[Federal Register Volume 85, Number 62 (Tuesday, March 31, 2020)]
[Notices]
[Pages 17923-17925]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-06611]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-88467; File No. SR-DTC-2020-006]


Self-Regulatory Organizations; The Depository Trust Company; 
Notice of Filing and Immediate Effectiveness of a Proposed Rule Change 
To Amend the DTC Operational Arrangements With Respect to Notices 
Submitted to DTC for Posting to LENS

March 25, 2020.
    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 March 18, 2020, 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)(1) 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)(1).
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I. Clearing Agency's Statement of the Terms of Substance of the 
Proposed Rule Change

    The proposed rule change \5\ consists of modifications to the DTC 
Operational Arrangements (Necessary for Securities to Become and Remain 
Eligible for DTC Services) (``OA'') \6\ in order to make clarifying 
changes to DTC's Procedures \7\ relating to notices posted to the Legal 
Notice System (``LENS''),\8\ as described below.
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    \5\ Capitalized terms not otherwise defined in this rule filing 
are defined as set forth in the Rules, By-Laws and Organization 
Certificate of DTC (the ``Rules''), available at http://www.dtcc.com/legal/rules-and-procedures.aspx, the Deposits Service 
Guide (``Deposits Guide''), available at http://www.dtcc.com/~/
media/Files/Downloads/legal/service-guides/Deposits.pdf and the 
Custody Service Guide (``Custody Guide''), available at http://
www.dtcc.com/~/media/Files/Downloads/legal/service-guides/
Custody.pdf.
    \6\ Available at http://www.dtcc.com/~/media/Files/Downloads/
legal/issue-eligibility/eligibility/operational-arrangements.pdf.
    \7\ Pursuant to the Rules, the term ``Procedures'' means the 
Procedures, service guides, and regulations of DTC adopted pursuant 
to Rule 27, as amended from time to time. See Rule 1, Section 1, 
supra note 5.
    \8\ As the registered holder of Securities Deposited at DTC and/
or as appropriate qualified registered securities depository, infra 
note 5, DTC receives notices to holders of the Securities. 
Participants may view these notices to holders via LENS, a secure 
interface offered by DTC. The Commission issued an order approving 
LENS on June 12, 1991. See Securities Exchange Act Release No. 29291 
(June 12, 1991), 56 FR 28190 (June 19, 1991) (File No. SR-DTC-91-
08). (``LENS Approval Order''). LENS was originally accessible 
through the DTC Participant Terminal System (``PTS''). Id. DTC 
subsequently implemented a web-based LENS interface. See Securities 
Exchange Act Release No. 43964 (February 14, 2001), 66 FR 11190 
(February 22, 2001) (SR-DTC-00-18). The LENS PTS function was 
retired effective August 27, 2010, and Participants may access LENS 
via the web-based functionality mentioned above. See Securities 
Exchange Act Release No. 62686 (August 10, 2010), 75 FR 50032 
(August 16, 2010) (SR-DTC-2010-10).
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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 consists of modifications to the OA in 
order to make clarifying changes to DTC's Procedures relating to 
notices posted to LENS, as described below.
Background
    DTC receives notices to holders of Securities from various sources 
that may not be Participants, or may be Participants acting in another 
capacity, including those that may be issuers, transfer agents, and/or 
other third parties, relating to Securities on Deposit at DTC. These 
parties may have a legal or regulatory obligation or other interest to 
distribute notices containing certain information to holders relating 
to Securities. These parties deliver such notices to DTC because DTC is 
the registered holder of the applicable Securities and/or the 
appropriate qualified registered securities depository \9\ with respect 
to an issue. DTC posts the notices it receives in this regard to LENS, 
where they are available for viewing by a Participant, who may

[[Page 17924]]

share the notices with investors that may hold a beneficial interest in 
an applicable Security on the books to the Participant.
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    \9\ 17 CFR 240.17Ad-16. Pursuant to Rule 17Ad-16, an 
``appropriate qualified registered securities depository'' shall 
mean the qualified registered securities depository that the 
Commission so designates by order or, in the absence of such 
designation, the qualified registered securities depository that is 
the largest holder of record of all qualified registered securities 
depositories as of the most recent record date. 17 CFR 240.17Ad-
16(f).
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    In 2019, DTC implemented changes \10\ to the text of the OA 
relating to receipt and posting to LENS of notices of transfer agent 
changes (``17Ad-16 Notice'') pursuant to Rule 17Ad-16 \11\ (``Rule 
17Ad-16'') of the Act.\12\ Pursuant to the 17Ad-16 Notice Rule Filing, 
DTC added a note to the sections relating to posting of 17Ad-16 Notices 
and trustee notices (Section II(B)(4)(f) and Section II (B)(5), 
respectively) to state that (1) DTC does not screen the 17Ad-16 Notices 
for confidential information, and (2) it is the full and sole 
responsibility of the transfer agent or trustee, as applicable, 
submitting a 17Ad-16 Notice to ensure that the information contained in 
the 17Ad-16 Notice is correct and does not include any information that 
would otherwise be deemed as confidential or material non-public 
information.
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    \10\ See Securities and Exchange Act Release No. 34-86113 (June 
14, 2019), 84 FR 28867 (June 20, 2019) (SR-DTC-2019-001) (``17Ad-16 
Notice Rule Filing'').
    \11\ 17 CFR 240.17Ad-16.
    \12\ 15 U.S.C. 78q-1.
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    Pursuant to the proposed rule change, DTC would make clarifying 
changes to the OA to add similar notes, where applicable, with respect 
to all notices received by DTC for posting to LENS, as described below. 
DTC would also add text to clarify and update requirements for delivery 
of certain notice types that DTC receives from transfer agents for 
posting to LENS, as described below.
Proposed Rule Change
    Because DTC is not the issuer, and does not have any role with 
respect to the creation or content, of notices sent to it for posting 
to LENS, DTC believes it would be prudent to include provisions in the 
OA relating to confidential information for all notices submitted to 
DTC for posting to LENS that are like those added with respect to the 
transfer agent notices submitted to DTC in accordance with the OA 
provisions implemented pursuant to the 17Ad-16 Notice Rule Filing. In 
this regard, pursuant to the proposed rule change, DTC would add text 
to the OA, including in and new Section II.B.4.g. and existing Section 
VI.E.1.b. with respect to information received for posting to LENS from 
any party that is consistent with the text previously added to the OA 
pursuant to the 17Ad-16 Notice Rule Filing, as described above. DTC 
would also make other changes relating to LENS to the OA, including 
clarifying and updating delivery requirements for LENS notices, as 
described below.
New Section Relating to Posting of Certain Notices Sent by Transfer 
Agents
    DTC would add a new Section II.B.4.g. to the OA to clarify delivery 
requirements for notices delivered to DTC from transfer agents for 
posting to LENS. The new section would be titled ``Other Notices 
Delivered by Transfer Agents for Posting to LENS'' and sequentially 
would follow the sections in the OA relating to requirements for the 
delivery and posting of 17Ab-16 Notices to LENS.
    Pursuant to the OA, a copy of a 17Ab-16 Notice should be either (i) 
printed and signed by the transfer agent on its company letterhead and 
emailed in a Word document or portable document format to DTC's 
Transfer Agent Services area at [email protected], or (ii) may be 
electronically signed and submitted using the link titled ``Notice of 
Assumption or Termination of Transfer Agent Services Form 17Ab-16'' 
available at: http://dtcc.com/matching-settlement-and-asset-services/agent-services/dtc-eligible-agent. The latter delivery option is 
dedicated solely to 17Ab-16 Notices. Therefore, DTC would add new 
Section 11.B.4.g. to describe that other notices, separate from 17Ab-16 
Notices, may also be sent to DTC from transfer agents for DTC's posting 
to LENS, including, but not limited to, closing memoranda and new issue 
memoranda,\13\ and state that such notices should be sent to 
[email protected]. The proposed text for this new section would also 
include (i) the email address ([email protected]) described above 
for inquiries regarding the status of LENS notices and (ii) a note 
consistent with that set forth in the section regarding posting of 
17Ab-16 Notices stating that ``DTC does not screen notices it receives 
for posting to LENS for confidential information. It is the full and 
sole responsibility of the transfer agent submitting a notice to ensure 
that the information contained in the notice is correct and does not 
include any information that would otherwise be deemed as confidential 
or material non-public information.'' Like 17Ab-16 Notices, an address 
for hard copy notices would not be provided. To provide additional 
clarity with respect to the instructions for delivery of a LENS notice, 
DTC would add a sentence to the section to state that ``Hard copy 
notices will not be posted to LENS.''
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    \13\ These types of notices provided to DTC for delivery to 
Participants and securityholders through LENS provide details 
relating to securities, including but not limited to details 
relating to new issues and related to closings of those issues.
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Section VI.E.1.b. (Legal Notices)
    Pursuant to the proposed rule change, to provide consistency with 
the text in the OA relating to 17Ab-16 Notices and reflecting the 
obligations of submitters of information as mentioned above, DTC would 
add a note to Section VI (E)(1)(b) \14\ of the OA that describes the 
Procedure for legal notices \15\ posted to LENS, to state that (1) DTC 
does not screen legal notices for confidential information, and (2) it 
is the full and sole responsibility of the issuer, transfer agent, 
trustee, or other party, as applicable, submitting a legal notice, to 
ensure that the information contained in the legal notice is correct 
and does not include any information that would otherwise be deemed as 
confidential or material non-public information.
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    \14\ See OA, supra note 6 at 54.
    \15\ Legal notices posted to LENS include notices (including 
notices to security holders) of bankruptcies, litigation/class 
actions, and defaults. See also description of LENS, available at 
http://www.dtcc.com/settlement-and-asset-services/issuer-services/legal-notice-system.
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    DTC would also update this section as follows:
    (i) Text would be added to state that if hardcopy delivery is used 
it is to be in addition to emailing the notices the section. This 
additional text would provide clarification consistent with the 
delivery requirements provided in the first paragraph of this section 
which states that all legal notices shall be sent by email but also 
provides a physical mailing address in the event the sender is required 
by the governing document for the applicable security to make hardcopy 
notification. The added text would also conform to similar included in 
the section that immediately precedes it (Section VI.E.1.a.) (Consent 
Notices) with respect to consent notices.
    (ii) DTC would eliminate an email address for delivery of notices 
for posting to LENS such that a sender would only be required to send a 
notice to a single email address, rather than two as currently stated 
in this section. Currently, the OA states that notices should be sent 
by email to [email protected] and 
[email protected]. In accordance with this 
change the revised text would only include the former and the latter 
would be removed. DTC believes that requiring delivery to a single 
email address rather than two would simplify the process and add 
efficiencies for DTC in that only one email address would need to be 
monitored for receipt of the applicable notices.

[[Page 17925]]

    (iii) Text would be added to provide a contact email address for 
inquiries regarding the status of any notice previously sent to DTC. 
This address would be [email protected]. DTC believes that providing 
a contact email in the text of the OA in this section would provide 
senders of notices with an enhanced ability to communicate with DTC 
about the status of LENS posting requests sent by them to DTC.
Effective Date
    The proposed rule change would become effective upon filing with 
the Commission.
2. Statutory Basis
    Section 17A(b)(3)(F) \16\ of the Act requires that the rules of the 
clearing agency be designed, inter alia, to promote the prompt and 
accurate clearance and settlement of securities transactions. DTC 
believes the proposed rule change is consistent with this provision 
because by making a clarifying change to the text within the Procedures 
set forth in the OA to (i) add a note relating to responsibilities of 
users with respect to accuracy and confidentiality considerations 
relating to notices sent to DTC for posting to LENS, as described above 
and (ii) adding text to clarify the delivery requirements of notices to 
be posted to LENS, the proposed rule change would provide enhanced 
transparency for users with respect to the Procedures relating to 
submission and processing of notices that may be submitted by them, as 
applicable, in accordance with the section of the OA mentioned above. 
Therefore, by providing users with enhanced transparency with regard to 
the Procedures relating to the submission of notices to LENS, and 
therefore facilitating the prompt posting of notices and distribution 
of information to Participants related to Securities held by the 
Participants, and that may be the subject of transactions processed 
through the DTC system, DTC believes that the proposed rule change 
would promote the prompt and accurate clearance and settlement of 
securities transactions consistent with the Act.
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    \16\ 15 U.S.C. 78q-1(b)(3)(F).
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(B) Clearing Agency's Statement on Burden on Competition

    DTC does not believe that the proposed rule change would have any 
impact, or impose any burden, on competition. The proposed rule change 
consists of clarifying changes that would add text to the OA that 
clarifies DTC's policies with respect to notices received from third 
parties for posting to LENS for view by Participants and would make 
other clarifying changes and updates to delivery information for 
notices, as described above. Therefore, the proposed rule change would 
not create new rights or obligations for users of DTC's services and 
would not impact, or impose any burden on, competition.

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

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

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

    The foregoing rule change has become effective pursuant to Section 
19(b)(3)(A) of the Act \17\ and paragraph (f) of Rule 19b-4 
thereunder.\18\ At any time within 60 days of the filing of the 
proposed rule change, the Commission summarily may temporarily suspend 
such rule change if it appears to the Commission that such action is 
necessary or appropriate in the public interest, for the protection of 
investors, or otherwise in furtherance of the purposes of the Act.
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    \17\ 15 U.S.C. 78s(b)(3)(A).
    \18\ 17 CFR 240.19b4(f).
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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-2020-006 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-2020-006. This file 
number should be included on the subject line if email is used. To help 
the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's internet website (http://www.sec.gov/rules/sro.shtml). 
Copies of the submission, all subsequent amendments, all written 
statements with respect to the proposed rule change that are filed with 
the Commission, and all written communications relating to the proposed 
rule change between the Commission and any person, other than those 
that may be withheld from the public in accordance with the provisions 
of 5 U.S.C. 552, will be available for website viewing and printing in 
the Commission's Public Reference Room, 100 F Street, NE, Washington, 
DC 20549 on official business days between the hours of 10:00 a.m. and 
3:00 p.m. Copies of the filing also will be available for inspection 
and copying at the principal office of DTC and on DTCC's website 
(http://dtcc.com/legal/sec-rule-filings.aspx). All comments received 
will be posted without change. Persons submitting comments are 
cautioned that we do not redact or edit personal identifying 
information from comment submissions. You should submit only 
information that you wish to make available publicly. All submissions 
should refer to File Number SR-DTC-2020-006 and should be submitted on 
or before April 21, 2020.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\19\
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    \19\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-06611 Filed 3-30-20; 8:45 am]
BILLING CODE 8011-01-P