governments. Most MMI trade in
large denominations (typically, $250,000 to $50 million) and are
purchased by institutional investors. Eligibility for inclusion in
the MMI Program also covers medium term notes that mature over a
longer term.
    \9\ Rule 1, supra note 5. MMI of an Issuer are designated by DTC
using unique four-character identifiers employed by DTC referred to
as Acronyms. An MMI Issuer can have multiple Acronyms representing
its Securities. MMI Transactions and other functions relating to MMI
(e.g., confirmations and RTP) instructed and/or performed by IPAs,
Participants and/or DTC as described herein are performed on an
``Acronym-by-Acronym'' basis.
    \10\ Capitalized terms not otherwise defined herein have the
respective meanings set forth in the Rules, the Settlement Guide,
and the Distributions Guide.
---------------------------------------------------------------------------

II. Clearing Agency's Statement of the Purpose of, and Statutory Basis
for, the Advance Notice

    In its filing with the Commission, the clearing agency included
statements concerning the purpose of and basis for the Advance Notice
and discussed any comments it received on the Advance Notice. 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 and B below, of the most significant aspects of such
statements.

(A) Clearing Agency's Statement on Comments on the Advance Notice
Received From Members, Participants, or Others

    DTC has not solicited and does not intend to solicit comments
regarding the Proposal. DTC has not received any unsolicited written
comments from

interested parties. To the extent DTC receives written comments on the
Proposal, DTC will forward such comments to the Commission. DTC has
conducted industry outreach with respect to the proposal including
discussion with industry associations and IPAs.

(B) Advance Notice Filed Pursuant to Section 806(e) of the Clearing and
Supervision Act

Nature of the Proposed Change
    DTC is proposing to (i) mitigate risk to DTC and Participants
relating to intra-day reversals of processed MMI Obligations in the
event of an IPA's RTP with respect to maturing obligations (``Maturing
Obligations'') \11\ for an Acronym and/or income payments \12\ relating
to Presentments for an Acronym, and (ii) reduce blockage for the
completion of MMI Obligations by eliminating the LPNC control, as more
fully described below.
---------------------------------------------------------------------------

    \11\ A Maturing Obligation is a payment owed in settlement by
the IPA to the Participant on whose behalf DTC presents the matured
MMI Securities.
    \12\ Principal and income for an Acronym are distributed by an
IPA according to a cycle determined by the terms of the issue (e.g.,
monthly, quarterly, and semi-annually). Such distributions may be
for interest only, principal only, or interest and principal.
---------------------------------------------------------------------------

Background
    When an Issuer issues MMI Securities at DTC, the IPA for that
Issuer sends issuance instructions to DTC electronically, which results
in crediting the applicable MMI Securities to the DTC Account of the
IPA. These MMI Securities are then Delivered to the Accounts of
applicable Participants that are purchasing the Issuance in accordance
with their purchase amounts. These purchasing Participants typically
include broker/dealers or banks, acting as custodians for institutional
investors. The IPA Delivery instructions may be free of payment or,
most often, Delivery Versus Payment. Deliveries of MMI are processed
pursuant to the same Rules and the applicable Procedures \13\ set forth
in the Settlement Guide, as are Deliveries generally, whether free or
versus payment. Delivery Versus Payment transactions are subject to
risk management controls of the IPA and Receiving Participants for Net
Debit Cap and Collateral Monitor sufficiency,\14\ and payment for
Delivery Versus Payment transactions is due from the receiving
Participants through DTC's net settlement process. To the extent, if
any, that the Participant has a Net Debit Balance in its Settlement
Account at end-of-day, payment of that amount is due to DTC.
---------------------------------------------------------------------------

    \13\ Pursuant to the Rules, the term ``Procedures'' means the
Procedures, service guides, and regulations of the Corporation
adopted pursuant to Rule 27, as amended from time to time. See Rule
1, Section 1, supra note 5, at 15. The Procedures applicable to MMI
settlement processing are set forth in the Settlement Guide. Supra
note 6.
    \14\ Delivery Versus Payment transfers at DTC are structured so
that the completion of Delivery of Securities to a Participant in
end-of-day settlement is contingent on the receiving Participant
satisfying its end-of-day net settlement obligation, if any. The
risk of Participant failure to settle is managed through risk
management controls, structured so that DTC may complete settlement
despite the failure to settle of the Participant, or Affiliated
Family of Participants, with the largest net settlement obligation.
The two principal controls are the Net Debit Cap and Collateral
Monitor. The largest net settlement obligation of a Participant or
Affiliated Family of Participants cannot exceed DTC liquidity
resources, based on the Net Debit Cap, and must be fully
collateralized, based on the Collateral Monitor. This structure is
designed so that DTC may pledge or liquidate Collateral of the
defaulting Participant in order to fund settlement among non-
defaulting Participants. Liquidity resources, including the
Participants Fund and a committed line of credit with a consortium
of lenders, are available to complete settlement among non-
defaulting Participants.
---------------------------------------------------------------------------

    When MMI Securities mature, the Maturity Presentment process is
initiated automatically by DTC on maturity date, starting at
approximately 6:00 a.m. Eastern Time (``ET''), for Delivery of matured
MMI Securities from the applicable DTC Participants' Accounts to the
applicable IPA Accounts. This automated process electronically sweeps
all maturing positions of MMI Securities from Participant Accounts and
debits the Settlement Account of the applicable IPA for the amount of
the Maturing Obligations for Presentments for the Acronym and credits
the Settlement Accounts of the Deliverers. In accordance with the
Rules, payment is due from the IPA for settlement to the extent, if
any, that the IPA has a Net Debit Balance in its Settlement Account at
end-of-day.
    With regard to DTC net settlement, MMI Issuers and IPAs commonly
consider the primary source of payments for Maturing Obligations of MMI
Securities to be funded by the proceeds of Issuances of the same
Acronym by that Issuer on the same Business Day. Because Presentments
are currently processed automatically at DTC, IPAs have the option to
refuse to pay for Maturing Obligations to protect against the
possibility that an IPA may not be able to fund settlement because it
has not received funds from the relevant Issuer. An IPA that refuses
payment for a Presentment (i.e., refuses to make payment for the
Delivery of matured MMI Securities for which it is the designated IPA
and/or pay interest or dividend income on an MMI Security for which it
is the designated IPA) must notify DTC of its RTP in the DTC Settlement
User Interface. An IPA may enter an RTP until 3:00 p.m. ET on the date
of the affected Presentment.
    Under the current Rules, the effect of an RTP is to instruct DTC to
reverse all processed Deliveries of that Acronym, including Issuances,
related funds credits and debits, and Presentments. This late day
reversal of processed (but not yet settled) transactions may override
DTC's risk management controls (i.e., Collateral Monitor and Net Debit
Cap) and force a presenting Participant into a Net Debit Balance; this
situation poses systemic risk with respect to the Participant's ability
to fund its settlement and, hence, DTC's ability to complete end-of-day
net funds settlement. Also, the possibility of intra-day reversals of
processed MMI Obligations creates uncertainty for Participants.
    Currently, to mitigate the risks associated with an RTP, DTC Rules
and the Settlement Guide provide for the LPNC risk management control.
DTC withholds credit intra-day from each Participant that has a
Presentment in the amount of the aggregate of the two largest credits
with respect to an Acronym. The LPNC is not included in the calculation
of the Participant's Collateral Monitor or its Net Debit Balance. This
provides protection in the event that MMI Obligations are reversed by
DTC as a result of an RTP.\15\
---------------------------------------------------------------------------

    \15\ See Securities Exchange Act Release No. 71888 (April 7,
2014), 79 FR 20285 (April 11, 2014) (SR-DTC-2014-02) (clarifying the
LPNC Procedures in the Settlement Guide) and Securities Exchange Act
Release No. 68983 (February 25, 2013), 78 FR 13924 (March 1, 2013)
(SR-DTC-2012-10) (updating the Rules related to LPNC).
---------------------------------------------------------------------------

    DTC's Rules and Procedures relating to settlement processing for
the MMI Program \16\ were designed to limit credit, liquidity, and
operational risk for DTC and Participants. In connection with ongoing
efforts by DTC to evaluate the risk associated with the processing of
MMI Obligations, DTC has determined that the risks presented by intra-
day reversals of processed MMI Obligations should be eliminated to
prevent the possibility that a reversal could override risk controls
and heighten liquidity and settlement risk. Eliminating intra-day
reversals of processed MMI Obligations would also enhance intra-day
finality and allow for the elimination of the LPNC which creates intra-
day blockage and affects liquidity through the withholding of
settlement credits.
---------------------------------------------------------------------------

    \16\ The Procedures applicable to MMI settlement processing are
set forth in the Settlement Guide. Supra note 6.

---------------------------------------------------------------------------

Proposal
    The Proposal would amend the Rules and the Settlement Guide to
eliminate provisions for intra-day reversals of processed MMI
Obligations based on an IPA's RTP or Issuer insolvency. In addition,
the Proposal would amend the Distributions Guide to make changes to
text relating to the processing of Income Presentments so that it is
consistent with the changes proposed in the Settlement Guide in that
regard, as more fully described below.
    Pursuant to the Proposal, DTC would no longer automatically process
Presentments (and Issuances and related deliveries). Rather, except as
noted below, DTC would only process these transactions after an
acknowledgment (``MMI Funding Acknowledgment'') is made by the IPA to
DTC whereby either: (i) The value of receiver-approved \17\ Issuances
alone,\18\ or a combination of receiver-approved Issuances plus an
amount the IPA(s) has acknowledged has been funded by the Issuer,
exceeds the Acronym's Presentments; or (ii) the IPA acknowledges it has
been funded for the entire amount of the gross value of an Acronym,
regardless of Issuances.\19\
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    \17\ DTC subjects certain transactions to receiver approval in
its RAD system.
    \18\ An affirmative MMI Funding Acknowledgement by the IPA would
not be required in the case that the aggregate amount of RAD
approved Issuances of an Acronym exceeds the aggregate amount of
Presentments since these Issuances would provide the funding of the
maturing obligations versus an Issuer having to fund the IPA. The
Proposal would provide that in this instance, the IPA is deemed to
provide a standing instruction to process transactions in the
Acronym, subject to risk management controls. Any such instruction
or deemed instruction by the IPA would be irrevocable once given.
    \19\ In the case where an affirmative MMI Funding Acknowledgment
by the IPA would be required for Presentments to be processed, the
MMI Funding Acknowledgement would be a notification provided by an
IPA to DTC with respect to an Acronym that the IPA acknowledges and
affirms its funding obligation for a maturing Acronym either (i) in
the entire amount of the Acronym or (ii) for an amount at least
equal to the difference between the value of Issuances and the value
of the Presentments. In the case of (ii) above, the IPA may (later
that day) increase the funding amount it acknowledges, but in no
event may the IPA reduce the amount of its obligation previously
acknowledged that day.
---------------------------------------------------------------------------

    DTC anticipates that the Proposal would generally maintain the
volume of transactions processed today in terms of the total number and
value of transactions that have passed position and risk controls
throughout the processing day. However, because of the requirement for
the IPA to provide an MMI Funding Acknowledgement prior to processing
of an Acronym, the reason why transactions do not complete during the
processing day would shift. It is expected that the value and volume of
MMI transactions recycling for risk management controls during the late
morning and afternoon time periods would be reduced as a result of MMI
transactions being held outside of the processing system awaiting an
MMI Funding Acknowledgement decision. The non-MMI transactions and
fully funded MMI transactions would also likely have a reduction in
blockage from risk management controls as a result of the elimination
of the LPNC control. The elimination of the LPNC control would no
longer withhold billions of dollars of settlement credits until 3:05
p.m. ET as it does today, which would in turn permit these transactions
to complete earlier in the day.
    An IPA would make an MMI Funding Acknowledgment using a new
Decision Making Application (``DMA''). When an MMI Funding
Acknowledgement has occurred, it would constitute the IPA's instruction
to DTC to attempt to process transactions in the Acronym. At this
point, if the IPA has acknowledged that it would fully fund the
Acronym, then the transactions would be sent to the processing system
and attempted against position and risk management controls. If the IPA
provides an MMI Funding Acknowledgement for only partial funding of the
entire amount of Presentments for an Acronym, DTC would test risk
management controls of Deliverers and Receivers with respect to that
Acronym to determine whether risk management controls would be
satisfied by all Deliverers and Receivers of the Acronym and determine
whether all parties maintain adequate position to complete the
applicable transactions, i.e., ``MMI Optimization''. In the case that
the aggregate amount of RAD approved Issuances of an Acronym exceeds
the aggregate amount of Presentments, and thus an affirmative
acknowledgment by the IPA would not be required, risk management
controls for all Deliverers and Receivers would be tested using MMI
Optimization as well.
    As indicated above, if partial funding from the IPA is necessary,
then transactions would be routed to MMI Optimization. Generally, in
MMI Optimization, all Deliverers and Receivers of the Acronym must
satisfy risk management controls and delivering Participants must hold
sufficient position, in order for the transactions in that Acronym to
be processed. However, as long as the Issuances that can satisfy
Deliverer and Receiver risk controls for that Acronym are equal to or
greater than the Maturing Presentments of that Acronym, the applicable
transactions (i.e., those that pass risk controls) would be processed.
If there are multiple IPAs for an Acronym, DTC would determine funding
based on the satisfaction of conditions for all Receivers and
Deliverers with respect to all Presentments, Issuances and applicable
Delivery Orders in the Acronym and MMI Funding Acknowledgements for all
IPAs with Issuances and Presentments in the Acronym. No instruction of
an IPA to DTC to process the subject MMI transactions shall be
effective until MMI Optimization is satisfied with respect to all
transactions in the Acronym.
    If there is no MMI Funding Acknowledgment for the IPA for an
Acronym for which Maturing Obligations are due by 3:00 p.m. ET on that
day and/or DTC is aware that the Issuer of an Acronym is insolvent
(``Acronym Payment Failure''), then DTC would not process transactions
in the Acronym.\20\
---------------------------------------------------------------------------

    \20\ DTC would automatically consider an Acronym Payment Failure
occurring due to an IPA's failure to provide timely MMI Funding
Acknowledgement (i.e., provide the acknowledgment by 3:00 p.m. ET)
as an RTP.
---------------------------------------------------------------------------

    In the event of an Acronym Payment Failure, DTC would (i) prevent
further issuance and maturity activity for the Acronym in DTC's system,
(ii) prevent Deliveries of MMI Securities of the Acronym on failure
date and halt all activity in that Acronym, (iii) set the Collateral
Value of the MMI Securities in the Acronym to zero for purposes of
calculating the Collateral Monitor of any affected Participant, and
(iv) notify Participants of the Acronym Payment Failure. Notification
would be made through a DTC broadcast through the current process.
    Notwithstanding the occurrence of an Acronym Payment Failure, the
IPA would remain liable for funding pursuant to any MMI Funding
Acknowledgment previously provided for that Business Day.
    A ``Temporary Acronym Payment Failure'' with respect to Income
Presentments would occur when an IPA notifies DTC that it temporarily
refuses to pay Income Presentments for the Acronym (typically due to an
Issuer's inability to fund Income Presentments on that day). A
Temporary Acronym Payment Failure would only be initiated if there are
no Maturity Presentments, Principal Presentments and/or Reorganization
Presentments on that Business Day. DTC expects the Issuer and/or IPA to
resolve such a situation by the next Business Day. In the event of a
Temporary Acronym Payment Failure, DTC would (i) temporarily devalue to
zero all of the Issuer's MMI Securities for purposes of calculating

the Collateral Monitor, unless and until the IPA acknowledges funding
with respect to the Income Payments on the following Business Day, (ii)
notify Participants of the delayed payment through a DTC broadcast as
is the current process today, and (iii) block from DTC's systems all
further Issuances and maturities by that Issuer for the remainder of
the Business Day on which notification of the Temporary Payment Failure
was received by DTC.
    An IPA would not be able to avail itself of a Temporary Acronym
Payment Failure for the same Acronym on consecutive Business Days.
    Also, in light of the proposed elimination of intra-day reversals
of processed MMI Obligations, DTC would also eliminate the RVPNA
control. The RVPNA control is provided for in the Settlement Guide and
implements current Section 1(c) of Rule 9(B). RVPNA is used to prevent
a Participant from Delivering free of value or undervalued any MMI
Securities received versus payment on the same Business Day.\21\ This
protects DTC against being unable to reverse transactions for
Deliveries Versus Payment of MMI Securities in the event of an RTP by
the IPA.\22\ The elimination of reversals of processed MMI Obligations
would eliminate the need for the RVPNA control.
---------------------------------------------------------------------------

    \21\ For purposes of RVPNA, MMI Securities are considered
undervalued if they are Delivered Versus Payment for less than 10
percent below market value.
    \22\ For example, if A Delivers MMI Securities to B versus
payment and B Delivers the same MMI Securities to C free of payment
(subject to risk management controls), under Rule 9(B), Section 1,
the Delivery to C is final when the securities are credited to C.
DTC would therefore be unable to reverse the Delivery to C and thus
it cannot reverse the Delivery from B to A.
---------------------------------------------------------------------------

Proposed Changes to the Rules, Settlement Guide, and Distributions
Guide
    DTC would amend the text of Rule 1 (Definitions), Rule 9(A)
(Transactions in Securities and Money Payments), Rule 9(B)
(Transactions in Eligible Securities), Rule 9(C) (Transactions in MMI
Securities), the Settlement Guide and the Distributions Guide to
reflect the proposed changes described above. Specifically:
    (i) Rule 1 would be amended to:
    a. Delete the definition of LPNC; and
    b. Add a cross-reference to indicate that the terms MMI Funding
Acknowledgment and MMI Optimization would be defined in Section 1 of
Rule 9(C).
    (ii) Rule 9(A) would be amended to add text providing that an
instruction to DTC from a Participant for Delivery Versus Payment of
MMI Securities pursuant to Rule 9(C) shall not be effective unless and
until applicable conditions specified in Rule 9(C) as set forth below
have been satisfied.
    (iii) Rule 9(B) would be amended to:
    a. Eliminate text referencing the LPNC;
    b. Eliminate the provision precluding DTC from acting on an
instruction for Delivery of MMI Securities subject of an Incomplete
Transaction if the instruction involves a Free Delivery, Pledge or
Release of Securities or a Delivery, Pledge or Release of Securities
substantially undervalued; and
    c. Add text providing that an instruction to DTC from a Participant
for Delivery Versus Payment of MMI Securities pursuant to Rule 9(C)
shall not be effective unless and until the applicable conditions
specified in Rule 9(C) described below have been satisfied.
    (iv) Rule 9(C) would be amended to:
    a. Add the definitions of MMI Funding Acknowledgment and MMI
Optimization to reflect the meaning of these terms as described above;
    b. Add text that Delivery Versus Payment of MMI Securities would be
affected in accordance with Rules 9(A), 9(B) and the Settlement Guide
in addition to Rule 9(C);
    c. Add text indicating that instructions by a Presenting
Participant for a Presentment or Delivery of MMI Securities would be
deemed to be given only when any applicable MMI Funding Acknowledgment
has been received by DTC;
    d. Remove conditions and references relating to reversals of
processed MMI Obligations;
    e. Set forth conditions for the processing of Presentments,
including:
    i. The requirement for the IPA to provide an MMI Funding
Acknowledgment, except in the case where the aggregate amount of
Issuances exceeds Presentments;
    ii. Satisfaction of risk management controls and RAD;
    iii. That an instruction to DTC with respect to an Issuance or
Presentment shall become effective upon satisfaction of the provisions
described in i. and ii. immediately above;
    iv. That DTC shall comply with an effective instruction;
    v. That the IPA acknowledges and agrees that DTC would process
instructions with respect to Issuances and Presentments as described
above and that the IPA's obligations in this regard are irrevocable;
and
    vi. That if the IPA notifies DTC in writing of its insolvency, or
if DTC otherwise has notice, or if the IPA issues a Payment Refusal for
the Acronym, then the IPA would not be required to acknowledge its
obligations and DTC would not be required to process any further
instructions with respect to the applicable Acronym;
    f. Eliminate references to MMI Securities being devalued in the
event of an RTP because in the event of any payment failure by the IPA,
DTC would then revert to the Acronym Payment Failure Process described
below; and
    g. Delete a reference indicating that DTC's Failure to Settle
Procedure includes special provisions for MMI Securities.
    (v) The Settlement Guide would be amended to:
    a. Delete the description of, and all references and provisions
related to, LPNC;
    b. Delete: (A) The definition of RVPNA, (B) a provision that
transactions for MMI Securities that are deemed RVPNA would recycle
pending release of the LPNC control at 3:05 p.m. ET, and (C) a note
that MMI Securities received versus payment are not allowed to be
freely moved until the LPNC control is released;
    c. Add a description of ``Unknown Rate'' to provide for a
placeholder in the Settlement Guide for references to an interest rate
where payment of interest by an IPA to Receivers is scheduled but the
interest rate to be paid is not known at the time;
    d. Change the heading of the section currently named ``Establishing
Your Net Debit Cap'' to ``Limitation of Participant Net Debit Caps by
Settling Banks'' to reflect the context of that section more
specifically;
    e. Revise the Settlement Processing Schedule to:
    i. Add a cutoff time of 2:30 p.m. ET for an IPA to replace the
Unknown Rate with a final interest rate and state that the IPA must
successfully transmit the final rate to DTC before 2:30 p.m. ET;
    ii. Add a cutoff time of 2:55 p.m. ET after which Issuances and
Presentments cannot be processed on the given Business Day because the
conditions described above for processing of MMI Obligations have not
been met;
    iii. Remove a reference for a cutoff relating to reversals of MMI
Obligations since reversals would no longer occur as described above;
    iv. Define 3 p.m. ET as the cutoff time for any required MMI
Funding Acknowledgements to be received in order for DTC to be able to
process for a given Acronym that day;
    v. Add at cutoff time of 3 p.m. ET for an IPA to notify DTC of a
Temporary Acronym Payment Failure;

    vi. Delete a reference to the release of LPNC controls as LPNC
would no longer exist; and
    vii. Clarify that a 3:10 p.m. ET cutoff after which CNS
transactions that cannot be completed would be dropped from the system,
also applies to valued transactions in non-MMI Securities and fully
paid for and secondary MMI Deliveries or Maturity Presentments;
    f. Add a section describing MMI Processing to include a description
of MMI Funding Acknowledgments and the MMI Optimization process as
described above;
    g. Revise the section referencing provisions for ``Issuer Failure
Processing'' to instead describe Acronym Payment Failure Processing and
Temporary Acronym Payment Failure Process, as these processes are
described above, since the contingencies for processing a payment
failure hinge on the failure of payment on an Acronym by an IPA
regardless of whether it is ultimately caused by an Issuer insolvency
or otherwise;
    h. Remove a duplicate reference to the DTC contact number for
Participants/IPAs to call in the event of an Acronym Payment Failure;
    i. Remove the description of the ``MMI IPA MP Pend'' process which
was designed to allow IPAs to minimize the impact of potential
reversals of processed MMI Obligations; as such reversals would no
longer occur; and
    j. Change the name of the section named ``Calculating Your Net
Debit Cap'' to ``Calculation of Participant Net Debit Caps''.
    (vi) The Distributions Guide would be amended to (i) delete
language reflecting that Income Presentments are processed at the
start-of-day, and (ii) add a brief description of the processing of
Presentments as proposed above and provide a cross-reference to the
Settlement Guide relating to MMI settlement processing.
    (vii) The Proposal would also make technical and clarifying changes
to the texts of the Rules and Settlement Guide for consistency
throughout the texts in describing the concepts and terms set forth
above, make corrections to grammar and spacing and edit text to provide
for enhanced readability.
Implementation
    The Proposal would be implemented in phases whereby Acronyms would
be migrated to be processed in accordance with the Proposal over a
period of five months beginning in November 2016 and with all Acronyms
expected to be implemented by the end of March 2017, except for the
implementation of the elimination of the Rule and Settlement Guide
provisions relating to RVPNA which elimination would not occur until
all other aspects of the Proposal are implemented with respect to all
Acronyms. DTC would announce phased implementation dates for the
Proposal via Important Notice upon all applicable regulatory approval
by the Commission.
Expected Effect on Risks to DTC, Its Participants, or the Market
    As described above, the Proposal would amend the Rules and the
Settlement Guide to: (i) Eliminate provisions for intra-day reversals
of processed MMI Obligations based on an IPA's RTP or Issuer
insolvency, (ii) impose a new requirement on IPAs to provide DTC an MMI
Funding Acknowledgment, (iii) remove the LPNC risk management control;
and (iv) implement MMI Optimization.
Elimination of Intra-day Reversals
    As noted above, under the current DTC Rules, intraday reversals of
MMI Obligations may override DTC's risk management controls (i.e.,
Collateral Monitor and Net Debit Cap) and force a presenting
Participant into an otherwise unanticipated Net Debit Balance at the
end-of-day; this situation poses systemic risk with respect to the
Participant's ability to fund its settlement and, hence, DTC's ability
to complete end-of-day net funds settlement. The proposed elimination
of intra-day reversals of processed MMI Obligations would decrease risk
to DTC, its Participants and the marketplace by eliminating the
settlement risk associated with such reversals, improving settlement
finality.
IPAs' Obligation To Provide an MMI Funding Acknowledgment
    Pursuant to the Proposal, DTC would no longer automatically process
Presentments (and Issuances and related deliveries). Rather, as
applicable, DTC would only process these transactions after receiving
an MMI Funding Acknowledgment from the IPA. In this regard, once an IPA
provides an MMI Funding Acknowledgment, its ability to notify DTC of an
RTP would be limited as it would not be allowed to reduce the amount of
its obligation previously acknowledged that day.\23\ This provision of
the Proposal would facilitate the elimination of intra-day reversals,
as described above, and, therefore, decrease settlement risk for DTC
and its Participants.
---------------------------------------------------------------------------

    \23\ As noted above, an affirmative MMI Funding Acknowledgement
by the IPA would not be required in the case that the aggregate
amount of RAD approved Issuances of an Acronym exceeds the aggregate
amount of Presentments since these Issuances would provide the
funding of the maturing obligations versus an Issuer having to fund
the IPA. The Proposal would provide that in this instance, the IPA
is deemed to provide a standing instruction to process transactions
in the Acronym, subject to risk management controls. Any such
instruction or deemed instruction by the IPA would be irrevocable
once given.
---------------------------------------------------------------------------

Removal of the LPNC Control
    Currently, the LPNC control exists to mitigate the risks associated
with an RTP by withholding credit intra-day from each Participant in
the amount of the aggregate of the two largest credits with respect to
Presentment of an Acronym. DTC expects that the proposed elimination of
the LPNC control and the attendant intraday withholding of credits
would reduce the risk of intraday liquidity blockages within DTC's
system for Participant activity, for both MMI and non-MMI transactions,
because at any point intraday, Participants would have a true view of
their Net Debit Balances or Net Credit Balances and be able to respond
accordingly.
MMI Optimization
    As described above, as applicable, DTC would test risk management
controls of Deliverers and Receivers using the proposed MMI
Optimization process with respect to the Acronym to determine whether
risk management controls would be satisfied by all Deliverers and
Receivers of the Acronym and determine whether all Deliverers maintain
adequate position to complete the applicable transactions. As described
above, the application of MMI Optimization to MMI transactions, as
applicable, would facilitate timely processing of transactions under
the proposal and reduce the risk to Participants that transactions may
not settle due to failure to satisfy risk controls.
Management of Identified Risks
    The proposed requirement for an IPA to provide DTC an MMI Funding
Acknowledgment prior to DTC's processing of affected MMI transactions,
as applicable, would replace DTC's current automatic processing of MMI
Transactions. The fact that such transactions would not be processed
until an MMI Funding Acknowledgment is provided by the IPA may create a
risk of blockage of MMI transactions by Participants. However, DTC
anticipates that the various aspects of the Proposal taken together
would offset any such risk and reduce the risk of blockage overall for
both MMI and non-MMI transactions because of the effect of (i) the
removal of the LPNC control would

eliminate the attendant withholding of settlement credits from
Participants intraday net settlement balances, and (ii) increased
efficiency in the testing of risk controls through the MMI Optimization
process, as described above, would reduce the volume of MMI
transactions that might otherwise recycle pending passing of risk
management controls.
Consistency With the Clearing Supervision Act
    DTC believes that the Proposal is consistent with Section 805(b) of
the Clearing Supervision Act.\24\ The objectives and principles of
Section 805(b) of the Clearing Supervision Act are the promotion of
robust risk management, promotion of safety and soundness, reduction of
systemic risks, and support of the stability of the broader financial
system.\25\
---------------------------------------------------------------------------

    \24\ 12 U.S.C. 5464(b).
    \25\ Id.
---------------------------------------------------------------------------

    DTC believes that the Proposal is consistent with the provisions of
the Clearing Supervision Act because the elimination of reversals of
MMI transactions would promote intraday settlement finality and protect
end-of day settlement from the risk of the failure to settle by IPAs or
affected Participants by removing the risk exposure due to the override
of DTC's risk management controls (i.e., Collateral Monitor and Net
Debit Cap) to process reversals under current rules. As such the
Proposal would promote the robustness of DTC's risk management
controls.
    DTC also believes that the Proposal is consistent with the
provisions of the Clearing Supervision Act because the elimination of
the risk that a Participant could incur a Net Debit Balance that
exceeds DTC's risk controls caused by an intra-day reversal of
processed (but not yet settled) MMI Obligations would promote both the
safety and soundness of DTC's system and reduce systemic risks by (i)
reducing the risk of a shortfall in a defaulting Participant's
collateral available for DTC to use to satisfy the defaulting
Participant's settlement obligations, and (ii) reducing the risk that a
Participant default could impose a strain on DTC's liquidity resources
and affect DTC's ability to complete system-wide settlement that day.
    In addition, DTC believes that the Proposal would be consistent
with Rule 17Ad-22(d)(12) promulgated under the Act.\26\ Rule 17Ad-
22(d)(12) requires that each registered clearing agency shall
establish, implement, maintain and enforce written policies and
procedures reasonably designed to, as applicable, ensure that final
settlement occurs no later than the end of the settlement day; and
requires that intraday or real-time finality be provided where
necessary to reduce risks.\27\ The Proposal would eliminate the intra-
day reversals of processed MMI transactions that are pending for end of
day system wide net settlement, thus promoting settlement finality and
eliminating the possibility that an intraday reversal could heighten
liquidity and settlement risk, as discussed above. As such, DTC
believes the Proposal is consistent with Rule 17Ad-22(d)(12).
---------------------------------------------------------------------------

    \26\ 17 CFR 240.17Ad-22(d)(12).
    \27\ Id.
---------------------------------------------------------------------------

    Taking each of the above points collectively (i.e., the Proposal's
promotion of robust risk management, safety and soundness, reduced
systemic risk, and consistency with Rule 17Ad-22(d)(12)). [sic] DTC
believes the Proposal supports the overall stability of the broader
financial system consistent with the Clearing Supervision Act.

III. Date of Effectiveness of the Advance Notice and Timing for
Commission Action

    The proposed change may be implemented if the Commission does not
object to the proposed change within 60 days of the later of (i) the
date that the proposed change was filed with the Commission or (ii) the
date that any additional information requested by the Commission is
received,\28\ unless extended as described below. The clearing agency
shall not implement the proposed change if the Commission has any
objection to the proposed change.
---------------------------------------------------------------------------

    \28\ See 12 U.S.C. 5465(e)(1)(G).
---------------------------------------------------------------------------

    Pursuant to Section 806(e)(1)(H) of the Clearing Supervision
Act,\29\ the Commission may extend the review period of an advance
notice for an additional 60 days, if the changes proposed in the
advance notice raise novel or complex issues, subject to the Commission
providing the clearing agency with prompt written notice of the
extension.
---------------------------------------------------------------------------

    \29\ 12 U.S.C. 5465(e)(1)(H).
---------------------------------------------------------------------------

    Here, as the Commission has not requested any additional
information, the date that is 60 days after DTC filed the Advance
Notice with the Commission is November 22, 2016. However, the
Commission finds it appropriate to extend the review period of the
Advance Notice, for an additional 60 days under Section 806(e)(1)(H) of
the Clearing Supervision Act.\30\ The Commission finds the Advance
Notice is both novel and complex because the material aspects of the
proposed changes to DTC's processing of MMI are detailed, substantial,
a first for DTC, and are interrelated with other risk management
practices at DTC.
---------------------------------------------------------------------------

    \30\ Id.
---------------------------------------------------------------------------

    Accordingly, the Commission, pursuant to 806(e)(1)(H) of the
Clearing Supervision Act,\31\ extends the review period for an
additional 60 days so that the Commission shall have until January 21,
2017 to issue an objection or non-objection to the Advance Notice (File
No. SR-DTC-2016-802).
---------------------------------------------------------------------------

    \31\ Id.
---------------------------------------------------------------------------

    The clearing agency shall post notice on its Web site of proposed
changes that are implemented.
    The proposal shall not take effect until all regulatory actions
required with respect to the proposal are completed.\32\
---------------------------------------------------------------------------

    \32\ See supra note 3 (regarding filing of related proposed rule
change).
---------------------------------------------------------------------------

IV. Solicitation of Comments

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

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to<EMAIL_ADDRESS>Please include
File Number SR-DTC-2016-802 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-2016-802. 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 Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all
written statements with respect to the Advance Notice that are filed
with the Commission, and all written communications relating to the
Advance Notice 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 Web site 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 Web site (http://dtcc.com/legal/sec-rule-filings.aspx). All comments received will be posted without
change; the Commission does not edit personal identifying information
from submissions. You should submit only information that you wish to
make available publicly. All submissions should refer to File Number
SR-DTC-2016-802 and should be submitted on or before November 25, 2016.

    By the Commission.
Brent J. Fields,
Secretary.
[FR Doc. 2016-27030 Filed 11-8-16; 8:45 am]
BILLING CODE 8011-01-P