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DOCUMENT ID: [Release No. 34-48909; File No. SR-NSCC-2003-16]
SUBJECT CATEGORY: Self-Regulatory Organizations; National Securities Clearing Corporation; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Relating to Data Services Only Members
DOCUMENT SUMMARY: December 11, 2003.
Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ notice is hereby given that on June 30, 2003, the
National Securities Clearing Corporation (``NSCC'') 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 primarily by NSCC. The Commission is publishing this
notice to solicit comments on the proposed rule change from interested persons.
\1\ 15 U.S.C. 78s(b)(1).
I. SelfRegulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change
The proposed rule change adds a new Rule 31 to NSCC's Rules and
amends miscellaneous other provisions of NSCC's Rules as they pertain to data services only members.\2\
\2\ The category of data services only member and modifications
applicable to such category were approved by the Commission in
Securities Exchange Act Release Nos. 44960 (October 19, 2001), 66 FR
56383 [File No. SRNSCC200114] (added data services only members
as a new category to NSCC rules and permitted them to use limited
services]; 45560 (March 14, 2002), 67 FR 13200 [File No. SRNSCC
200118] (permitted data services only members to access Fund/SERV
for nonsettling transactions); 47197 (January 15, 2003), 68 FR 3917
[File No. SRNSCC200213] (permitted data services only members to
access NSCC's insurance processing services for nonsettling
transactions); and 47664 (April 7, 2003), 68 FR 17850 [File No. SR
NSCC200304] (permitted data services only members and insurance
carrier members to populate NSCC's new product repository databases with information relating to insurance products).
II. SelfRegulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, NSCC 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. NSCC has prepared summaries, set forth in sections (A),
(B), and (C) below, of the most significant aspects of such statements.\3\
\3\ The Commission has modified parts of these statements.
(A) SelfRegulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change
The proposed rule change (i) expands the types of entities that may become data services only members under NSCC's rules to include the same type of entities that are eligible to use NSCC's mutual fund services; (ii) permits data services only members to access NSCC's mutual fund profile service; and (iii) consolidates many of NSCC's rules applicable to data services only members in a new Rule 31 of NSCC's rules.
The proposed rule change adds new types of entities that may become data services only members of NSCC. Data services only members are only eligible to access certain limited data and information services of NSCC specifically enumerated under NSCC's rules. They are not permitted to enter transactions for settlement through NSCC facilities.
Currently, a data services only member must meet the requirements of any clause (i) through (vi) of Section 1 of Rule 2 of NSCC's Rules; that is, they must be either a registered brokerdealer, bank or trust company, registered clearing agency, insurance company or entity licensed to sell insurance products, an investment company that has registered under the Investment Company Act of 1940, as amended, or an entity that has demonstrated to NSCC's Board of Directors that its business and capabilities are such that it could reasonably expect material benefit from access to such services in order to be accepted as a data services only member.
These types of entities are identical to the types permitted to be NSCC members under Rule 2, subject in the case of Rule 2 membership to additional criteria relating to standards of financial responsibility and operational capability as set forth in NSCC's procedures. Since data services only members do not input transactions for settlement through NSCC's facilities and since NSCC is therefore not subject to settlement exposure by these members, data services only members are not subject to additional NSCC membership standards regarding financial responsibility.
The proposed rule change adds to the types of entities that may
become data services only members the types that are currently eligible
to use mutual fund services under rule 52;\4\ that is, they may also be
either (i) an investment advisor as defined in section 202(a)(ii) of
the Investment Advisors Act of 1940, as amended; (ii) a principal
underwriter as defined in section 2(a)(29) of the Investment Company
Act of 1940, as amended, or a codistributor, subdistributor, or
otherwise authorized to process mutual fund transactions; or (iii) an
organization or entity that acts as a thirdparty administrator on
behalf of defined contribution plans as defined in section 414(i) of the Internal Revenue Code of 1986, as amended.
\4\ Entities eligible to use mutual fund services include fund
members admitted under Rule 51 and TPA members admitted under Rule 60 of NSCC's Rules.
The proposed rule change also adds NSCC's mutual fund profile service to the types of services available to data services only members. Mutual fund profile service (``MFPS'') contains information on mutual funds and investment funds as input by the fund, including data on commission discounts (``breakpoints'') available to certain investors buying shares of certain funds under the criteria established by the fund.
Allowing data services only members to access mutual fund profile service and expanding the entities eligible to become data services only members will assist in making mutual fund information, including breakpoint information, more widely available.
The proposed rule change also makes technical changes to NSCC's Rules by adding a new Rule 31 applicable to data services only members, consolidating for ease of reference many NSCC rule provisions applicable to data services only members. Consolidation of many of the provisions applicable to data services only members in Rule 31 will benefit NSCC participants by clarifying the responsibilities and entitlements directly applicable to data services only members and by making it easier for entities not familiar with clearing agency rules to join NSCC.
The technical changes proposed for consolidation of certain rule
provisions applicable to data services only members will facilitate
access to NSCC services by qualified entities. The proposed changes
which add additional entity types to the ones which may currently
qualify to become a data services only member and permit data services
only members to access NSCC's mutual fund profile service will enable a
wider group of mutual fund industry participants to have automated access to MFPS data about mutual funds. These
[[Page 74678]]
proposed changes to NSCC's rules facilitate the prompt and accurate
clearance and settlement of securities transactions and are therefore
consistent with the requirements of the Act and the rules and regulations thereunder.
(B) SelfRegulatory Organization's Statement on Burden on Competition
NSCC does not believe the proposed rule change will impose a burden on competition.
(C) SelfRegulatory Organization's Statement on Comments on the
Proposed Rule Change Received From Members, Participants, or Others
NSCC has not solicited nor received written comments on the
proposed rule change. NSCC has worked closely with the industry to
enhance the availability of mutual fund services to a wider range of
mutual fund industry participants. NSCC will notify the Commission of any written comments it receives.
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)(iii) of the Act \5\ and Rule 19b4(f)(4)\6\ promulgated
thereunder because the proposal effects a change in an existing service
of NSCC that (i) does not adversely affect the safeguarding of
securities or funds in the custody or control of NSCC or for which it
is responsible and (ii) does not significantly affect the respective
rights or obligations of NSCC or persons using the service. At any time
within sixty days of the filing of the proposed rule change, the
Commission could have summarily abrogated such rule change if it
appeared to the Commission that such action was necessary or
appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act.
\5\ 15 U.S.C. 78s(b)(3)(A)(iii).
\6\ 17 CFR 240.19b4(f)(4).
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. Persons making written submissions should file six copies thereof with the Secretary, Securities and Exchange Commission, 450 Fifth Street NW., Washington, DC 205490609. Comments may also be submitted electronically at the following email address: rulecomments@sec.gov. All comment letters should refer to File No. SRNSCC200316. 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, comments should be sent in hardcopy or by email but not by both methods. 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 inspection and copying in the Commission's Public Reference Section, 450 Fifth Street NW., Washington, DC 20549. Copies of such filing will also be available for inspection and copying at the principal office of NSCC and on NSCC's Web site at http://www.nscc.com/legal/. All submissions should refer to the File No. SR
For the Commission by the Division of Market Regulation, pursuant to delegated authority.\7\
\7\ 17 CFR 200.303(a)(12).
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 0331648 Filed 122303; 8:45 am]
BILLING CODE 801001P
SUMMARY: National Securities Clearing Corp.,
DOCUMENT BODY 2: December 11, 2003.
Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ notice is hereby given that on June 30, 2003, the
National Securities Clearing Corporation (``NSCC'') 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 primarily by NSCC. The Commission is publishing this
notice to solicit comments on the proposed rule change from interested persons.
\1\ 15 U.S.C. 78s(b)(1).
I. SelfRegulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change
The proposed rule change adds a new Rule 31 to NSCC's Rules and
amends miscellaneous other provisions of NSCC's Rules as they pertain to data services only members.\2\
\2\ The category of data services only member and modifications
applicable to such category were approved by the Commission in
Securities Exchange Act Release Nos. 44960 (October 19, 2001), 66 FR
56383 [File No. SRNSCC200114] (added data services only members
as a new category to NSCC rules and permitted them to use limited
services]; 45560 (March 14, 2002), 67 FR 13200 [File No. SRNSCC
200118] (permitted data services only members to access Fund/SERV
for nonsettling transactions); 47197 (January 15, 2003), 68 FR 3917
[File No. SRNSCC200213] (permitted data services only members to
access NSCC's insurance processing services for nonsettling
transactions); and 47664 (April 7, 2003), 68 FR 17850 [File No. SR
NSCC200304] (permitted data services only members and insurance
carrier members to populate NSCC's new product repository databases with information relating to insurance products).
II. SelfRegulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, NSCC 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. NSCC has prepared summaries, set forth in sections (A),
(B), and (C) below, of the most significant aspects of such statements.\3\
\3\ The Commission has modified parts of these statements.
(A) SelfRegulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change
The proposed rule change (i) expands the types of entities that may become data services only members under NSCC's rules to include the same type of entities that are eligible to use NSCC's mutual fund services; (ii) permits data services only members to access NSCC's mutual fund profile service; and (iii) consolidates many of NSCC's rules applicable to data services only members in a new Rule 31 of NSCC's rules.
The proposed rule change adds new types of entities that may become data services only members of NSCC. Data services only members are only eligible to access certain limited data and information services of NSCC specifically enumerated under NSCC's rules. They are not permitted to enter transactions for settlement through NSCC facilities.
Currently, a data services only member must meet the requirements of any clause (i) through (vi) of Section 1 of Rule 2 of NSCC's Rules; that is, they must be either a registered brokerdealer, bank or trust company, registered clearing agency, insurance company or entity licensed to sell insurance products, an investment company that has registered under the Investment Company Act of 1940, as amended, or an entity that has demonstrated to NSCC's Board of Directors that its business and capabilities are such that it could reasonably expect material benefit from access to such services in order to be accepted as a data services only member.
These types of entities are identical to the types permitted to be NSCC members under Rule 2, subject in the case of Rule 2 membership to additional criteria relating to standards of financial responsibility and operational capability as set forth in NSCC's procedures. Since data services only members do not input transactions for settlement through NSCC's facilities and since NSCC is therefore not subject to settlement exposure by these members, data services only members are not subject to additional NSCC membership standards regarding financial responsibility.
The proposed rule change adds to the types of entities that may
become data services only members the types that are currently eligible
to use mutual fund services under rule 52;\4\ that is, they may also be
either (i) an investment advisor as defined in section 202(a)(ii) of
the Investment Advisors Act of 1940, as amended; (ii) a principal
underwriter as defined in section 2(a)(29) of the Investment Company
Act of 1940, as amended, or a codistributor, subdistributor, or
otherwise authorized to process mutual fund transactions; or (iii) an
organization or entity that acts as a thirdparty administrator on
behalf of defined contribution plans as defined in section 414(i) of the Internal Revenue Code of 1986, as amended.
\4\ Entities eligible to use mutual fund services include fund
members admitted under Rule 51 and TPA members admitted under Rule 60 of NSCC's Rules.
The proposed rule change also adds NSCC's mutual fund profile service to the types of services available to data services only members. Mutual fund profile service (``MFPS'') contains information on mutual funds and investment funds as input by the fund, including data on commission discounts (``breakpoints'') available to certain investors buying shares of certain funds under the criteria established by the fund.
Allowing data services only members to access mutual fund profile service and expanding the entities eligible to become data services only members will assist in making mutual fund information, including breakpoint information, more widely available.
The proposed rule change also makes technical changes to NSCC's Rules by adding a new Rule 31 applicable to data services only members, consolidating for ease of reference many NSCC rule provisions applicable to data services only members. Consolidation of many of the provisions applicable to data services only members in Rule 31 will benefit NSCC participants by clarifying the responsibilities and entitlements directly applicable to data services only members and by making it easier for entities not familiar with clearing agency rules to join NSCC.
The technical changes proposed for consolidation of certain rule
provisions applicable to data services only members will facilitate
access to NSCC services by qualified entities. The proposed changes
which add additional entity types to the ones which may currently
qualify to become a data services only member and permit data services
only members to access NSCC's mutual fund profile service will enable a
wider group of mutual fund industry participants to have automated access to MFPS data about mutual funds. These
[[Page 74678]]
proposed changes to NSCC's rules facilitate the prompt and accurate
clearance and settlement of securities transactions and are therefore
consistent with the requirements of the Act and the rules and regulations thereunder.
(B) SelfRegulatory Organization's Statement on Burden on Competition
NSCC does not believe the proposed rule change will impose a burden on competition.
(C) SelfRegulatory Organization's Statement on Comments on the
Proposed Rule Change Received From Members, Participants, or Others
NSCC has not solicited nor received written comments on the
proposed rule change. NSCC has worked closely with the industry to
enhance the availability of mutual fund services to a wider range of
mutual fund industry participants. NSCC will notify the Commission of any written comments it receives.
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)(iii) of the Act \5\ and Rule 19b4(f)(4)\6\ promulgated
thereunder because the proposal effects a change in an existing service
of NSCC that (i) does not adversely affect the safeguarding of
securities or funds in the custody or control of NSCC or for which it
is responsible and (ii) does not significantly affect the respective
rights or obligations of NSCC or persons using the service. At any time
within sixty days of the filing of the proposed rule change, the
Commission could have summarily abrogated such rule change if it
appeared to the Commission that such action was necessary or
appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act.
\5\ 15 U.S.C. 78s(b)(3)(A)(iii).
\6\ 17 CFR 240.19b4(f)(4).
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. Persons making written submissions should file six copies thereof with the Secretary, Securities and Exchange Commission, 450 Fifth Street NW., Washington, DC 205490609. Comments may also be submitted electronically at the following email address: rulecomments@sec.gov. All comment letters should refer to File No. SRNSCC200316. 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, comments should be sent in hardcopy or by email but not by both methods. 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 inspection and copying in the Commission's Public Reference Section, 450 Fifth Street NW., Washington, DC 20549. Copies of such filing will also be available for inspection and copying at the principal office of NSCC and on NSCC's Web site at http://www.nscc.com/legal/. All submissions should refer to the File No. SR
For the Commission by the Division of Market Regulation, pursuant to delegated authority.\7\
\7\ 17 CFR 200.303(a)(12).
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 0331648 Filed 122303; 8:45 am]
BILLING CODE 801001P
14 CFR Part 39 40 CFR Part 52 14 CFR Part 71 33 CFR Part 165 50 CFR Part 679 47 CFR Part 73 26 CFR Part 1 40 CFR Part 180 33 CFR Part 117 50 CFR Part 17 44 CFR Part 67 50 CFR Part 648 14 CFR Part 97 33 CFR Part 100 40 CFR Part 63 50 CFR Part 622 44 CFR Part 65 50 CFR Part 660 26 CFR Part 301 39 CFR Part 111 40 CFR Part 300 6 CFR Part 5 40 CFR Part 271 47 CFR Part 64 40 CFR Parts 52 and 81 50 CFR Part 665 44 CFR Part 64 10 CFR Part 50 49 CFR Part 571 47 CFR Part 76