[Federal Register Volume 83, Number 171 (Tuesday, September 4, 2018)]
[Rules and Regulations]
[Pages 44821-44828]
[FR Doc No: 2018-18766]

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DEPARTMENT OF COMMERCE

Bureau of Industry and Security

15 CFR Part 744

[Docket No. 180718671-8671-01]
RIN 0694-AH57

Addition of Certain Entities to the Entity List, Revision of
Entries on the Entity List and Removal of Certain Entities From the
Entity List

AGENCY: Bureau of Industry and Security, Commerce.

ACTION: Final rule.

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SUMMARY: This final rule amends the Export Administration Regulations
(EAR) by adding fifteen entities under seventeen entries to the Entity
List. These fifteen entities have been determined by the U.S.
Government to be acting contrary to the national security or foreign
policy interests of the United States and will be listed on the Entity
List under the destinations of the People's Republic of China, Hong
Kong, Pakistan, Russia, Saudi Arabia, Turkey, the United Arab Emirates
and the United Kingdom. This final rule also modifies two entries on
the entity list: One entry under the destination of Hong Kong and one
entry under the destination of Russia. Lastly, this final rule removes
one entity under the destination of Greece from the Entity List. The
removal is the result of a request for removal BIS received pursuant to
the EAR and a review of information provided in the removal request.

DATES: This rule is effective September 4, 2018.

FOR FURTHER INFORMATION CONTACT: Chair, End-User Review Committee,
Office of the Assistant Secretary, Export Administration, Bureau of
Industry and Security, Department of Commerce, Phone:<PHONE_NUMBER>,
Email: [email protected].

SUPPLEMENTARY INFORMATION:

Background

    The Entity List (15 CFR, subchapter C, part 744, Supplement No. 4)
identifies entities reasonably believed to be involved, or to pose a
significant risk of being or becoming involved, in activities contrary
to the national security or foreign policy interests of the United
States. The Export Administration Regulations (EAR) (15 CFR, Subchapter
C, parts 730-774) imposes additional license requirements on, and
limits the availability of most license exceptions for, exports,
reexports, and transfers (in-country) to those listed. The license
review policy for each listed entity is identified in the ``License
review policy'' column on the Entity List, and the impact on the
availability of license exceptions is described in the relevant Federal
Register notice adding entities to the Entity List. BIS places entities
on the Entity List pursuant to part 744 (Control Policy: End-User and
End-Use Based) and part 746 (Embargoes and Other Special Controls) of
the EAR.
    The End-User Review Committee (ERC), composed of representatives of
the Departments of Commerce (Chair), State, Defense, Energy and, where
appropriate, the Treasury, makes all decisions regarding additions to,
removals from, or other modifications to the Entity List. The ERC makes
all decisions to add an entry to the Entity List by majority vote, and
makes all decisions to remove or modify an entry by unanimous vote.

ERC Entity List Decisions

Additions to the Entity List

    This rule implements the decision of the ERC to add fifteen
entities under seventeen entries to the Entity List. These fifteen
entities are being added based on Sec.  744.11 (License requirements
that apply to entities acting contrary to the national security or
foreign policy interests of the United States) of the EAR. The
seventeen entries added to the Entity List consist of two entries
located in the People's Republic of China (China), five entries located
in Hong Kong, two entries located in Pakistan, one entry located in
Russia, one entry located in Saudi Arabia, two entries located in
Turkey, three entries located in the United Arab Emirates (U.A.E.), and
one entry located in the United Kingdom. There are seventeen entries
for the fifteen entities because one entry is listed in three
locations, resulting in two additional entries.
    The ERC reviewed Sec.  744.11(b) (Criteria for revising the Entity
List) in making the determination to add these fifteen entities under
seventeen entries to the Entity List. Under that paragraph, persons for
whom there is reasonable cause to believe, based on specific and
articulable facts, that they have been involved, are involved, or pose
a significant risk of being or becoming involved in, activities that
are contrary to the national security or foreign policy interests of
the United States, along with those acting on behalf of such persons,
may be added to the Entity List. Paragraphs (b)(1) through (5) of Sec.
744.11 provide an illustrative list of activities that could be
contrary to the national security or foreign policy interests of the
United States.
    The ERC determined that the two entities located in China (Ma
Yunong and Seajet Company Limited), as well as one entity located in
Hong Kong (ZM International Company Ltd.) have been involved in
activities that are contrary to the national security and foreign
policy interests of the United States as set forth in Sec.  744.11(b).
Specifically, the ERC determined that these parties unlawfully procured
and diverted U.S.-origin armored vehicles to the Democratic People's
Republic of Korea (North Korea) in violation of the EAR. For the
remaining four entities located in Hong Kong (Calvin Law, CLC Holdings
Limited, LHI Technology (H.K.) Company Limited, and Ray Hui), the ERC
determined that these entities have been involved in activities that
are contrary to the national security and foreign policy interests of
the United States as set forth in Sec.  744.11(b). These four entities
procured U.S.-origin items for reexport to entities in China and other
countries without obtaining the necessary license(s).
    The ERC determined that the U.A.E.-based company Good Luck Shipping
LLC has been involved in activities contrary to the national security
and foreign policy interests of the United States as set forth in Sec.
744.11(b) of the EAR; this entity has transshipped U.S.-origin items to
sanctioned destinations without the required authorizations. The ERC
determined that Technology Links Pvt. Ltd., located in Pakistan, be
added to the Entity List based on the company's involvement in the
supply of items subject to the EAR to nuclear and missile-related
Entity List parties in Pakistan without the license required under
Sec.  744.11 of the EAR. In addition, the ERC determined that Techcare
Services FZ LLC, located in the U.A.E., and UEC (Pvt.) Ltd., located in
Pakistan, Saudi Arabia and the U.A.E., made multiple attempts to
acquire U.S.-origin commodities ultimately destined for Pakistan's
unsafeguarded nuclear program and have provided false and misleading
information to BIS during an end-use check.
    The ERC also determined that the two entities located in Turkey,
Huseyin Engin Borluca and 3K Aviation Consulting and Logistics, along
with Evans Meridians Ltd., located in the British Virgin Islands, have
engaged in transactions in violation of the U.S. embargo against Iran
by transferring, or attempting to transfer, U.S.-origin

aircraft engines to an Iranian customer without the required
authorizations. Lastly, the ERC determined that the Joint Stock Company
(JSC) NIIME be added to the Entity List under the destination of
Russia. JSC NIIME operates as the de facto research and development
branch of PJSC Mikron, a listed entity on the Entity List. Prior review
of exports, reexports and transfers (in-country) involving JSC NIIME
will enhance BIS's ability to prevent violations of the EAR.
    Pursuant to Sec.  744.11(b) of the EAR, the ERC determined that the
conduct of these fifteen entities raises sufficient concern that prior
review of exports, reexports or transfers (in-country) of all items
subject to the EAR involving these entities, and the possible
imposition of license conditions or license denials on shipments to the
persons, will enhance BIS's ability to prevent violations of the EAR.
    For the fifteen entities under seventeen entries added to the
Entity List, BIS imposes a license requirement for all items subject to
the EAR, and a license review policy of presumption of denial. The
license requirements apply to any transaction in which items are to be
exported, reexported, or transferred (in-country) to any of the
entities or in which such entities act as purchaser, intermediate
consignee, ultimate consignee, or end-user. In addition, no license
exceptions are available for exports, reexports, or transfers (in-
country) to the entities being added to the Entity List in this rule.
The acronym ``a.k.a.'' (also known as) is used in entries on the Entity
List to identify aliases, thereby assisting exporters, reexporters and
transferors in identifying entities on the Entity List.
    This final rule adds the following fifteen entities under seventeen
entries to the Entity List:

China

    (1) Ma Yunong, a.k.a., the following one alias:

--George Ma.

    B-804 SOHO New Town, 88 Jianguo Road, Chaoyang District, Beijing,
100022, China; and Room 1002, LT Square, No. 500, Chengdu North Road,
Shanghai, 200003, China; and Unit 1906-2, West Tower, Fortune Plaza,
No. 114, Tiyu Dong Rd, Tianhe District, Guangzhou 510620, China; and
    (2) Seajet Company Limited,
    B-804 SOHO New Town, 88 Jianguo Road, Chaoyang District, Beijing,
100022, China; and Room 1002, LT Square, No. 500, Chengdu North Road,
Shanghai, 200003, China; and Unit 1906-2, West Tower, Fortune Plaza,
No. 114, Tiyu Dong Rd, Tianhe District, Guangzhou 510620, China; and
No. 2, Juhe 6 Street, Jufuyuan, Business Development Tongzhou Di,
Beijing, China; and Room 2, A316 Haidin 9 Road, Tianjin, Port Free
Trade Zone, Tianjin, China.

Hong Kong

    (1) Calvin Law,
    Flat 2808, 28/F, Asia Trade Centre, 79 Lei Muk Road, Kwai Chung,
N.T., Hong Kong; and Units 801-803 and 805, Park Sun Building, No. 97-
107 Wo Yi Hop Road, Kwai Chung, Hong Kong;
    (2) CLC Holdings Limited, a.k.a., the following one alias:

--CLC Xpress.

    Flat 2808, 28/F, Asia Trade Centre, 79 Lei Muk Road, Kwai Chung,
N.T., Hong Kong; and Units 801-803 and 805, Park Sun Building, No. 97-
107 Wo Yi Hop Road, Kwai Chung, Hong Kong;
    (3) LHI Technology (H.K.) Company Limited,
    Units 801-803 and 805, Park Sun Building, No. 97-107 Wo Yi Hop
Road, Kwai Chung, Hong Kong;
    (4) Ray Hui,
    Units 801-803 and 805, Park Sun Building, No. 97-107 Wo Yi Hop
Road, Kwai Chung, N.T., Hong Kong; and
    (5) ZM International Company Ltd.,
    4/F Enterprise Bldg 228-238, Queen's Road Central, Hong Kong; and
Room C, 22/F, 235 Wing Lok Street, Trade Centre, Sheung Wan, Hong Kong.

Pakistan

    (1) Technology Links Pvt. Ltd., a.k.a., the following two aliases:

--Techlinks; and
--Techlink Communications.

    4/10-11-12 Rimpa Plaza, M.A. Jinnah Road, Karachi, Pakistan; and
Suite 3, 2nd Floor, Kashmir Center, 632/G-1 Market Johar Town Lahore,
Paksitan; and 111B Block No.2, Mezzanine Floor,
    Khalid bin Waleed Road, P.E.C.H.S., Karachi, Pakistan; and
    (2) UEC (Pvt.) Ltd.,
    29-M, Civic Centre, Model Town Ext. Lahore-43700, Pakistan; and
Office No. 610, 6th Floor, Progressive Centre, 30-A, Block No. 6,
P.E.C.H.S., Karachi, Pakistan (See alternate addresses under Saudi
Arabia and U.A.E.).

Russia

    (1) Joint Stock Company (JSC) NIIME, a.k.a., the following two
aliases:

--Aktsionernoe Obshchestvo (AO) Nauchnoisledovatelskiy Institut
Molekulyarnoy Elektroniki (NIIME); and
--Molecular Electronics Research Institute (MERI).

    1st Zapadniy Proezd 12/1, Zelenograd, Russia, 124460.

Saudi Arabia

    (1) UEC (Pvt.) Ltd.,
    P.O. Box 245221, Riyadh 11312, Kingdom of Saudi Arabia (See
alternate addresses under Pakistan and U.A.E.).

Turkey

    (1) 3K Aviation Consulting and Logistics, a.k.a., the following one
alias:

--3K Havacilik ve Danismanlik SAN. TIC. LTD. ST.

    Biniciler Apt. Savas Cad. No. 18/5, Sirinyali Mah. 07160, Antalya,
Turkey; and Sonmez Apt. No. 4/5 1523 Sokak, Sirinyali Mah. 07160,
Antalya, Turkey; and
    (2) Huseyin Engin Borluca,
    Biniciler Apt. Savas Cad. No. 18/5, Sirinyali Mah. 07160, Antalya,
Turkey; and Sonmez Apt. No. 4/5 1523 Sokak, Sirinyali Mah. 07160,
Antalya, Turkey.

United Arab Emirates

    (1) Good Luck Shipping LLC, a.k.a., the following two aliases:

--Good Luck Shipping Services; and
--GLS.

    Office 206/207 Malik Saeed, Ahmad Ghabbash, Bur Dubai, UAE; and
P.O. Box 8486, Dubai, UAE; and PO Box 5562, Dubai, UAE;
    (2) Techcare Services FZ LLC,
    No. 1, Ground Floor Office 8/D, P.O. Box 312391, Al-Jazeera Al
Hamra, UAE; and
    (3) UEC (Pvt.) Ltd.,
    P.O. Box 97, Abu Dhabi, UAE (See alternate addresses under Pakistan
and Saudi Arabia).

United Kingdom

    (1) Evans Meridians Ltd.,
    Drake Chambers, 1st Floor Yamraj Building, P.O. Box 3321, Road
Town, Tortola, British Virgin Islands.

Modifications to the Entity List

    This final rule implements the decision of the ERC to modify two
existing entries on the Entity List under the destination of Hong Kong
and Russia. BIS is revising the entry for Joinus Freight Systems (H.K.)
Ltd. by adding an additional alias and address and modifying the entity
name and an existing address. In addition, the ERC determined, with the
addition of JSC NIIME to the Entity List, the existing entry for
``Joint Stock Company Mikron'' be revised by modifying the entity name
to ``PJSC Mikron'' and removing its alias.
    This final rule makes the following modifications to two entries on
the Entity List:

Hong Kong

    (1) Joinus Freight Systems (H.K.) Limited, a.k.a., the following
two aliases:

--JFS Global Logistics; and
--Joinus Freight Systems Global Logistics Limited.

    Unit 07-07, 25F, Tower B, Regent Centre, 63 Wo Yi Hop Road, Kwai
Chung, N.T. Hong Kong and Units 801-803 and 805, Park Sun Building, No.
97-107 Wo Yi Hop Road, Kwai Chung, Hong Kong.

Russia

    (1) PJSC Mikron,
    1st Zapadniy Proezd 12/1, Zelenograd, Russia, 124460.

Removal From the Entity List

    This rule implements a decision of the ERC to remove the following
entry from the Entity List on the basis of a removal request BIS
received: Top Electronics Components S.A., located in Greece. This
entry was added to the Entity List on October 9, 2012 (77 FR 61256).
The ERC decided to remove this entry based on information BIS received
pursuant to Sec.  744.16 of the EAR and the additional review the ERC
conducted.
    This final rule implements the decision to remove the following one
entity located in Greece from the Entity List:

Greece

    (1) Top Electronics Components S.A.,
    66 Alkminis & Aristovoulov Str, Kato Petralona, Athens, Greece
11853.

Savings Clause

    Shipments of items removed from eligibility for a License Exception
or export or reexport without a license (NLR) as a result of this
regulatory action that were en route aboard a carrier to a port of
export or reexport, on September 4, 2018, pursuant to actual orders for
export or reexport to a foreign destination, may proceed to that
destination under the previous eligibility for a License Exception or
export or reexport without a license (NLR).

Export Control Reform Act of 2018

    On August 13, 2018, the President signed into law the John S.
McCain National Defense Authorization Act for Fiscal Year 2019, which
included the Export Control Reform Act of 2018 (ECRA) (Title XVII,
Subtitle B of Pub. L. 115-232) that provides the legal basis for BIS's
principal authorities and serves as the authority under which BIS
issues this rule. As set forth in Section 1768 of ECRA, all
delegations, rules, regulations, orders, determinations, licenses, or
other forms of administrative action that have been made, issued,
conducted, or allowed to become effective under the Export
Administration Act of 1979 (50 U.S.C. 4601 et seq.) (as in effect prior
to August 13, 2018 and as continued in effect pursuant to the
International Emergency Economic Powers Act (50 U.S.C. 1701 et seq.)
and Executive Order 13222 of August 17, 2001, 3 CFR, 2001 Comp., p. 783
(2002), as amended by Executive Order 13637 of March 8, 2013, 78 FR
16129 (March 13, 2013), and as extended by the Notice of August 8,
2018, 83 FR 39871 (August 13, 2018)), or the Export Administration
Regulations, and are in effect as of August 13, 2018, shall continue in
effect according to their terms until modified, superseded, set aside,
or revoked under the authority of ECRA.

Rulemaking Requirements

    1. Executive Orders 13563 and 12866 direct agencies to assess all
costs and benefits of available regulatory alternatives and, if
regulation is necessary, to select regulatory approaches that maximize
net benefits (including potential economic, environmental, public
health and safety effects, distributive impacts, and equity). Executive
Order 13563 emphasizes the importance of quantifying both costs and
benefits, of reducing costs, of harmonizing rules, and of promoting
flexibility. This rule has been determined to be not significant for
purposes of Executive Order 12866. This rule is not an Executive Order
13771 regulatory action because this rule is not significant under
Executive Order 12866.
    2. Notwithstanding any other provision of law, no person is
required to respond to nor be subject to a penalty for failure to
comply with a collection of information, subject to the requirements of
the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.) (PRA),
unless that collection of information displays a currently valid Office
of Management and Budget (OMB) Control Number. This regulation involves
collections previously approved by OMB under control number 0694-0088,
Simplified Network Application Processing System, which includes, among
other things, license applications, and carries a burden estimate of
43.8 minutes for a manual or electronic submission.
    Total burden hours associated with the PRA and OMB control number
0694-0088 are not expected to increase as a result of this rule. You
may send comments regarding the collection of information associated
with this rule, including suggestions for reducing the burden, to
Jasmeet K. Seehra, Office of Management and Budget (OMB), by email to
[email protected], or by fax to<PHONE_NUMBER>.
    3. This rule does not contain policies with Federalism implications
as that term is defined in Executive Order 13132.
    4. For the fifteen entities under seventeen entries added to the
Entity List in this final rule, the provisions of the Administrative
Procedure Act (5 U.S.C. 553) requiring notice of proposed rulemaking,
the opportunity for public participation and a 30-day delay in
effective date are inapplicable, because this regulation involves a
military or foreign affairs function of the United States (5 U.S.C.
553(a)(1)). BIS implementation of this rule is necessary to protect
U.S. national security or foreign policy interests by preventing items
subject to the EAR from being exported, reexported, or transferred (in-
country) to the entities being added to the Entity List. If this rule
were delayed to allow for notice and comment and a delay in effective
date, the entities being added to the Entity List by this action would
continue to be able to receive items subject to the EAR without a
license and to conduct activities contrary to the national security or
foreign policy interests of the United States. In addition, publishing
a proposed rule would give these entities notice of the U.S.
Government's intention to place them on the Entity List, which could
create an incentive for them to accelerate their receipt of items
subject to the EAR to conduct activities that are contrary to the
national security or foreign policy interests of the United States,
including taking steps to set up additional aliases, change addresses,
and engaging in other measures to try to limit the impact of the
listing on the Entity List once a final rule is published.
    5. For the one entity removed from the Entity List in this final
rule, pursuant to the Administrative Procedure Act (APA), 5 U.S.C.
553(b)(3)(B), BIS finds good cause to waive requirements that this rule
be subject to notice and the opportunity for public comment because it
would be contrary to the public interest. In determining whether to
grant a request for removal from the Entity List, a committee of U.S.
Government agencies (the End-User Review Committee (ERC)) evaluates
information about and commitments made by listed entities requesting
removal from the Entity List, the nature and terms of which are set

forth in 15 CFR part 744, Supplement No. 5, as noted in 15 CFR
744.16(b). The information, commitments, and criteria for this
extensive review were all established through the notice of proposed
rulemaking and public comment process (72 FR 31005 (June 5, 2007)
(proposed rule), and 73 FR 49311 (August 21, 2008) (final rule)). The
removal has been made within the established regulatory framework of
the Entity List. If the rule were to be delayed to allow for public
comment, U.S. exporters may face unnecessary economic losses as they
turn away potential sales to the entities removed by this rule because
the customer remained a listed entity on the Entity List even after the
ERC approved the removal pursuant to the rule published at 73 FR 49311
on August 21, 2008. By publishing without prior notice and comment, BIS
allows the applicant whose removal has been approved by the ERC to
receive U.S. exports immediately, subject to any other potential
license requirements that may apply under provisions of the EAR other
than the Entity List).
    Removals from the Entity List involve interagency deliberation and
result from review of public and non-public sources, including, where
applicable, sensitive law enforcement information and classified
information, and the measurement of such information against the Entity
List removal criteria. This information is extensively reviewed
according to the criteria for evaluating removal requests from the
Entity List, as set out in 15 CFR part 744, Supplement No. 5, and 15
CFR 744.16(b). For reasons of national security, BIS is not at liberty
to provide to the public detailed information on which the ERC relied
to make the decisions to remove these entities. In addition, the
information included in the removal request is information exchanged
between the applicant and the ERC, which by law (section 12(c) of the
Export Administration Act of 1979), BIS is restricted from sharing with
the public. Moreover, removal requests from the Entity List contain
confidential business information, which is necessary for the extensive
review conducted by the U.S. Government in assessing such requests.
    Section 553(d) of the APA generally provides that rules may not
take effect earlier than thirty (30) days after they are published in
the Federal Register. BIS finds good cause to waive the 30-day delay in
effectiveness under 5 U.S.C. 553(d)(1) because this rule is a
substantive rule that relieves a restriction. This rule's removal of
one entity from the Entity List removes requirements (the Entity-List-
based license requirement and limitation on use of license exceptions)
on this entity. The rule does not impose a requirement on any other
person for these removals from the Entity List. Further, no other law
requires that a notice of proposed rulemaking and an opportunity for
public comment be given for this final rule.
    6. The Department finds that there is good cause under 5 U.S.C.
553(b)(3)(B) to waive the provisions of the APA regarding notice of
proposed rulemaking, the opportunity for public comment, and a 30-day
delay in effective date for the modifications included in this rule
because, as described above, they are impracticable and are contrary to
the public interest. In addition, the changes are limited to providing
additional information that will assist the public in more easily
identifying the listed entities on the Entity List.
    7. Because a notice of proposed rulemaking and an opportunity for
public comment are not required to be given for this rule by 5 U.S.C.
553, or by any other law, the analytical requirements of the Regulatory
Flexibility Act, 5 U.S.C. 601 et seq., are not applicable. Accordingly,
no regulatory flexibility analysis is required and none has been
prepared.

List of Subjects in 15 CFR Part 744

    Exports, Reporting and recordkeeping requirements, Terrorism.

    Accordingly, part 744 of the Export Administration Regulations (15
CFR parts 730-774) is amended as follows:

PART 744--[AMENDED]

0
1. The authority citation for part 744 is revised to read as follows:

    Authority:  Pub. L. 115-232, Title XVII, Subtitle B. 50 U.S.C.
4601 et seq.; 50 U.S.C. 1701 et seq.; 22 U.S.C. 3201 et seq.; 42
U.S.C. 2139a; 22 U.S.C. 7201 et seq.; 22 U.S.C. 7210; E.O. 12058, 43
FR 20947, 3 CFR, 1978 Comp., p. 179; E.O. 12851, 58 FR 33181, 3 CFR,
1993 Comp., p. 608; E.O. 12938, 59 FR 59099, 3 CFR, 1994 Comp., p.
950; E.O. 12947, 60 FR 5079, 3 CFR, 1995 Comp., p. 356; E.O. 13026,
61 FR 58767, 3 CFR, 1996 Comp., p. 228; E.O. 13099, 63 FR 45167, 3
CFR, 1998 Comp., p. 208; E.O. 13222, 66 FR 44025, 3 CFR, 2001 Comp.,
p. 783; E.O. 13224, 66 FR 49079, 3 CFR, 2001 Comp., p. 786; Notice
of September 18, 2017, 82 FR 43825 (September 19, 2017); Notice of
November 6, 2017, 82 FR 51971 (November 8, 2017); Notice of January
17, 2018, 83 FR 2731 (January 18, 2018); Notice of August 8, 2018,
83 FR 39871 (August 13, 2018).

0
2. Supplement No. 4 to part 744 is amended:
0
a. Under China, the People's Republic of, by adding in alphabetical
order two Chinese entities ``Ma Yunong'' and ``Seajet Company
Limited'';
0
b. Under Greece, by removing one Greek entity, ``Top Electronics
Components S.A., 66 Alkminis & Aristovoulov Str, Kato Petralona,
Athens, Greece 11853'';
0
c. Under Hong Kong:
0
i. By adding in alphabetical order entities ``Calvin Law'' and ``CLC
Holdings Limited'';
0
ii. By revising entity''Joinus Freight Systems (H.K.) Limited''; and
0
iii. By adding in alphabetical order entities ``LHI Technology (H.K.)
Company Limited,'' ``Rau Hui,'' and ``ZM International Company Ltd.'';
0
d. Under Pakistan, by adding in alphabetical order two Pakistani
entities ``Technology Links PVT. Ltd.'';
0
e. Under Russia,
0
i. By revising entity ``Joint Stock Company Mikron''; and
0
ii. By adding in alphabetical order one entity ``RJSC Mikron'';
0
f. By adding in alphabetical order a heading for Saudi Arabia and one
Saudi Arabian entity ``UEC (Pvt.) Ltd.'';
0
g. Under Turkey, by adding in alphanumerical order two Turkish entities
3K Aviation Consulting and Logistics'' and ``Huseyin Engin Borluca'';
0
h. Under the United Arab Emirates, by adding in alphabetical order
three Emirati entities ``Good Luck Shipping LLC,'' Techare Sevices FZ
LLC,'' and ``UEC (Pvt.) Ltd.''; and
0
i. Under the United Kingdom, by adding in alphabetical order one
British entity ``Evans Meridians Ltd.''.
    The additions and revisions read as follows:

Supplement No. 4 to Part 744--Entity List

----------------------------------------------------------------------------------------------------------------
                                                              License         License review    Federal Register
            Country                      Entity             requirement           policy            citation
----------------------------------------------------------------------------------------------------------------

                                                  * * * * * * *
----------------------------------------------------------------------------------------------------------------

                                                                  * * * * * * *

CHINA, PEOPLE'S REPUBLIC OF      Ma Yunong, a.k.a., the  For all items      Presumption of     83 FR [INSERT FR
                                  following one alias:    subject to the     denial.            PAGE NUMBER 9/4/
                                 --George Ma...........   EAR. (See Sec.                        2018].
                                 B-804 SOHO New Town,     744.11 of the
                                  88 Jianguo Road,        EAR).
                                  Chaoyang District,
                                  Beijing, 100022,
                                  China; and Room 1002,
                                  LT Square, No. 500,
                                  Chengdu North Road,
                                  Shanghai, 200003,
                                  China; and Unit 1906-
                                  2, West Tower,
                                  Fortune Plaza, No.
                                  114, Tiyu Dong Rd,
                                  Tianhe District,
                                  Guangzhou 510620,
                                  China.

                                                                  * * * * * * *

                                 Seajet Company          For all items      Presumption of     83 FR [INSERT FR
                                  Limited, B-804 SOHO     subject to the     denial.            PAGE NUMBER 9/4/
                                  New Town, 88 Jianguo    EAR. (See Sec.                        2018].
                                  Road, Chaoyang          744.11 of the
                                  District, Beijing,      EAR).
                                  100022, China; and
                                  Room 1002, LT Square,
                                  No. 500, Chengdu
                                  North Road, Shanghai,
                                  200003, China; and
                                  Unit 1906-2, West
                                  Tower, Fortune Plaza,
                                  No. 114, Tiyu Dong
                                  Rd, Tianhe District,
                                  Guangzhou 510620,
                                  China; and No. 2,
                                  Juhe 6 Street,
                                  Jufuyuan, Business
                                  Development Tongzhou
                                  Di, Beijing, China;
                                  and Room 2, A316
                                  Haidin 9 Road,
                                  Tianjin, Port Free
                                  Trade Zone, Tianjin,
                                  China.

                                                                  * * * * * * *

                                                  * * * * * * *
----------------------------------------------------------------------------------------------------------------

                                                                  * * * * * * *

HONG KONG                        Calvin Law, Flat 2808,  For all items      Presumption of     83 FR [INSERT FR
                                  28/F, Asia Trade        subject to the     denial.            PAGE NUMBER 9/4/
                                  Centre, 79 Lei Muk      EAR. (See Sec.                        2018].
                                  Road, Kwai Chung,       744.11 of the
                                  N.T., Hong Kong; and    EAR).
                                  Units 801-803 and
                                  805, Park Sun
                                  Building, No. 97-107
                                  Wo Yi Hop Road, Kwai
                                  Chung, Hong Kong.

                                                                  * * * * * * *

                                 CLC Holdings Limited,   For all items      Presumption of     83 FR [INSERT FR
                                  a.k.a., the following   subject to the     denial.            PAGE NUMBER 9/4/
                                  one alias:              EAR. (See Sec.                        2018].
                                 --CLC Xpress..........   744.11 of the
                                 Flat 2808, 28/F, Asia    EAR).
                                  Trade Centre, 79 Lei
                                  Muk Road, Kwai Chung,
                                  N.T., Hong Kong; and
                                  Units 801-803 and
                                  805, Park Sun
                                  Building, No. 97-107
                                  Wo Yi Hop Road, Kwai
                                  Chung, Hong Kong.

                                                                  * * * * * * *

                                 Joinus Freight Systems  For all items      Presumption of     83 FR [INSERT FR
                                  (H.K.) Limited,         subject to the     denial.            PAGE NUMBER 9/4/
                                  a.k.a., the following   EAR. (See Sec.                        2018].
                                  two aliases:            744.11 of the
                                 --JFS Global             EAR).
                                  Logistics; and.
                                 --Joinus Freight
                                  Systems Global
                                  Logistics Limited.
                                 Unit 07-07, 25F, Tower
                                  B, Regent Centre, 63
                                  Wo Yi Hop Road, Kwai
                                  Chung, N.T. Hong Kong
                                  and Units 801-803 and
                                  805, Park Sun
                                  Building, No. 97-107
                                  Wo Yi Hop Road, Kwai
                                  Chung, Hong Kong.

                                                                  * * * * * * *

                                 LHI Technology (H.K.)   For all items      Presumption of     83 FR [INSERT FR
                                  Company Limited,        subject to the     denial.            PAGE NUMBER 9/4/
                                  Units 801-803 and       EAR. (See Sec.                        2018].
                                  805, Park Sun           744.11 of the
                                  Building, No. 97-107    EAR).
                                  Wo Yi Hop Road, Kwai
                                  Chung, Hong Kong.

                                                                  * * * * * * *

                                 Ray Hui,                For all items      Presumption of     83 FR [INSERT FR
                                 Units 801-803 and 805,   subject to the     denial.            PAGE NUMBER 9/4/
                                  Park Sun Building,      EAR. (See Sec.                        2018].
                                  No. 97-107 Wo Yi Hop    744.11 of the
                                  Road, Kwai Chung,       EAR).
                                  N.T., Hong Kong.

                                                                  * * * * * * *

                                 ZM International        For all items      Presumption of     83 FR [INSERT FR
                                  Company Ltd.,           subject to the     denial.            PAGE NUMBER 9/4/
                                 4/F Enterprise Bldg      EAR. (See Sec.                        2018].
                                  228-238, Queen's Road   744.11 of the
                                  Central, Hong Kong;     EAR).
                                  and Room C, 22/F, 235
                                  Wing Lok Street,
                                  Trade Centre, Sheung
                                  Wan, Hong Kong.

                                                  * * * * * * *
----------------------------------------------------------------------------------------------------------------
PAKISTAN
                                                                  * * * * * * *

                                 Technology Links Pvt.   For all items      Presumption of     83 FR [INSERT FR
                                  Ltd., a.k.a., the       subject to the     denial.            PAGE NUMBER 9/4/
                                  following two           EAR. (See Sec.                        2018].
                                  aliases:                744.11 of the
                                 --Techlinks; and......   EAR).
                                 --Techlink
                                  Communications.
                                 4/10-11-12 Rimpa
                                  Plaza, M.A. Jinnah
                                  Road, Karachi,
                                  Pakistan; and Suite
                                  3, 2nd Floor, Kashmir
                                  Center, 632/G-1
                                  Market Johar Town,
                                  Lahore, Pakistan; and
                                  111B Block No.2,
                                  Mezzanine Floor,
                                  Khalid bin Waleed
                                  Road, P.E.C.H.S.,
                                  Karachi, Pakistan.

                                                                  * * * * * * *
                                 --UEC (Pvt.) Ltd.,      For all items      Presumption of     83 FR [INSERT FR
                                 29-M, Civic Centre,      subject to the     denial.            PAGE NUMBER 9/4/
                                  Model Town Ext.         EAR. (See Sec.                        2018].
                                  Lahore-43700,           744.11 of the
                                  Pakistan; and Office    EAR).
                                  No. 610, 6th Floor,
                                  Progressive Centre,
                                  30-A, Block No. 6,
                                  P.E.C.H.S., Karachi,
                                  Pakistan (See
                                  alternate addresses
                                  under Saudi Arabia
                                  and U.A.E.).

                                                                  * * * * * * *

                                                  * * * * * * *
----------------------------------------------------------------------------------------------------------------
RUSSIA
                                                                  * * * * * * *

                                 Joint Stock Company     For all items      Presumption of     83 FR [INSERT FR
                                  (JSC) NIIME, a.k.a.,    subject to the     denial.            PAGE NUMBER 9/4/
                                  the following two       EAR. (See Sec.                        2018].
                                  aliases:                744.11 of the
                                 --Aktsionernoe           EAR).
                                  Obshchestvo (AO).
                                 Nauchnoisledovatelskiy
                                  Institut
                                  Molekulyarnoy
                                  Elektroniki (NIIME);
                                  and.
                                 --Molecular
                                  Electronics Research
                                  Institute (MERI).
                                 1st Zapadniy Proezd 12/
                                  1, Zelenograd,
                                  Russia, 124460.

                                                                  * * * * * * *

                                 PJSC Mikron,            For all items      Presumption of     83 FR [INSERT FR
                                 1st Zapadniy Proezd 12/  subject to the     denial.            PAGE NUMBER 9/4/
                                  1, Zelenograd,          EAR. (See Sec.                        2018].
                                  Russia, 124460.         744.11 of the
                                                          EAR).

                                                                  * * * * * * *
----------------------------------------------------------------------------------------------------------------
SAUDI ARABIA                     UEC (Pvt.) Ltd.,        For all items      Presumption of     83 FR [INSERT FR
                                 P.O. Box 245221,         subject to the     denial.            PAGE NUMBER 9/4/
                                  Riyadh 11312, Kingdom   EAR. (See Sec.                        2018].
                                  of Saudi Arabia (See    744.11 of the
                                  alternate addresses     EAR).
                                  under Pakistan and
                                  U.A.E.).

                                                  * * * * * * *
----------------------------------------------------------------------------------------------------------------
TURKEY.........................  3K Aviation Consulting  For all items      Presumption of     83 FR [INSERT FR
                                  and Logistics,          subject to the     denial.            PAGE NUMBER 9/4/
                                  a.k.a., the following   EAR. (See Sec.                        2018].
                                  one alias:              744.11 of the
                                 --3K Havacilik ve        EAR.).
                                  Danismanlik SAN. TIC.
                                  LTD. ST.
                                 Biniciler Apt. Savas
                                  Cad. No. 18/5,
                                  Sirinyali Mah. 07160,
                                  Antalya, Turkey; and
                                  Sonmez Apt. No. \4/5\
                                  1523 Sokak, Sirinyali
                                  Mah. 07160, Antalya,
                                  Turkey.

                                                                  * * * * * * *
                                 Huseyin Engin Borluca,  For all items      Presumption of     83 FR [INSERT FR
                                 Biniciler Apt. Savas     subject to the     denial.            PAGE NUMBER 9/4/
                                  Cad. No. 18/5,          EAR. (See Sec.                        2018].
                                  Sirinyali Mah. 07160,   744.11 of the
                                  Antalya, Turkey; and    EAR.).
                                  Sonmez Apt. No. \4/5\
                                  1523 Sokak, Sirinyali
                                  Mah. 07160, Antalya,
                                  Turkey.

                                                                  * * * * * * *

                                                  * * * * * * *
----------------------------------------------------------------------------------------------------------------

                                                                  * * * * * * *

UNITED ARAB EMIRATES             Good Luck Shipping      For all items      Presumption of     83 FR [INSERT FR
                                  LLC, a.k.a., as the     subject to the     denial.            PAGE NUMBER 9/4/
                                  following two           EAR. (See Sec.                        2018].
                                  aliases:                744.11 of the
                                 --Good Luck Shipping     EAR.).
                                  Services; and.
                                 --GLS.................
                                 Office 206/207 Malik
                                  Saeed, Ahmad
                                  Ghabbash, Bur Dubai,
                                  UAE; and P.O. Box
                                  8486, Dubai, UAE; PO
                                  Box 5562, Dubai, UAE.

                                                                  * * * * * * *

                                 Techcare Services FZ    For all items      Presumption of     83 FR [INSERT FR
                                  LLC,                    subject to the     denial.            PAGE NUMBER 9/4/
                                 No. 1, Ground Floor      EAR. (See Sec.                        2018].
                                  Office 8/D, P.O. Box    744.11 of the
                                  312391, Al-Jazeera Al   EAR.).
                                  Hamra, UAE.

                                                                  * * * * * * *

                                 UEC (Pvt.) Ltd.,......  For all items      Presumption of     83 FR [INSERT FR
                                 P.O. Box 97, Abu         subject to the     denial.            PAGE NUMBER9/4/
                                  Dhabi, UAE (See         EAR. (See Sec.                        2018].
                                  alternate addresses     744.11 of the
                                  under Pakistan and      EAR.).
                                  Saudi Arabia).

                                                                  * * * * * * *

                                                  * * * * * * *
----------------------------------------------------------------------------------------------------------------

                                                                  * * * * * * *

UNITED KINGDOM                   Evans Meridians Ltd.,   For all items      Presumption of     83 FR [INSERT FR
                                 Drake Chambers, 1st      subject to the     denial.            PAGE NUMBER 9/4/
                                  Floor Yamraj            EAR. (See Sec.                        2018].
                                  Building, PO Box        744.11 of the
                                  3321, Road Town,        EAR.).
                                  Tortola, British
                                  Virgin Islands.

                                                                  * * * * * * *

                                                  * * * * * * *
----------------------------------------------------------------------------------------------------------------

    Dated: August 24, 2018.
Richard E. Ashooh,
Assistant Secretary for Export Administration.
[FR Doc. 2018-18766 Filed 8-31-18; 8:45 am]
 BILLING CODE 3510-33-P


[Federal Register Volume 83, Number 164 (Thursday, August 23, 2018)]
[Notices]
[Pages 42743-42749]
[FR Doc No: 2018-18159]

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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-83871; File No. SR-DTC-2018-007]

Self-Regulatory Organizations; The Depository Trust Company;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Amend the Process of the Reduction of Dividend or Interest Payments to
a Participant on Treasury Shares or Repurchased Debt Securities

August 17, 2018.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on August 9, 2018, The Depository Trust Company (``DTC'') filed with
the Securities and Exchange Commission (``Commission'') the proposed
rule change as described in Items I, II and III below, which Items have
been prepared by the clearing agency. DTC filed the proposed rule
change pursuant to Section 19(b)(3)(A) of the Act \3\ and Rule 19b-
4(f)(6) \4\ thereunder. The Commission is publishing this notice to
solicit comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 15 U.S.C. 78s(b)(3)(A).
    \4\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------

I. Clearing Agency's Statement of the Terms of Substance of the
Proposed Rule Change

    The proposed rule change of DTC would amend the Operational
Arrangements and the Distributions Guide`` \5\ to streamline the
process for reducing payment to a Participant of a dividend or interest
payment with respect to an equity or debt security, when such
Participant held, on the record date for the distribution: (i) Shares
of the security that had been repurchased by the issuer of the security
(``Treasury Shares'') or (ii) debt that had been repurchased by the
issuer of the debt (``Repurchased Debt Securities''). Specifically, DTC
proposes to provide functionality to Participants so that a Participant
that held Treasury Shares or Repurchased Debt Securities on the record
date would use the Corporate Actions Web (``CA Web'') to reduce its
entitlement to the distribution by the amount attributable to the
Treasury Shares or Repurchased Debt Securities. The proposed rule
change would also amend the Fee Guide to modify and clarify the fees
associated with Treasury Shares or Repurchased Debt Securities
adjustments.\6\ In addition, DTC would make ministerial and clarifying
changes to the Operational Arrangements and the Fee Guide, as discussed
below.
---------------------------------------------------------------------------

    \5\ Each capitalized term not otherwise defined herein has its
respective meaning as set forth in the Rules, By-Laws and
Organization Certificate of DTC (the ``Rules''), available at http://www.dtcc.com/legal/rules-and-procedures.aspx; the DTC Operational
Arrangements (Necessary for Securities to Become and Remain Eligible
for DTC Services) (``Operational Arrangements''), available at
http://www.dtcc.com/~/media/Files/Downloads/legal/issue-eligibility/
eligibility/operational-arrangements.pdf; the Distributions Service
Guide (the ``Distributions Guide''), available at http://
www.dtcc.com/~/media/Files/Downloads/legal/service-guides/
Service%20Guide%20Distributions.pdf; and the Guide to the 2018 DTC
Fee Schedule (``Fee Guide''), available at http://www.dtcc.com/~/
media/Files/Downloads/legal/fee-guides/dtcfeeguide.pdf.
    \6\ The proposed rule changes with respect to the Fee Guide
would apply to Treasury Shares or Repurchased Debt Securities
position adjustments in connection with distributions with a record
date as well as to distributions with an effective date (i.e.,
mandatory corporate actions). For information on the process for
reducing payment on Treasury Shares or Repurchased Debt Securities
in connection with an effective date distribution, see Operational
Arrangements, supra note 5, at 42-43.
---------------------------------------------------------------------------

II. Clearing Agency's Statement of the Purpose of, and Statutory Basis
for, the Proposed Rule Change

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

(A) Clearing Agency's Statement of the Purpose of, and Statutory Basis
for, the Proposed Rule Change

1. Purpose
    The proposed rule change would amend the Operational Arrangements
and the Distributions Guide to streamline the process for reducing
payment to a Participant of a dividend or interest payment with respect
to an equity or debt security, when such Participant held, on the
record date for the distribution, Treasury Shares or Repurchased Debt
Securities. Specifically, DTC proposes to provide functionality to
Participants so that a Participant that held Treasury Shares or
Repurchased Debt Securities on the record date would use the CA Web to
reduce its entitlement to the distribution by the amount attributable
to the Treasury Shares or Repurchased Debt Securities. The proposed
rule change would also amend the Fee Guide to modify and clarify the
fees associated with Treasury Shares or Repurchased Debt Securities
adjustments. In addition, DTC would make ministerial and clarifying
changes to the Operational Arrangements and the Fee Guide, as discussed
below.
(i) Background
A. Dividend and Interest Payments
    DTC receives information on dividend and interest payment
distributions (each, an ``announcement'') from the issuer, the transfer
agent or paying agent of the issuer (each, an ``Agent''), exchanges,
trustees, and various other industry sources.\7\ An announcement of a
distribution typically includes, among other things, a security
description and CUSIP, record date, payable date, and either the rate
per share for a dividend or the interest rate per $1,000 principal
amount. DTC uses the information to

publish a notice of the distribution to its Participants.\8\
---------------------------------------------------------------------------

    \7\ DTC also maintains internal records for scheduled fixed rate
interest and principal payments.
    \8\ DTC typically publishes announcements via CA Web and
International Organization for Standardization (``ISO'') 20022
messaging. For information about CA Web and ISO 20022, see
Securities Exchange Act Release No. 79746 (January 5, 2017), 82 FR
3372 (January 11, 2017) (SR-DTC-2016-014).
---------------------------------------------------------------------------

    With respect to a distribution with a record date (a ``Record Date
Distribution''), DTC systemically captures the position in the subject
security for each Participant as of the record date (``Record Date
Position''). DTC calculates the distribution entitlement of each
Participant based on its Record Date Position, the rate information in
the announcement, and any elections of the Participant with respect to
options offered by distribution event, if applicable.\9\ Each
Participant may view its projected entitlements as calculated by
DTC.\10\ Based on the aggregate entitlements of all Participants that
had position in the CUSIP on the record date, DTC calculates the amount
of funds (for an interest payment or cash dividend) and/or shares of
stock (for a stock dividend) it expects to receive from the Agent on
the payable date (``DTC Expected Payment'').
---------------------------------------------------------------------------

    \9\ Examples of option types include elections for cash,
securities, or a combination of both.
    \10\ A Participant can obtain information about its Record Date
Positions and entitlements from DTC through DTC's Computer-to-
Computer Facility (``CCF'') files, CA Web and ISO 20022. For
information about CCF files, see Securities Exchange Act Release No.
79746 (January 5, 2017), 82 FR 3372 (January 11, 2017) (SR-DTC-2016-
014). It is the Participant's responsibility to verify the accuracy
of information against its own records, and to report any
discrepancy to DTC. See Distributions Guide, supra note 5, at 24.
---------------------------------------------------------------------------

    Typically, on the Business Day prior to the payable date, DTC will
confirm the DTC Expected Payment with the Agent. On the payable date,
DTC receives the payment of funds and/or shares of stock from the
Agent. After DTC validates that it has received the full amount of the
DTC Expected Payment, DTC will allocate the distribution to
Participants in accordance with the entitlement of each Participant.
B. Current Process for the Reduction of Payment on Treasury Shares or
Repurchased Debt Securities (for Cash Dividend, Stock Dividend, or
Interest Payments)
    An issuer may engage in a stock or debt buyback program, which may
include repurchasing its securities through a broker dealer or market
maker that is a Participant or a direct or indirect customer of a
Participant. If the repurchased securities are neither cancelled by the
issuer nor withdrawn from DTC by the Participant before the record date
for a distribution, then the Participant would be holding Treasury
Shares or Repurchased Debt Securities on the record date.
    A Participant that is holding Treasury Shares or Repurchased Debt
Securities on the record date (which, by definition, the Participant
holds directly or indirectly for the benefit of the issuer), should not
receive a distribution payment with respect to such shares because,
generally, an issuer does not make a distribution to itself. As such,
an Agent should not include Treasury Shares or Repurchased Debt
Securities when it calculates the total amount of a Record Date
Distribution it will pay DTC on the payable date.
    However, DTC does not have independent knowledge of whether a
Participant is holding Treasury Shares or Repurchased Debt Securities.
If DTC is not aware that the Record Date Position of a Participant
includes Treasury Shares or Repurchased Debt Securities, DTC would
calculate its DTC Expected Payment based on the total of Record Date
Positions of its Participants, including any Treasury Shares or
Repurchased Debt Securities. The imbalance may not be discovered until
DTC confirms the DTC Expected Payment with the Agent on the Business
Day prior to the payable date, or even on the payable date, when DTC
may receive a distribution from the Agent that is less than the DTC
Expected Payment (because the Agent did not include the funds and/or
shares of stock otherwise attributable to the Treasury Shares or
Repurchased Debt Securities).
    DTC needs to be informed of the amount of any Treasury Shares or
Repurchased Debt Securities that were held by any Participant on the
record date, so DTC can reduce the captured Record Date Position of the
relevant Participant, recalculate the expected entitlement of such
Participant and adjust the DTC Expected Payment accordingly. For
example, if ten shares of CUSIP X were credited to the account of a
Participant on the record date for a dividend distribution for CUSIP X,
the captured Record Date Position of the Participant would be ten
shares of CUSIP X. Ordinarily, DTC would calculate the amount of the
entitlement of the Participant to the dividend by applying the
announced rate for the distribution to the Record Date Position of ten
shares. However, assume that four of the ten shares of CUSIP X of the
Participant's Record Date Position were Treasury Shares. The
Participant would not be entitled to receive a dividend for its entire
Record Date Position of ten shares of CUSIP X. Once informed that the
Participant was holding four shares of CUSIP X that were Treasury
Shares on the record date, DTC would need to reduce the Record Date
Position of the Participant by four shares. DTC would then need to
recalculate the entitlement of the Participant by applying the
announced rate to the adjusted Record Date Position of six shares of
CUSIP X.
    As currently provided in the Operational Arrangements, an issuer or
Agent must notify DTC in writing that one or more Participants held
Treasury Shares or Repurchased Debt Securities on the record date, and
that the DTC Expected Payment will be reduced by the amount
attributable to the Treasury Shares or Repurchased Debt Securities held
by the Participant(s). The issuer or Agent letter must include
identification of the security, record date, payable date, the total
number of Treasury Shares or Repurchased Debt Securities held at DTC on
the record date, Participant name and number, and number of shares/
principal value per Participant subject to the reduction.\11\ DTC must
also receive a signed letter from each Participant that was holding the
Treasury Shares or Repurchased Debt Securities that includes, among
other things, a Participant officer-level authorization of the
reduction, and an indemnification statement.\12\
---------------------------------------------------------------------------

    \11\ Since 2002, the issuer or Agent has been responsible for
notifying DTC of a payment reduction due to Treasury Shares or
Repurchased Debt Securities. See Securities Exchange Release No.
45994 (May 29, 2002), 67 FR 39452 (June 7, 2002) (SR-DTC-2002-02).
    \12\ In 2011, DTC modified the process to require that the
issuer or Agent also provide DTC with Participant(s) confirmation
letters of the Treasury Shares or Repurchased Debt Securities that
they held on the record date. Securities Exchange Act No. 65901
(December 6, 2011), 76 FR 77281, 77282 (December 12, 2011) (SR-DTC-
2011-10).
---------------------------------------------------------------------------

    The letters from the issuer or Agent and Participant(s) must be
emailed to the designated DTC mailbox no later than three Business Days
prior to the payable date. Once DTC receives the letters, DTC manually
verifies the information in the letters against the applicable
distribution announcement for CUSIP, record date, payable date, and
rate, and validates the Record Date Position of the applicable
Participant(s). DTC staff then use the Position Adjustment Tool
(``PAT''), an existing internal function of its Participant Browser
System (``PBS''), to reduce the Record Date Position of the
Participant(s) by the amount of the Treasury Shares or Repurchased Debt
Securities that were held by the Participant(s) on the record date.\13\
The

projected entitlement of the Participant(s) to the distribution is then
recalculated by applying the announced rate to the adjusted Record Date
Position(s). The manual reduction must be completed on or before two
Business Days prior to the payable date, because PAT requires overnight
processing. On the Business Day prior to the payable date, DTC reviews
and adjusts, as necessary, any of the elections the Participant(s) made
prior to the position reduction (e.g., tax elections or dividend
reinvestment) that may have been affected by the adjustment.\14\
---------------------------------------------------------------------------

    \13\ This adjustment only affects the captured Record Date
Position for purposes of the distribution. There is no change to the
actual position held by the Participant.
    \14\ The DTC Expected Amount would be recalculated accordingly.
---------------------------------------------------------------------------

C. Current Fees
    Currently, each Participant is charged fifty dollars ($50) per
position adjustment,\15\ provided that the adjustment is made no later
than two Business Days prior to the payable date (a ``timely'' position
adjustment).\16\
---------------------------------------------------------------------------

    \15\ Position adjustment fees are charged per adjustment
irrespective of security-type or value of the distribution. These
fees also apply to position adjustments with respect to
distributions with an effective date. Position adjustments in
connection with a distribution with an effective date are infrequent
and may occur approximately once a year.
    \16\ See Fee Guide, supra note 5, at 8. The fee was established
in 2011 at forty dollars ($40) to recover costs. See Securities
Exchange Act Release No. 63659 (January 6, 2011), 76 FR 2430
(January 13, 2011) (SR-DTC-2010-17). The fee was increased in 2013
to fifty dollars ($50). See Securities Exchange Act Release No.
65597 (May 16, 2013), 78 FR 30382 (May 22, 2013) (SR-DTC-2013-06).
---------------------------------------------------------------------------

    If a Participant submits a position adjustment request less than
two Business Days prior to the payable date (a ``late'' position
adjustment), it is charged a fee of three hundred and fifty dollars
($350) reflecting (i) DTC costs associated with the adjustment, and
(ii) a disincentive charge, in order to discourage late position
adjustments, which require exception processing.\17\
---------------------------------------------------------------------------

    \17\ See Fee Guide, supra note 5, at 8. The fee was established
in 2011 at three hundred dollars ($300) to recover the increased
costs of late adjustments as well as to discourage behavior that was
keeping the industry from achieving peak efficiency (i.e., exception
processing due to late submissions). See Securities Exchange Act
Release No. 63659 (January 6, 2011), 76 FR 2430 (January 13, 2011)
(SR-DTC-2010-17). When DTC makes a position adjustment with less
than two Business Days prior to the payable date, (i) it requires
additional analysis, (ii) the payable date activities and
calculations for the distribution are disrupted, and (iii) resources
need to be diverted to perform research, resolve any imbalance with
the Agent, and coordinate the return of any overpayment. The fee was
increased in 2013 to three hundred and fifty dollars ($350) to
further discourage exception processing and to more closely align to
the amount of risk presented, as well as to the costs of additional
research and analysis by DTC to ascertain exact event details,
Participant entitlements and payment calculations. See Securities
Exchange Act Release No. 65597 (May 16, 2013), 78 FR 30382 (May 22,
2013) (SR-DTC-2013-06). Approximately two hundred and fifty dollars
($250) of the fee was attributable to cost recovery, the balance of
approximately one hundred dollars ($100) was a charge to discourage
exception processing. Since then, approximately 10% of all Record
Date Position adjustments have been late.
---------------------------------------------------------------------------

(ii) Proposal
A. Position Adjustment Tool
    DTC is in the process of migrating PAT from PBS to CA Web, and,
pursuant to the proposed rule change, would make this functionality
available to Participants for this purpose. The proposed rule change
would provide that a Participant that held Treasury Shares or
Repurchased Debt Securities on the record date must use the PAT
functionality on the CA Web to reduce its Record Date Position by the
amount of the Treasury Shares or Repurchased Debt Securities it held on
the record date.\18\ By allowing Participants to use this
functionality, and by removing direct DTC intervention, the proposed
rule change would help automate and streamline the position adjustment
process, reducing the risk of errors and delays associated with the
manual submission and processing of Record Date Position
adjustments.\19\ In addition, for timely position adjustments, an
issuer or Agent would no longer be required to initiate the position
adjustment.\20\
---------------------------------------------------------------------------

    \18\ The requirement to use the CA Web PAT functionality would
only apply to Record Date Distributions. DTC will continue to use
the existing manual process and forms with respect to distributions
with an effective date. See Operational Arrangements, supra note 5,
at 42-43.
    \19\ Such errors may include, but are not limited to, data input
errors, event misidentification, and entitlement calculation errors.
Such errors could result in incorrect allocations which would need
to be reversed and reallocated, thereby affecting payment finality.
Even pre-allocation, such errors could lead to an imbalance with the
Agent. If DTC cannot balance with the Agent, the allocation of the
distribution could be delayed while DTC researches and resolves the
issue and rebalances with the Agent. Reversed or delayed allocations
could also impact Participants that had relied on the allocation to
effect other securities transactions and would therefore impact the
prompt and accurate clearance and settlement of securities
transactions.
    \20\ Since the requirement for Participant confirmation letters
was added in 2011, DTC has increasingly relied on the Participant
confirmation letters and DTC's reconciliation with the issuer or
Agent before the payable date. As such, DTC believes that the
initial issuer or Agent letter would not be necessary in connection
with a Participant's position adjustment through the CA Web, because
the entitlements would systemically be updated and would be more
easily reconciled with the issuer or Agent.
---------------------------------------------------------------------------

    DTC believes that the process for a Participant to adjust its
Record Date Position for a distribution using PAT functionality on CA
Web would be straightforward. Currently, a Participant can view its
Record Date Position and its entitlement with respect to a specific
distribution event on the ``Entitlements'' tab on CA Web. Pursuant to
the proposed rule change, the PAT functionality for a Record Date
Distribution would be available on the Entitlements tab for any
Participant that held a position on the record date. Using PAT, the
Participant would reduce its Record Date Position in the subject CUSIP
by the amount of Treasury Shares or Repurchased Debt Securities it held
on the record date. The DTC system would then systemically recalculate
the entitlement of the Participant based on the adjusted Record Date
Position.
    The proposed rule change would not affect the existing deadline for
submitting a timely Record Date Position adjustment.\21\ Therefore, a
Participant would have to make its position adjustment through the CA
Web no later than two Business Days prior to the payable date. If a
Participant wants to adjust its entitlement less than two Business Days
prior to the payable date, it would have to follow the existing manual
process described above.
---------------------------------------------------------------------------

    \21\ PAT would continue to require overnight processing.

B. Fee Change
    Pursuant to the proposed rule change, DTC would amend the Fee Guide
to modify the fees associated with position adjustments with respect to
Treasury Shares or Repurchased Debt Securities, in order to (i) align
the fees with the operational costs of processing a Record Date
Position adjustment and (ii) encourage Participants to process their
own Record Date Position adjustments with the PAT functionality through
CA Web, rather than relying on the manual and exception processing that
is required for a late position adjustment.
    Under the proposed rule change, a Participant that adjusts its
position no later than two Business Days prior to the payable date
would be charged twenty-five dollars ($25) per adjustment, a decrease
from the current fee of fifty dollars ($50).\22\ DTC believes that the
lower fee would be appropriate because DTC would have reduced costs due
to the decrease in DTC's manual processing.
---------------------------------------------------------------------------

    \22\ See supra note 16.
---------------------------------------------------------------------------

    In addition, DTC would increase the fee charged to the Participant
for a position adjustment performed less than two Business Days prior
to the payable date. The fee would be increased from three hundred and
fifty dollars ($350) to five hundred dollars ($500) per adjustment. The
purpose of the proposed increase is to encourage

Participants to use the PAT functionality to perform Record Date
Position adjustments by discouraging the late submissions of position
adjustments, which would continue to require manual and exception
processing.\23\
---------------------------------------------------------------------------

    \23\ See supra note 17. Approximately two hundred and fifty
dollars ($250) of the proposed fee would be attributable to cost,
and the balance of approximately two hundred and fifty dollars
($250) would be a disincentive charge.
---------------------------------------------------------------------------

(iii) Proposed Rule Changes
A. Operational Arrangements
    Section IV.C.2.
    Pursuant to the proposed rule change, the Operational Arrangements
would be amended to add a paragraph under the current heading
``Reduction of Payment on Treasury or Repurchased Securities (for Cash
Dividend or Interest Payment),'' which would be retitled ``Reduction of
Payment on Treasury Shares or Repurchased Debt Securities (for Cash
Dividend or Interest Payment)'' to clarify that the process applies to
both debt and equity securities. The proposed paragraph would state
that ``[a] Participant that holds treasury shares or repurchased debt
securities (i.e., issuer buy-back) at DTC on the record date for a cash
dividend or interest payment shall submit an instruction through the
Corporate Actions Web (``CA Web'') to reduce its entitlement to the
payment by the amount attributable to such treasury shares or
repurchased securities. Such instruction must be submitted by the
Participant no later than two business days prior to payable date;
otherwise, an instruction will need to be manually submitted to DTC in
accordance with the below process.''
    The proposed rule change would not substantively change the
existing paragraph that describes the manual process that would be
required of the issuer or Agent if a Participant does not submit an
instruction through CA Web no less than two Business Days prior to the
payable date. However, pursuant to the proposed rule change, the
paragraph would be amended to clarify language. Specifically, the
paragraph would reflect that the manual process would apply if the
Participant does not submit an instruction through CA Web, and language
about a deadline that is no longer applicable would be removed.
    Section IV.D.3.
    Pursuant to the proposed rule change, the Operational Arrangements
would be amended to add a paragraph under the current heading
``Reduction of Payment on Treasury or Repurchased Securities (for Stock
Dividend Payments),'' which would be retitled ``Reduction of Payment on
Treasury Shares (for Stock Dividend Payments)'' to clarify that the
process applies to equity securities. The proposed paragraph would
state that ``[a] Participant that holds treasury shares at DTC on the
record date for a stock dividend payment shall submit an instruction
through the CA Web to reduce its entitlement to the distribution by the
amount attributable to such treasury shares. Such instruction must be
submitted by the Participant no later than two business days prior to
payable date; otherwise, an instruction will need to be manually
submitted to DTC in accordance with the below process.''
    The proposed rule change would not substantively change the
existing paragraph that describes the manual process that would be
required of the issuer or Agent if a Participant misses the cut-off for
adjusting its Record Date Position with PAT. However, pursuant to the
proposed rule change, the paragraph would be amended to streamline
language. Specifically, the paragraph would reflect that it would apply
if the Participant does not submit an instruction through CA Web no
less than two Business Days prior to the payable date, and language
about a deadline that is no longer applicable would be removed.
    Section VI.B.1.
    In addition, for consistency, DTC proposes to replace the current
heading with ``Reduction of Payment on Treasury Shares or Repurchased
Debt Securities.''
B. Distributions Guide
    As discussed above, pursuant to the proposed rule change, an issuer
or Agent would no longer be required to initiate a Record Date Position
adjustment with respect to Treasury Shares or Repurchased Debt
Securities.\24\ Rather, a Participant that held Treasury Shares or
Repurchased Debt Securities on the record date for a distribution would
be able to directly adjust its own Record Date Position. As such, DTC
is proposing to amend the Distributions Guide to add a section titled
``Position Adjustment for Reduction of Payment on Treasury Shares or
Repurchased Debt Securities (for Record Date Distributions).'' The
section would provide that ``[t]o the extent that a participant is
holding treasury shares or repurchased debt securities (i.e., issuer
buyback) on the record date for a cash or stock dividend or interest
payment, the participant may not be entitled to the distribution. The
participant must utilize the position adjustment tool in CA Web to
reduce its record date position of the subject CUSIP by the amount of
the treasury or repurchased securities, so that it will not be funded
on payable date for such securities. Position adjustments through CA
Web must be made no later than two business days prior to payable date.
On or after the business day prior to payable date, the adjustment will
need to be manually processed, as further described in the Operational
Arrangements, and the participant will be subject to an additional
fee.''
---------------------------------------------------------------------------

    \24\ See supra note 20.

C. Fee Guide
    Pursuant to the proposed rule change, the Fee Guide would be
amended to reflect that the fee charged to a Participant that adjusts
its position with respect to Treasury Shares or Repurchased Debt
Securities on or before two Business Days prior to the payable date
would be twenty-five dollars ($25), a decrease from the current fee of
fifty dollars ($50). The Fee Guide would also be amended to reflect
that the fee charged to a Participant for a position adjustment
performed less than two Business Days prior to the payable date would
be increased from three hundred and fifty dollars ($350) to five
hundred dollars ($500).
    For enhanced clarity, DTC is proposing to change the relevant
heading in the Fee Guide from ``Treasury Shares'' to ``Treasury Shares
or Repurchased Debt Securities Adjustments'' to reflect that the
process and fees apply to both equity and debt securities. For
consistency, DTC would also modify the fee names under this heading
from ``Treasury Shares Adjustments'' to ``Treasury Shares or
Repurchased Debt Securities Adjustments'' and from ``Late Treasury
Shares Adjustments'' to ``Late Treasury Shares or Repurchased Debt
Securities Adjustments.''
    Pursuant to the proposed rule change, DTC would modify the
conditions listed in the Fee Guide to clarify the time at which an
adjustment is late, in order to conform to current practice. For
``Treasury Shares or Repurchased Debt Securities Adjustments,'' the
condition would be modified to state: ``Per adjustment made on or
before 2 business days prior to payable date.'' For ``Late Treasury
Shares or Repurchased Debt Securities Adjustments,'' the condition
would be modified to state: ``Per adjustment made less than 2 business
days prior to payable date.''
D. Implementation Timeframe
    DTC expects to implement the proposed changes no earlier than
thirty

(30) days after the date of filing, or such shorter time as the
Commission may designate, and no later than October 1, 2018. DTC would
announce the implementation date of the proposed change by Important
Notice, posted to its website.
2. Statutory Basis
    DTC believes that the proposed rule change is consistent with the
requirements of the Act and the rules and regulations thereunder
applicable to a registered clearing agency. Specifically, DTC believes
that the proposed rule change is consistent with Section 17A(b)(3)(F)
of the Act \25\ and Section 17A(b)(3)(D) of the Act \26\ for the
reasons described below.
---------------------------------------------------------------------------

    \25\ 15 U.S.C. 78q-1(b)(3)(F).
    \26\ 15 U.S.C. 78q-1(b)(3)(D).
---------------------------------------------------------------------------

    Section 17A(b)(3)(F) of the Act requires, inter alia, that the
Rules be designed to promote the prompt and accurate clearance and
settlement of securities transactions.\27\ By automating the Record
Date Position adjustment process for Treasury Shares and Repurchased
Debt Securities, thereby reducing the manual intervention by DTC, the
proposed rule change would (i) increase the efficiency of the DTC
centralized processing of dividend and interest payments by
streamlining the Record Date Position adjustment process, and (ii)
reduce the risk of errors and delays associated with manual
processing,\28\ which DTC believes would promote the prompt and
accurate clearance of securities transactions by DTC. In addition, the
proposed rule change would make clarifying and ministerial changes to
the Operational Arrangements and Fee Guide. Making clarifying and
ministerial changes to help ensure that the procedures relating to
position adjustments in connection with Treasury Shares or Repurchased
Debt Securities are accurate and clear would facilitate Participants'
understanding of their rights and obligations with respect thereto.
When Participants better understand their rights and obligations
regarding DTC's services, they can act in accordance with the Rules,
which DTC believes would promote the prompt and accurate clearance and
settlement of securities transactions by DTC. Therefore, DTC believes
that these proposed rule changes would promote the prompt and accurate
clearance and settlement of securities transactions, consistent with
Section 17A(b)(3)(F) of the Act, cited above.
---------------------------------------------------------------------------

    \27\ 15 U.S.C. 78q-1(b)(3)(F).
    \28\ See supra note 19.
---------------------------------------------------------------------------

    Section 17A(b)(3)(D) of the Act requires, inter alia, that the
Rules provide for the equitable allocation of reasonable fees among
Participants.\29\ DTC believes that the proposed rule change to the fee
with respect to a timely position adjustment would provide for the
equitable allocation of reasonable fees. DTC's manual intervention in
the Record Date Position adjustment process would be reduced because
Participants would be able to use the PAT functionality to make their
Record Date Position adjustments, and therefore DTC's costs with
respect to processing timely Record Date Position adjustments would
decrease. Pursuant to the proposed rule change, the fee would be
reduced to align with the anticipated decrease in operational costs for
DTC, and therefore would be reasonable. In addition, the fee would
continue to be charged on a per adjustment basis and would therefore be
equitably allocated because all Participants that perform timely
position adjustments would be treated equally under the proposal.
---------------------------------------------------------------------------

    \29\ 15 U.S.C. 78q-1(b)(3)(D).
---------------------------------------------------------------------------

    DTC believes that the proposed rule changes to the fee with respect
to a late position adjustment would provide for the equitable
allocation of reasonable fees. Currently, the fee is designed (i) to
align with DTC's operational cost (approximately 71% of the fee), and
(ii) to have a deterrent effect on late adjustments (approximately 29%
of the fee). DTC's operational costs for late position adjustments
would not change pursuant to the proposed rule change. However, as
noted above, under the current fee approximately 10% of Record Date
Position adjustments continue to be late, which suggests that the
disincentive portion of the current fee does not have a sufficient
deterrent effect. Further, pursuant to the proposed rule change, the
risks associated with the manual processing of late position
adjustments--the risk of error and the associated risks of delayed
allocation or re-allocation of the distribution--would be
disproportionately greater than any risks associated with timely
position adjustments. Currently, both timely and late Record Date
Position adjustments carry the risks associated with manual processing.
However, pursuant to the proposed rule change, only late Record Date
Position adjustments would be subject to the risks of manual processing
because timely Record Date Position adjustments would be performed
through the CA Web. Given the insufficient deterrent effect of the
current fee and the disproportionate risks of late position
adjustments, DTC believes that discouraging late Record Date Position
adjustments would be more crucial than before. As such, DTC believes
that the proposed increase of the fee is reasonable because the
increase from three hundred and fifty dollars ($350) to five hundred
dollars ($500) is a modest amount designed to provide a stronger
disincentive to Participants from submitting late position adjustments.
DTC believes that this stronger disincentive could reduce the number of
late position adjustments and encourage Participants to use the PAT
functionality through CA Web, thereby promoting an efficient process
and avoiding the risks of manual processing, which could result in
delayed allocations or otherwise affect payment finality. In addition,
DTC believes that the proposed rule change provides for the equitable
allocation of fees because all Participants that submit a late position
adjustment would be equally subject to the fee, which would continue to
be charged on a per adjustment basis irrespective of security-type or
value of the distribution. Therefore, DTC believes that the proposed
rule change would provide for the equitable allocation of reasonable
fees among Participants, consistent with Section 17A(b)(3)(D) of the
Act.
    In addition, the proposed rule change is designed to be consistent
with Rule 17Ad-22(e)(21) promulgated under the Act.\30\ Rule 17Ad-
22(e)(21) requires DTC, inter alia, to establish, implement, maintain
and enforce written policies and procedures reasonably designed to be
efficient and effective in meeting the requirements of its participants
and the markets it serves. The proposed rule change, as described
above, would modify the Operational Arrangements and the Distributions
Guide to streamline the position adjustment process for Participants
that held Treasury Shares or Repurchased Debt Securities on the record
date for a dividend or interest payment, which would enhance (i)
efficiency in making such adjustments by reducing DTC's manual
intervention in the process, and (ii) effectiveness in making such
adjustments by providing PAT functionality to Participants to make
their own Record Date Position adjustments and discouraging manual
processing. Therefore, by establishing a more efficient and effective
process for Participants to reduce their entitlements to Record Date
Distributions in respect of Treasury Shares or Repurchased Debt
Securities, and consequently, for DTC to allocate Record Date
Distributions, DTC

believes that the proposed change is consistent with the requirements
of Rule 17Ad-22(e)(21), promulgated under the Act, cited above.
---------------------------------------------------------------------------

    \30\ 17 CFR 240.17Ad-22(e)(21).
---------------------------------------------------------------------------

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

    DTC believes that the proposed rule change with respect to
streamlining the process for reducing payment to a Participant of a
dividend or interest payment, when such Participant held Treasury
Shares or Repurchased Debt Securities on the record date for the
distribution, would not have an impact on competition.\31\ Although the
proposed rule change requires Participants to use the CA Web to make
Record Date Position adjustments, the requirement to use the CA Web,
which would facilitate the position adjustment process for all
Participants, would not impose a burden on competition. The CA Web is
an existing DTC platform that all Participants are required to use to
access other types of services, and is already used by Participants to
view their Record Date Positions and related entitlements. In addition,
the requirement would apply equally to all Participants that held
Treasury Shares or Repurchased Debt Securities on the record date for a
dividend or interest payment. Therefore, DTC believes that the proposed
rule change with respect to streamlining the process of Record Date
Position adjustments would not impose a burden on competition.
---------------------------------------------------------------------------

    \31\ 15 U.S.C. 78q-1(b)(3)(I).
---------------------------------------------------------------------------

    DTC believes that the proposed rule change to decrease the fee for
a timely position adjustment may impact competition, but would not
create a burden on competition.\32\ The decreased fee could promote
competition by positively impacting Participants' operating costs.
Based on the foregoing, DTC believes that the proposed rule change
would not impose a burden on competition, but may promote competition.
---------------------------------------------------------------------------

    \32\ Id.
---------------------------------------------------------------------------

    DTC believes that the proposed rule change to increase the fee for
a late position adjustment could have an impact on competition because
it could create a burden on competition by increasing Participants'
fees and thereby negatively affect such Participants' operating costs.
However, DTC believes that any burden on competition would not be
significant and would be necessary and appropriate in furtherance of
the purposes of the Act, as permitted by Section 17A(b)(3)(I) of the
Act.\33\ DTC believes any burden on competition would not be
significant because (i) ideally, the fee would apply no one, as
Participants would be discouraged from submitting late position
adjustments, (ii) the fee would only apply when a Participant holds
Treasury Shares or Repurchased Debt Securities on the record date of a
dividend or interest distribution, and a Participant could only be
charged once per distribution event, (iii) the fee would be charged on
a per-adjustment basis, irrespective of security-type or value of the
distribution, and would apply equally to any Participant that submits a
late position adjustment, (iv) Participants can manage their late fees
by making timely position adjustments, and (v) the amount of the
increase, one hundred and fifty dollars ($150), is a modest amount that
could be managed by Participants by making timely position adjustments.
Therefore, DTC believes that the proposed rule change to the fee for
late position adjustments would not impose a significant burden on
competition.\34\
---------------------------------------------------------------------------

    \33\ Id.
    \34\ Id.
---------------------------------------------------------------------------

    DTC believes that any burden on competition that may be created by
the proposed rule change to increase the fee for late position
adjustments would be necessary and appropriate in furtherance of the
purposes of the Act, as permitted by Section 17A(b)(3)(I) of the
Act.\35\ DTC believes that the proposed rule change to increase the fee
for late position adjustments, in order to encourage streamlined
processing of position adjustments and discourage manual and exception
processing of position adjustments, would be necessary in furtherance
of the purposes of the Act because the Rules must be designed to
promote the prompt and accurate clearance and settlement of securities
transactions.\36\ As discussed above, under the current fee
approximately 10% of Record Date Position adjustments continue to be
late, which suggests that the disincentive portion of the current fee
does not have a sufficient deterrent effect. Further, pursuant to the
proposed rule change, the risks associated with the manual processing
of late position adjustments--the risk of error and the associated
risks of delayed allocation or re-allocation of the distribution--would
be disproportionately greater than any risks associated with timely
position adjustments. Currently, both timely and late Record Date
Position adjustments carry the risks associated with manual processing,
but pursuant to the proposed rule change, only late Record Date
Position adjustments would be subject to the risks of manual processing
because timely Record Date Position adjustments would be performed
through the CA Web. In light of the insufficient deterrent effect of
the current fee and the disproportionate risks of late position
adjustments, DTC believes that increasing the fee for late position
adjustments is necessary in order to discourage late Record Date
Position adjustments, which may lead to errors that could result in an
imbalance with the Agent and delayed allocation or incorrect
allocations which would need to be reversed and reallocated, thereby
affecting payment finality. In addition, reversed or delayed
allocations could also impact Participants that had relied on the
allocation to effect other securities transactions. Thus, DTC believes
that the proposed rule change to increase the fee for late position
adjustments is designed to promote the prompt and accurate clearance
and settlement of securities transactions and would therefore be
necessary in furtherance of the purposes of the Act, as permitted by
Section 17A(b)(3)(I) of the Act.
---------------------------------------------------------------------------

    \35\ Id.
    \36\ 15 U.S.C. 78q-1(b)(3)(F).
---------------------------------------------------------------------------

    DTC believes that the proposed rule change to increase the fee for
late position adjustments, in order to encourage streamlined processing
of position adjustments and to discourage manual and exception
processing of position adjustments, would be appropriate in furtherance
of the purposes of the Act, as permitted by Section 17A(b)(3)(I) of the
Act.\37\ As discussed above, DTC believes that the current fee does not
have a sufficient deterrent effect on late position adjustments.
Therefore, DTC believes that it would be appropriate to increase the
disincentive portion of the fee by one hundred and fifty dollars ($150)
in order to strengthen the deterrent effect of the fee on late position
adjustments. In addition, DTC believes that the proposed rule change
provides for the equitable allocation of fees because all Participants
that submit a late position adjustment would be equally subject to the
fee, which would continue to be charged on a per adjustment basis
irrespective of security-type or value of the distribution. Therefore,
DTC believes that the proposed rule change to increase the late fee for
late position adjustments would be appropriate in furtherance of the
purposes of the Act, as permitted by Section 17A(b)(3)(I) of the
Act.\38\
---------------------------------------------------------------------------

    \37\ 15 U.S.C. 78q-1(b)(3)(I).
    \38\ Id.
---------------------------------------------------------------------------

    DTC does not believe that the proposed rule change with respect to
the clarifying and ministerial changes to

the Operational Arrangements and the Fee Guide would have any impact on
competition \39\ because it would merely update the Operational
Arrangements and the Fee Guide to make changes for accuracy and
clarity, and therefore would not affect the rights and obligations of
any Participant or other interested party.
---------------------------------------------------------------------------

    \39\ Id.
---------------------------------------------------------------------------

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

    Written comments relating to this proposed rule change have not
been solicited or received. DTC will notify the Commission of any
written comments received by DTC.

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

    Because the foregoing proposed rule change does not:
    (i) Significantly affect the protection of investors or the public
interest;
    (ii) impose any significant burden on competition; and
    (iii) become operative for 30 days from the date on which it was
filed, or such shorter time as the Commission may designate, it has
become effective pursuant to Section 19(b)(3)(A) of the Act and Rule
19b-4(f)(6) thereunder.
    At any time within 60 days of the filing of the proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act.

IV. Solicitation of Comments

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

Electronic Comments

     Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include
File Number SR-DTC-2018-007 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-2018-007. This file
number should be included on the subject line if email is used. To help
the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's internet website (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 website viewing and printing in
the Commission's Public Reference Room, 100 F Street NE, Washington, DC
20549 on official business days between the hours of 10:00 a.m. and
3:00 p.m. Copies of the filing also will be available for inspection
and copying at the principal office of DTC and on DTCC's website
(http://dtcc.com/legal/sec-rule-filings.aspx). All comments received
will be posted without change. Persons submitting comments are
cautioned that we do not redact or edit personal identifying
information from comment submissions. You should submit only
information that you wish to make available publicly. All submissions
should refer to File Number SR-DTC-2018-007 and should be submitted on
or before September 13, 2018.
---------------------------------------------------------------------------

    \40\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\40\
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-18159 Filed 8-22-18; 8:45 am]
 BILLING CODE 8011-01-P