DTC Updates Rules for Tech Glitches in Trading
Published Date: 3/27/2025
Notice
Summary
The Depository Trust Company (DTC) is updating its rules to better handle system disruptions that could affect its operations. These changes also apply to its sister agencies, FICC and NSCC, making sure everyone is on the same page when tech troubles hit. This update helps protect participants and keeps the system running smoothly, with no immediate cost changes announced.
Analyzed Economic Effects
5 provisions identified: 0 benefits, 5 costs, 0 mixed.
New Reconnection Paperwork and Indemnity Rules
Before the Clearing Agencies will reconnect a disconnected Participant, the Participant must provide (1) a detailed, auditable report from a Third‑Party Cybersecurity Firm, (2) a Participant Officer attestation, and (3) an executed indemnity acceptable to the Clearing Agencies. The required report must include root‑cause analysis, actions taken, confirmation that severe/critical items are resolved, and confirmation that systems have operated normally for at least 72 hours.
More Firms Become Covered Participants
The rule explicitly expands who counts as a DTCC Systems Participant to include Affiliates of members and entities similar to third‑party service providers or service bureaus that directly or indirectly connect to DTCC systems. That means more firms and their affiliates could be subject to being disconnected from DTCC systems and to the Disruption Rules.
Faster Mandatory Incident Notifications
A DTCC Systems Participant must provide the Clearing Agencies immediate written notice, and in any event within two hours of experiencing or learning (and having legal permission to disclose) about an unaffiliated Participant System Disruption. The notice must include legal entity names, contact details, and event details such as event type, scope, start and discovery dates, and any other known notices.
Reconnection Testing Before Live Access
A disconnected Participant must demonstrate testing capabilities before Reconnection, such as operating in a test environment, sending/receiving messages, replaying or resubmitting messages, reversing or voiding messages, confirming message integrity, and having alternative communications. Approval of Reconnection must be given by two or more members of the Clearing Agencies' senior most management committee after the Clearing Agencies are satisfied with the testing.
Stronger Consequences for Noncompliance
If a DTCC Systems Participant fails to comply with the Disruption Rules, the Clearing Agencies may impose disciplinary actions allowed under their rules or take actions permitted under applicable agreements; a Participant that authorizes another party to access DTCC Systems may be required to assume responsibility for that party's compliance. The rule also clarifies that a disconnected Participant must still meet its obligations to the Clearing Agencies and comply with their rules.
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Previous / Next Documents
Previous: 2025-05206, Self-Regulatory Organizations; National Securities Clearing Corporation; Notice of Filing of Proposed Rule Change Relating to a Participant System Disruption
The National Securities Clearing Corporation (NSCC) wants to update its rules to better handle system disruptions that could affect its operations. These changes also apply to its sister agencies, FICC and DTC, and aim to keep things running smoothly when tech troubles hit. No big cost changes are expected, but participants should watch for new procedures starting soon after approval.
Next: 2025-05208, Self-Regulatory Organizations; Fixed Income Clearing Corporation; Notice of Filing of Proposed Rule Change Relating to a Participant System Disruption
The Fixed Income Clearing Corporation (FICC) is updating its rules to better handle system disruptions that might affect participants using their services. These changes also involve two sister agencies, NSCC and DTC, and aim to keep things running smoothly during tech hiccups. If you’re a participant, expect clearer steps and protections soon, with no immediate cost changes announced.