DTC Refines Doomsday Plan Under New Exchange Rules
Published Date: 4/28/2025
Notice
Summary
The Depository Trust Company (DTC) is updating its plan to handle tough times, like big money losses or business troubles, to keep the financial system safe and steady. This update makes sure DTC follows new rules that require clear steps for recovery or an orderly shutdown if needed. These changes affect DTC and its users, aiming to protect everyone's money and keep things running smoothly without surprise costs or delays.
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Analyzed Economic Effects
4 provisions identified: 3 benefits, 0 costs, 1 mixed.
Keeps DTC services running during crises
DTC's amended Recovery & Wind-Down Plan is designed to keep DTC's core payment, clearing, and settlement services operating in extreme stress and to enable Participants and Pledgees to maintain access by transferring DTC membership if DTC defaults or the Wind-down Plan is triggered. The changes are intended to meet SEC Rule 17ad-26 and would take effect on the rule's compliance date, December 15, 2025.
Defines staffing needs and retention tools
The amended Plan will include an attachment (Attachment A-1) listing staffing roles needed to support DTC's core services and an analysis (Attachment A-2) of how to retain those roles during recovery or wind-down. The analysis explicitly lists succession planning, retention agreements, and cross-training as key tools to address employee retention challenges.
Requires review of service-provider contracts
DTC will identify third-party and affiliated service providers for core services (Attachment B-1) and, by the compliance date, review written agreements to evaluate termination and alteration rights and endeavor to amend agreements so those providers continue to perform in a recovery or orderly wind-down. The compliance date for Rule 17ad-26 is December 15, 2025.
Annual testing and participant simulations required
The Plan will include procedures (Attachment F) to test DTC's ability to implement recovery and wind-down at least every 12 months, and certain DTC Participants will be required to participate in simulations based on criteria like account structure, business model, and Participant size. The Board must review and approve the Plan at least every 12 months or after material changes (Attachment G).
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