[Federal Register Volume 59, Number 200 (Tuesday, October 18, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-27530]


[[Page Unknown]]

[Federal Register: October 18, 1994]


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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-34825; File No. SR-NSCC-94-15]

 

Self-Regulatory Organizations; National Securities Clearing 
Corporation; Order Approving A Proposed Rule Change Modifying Rules and 
Procedures Relating to Compared Trade Summaries

October 12, 1994.
    On August 2, 1994, the National Securities Clearing Corporation 
(``NSCC'') filed with the Securities and Exchange Commission 
(``Commission'') a proposed rule change (File No. SR-NSCC-94-15) 
pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'').\1\ Notice of the proposal was published on September 1, 
1994, in the Federal Register to solicit comments on the proposed rule 
change.\2\ No comment letters were received. For the reasons discussed 
below, the Commission is approving the proposed rule change.
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    \1\15 U.S.C. 78s(b)(1) (1988).
    \2\Securities Exchange Act Release No. 34595 (August 25, 1994), 
59 FR 45321.
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I. Description

    The proposed rule change is to facilitate NSCC's distribution each 
day of a Consolidated Trade Summary that reports both Continuous Net 
Settlement (``CNS'') and Non-CNS trades due for settlement the next 
day. NSCC will continue to distribute each day its current CNS and non-
CNS Compared Trade Summaries which also report, in greater detail, the 
trades due to settle the next day. After ninety days or more, NSCC 
intends to eliminate the CNS and non-CNS Compared Trade Summaries and 
distribute only the Consolidated Trade Summary.\3\
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    \3\NSCC Plans to begin distribution of the Consolidated Trade 
Summary on September 20, 1994. NSCC will not eliminate the CNS and 
Non-CNS Compared Trade Summaries in connection with the 
Reconfirmation and Pricing Service (``RECAPS''). RECAPS is a fail 
clearance system that provides an opportunity to reconfirm and 
reprice transactions that already have been compared. NSCC's 
Procedure II (G).
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    On both the CNS and Non-CNS Compared Trade Summary, each 
transaction appears at the original contract price, and quantities and 
money are totalled and netted for each security issue. The contract 
output provided to member on T+1 contains much of the trade detail 
given on the CNS and Non-CNS Compared Trade Summaries.\4\ In contrast, 
the Consolidated Trade Summary reports only the net positions due for 
settlement on the following day. Each position, in CUSIP order, is 
reported as broad buys and sells by marketplace or source, netted by 
issue, quantity, and money. The Consolidated Trade Summary eliminates 
trade details, such as the contra-broker, price, and trade date, which 
are currently included on the CNS and Non-CNS Compared Trade Summaries 
and which already have been provided to members through the contract 
output NSCC provides.
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    \4\Prime broker transactions do not have contract output. 
Instead, the details of these transactions are reported on the 
Regional Interface Operation (``RIO'') Blotter.
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II. Discussion

    The Commission finds that the proposed rule change is consistent 
with the requirements of the Act and the rules and regulations 
thereunder and particularly with the requirements of Section 
17A(b)(3)(F).\5\ Section 17A(b)(3)(F) requires that the rules of a 
clearing agency be designed to promote the prompt and accurate 
clearance and settlement of securities transactions. Introduction of 
the Consolidated Trade Summary aids NSCC in its effort to move towards 
three business by settlement (``T+3'') and is consistent with Rule 
15c6-1 under the Act.\6\ Currently, NSCC's Rules require that the CNS 
and Non-CNS Compared Trade Summaries be issued on the morning of T+4. 
When the settlement cycle is reduced to T+3, it will be necessary to 
issue trade reports earlier. In anticipation of the move to T+3, the 
proposal requires that the Consolidated Trade Summary be issued on the 
day before settlement.
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    \5\15 U.S.C. 78q-1(b)(3)(F) (1988).
    \6\On October 6, 1993, the Commission adopted Rule 15c6-1 under 
the Act, which establishes three business days after the trade date 
(``T+3'') instead of five business days (``T+5'') as the standard 
settlement timeframe for most broker-dealer transactions. The rule 
becomes effective June 1, 1995. Securities Exchange Act Release No. 
33023 (October 6, 1993), 58 FR 52891.
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    When the settlement cycle is reduced, NSCC will issue the trade 
summaries on T+2, which is the day after NSCC issues the contract 
output to members. To repeat the trade details reported on the contract 
output in the Consolidated Trade Summary, as is currently done in the 
CNS and non-CNS Compared Trade Summaries would duplicate unnecessarily 
the information provided only the day before. By eliminating 
information for each individual trade, the Consolidated Trade Summary 
will provide a more concise statement. The Commission believes that 
NSCC's rule change reducing the redundant information contained in the 
trade summaries to include only information on net positions due for 
settlement on the following day should result in benefits to both 
customers and members by increasing efficiency and reducing costs.

III. Conclusion

    On the basis of the foregoing, the Commission finds that the 
proposal is consistent with the requirements of the Act and 
particularly with Section 17A(b)(3)(F) of the Act and the rules and 
regulations thereunder.
    It is therefore ordered, pursuant to Section 19(b)(2) of the Act, 
that the proposed rule change (File No. SR-NSCC-94-15) be and hereby is 
approves.

    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority.\7\
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    \7\17 CFR 200.30-3(a)(12) (1994).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 94-27530 Filed 10-17-94; 8:45 am]
BILLING CODE 8010-01-M