[Federal Register Volume 82, Number 147 (Wednesday, August 2, 2017)]
[Notices]
[Pages 36057-36064]
[FR Doc No: 2017-16269]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-81249; File No. SR-DTC-2017-010]

Self-Regulatory Organizations; The Depository Trust Company;
Notice of Filing and Immediate Effectiveness of a Proposed Rule Change
To Modify the DTC Operational Arrangements Necessary for Securities To
Become and Remain Eligible for DTC Services in Order To Clarify and
Update Provisions Relating to the Processing of Eligibility Requests
and Servicing of Assets on Deposit at DTC

July 28, 2017.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on July 17, 2017, The Depository Trust Company (``DTC'') filed with the
Securities and Exchange Commission (``Commission'') the proposed rule
change as described in Items I, II and III below, which Items have been
prepared by the clearing agency. DTC filed the proposed rule change
pursuant to Section 19(b)(3)(A) \3\ of the Act and subparagraphs (f)(2)
and (f)(4) of Rule 19b-4 \4\ thereunder. The proposed rule change was
effective upon filing with the Commission. 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 modifications to the DTC
Operational Arrangements (Necessary for Securities to Become and Remain
Eligible for DTC Services) (``OA'') \5\ proposed in order to clarify
and update provisions relating to the processing of eligibility
requests and servicing of securities on Deposit at DTC, as more fully
described below.\6\
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    \5\ Available at http://www.dtcc.com/~/media/Files/Downloads/
legal/issue-eligibility/eligibility/operational-arrangements.pdf.
    \6\ Each term not otherwise defined herein has its respective
meaning as set forth in the Rules, By-Laws and Organization
Certificate of DTC (the ``Rules''), available at http://www.dtcc.com/legal/rules-and-procedures.aspx and the OA, supra note
5.
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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 OA was first published by DTC in June 1987. It was then updated
in June 1988, February 1992, December 1994, January 1998, May, 2002,
January 2009, December 2011 and most recently in 2016.\7\ The OA is
designed to maximize the number of issues of securities that may be
made eligible for DTC services, providing for the orderly processing of
such securities and timely payments to Participants. DTC's experience
demonstrates that when Participants, Issuers, Underwriters, Agents (as
such terms are defined in the Rules \8\ or in the OA \9\), and their
counsel are aware of DTC's requirements, those requirements can be
readily met in most instances. The purpose of this rule change is to
revise the text of the OA in order to update and clarify DTC's
processes in this regard. Additionally, some ministerial changes,
changes to methods of notification, and clarifying language have been
introduced, to provide a more concise description of OA procedures. In
this regard, the proposed rule change would revise the text of the OA
as set forth in the respective sections as described below:
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    \7\ See Securities Exchange Act Release Nos. 24818 (August 19,
1987), 52 FR 31833 (August 24, 1987) (SR-DTC-87-10); 25948 (July 27,
1988), 53 FR 29294 (August 3, 1988) (SR-DTC-88-13); 30625 (April 30,
1992), 57 FR 18534 (April 30, 1992) (SR-DTC-92-06); 35649 (April 26,
1995), 60 FR 21576 (May 2, 1995) (SR-DTC-94-19); 39894 (April 21,
1998), 63 FR 23310 (April 28, 1998) (SR-DTC-97-23); 45994 (May 29,
2002), 68 FR 35037 (June 11, 2003) (SR-DTC-2002-02); 59199 (January
6, 2009), 74 FR 1266 (January 12, 2009) (SR-DTC-2008-14); 65901
(December 6, 2011), 76 FR 77281 (December 12, 2011) (SR-DTC-2011-
10); 77043 (February 3, 2016), 81 FR 6913 (February 9, 2016) (SR-
DTC-2016-002); and 79122 (October 19, 2016), 81 FR 73450 (October
25, 2016) (SR-DTC-2016-010). A proposed change to amend the OA that
was filed with the Commission on July 7, 2017, SR-DTC-2017-011
(``ATOP Rule Filing''), is pending implementation. See Securities
Exchange Act Release No. 81096 (July 7, 2017), 82 FR 32406 (July 13,
2017) (SR-DTC-2017-011). The ATOP Rule Filing and its pending
implementation date are discussed more fully below. See infra note
31.
    \8\ See supra note 6.
    \9\ See supra note 5.

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          OA Section                            Revision
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Important Legal Information..  The proposed change would (i) update the
                                most recent copyright date of the OA
                                from 2016 to 2017 and (ii) make
                                grammatical corrections and revise text
                                for readability.
Section I.A.2. (Securities     The proposed rule change would (i) update
 Eligible for DTC's Services).  a reference to a link for DTC securities
                                eligibility documentation (ii) revise
                                the defined term for Money Market
                                Instruments from ``MMIs'' to ``MMI'' for
                                consistency with the Rules and the DTC
                                Settlement Service Guide \10\ and (iii)
                                revise a cross-reference to a footnote
                                regarding the DTC Custody Service to
                                refer to the section number the footnote
                                appears in, rather than just the page
                                number the footnote appears on.
Section I.A.4. (Standard Time  The proposed rule change would revise
 Frames for Providing           text (i) for consistency with language
 Underwriting Information to    in DTC's Fee Schedule,\11\ to describe
 DTC).                          charges made to underwriters that fail
                                to meet the requirements of this
                                subsection as ``surcharges'' rather than
                                ``fines,'' (ii) to move a reference to
                                related standard time frames to earlier
                                in the section for reference purposes
                                and (iii) remove a link to the
                                Underwriting Service Guide in respect to
                                a reference to DTC's eligibility
                                requirements, since the OA is the
                                primary source for these requirements.
Section I.A.6. (Signature)...  Change word usage in a sentence relating
                                to methods of transmission, recording or
                                storage of signatures, by replacing
                                ``xeroxing'' with ``photocopying.''

Section I.B.1.b. (Required     The proposed rule change would (i) revise
 Riders to LOR).                text for readability, (ii) update a
                                reference to a link for DTC securities
                                eligibility documentation that includes
                                various DTC forms Letters of
                                Representation (``LOR'') and riders to
                                the LOR, (iii) delete references to
                                Exhibit C and Exhibit D of the OA that
                                contain forms of the Blanket Letter of
                                Representations (``BLOR'') and Issuer
                                Letter of Representations (``ILOR''),
                                respectively, which exhibits would be
                                removed from the OA, as discussed below,
                                and (iv) replace the deleted references
                                to Exhibits C and D with links to the
                                BLOR and ILOR. The proposed rule change
                                would also add text noting that sample
                                offering document language is available
                                in the form of BLOR and ILOR.
Section I.B.1.d. (LOR          The proposed rule change would remove a
 Requirements for               provision stating that DTC may be
 Certificated Securities).      require an Agent to sign a ``Tender
                                LOR'' for certificated issues with put
                                features. The Tender LOR is used by DTC
                                to obtain the Agent's agreement for DTC
                                to use its procedures applicable to the
                                processing of tenders for Securities
                                with put features. However, DTC already
                                maintains authority to use its
                                procedures in this regard pursuant to
                                the OA as set forth in Section V.B.2.
                                (Put Features with Special Processing
                                Requirements). Therefore, it is
                                unnecessary for DTC to separately obtain
                                a signed Tender LOR from Agents in this
                                regard.
Section I.B.4.a. (Ownership    The proposed rule change would (i) revise
 Thresholds).                   the text to update links to
                                documentation referenced by this section
                                and (ii) revise the defined term for
                                Segregation Account 100 service from
                                ``SEG 100'' to ``Seg 100'' for
                                consistency with other references to
                                this service in the OA.
Section I.B.4.b. (Revisions    The proposed rule change would update a
 to Eligible Securities).       cross-reference relating to information
                                on altering the terms of an offer from
                                referencing Section VI(A)(2)(d) to
                                instead reference Section VI(C)(5)(c).
Section I.B.5. (Instruction    The proposed rule change would (i)
 Letters Regarding the          correct the text of this section to add
 Expiration of a Restrictive    ``the Securities'' after ``Issuer of''
 Period).                       and (ii) add links to existing forms and
                                requirements for Issuers and Agents to
                                request the processing of exchanges
                                relating to CUSIPs for securities that
                                were originally restricted pursuant to
                                Rule 144A and/or Regulation S and which
                                have become unrestricted.
Section I.C.1. (Retail         The proposed rule change would make a
 Certificates of Deposit).      grammatical change to the text of this
                                section to improve readability.
Section I.C.2. (Unit           The proposed rule change would add
 Securities).                   clarifying language in this section
                                relating to additional eligibility
                                requirements for unit securities \12\
                                for improved readability, including with
                                respect to (i) CUSIP requirements for
                                immediately separable Units versus Units
                                separable after their initial closing
                                date \13\ and (ii) requirements as
                                stated in this section relating to Units
                                for which are separable into their
                                components on a voluntary basis versus
                                on a mandatory basis.
Section I.C.3. (New Issue      The proposed rule change would revise
 Eligibility Requirements for   this section to update the link to a
 Municipal Securities).         list of NIIDS Data Elements and related
                                procedures.
Section I.C.5. (Non-U.S.       The proposed rule change would revise
 Currency Denominated           this section to update a cross-reference
 Securities).                   to Section IV.B.3. by changing the
                                referenced title of that section from
                                ``Securities without an Option for U.S.
                                Dollar Payment'' to ``Securities
                                Denominated in a Non-U.S. Currency
                                without an Option for U.S. Dollar
                                Payment.''
Section I.D. (Compliance with  The proposed rule change would make a
 Regulations).                  technical correction to remove
                                unnecessary numbering within the
                                section.
Section I.E. (DTC Fee          The proposed rule change would add this
 Schedule).                     subsection to include the link to the
                                DTC Fee Schedule \14\ for transparency
                                with respect to current exception
                                processing fees, late fees and
                                surcharges referred to in the OA.
Section II.A.1 (CUSIP Number   The proposed rule change would make
 Assignment).                   changes to the text of this section for
                                clarity and improved readability with
                                respect to an example provided within.
Section II.B.1. (Possession    The proposed rule change would (i) add
 and Inspection).               text to this section \15\ to insert a
                                cross-reference to a related process
                                concerning confirmation of FAST balances
                                by an Agent and (ii) update the address
                                for delivery of security certificates to
                                the DTC Securities Processing
                                Department.
Section II.B.2.a. (FAST).....  The proposed rule change would add a link
                                as a reference for additional
                                information for Agents interested in
                                becoming FAST Agents.
Section II.B.2.c. (DWAC).....  The proposed rule change would add text
                                to this section to clarify that DTC may
                                require a FAST Agent to use the DWAC
                                process for the separation of a Unit
                                into its components.
Section II.B.3. (Transfer      The proposed rule change delete text in
 Turnaround Times).             regard to monitoring by DTC of transfer
                                turnaround times for Agents and
                                preventing eligibility of an Agent that
                                fails to comply. It is not practical for
                                DTC to monitor transfer turnaround times
                                since transfer turnaround times are
                                established outside of DTC pursuant to
                                Rule 17Ad-2 under the Act \16\ and,
                                pursuant to that rule, Agent reporting
                                on compliance is required to be made to
                                the SEC and the Agent's ``appropriate
                                regulatory agency,'' if applicable.\17\
Section II.B.4.b. (Transfer    The proposed rule change would revise the
 Agent Required Notices).       text of this section (i) to state that
                                Agents should notify DTC by the
                                effective date of the Agent's assuming
                                or terminating services as Agent for an
                                Issuer, or the Agent's change of name or
                                address, by the effective date of the
                                change, rather than at least 10 calendar
                                days in advance, because receipt of such
                                notice on the effective date is
                                sufficient for DTC to timely update its
                                records to reflect the applicable change
                                and (ii) to update references to the
                                form Agents use to notify DTC of such
                                changes, including updating the
                                applicable link to the form and
                                inserting the DTC e-mail address that a
                                completed form should be delivered to.
                                Subsections within Section II.B.4.b.
                                numbered and titled, respectively, ``(1)
                                Termination of Transfer Agent
                                Services,'' ``(2) Assumption of Transfer
                                Agent Services'' and ``(3) Transfer
                                Agent's Change of Name or Address,''
                                would become separate sections and would
                                renumbered to an alphabetical format
                                sequentially numbered with the other
                                Sections of II.B.4.b. The section that
                                would be renumbered Section II.B.4.c.,
                                (``Termination of Transfer Agent
                                Services''), as mentioned above, would
                                be revised for readability and clarity.

Section II.B.4.c. (Business    The proposed rule change would delete
 Contingency).                  this subsection which relates to
                                connectivity testing by transfer agents
                                and paying agents that are Participants,
                                because this subsection is duplicative
                                of the Rules and unnecessary for
                                inclusion in the OA.\18\
Section II.B.5. (Trustee       The proposed rule change would clarify
 Required Notices).             and update text from original Section
                                VI.B.4 (Trustee Requirements) and
                                reposition the text to new Section
                                II.B.5. (Trustee Required Notices).
Section III.A. (Record Date    The proposed rule change would (i) revise
 Requirements).                 the text of this section to clarify text
                                relating to the option for Securities to
                                pay distributions in one or more
                                currencies and (ii) delete outmoded
                                language regarding establishment of
                                record dates by securities exchanges,
                                since the establishment of the record
                                date by the Issuer is not dependent on
                                the date of an ex-date established by a
                                securities exchange.
Section III.B. (Notices).....  The proposed rule change would clarify
                                this section to state that where an
                                Issuer or Agent provides information or
                                notice to DTC for distribution to
                                Participants, the notice should include
                                the terms of the event in addition to
                                other relevant information as stated
                                therein, including CUSIP numbers,
                                payment information and any relevant
                                instructions. The proposed rule change
                                would also change a cross reference from
                                Exhibit E to Exhibit C to reflect the
                                deletion of certain exhibits, as
                                described herein.
Section III.C. (Payment        The proposed rule change would modify the
 Instructions).                 text of this section to clarify that the
                                prohibition against Agents deducting
                                fees from distribution payments to DTC
                                includes a prohibition against invoicing
                                DTC for such fees.
Section III.C.1. (Income       The proposed rule change would delete a
 Payment Standards).            paragraph from this section in regard to
                                instructing Issuers to fund their Agents
                                by 1 p.m. on a payable date since DTC
                                has no visibility on the transfer of
                                funds between Issuers and Agents and is
                                therefore unable to enforce such a
                                requirement.
Section III.C.2. (Redemption   The proposed rule change would (i) delete
 and Maturity Payment           a paragraph from this section in regard
 Standards).                    to instructing Issuers to fund their
                                Agents for redemption and maturity
                                payments by 1 p.m. on a payable date
                                since DTC has no visibility on the
                                transfer of funds between Issuers and
                                Agents and is therefore unable to
                                enforce such a requirement, (ii) update
                                a link referring to information about
                                DTC principal and income processing, and
                                (iii) delete a reference to a defunct
                                email address for informational
                                inquiries and replace it with contact
                                information for DTC's client support
                                team.
Section III.C.3.               The proposed rule change would add e-mail
 (Reorganization Payment        addresses for DTC's reorganization
 Standards).                    department and a phone number to the
                                DTCC customer service hotline to promote
                                accessibility to DTC staff for questions
                                regarding wire instructions and payment
                                arrangements. The text of this section
                                would also be revised to change ``pm''
                                to ``p.m.'' in connection with timeframe
                                references appearing in two places.
Section III.D. (Additional     The proposed rule change would revise the
 Payment Arrangements/          text of this section (i) to clarify
 Policies/Procedures).          language for improved readability and
                                scope and (ii) update references to DTC
                                contact information.
Section III.D.1. (Redemption   The proposed rule change would revise
 Payments with Presentation     this section to correct capitalization
 (``PWP'')).                    of a defined term.
Section III.D.2.               The proposed rule change would add text
 (Compensation Claims Policy    for clarity and simplification to state
 and Related Procedures).       DTC's policy with respect to DTC's
                                ability to claim Paying Agents and
                                Issuers that fail to pay DTC for a
                                payment event on the scheduled payment
                                date, rather than referring to a
                                separate procedure in this regard. In
                                addition, text regarding Agents ability
                                to submit a claim to DTC for erroneous
                                payments made to DTC would be deleted
                                from this section as it is duplicative
                                of information provided in Section
                                III.D.3. of the OA--``Requests for
                                Return of Funds.'' \19\ In addition,
                                Section III.D.2. would be renamed from
                                ``Compensation Claims Policy and Related
                                Procedures'' to ``Compensation Claims
                                Policy.''
Section III.D.3. (Requests     The proposed rule change would delete
 for Return of Funds).          references to the ``Return of Funds
                                Procedure'' and contact information to
                                obtain a copy of such procedure. The
                                procedure is no longer separately
                                provided because it was duplicative of
                                this Section III.D.3.
                               The proposed rule change would clarify
                                the text of this section in subsection
                                a. with respect to DTC's practice for
                                the return of funds to Agents with
                                regard to payments for which the Issuer
                                has not paid the Agent and where the
                                Agent has made erroneous payments to
                                DTC. In addition, subsection a.,
                                currently titled ``Issuer Default/
                                Bankruptcy Considerations'' would be
                                changed to ``Issuer Default/Bankruptcy
                                Considerations/Agent Not Funded by
                                Issuer'' in order to clarify the scope
                                of the subsection.
                               The proposed rule change would revise
                                subsection b. (Processing Errors) to add
                                contact information for an Agent or
                                Issuer to notify DTC in the event an
                                Agent or Issuer makes an erroneous
                                payment to DTC, and clarify DTC's
                                existing practice of returning funds
                                only to the bank account from which the
                                erroneous payment was received. The
                                purpose of this provision would be to
                                ensure that funds are sent back only to
                                the party that sent them to DTC and
                                reduce the possibility of error or fraud
                                in the transmission of the return of
                                funds. The proposed rule change would
                                also revise the text of this subsection
                                for a grammatical change and
                                readability.

Section IV.A. (Dividend and    The proposed rule change would (i) revise
 Income Notification            the title and text of this section,
 Procedures).                   which relates to payment notice
                                information required from Agents, to (a)
                                add the word ``Payment'' to the title so
                                that the section would be named
                                ``Dividend and Income Payment
                                Notification Procedures,'' (b) remove a
                                requirement that information provided to
                                DTC under this section must include any
                                income related to a corporate action,
                                because DTC is able to determine this
                                information from dividend and interest
                                rate information that is required to be
                                provided by an Issuer or Agent pursuant
                                to this section and (c) clarify that
                                payment notices for exchange traded
                                funds (``ETFs'') are generally not
                                required, unless specifically requested
                                by DTC, because this information is
                                sourced from securities exchanges on
                                which the applicable ETF is listed, (ii)
                                remove the requirement for parties that
                                send an e-mail to DTC's Announcements
                                Department to telephone DTC if an e-mail
                                receipt is not received by them from DTC
                                within an hour to confirm such notice
                                was received and (iii) change the
                                physical delivery address used for
                                transmission of notices to DTC in the
                                event electronic transmission is not
                                available.
Section IV.A.1. (Structured    The proposed rule change would clarify
 Securities).                   that ``record date'' and ``payable
                                date'' are required information that
                                must be provided to DTC in connection
                                with minimal notification of structured
                                security rate information. In addition,
                                the proposed rule change would remove
                                the text ``preferably two business
                                days'' from the description of the
                                required timeframe to for minimum
                                notification.
Section IV.A.1.a. (Non-        The proposed rule change would revise the
 Conforming Structured          text of this section to provide a link
 Securities).                   to a copy of the Non-Conforming
                                Structured Securities Attestation
                                Letter.
Section IV.A.1.c. (Remittance  The proposed rule change would delete
 Reporting to DTC for           this section as it is outdated and no
 Structured Securities).        longer applicable.
Section IV.A.2. (American/     The proposed rule change would revise
 Global Depositary Receipts     this section to update an email address
 (``ADR/GDR'')).                provided to contact the DTC
                                Announcements Department. The text of
                                this section would also be revised to
                                clarify that a notice of payment
                                information for an American or Global
                                Depository Receipt must include the
                                record date in addition to other
                                information as provided in the text of
                                this section. The text of this section
                                would also be revised to remove a
                                reference to a preferred timeframe for
                                submission of a notice of payment
                                information. The text would also be
                                revised to move the placement of
                                ``payable date,'' which appears in a
                                list of notice requirements, from below
                                to above ``payment amount per share.''
Section IV.A.3. (Unit          This section describes notice
 Investment Trust (``UIT'')     requirements for record date and other
 Securities).                   information that must be provided to DTC
                                for distributions and payments on UITs.
                                The proposed rule change would delete
                                this section because it is no longer
                                accurate. Securities Exchanges rather
                                than Agents provide the information
                                required by this Section to DTC.
Section IV.B. (Currency        The proposed rule change would update
 Payment Provisions).           headings of subsections within this
                                section to clarify their scope in
                                relation Securities in Non-U.S.
                                denominated currencies.
Section IV.C.1. (Dividend or   The proposed rule change would revise
 Interest Rate Change).         this section to provide updated delivery
                                information for notices by Issuers and
                                Agents to DTC with respect to changes in
                                dividend or interest rates, and replace
                                a reference to ``Publication Date'' with
                                ``payment date'' to reflect currently
                                used terminology.
Section IV.C.2. (Reduction of  This section describes the process by
 Payment on Treasury or         which an Agent may inform DTC that
 Repurchased Securities (for    payment to a Participant of cash
 Cash Dividend or Interest      dividend and interest payments for a
 Payment)).                     particular distribution on Securities
                                the Participant is holding should be
                                adjusted. The proposed rule change would
                                revise this section to reflect an
                                existing requirement for the Agent to
                                provide a confirmation letter signed by
                                the Participant that holds the subject
                                shares whereby the Participant
                                authorizes the adjustment in payment and
                                includes an indemnification statement
                                indemnifying DTC with respect to
                                processing the adjustment.\20\
                               The proposed rule change would also amend
                                the text to update (i) this section with
                                respect to information the Agent must
                                provide to DTC with regard to the
                                adjustment which DTC needs to process
                                the adjustment promptly and accurately
                                and (ii) contact information for the
                                delivery of such information by the
                                Agent to DTC.
                               In addition, the proposed rule change
                                would remove a provision from this
                                section that states that instructions
                                submitted to DTC in accordance with this
                                section that are submitted outside of
                                required timeframes will subject the
                                responsible Participant to a
                                disincentive fee. The disincentive fee
                                is not necessary because it is in the
                                best interest for the applicable
                                responsible parties to submit these
                                instructions timely to allow same-day
                                distribution of applicable principal and
                                income payments to Participants and
                                beneficial owners, and the disincentive
                                fee is not necessary for this purpose.
Section IV.D. (Additional      The proposed rule change would update the
 Dividend Policies).            title of this section to reflect that
                                the requirements constitute procedures
                                of DTC. Therefore, the section would be
                                retitled ``Additional Dividend
                                Procedures.''
Section IV.D.1.a. (Voluntary   The proposed rule change would revise
 Dividend Reinvestment and      this section to re-order an existing
 Securities with an Automatic   list of Agent requirements and add
 Dividend Reinvestment (with    clarifying terms regarding (i) the
 an option to elect a cash      timing of the Agent's acceptance of
 dividend)).                    dividend reinvestment-related
                                instructions from DTC, (ii) the
                                agreement of the Agent that shares
                                reinvested through DTC's Dividend
                                Reinvestment Program (``DRP'') shall of
                                the same Security as the issue paying
                                the dividend, and (iii) a requirement,
                                consistent with DTC's eligibility
                                requirements, that reinvestment shares
                                must carry transfer or ownership
                                restrictions. The proposed rule change
                                would also make changes to the text (i)
                                for enhanced readability on the purpose
                                and function of the DRP and (ii) update
                                email and mailing address information
                                for the delivery of instructions and
                                security certificates to DTC.

Section IV.D.1.b. (Automatic   The proposed rule change would delete
 Dividend Reinvestment).        text stating that DTC may not make an
                                issue from an Agent eligible if the
                                Agent has a record of not complying with
                                the provisions of this section as this
                                is not a criterion for determining
                                eligibility of an issue for a
                                reinvestment program. DTC reviews issues
                                for eligibility for inclusion in a
                                reinvestment program by applying the
                                criteria set forth in the OA on an issue-
                                by-issue basis.
Section IV.D.2. (Stock         The proposed rule change would revise the
 Distributions to Holders of    text of this section to (i) rename the
 Record).                       subsection from ``Stock Distributions to
                                Holders of Record'' to become ``Stock/
                                Pay-in-Kind (``PIK'') Distributions to
                                Holders of Record'' and (ii) reflect the
                                required information flow of notices for
                                stock distributions to record date
                                holders. The proposed text would also
                                include a statement on the processing of
                                bond-related ``Paid-in-kind
                                distributions'' and variations.
Section IV.D.2.a. (Fractional  The proposed rule change would (i) revise
 Entitlements in Cash or        the text of this section to reflect that
 Additional Roundup Shares).    DTC no longer supports distribution of
                                fractional shares; per SEC filing No. SR-
                                DTC-2015-007,\21\ (ii) revise language
                                stating the timing by which an Issuer or
                                Agent must provide DTC with the
                                information DTC needs to collect
                                Participant instructions (regarding
                                liquidation or issuance of shares to
                                satisfy Participant cash-in-lieu
                                (``CIL'')/roundup entitlements) \22\ and
                                (iii) update an address for the delivery
                                of physical securities to DTC.
Section IV.D.2.b.              The proposed rule change would clarify
 (Restriction Distribution      text relating to a requirement to send a
 Shares Issued).                notice to DTC and the information on
                                such notice.
Section IV.D.3. (Reduction of  The proposed rule change would revise
 Payment on Treasury or         this section to clarify Participant
 Repurchased Securities (for    authorization requirements with regard
 Stock Dividend Payments)).     to reductions of payment on treasury or
                                repurchased shares for stock dividend
                                payments, to add that the confirmation
                                letter required pursuant to this section
                                must contain an officer-level
                                authorization for the applicable
                                reduction.\23\
                               In addition, the proposed rule change
                                would remove a provision from this
                                section that states that instructions
                                submitted to DTC outside of required
                                timeframes will subject the responsible
                                Participants to a disincentive fee. The
                                disincentive fee is not necessary
                                because it is in the best interest for
                                the applicable responsible parties to
                                submit these instructions timely to
                                allow same-day distribution of stock to
                                Participants and beneficial owners, and
                                the disincentive fee is not necessary
                                for this purpose.
Section V.A. (Redemptions,     The proposed rule change would (i) delete
 Advance Refundings and Calls   a need to call DTC to confirm hardcopy/
 Inclusive of Sinking Funds     email notice receipt, (ii) clarify the
 and Mandatory Redemptions).    need for the Agent to contact DTC the
                                first time they use the spreadsheet
                                submission process and (iii) conform the
                                usage of the defined term ``PWP'' (i.e.,
                                Payment Without Presentation) with its
                                initial definition in Section III.D.1.
Section V.A.2. Partial         The proposed rule change would revise
 Redemptions for Auction Rate   this section to (i) delete references to
 Securities (``ARS'') and       discretionary processing fees, relating
 Requests for ARS Lottery       to the release of lottery results, that
 Results.                       are not charged, (ii) update contact
                                information with respect to information
                                on ARS processing and (iii) make
                                grammatical changes to text for improved
                                readability.
Section V.B.1. (Standards for  This section relates to instructions from
 Put Notifications).            Issuers and Agents and information for
                                the processing of optional puts and
                                mandatory tenders.\24\ The proposed rule
                                change would revise this section and
                                clarify text for purposes of
                                completeness with regard to processing
                                timeframes and information DTC requires
                                to timely process optional puts and
                                mandatory tenders. The proposed rule
                                change would also revise the text to
                                update DTC contact information.
Section V.B.2.b.               The proposed rule change would revise the
 (Collateralized Mortgage       text of this section to clarify the
 Obligations (``CMOs'') and     scope and indicate that mortgage backed
 Asset-Backed Securities        securities, in addition to CMOs and ABSs
 (``ABSs'')).                   are covered by this section. The text of
                                this section would also be revised to
                                update DTC contact information, Web site
                                references and revise wording for
                                improved readability.
Section V.B.2.c. (Put          The proposed rule change would clarify
 ``Extendible'' Issues) \25\.   the text of this section to reflect the
                                process as it has been established in
                                practice in conjunction with Agents on
                                this type of put. The proposed rule
                                change would also revise the text of
                                this section for enhanced readability
                                and to update DTC contact and mailing
                                information.
Section V.B.2.d. (Put Bonds    The proposed rule change would revise the
 (Repayment Options)).          text to (i) clarify that late
                                notification may result in late
                                notification fees in accordance with the
                                DTC Fee Schedule and (ii) update DTC
                                contact and mailing information.
Section V.B.2.e. (Survivor     The proposed rule change would revise the
 Options) \26\.                 text of this section to add the Web site
                                location of the DTC Reorganizations
                                Service Guide for further information on
                                processing. The proposed rule change
                                would also clarify that DTC does not
                                monitor presentment of supporting
                                documentation to an Agent for processing
                                of survivor options.
Section VI.A. (Standards for   The proposed rule change would update the
 Voluntary and Mandatory        text of this section to clarify the
 Reorganizations).              notice and timing requirements for
                                Issuers and Agents to allow DTC to
                                timely process voluntary and mandatory
                                corporate actions and update the title
                                of the section to reflect that it
                                pertains to notices. The proposed rule
                                change would also add a cross reference
                                to the DTC Fee Schedule for applicable
                                fees.
Section VI.B.1. (Reduction of  The proposed rule change would shorten
 Payment on Treasury or         the amount of time in advance that
 Repurchased Securities).       Agents must provide to DTC (i)
                                information as required by this section
                                \27\ and (ii) confirmation letters \28\
                                to DTC, prior to the processing of
                                adjustments to Participant accounts
                                reflecting a reduced payment/
                                distribution amount, in accordance with
                                this section, from five business days to
                                no later than three business days prior
                                to the payment/distribution date of the
                                entitlement. The change would more
                                accurately reflect the amount of time
                                required by DTC to receive the necessary
                                information and confirmation letters in
                                order to timely process such
                                adjustments. The proposed rule change
                                would revise the list of information DTC
                                requires in connection with processing
                                such adjustments in order to specify the
                                information that DTC needs in order to
                                promptly and accurately process an
                                adjustment.\29\ The proposed rule change
                                would also revise DTC's contact
                                information to reflect that the
                                information should no longer be send to
                                DTC via fax, but only via email.\30\

Section VI.B.2. (Mandatory     The proposed rule change would move the
 Separation of a Unit After     text of former Section VI.A.2.i. to this
 the Closing Date).             newly numbered section.
Section VI.C. (Processing for  The proposed rule change would change the
 Specific Voluntary             numbering of former Section VI.A.2 to
 Reorganizations).              VI.C.\31\ and rename it from
                                ``Processing for Specific Voluntary
                                Reorganization Features'' to
                                ``Processing for Specific Voluntary
                                Reorganizations.'' The proposed rule
                                change would divide the content of the
                                newly numbered section into 5
                                subsections reflecting, and separating
                                for enhanced readability, the existing
                                content of former Section VI.A.2.:
                               1. Unit Investment Trust.
                               2. Mortgage-Backed Securities with
                                Monthly Early Redemption Features.
                               3. Rights Offers (Use of DTC's Automated
                                Subscription Offer Program (``ASOP'').
                               4. Standards for Convertible Issues/
                                Warrants/Rights; and
                               5. Voluntary Tenders/Exchanges/Mergers
                                with Elections (Use of DTC's Automated
                                Tender Offer Program (``ATOP'').
                               Each of these subsections would be
                                revised to clarify the text for enhanced
                                readability and to provide enhanced
                                detail on relevant notice and
                                information requirements. The proposed
                                rule change would also update DTC
                                contact information and mailing
                                addresses. Former subsection h (under
                                form Section VI.A.2.) would be deleted
                                and relevant text moved above in the new
                                Section VI.C. to consolidate text
                                regarding unit investment trusts within
                                the section. The proposed rule change
                                would also add text relating to
                                processing of payment of cash for
                                convertible securities setting forth
                                existing requirements for processing
                                such payments.
Section VI.D. (Chargeback of   The proposed rule change would renumber
 Reorganization Payments).      subsection VI.A.2.j. to become its own
                                subsection VI.D.
Section VI.E. (Proxy Related   The proposed rule change would renumber
 Procedures).                   former subsection VI.B. to become
                                subsection VI.E. The content of this
                                subsection would be revised to update
                                DTC contact information and addresses
                                and provide enhanced detail on consent
                                and legal notices to be submitted by
                                Issuers, Agents, trustees or other third
                                parties to DTC. Accurate delivery of
                                such notices to DTC facilitates the
                                ability of DTC to process proxy-related
                                requests and to make applicable notice
                                information available to the industry.
Section VII.A. (Partial        The proposed rule change would change the
 Redemption Exclusions).        name of the ``Call Notification
                                Department'' to ``Redemption
                                Notification Department'' to reflect the
                                updated name of the department.
Section VII.B. (VRDO Interest  The proposed rule change would (i) delete
 Payment Information).          the text regarding use of vendor/service
                                bureaus that are obsolete and (ii)
                                simplify notice requirements and related
                                details and conform such requirements to
                                existing practice.
Section VII.C. (Optional       The proposed rule change would update the
 Tender Provisions).            link to information regarding DTC
                                deliver orders and update DTC's contact
                                information.
Section VII.D. (Mandatory      The proposed rule change would change the
 Tender Provisions).            name of the ``Announcements Department''
                                to reflect the updated name of the
                                department and update DTC's contact
                                information.
Section VII.E. (Use of Credit  The proposed rule change would update the
 Facilities).                   text of this section to update DTC's
                                mailing address.
Section VII.F. (Mandatory      The proposed rule change would update the
 Tender Retention/Exclusion     text of this section to add an email
 Provisions).                   address for DTC's Reorganization
                                Department to submit requests relating
                                to DTC's mandatory exclusion procedures.
Section VIII. (Additional      The proposed rule change would delete
 Operational Requirements for   Section VIII. as it is obsolete and the
 Cross-Currency and Other       remaining provisions of the OA shall
 Warrants).                     apply to the securities covered by this
                                Section.
Exhibit B. (Underwriting       This exhibit contains the timeframes,
 Standard Time Frames).         referred to in Section I.A.4. of the OA,
                                for information and/or materials needed
                                by DTC to process an underwriting
                                transaction and notify Participants in a
                                timely fashion.
                               The proposed rule change would update
                                Exhibit B to: (i) Revise text to
                                indicate that that materials and
                                information for underwriting
                                transactions are submitted to DTC via UW
                                SOURCE, consistent with current practice
                                as set forth in Section I.A.1., (ii)
                                consolidate, for consistency, time
                                frames for the submission of offering
                                documentation and certain information
                                submitted via UW SOURCE,\32\ (iii)
                                reduce the number of days in advance of
                                a closing date for an underwriting
                                transaction that a BLOR or ILOR, as
                                applicable, of a U.S. Issuer must be
                                submitted,\33\ (iv) clarify that an
                                Underwriter's failure to timely submit
                                final offering documents would result in
                                a surcharge in accordance with the Fee
                                Schedule and (v) conform and clarify
                                text within the exhibit for consistency
                                and enhanced readability.
Exhibit C (BLOR).............  The proposed rule change would remove
                                this exhibit from the OA and move the
                                document to the DTCC Web site. The link
                                would be provided under Section I.B.1.b.
                                of the OA.
Exhibit D (ILOR).............  The proposed rule change would remove
                                this exhibit from the OA and move the
                                document to the DTCC Web site. The link
                                would be provided under Section I.B.1.b.
                                of the OA.
Exhibit E (Payments Time       The proposed rule change would remove
 Frame chart).                  Exhibit E which contains a chart
                                outlining payment and notification
                                timeframes. The timeframes in the chart
                                are outdated and redundant of
                                information provided in the body of the
                                OA.
Exhibit F (Non-Conforming      The proposed rule change would remove
 Structured Securities          this exhibit from the OA and move the
 Attestation letter).           document to the DTCC Web site. The link
                                to this document would be provided under
                                Section IV.A.1.a. of the OA.\34\
Throughout OA................  The proposed rule change would revise
                                phone numbers, e-mail addresses, Web
                                site locations of documents, mailing
                                addresses throughout the OA generally to
                                the extent not mentioned above. The
                                proposed rule change would also
                                generally revise text to, update and
                                clarify processing timeframes, improve
                                readability, correct grammar and update
                                cross-references to the extent not
                                already mentioned above. The proposed
                                rule change would conform usage of the
                                defined term ``Closing Date,'' as
                                defined in Section I.A.5., throughout
                                the OA.
------------------------------------------------------------------------

Effective Date of Proposed Rule Change
---------------------------------------------------------------------------

    \10\ Available at http://www.dtcc.com/~/media/Files/Downloads/
legal/service-guides/Settlement.pdf.
    \11\ Available at http://www.dtcc.com/~/media/Files/Downloads/
legal/fee-guides/dtcfeeguide.pdf.
    \12\ Unit securities or ``Units'' are securities comprised of
two or more separate components. A Unit may be comprised of debt
Securities, equity Securities and/or warrants. Units may separate
into their component parts on or after the closing date of their
issuance. See Section I.C.2. of the OA, supra note 5.
    \13\ For immediately separable Units, DTC requires CUSIPs only
for each the components of the Unit, but not for the Unit itself.
For Units that are not immediately separable, DTC requires a CUSIP
for the Unit itself and each of the individual components of the
Unit. See Section I.C.2. of the OA, supra note 5.
    \14\ See supra note 11.
    \15\ This section describes conditions that must be met for DTC
to support distribution of securities issued on a closing date. See
Section II.B.1 of the OA, supra note 5.
    \16\ 17 CFR 240.17Ad-2.
    \17\ See 17 CFR 240.17Ad-2.
    \18\ See Rule 2, supra note 6 at 22.
    \19\ See OA, supra note 5.
    \20\ The confirmation letter acts as the Participant's
instruction to DTC pursuant to Rule 6 (Services) in this regard. See
Rule 6, supra note 6. Pursuant to Rule 6 the Participant providing
an instruction to DTC indemnifies DTC against any loss, liability or
expense as a result of (a) any act done in reliance upon the
authenticity of the instruction, (b) the inaccuracy of the
information contained therein or (c) effecting transactions in
reliance upon such information or instruction, so long as the
transaction is effected in accordance with such information and
instructions. Id.
    \21\ Securities Exchange Act Release No. 75487 (July 20, 2015),
80 FR 44178 (July 24, 2015) (SR-DTC-2015-007).
    \22\ The revised language would require such information be
provided to DTC at least five business days prior to the processing
of a stock distribution with a fractional entitlement, rather than
``approximately one to two weeks,'' as currently stated, because (a)
the timeframe as currently stated may create uncertainty for
responsible parties as to their obligations under this provision and
(b) in DTC's experience, five business days is sufficient time to
allow for timely processing in this regard.
    \23\ Pursuant to Rule 6, DTC acts for a Participant, subject to
the Rules, on duly authorized instructions from the Participant. See
Rule 6, supra note 6.
    \24\ An optional put is a provision under which the holder of
securities may elect to have the securities repaid at the stated put
price after giving notice to the tender agent within the required
notification period. Persons not giving notice retain the
securities. A mandatory tender is a provision under which all
holders of the securities are ``cashed out'' at the stated put price
on the payable date. Holders may have the right to retain their
securities.
    \25\ An extendible put is relates to a Security subject to a
``put'' provision that may be exchanged for a new security, in
accordance with the terms and conditions of such put, with a new
maturity date.
    \26\ Survivor options relate to certain securities, which by
their terms, may contain early redemption provisions in certain
eventualities, such as the death of a beneficial owner.
    \27\ The list of information would also be revised, as discussed
below.
    \28\ The confirmation letter acts as the Participant's
instruction to DTC pursuant to Rule 6 (Services) in with respect to
the processing of the adjustments processed pursuant to this section
of the OA. See Rule 6, supra note 6.
    \29\ Pursuant to this section, information currently required
includes (i) Security description and CUSIP number(s), (ii) total
number of treasury or repurchased shares, and (iii) Participant(s)
account name(s) and number(s) holding such share positions. For the
reason discussed above, the proposed rule change would delete (ii)
above and add to the list of required information (a) total number
of shares/principal value and (b) number of shares/principal value
per Participant. The proposed rule change would also modify (iii)
above to add ``/principal'' without a space after ``share.''
    \30\ The purpose of this change is to enhance efficiency and
security of the processing of information in this regard by having
it transmitted only to a secure DTC email account rather than by fax
which requires additional physical processing to retrieve and
maintain a record of the information. The proposed rule change would
also eliminate the requirement for a sender to confirm DTC's receipt
of the information.
    \31\ On July 7, 2017, DTC submitted the ATOP Rule Filing to the
Commission pursuant to subparagraph (f)(6) of Rule 19b-4 under the
Act, 17 CFR 240.19b-4(f)(6), to amend former Section VI.A.2. in the
subsection titled ``Consents'' thereunder, in order to require
Agents to use DTC's Automated Tender Offer Program to process
consent solicitations for book-entry securities. See Securities
Exchange Act Release No. 81096 (July 7, 2017), 82 FR 32406 (July 13,
2017) (SR-DTC-2017-011). By its terms, the ATOP Rule Filing would be
implemented 30 days after the date of its filing date, or such
shorter time as the Commission may designate (``ATOP Rule Filing
Implementation Date''). See Id. Pursuant to the proposed rule
change, as of the ATOP Rule Filing Implementation Date, the changes
proposed under the ATOP Rule Filing would be incorporated into the
corresponding subsection titled ``Consents'' under the renumbered
Section VI.C. described herein.
    \32\ The number of days in advance of the closing date of an
underwriting transaction that DTC must receive applicable offering
documentation, as well as certain identifying information with
respect to underwriters and securities relating to the transaction
would be reduced to more accurately reflect the amount of lead time
necessary for DTC to timely process an underwriting transaction.
    \33\ The related timeframe for non-U.S. Issuers to submit a BLOR
or ILOR, as applicable, prior to a closing date of a transaction
would not change due to the amount of time necessary to complete
existing physical processing requirements for BLORS and ILORS of
non-U.S. Issuers.
    \34\ See Section IV.A.1.a. of the OA, supra note 5.
---------------------------------------------------------------------------

    The proposed rule change would be effective immediately.
2. Statutory Basis
    Section 17A(b)(3)(F) of the Act \35\ requires that the rules of the
clearing agency be designed, inter alia, to promote the prompt and
accurate clearance and settlement of securities transactions. DTC
believes that the proposed rule change is consistent with this
provision because it would update the OA to clarify text, provide
additional detail on existing processes, update DTC's contact
information and therefore provide Participants, Issuers and Agents with
transparency with respect to DTC's eligibility and asset servicing
processes. By providing such transparency, the proposed rule change
would allow each of these parties greater transparency on processing of
transactions in their Securities and, therefore, would promote the
prompt and accurate clearance and settlement of securities
transactions.
---------------------------------------------------------------------------

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

    The proposed rule changes are also designed to be consistent with
Rule 17Ad-22(e)(23) of the Act,\36\ which was recently adopted by the
Commission.\37\ Rule 17Ad-22(e)(23) requires DTC, inter alia, to
establish, implement, maintain and enforce written policies and
procedures reasonably designed to (i) publicly disclose all relevant
rules and material procedures, including key aspects of its default
rules and procedures, and (ii) provide sufficient information to enable
participants to identify and evaluate the risks, fees, and other
material costs they incur by participating in the covered clearing
agency. The proposed rule changes, as described above, would update
DTC's OA with respect to rules, material procedures and certain fee
provisions relating to DTC's securities eligibility and asset servicing
processes. As such, DTC believes that the proposed changes would
promote disclosure of relevant rules and material procedures and
provide sufficient information to enable participants and other users
of DTC's services to evaluate fees and other material costs of
utilizing DTC's services, in accordance with the requirements of Rule
17Ad-22(e)(23), promulgated under the Act, cited above.
---------------------------------------------------------------------------

    \36\ 17 CFR 240.17Ad-22(e)(23).
    \37\ The Commission adopted amendments to Rule 17ad-22,
including the addition of new subsection 17ad-22(e), on September
28, 2016. See Securities Exchange Act Release No. 78961 (September
28, 2016), 81 FR 70786 (October 13, 2016) (S7-03-14). DTC is a
``covered clearing agency'' as defined by new Rule 17ad-22(a)(5) and
must comply with subsection (e) of Rule 17Ad-22. Id.
---------------------------------------------------------------------------

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

    DTC does not believe that the proposed rule change would have any
impact on competition because the proposed changes merely relate to
updates and clarifications of the OA which would not significantly
affect the rights and obligations of users of DTC's services, and would
not disproportionally impact any users.

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

    DTC has not solicited and does not intend to solicit comments
regarding the proposed rule change. DTC has not received any
unsolicited written comments from interested parties. To

the extent DTC receives written comments on the proposed rule change,
DTC will forward such comments to the Commission.

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) \38\ of the Act and paragraph (f) of Rule 19b-4 \39\
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.
---------------------------------------------------------------------------

    \38\ 15 U.S.C. 78s(b)(3)(A).
    \39\ 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-2017-010 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.

All submissions should refer to File Number SR-DTC-2017-010. This file
number should be included on the subject line if email is used. To help
the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all
written statements with respect to the proposed rule change that are
filed with the Commission, and all written communications relating to
the proposed rule change between the Commission and any person, other
than those that may be withheld from the public in accordance with the
provisions of 5 U.S.C. 552, will be available for Web site viewing and
printing in the Commission's Public Reference Room, 100 F Street NE.,
Washington, DC 20549 on official business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of the filing also will be available
for inspection and copying at the principal office of DTC and on DTCC's
Web site (http://dtcc.com/legal/sec-rule-filings.aspx). All comments
received will be posted without change; the Commission does not edit
personal identifying information from submissions. You should submit
only information that you wish to make available publicly. All
submissions should refer to File Number SR-DTC-2017-010 and should be
submitted on or before August 23, 2017.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\40\
---------------------------------------------------------------------------

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

Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-16269 Filed 8-1-17; 8:45 am]
 BILLING CODE 8011-01-P