[Federal Register Volume 83, Number 240 (Friday, December 14, 2018)]
[Notices]
[Pages 64401-64412]
[FR Doc No: 2018-27078]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-84768; File No. SR-DTC-2018-011]

Self-Regulatory Organizations; The Depository Trust Company;
Notice of Filing and Immediate Effectiveness of a Proposed Rule Change
To Amend the Guide to the DTC Fee Schedule

December 10, 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 November 26, 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 Rules 19b-
4(f)(2) and (f)(4) thereunder.\4\ The Commission is publishing this
notice to solicit comments on the proposed rule change from interested
persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 15 U.S.C. 78s(b)(3)(A).
    \4\ 17 CFR 240.19b-4(f)(2) and (f)(4).
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I. Clearing Agency's Statement of the Terms of Substance of the
Proposed Rule Change

    The proposed rule change consists of amendments to the Guide to the
DTC Fee Schedule (``Fee Guide'') \5\ in order to (i) simplify the
pricing structure, (ii) align fees with the costs of services provided
by DTC, and (iii) encourage Participant practices that promote
efficient market behavior. The proposed changes would include: (A)
Grouping certain fee line items for related or similar services under
one fee line item, (B) deleting fees with little or no activity, (C)
updating certain fees to reflect DTC's costs in relation to the
service, (D) decreasing certain fees in order to incentivize
Participants to utilize certain DTC services that promote efficiency,
both in the servicing of physical securities in the Custody Service and
for the settlement of securities transactions at DTC, and (E)
increasing a surcharge to discourage the late submission of certain
underwriting documentation. In addition, the proposed rule change would
also make

clarifying changes to the Fee Guide, as described in greater detail
below.
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    \5\ Each capitalized term not otherwise defined herein has its
respective meaning as set forth in the Fee Guide and the Rules, By-
Laws and Organization Certificate of DTC (the ``Rules''), available
at http://www.dtcc.com/legal/rules-and-procedures.aspx.
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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 Fee Guide in order to (i)
simplify the pricing structure, (ii) align fees with the costs of
services provided by DTC, and (iii) encourage Participant practices
that promote efficient market behavior. The proposed changes will
include: (A) Grouping certain fee line items for related or similar
services under one fee line item, (B) deleting fees with little or no
activity, (C) updating certain fees to reflect DTC's costs in relation
to the service, (D) decreasing certain fees in order to incentivize
Participants to utilize certain DTC services that promote efficiency,
both in the servicing of physical securities in the Custody Service and
for the settlement of securities transactions at DTC, and (E)
increasing a surcharge to discourage the late submission of certain
underwriting documentation. In addition, the proposed rule change would
also make clarifying changes to the Fee Guide, as described in greater
detail below.
(i) Background
    Participants are charged fees in accordance with the Fee Guide,
based upon their activities and the services that they utilize. The Fee
Guide lists approximately 283 individual fees. Certain fees need to be
updated in order to better align with the costs incurred by DTC in
providing those services.
    In response to feedback from Participants that the pricing
structure is complex, DTC has undertaken a strategic review of its
pricing and its pricing structure. As a result of the review, DTC
developed an enhanced pricing strategy with the goals of reducing
pricing complexity, aligning fees with costs, and encouraging
Participant practices that promote efficient market behavior.\6\
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    \6\ DTC's affiliates, National Securities Clearing Corporation
(``NSCC'') and Fixed Income Clearing Corporation (``FICC'') have
undertaken similar reviews and are proposing changes to their
respective fees.
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A. Simplify the Pricing Structure
(1) Fee Groupings
    As discussed above, Participants have indicated that the DTC
pricing structure is complex. In response to this feedback, the
proposed rule change would reduce the number of individual fee line
items by creating new fee groupings that would consolidate separate fee
line items for similar services or transactions. These fee line items
would be grouped together into one line item with a standard fee, and
the related fee condition may be modified to conform to the fee
grouping. The standard fee would apply to each of the grouped services
or transactions. In most cases, the proposed rule change would not
change the amount charged to a Participant for each service or
transaction within the fee grouping. However, in a few circumstances,
the proposed standard fee may reflect an increase or decrease relative
to the amount currently charged in order to either (i) align fees with
costs or (ii) encourage Participant practices that promote efficient
market behavior.
(2) Removing Fees With Little or No Activity
    The proposed rule change would remove fees for certain services
that have little or no activity.\7\ Pursuant to the proposed rule
change, DTC would delete these fees in order to further simplify the
pricing structure by reducing the number of line items in the Fee
Guide.
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    \7\ DTC examined how often all fees were charged over a period
of no less than two years.
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B. Fee Realignment
    Pursuant to the proposed rule change, DTC would update certain fees
in the Fee Guide to more closely reflect the costs incurred by DTC in
providing the services. DTC believes that it is reasonable and
appropriate to charge fees that properly align with DTC's costs.
Aligning fees with costs adds efficiency to the market by allowing a
Participant to more accurately evaluate the value of a service and to
make business decisions accordingly. The primary goal of DTC with
respect to the proposed realignment of fees is to reduce, where
appropriate, the fees charged to Participants for services. Certain of
the proposed fees that relate to services with declining volumes have
been reduced because they consume fewer DTC resources. Other proposed
fees have been reduced because certain streamlined processes have
resulted in the reduction of processing costs for DTC. In both cases,
pursuant to the proposed rule change, DTC, through these fee
reductions, would be passing along its cost savings to Participants.
    Finally, a few proposed fees would result in fee increases in order
to align with the costs incurred by DTC in providing the relevant
services. Increasing a fee to align with the costs incurred by DTC in
providing the service would allow DTC to efficiently offer the
particular service, as well as continue to appropriately manage its
resources for all its services, thereby enabling DTC to efficiently
provide dependable and stable services to its Participants.
C. Promote Efficient Market Behavior
    DTC believes the proposed changes to reduce certain fees would
encourage Participant use of certain DTC services that offer
efficiencies that are designed to promote the prompt and accurate
clearance and settlement of securities transactions (``efficient market
behavior''). Pursuant to the proposed rule change, DTC would reduce
certain fees for its Custody Service in order to encourage Participants
to centralize the servicing of their physical securities at DTC, which
already services the securities deposited at DTC by Participants for
book-entry services. The Custody Service allows a Participant to
outsource to DTC servicing of physical securities by depositing, among
other things, securities not eligible for DTC book-entry services,
including securities such as customer-registered custodial assets,
restricted shares, and other DTC-ineligible securities such as
certificated money market instruments (MMIs), private placements, and
limited partnership interests.\8\ A Participant that does not use the
Custody Service would otherwise need to secure its own physical
securities as well as independently handle certain transactions, such
as the transfer of physical securities and the handling of
reorganization events. By utilizing the Custody Service, a Participant
is able to benefit from, among other things, cost savings from the
economies of scale offered by DTC, and the added efficiency of the
limited depository services offered by DTC with respect to

securities held in its Custody Service.\9\ In addition, pursuant to the
proposed rule change, DTC would also reduce or eliminate fees for
certain settlement services in order to encourage Participants to
submit their transactions earlier in day. The earlier submission of
transactions by Participants results in more efficient settlement
processing by increasing the volume of transactions processed in the
night-cycle, which, in turn, enhances intraday settlement processing.
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    \8\ For further information about the Custody Service, see the
Custody Service Guide, available at http://www.dtcc.com/~/media/
Files/Downloads/legal/service-guides/Custody.pdf.
    \9\ The limited depository services may include physical
processing for the security on a Participant's behalf, such as
facilitating the transfer of security certificates, and providing
custody reorganization services.
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    Finally, pursuant to the proposed rule change, DTC would increase
an underwriting surcharge charged to a Participant for the late
submission of a letter of representations (``LOR'') or blanket letter
of representations (``BLOR'') \10\ in order to increase the incentive
for a Participant to submit its underwriting documentation in a timely
manner. Failure of a Participant to submit a LOR or BLOR with respect
to a security on time could delay the clearance and settlement of
transactions in that security.
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    \10\ In order to make a book-entry only (``BEO'') issue eligible
at DTC, the issuer must submit to DTC a LOR or BLOR prior to such
issue being determined to be eligible. For more information on LORs
and BLORs, see The DTC Operational Arrangements (Necessary for
Securities to Become and Remain Eligible for DTC Services) at 4-6,
available at http://www.dtcc.com/~/media/Files/Downloads/legal/
issue-eligibility/eligibility/operational-arrangements.pdf.
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D. Clarify the Fee Guide
    Pursuant to the proposed rule change, DTC would amend certain
headings, fee names, and fee conditions to add clarity and conformity
to the Fee Guide.
(ii) Proposed Fee Changes
    Pursuant to the proposed rule change, DTC would amend the Fee Guide
as follows:
A. Simplify the Pricing Structure
(x) Fee Groupings With No Change to Fee Amount
Custody and Securities Processing/Securities Processing/Maintenance of
Long Position (Registered Securities)
    (1) Frozen Letter. Currently, there are separate identified fees
for (i) ``deliver,'' (ii) ``receive,'' and (iii) ``reject'' frozen
letter transactions, each with a fee of $10.00. Pursuant to the
proposed rule change, these fees would be consolidated and charged as a
``Frozen letter deliver, receive or reject'' fee. The proposed rule
change would not change the current amount of the fee. DTC believes
that it would be appropriate to consolidate these fees because it would
simplify the pricing structure by having one standard fee for frozen
letter transactions.
Custody and Securities Processing/Securities Processing/General Asset
Services
    (2) Researching of aged and other special items; Extraordinary
processing/research fee for ICSR; Paying agent research. Pursuant to
the proposed rule change, ``Researching of aged and other special
items,'' ``Extraordinary processing/research fee for ICSR,'' and
``Paying agent research'' line items would be consolidated and charged
as a ``Researching fee.'' \11\ The proposed condition would read, ``per
hour or per CUSIP, depending on the nature of the research.'' The
proposed rule change would not affect the current fee of $100.00 per
hour or CUSIP, as applicable. DTC believes that it would be appropriate
to consolidate these fees because it would simplify the pricing
structure by having one standard fee for these research activities.
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    \11\ As discussed below, certain other research fees with
respect to Deposit Automation Management and New York Window
Services would also be consolidated into the proposed ``Researching
fee.''
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Custody and Securities Processing/Corporate Actions/Instruction
Processing Fee
    (3) EDS/DRIP Election; Voluntary Corporate Action Base Election;
Voluntary Corporate Action Election. These separate fees all relate to
voluntary corporate action instructions. Pursuant to the proposed rule
change, these fees would be consolidated and charged as a ``Corporate
Action Instruction Fee.'' The proposed rule change would not affect the
amount of the fee. Pursuant to the proposed rule change, the condition
for the fee would read: ``Per voluntary and elective EDS/DRP
instruction, up to 50 instructions per offer'' in order to reflect the
consolidation of the fees for each instruction type. DTC believes that
it would be appropriate to consolidate these fees because it would
simplify the pricing structure by having one standard fee for
transactions relating to instruction processing for voluntary corporate
action events.
Custody and Securities Processing/Custody Services/Custody (Non-Core
Services)
    (4) Custody inventory swing withdrawal; Custody inventory swing
deposit. Pursuant to the proposed rule change, these fees would be
consolidated and charged as a ``Custody inventory swing deposit or
withdrawal'' fee. The condition for the fee would be modified to read:
``Per deposit or withdrawal.'' The proposed rule change would not
affect the current fee. DTC believes that it would be appropriate to
consolidate these fees because it would simplify the pricing structure
by having one standard fee for these related activities.
Custody and Securities Processing/Custody Services/Custody (Exception
Processing)
    (5) Rejects. There are currently separate identified fees of
$125.00 for (i) ``Transfer,'' (ii) ``Reorg,'' and (iii) ``Front-end
reorg reject.'' \12\ Pursuant to the proposed rule change, these fees
would be consolidated and charged as a ``Transfer, Reorg or Front-end
reorg rejects'' fee. The proposed rule change would not affect the
amount of the fee. DTC believes that it would be appropriate to
consolidate the fees because it would simplify the pricing structure by
having one standard fee for custody rejects.
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    \12\ There is also a $75.00 ``Custody Deposit'' fee, which would
not be affected by the proposed rule change.
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Custody and Securities Processing/Deposit Services/Branch Deposits
(Core Services)
    (6) Regular deposit received from a branch; Deposit of bearer
securities received from a branch. Pursuant to the proposed rule
change, these fees would be consolidated and charged as a ``Regular or
bearer deposit received from a branch'' fee. The proposed rule change
would not affect the current fee of $18.00 for each activity. DTC
believes that it would be appropriate to consolidate the fees because
it would simplify the pricing structure by having one standard fee for
branch deposits.
Custody and Securities Processing/Deposit Services/Branch Deposits
(Exception Processing),\13\ and Custody and Securities Processing/
Deposit Services/Deposit Automation Management (DAM)
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    \13\ To conform with the proposed fee groupings, the subheading
``Branch Deposits (Exception Processing)'' would be modified to read
``Branch Deposits and Deposit Automation Management (DAM) (Exception
Processing).
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    (7) BDS TA deposit reject; Rejected deposit; Rejected reorg
deposit. Pursuant to the proposed rule change, these fees would be
consolidated and charged as a ``Rejected BDS TA deposit, Rejected DAM
or Rejected Reorg deposits'' fee. The proposed rule change would not
affect the current fee of $125.00 for each activity. DTC believes

that it would be appropriate to consolidate the fees because it would
simplify the pricing structure by having one standard fee for branch
deposit rejections.
    (8) Registered certificate deposit; Previous reverse split.
Pursuant to the proposed rule change, these fees would be consolidated
and charged as a ``Registered certificate deposit or Previous reverse
split'' fee. The proposed rule change would not affect the current fee
of $12.00 for each activity. DTC believes that it would be appropriate
to consolidate the fees because it would simplify the pricing structure
by having one standard fee for these DAM activities.
    (9) Research fee. Pursuant to the proposed rule change, this fee
would be consolidated into the proposed ``Researching fee,'' as
discussed above.\14\ For clarity and transparency, the ``Researching
fee'' line item would also appear in this section. Pursuant to the
proposed rule change, the proposed condition would read: ``per hour or
per CUSIP, depending on the nature of the research.''
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    \14\ See supra note 11.
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Custody and Securities Processing/New York Window Services/Deliveries,
and Custody and Securities Processing/New York Window Services/Receives
\15\
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    \15\ To conform with the proposed fee groupings, the subheading
``Deliveries'' that appears under the New York Window Services
heading would be amended to ``Deliveries and Receives.'' The current
subheading ``Receives'' would be deleted.
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    (10) ESS or FOSS delivery; ESS or FOSS reclaim delivery; ESS or
FOSS receive; ESS or FOSS reclaim receive. Pursuant to the proposed
rule change, each of these activities would be consolidated and charged
as an ``ESS or FOSS delivery, receive or reclaim'' fee. The condition
for the fee would be modified to read: ``Per delivery, per receive or
per item for reclaim.'' The proposed rule change would not affect the
current fee of $25.00. DTC believes that it would be appropriate to
consolidate the fees because it would simplify the pricing structure by
having one standard fee for these related and similar activities.
    (11) Internal cross-delivery; Internal cross-receive. Pursuant to
the proposed rule change, these activities would be consolidated and
charged as an ``Internal cross-delivery or receive'' fee. The condition
for the proposed fee grouping would read: ``Per delivery or receive.''
The proposed rule change would not affect the current fee of $20.00 for
each activity. DTC believes that it would be appropriate to consolidate
the fees because it would simplify the pricing structure by having one
standard fee for the service.
Custody and Securities Processing/New York Window Services/Other
Services
    (12) Research. Pursuant to the proposed rule change, this fee would
be consolidated into the proposed ``Researching fee,'' as discussed
above.\16\ For clarity and transparency, the ``Researching fee'' line
item would also appear in this section. Pursuant to the proposed rule
change, the proposed condition would read: ``per hour or per CUSIP,
depending on the nature of the research.''
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    \16\ See supra note 11.
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Custody and Securities Processing/Withdrawal Services/Direct
Registration System (DRS)
    (13) Initiation of DRS Profile transaction; Cancellation of DRS
Profile change. Pursuant to the proposed rule change, these fee line
items would be consolidated and charged as an ``Initiation or
cancellation of DRS Profile transaction'' fee. The condition for the
fee grouping would read: ``Per transaction submitted or transaction
cancelled before a Limited Participant Account action.'' The proposed
rule change would not affect the current fee of $0.31 for each
activity.
Custody and Securities Processing/Withdrawal Services/Municipal Bearer
Bond Service, and Custody and Securities Processing/Withdrawal
Services/Urgent Withdrawal, or Certificates-on-Demand, and Custody and
Securities Processing/Withdrawal Services/Withdrawals-by-Transfer
    (14) Critical withdrawal request; Generation of WT (interface or
window pickup); Direct mail by transfer agent (DMA)--Certificate.
Pursuant to the proposed rule change, the fees for these activities
would be consolidated and charged as a ``Physical Certificate: Critical
withdrawal, WT (interface or window pick-up) or DMA withdrawal
request'' fee. The condition for the fee would be modified to read:
``Per request or assignment; special costs and TA fees additional.''
The proposed rule change would not affect the current fee of $500.00
per request or assignment. DTC believes that it would be appropriate to
consolidate the fees because it would simplify the pricing structure by
having one standard fee for the service. In order to reflect the
proposed consolidation, DTC is proposing to (i) modify the subheading
of ``Urgent Withdrawal, or Certificates-on-Demand'' to ``Urgent
Withdrawal, Certificates-on-Demand, or Withdrawals by Transfer,'' and
(ii) delete the current subheading of ``Withdrawals by Transfer.''
Settlement Services/Book-Entry Delivery, Excluding MMIs
    (15) Stock loans and returns. In the current Fee Guide, there is a
``Stock loans and returns'' fee of $0.25 per item; charged to the
deliverer. The receiver of a stock loan or return is currently charged
$0.11 under the fee ``Receive, regardless of time.'' Pursuant to the
proposed rule change, both the deliverer and receiver would be charged
a Stock loans and returns fee of $0.18, the average of the respective
current fees. The proposed rule change would modify the condition of
``Stock loans and returns'' fee to read: ``Per item; charged to
deliverer and receiver.'' The purpose of the proposed rule change would
be to simplify the pricing structure by having one standard fee for
both sides of the transaction.
    (16) Receive, regardless of time. Pursuant to the proposed rule
change, the fee name would be amended to reflect the proposed exclusion
of stock loan receives and reclaim receives from this fee, in order to
align with the proposed changes to the ``Stock loans and returns'' and
``Reclaim'' fees. As such, DTC is proposing to amend the fee name to
``Receive, regardless of time (excluding reclaims and stock loans and
returns).''
    (17) Reclaim. In the current Fee Guide, there is a ``Reclaim'' fee
of $0.45 per item; charged per delivery. Currently, the receive of a
reclaim is charged $0.11 as a ``Receive, regardless of time'' fee.
Pursuant to the proposed rule change, both a delivery and receive of a
reclaim would be charged as a ``Reclaims'' \17\ fee of $0.26, the
average of the respective current fees. The proposed rule change would
modify the condition of ``Reclaims'' fee to read: ``Per delivery or
receive.'' The purpose of the proposed rule change would be to simplify
the pricing structure by having one standard fee for both sides of the
transaction.
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    \17\ For conformity with other fee names in this section, DTC is
proposing to change the fee name to ``Reclaims.''
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Settlement Services/Money Market Instruments (MMI) by Book-Entry Only
    (18) MMI DO; Maturity or reorganization presentment; Issuance
instruction, both directly placed and dealer placed; Issuance deposit;
MMI issuance receiver. Pursuant to the proposed rule change, these fees
would be consolidated and charged as an ``MMI Transaction'' fee. The
proposed rule change would not affect the current

fee of $1.00 for each transaction. To reflect the consolidation, DTC is
proposing to modify the condition to read: ``Per item delivered, or
received, issued or maturing.'' DTC believes that it would be
appropriate to consolidate the fees because it would simplify the
pricing structure by having one standard fee for these MMI
transactions.
(y) Deletion of Fees With Little or No Volume
    The following fees have minimal or no activity. Pursuant to the
proposed rule change, these fees would be deleted in order to simplify
the pricing structure.
Custody and Securities Processing/General Asset Services
    (19) Transmission of image of deposit by fax or email, additional
recipient.
    (20) Photocopying of statement or certificate.
    (21) Recording of certificate numbers.
Custody and Securities Processing/Municipal Bearer Bond Service
    (22) BEO issue.
Custody and Securities Processing/Corporate Actions/Instruction
Processing Fees
    (23) Voluntary Corporate Action Bulk Election.
Custody and Securities Processing/Custody Services/Custody (Core
Services)
    (24) Certified Mailing.
    (25) Photocopying and sending certificate or other document copies.
Custody and Securities Processing/Custody Services/Custody (Exception
Processing)
    (26) Box-to-box audit count.
    (27) Customer audit count.
Custody and Securities Processing/Deposit Services/Branch Deposits
(Exception Processing), and Custody and Securities Processing/Deposit
Services/Deposit Automation Management (DAM)
    (28) Incorrect/no PDF-generated DAM deposit ticket attached.
    (29) Depository Facilities: Facility usage fee.
    (30) Depository Facilities: Facility deposit.
Custody and Securities Processing/Deposit Services/Restricted Deposits
    (31) Processing of trailing documents.
Custody and Securities Processing/New York Window Services/Other
Services
    (32) Pass-through fees.
    (33) Long position.
Custody and Securities Processing/Reorganization Services/
Reorganization
    (34) Photocopy.
Custody and Securities Processing/Withdrawal Services/Direct
Registration System (DRS)
    (35) Establishment of DRS account and subsequent mailing
transaction.
    (36) Initiation of DRS Profile change using DRST via PTS or PBS.
    (37) Cancellation of DRS Profile change using DRST via PTS or PBS.
Custody and Securities Processing/Withdrawal Services/Interface
Department
    (38) Sorting.
Forms
    (39) Forms provided by DTC.\18\
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    \18\ To conform with this change, the entire ``Forms'' section
of the Fee Guide would be removed.
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B. Simplify the Pricing Structure/Realignment of Fee (Fee Groupings
With a Fee Realignment)
Custody and Securities Processing/Securities Processing/Maintenance of
Long Position (Registered Securities)
    (40) Less active issue. Currently, there are separate fees for
registered corporate issues ($0.70) and registered municipal issues
($1.29). Pursuant to the proposed rule change, the fee would be $0.70
for either type of security. The proposed rule change would result in a
fee decrease of $0.59 for registered municipal issues, which would
better align the fee with declining volumes of less active registered
municipal securities. As discussed above, certain fees that relate to
services with declining volumes would be reduced because they consume
fewer DTC resources. Pursuant to the proposed rule change, the new fee
condition would read: ``For registered corporate issues, when a daily
average of 15 or fewer participants have position or registered
municipal issues, when a daily average of 1 or 2 participants have
position.'' The purpose of the proposed rule change would be to (i)
simplify the pricing structure by having one standard fee for the
service and (ii) more closely align to DTC's decreased cost of
providing the service for registered municipal securities.
Custody and Securities Processing/Withdrawal Services/Municipal Bearer
Bond Service, and Custody and Securities Processing/Withdrawal
Services/Urgent Withdrawal, or Certificates-on-Demand
    (41) COD \19\ (Municipal Bearer Bond Service); COD (Urgent
Withdrawal, or Certificates-on-Demand). Currently, a COD under the
Municipal Bearer Bond Service is charged a fee of $300.00, and other
CODs are charged a fee of $240.00. Pursuant to the proposed rule
change, the COD (Municipal Bearer Bond Service) fee line item would be
consolidated with the COD (Urgent Withdrawal, or Certificates-on-
Demand) fee line item and charged as a ``COD'' fee, in the amount of
$300.00. The proposed rule change would result in a fee increase of
$60.00 for non-Municipal Bearer Bond Service CODs. The condition for
the fee would be amended to read: ``Per withdrawal/COD.'' The purpose
of the proposed rule change with respect to consolidating the fees
would be to simplify the pricing structure by having one standard fee
for these COD transactions. The purpose of the proposed rule change
with respect to the fee increase would be to align to DTC's cost of
providing the COD service, whether under the Municipal Bearer Bond
Service or otherwise. Finally, in order to reflect the proposed
consolidation, DTC is proposing to delete the subheading ``Municipal
Bearer Bond Service.''
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    \19\ COD is an acronym for ``certificate on demand.''
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Settlement Services/Book-Entry Delivery, Excluding MMIs
    (42) Book-entry deliveries through CNS: Delivery to CNS; Receive
from CNS. Currently, a Participant that delivers securities to the NSCC
CNS \20\ account at DTC is charged $0.09 per item delivered; charged to
both sides. A Participant that receives securities from the CNS account
is charged $0.035 per item received, charged to both sides. Pursuant to
the proposed rule change, each of these activities would be charged as
a ``Delivery to/from CNS'' fee of $0.08, charged to both sides. To
reflect the consolidation, DTC is proposing to delete the verbiage
``Book-entry deliveries through CNS.'' The purpose of the proposed rule
change with respect to consolidating the fees would be to simplify the
pricing structure by charging a standard fee to both a deliverer and
receiver in a CNS transaction. The purpose of the proposed rule change
(with respect to

establishing a new fee for the fee grouping) would be to update the fee
to better reflect the operational complexity, increased capacity, and
system supports that are required to process CNS transactions at DTC.
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    \20\ CNS is an acronym for the NSCC ``Continuous Net
Settlement'' system.
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    (43) Deliver order exception processing: Hold or release of pending
DO that is recycling for insufficient position; Cancellation of pending
DO. Currently, a Participant is charged $0.40 per item for ``Hold or
release of a pending DO that is recycling for insufficient position.''
A Participant is currently charged $0.20 per item for ``Cancellation of
pending DO.'' Pursuant to the proposed rule change, the hold or release
of a pending DO and the cancellation of a pending DO would each be
charged a fee of $0.24 per item, a weighted average that is based on
the volume of each activity, under the fee name ``Hold, cancel or
release of pending DO that is recycling for insufficient position.''
The purpose of the proposed rule change would be to (i) simplify the
pricing structure by having one standard fee for similar activities and
(ii) more closely align to DTC's costs incurred in relation to
providing the service for each type of DO exception processing.
C. Simplify the Pricing Structure/Promote Efficient Market Behavior
(Fee Groupings With a Fee Change To Promote Efficient Market Behavior)
Custody and Securities Processing/Deposit Services/Reorganization
Deposits
    (44) Mandatory (regular or legal); Redemption or call (regular or
legal). Currently, each of these reorganization deposit fees is $90.00
per deposit. Pursuant to the proposed rule change, these fees would be
consolidated and charged as a ``Mandatory, Redemption or Call Deposits
(regular or legal)'' fee. Pursuant to the proposed rule change, the fee
for ``Mandatory, Redemption or Call Deposits (regular or legal)'' would
be $60.00, a $30.00 decrease from the current fees. The purpose of the
proposed rule change would be to (i) simplify the pricing structure by
having one standard fee for these related activities and (ii)
incentivize Participants to utilize DTC to centralize, and enhance the
efficiency of, the servicing of their securities.
Custody and Securities Processing/New York Window Services/Deliveries,
and Custody and Securities Processing/New York Window Services/Receives
    (45) OTW \21\ delivery (including government securities); OTW
reclaim delivery; OTW receive (including government receives); OTW
reclaim receive. Pursuant to the proposed rule change, these fees would
be consolidated and charged as an ``OTW delivery, receive or reclaim
(including government securities)'' fee. The condition for the proposed
fee grouping would be modified to read: ``Per delivery, per receive or
per item for reclaim.'' Pursuant to the proposed rule change, the fee
for the new fee grouping would be reduced to $40.00, a decrease of
$10.00 from the current fees. The purpose of the proposed rule change
with respect to consolidating the fees would be to simplify the pricing
structure by having one standard fee for these related activities. The
purpose of the proposed rule change with respect to the reduction of
the fee would be to encourage Participants to utilize the OTW services,
by incentivizing the presentation of more physical securities to DTC's
central facility, and thereby promote processing efficiency.
---------------------------------------------------------------------------

    \21\ OTW is an acronym for ``over-the-window.''
---------------------------------------------------------------------------

Underwriting Services/Late Surcharges
    (46) Late receipt of LOR or BLOR (on closing date); Late closing
(after 2:00 p.m. eastern time). Currently, a Participant is charged a
$300.00 surcharge for a ``Late receipt of LOR or BLOR (on closing
date),'' and is charged a $400.00 surcharge for a ``Late closing (after
2:00 p.m. eastern time).'' Pursuant to the proposed rule change, these
surcharges would be consolidated and charged as a ``Late receipt of LOR
or BLOR (on closing date) or Late Closing (after 2:00 p.m. eastern
time)'' surcharge of $400. These surcharges are intended to align with
DTC's cost in relation to a late submission or closing, as well as to
incentivize Participants to move through the underwriting process in a
timely manner. As such, DTC is proposing a $400.00 surcharge for this
fee grouping, which would result in a surcharge increase of $100.00 for
late submissions of LORs and BLORs. DTC is proposing the amount of $400
for the standard surcharge in order to standardize the amount of the
surcharge, and to further encourage Participants to submit underwriting
documentation in a timely manner.
D. Fee Realignment
Custody and Securities Processing/Corporate Actions/Allocation Fees
    (47) Mandatory Corporate Actions. Pursuant to the proposed rule
change, the fee would be reduced from $80.00 to $75.00. The purpose of
the proposed rule change would be to align the fee with the costs of
providing the service. The costs incurred by DTC are decreasing because
of certain streamlined processes that have resulted in the reduction of
processing costs for this service.
Custody and Securities Processing/Corporate Actions/Voluntary Event
Handling Fee
    (48) Voluntary Corporate Action Handling. Pursuant to the proposed
rule change, the fee would be reduced from $95.00 to $90.00. The
purpose of the proposed rule change would be to align the fee with the
costs of providing the service. The costs incurred by DTC are
decreasing because of certain streamlined processes that have resulted
in the reduction of processing costs for this service.
Settlement Services/Book-Entry Delivery, Excluding MMIs
    (49) Institutional receive or delivery (ID). Pursuant to the
proposed rule change, this fee would be reduced from $0.05 per receive
or delivery to $0.04 per receive or delivery. The purpose of the
proposed reduction would be to more closely align the fee with DTC's
decreased cost of providing the service, which is primarily handled as
straight-through processing.
    (50) ID Net receive or delivery. Pursuant to the proposed rule
change, this fee would be reduced from $0.025 per receive or delivery
to $0.02 per receive or delivery. The purpose of the proposed reduction
would be to more closely align the fee with DTC's decreased cost of
providing the service, which is primarily handled as straight-through
processing.
    (51) Fed DO. Pursuant to the proposed rule change, this fee would
be reduced from $2.25 per item delivered or received to $1.50 per item
delivered or received. The purpose of the proposed reduction is to more
closely align the fee with DTC's cost of providing the service.
E. Promote Efficient Market Behavior
Custody and Securities Processing/Custody Services/Custody (Core
Services)
    (52) Withdrawal and pickup (COD) between 8:30 a.m.-2:00 p.m.
Pursuant to the proposed rule change, the fee would be reduced from
$60.00 to $50.00. The purpose of the proposed rule change would be to
incentivize Participants to utilize DTC to centralize, and enhance the
efficiency of, the servicing of their physical securities.
    (53) Withdrawal and pickup (COD) between 2:00 p.m.-4:30 p.m.
Pursuant to the proposed rule change, the fee would be reduced from
$100.00 to $75.00. The purpose of the proposed rule change

would be to incentivize Participants to utilize DTC to centralize, and
enhance the efficiency of, the servicing of their physical securities.
    (54) Withdrawal and subsequent deposit. Pursuant to the proposed
rule change, the fee would be reduced from $20.00 to $15.00. The
purpose of the proposed rule change would be to incentivize
Participants to utilize DTC to centralize, and enhance the efficiency
of, the servicing of their physical securities.
    (55) Withdrawal and shipment between 8:30 a.m.-2:00 p.m. Pursuant
to the proposed rule change, the fee would be reduced from $70.00 to
$55.00. The purpose of the proposed rule change would be to incentivize
Participants to utilize DTC to centralize, and enhance the efficiency
of, the servicing of their physical securities.
    (56) Withdrawal and shipment between 2:00 p.m.-4:30 p.m. Pursuant
to the proposed rule change, the fee would be reduced from $110.00 to
$80.00. The purpose of the proposed rule change would be to incentivize
Participants to utilize DTC to centralize, and enhance the efficiency
of, the servicing of their physical securities.
    (57) Custody reorg deposit. Pursuant to the proposed rule change,
the fee would be reduced from $90.00 to $60.00. The purpose of the
proposed rule change would be to incentivize Participants to utilize
DTC to centralize, and enhance the efficiency of, the servicing of
their physical securities.
Custody and Securities Processing/Custody Services/Custody (Exception
Processing)
    (58) Reorg research. Pursuant to the proposed rule change, the fee
would be reduced from $110.00 to $80.00. The purpose of the proposed
rule change would be to incentivize Participants to utilize DTC to
centralize, and enhance the efficiency of, the servicing of their
physical securities.
Custody and Securities Processing/Deposit Services/Restricted Deposits
    (59) Restricted Deposit: Before 2:00 p.m. Pursuant to the proposed
rule change, the fee would be reduced from $90.00 to $60.00. The
purpose of the proposed rule change would be to incentivize
Participants to utilize the restricted deposit services to centralize,
and enhance the efficiency of, the servicing of their physical
securities.
    (60) Restricted Deposit: After 2:00 p.m. eastern time. Pursuant to
the proposed rule change, the fee would be reduced from $110.00 to
$80.00. The purpose of the proposed rule change would be to incentivize
Participants to utilize the restricted deposit services to centralize,
and enhance the efficiency of, the servicing of their physical
securities.
    (61) Reject of restricted deposit. Pursuant to the proposed rule
change, this disincentive fee for rejections of restricted deposits
would be eliminated. The purpose of the proposed rule change would be
to remove any disincentive for Participants to utilize the restricted
deposit service, and instead encourage Participants to utilize the
restricted deposit service to centralize, and enhance the efficiency
of, the servicing of their physical securities.
Settlement Services/Book-Entry Delivery, Excluding MMIs
    (62) Night deliver order. Pursuant to the proposed rule change, the
fee would be reduced from $0.20 to $0.17 per item; charged to
deliverer; applies to each DO submitted. DTC is proposing to reduce
this fee in order to encourage Participants to submit their
transactions earlier in day. The earlier submission of transactions by
Participants results in more efficient settlement processing by
increasing the volume of transactions processed in the night-cycle,
which, in turn, enhances intraday settlement processing.
    (63) Deliver order exception processing: Dropped DO not completed
because of insufficient deliverer position or collateral. Since the fee
for ``Dropped DO not completed because of insufficient deliverer
position or collateral'' may cause a Participant to delay making a
particular delivery, the proposed rule change would eliminate the fee
in order to encourage Participants to submit their transactions earlier
in the day. The earlier submission of transactions by Participants
results in more efficient settlement processing by increasing the
volume of transactions processed in the night-cycle, which, in turn,
enhances intraday settlement processing.
    (64) Deliver order exception processing: Insufficient receiver
collateral or net debit cap. Since the fee for ``Insufficient receiver
collateral or net debit cap'' may cause a Participant to delay making a
particular delivery, the proposed rule change would eliminate the fee
in order to encourage Participants to submit their transactions earlier
in the day. The earlier submission of transactions by Participants
results in more efficient settlement processing by increasing the
volume of transactions processed in the night-cycle, which, in turn,
enhances intraday settlement processing.
F. Clarify the Fee Guide
    DTC is proposing to amend the following provisions to clarify the
Fee Guide:
Custody and Securities Processing/Securities Processing/Maintenance of
Long Position (Registered Securities)
    (65) Average daily number of shares, rounded up to a multiple of
100 shares. For clarity and transparency, the proposed rule change
would amend the fee name to: ``Average daily number of shares (stocks,
bonds and registered muni), rounded up to a multiple of 100 shares.''
The purpose of the proposed rule change is to clarify the types of
securities that are included in the service.
    (66) BEO issue. For clarity and transparency, the proposed rule
change would amend the fee name to: ``BEO issue (stocks, bonds and
registered muni).'' The purpose of the proposed rule change is to
clarify the types of securities that are included in the service.
    (67) Medium-term note, money market instrument, and commercial
paper. For clarity and transparency, the proposed rule change would
amend the fee name to: ``Medium-term note, money market instrument,
registered muni and commercial paper.'' The purpose of the proposed
rule change is to clarify the types of securities that are included in
the service.
    (68) Issue that has been nontransferable for up to 6 years
(surcharge). For clarity and transparency, the proposed rule change
would amend the fee name to: ``Stock, bond, registered and bearer muni
that have been nontransferable for up to 6 years (surcharge).'' The
purpose of the proposed rule change is to clarify the types of
securities that are included in the service.
    (69) Issue that remains nontransferable after 6 years (surcharge).
For clarity and transparency, the fee name would be amended to:
``Stock, bonds, registered and bearer muni that remain nontransferable
after 6 years (surcharge).'' The purpose of the proposed rule change is
to clarify the types of securities that are included in the service.
    (70) Swing of security position (receive or deliver). For clarity
and transparency, the fee name would be amended to: ``Swing of security
position (receive, or deliver (including stock dividend deliver)).''
The purpose of the proposed rule change is to clarify the types of
securities that are included in the service.

Underwriting Services/Eligibility Fees
    (71) Equity Eligibility--Additional CUSIP Fee. For clarity and
transparency, the first line of the fee condition would be modified to
read: ``Per additional CUSIP;''. The purpose of the proposed rule
change is to accurately reflect the existing underwriting fee-per-CUSIP
structure, which consists of an initial fixed fee for the first CUSIP
and an incremental fee for each additional CUSIP.\22\
---------------------------------------------------------------------------

    \22\ Securities Exchange Act Release No. 71206 (December 30,
2013), 79 FR 690 (January 6, 2014) (SR-DTC-2013-12).
---------------------------------------------------------------------------

    (72) Debt Eligibility--Additional CUSIP Fee. For clarity and
transparency, the first line of the fee condition would be modified to
read: ``Per additional CUSIP;''. The purpose of the proposed rule
change is to accurately reflect the existing underwriting fee-per-CUSIP
structure, which consists of an initial fixed fee for the first CUSIP
and an incremental fee for each additional CUSIP.\23\
---------------------------------------------------------------------------

    \23\ Id.
---------------------------------------------------------------------------

Expected Participant Impact
    In general, DTC anticipates that the proposed rule change would (i)
have no impact on approximately 30% of Participants, (ii) result in fee
reductions for approximately 49% of Participants, and (iii) result in
fee increases for approximately 21% of Participants. These estimates
were calculated against 2017 volume figures. In terms of the estimated
fee increases, approximately 38% would have an increase of less than
$1,000 per year, approximately 22% would have an increase between
$1,000 and $10,000 per year, approximately 38% would have an increase
between $10,000 and $75,000 per year, and approximately 2% would have
an increase between $100,000 and $200,000 per year. These estimated
impacts correlate to a Participant's business model and its use of the
services affected by the proposed rule change. Taken collectively, the
proposed rule change would reduce DTC's revenue by approximately 1%.
Participant Outreach
    Beginning in June 2018, DTC has conducted outreach to Participants
in order to provide them with notice of the proposed changes to the
affected fees. As of the date of this filing, no written comments
relating to the proposed changes have been received in response to this
outreach. The Commission will be notified of any written comments
received.
Implementation Timeframe
    DTC would implement this proposal on January 1, 2019. As proposed,
a legend would be added to the Fee Guide stating there are changes that
became effective upon filing with the Commission but have not yet been
implemented. The proposed legend also would include a date on which
such changes would be implemented and the file number of this proposal,
and state that, once this proposal is implemented, the legend would
automatically be removed from the Fee Guide.
2. Statutory Basis
    DTC believes that this proposal is consistent with the requirements
of the Act and the rules and regulations thereunder applicable to a
registered clearing agency. Specifically, DTC believes that this
proposal is consistent with Sections 17A(b)(3)(D) \24\ and 17A(b)(3)(F)
\25\ of the Act and Rule 17Ad-22(e)(23)(ii),\26\ as promulgated under
the Act, for the reasons described below.
---------------------------------------------------------------------------

    \24\ 15 U.S.C. 78q-1(b)(3)(D).
    \25\ 15 U.S.C. 78q-1(b)(3)(F).
    \26\ 17 CFR 240.17Ad-22(e)(23)(ii).
---------------------------------------------------------------------------

    (i) Section 17A(b)(3)(D) of the Act requires, inter alia, that the
Rules provide for the equitable allocation of reasonable dues, fees,
and other charges among participants.\27\ For the reasons set forth
below, DTC believes that each of the proposed rule changes described
above in Items II(A)1(ii)A-F would provide for the equitable allocation
of reasonable dues, fees, and other charges among participants.
---------------------------------------------------------------------------

    \27\ 15 U.S.C. 78q-1(b)(3)(D).
---------------------------------------------------------------------------

A. Simplify the Pricing Structure
    DTC believes that each of the proposed rule changes described in
Items II(A)1(ii)A(x) (Simplify the Pricing Structure: Fee Groupings)
and II(A)1(ii)A(y) (Simplify the Pricing Structure: Deletion of Fees
with Little or No Volume) would provide for the equitable allocation of
reasonable fees. Each of the proposed rule changes described in Item
II(A)1(ii)A(x) would consolidate individual fee line items into a
single fee line item. Each of the proposed rule changes described in
Item II(A)1(ii)A(y) would delete a fee with little or no volume. Each
fee for a service as described in Items II(A)1(ii)A(x) and
II(A)1(ii)A(y) would continue to be charged (or not charged, with
respect to the proposed fee deletions) to a Participant in accordance
with (i) its utilization of the service, and (ii) the fee condition set
forth in the Fee Guide, and would therefore be equitably allocated. In
addition, the proposed rule changes described in Item II(A)1(ii)A(x)
would not affect current fees, and would therefore continue to provide
for reasonable fees. Further, the proposed rule changes described in
Item II(A)1(ii)A(y), which would delete fees that have little or no
volume, would be commensurate with DTC's minimal cost of providing the
relevant service. Therefore, DTC believes that each of the proposed
rule changes described in Items II(A)1(ii)A(x) and II(A)1(ii)A(y) would
not affect the allocation or amount of fees, and would thereby continue
to provide for the equitable allocation of reasonable fees, consistent
with Section 17A(b)(3)(D) of the Act.\28\
---------------------------------------------------------------------------

    \28\ Id.
---------------------------------------------------------------------------

B. Fee Realignment
    DTC believes that each of the proposed rule changes with respect to
the proposed realignment of fees, as described in Items II(A)1(ii)B
(Simplify the Pricing Structure/Fee Realignment) \29\ and II(A)1(ii)D
(Fee Realignment), would provide for the equitable allocation of
reasonable fees. Each proposed fee for a service as described in Items
II(A)1(ii)B and D would continue to be charged to a Participant in
accordance with (i) its utilization of the service, and (ii) the fee
condition set forth in the Fee Guide. DTC believes that, pursuant to
the proposed rule changes described in Items II(A)1(ii)B and D, the
proposed fees would continue to be equitably allocated because all
Participants that utilize a particular service would be treated equally
with respect to these fees under the proposal.\30\
---------------------------------------------------------------------------

    \29\ DTC believes that the consolidation of fee line items, in
and of itself, would not affect the allocation or amount of fees.
Therefore, to the extent that a proposed rule change described in
Item II(A)1(ii)B (Simplify the Pricing Structure/Fee Realignment)
addresses the consolidation of fee line items, DTC believes that
such proposed rule change would continue to provide for the
equitable allocation of reasonable fees. See supra Item II(A)2(i)A.
    \30\ As discussed above in the section titled ``Expected
Participant Impact,'' the proposed rule change may result in fee
increases or fee decreases for some Participants. A Participant may
be impacted differently than another Participant due to its use of
the various services with fees that would be affected by the
proposed rule change, pursuant to its own particular business
structure.
---------------------------------------------------------------------------

    DTC believes that each of the proposed rule changes described in
Items II(A)1(ii)B (Simplify the Pricing Structure/Fee Realignment) and
II(A)1(ii)D (Fee Realignment) would provide for reasonable fees. First,
as discussed above, most of the proposed fee realignments described in
Items II(A)1(ii)B and D would result in a fee reduction for a service.
As described above, these fee reductions are being

proposed due to (i) declining volumes in connection with the service
requiring fewer DTC resources and/or (ii) certain streamlined processes
having resulted in the reduction of processing costs for DTC in
connection with the service. In both cases, DTC, through the proposed
fee reductions, would be passing along its cost savings to
Participants. Therefore, DTC believes that such proposed fee reductions
would continue to provide for the allocation of reasonable fees among
Participants. Second, as discussed above, a few proposed fee
realignments, as described in Items II(A)1(ii)B(41)-(43),\31\ would
result in an increase to a fee for a service. Such proposed fee
increases would allow those fees to remain commensurate with the costs
of resources allocated by DTC in connection with the relevant services.
The proposed fee increases to align with the costs incurred by DTC in
providing the service would allow DTC to efficiently offer the service.
Therefore, DTC believes that the proposed rule changes described in
Items II(A)1(ii)B and D, would provide for the equitable allocation of
reasonable fees, consistent with Section 17A(b)(3)(D) of the Act.\32\
---------------------------------------------------------------------------

    \31\ Per email instruction from DTC's legal staff on December 4,
2018, Commission staff revised this reference to correct a
typographical error, changing ``B(43)-(45)'' to ``B(41)-(43).''
    \32\ 15 U.S.C. 78q-1(b)(3)(D).
---------------------------------------------------------------------------

C. Promote Efficient Market Behavior
    DTC believes that each of the proposed rule changes described in
Items II(A)1(ii)C (Simplify the Pricing Structure/Promote Efficient
Market Behavior) \33\ and II(A)1(ii)E (Promote Efficient Market
Behavior) would provide for the equitable allocation of reasonable
fees. Each proposed fee for a service as described in Items II(A)1(ii)C
and E would continue to be charged to a Participant in accordance with
(i) its utilization of the service, and (ii) the fee condition set
forth in the Fee Guide. DTC believes that, pursuant to the proposed
rule changes described in Items II(A)1(ii)C and E, the proposed fees
would continue to be equitably allocated because all Participants that
utilize a particular service (or submit a late BLOR or LOR) would be
treated equally with respect to these fees under the proposal.\34\
---------------------------------------------------------------------------

    \33\ DTC believes that the consolidation of fee line items, in
and of itself, would not affect the allocation or amount of fees.
Therefore, to the extent that a proposed rule change described in
Item II(A)1(ii)C (Simplify the Pricing Structure/Promote Efficient
Market Behavior) addresses the consolidation of fee line items, DTC
believes that such proposed rule change would continue to provide
for the equitable allocation of reasonable fees. See supra Items
II(A)2(i)A and B.
    \34\ See supra note 30.
---------------------------------------------------------------------------

    DTC believes that the each of the proposed rule changes described
in Items II(A)1(ii)C (Simplify the Pricing Structure/Promote Efficient
Market Behavior) and II(A)1(ii)E (Promote Efficient Market Behavior)
would provide for reasonable fees. First, with the exception of the
surcharge for the late submission of a LOR or BLOR, the proposed fee
changes described in Items II(A)1(ii)C and E would reduce fees to
encourage Participant use of certain DTC services that promote
efficiency in the handling of physical securities or the processing of
securities transactions for settlement. As such, DTC believes that
these proposed fee reductions would result in reasonable fees because
the use of these efficiencies offered by DTC could result in future
decreased processing costs for Participants and for DTC, which, in
turn, could be passed along to Participants. Second, DTC is proposing
to increase the surcharge for the late submission of a LOR or BLOR from
$300 to $400 in order to increase the incentive for a Participant to
submit its underwriting documentation in a timely manner. DTC believes
that the increase of this surcharge would be reasonable because
Participants are already accustomed to the $400.00 surcharge for late
closings, which is being consolidated into one line item with the late
submission of LORs and BLORs surcharge. DTC also believes that the
proposed fee would be reasonable because (i) the increase would be a
modest amount ($100) that would only apply when a Participant submits a
late LOR or BLOR, and (ii) a Participant can avoid the surcharge by
submitting the LOR or BLOR on time. Therefore, DTC believes that each
of the proposed rule changes described in Items II(A)1(ii)C and E would
provide for the equitable allocation of reasonable fees, consistent
with Section 17A(b)(3)(D) of the Act.\35\
---------------------------------------------------------------------------

    \35\ 15 U.S.C. 78q-1(b)(3)(D).
---------------------------------------------------------------------------

D. Clarify the Fee Guide
    DTC believes that each of the proposed rule changes described in
Item II(A)1(ii)F (Clarify the Fee Guide) would provide for the
equitable allocation of reasonable fees among participants. Each of the
proposed rule changes described in II(A)1(ii)F would clarify a fee line
item without affecting the amount of the existing fee for such line
item. Each fee for a service as described in Item II(A)1(ii)F would
continue to be charged to a Participant in accordance with (i) its
utilization of the service, and (ii) the fee condition set forth in the
Fee Guide. Therefore, DTC believes that each of the proposed rule
changes described in Item II(A)1(ii)F would not affect the allocation
or amount of fees, and would thereby continue to provide for the
equitable allocation of reasonable fees, consistent with Section
17A(b)(3)(D) of the Act.\36\
---------------------------------------------------------------------------

    \36\ Id.
---------------------------------------------------------------------------

    For the foregoing reasons, DTC believes that each of the proposed
rule changes described in Items II(A)1(ii)A-F would provide for the
equitable allocation of reasonable dues, fees, and other charges among
participants, consistent with Section 17A(b)(3)(D) of the Act.\37\
---------------------------------------------------------------------------

    \37\ Id.
---------------------------------------------------------------------------

    (ii) 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.\38\ For the reasons set forth
below, DTC believes that each of the proposed rule changes described in
Items II(A)1(ii)A-F is designed to promote the prompt and accurate
clearance and settlement of securities transactions.
---------------------------------------------------------------------------

    \38\ 15 U.S.C. 78q-1(b)(3)(F).
---------------------------------------------------------------------------

A. Simplify the Fee Guide
    DTC believes that each of the proposed rule changes with respect to
the consolidation of individual fee line items or deletion of fees, as
described in Items II(A)1(ii)A(x) (Simplify the Pricing Structure: Fee
Groupings), II(A)1(ii)A(y) (Simplify the Pricing Structure: Deletion of
Fees with Little or No Volume), II(A)1(ii)B (Simplify the Pricing
Structure/Fee Realignment), and II(A)1(ii)C (Simplify the Pricing
Structure/Promote Efficient Market Behavior) is designed to promote the
prompt and accurate clearance and settlement of securities
transactions. DTC is proposing changes, as described in Items
II(A)1(ii)A(x), II(A)1(ii)A(y), II(A)1(ii)B, and II(A)1(ii)C, that are
designed to improve the accuracy and clarity of the Fee Guide by
simplifying the Fee Guide through fee groupings or through the deletion
of fees with little or no volume. Improving the accuracy and clarity of
the Rules and Procedures, including the Fee Guide, would help
Participants to better understand their rights and obligations
regarding DTC services. When Participants better understand their
rights and obligations regarding DTC services, they can act in
accordance with the Rules and Procedures, which DTC believes would
promote the prompt and accurate clearance and settlement of securities
transactions by DTC. As such, DTC believes the proposed rule changes to
simplify and clarify the Fee Guide are

consistent with Section 17A(b)(3)(F) of the Act.\39\
---------------------------------------------------------------------------

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

B. Fee Realignment
    DTC believes that each of the proposed rule changes with respect to
the proposed realignment of fees, as described in Items II(A)1(ii)B
(Simplify the Pricing Structure/Fee Realignment) and II(A)1(ii)D (Fee
Realignment) is designed to promote the prompt and accurate clearance
and settlement of securities transactions. First, most of the proposed
fee realignments described in Items II(A)1(ii)B and D would result in a
fee reduction for a service to align with DTC's decreased costs in
providing the service. Second, DTC would increase certain fees to align
with the higher costs incurred by DTC in providing the relevant
service. By aligning fees with costs, each of the proposed rule changes
would add efficiency to the market by allowing a Participant to more
accurately evaluate the value of a service and to make efficient
decisions about the allocation of its resources within its business. In
addition, the proposal to increase certain fees to align with the
higher costs incurred by DTC in providing the service would allow DTC
to more efficiently offer the related service and to continue to
appropriately manage its resources for all its services. In this way,
each of the proposed rule changes with respect to the proposed
realignment of fees, as described in Items II(A)1(ii)B and II(A)1(ii)D
would enable DTC continue to efficiently provide prompt and accurate
clearance and settlement services to its Participants.
C. Promote Efficient Market Behavior
    DTC believes that each of the proposed rule changes described in
Items II(A)1(ii)C (Simplify the Pricing Structure/Promote Efficient
Market Behavior) and II(A)1(ii)E (Promote Efficient Market Behavior) is
designed to promote the prompt and accurate clearance and settlement of
securities transactions. First, DTC is proposing to reduce or eliminate
fees for certain settlement services in order to encourage Participants
to submit their transactions earlier in the day. By encouraging the
earlier submission of securities transactions by Participants, the
proposed rule change is designed to promote efficient settlement
processing by increasing the volume of transactions processed in the
night-cycle, which, in turn, enhances intraday settlement processing of
securities transactions. Therefore, by encouraging behavior that would
promote efficient settlement processing of securities transactions, DTC
believes that the proposed rule changes with respect to the reduction
or elimination of fees for certain settlement services are designed to
promote the prompt and accurate clearance and settlement of securities
transactions.
    Second, DTC is proposing to reduce certain fees for its Custody
Service in order to encourage Participants to centralize the servicing
of their physical securities at DTC, which already services the
securities deposited at DTC by Participants for book-entry services. By
utilizing the Custody Service, a Participant is able to benefit from,
among other things, cost savings from the economies of scale offered by
DTC, and the added efficiency of the limited depository services
offered by DTC with respect to securities held in its Custody Service.
Therefore, by encouraging behavior that would promote added efficiency
to the processing and handling of physical securities, DTC believes
that the proposed rules changes to reduce certain fees for its Custody
Service in order to encourage Participants to centralize the servicing
of their physical securities at DTC are designed to promote the prompt
and accurate clearance and settlement of securities transactions.
    Third, DTC is proposing to increase an underwriting surcharge for
the late submission of a LOR or BLOR in order to encourage Participants
to submit underwriting documentation in a timely manner. In this way,
the proposed rule change is designed to deter behavior that could delay
the prompt and accurate clearance and settlement of transactions in
that security. Therefore, by deterring behavior that could delay the
prompt and accurate settlement of transactions in a security, DTC
believes that the proposed rule changes are designed to promote the
prompt and accurate clearance and settlement of securities
transactions.
D. Clarify the Fee Guide
    DTC believes that each of the proposed rule changes described in
Item II(A)1(ii)F (Clarify the Fee Guide) is designed to promote the
prompt and accurate clearance and settlement of securities
transactions. Each of these changes would amend certain headings, fee
names, and fee conditions to improve the accuracy and clarity of the
Fee Guide. Improving the accuracy and clarity of the Rules and
Procedures, including the Fee Guide, would help Participants to better
understand their rights and obligations regarding DTC services. When
Participants better understand their rights and obligations regarding
DTC services, they can act in accordance with the Rules and Procedures,
which DTC believes would promote the prompt and accurate clearance and
settlement of securities transactions by DTC. As such, DTC believes the
proposed rule changes to clarify the Fee Guide, as described in Item
II(A)1(ii)F, are consistent with Section 17A(b)(3)(F) of the Act.\40\
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    \40\ Id.
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    For the foregoing reasons, DTC believes that each of the proposed
rule changes described in Items II(A)1(ii)A-F are designed to promote
the prompt and accurate clearance and settlement of securities
transactions, consistent with Section 17A(b)(3)(F) of the Act.\41\
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    \41\ Id.
---------------------------------------------------------------------------

    (iii) Rule 17Ad-22(e)(23)(ii) under the Act requires DTC to
establish, implement, maintain and enforce written policies and
procedures reasonably designed to provide sufficient information to
enable participants to identify and evaluate the risks, fees, and other
material costs they incur by participating in DTC.\42\
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    \42\ 17 CFR 240.17Ad-22(e)(23)(ii).
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    DTC believes that the proposed rule changes with respect to (1)
simplifying the pricing structure of the Fee Guide through (x) fee
groupings, as described in Items II(A)1(ii)A(x) (Simplify the Pricing
Structure: Fee Groupings), II(A)1(ii)B (Simplify the Pricing Structure/
Fee Realignment), and II(A)1(ii)C (Simplify the Pricing Structure/
Promote Efficient Market Behavior), and (y) deleting fees with little
or no volume, as described in Item II(A)1(ii)A(y) (Simplify the Pricing
Structure: Deletion of Fees with Little or No Volume), and (2)
clarifying the Fee Guide, as described in Item II(A)1(ii)F, by amending
conditions and headings and by making conforming changes, would help
ensure that the pricing structure of the Fee Guide is well-defined and
clear to Participants. Having a well-defined and clear Fee Guide would
help Participants to better understand the fees and help provide
Participants with increased predictability and certainty regarding the
fees they incur in participating in DTC. In this way, DTC believes the
proposed rule changes to simplify the pricing structure of the Fee
Guide and to clarify the Fee Guide, as described in Items
II(A)1(ii)A(x), II(A)1(ii)A(y), II(A)1(ii)B, II(A)1(ii)C, and
II(A)1(ii)F are consistent with Rule 17Ad-22(e)(23)(ii) under the Act,
cited above.

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

(i) Simplify the Fee Guide
    No Impact on Competition. DTC believes that each of the proposed
rule changes with respect to the consolidation of individual fee line
items, as described in Item II(A)1(ii)A(x) (Simplify the Pricing
Structure: Fee Groupings), would not have an impact on competition.\43\
These proposed rule changes would improve the accuracy and clarity of
the Fee Guide by simplifying the Fee Guide through fee groupings.
Having an accurate and clear Fee Guide would facilitate Participants'
understanding of the Fee Guide and their obligations thereunder, and so
would not affect the rights and obligations of any Participant or other
interested party. Therefore, DTC does not believe that the proposed
changes with respect to the consolidation of individual fee line items,
as described in Item II(A)1(ii)A(x), would have an impact on
competition.
---------------------------------------------------------------------------

    \43\ 15 U.S.C. 78q-1(b)(3)(I).
---------------------------------------------------------------------------

    Impact on Competition. DTC believes that each of the proposed rule
changes with respect to the deletion of fees with little or no volume,
as described in Item II(A)1(ii)A(y) (Simplify the Pricing Structure:
Deletion of Fees with Little or No Volume), may impact competition by
potentially reducing Participants' operating costs. Therefore, DTC
believes that the proposed rule changes with respect to the deletion of
fees with little or no volume, as described in Item II(A)1(ii)A(y),
would not impose a burden on competition, but may promote competition.
(ii) Fee Realignment
    Impact on Competition. DTC believes that each of the proposed rule
changes with respect to the proposed adjustment of fees to align with
DTC's costs, as described in Items II(A)1(ii)B (Simplify the Pricing
Structure/Fee Realignment)\44\ and II(A)1(ii)D (Fee Realignment), may
have an impact on competition, because these changes would result in
either a fee decrease or fee increase to Participants for the relevant
service.\45\
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    \44\ DTC believes that the consolidation of fee line items, in
and of itself, would not have an impact on competition. See supra
Item II(B)(i).
    \45\ 15 U.S.C. 78q-1(b)(3)(I).
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    First, the proposed rule changes that would result in a fee
reduction for a service could promote competition by potentially
reducing Participants' operating costs. Therefore DTC believes that the
proposed rule changes to reduce fees in order to better align with
costs would not impose a burden on competition, but may promote
competition. Second, the proposed rule changes that would result in a
fee increase for a service may impact competition by creating a burden
on competition by negatively affecting such Participants' operating
costs. However, DTC believes that any burden on competition that may be
caused by these proposed rule changes 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.\46\
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    \46\ Id.
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    Burden on Competition Would Not Be Significant. DTC believes the
burden on competition that may be imposed by the proposed fee increase
for a non-Municipal Bearer Bond Service COD, as described in Item
II(A)1(ii)B(41),\47\ would not be significant because it would be a
nominal amount ($60.00) where Participants are already accustomed to
paying a $300.00 fee for a similar service within the proposed fee
grouping. In addition, DTC believes that the burden on competition that
may be imposed by the proposed fee increase for receives from CNS, as
described in Item II(A)1(ii)B(42),\48\ would not be significant. Even
though the amount of the fee increase may appear significant relative
to the current fee (a proposed increase from $0.035 to $0.08), DTC
believes that the fee increase does not, in and of itself, mean that
the burden on competition is significant. DTC does not believe that the
fee increase would impose a significant burden on competition, because
the impact of the fee increase would correlate to a Participant's
particular business model and how CNS fits into that model, and
therefore, Participants with similar business models and relationships
with CNS would be similarly impacted. Finally, DTC believes that the
burden on competition that may be imposed by the proposed fee increase
for the cancellation of pending DO, as described in Item
II(A)1(ii)B(43),\49\ would not be significant because the increase
would be a nominal amount ($0.04) and the activity that triggers the
fee occurs infrequently. Therefore, DTC believes that any burden on
competition that may be caused by the proposed rule changes addressed
immediately above would be insignificant.
---------------------------------------------------------------------------

    \47\ Per email instruction from DTC's legal staff on December 4,
2018, Commission staff revised this reference to correct a
typographical error, changing ``B(43)'' to ``B(41).''
    \48\ Per email instruction from DTC's legal staff on December 4,
2018, Commission staff revised this reference to correct a
typographical error, changing ``B(44)'' to ``B(42).''
    \49\ Per email instruction from DTC's legal staff on December 4,
2018, Commission staff revised this reference to correct a
typographical error, changing ``B(45)'' to ``B(43).''
---------------------------------------------------------------------------

    Burden on Competition Would Be Necessary and Appropriate. DTC
believes that any insignificant burden on competition that may be
imposed by the proposed rule changes addressed immediately above would
be necessary and appropriate in furtherance of the purposes of the Act,
as permitted by Section 17A(b)(3)(I) of the Act.\50\ As discussed
above, DTC believes that the proposed rule changes would (1) provide
for the equitable allocation of reasonable fees,\51\ as required by
Section 17A(b)(3)(D) of the Act,\52\ and (2) promote the prompt and
accurate clearance and settlement of securities transactions,\53\
consistent with Section 17A(b)(3)(F) of the Act.\54\ Therefore, DTC
believes that any insignificant burden on competition that may be
imposed by the proposed rule changes addressed immediately above would
be necessary and appropriate in furtherance of the purposes of the Act,
specifically Section 17A(b)(3)(D) of the Act and Section 17A(b)(3)(F)
of the Act, respectively, as permitted by Section 17A(b)(3)(I) of the
Act.\55\
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    \50\ Id.
    \51\ See supra Item II(A)2(i)B.
    \52\ 15 U.S.C. 78q-1(b)(3)(D).
    \53\ See supra Item II(A)2(ii)B.
    \54\ 15 U.S.C. 78q-1(b)(3)(F).
    \55\ 15 U.S.C. 78q-1(b)(3)(I).
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(iii) Promote Efficient Market Behavior
    Impact on Competition. DTC believes that each of the proposed
adjustments of certain fees to encourage efficient market behavior, as
described in Items II(A)1(ii)C (Simplify the Pricing Structure/Promote
Efficient Market Behavior)\56\ and II(A)1(ii)E (Promote Efficient
Market Behavior), may have an impact on competition, because these
proposed adjustments would result in either a fee decrease or fee
increase to Participants for the relevant service.\57\ First, DTC
believes that each of the proposed fee reductions for a service could
promote competition by potentially reducing Participants' operating
costs. Based on the foregoing, DTC believes that each of the proposed
reduction of certain fees in order to promote efficient market
behavior, as described in Items II(A)1(ii)C and II(A)1(ii)E, would not
impose a burden on competition, but may promote competition. Second,
DTC believes that the proposed increase of the surcharge for the late
submission of a LOR or BLOR may impact competition, because

it could create a burden on competition by negatively affecting such
Participants' operating costs. However, DTC believes that the 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.\58\
---------------------------------------------------------------------------

    \56\ DTC believes that the consolidation of fee line items, in
and of itself, would not have an impact on competition. See supra
Item II(B)(i).
    \57\ 15 U.S.C. 78q-1(b)(3)(I).
    \58\ Id.
---------------------------------------------------------------------------

    Burden on Competition Would Not Be Significant. DTC believes that
any burden on competition that may be imposed by the proposed increase
of the surcharge for the late submission of a LOR or BLOR would be
insignificant because (1) the increase would be a modest amount ($100)
that would only apply when a Participant submits a late LOR or BLOR,
and (2) a Participant can avoid the surcharge by submitting the LOR or
BLOR on time.
    Burden on Competition Would Be Necessary and Appropriate. DTC
believes that any insignificant burden on competition that is created
by the proposed increase of the surcharge for the late submission of a
LOR or BLOR would be necessary and appropriate in furtherance of the
purposes of the Act, as permitted by Section 17A(b)(3)(I) of the
Act.\59\ As discussed above, DTC believes that the proposed rule
changes would (1) provide for the equitable allocation of reasonable
fees,\60\ as required by Section 17A(b)(3)(D) of the Act,\61\ and (2)
promote the prompt and accurate clearance and settlement of securities
transactions,\62\ consistent with Section 17A(b)(3)(F) of the Act.\63\
Therefore, DTC believes that any insignificant burden on competition
that may be imposed by the proposed rule changes addressed immediately
above would be necessary and appropriate in furtherance of the purposes
of the Act, specifically Section 17A(b)(3)(D) of the Act and Section
17A(b)(3)(F) of the Act, respectively, as permitted by Section
17A(b)(3)(I) of the Act.\64\
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    \59\ Id.
    \60\ See supra Item II(A)2(i)C.
    \61\ 15 U.S.C. 78q-1(b)(3)(D).
    \62\ See supra Item II(A)2(ii)C.
    \63\ 15 U.S.C. 78q-1(b)(3)(F).
    \64\ 15 U.S.C. 78q-1(b)(3)(I).
---------------------------------------------------------------------------

(iv) Clarify the Fee Guide
    No Impact on Competition. DTC believes that each of the proposed
clarifications to the Fee Guide, as described in Item II(A)1(ii)F
(Clarify the Fee Guide), would not have an impact on competition.\65\
Each of these changes would amend certain headings, fee names, and fee
conditions to improve the accuracy and clarity of the Fee Guide. Having
an accurate and clear Fee Guide would facilitate Participants'
understanding of the Fee Guide and their obligations thereunder, and so
would not affect the rights and obligations of any Participant or other
interested party. Therefore, DTC believes that each of the proposed
clarifications to the Fee Guide, as described in Item II(A)1(ii)F
(Clarify the Fee Guide), would not have an impact on competition.
---------------------------------------------------------------------------

    \65\ 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

    The foregoing rule change has become effective pursuant to Section
19(b)(3)(A) of the Act \66\ and paragraph (f) of Rule 19b-4
thereunder.\67\ 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.
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    \66\ 15 U.S.C. 78s(b)(3)(A).
    \67\ 17 CFR 240.19b-4(f).
---------------------------------------------------------------------------

IV. Solicitation of Comments

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

Electronic Comments

     Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to<EMAIL_ADDRESS>Please include
File Number SR-DTC-2018-011 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-2018-011. 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-2018-011 and should be submitted on
or before January 4, 2019.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\68\
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    \68\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2018-27078 Filed 12-13-18; 8:45 am]
 BILLING CODE 8011-01-P