On August 13, 2026, the Securities and Exchange Commission approved DTC’s proposed rule change, SR-DTC-2026-009, amending DTC’s Redemptions Service Guide and Operational Arrangements. The proposal was originally filed on June 15, 2026, and published for public comment on July 2. The SEC received no comments on the proposal.

At the center of the rule change is DTC’s Payment without Presentation (PWP) process. PWP allows agents to remit maturity or full-call proceeds to DTC without requiring DTC to physically deliver the associated security certificate, instead relying on DTC’s book-entry records to determine entitlements.

What Is Changing?

The approved framework makes several important operational changes.

1. Physical presentation is largely eliminated.
For eligible redemption and maturity events, DTC will no longer need to present physical certificates, Letters of Transmittal, or certain other physical documentation before agents remit proceeds.

2. Automated notifications replace physical paperwork.
Agents may opt in to receive electronic notifications containing DTC-specific payment information, including the relevant CUSIP, payment date, and amount due. These notifications are intended to provide the information previously communicated through physical documentation.

3. PWP participation becomes mandatory for eligible securities.
The PWP process will generally be mandatory for eligible fully registered debt securities represented by physical certificates held at DTC and registered in the name of Cede & Co.

Opt-outs will be limited to situations involving a state statute, court order, other legal or regulatory obligation, or certain governmental entities or authorized representatives that require physical documentation. Any opt-out must be submitted to DTC in writing and applies only to the affected securities.

4. DTC establishes a new certificate retention process.
Physical certificates associated with eligible events will be segregated and imaged for record-retention purposes. DTC will retain them for at least 90 days following redemption before destroying them pursuant to its procedures.

Why Did the SEC Approve the Change?

The SEC concluded that the amendments are consistent with Section 17A of the Securities Exchange Act, particularly the requirement that clearing agency rules promote the prompt and accurate clearance and settlement of securities transactions.

According to the Commission, eliminating unnecessary physical documentation should reduce delays associated with transporting, handling, and reconciling certificates. Greater reliance on automated notifications and DTC’s book-entry records should also make the redemption process more efficient and reliable while reducing operational risk.

In practical terms, the rule represents another step away from paper-dependent securities infrastructure and toward standardized electronic processing.

Why This Matters for Issuers and Market Participants

For issuers, paying agents, financial institutions, and other participants involved with certificated debt securities, the change may require updates to existing redemption procedures and internal controls.

Organizations should consider reviewing:

• Redemption and maturity workflows involving DTC-held securities;

• Procedures for reconciling DTC payment information;

• Internal controls governing automated redemption notifications;

• Agreements and procedures involving paying agents and other service providers;

• Record-retention practices; and

• Whether any securities qualify for the rule's limited opt-out provisions.

Because participation is moving from an optional framework to a generally mandatory process for eligible securities, affected parties should not treat the change simply as an alternative processing method. Existing procedures that assume delivery of physical certificates or Letters of Transmittal may need to be updated.

The Bigger Picture: Securities Infrastructure Continues to Go Digital

Although this rule change is primarily operational, it reflects a broader modernization trend across U.S. securities markets.

Clearing, settlement, ownership records, and securities servicing increasingly rely on electronic records and automated infrastructure rather than physical certificates. DTC's updated PWP framework extends that transition to another part of the securities lifecycle: the final redemption or maturity of certain debt instruments.

For companies issuing or administering debt securities, modernization can reduce friction—but it also makes accurate electronic records, clear operational responsibilities, and appropriate internal controls increasingly important.

What Companies Should Do Now

Issuers and market participants with debt securities processed through DTC should determine whether their securities and existing procedures are affected by the amended PWP requirements. Paying-agent arrangements and internal redemption procedures should also be reviewed to ensure that teams are prepared to process payments based on DTC's electronic notifications and book-entry records rather than physical presentment.

Where an organization believes physical documentation remains legally required, it should determine whether it falls within one of DTC's limited opt-out categories and be prepared to document that basis appropriately.

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This blog post is for informational purposes only and is not legal advice. Please consult with a Launch Legal attorney regarding your specific situation.