SEC Approves DTC Rule Change to Modernize Redemption Process
The change binds all DTC-held physical debt securities, effective August 13, 2026, mandating electronic notifications for redemptions.
On August 13, 2026, the Securities and Exchange Commission approved proposed rule change SR-DTC-2026-009, filed by the Depository Trust Company on June 15, 2026. The filing, made under Section 19(b)(1) of the Securities Exchange Act of 1934 and Rule 19b-4, was published for comment on July 2, 2026 (FR 91 40642). The Commission received no comments.
The order amends the Redemptions Service Guide and the Operational Arrangements to update the Payment without Presentation (PWP) process. The amendments eliminate the requirement for a Letter of Transmittal or other physical documents for eligible redemption and maturity events, allow agents to receive automated electronic notifications containing CUSIP, payment date, and amount, and require that physical certificates be retained for at least ninety days after redemption before destruction. The Redemptions Guide and OA language referencing physical presentment is removed, and terminology is clarified throughout.
Participation in the PWP process becomes mandatory for all eligible fully registered debt securities represented by physical certificates held at DTC and registered under the name Cede & Co. Opt-out is permitted only to satisfy a state statute, court order, other legal or regulatory obligation, or when the agent is a governmental entity or authorized representative requiring physical documentation. Opt-out requests must be submitted to DTC in writing and are limited to the applicable securities.
The Commission found the rule change consistent with the Exchange Act, specifically Section 17A(b)(3)(F), which requires clearing agency rules to promote prompt and accurate clearance and settlement of securities transactions. By removing physical document presentment and relying on DTC's book-entry records and automated notifications, the change is expected to streamline processing, reduce delays associated with handling and transportation of certificates, and improve efficiency and reliability in the redemption workflow.