[Federal Register Volume 84, Number 109 (Thursday, June 6, 2019)]
[Notices]
[Pages 26466-26480]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-11802]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-85986; File No. SR-DTC-2019-003]
Self-Regulatory Organizations; The Depository Trust Company;
Notice of Filing and Immediate Effectiveness of a Proposed Rule Change
To Amend the Reorganizations Service Guide
May 31, 2019.
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 May 21, 2019, The Depository Trust Company (``DTC'') filed with the
Securities and Exchange Commission (``Commission'') the proposed rule
change as described in Items I, II and III below, which Items have been
prepared by the clearing agency. DTC filed the proposed rule change
pursuant to Section 19(b)(3)(A) of the Act \3\ and Rule 19b-4(f)(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)(4).
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I. Clearing Agency's Statement of the Terms of Substance of the
Proposed Rule Change
The proposed rule change by DTC would revise the Reorganizations
Service Guide (``Guide'') \5\ to: (1) Update its corporate action
service by transitioning corporate action \6\
[[Page 26467]]
functions on its Participant Terminal System (``PTS'') and its
Participant Browser Service (``PBS'') systems \7\ for the processing of
Reorganizations to its Corporate Action Web (``CA Web'') system; \8\
and (2) restructure, streamline and clarify the Guide for enhanced
transparency and clarity, as more fully described below.
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\5\ Each capitalized term not otherwise defined herein has its
respective meaning as set forth in the Rules, By-Laws and
Organization Certificate of DTC (``DTC Rules'') and in the Guide,
available at http://www.dtcc.com/legal/rules-and-procedures.aspx.
\6\ DTC offers an array of services for processing corporate
action events. The services fall into three categories: (i)
Distributions, such as cash and stock dividends, principal and
interest, and capital gain distributions (collectively,
``Distributions''); (ii) redemptions such as full and partial calls,
final paydowns, and maturities (collectively, ``Redemptions''); and
(iii) reorganizations, which include both mandatory and voluntary
reorganizations such as exchange offers, conversions, Dutch
auctions, mergers, puts, reverse stock splits, tender offers, and
warrant exercises (collectively, ``Reorganizations'').
\7\ PTS and PBS are user interfaces for DTC's Settlement and
Asset Services functions. PTS is mainframe-based and PBS is web-
based with a mainframe back-end. Participants may use either PTS or
PBS, as they are functionally equivalent. References to a particular
PTS function in this rule filing include the corresponding PBS
function.
\8\ In PTS/PBS, corporate actions are announced using DTC
proprietary codes to signify event types. CA Web replaces DTC's
proprietary codes with market standard language. For example, a cash
dividend payment that PTS/PBS identifies as a ``08'' function code
is identified in CA Web as a ``Cash Dividend'' event. Additionally,
CA Web incorporates the entire lifecycle of an event into one
platform with a unique corporate action identifier that follows the
event through its lifecycle. CA Web gives Participants the ability
to customize screen displays and offers flexible methods for event
search, neither of which is available in the PTS/PBS systems.
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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 by DTC would revise the Guide to: (1)
Update its corporate action service by transitioning corporate action
functions on its PTS and PBS systems for the processing of
Reorganizations to its CA Web system; and (2) restructure, streamline
and clarify the Guide for enhanced transparency and clarity, as more
fully described below.
(i) Overview of the Proposed Rule Change
Transition of PTS/PBS Reorganizations Functions to CA Web
Beginning in 2011, DTC has filed a series of rule changes to update
its corporate action services by migrating the corporate action
functions for Distributions from PTS/PBS to CA Web, a then new browser
user interface.\9\ After a Participant testing phase, PTS/PBS functions
for Distributions were retired in 2015, and the use of CA Web for
processing Distributions became mandatory for all Participants.\10\
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\9\ See Securities Exchange Act Release No. 68114 (October 26,
2012), 77 FR 66497 (November 5, 2012) (SR-DTC-2012-08).
\10\ See Securities Exchange Act Release No. 73864 (December 17,
2014), 79 FR 77063 (December 23, 2014) (SR-DTC-2014-12).
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In 2016, DTC filed a rule filing to transition PTS/PBS functions
for Redemptions to CA Web, and to update the Guide to add the
appropriate references.\11\ After a Participant testing phase, PTS/PBS
functions for Redemptions were retired in 2017, and the use of CA Web
for processing Redemptions became mandatory for all Participants.
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\11\ See Securities Exchange Act Release No. 79746 (January 5,
2017), 82 FR 3372 (January 11, 2017) (SR-DTC-2016-014).
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Pursuant to the proposed rule change, DTC would transition PTS/PBS
functions for Reorganizations to CA Web, and update the Guide to add
the appropriate references.\12\ A pilot testing period began in Q3 of
2018 and will conclude in Q2 of 2019, at which time Reorganizations
activity within the following PTS and corresponding PBS functions would
be retired and transitioned to CA Web: ADJI (Adjustment Inquiries),
RIPS (Reorganization Inquiry for Participants), and SDAR Dept. R (Same
Day Allocation Reporting).\13\ DTC has been communicating this change
to Participants through CA Web review sessions, Important Notices, and
industry outreach.\14\
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\12\ As in the previous migrations of corporate action PTS/PBS
functions to CA Web, corporate action functions relating to the
submission of instructions by Participants will remain on PTS/PBS
until a later date.
\13\ See PTS/PBS Function Guides, available at http://www.dtcc.com/settlement-and-asset-services/edl-ptspbs-function-guides.
\14\ See Important Notice B10792-19 (March 14, 2019); Important
Notice B8760-18 (June 7, 2018), Important Notice B9072-18 (July 9,
2018) and Important Notice B9122-18 (July 26, 2018), available at
http://www.dtcc.com/legal/important-notices; and DTC Corporate
Actions Product Update to SIFMA (October 11, 2018), available at
https://www.sifma.org/wp-content/uploads/2017/05/SIFMA-CAS_DTCC-Corporate-Actions-Update_2018.pdf.
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Restructure, Streamline and Clarify the Guide
DTC proposes to restructure, streamline and clarify the Guide for
enhanced transparency and clarity as set forth below.
DTC would restructure the Guide into three parts. The first part
would provide an introduction and background on reorganizations. The
second part would address Reorganizations announcements
(``Announcements''). The third part would address the processing of
mandatory events and voluntary offerings, including, but not limited
to, Participant instructions.
DTC would streamline the Guide as follows:
(1) The Guide currently contains contact numbers for information
about different services described in the Guide. As a practical matter,
the contact information for information about each of these services is
the same. Therefore, the individual references to contact information
for information about a service would be deleted and would be replaced
by a single reference in the beginning of the Guide.
(2) Currently, each section of the Guide that describes a service
contains a list of associated PTS and PBS functions. DTC is proposing
to insert a table toward the beginning of the Guide that would contain
a consolidated list of PTS/PBS functions that are associated with
reorganization events generally, the parallel CA Web functionality, and
the applicability to voluntary events, mandatory events, or proxy.
(3) Sections relating to procedures for the hard copy submission of
Participant instructions in connection with different offerings would
be clarified and consolidated into one proposed section that outlines
the common procedure and set of requirements for the submission of
instructions outside of the Automated Tender Offer Program (``ATOP'')
and the Automated Subscription Offer Program (``ASOP'').\15\
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\15\ ATOP allows Participants to accept various voluntary
offers, such as voluntary tender or exchange offers, in a book-entry
environment. See Securities Exchange Act Release No. 33797 (March
22, 1994), 59 FR 14696 (March 29, 1994) (SR-DTC-93-11) (approving
enhancements to ATOP). ASOP allows Participants to accept rights
offers and receive the underlying securities within a fully
automated book-entry environment. See Securities Exchange Act
Release No. 35108 (December 16, 1994), 59 FR 67356 (December 29,
1994) (SR-DTC-94-15) (instituting ASOP).
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(4) Currently, the Guide contains several sections titled
``Important Considerations'' in connection with different
reorganization services. These sections contain a substantial amount of
overlapping information. Therefore, DTC is proposing to consolidate
these
[[Page 26468]]
sections into a single proposed ``Important Considerations'' section.
(5) Currently, the Guide contains several sections titled
``Interest Payments, Dividends, Distributions, and Voting Rights for
Tendered Securities,'' in connection with different reorganization
services. These sections contain a substantial amount of overlapping
information. Therefore, DTC is proposing to consolidate these sections
into a single proposed ``Interest Payments, Dividends, Distributions,
and Voting Rights for Tendered Securities'' section.
Finally, DTC would clarify and enhance the transparency of certain
services and procedures by:
(1) Clarifying and simplifying language;
(2) Inserting additional background information and clarifying
information;
(3) Replacing references to DTC's proprietary Computer-to-Computer
Facility (``CCF'') announcement files with references to International
Organization for Standardization (``ISO'') 20022 messaging in order to
reflect the retirement and transition to ISO 20022 to communicate
Reorganizations Announcements; \16\ and
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\16\ See Securities Exchange Act Release Nos. 79746 (January 5,
2017), 82 FR 3372 (January 11, 2017) (SR-DTC-2016-014); 76811
(December 31, 2015), 81 FR 826 (January 7, 2016) (SR-DTC-2015-013);
68114 (October 26, 2012), 77 FR 66497 (November 5, 2012) (SR-DTC-
2012-08); and 63886 (February 10, 2011), 76 FR 9070 (February 16,
2011) (SR-DTC-2011-02).
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(4) Making the following ministerial changes to accurately reflect
current terminology or to remove references to retired systems:
For simplicity, consolidate each reference to CCF/CCF II
files in a reference to CCF files, because CCF/CCF II files are
collectively known as CCF Files.
Remove references to MDH (Mainframe Dual Host) message
format files, which are no longer supported.\17\
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\17\ As part of enhanced business continuity plans in the
aftermath of the events of September 11, 2001, on or around 2005,
MDH, a proprietary communications protocol, was retired by DTC. See
Important Notice Z#0004 (October 2, 2002), available at http://
www.dtcc.com/~/media/Files/Downloads/Investment-Product-Services/
Insurance-and-Retirement-Services/SMART_user_guide.pdf.
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References to ``product'' or ``program'' would be replaced
by references to ``service,'' which is more appropriate for a service
guide.
References to ``relinquishment'' as an available put
exercise would be deleted because they are no longer included as
features of put bonds in the industry.
References to ``hard copy'' reports, notifications, or
instructions would be changed to refer more generally to any medium
used by Participants for transmitting instructions to, or viewing
messages from, DTC.
Correct spelling, grammatical and typographical errors
throughout.
Update other text and contact information, such as
addresses, phone numbers, website information, and email addresses.
(ii) Proposed Rule Change
DTC proposes to amend the Guide as follows:
(1) Important Legal Information: The copyright date would be
updated from 2016 to 2019.
(2) About Reorganization: This heading would be changed to ``About
Reorganization Services.''
a. Introduction: No change would be made to this title.
b. Overview: The ``Overview'' section would be modified to include
references to CA Web and ISO 20022 messaging, and to explain how the
functionality for reorganization services can be accessed. The word
``chapter'' would be replaced with the word ``guide'' to reflect that
the overview addresses the reorganization services throughout the
Guide. The second paragraph of the section would also be modified to
remove the specific references to PTS/PBS functions that would cease to
be available on PTS/PBS, since these functions would be already covered
in the references to PTS and PBS in the amended first paragraph of the
section. Further, the section would be modified to clarify a note about
a Participant's obligation to check the accuracy of information
regarding reorganization activities.
c. Proposed ``Reorganization/Proxy Contact Number'' section: The
new proposed section, ``Reorganization/Proxy Contact Number,'' would be
added to provide Participants with the contact information for
information regarding any aspect of reorganization/proxy processing or
a specific event. In connection with this proposed change, DTC is
proposing to remove the sections of contact information that are
repeated throughout the Guide in connection with each particular
service.
d. About Reorganizations: The title would be changed to ``About the
Reorganizations Service.'' The section would be modified to provide
additional context for, and descriptions of, the Reorganizations
service. The definition of ``agent,'' as used in the Guide, would be
inserted into this section. In addition, the section would be modified
to clarify what would occur if DTC is unable to fully support a
Reorganizations event.
e. Types of Reorganization Products: The title of the section would
be changed to ``Types of Reorganization Event Services.'' The list of
services that are announced and processed by the Reorganization
Department would be clarified and narrowed to the main event types:
Voluntary Offerings, Mandatory Reorganizations, and Proxy. Pursuant to
the restructuring of the Guide, the event subtypes would be addressed
later in the Guide.
f. Reorganization Envelopes: The ``Reorganization Envelopes''
section would be removed because the relevant information about viewing
Announcements would be included in the proposed section titled ``How to
View Mandatory and Voluntary Reorganization Announcements.''
g. Reorganization (RRG) Account/Contra-CUSIP Numbers: This section
would be amended and relocated within the Guide. The title would be
changed to ``Reorganization (RRG) Segregated Account.'' The text at the
end of the section, which reads: ``059 = the activity code of the RIPS
envelope (in this case, rights)'' and ``01 = The sequence number of the
RIPS envelope'' would be modified to remove the references to the RIPS
envelope, to provide more generally that the information is viewable on
other platforms, in addition to RIPS.
h. Pledged Securities: This section would be amended and relocated
within the Guide. For clarity, the section would be modified to include
the following sentence: ``There are specific processes for pledging on
voluntary reorganization events detailed below.''
i. Segregated Securities: This section would be relocated within
the Guide, as discussed below.
j. Chills on Reorg Activities: This section would be amended and
relocated within the Guide. For additional clarity, the section would
be modified to include the following sentence: ``The timing of the
chills will vary depending upon the event type or security type such as
book-entry only.''
k. Frozen Letters: This section would be amended and relocated
within the Guide. The section would be amended to remove the list of
items that are required for a frozen letter request and would reflect
that a template request form (that reflects these requirements) is
available. In addition, the section would be amended to replace the
reference to ``the appropriate person at DTC'' with a specific email
contact at [email protected].\18\ Further, for accuracy, the
following note would be removed: ``Note--DTC does not provide a
specific
[[Page 26469]]
form for an indemnity clause. You must provide the indemnity clause in
whatever format your own legal requirements dictate.'' The template
request form includes an indemnity.\19\
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\18\ See Important Notice B3751-16 (June 29, 2016), available at
http://www.dtcc.com/~/media/Files/pdf/2016/6/29/3751-16.pdf.
\19\ See Important Notice B3751-16 (June 29, 2016), available at
http://www.dtcc.com/~/media/Files/pdf/2016/6/29/3751-16.pdf;
Important Notice B7348 (January 5, 2005), available at www.dtcc.com/
~/media/Files/pdf/2005/1/27/7348.pdf.
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l. Preparing to Use the Products: The title would be changed to
``Preparing to Use the Services.'' The list of technical requirements
would be amended to (i) make ministerial corrections to the references
to PTS and PBS, (ii) add references to CA Web and to ISO 20022 Messages
via MQ and file protocols, and (iii) delete the references to CCF II
and MDH. In addition, the table of PTS/PBS functions would be modified
to insert parallel CA Web functionality. The table would be accompanied
by a note that reads: ``Note that in 2019, the following PTS/PBS
functions will no longer be available for current Reorganization
activity and will be replaced with CA Web functionality as indicated.
PTS/PBS functions will, however, be available for historical research
purposes.'' Further, the section would be amended to add the following
clarifying text: ``DTC offers a comprehensive overview of
reorganization activity comprised of Announcements, Allocations,
Adjustments and applicable alerts via CA Web's Reorganization dashboard
which ``pushes'' data to users. Understanding the Reorganizations
lifecycle and data model are important prerequisites for successful use
of the Reorganizations service. DTC offers robust training resources
available at its Asset Services Learning Center--https://
dtcclearning.com/products-and-services/asset-services.'' Finally, the
last sentence in the section would be changed to: ``Note: DTC also
provides various reports, including on SMART/Search, and Participants
have the ability to export data from CA Web to spreadsheets, for
manipulation and analysis.'' The purpose of this modification to this
general statement is to reflect that various reports are accessed
through SMART/Search and CA Web data reports. In general, Participants
no longer use, and therefore DTC no longer provides, hard copy reports.
m. Reorganization Contact Numbers: This section would be deleted
because contact information would be provided in the proposed section,
``Reorganization/Proxy Contact Number.''
n. Service Topics: This heading would be deleted because it is not
relevant to the proposed restructuring of the Guide.
o. Allocations: This entire section would be amended and relocated
within the Guide.
(i) About the Product: As noted above, this section would be
amended and relocated within the Guide. The title ``About the Product''
would be replaced with ``About Allocations.'' The section would be
amended to clarify that DTC will allocate cash and stock to Participant
upon receipt of the confirmed position and entitlements from the agent.
For enhanced transparency, the proposed section would include
additional information on cash allocations, reorganization cash
settlement reporting and stock allocations.
p. Proposed ``How Reorganizations Work'' section: DTC is proposing
to insert a section containing basic information on the elements of
Reorganizations that are relevant to the reorganization services. In
particular, the section would discuss the types of event information
that may be relevant to reorganization events, the types of entitlement
options, the types of entitlement payouts, and the methods by which DTC
might deliver entitlement information to Participants.
q. Associated PTS/PBS Functions: The table of PTS/PBS functions,
which currently reflects PTS/PBS functions used in association with
Allocations, would be modified to reflect a consolidated chart of PTS/
PBS functions that are used in association with Reorganization events
more generally, and to insert parallel CA Web functionality and
applicability of the functions to voluntary events, mandatory events,
and/or proxy. In addition, certain function descriptions would be
revised for clarity. The section heading would be changed to
``Associated PTS/PBS and CA Web Functions.'' Further, the paragraphs
beginning with ``PTOP (PTS)'' and ``PSOP (PTS)'' would be moved to the
proposed ``Voluntary Reorganizations'' section later in the Guide.
r. Allocations Contact Number: This section would be deleted
because contact information would be provided in the proposed section,
``Reorganization/Proxy Contact Number.''
(3) Announcements: There would be no changes to this heading.
a. About the Product: The title ``About the Product'' would be
changed to ``About the Service.'' The section would be modified to
replace a reference to ``product'' with ``service'' and to clarify the
types of Reorganizations activities for which DTC provides
Announcements. Further, the section would be updated to remove
references to CCF, CCF II and MDH, and to insert references to CA Web
and ISO 20022. For clarity, an additional note would be inserted, which
would read: ``Note: For all the event/activity types listed, if the
event involves a Canadian issue paying in Canadian dollars, DTC will
announce either two events or one event with multiple options to
include a U.S. dollar option.''
b. How the Product Works: The title ``How the Product Works'' would
be replaced with ``How the Announcement Service Works.'' The section
would be modified to remove inaccurate references to an internal
database and newspapers as sources of reorganization information.
Although DTC may track anticipated reorganization events in its
internal database, it does not announce an event until it retrieves
information from one of the listed sources. DTC does not retrieve
reorganization information from newspapers because, in contrast to the
other listed sources, the information is not directly issued by the
issuer or agent.
c. About the RIPS Function: This section would be consolidated into
and replaced by the proposed section titled ``How to View Mandatory and
Voluntary Reorganization Announcements.''
d. Proposed ``How to View Mandatory and Voluntary Reorganization
Announcements'' section: The proposed section would replace the
``Reorganization Envelopes'' and ``About the RIPS Function'' sections
and would reflect the Reorganization Announcements functionality that
would be available through CA Web and ISO 20022, and would be modified
to reflect enhanced functionality offered by CA Web and ISO 20002.
e. Associated PTS/PBS Functions: This section would be deleted
because the information would be updated and included in the proposed
``Associated PTS/PBS and CA Web Functions'' section at the beginning of
the Guide.
f. Announcements Contact Numbers: This section would be deleted
because contact information would be provided in the proposed section,
``Reorganization/Proxy Contact Number.''
(4) CD Early Redemptions: This entire section, with the exception
of ``Associated PBS/PTS functions'' and ``CD Early Redemptions Contact
Numbers,'' would be amended and relocated within the Guide.
a. About the Product: As noted above, this section would be amended
and relocated within the Guide. The section
[[Page 26470]]
would be modified to replace references to ``product'' with
``service.'' The modifications would include changing the title of the
section ``About the Product'' to ``About the Service.''
b. How the Product Works: As noted above, this section would be
amended and relocated within the Guide. The title ``How the Product
Works'' would be changed to ``How the Service Works.''
c. Exempt Instructions: As noted above, this section would be
relocated within the Guide.
d. Non-Exempt Instructions: As noted above, this section would be
amended and relocated within the Guide. For transparency, it would be
modified to note that ``[t]he documents must be received by DTC within
five days of the instruction otherwise the instruction will drop off
the system (i.e., an incomplete instruction) and will have to be
reentered into the system to re-initiate the process,'' which is the
current process.
e. Issuer Acceptance: As noted above, this section would be
relocated within the Guide.
f. Associated PTS/PBS Functions: This section would be deleted
because the information would be updated and included in the proposed
``Associated PTS/PBS and CA Web Functions'' section in the beginning of
the Guide.
g. CD Early Redemptions Contact Numbers: This section would be
deleted because contact information would be provided in the proposed
section, ``Reorganization/Proxy Contact Number.''
(5) Change Mode of Payment (CMOP): This entire section, with the
exception of ``Associated PBS/PTS functions'' and ``CMOP Contact
Numbers,'' would be amended and relocated within the Guide.
a. About the Product: As noted above, this section would be amended
and relocated within the Guide. The title ``About the Product'' would
be changed to ``About the Service.''
b. Associated PTS/PBS Functions: This section would be deleted
because the information would be updated and included in the proposed
``Associated PTS/PBS and CA Web Functions'' section in the beginning of
the Guide.
c. CMOP Contact Numbers: This section would be deleted because
contact information would be provided in the proposed section,
``Reorganization/Proxy Contact Number.''
(6) Conversions: This entire section, with the exception of
``Associated PBS/PTS functions'' and ``Conversions Contact Numbers,''
would be amended and relocated within the Guide.
a. About the Product: As noted above, this section would be amended
and relocated within the Guide. The title ``About the Product'' would
be changed to ``About the Service.'' The section would be modified to
clarify that (i) if entitlements of cash and/or securities is not yet
determined at the time of the instruction, DTC may move a Participant's
instructed position into a contra CUSIP until the entitlements are
determined, and (ii) the entry on the Participant Daily Activity
Statement for conversions is ``Conversions (Account #2222/4444).''
b. About Conversion Features: As noted above, this section would be
relocated within the Guide. The section would be modified to add
additional context and to reflect the trend in the industry to use
market triggers as a conversion feature. In addition, DTC is proposing
to add language that would explain the circumstances in which an
entitlement amount would not be determined at the time of the
Participant's instructions, and would further advise that, in these
circumstances, Participants would input their instructions through
ATOP, rather than the RCNV (PTS).\20\
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\20\ RCNV is used to submit conversion instructions when the
conversion rate(s) and/or new entitlements (securities) are known
and the new securities are eligible for DTC services. Participants
get immediate use of the securities. PTOP (ATOP) is used to submit
conversion instructions when the rate(s) and or new entitlement(s)
is cash, cash or securities or cash and securities, and is
unavailable at the time of the instruction. Participants get
credited with the entitlements upon receipt from the Issuer/Agent.
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c. How the Product Works: As noted above, this section would be
relocated within the Guide. The title ``How the Product Works'' would
be changed to ``How the Service Works.'' This section would be modified
to provide further clarity with respect to circumstances where the
amount of the entitlement is undetermined at the time of the
Participant's instruction and to reflect the increased utilization of
market triggers for convertibility. DTC is further proposing to delete
the sentence ``DTC credits these shares to your general free account if
an underlying issue is in an interim period. The additional shares are
allocated on the due bill redemption date,'' because the concept is
covered elsewhere in the Guide.
d. Pledge and Transfer of Underlying Securities by Book Entry: As
noted above, this section would be relocated within the Guide. The
section would be modified to clarify that the section relates to
conversion instructions submitted to DTC via the PTS RCNV or PBS Reorg
Conversion functions, as opposed to through ATOP. In addition, the
section would be modified to (i) clarify that the conversion process
does not complete until DTC receives the securities from the agent, and
(ii) alert Participants that DTC will reverse the credits to a
Participant's account for underlying securities if DTC does not receive
the underlying securities from the agent promptly.
e. Associated PTS/PBS Functions: This section would be deleted
because the information would be updated and included in the proposed
``Associated PTS/PBS and CA Web Functions'' section in the beginning of
the Guide.
f. Conversions Contact Numbers: This section would be deleted
because contact information would be provided in the proposed section,
``Reorganization/Proxy Contact Number.''
(7) Eurobond Conversions: This entire section would be amended and
relocated within the Guide, amended as discussed below.
a. About the Product: As noted above, this section would be amended
and relocated within the Guide. The title ``About the Product'' would
be changed to ``About the Service.'' In addition, references to
``product'' would be replaced with ``service.''
b. How the Product Works: As noted above, this section would be
amended and relocated within the Guide. The title ``How the Product
Works'' would be changed to ``How the Service Works.'' For accuracy and
because the list does not necessarily remain static, the section would
be modified to replace the sentence ``A cumulative listing of the
securities that qualify for the program appears in DTC's Monthly
Reference Directory'' with ``To determine whether a security qualifies
for the program, contact DTC's Customer Support Center at 1-888-382-
2721 and follow the menu options.''
c. Important Considerations: This section would be consolidated
with other ``Important Considerations'' sections into the proposed new
``Important Considerations'' section. The proposed ``Important
Considerations'' section would reflect a modification to replace a
reference to ``product'' with ``service.'' In addition, the proposed
``Important Considerations'' section would replace the statement ``DTC
will make copy #4 of the Certification of Conversion form from the
conversion agent available for you to pick up,'' with ``DTC will make
available via email the agent's Certification of Conversion form.''
This modification would reflect that conversion agents no longer supply
hard copy Certification of Conversion forms.
[[Page 26471]]
d. Pledge and Transfer of Eurobond Underlying Securities by Book-
Entry: This section would be amended and relocated within the Guide.
The section would be modified to (i) clarify that the conversion
process does not complete until DTC receives the securities from the
agent, and (ii) alert Participants that DTC will reverse credits to a
Participant's account for underlying securities if DTC does not receive
the underlying securities from the agent promptly. The section would
also be revised to replace an enumeration of ``a, b, c, d, and e'' with
``1, 2, 3, 4, and 5'' to conform to the referenced list.
(8) Hard Copy Procedure for Conversions/Submitting a Hard Copy
Conversion Instruction: These ``Hard Copy Procedure'' sections would be
deleted and replaced by the proposed section ``Procedures for
Submitting Instructions Outside of PTS/PBS,'' which would update and
consolidate separate hard copy procedures for different event types. In
addition, the proposed section would consolidate the ``Warning!''
statements that currently appear in the separate hard copy procedures
sections. Finally, because the proposed section would apply to multiple
event types, the section would include a new table that would list the
forms for instructions to DTC outside of PTS/PBS. The new table would
list the event types, the appropriate instruction form for each event,
and the appropriate email address to which the form should be directed.
(9) Hard Copy Procedure for Warrant Exercises/Exercising a Warrant
via Hard Copy: These ``Hard Copy Procedure'' sections would be deleted
and replaced by the proposed section ``Procedures for Submitting
Instructions Outside of PTS/PBS,'' which, as noted above, would update
and consolidate separate hard copy procedures for different event
types. In addition, the proposed section would consolidate the
``Warning!'' statements that currently appear in the separate hard copy
procedures sections. Finally, because the proposed section would apply
to multiple event types, the section would include a new table of forms
for instructions to DTC outside of PTS/PBS. The new table would list
the event types, the appropriate instruction form for each event, and
the appropriate email address to which the form should be directed.
(10) Hard Copy Procedures for Voluntary Offerings and Put Option
Exercises/Overview, Accepting an Offer or Put Option Exercise, and
Submitting a Notice of Guaranteed Delivery: These ``Hard Copy
Procedure'' sections would be deleted and replaced by the proposed
section ``Procedures for Submitting Instructions Outside of PTS/PBS,''
which, as noted above, would update and consolidate separate hard copy
procedures for different event types. In addition, the proposed section
would consolidate the ``Warning!'' statements that currently appear in
the separate hard copy procedures sections. Finally, because the
proposed section would apply to multiple event types, the section would
include a new table of forms for instructions to DTC outside of PTS/
PBS. The new table would list the event types, the appropriate
instruction form for each event, and the appropriate email address to
which the form should be directed.
(11) Hard Copy Procedures for Voluntary Offerings and Put Option
Exercises/Accepting an Offer to Tender Securities by Sealed Bids, and
Withdrawing an Acceptance: These ``Hard Copy Procedure'' sections would
be deleted and replaced by the proposed section ``Procedures for
Submitting Instructions Outside of PTS/PBS,'' which would consolidate
and update the separate hard copy procedures for different event types.
(12) Mandatory Reorganizations: This entire section, with the
exception of ``Associated PBS/PTS functions'' and ``Mandatory
Reorganization Contact Numbers,'' would be amended and relocated within
the Guide.
a. About the Product: As noted above, this section would be amended
and relocated within the Guide. The title ``About the Product'' would
be changed to ``About the Service.'' The section would be modified for
enhanced readability and to add transparency about situations when a
mandatory corporate action may be set-up or processed differently.
b. How the Product Works: As noted above, this section would be
amended and relocated within the Guide. The title ``How the Product
Works'' would be changed to ``How the Service Works.''
c. Various Types of Mandatory Reorganizations: As noted above, this
section would be amended and relocated within the Guide. This section
would be modified to clarify that the activities that are listed are
examples of Mandatory Reorganization events. In addition, the list of
event types would be revised for clarity and consistency, and
additional event types would be added for enhanced transparency.
d. Associated PTS/PBS Functions: This section would be deleted
because the information would be updated and included in the proposed
``Associated PTS/PBS and CA Web Functions'' section in the beginning of
the Guide.
e. Mandatory Reorganization Contact Numbers: This section would be
deleted because contact information would be provided in the proposed
section, ``Reorganization/Proxy Contact Number.''
(13) Proxy: For clarity, the title of the section would be changed
to ``Proxy Announcements.''
a. About the Product: The title ``About the Product'' would be
changed to ``About the Service.'' The section would be modified to
change a reference to ``product'' with ``service,'' and to update the
name of the service. For enhanced clarity, the section would be
modified to include general and extraordinary meetings as issuer
communications that are supported by Proxy Announcements. In addition,
for accuracy, the bullet points for Bankruptcies, Legal notices, and
Appraisal or dissenters' rights would be deleted. Announcements for
those events are handled by the Reorganizations Announcements group,
and not by the proxy announcements group.
b. How the Product Works: The title ``How the Product Works'' would
be changed to ``How the Service Works.'' The paragraphs of the section
would be reordered. The section would also be modified to (i) add
references to CA Web and ISO 20022, (ii) to make ministerial clarifying
changes, (iii) to remove a reference to bankruptcy announcement,
because bankruptcies would have its own section in the revised Guide,
and (iv) remove the sentences ``DTC also offers election processing for
consent solicitation events via its ATOP (Automated Tender Offer
Program) service. Under this service, DTC allows participant
instruction on consent solicitation events to be accepted via ATOP and
transmitted electronically to balloting agents,'' because consent
solicitations are not processed as part of the proxy service, but
rather as part of voluntary reorganization services. In addition, the
section would be revised to reflect that Omnibus Proxies are available
through DTC's Securities Position Report (``SPR'') service for those
issuers that are registered for the service. Further, the section would
be modified to provide a reminder to Participants that they should make
sure that their proxy contact information is up-to-date. Finally, a
note about voting securities registered to Cede & Co. that have been
withdrawn on or before record date would be updated from requiring
microfilm copies of the front and back of the certificate to requiring
images (i.e., scanned copies of the front and back of the certificate).
[[Page 26472]]
(14) Proposed ``Processing'' section: As part of the proposed
restructuring of the Guide, DTC is proposing that the ``Processing''
section follow the proposed ``Proxy Announcements'' section in the
Guide.
(15) Proposed ``Mandatory Reorganizations'' section: The entire
Mandatory Reorganizations section, amended as discussed above, would be
moved under the ``Processing'' heading.
(16) Proposed ``Voluntary Offerings'' section: The Voluntary
Offerings section, which appears later in the Guide, would be moved up
to follow the proposed Mandatory Reorganization section. The Voluntary
Offerings section would be modified, as discussed below.
(17) About Legal Notices: This section would be modified for
clarity and to remove references to LENP and the PBS Legal Notice
System, because those platform-based functions were superseded by the
web-based Legal Notice System (``LENS'').\21\ In addition, the section
would be modified to clarify that the LENS service is available to both
Participants and non-Participants.
---------------------------------------------------------------------------
\21\ See Securities Exchange Act Release No. 62686 (August 10,
2010), 75 FR 50032 (August 16, 2010) (SR-DTC-2010-10).
---------------------------------------------------------------------------
(18) Other Shareholder or Bondholder Services: This section would
be modified to accurately reflect the services offered. Specifically,
DTC has not offered ``Ratification of Assertion of appraisal of
Dissenter's Rights,'' as a discrete service and therefore this language
would be deleted. DTC is proposing to add ``Confirmation of a
position,'' as this is a specific service provided by DTC as a part of
the shareholder or bondholder service offerings. The section would also
be revised to add clarifying language and to provide a website address
at which template instructions and letters may be found. Finally,
contact information would be deleted, because, as discussed above,
contact information would be provided at the beginning of the Guide.
(19) Dissenters' Rights/Appraisal Rights: This section would be
revised to state that stockholders may be required to present (and not
deposit) share certificates (or in the case of Direct Registration
Service (DRS) only securities, a DRS Statement) in connection with
their dissent. The purpose of this revision would be to clarify that
this is not a DTC requirement, but, rather, may be a required action
pursuant to the terms of the merger. The section would also be modified
to remove the requirement of an ``appraisal rights questionnaire or
dissenters' rights questionnaire.'' An ``appraisal rights questionnaire
or dissenters' rights questionnaire'' is substantively similar to the
required instruction letter and is therefore no longer required. In
addition, DTC is proposing to add a note providing a website address at
which template instructions and letters may be found.
(20) Associated PTS/PBS Functions: This section would be deleted
because the information would be updated and included in the proposed
``Associated PTS/PBS and CA Web Functions'' section in the beginning of
the Guide.
(21) Proxy Contact Numbers: This section would be deleted because
contact information would be provided in the proposed section,
``Reorganization/Proxy Contact Number.''
(22) Puts: This entire section, except for ``Associated PTS/PBS
Functions'' and ``Puts Contact Numbers,'' would be amended and
relocated within the Guide.
a. About the Product: As noted above, this section would be amended
and relocated within the Guide. The section would be modified to change
a reference to ``product'' with ``service.'' In addition, the reference
to exercising relinquishments would be deleted. In addition, the
provision referencing a relinquishment, ``[n]on-option securities based
on your position in the contra (relinquishment) security,'' would be
deleted.
b. About Puts: This section would be relocated within the Guide,
where it would proceed the proposed ``Puts/About the Product'' section.
c. Types of Put Options: This section would be amended and
relocated within the Guide, and would be amended to remove the
reference to ``Relinquishment'' and to add a line item for ``Put
(Survivor Option).'' ``Put (Survivor Option)'' would be described as
``Issue has an early redemption feature. This feature allows the holder
to elect to sell bonds back to the issuer on a predetermined basis
(excluding monthly) according to specific priorities.''
d. Exercising Put Options: This section would be relocated within
the Guide. The section would be amended to clarify that ``[e]xcept with
respect to put options that have an offer to purchase with no
withdrawal privilege, you can submit exercise instructions via the PTS
PUTS or PBS Put Option Bonds functions. Instructions relating to put
options that have an offer to purchase with a withdrawal privilege can
be submitted through the PTS PTOP or PBS Voluntary Tenders and
Exchanges functions.''
e. Withdrawing Put Option Instructions: This section would be
relocated within the Guide, and would be amended to include CA Web and
to further clarify that the event details would be available on PTS
RIPS, PBS Redemptions and Reorganizations or CA Web.
f. Rejection of Withdrawal of Put Option Instructions: This section
would be relocated within the Guide, and would be modified to remove
the specific reference to how DTC would communicate the rejection,
because there are different ways for a Participant to access this
information.
g. Proration of a Repayment Option: This section would be relocated
within the Guide. The text of the section would be deleted and would be
replaced by an instruction to refer to ``the proration details found in
the Proration of an Offer section of the About DTC's Automated Tender
Offer Program (ATOP) topic of this guide.''
h. Interest Payments, Dividends, Distributions, and Voting Rights
for Tendered Securities: This section would be consolidated with
``About ATOP/Interest Payments, Dividends, Distributions, and Voting
Rights for Tendered Securities,'' and ``Warrant Exercises/Interest
Payments, Dividends, Distributions, and Voting Rights,'' into a single
proposed section, ``Interest Payments, Dividends, Distributions, and
Voting Rights for Tendered Securities,'' which would appear later in
the Guide. The proposed section would reflect the consolidation, and
would enumerate the different types of tendered securities for which
Cede & Co. may receive property or rights to distribute to
Participants. References to specific offer options would be genericized
(e.g., the reference to a specific ``repayment option period'' would be
replaced with a more general reference to ``corporate action,'' and
replace a reference to the terms ``of a repayment option'' with the
terms ``of an offer'').
i. Important Considerations: This section would be consolidated
with other ``Important Considerations'' sections the proposed
``Important Considerations'' section that would be inserted in the
proposed ``Instructions/Expirations'' section. The eighth bullet, ``No
legal deposits of the subject security will be accepted from the date
of the PTS RIPS or PBS Reorganizations and Redemptions announcement for
the duration of the put exercise period'' would be deleted because it
is inaccurate.\22\ The ninth bullet would be removed because it would
be covered in the Chills on Reorg Activities section.
[[Page 26473]]
The tenth bullet would be deleted because the necessary information
would appear in the proposed ``Procedures for Submitting Instructions
Outside of PTS/PBS'' section. The proposed section would also eliminate
a reference to ``relinquishment.'' The proposed section would reflect
the substance of the consolidated sections, and would, where
appropriate, replace the references to specific tenders and designated
PTS/PBS functions with generic references.
---------------------------------------------------------------------------
\22\ DTC cannot prevent submission of legal deposits during the
put exercise period because the target CUSIP is not chilled for
deposits.
---------------------------------------------------------------------------
j. Associated PTS/PBS Functions: This section would be deleted
because the information would be updated and included in the proposed
``Associated PTS/PBS and CA Web Functions'' section in the beginning of
the Guide.
k. Puts Contact Numbers: This section would be deleted because
contact information would be provided in the proposed section,
``Reorganization/Proxy Contact Number.''
(23) Rejection by DTC or the Agent: This entire section would be
relocated within the Guide, as noted above.
a. Rejection by DTC: As noted above, this section would be
relocated within the Guide.
b. Rejection by the Agent: As noted above, this section would be
relocated within the Guide.
(24) Rights Subscriptions: This entire section, except for
``Associated PTS/PBS Functions,'' ``Rights Subscriptions Contact
Numbers,'' ``Distribution of Underlying Securities,'' ``Distribution of
Sale Proceeds,'' ``Cancellation of Rights Offer,'' and ``About the
Rights Subscription Instructions PTS/PBS Backup Form,'' which would be
deleted, would be amended and relocated within the Guide.
a. About the Product: As noted above, this section would be amended
and relocated within the Guide. The title ``About the Product'' would
be changed to ``About the Service.'' The section would be modified to
change a reference to ``product'' with ``service,'' and to update the
name of the service. In addition, for accuracy and clarity, the section
would be amended to replace a reference to ``underlying securities''
with ``entitlements,'' and note that DTC would also allocate refunds
when applicable. Further, the final sentence in the section would be
updated to add a reference to CA Web.
b. About Rights: As noted above, this section would be amended and
relocated within the Guide. The last sentence in this section would be
updated to add references to CA Web and ISO 20022.
c. Relevant Terms: As noted above, this section would be amended
and relocated within the Guide. For enhanced clarity, the term ``Cover
of Protect,'' which refers to ``The surrendering of rights for which a
previous protect had been submitted as a guarantee of delivery'' would
be added to the table of relevant terms. For consistency, DTC is
proposing to refer to ``agent,'' rather than a specific type of agent,
and would therefore delete the definition of ``Subscription Agent (or
Issuer's Agent).''
d. About DTC's Automated Subscription Offer Program (ASOP): As
noted above, this section would be amended and relocated within the
Guide.
e. General Information Regarding ASOP: As noted above, this section
would be amended and relocated within the Guide. The section would be
modified to include references to CA Web Announcements and ISO 20022.
f. Subscription Instructions: As noted above, this section would be
amended and relocated within the Guide. The following paragraph would
be deleted because DTC would be adding the proposed ``Procedures for
Submitting Instructions Outside of PTS/PBS'' section, which would be
applicable to Subscription Instructions: ``No hardcopy instructions are
accepted by DTC unless specifically authorized in advance by the
appropriate DTC Reorganization department or Relationship Manager. In
the event of a PTS or PBS outage, a backup hard copy form (Rights
Subscription Instructions PTS/PBS Backup Form) is available for the
purpose of instructing DTC to surrender rights and the required
subscription payment (see About the Rights Subscription Instructions
PTS/PBS Backup Form). If you experience a PTS or PBS outage, you can
alternatively execute and submit the required Notice of Guaranteed
Delivery document and subscription payment directly to the agent; a DTC
backup hard copy form is not available for this purpose.''
g. Subscription Payments: As noted above, this section would be
amended and relocated within the Guide. The last sentence in the
section would be amended to include references to CA Web and ISO 20022
messages.
h. Payments with Notices of Guaranteed Delivery: As noted above,
this section would be amended and relocated within the Guide. The last
sentence in the section would be amended to include references to CA
Web and ISO 20022 messages.
i. Movement of Underlying Securities: As noted above, this section
would be amended and relocated within the Guide. The section would be
modified to add references to contra-CUSIPs, which may, in certain
circumstances be applicable. For clarity, the sentences in the first
paragraph of the section would be reordered.
j. Subscription Sub-Accounts: As noted above, this section would be
amended and relocated within the Guide. The last sentence of this
section would be modified to include a reference to CA Web.
k. Schedule for Submitting Instructions: As noted above, this
section would be amended and relocated within the Guide. The first
paragraph of the section would be modified to include references to CA
Web Announcements and ISO 20022 messaging. In addition, the table of
instructions and PSOP times would be modified to remove the row
relating to ``Notices of Guaranteed Delivery on the last day of the
offer, with deferred subscription payments,'' because the information
already appears in the note below.
l. Inquiring About ASOP-Eligible Offers: As noted above, this
section would be amended and relocated within the Guide and would be
modified to (i) include references to CA Web and ISO 20022 messaging,
and (ii) replace a reference to a ``hard copy notice'' with ``email
alert,'' as hard copy notices are no longer provided. The section would
also be amended to clarify that ``[w]ith certain rights subscription
events you may be directed to submit your instructions through PTOP.''
m. Accepting an ASOP-Eligible Offer: As noted above, this section
would be amended and relocated within the Guide. The section would be
amended to clarify that ``[i]nstructions being submitted to DTC after
the DTC cutoff must be approved by, and delivered to, the agent
handling the event, prior to submission to DTC.'' In addition, the
section would be amended to add a reference to CA Web.
n. Checklist for Submitting an Acceptance: As noted above, this
section would be amended and relocated within the Guide. The section
would be amended to clarify, with respect to special representations,
that a Participant's ability to input these representations in specific
fields on the PTS PSOP or PBS Rights Subscriptions screen, or in the
Comments field, would be based on the terms of the offer. In addition,
in respect to an acknowledgement message regarding the acceptance, the
section would be modified to provide that ``Participants that subscribe
to the ISO 20022 Instruction Statement Report (CAST) will be able to
verify instructions status on the message.''
[[Page 26474]]
o. Submitting a Protect for an ASOP-Eligible Offer: As noted above,
this section would be amended and relocated within the Guide. The
section would be amended to clarify that a Participant can cover its
protect by ``on or before the end of the period, by either delivering
securities [the Participant has] on deposit with DTC or having another
participant deliver on [the Participant's] behalf to the agent via the
PTS PSOP or PBS Rights Subscriptions function.'' In addition,
references to ``hard copy instructions'' would be replaced with
``instructions,'' so as to include emails, faxes, and other methods of
instructions outside of PTS PSOP or the PBS Rights Subscriptions
function. In addition, the section would be modified to instruct
Participants that ``[i]f you intended to submit a protect instruction
via PSOP but missed the cutoff for submitting the protect via PSOP it
is your responsibility to contact the agent and determine if they will
accept an email submission directly. If accepted, the agent will notify
DTC and the Participant should submit a Protect Submission Form to DTC
via email. DTC will then input the protect submission on behalf of the
Participant. The Participant must confirm the protect submission input
by DTC is accurate. The Participant will be able to cover the protect
opened by DTC.'' Further, the section would be amended to include CA
Web as a source for viewing a notice of an offer.
p. Checklist for Submitting a Protect: As noted above, this section
would be amended and relocated within the Guide. The section would be
amended to clarify, with respect to special representations, that a
Participant's ability to input these representations in specific fields
on the PTS PSOP or PBS Rights Subscriptions screen, or in the Comments
field, would be based on the terms of the offer. The section would also
be amended to remove the statement that ``(The field available for this
message is 150 characters in length.)'' because it is not directly
relevant to the process and is subject to change. In addition, in
respect to an acknowledgement message regarding the acceptance, the
section would be modified to provide that ``Participants that subscribe
to the ISO 20022 Instruction Statement Report (CAST) will be able to
verify instructions status on the message.''
q. Submitting a Cover of Protect via PTS PSOP or PBS Rights
Subscriptions for an ASOP-Eligible Offer: As noted above, this section
would be amended and relocated within the Guide. The section would be
amended to clarify that a Participant ``cannot subsequently deliver the
securities to the Agent via the PTS PSOP or PBS Rights Subscriptions
function unless the instruction was subsequently input by DTC.'' In
addition, the warning that states ``Warning! To be able to cover a
protect via PTS PSOP or PBS Rights Subscriptions you must submit
protect instructions for ASOP-eligible offers via PTS PSOP or PBS
Rights Subscriptions; except as noted in Subscription Instructions,
hard copy instructions will not be accepted by DTC on ASOP-eligible
offers and, if submitted, will be rejected. DTC may attempt to notify
you of the rejection, but DTC has no liability for any failure to
notify'' would be replaced with a warning that states ``Warning! You
must accept ASOP-eligible offers via PTS PSOP or PBS Rights
Subscriptions; except as noted in Subscription Instructions,
instructions outside of PTS/PBS will not be accepted by DTC on ASOP-
eligible offers during the period when instructions can be input via
PTS PSOP or PBS Rights Subscriptions for ASOP eligible offers and, if
submitted, will be rejected. If possible, DTC will attempt to notify
you of the rejection, but DTC cannot guarantee such notification.'' The
purpose of this change would be to clarify that, unless otherwise
noted, no instruction would be accepted by DTC while the instruction
window is open in PSOP. Finally, the section would be amended to
include CA Web as a source for viewing a notice of an offer.
r. Checklist for Submitting a Cover of Protect via PTS PSOP or PBS
Rights Subscriptions: As noted above, this section would be amended and
relocated within the Guide. The section would be modified to remove the
first step that reads ``submit a Notice of Guaranteed Delivery and the
required subscription payment to the subscription agent via PTS PSOP or
PBS Rights Subscriptions before the offer expires,'' because this is a
prerequisite to submitting a cover of protect and is not part of the
actual process. DTC is proposing that the first step for a Participant
would be to ``[v]erify that a Notice of Guaranteed Delivery and the
required subscription payment to the agent via PTS PSOP or PBS Rights
Subscriptions was submitted and accepted,'' so it confirms that the
prerequisite occurred prior to submission of the cover. For clarity,
the second step would be simplified to instruct a Participant to
``[r]etrieve the specific protect instruction you want to cover.'' In
step four, the sentence stating ``See Submitting Cover Protect
Instructions Via PTS PSOP or PBS Rights Subscriptions'' would be
deleted, as it is duplicative. Step five would be modified to clarify
that a Participant can submit more than one instruction to cover the
Notice of Guaranteed Delivery as long as the quantity of rights
indicated in those instructions does not exceed the original Notice of
Guaranteed Delivery quantity, with the total of all cover of protect
instructions equaling the amount of the protect submission. Step eight
would be amended to replace ``PTS POS or PBS Security Position
functions'' with ``Settlement Web'' because the POS function has been
retired and the functionality is currently available on the Settlement
Web. The ninth step would be deleted because a Participant should make
its own determination about its document retention procedures.
s. Submitting a Cover of Protect on Behalf of another Participant:
As noted above, this section would be amended and relocated within the
Guide. The section would be modified to add a clarifying warning to
Participants that states: ``Warning! To be able to cover a protect via
PTS PSOP or PBS Rights Subscriptions on behalf of another participant
you must submit protects on ASOP-eligible offers via PTS PSOP or PBS
Rights Subscriptions or have had a protect submitted directly to the
agent via email and subsequently communicated to DTC and input to PSOP
by DTC; cover of protect instructions outside of PTS/PBS will not be
accepted by DTC on ASOP-eligible offers and, if submitted, will be
rejected. If possible, DTC will attempt to notify you of the rejection,
but cannot guarantee such notification.'' Further, the section would be
amended to include CA Web as a source for viewing a notice of an offer.
t. Checklist for Submitting a Cover of Protect on Behalf of another
Participant: As noted above, this section would be amended and
relocated within the Guide. The section would be modified to amend the
second step in the checklist to clarify that a Participant should enter
and transmit an instruction to surrender rights and cover the protect
via PTS PSOP or PBS Rights Subscriptions ``during the period when cover
of protect submissions can be input.'' The fifth step would be amended
for clarity and readability. The sixth step would be deleted because a
Participant should make its own determination about its document
retention procedures. Further, with respect to an acknowledgement
message regarding the acceptance, the section would be modified to
provide that ``Participants that subscribe to the ISO 20022 Instruction
Statement Report
[[Page 26475]]
(CAST) will be able to verify instructions status on the message.''
u. Surrendering Rights for Sale via ASOP: As noted above, this
section would be amended and relocated within the Guide. The section
would be amended to include CA Web as a source for viewing a notice of
an offer.
v. Checklist for Submitting Sell Instructions: As noted above, this
section would be amended and relocated within the Guide. The section
would be amended by modifying the seventh step in the checklist for
clarity and readability, and to provide that, with respect to an
acknowledgement message regarding the acceptance, ``Participants that
subscribe to the ISO 20022 Instruction Statement Report (CAST) will be
able to verify instructions status on the message.'' The eighth step
would be deleted because a Participant should make its own
determination about its document retention procedures.
w. Rejection of Acceptances, Covers of Protects, or Sell
Instructions: As noted above, this section would be relocated within
the Guide.
x. Distribution of Underlying Securities: This section would be
deleted because it would be addressed in the proposed Allocations
section.
y. Distribution of Sale Proceeds: This section would be deleted
because it would be addressed in the proposed Allocations section.
z. Cancellation of Rights Offer: This section would be deleted
because it would be addressed in the proposed Allocations section.
aa. About the Rights Subscription Instructions PTS/PBS Backup Form:
As discussed above, the proposed ``Procedures for Submitting
Instructions Outside of PTS/PBS'' would replace the ``Hard Copy
Procedure for Conversions/Submitting a Hard Copy Conversion
Instruction,'' ``Hard Copy Procedure for Warrant Exercises/Exercising a
Warrant via Hard Copy,'' ``Hard Copy Procedures for Voluntary Offerings
and Put Option Exercises,'' and ``About the Rights Subscription
Instructions PTS/PBS Backup Form'' sections.
bb. Associated PTS/PBS Functions: This section would be deleted
because the information would be updated and included in the proposed
``Associated PTS/PBS and CA Web Functions'' section in the beginning of
the Guide.
cc. Rights Subscriptions Contact Numbers: This section would be
deleted because contact information would be provided in the proposed
section, ``Reorganization/Proxy Contact Number.''
(25) Voluntary Offerings: This entire section would be amended and
relocated within the Guide, as discussed above.
a. About the Product: As noted above, this section would be amended
and relocated within the Guide. The title ``About the Product'' would
be replaced with ``About the Service.'' The section would be modified
to streamline language and to reference CA Web as a source of
information on voluntary offers. Further, the section would be modified
to delete references to specific types of voluntary reorganizations in
the first paragraph and provide a new table of various examples of
voluntary reorganizations and descriptions of each. In addition, the
last two paragraphs of the section would be deleted because one of the
paragraphs is inaccurate, and the second because it is always the
responsibility of a Participant to confirm that their transactions were
properly processed and recorded. Finally, the section would be modified
to insert the following language for additional context: ``Voluntary
offerings are in the form of either (1) issuer or third party offers
(e.g., tender, exchange, merger with elections), (2) offers that
reflect the attributes of the security (e.g., Right, Convertible
Security, Put Bond or Warrant) and (3) certain consent-only
solicitations (which do not require securities being forwarded to the
agent and may not include collecting and allocating proceeds to you).
In addition, this service may require certifications as part of the
acceptance of an offer (instruction process) and could include
provisions such as conditional tenders and odd-lots.''
b. Proposed ``Additional Processes Associated with Reorganization
Events'' heading: For clarity, DTC is proposing to insert the heading
``Additional Processes Associated with Reorganization Events.''
c. Proposed ``Pledged Securities'' section: The ``Pledged
Securities'' section, amended as discussed above, would be moved under
the proposed ``Additional Processes Associated with Reorganization
Events'' heading.
d. Proposed ``Segregated Securities'' section: The ``Segregated
Securities'' section, amended as discussed above, would be moved under
the proposed ``Pledged Securities'' section.
e. Proposed ``Reorganization (RRG) Segregated Account'' section:
The ``Reorganization (RRG) Segregated Account'' section, amended as
discussed above, would be moved under the proposed ``Segregated
Securities'' section.
f. About Contra-CUSIPs: No change.
g. Pledge of Contra-Securities: The section would be amended to
clarify that, for the purpose of its pledge, the contra-securities
represent a Participant's rights through DTC to receive from the agent
the cash ``and/or security'' payments based on the ``rate or accepted''
bid and/or the return of some or all of the surrendered securities in
accordance with the terms of the offer.
h. Solicitation Fees and Transfer Taxes: This section would be
relocated within the Guide. The section would be modified to include
references to CA Web Announcements and ISO 20022 messaging.
i. Proposed ``Chills on Reorg Activities'' section: The ``Chills on
Reorg Activities'' section, amended as discussed above, would be moved
under the ``Pledge of Contra-Securities'' section.
j. Proposed ``Frozen Letters'' section: The ``Frozen Letters''
section, amended as discussed above, would be moved under the proposed
``Chills on Reorg Activities'' section.
k. Proposed ``Interest Payments, Dividends, Distributions, and
Voting Rights for Tendered Securities'' section: The ``Interest
Payments, Dividends, Distributions, and Voting Rights for Tendered
Securities'' section, amended as discussed above and below, would be
moved under the proposed ``Frozen Letters'' section.
(26) Proposed ``INSTRUCTIONS/EXPIRATIONS'' section: As part of the
proposed restructuring of the Guide, DTC is proposing that a
``INSTRUCTIONS/EXPIRATIONS'' section follow the ``Voluntary Offerings''
section in the Guide.
a. Relevant Terms: As discussed above, for consistency, DTC is
proposing to refer to ``agent,'' rather than a specific type of agent,
and would therefore delete the definitions of ``Tender Agent'' and
``Information Agent.''
b. Proposed ``Important Considerations'' section: As discussed
above and below, the other ``Important Considerations'' sections,
including the proposed amendments, would be consolidated into the
proposed ``Important Considerations'' section, which would be inserted
under the ``Relevant Terms'' section.
c. About DTC's Automated Tender Offer Program (ATOP): This section
would be modified to replace a reference to ``product'' with
``service,'' and to delete references to CCF II and MDH. The section
would also be modified to clarify that ATOP allows a Participant to
submit instructions on Consent Solicitation events for transmission to
balloting agents. Further, the section would be amended
[[Page 26476]]
to include CA Web as a source for viewing information about an offer.
d. Inquiring About ATOP-Eligible Offers: This section would be
modified to (i) include references to CA Web and ISO 20022 messaging,
(ii) delete a reference to a ``hard copy notice,'' as hard copy notices
are no longer provided, and add ``email alert,'' and (iii) delete the
bullet ``A PTS RIPS or PBS Reorganizations and Redemptions notice
through CCF,'' because CCF corporate action announcement files were
retired as of December 31, 2018. The section would also be amended to
remind Participants that they should take note of (i) any special
conditions of the offer, such as the existence of odd-lot preference or
the ability to submit a conditional acceptance, and the price range and
permissible increments on bid price tenders, as well as ``early
expirations associated with a premium or consent,'' and ``If a
withdrawal of a previously submitted instruction is part of the offer
and the timeframes for requesting the withdrawal.''
e. Accepting an ATOP-Eligible Offer: The reference to ``Submitting
a VOI'' would be deleted because that section does not appear in the
Guide. In addition, the warning in this section would be modified to
clarify that DTC will not accept any instructions outside of ATOP
during the period when the instruction window is open on ATOP. Further,
the section would be amended to include CA Web as a source for viewing
a notice of an offer. Finally, the reference to ``Hard Copy Procedures
for Voluntary and Put Options'' would be replaced with ``Submitting a
Protect for an ATOP-Eligible Offer,'' in order to conform to other
proposed changes.
f. Checklist for Submitting an Acceptance: The section would be
amended to clarify, with respect to the second step regarding special
representations, that a Participant's ability to input these
representations in specific fields on the PTS PTOP or PBS Voluntary
Tenders and Exchanges screen, or in the Comments field, would be based
on the terms of the offer. With respect to comments, the statement that
``[t]he field available for this message is 67 characters in length''
would be deleted because it is not directly relevant to the process and
is subject to change. The third step would be modified to clarify that
a Participant should enter and transmit the acceptance via PTS PTOP or
PBS Voluntary Tenders and Exchanges ``during the period when
submissions can be input via PTS or PBS for ATOP eligible offers.'' The
reference to ``Submitting a VOI'' would be deleted because that section
does not appear in the Guide. In the fourth step, a reference to the
Viewing VOI Details section would be deleted because that section does
not appear in the Guide. In the fifth step, the reference to a ``PTS/
PBS'' message would be replaced by a generic reference to a ``message''
because Participants can access the acknowledgement message on various
platforms. In addition, in respect to an acknowledgement message
regarding the acceptance of an instruction, the section would be
modified to provide that ``Participants that subscribe to the ISO 20022
Instruction Statement Report (CAST) will be able to verify instructions
status on the message.'' Finally, in the sixth step, the reference to a
``PTS PTOP or PBS Voluntary Tenders and Exchanges'' message would be
replaced by a generic reference to a ``message'' because Participants
can access the acknowledgement message through various platforms.
g. Submitting a Protect for an ATOP-Eligible Offer: The section
would be amended to clarify that (i) an offer has to include a
guaranteed delivery option in order for a Participant to submit a
protect, and (ii) a Participant can cover its protect ``on or before
the end of the period, by either delivering securities [the Participant
has] on deposit with DTC or having another participant deliver on [the
Participant's] behalf to the subscription agent via the PTS PTOP or PBS
Voluntary Tenders and Exchanges functions.'' Further, the warning would
be amended to clarify the parameters of submitting an email submission
to DTC. The reference to the ``Submitting a Protect'' section would be
replaced with a reference to the ``Submitting a Cover of Protect.'' The
warning would state: ``Warning! You must submit Notices of Guaranteed
Delivery on ATOP-eligible offers via PTS PTOP or PBS Voluntary Tenders
and Exchanges; hard copy instructions outside of PTS/PBS will not be
accepted by DTC on ATOP-eligible offers during the period when protect
submissions can be input via PTOP for ATOP eligible offers and, if
submitted during this period, will be rejected. If possible, DTC will
attempt to notify you of the rejection, but cannot guarantee such
notification. If you intended to submit a protect instruction via PTOP
but missed the cutoff for submitting the protect via PTOP, it is your
responsibility to contact the agent and determine if they will accept
an email submission directly. If accepted, the agent will notify DTC
and the Participant should email a Protect Submission Form to DTC. DTC
will then input the protect submission on behalf of the Participant.
The Participant must confirm the protect submission input by DTC is
accurate.'' In addition, references to ``hard copy instructions'' would
be replaced with ``instructions,'' in order to include emails, faxes,
and other methods of instructions outside of PTS PTOP or the PBS
Voluntary Tenders and Exchanges function. In addition, the section
would be amended to include CA Web as a source for viewing information
about an offer.
h. Checklist for Submitting a Protect: The section would be amended
to clarify, with respect to special representations, that a
Participant's ability to input these representations in specific fields
on the PTS PTOP or PBS Voluntary Tenders and Exchanges screen, or in
the Comments field, would be based on the terms of the offer. In
addition, with respect to comments, the statement that ``[t]he field
available for this message is 67 characters in length'' would be
deleted because it is not directly relevant to the process and is
subject to change. The section would be modified to amend the second
step to clarify that a Participant should enter and transmit an
instruction to surrender rights and cover the protect via PTS PTOP or
PBS Voluntary Tenders and Exchanges functions ``during the period when
cover of protect submissions can be input.'' Further, a reference to
the Viewing VOI Details section would be deleted because that section
does not appear in the Guide. In addition, the references to a ``PTS/
PBS'' or ``PTS PTOP or PBS Voluntary Tenders and Exchanges'' message
would be replaced by a generic reference to a ``message'' because
Participants can access the acknowledgement message on various
platforms. Finally, in respect to an acknowledgement message regarding
the acceptance, the section would be modified to provide that
``Participants that subscribe to the ISO 20022 Instruction Statement
Report (CAST) will be able to verify instructions status on the
message.''
i. Submitting a Cover of Protect via PTS PTOP or PBS Voluntary
Tenders and Exchanges for an ATOP-Eligible Offer: The section would be
modified to replace a reference to ``hard copy instructions'' with the
generic ``instructions,'' to conform the language with the proposed
``Procedures for Submitting Instructions Outside of PTS/PBS'' section.
The section would also be modified to clarify that instructions outside
of PTS PTOP or the PBS Voluntary Tenders and Exchanges function would
not be accepted while the instruction window is open. In addition, the
section would be amended
[[Page 26477]]
to include CA Web as a source for viewing information about an offer.
j. Checklist for Submitting a Cover of Protect via PTS PTOP or PBS
Voluntary Tenders and Exchanges: The section would be modified to
remove the first step that reads ``Submit a Notice of Guaranteed
Delivery to the tender agent via PTOP before the offer expires,''
because this is a prerequisite to submitting a cover of protect and is
not part of the actual process. DTC is proposing that the first step
state that a Participant ``[v]erify that a protect instruction was
submitted and accepted,'' so that a Participant confirms that the
prerequisite occurred prior to submission of the cover. The section
would be amended to add a step that would remind Participants to
``[v]erify the existence of sufficient position being available to
cover the protect instruction position.'' For clarity, the following
step would be simplified to instruct a Participant to ``[r]etrieve the
specific protect instruction you want to cover.'' The next step would
be amended to clarify that a Participant should ``[e]nter and transmit
an instruction to surrender securities and cover the protect via PTS
PTOP or PBS Voluntary Tenders and Exchanges during the period when
cover of protect submissions can be input,'' and would add a reference
to the Cover of Protect on Behalf of Another Participant section, if
another participant is covering the protect on the Participant's
behalf. Further, a reference to the Viewing VOI Details section would
be deleted because that section does not appear in the Guide. In the
subsequent steps, the reference to a ``PTS/PBS,'' ``PBS,'' or ``PTOP''
message would be replaced by a generic reference to a ``message''
because Participants can access the acknowledgement message on various
platforms. In addition, in respect to an acknowledgement message
regarding the acceptance, the section would be modified to provide that
``Participants that subscribe to the ISO 20022 Instruction Statement
Report (CAST) will be able to verify instructions status on the
message.'' Finally, in the sixth step, the reference to a ``PTS PTOP or
PBS Voluntary Tenders and Exchanges'' message would be replaced by a
generic reference to a ``message'' because Participants can access the
acknowledgement message through various platforms.
k. Submitting a Cover of Protect via PTS PTOP or PBS Voluntary
Tenders and Exchanges on Behalf of Another Participant: The section
would be modified to replace a reference to ``hard copy instructions''
with the generic ``instructions,'' to conform the language with the
proposed ``Procedures for Submitting Instructions Outside of PTS/PBS''
section. In addition, the warning language would be amended to conform
with existing practice. The proposed warning would read: ``Warning! To
be able to cover a protect via PTS PTOP or PBS Voluntary Tenders and
Exchanges on behalf of another participant you must submit protects on
ATOP-eligible offers via PTS PTOP or PBS Voluntary Tenders and
Exchanges; hard copy or have had a protect submitted directly to the
agent via email and subsequently communicated to DTC and input to PTOP
by DTC; cover of protect instructions outside of PTS/PBS will not be
accepted by DTC on ATOP-eligible offers and, if submitted, will be
rejected. If possible, DTC will attempt to notify you of the rejection,
but cannot guarantee such notification.'' Further, the section would be
amended to include CA Web as a source for viewing a notice of an offer.
l. Checklist for Submitting a Cover of Protect via PTS PTOP or PBS
Voluntary Tenders and Exchanges on Behalf of Another Participant: The
section would be modified by deleting a reference to the Viewing VOI
Details section because that section does not appear in the Guide. In
addition, references to a ``PTS/PBS'' or ``PBS'' message would be
replaced by a generic reference to a ``message'' because Participants
can access the acknowledgement message on various platforms. In
addition, in respect to an acknowledgement message regarding the
acceptance, the section would be modified to provide that
``Participants that subscribe to the ISO 20022 Instruction Statement
Report (CAST) will be able to verify instructions status on the
message.''
m. Withdrawing an Acceptance of an ATOP-Eligible Offer: The section
would be modified to replace a reference to ``hard copy instructions''
with the generic ``instructions,'' to conform the language with the
proposed ``Procedures for Submitting Instructions Outside of PTS/PBS''
section. In addition, the warning language would be amended for
clarification. The proposed warning would read: ``Warning! You must
submit withdrawals of acceptances on ATOP-eligible offers via PTS PTOP
or PBS Voluntary Tenders and Exchanges; withdrawals outside PTS/PBS
will not be accepted by DTC on ATOP-eligible offers during the period
when withdrawal of instructions can be input, and, if submitted, will
be rejected. If possible, DTC will attempt to notify you of the
rejection, but cannot guarantee such notification.''
n. Checklist for Withdrawing an Acceptance: The section would be
modified by deleting references to the Viewing VOI Details section
because that section does not appear in the Guide. In addition,
references to a ``PTS/PBS'' or ``PTS PTOP or PBS Voluntary Tenders and
Exchanges'' message would be replaced by a generic reference to a
``message'' because Participants can access the acknowledgement message
on various platforms. Further, in respect to an acknowledgement message
regarding the acceptance, the section would be modified to provide that
``Participants that subscribe to the ISO 20022 Instruction Statement
Report (CAST) will be able to verify instructions status on the
message.''
o. About Rejections of Acceptances and Covers of Protects: This
section would be retitled ``About Rejections of Instructions'' in order
to encompass acceptances via Notices of Guaranteed Delivery.
p. Proration of an Offer: This section would be modified to enhance
transparency of the process and to clarify what would happen to
unaccepted positions.
q. Interest Payments, Dividends, Distributions, and Voting Rights
for Tendered Securities: As discussed above, this section would be
consolidated with ``Puts/Interest Payments, Dividends, Distributions,
and Voting Rights for Tendered Securities,'' and ``Warrant Exercises/
Interest Payments, Dividends, Distributions, and Voting Rights,'' into
a single proposed section by the same name, ``Interest Payments,
Dividends, Distributions, and Voting Rights for Tendered Securities,''
which would appear later in the Guide.
r. Available Reports: This section would be modified to delete
references to CCF II and MDH, and to include references to CA Web and
ISO 20022 Announcement messages. The sentence ``Allocation information
is available through all of the normal cash and position inquiries such
as the PBS functions PTS SDAR or PBS Reorg/Redemptions/Dividend
Allocations, PTS POS or PBS Security Position, PTS PART or Participant
Activity Research and PTS ART or PBS Activity Research Tool'' would be
replaced with the following sentence: ``Allocation information is
available through the Reorganization Cash/Stock Settlement Lists and
the Participant Daily Activity Statement.'' The purpose of this
proposed change is to remove references to functions (PTS POS or PBS
Security Position and PTS ART or PBS Activity
[[Page 26478]]
Research Tool) that have been migrated to the Settlement Web.\23\
---------------------------------------------------------------------------
\23\ See Securities Exchange Act Release No. 63936 (February 22,
2011), 76 FR 10628 (February 25, 2011) (SR-DTC-2011-03).
---------------------------------------------------------------------------
s. Important Considerations: This section would be consolidated
with the other ``Important Considerations'' sections into the proposed
``Important Considerations'' section that would be inserted in the
proposed ``Instructions/Expirations'' section, as discussed above. The
proposed section would reflect the substance of the consolidated
sections, and would, where appropriate, replace references to specific
tenders and designated PTS/PBS functions with generic references.
t. Associated PTS/PBS Functions: This section would be deleted
because the information would be updated and included in the proposed
``Associated PTS/PBS and CA Web Functions'' section in the beginning of
the Guide.
u. Voluntary Offerings Contact Numbers: This section would be
deleted because contact information would be provided in the proposed
section, ``Reorganization/Proxy Contact Number.''
v. Proposed ``Voluntary Offers Representing Attributes of the
Security (processed via various functions)'' section: This proposed
section would be added in order to provide direction as to which PTS
function to use for submitting voluntary instructions in connection
with securities with specific attributes.
(27) Proposed ``Conversions'' section, including the proposed
``About the Service,'' ``About Conversion Features,'' ``How the Service
Works,'' and ``Pledge and Transfer of Underlying Securities by Book-
Entry'' sections: These proposed sections, as discussed above, would be
inserted after the proposed ``Voluntary Offers Representing Attributes
of the Security (processed via various functions)'' section.
(28) Proposed ``Eurobond Conversions'' section, including the
proposed ``About the Service,'' ``How It Works,'' ``Important
Considerations,'' and ``Pledge and Transfer of Eurobond Underlying
Securities by Book-Entry'' sections: These proposed sections, as
discussed above, would be inserted after the proposed ``Conversions''
sections.
(29) Proposed ``Puts'' section, including the proposed ``About
Puts,'' ``About the Service,'' ``Types of Put Options,'' ``Exercising
Put Options,'' ``Withdrawing Put Options,'' ``Rejection of Withdrawal
of Put Option Instructions,'' and ``Proration of Repayment Option''
sections: These proposed sections, as discussed above, would be
inserted after the proposed ``Eurobond Conversions'' sections.
(30) Proposed ``Rejection by DTC or Agent'' section, including the
proposed ``Rejection by DTC,'' and ``Rejection by the Agent'' sections:
These proposed sections, as discussed above, would be inserted after
the proposed ``Puts'' sections.
(31) Proposed ``Rights Subscriptions,'' including the proposed
``About the Service,'' ``About Rights,'' ``Relevant Terms,'' ``About
DTC's Automated Subscription Offer Program (ASOP),'' ``General
Information Regarding ASOP,'' ``Subscription Instructions,''
``Subscription Payments,'' ``Payments with Notices of Guaranteed
Delivery,'' ``Movement of Underlying Securities,'' ``Subscription Sub-
Accounts,'' ``Schedule for Submitting Instructions,'' ``Inquiring About
ASOP-Eligible Offers,'' ``Accepting an ASOP-Eligible Offer,''
``Checklist for Submitting an Acceptance,'' ``Submitting a Protect for
an ASOP-Eligible Offer,'' ``Checklist for Submitting a Protect,''
``Submitting a Cover of Protect via PTS PSOP or PBS Rights
Subscriptions for an ASOP-Eligible Offer,'' ``Checklist for Submitting
a Cover of Protect via PTS PSOP or PBS Rights Subscriptions,''
``Submitting a Cover of Protect via PTS PSOP or PBS Rights
Subscriptions on Behalf of Another Participant,'' ``Checklist for
Submitting a Cover of Protect via PTS PSOP or PBS Rights Subscriptions
on Behalf of Another Participant,'' ``Surrendering Rights for Sale via
ASOP,'' ``Checklist for Submitting Sell Instructions,'' and ``Rejection
of Acceptances, Covers of Protects, or Sell Instructions'' sections:
These proposed sections, as discussed above, would be inserted after
the proposed ``Rejection by DTC or Agent'' section.
(32) Warrant Exercises: No changes would be made to this title.
a. About the Product: This section would be retitled ``About the
Service'' and references to ``product'' would be replaced with
``service.'' The section would also be modified to (i) clarify that
warrants could be exercised as a cash or cashless exercise, if part of
the relevant offer, and to make conforming changes, and (ii) delete the
bullets for ``Notify you of upcoming expirations and record dates for
warrant exercises'' because it would be covered by the proposed bullet
``Announce key terms and dates related to the warrant as provided by
the issuer and/or agent.''
b. Interest Payments, Dividends, Distributions, and Voting Rights:
As discussed above, this section would be consolidated with the ``Puts/
Interest Payments, Dividends, Distributions, and Voting Rights for
Tendered Securities'' section and the ``About ATOP/Interest Payments,
Dividends, Distributions, and Voting Rights'' section into a single
proposed section, also named ``Interest Payments, Dividends,
Distributions, and Voting Rights for Tendered Securities,'' which would
appear later in the Guide.
c. About Warrants: No changes would be made to this section.
d. How the Product Works: The section would be retitled ``How the
Service Works.'' In addition, a reference to the ``Hard Copy Procedure
for Warrant Exercises'' section would be replaced by a reference to the
proposed ``Procedures for Submitting Instructions Outside of PTS/PBS''
section.
e. Pledge and Transfer of Underlying Securities by Book-Entry:
Ministerial changes only.
f. Interest Payments, Dividends, Distributions, and Voting Rights:
This section would be deleted because it is duplicative of the earlier
``Warrant Exercises/Interest Payments, Dividends, Distributions, and
Voting Rights'' section.
g. Associated PTS/PBS Functions: This section would be deleted
because the information would be updated and included in the proposed
``Associated PTS/PBS and CA Web Functions'' section in the beginning of
the Guide.
h. Warrant Exercises Contact Numbers: This section would be deleted
because contact information would be provided in the proposed section,
``Reorganization/Proxy Contact Number.''
(33) Proposed ``Procedures for Submitting Instructions Outside of
PTS/PBS'' section: As discussed above, the proposed ``Procedures for
Submitting Instructions Outside of PTS/PBS'' would replace the ``Hard
Copy Procedure for Conversions/Submitting a Hard Copy Conversion
Instruction,'' ``Hard Copy Procedure for Warrant Exercises/Exercising a
Warrant via Hard Copy,'' ``Hard Copy Procedures for Voluntary Offerings
and Put Option Exercises,'' and ``About the Rights Subscription
Instructions PTS/PBS Backup Form'' sections.
(34) Reorganization Presentments for MMI Issues: Ministerial
changes only.
(35) Proposed ``CD Early Redemptions'' section, including the
proposed ``About the Service,'' ``How the Service Works,'' ``Exempt
Instructions,'' ``Non-Exempt Instructions,'' and ``Issuer Acceptance''
sections: These proposed sections, as discussed above, would be
inserted after under the Reorganization Presentments for MMI Issues
section.
(36) Proposed ``Change Mode of Payment (CMOP)'' section, including
the
[[Page 26479]]
proposed ``About the Service'' section: The Change Mode of Payment
(CMOP)/About the Product sections, amended as discussed above, would be
moved under the Proposed ``CD Early Redemptions/Issuer Acceptance''
section.
(37) Proposed ``Allocations'' section, including the proposed
``About Allocations'' section: These proposed sections, as discussed
above, would be inserted under the proposed ``Change Mode of Payment
(CMOP)/About the Service'' section.
(38) Proposed ``Solicitation Fees and Transfer Taxes'' section:
This section, as discussed above, would be inserted after under the
proposed ``About Allocations'' section.
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 Section 17A(b)(3)(F) \24\ of the Act and
Rule 17Ad-22(e)(23)(i),\25\ as promulgated under the Act, for the
reasons described below.
---------------------------------------------------------------------------
\24\ 15 U.S.C. 78q-1(b)(3)(F).
\25\ 17 CFR 240.17Ad-22(e)(23)(i).
---------------------------------------------------------------------------
Section 17A(b)(3)(F) of the Act requires, inter alia, that the DTC
Rules be designed to promote the prompt and accurate clearance and
settlement of securities transactions.\26\ DTC believes that the
proposed rule change with respect to the migration of Reorganizations
processing functions from PTS/PBS to CA Web is consistent with this
provision of the Act because it would migrate Reorganizations functions
to a more flexible interface that utilizes market standard language and
incorporates the entire lifecycle of an event into one platform. By
providing Participants with more efficient access to reorganization
services and a broader view of a reorganization event, DTC believes
that the proposed rule change is designed to promote the prompt and
accurate clearance and settlement of securities transactions relating
to Reorganizations, consistent with Section 17A(b)(3)(F) of the
Act.\27\
---------------------------------------------------------------------------
\26\ 15 U.S.C. 78q-1(b)(3)(F).
\27\ Id.
---------------------------------------------------------------------------
DTC believes that the proposed rule change with respect to the
restructuring, streamlining, and clarification of the Guide is
consistent with Section 17A(b)(3)(F) of the Act.\28\ DTC believes that
the proposed rule change would enhance the clarity and transparency of
the Guide, which would allow a Participant to more efficiently conduct
its business in connection with processing reorganization events.
Therefore, DTC believes that the proposed rule change is designed to
promote the prompt and accurate clearance and settlement of securities
transactions related to Reorganizations, consistent with Section
17A(b)(3)(F) of the Act.\29\
---------------------------------------------------------------------------
\28\ Id.
\29\ Id.
---------------------------------------------------------------------------
Rule 17Ad-22(e)(23)(i) under the Act requires, inter alia, that DTC
establish, implement, maintain and enforce written policies and
procedures reasonably designed to publicly disclose all relevant rules
and material procedures.\30\ DTC believes that the proposed rule change
with respect to the restructuring, streamlining, and clarification of
the Guide would enhance the transparency and clarity of the Guide.
Having clear and transparent provisions about the DTC Reorganizations
services would enable Participants to better understand the processes
and provide Participants with increased predictability and certainty
regarding their rights and obligations with respect to their use of the
services. Therefore, DTC believes that the proposed rule changes with
respect to the restructuring, streamlining, and clarification of the
Guide are consistent with Rule 17Ad-22(e)(23)(i) under the Act, cited
above.
---------------------------------------------------------------------------
\30\ 17 CFR 240.17Ad-22(e)(23)(i).
---------------------------------------------------------------------------
(B) Clearing Agency's Statement on Burden on Competition
DTC believes that the proposed rule change with respect to the
migration of Reorganizations processing functions from PTS/PBS to CA
Web may have an impact on competition, because it would facilitate a
more efficient process for communicating and processing Reorganizations
information.\31\ Having a more efficient process could promote
competition by potentially reducing Participants' operating costs. In
addition, CA Web is an existing DTC platform that all Participants are
required to use to access other types of services, including
Distributions and Redemptions processing, and so would not affect the
rights and obligations of any Participant. Therefore, DTC believes that
the proposed rule change with respect to the migration of functions
from PTS/PBS to CA Web may promote competition but would not create a
burden on competition.\32\
---------------------------------------------------------------------------
\31\ 15 U.S.C. 78q-1(b)(3)(I).
\32\ Id.
---------------------------------------------------------------------------
DTC believes that the proposed rule changes with respect to
restructuring, streamlining, and clarifying the Guide would not have an
impact on competition.\33\ The proposed rule change would enhance the
clarity and transparency of the Guide to better reflect DTC's
Reorganizations services and practices. Improving the clarity and
transparency of the DTC Rules and Procedures, including the Guide,
would help Participants to better understand their rights and
obligations regarding DTC services, and so would not affect the rights
and obligations of any Participant or other interested party.
---------------------------------------------------------------------------
\33\ Id.
---------------------------------------------------------------------------
(C) Clearing Agency's Statement on Comments on the Proposed Rule Change
Received From Members, Participants, or Others
Written comments relating to the 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 \34\ and paragraph (f) of Rule 19b-4
thereunder.\35\ 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.
---------------------------------------------------------------------------
\34\ 15 U.S.C. 78s(b)(3)(A).
\35\ 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 protected]. Please include
File Number SR-DTC-2019-003 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-2019-003. This file
number should be included on the
[[Page 26480]]
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-2019-003
and should be submitted on or before June 27,2019.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\36\
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\36\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2019-11802 Filed 6-5-19; 8:45 am]
BILLING CODE 8011-01-P