[Federal Register Volume 59, Number 241 (Friday, December 16, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-30913]


[[Page Unknown]]

[Federal Register: December 16, 1994]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-35078; File No. SR-MCC-94-14]

 

Self-Regulatory Organizations; Midwest Clearing Corporation; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change 
Relating to the Automated Customer Account Transfer Service and the 
ACAT-Fund/SERV Interface

December 9, 1994.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 
1934\1\ (``Act''), notice is hereby given that on November 8, 1994, the 
Midwest Clearing Corporation (``MCC'') 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 MCC. The Commission is publishing this notice to solicit 
comments on the proposed rule change from interested persons.
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    \1\15 U.S.C. 78s (b)(1) (1988).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    MCC proposes to amend its procedures to comply with New York Stock 
Exchange (``NYSE'') Rule 412 which sets forth the time for transferring 
customer accounts\2\ and with National Securities Clearing Corporation 
(``NSCC'') Rule 50, Section 9\3\ regarding NSCC's Automated Customer 
Account Transfer (``ACAT'') Service.\4\ MCC also proposes to amend its 
procedures regarding the ACAT-Fund/SERV interface to comply with the 
NYSE requirement that all mutual fund account transfers be accomplished 
by use of an automated system where the NYSE member organizations are 
participants in a registered clearing agency which has such a facility.
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    \2\For a complete description of the recent amendments to NYSE 
Rule 412, refer to Securities Exchange Act Release No. 34633 
(September 2, 1994), 59 FR 46872 [File No. SR-NYSE-94-21] (order 
approving amendments to NYSE Rule 412).
    \3\For a complete description of the recent amendments to NSCC's 
Rule 50, Section 9, refer to Securities Exchange Act Release No. 
34879 (October 21, 1994), 59 FR 54229 [File No. SR-NSCC-94-13] 
(order approving modifications to NSCC's ACAT Service to accelerate 
the time in which customer accounts are transferred).
    \4\For a complete description of NSCC's ACAT system, refer to 
Securities Exchange Act Release No. 22481 (September 30, 1985), 50 
FR 41274 [File No. SR-NSCC-85-7] (order approving proposed rule 
change establishing ACAT Service).
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II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filng with the Commission, MCC 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. MCC has prepared summaries, set forth in Sections (A), 
(B), and (C) below, of the most significant aspects of such statements.

(A) Self-Regulatory Organization's Statement of the Purpose of and 
Statutory Basis for, the Proposed Rule Change

    NSCC's ACAT Service is an input, comparison, and settlement service 
for customer account transfers from one brokerage firm to another. MCC 
Article VI, Rule 3 authorizes MCC to establish procedures for its 
linkage to NSCC's ACAT Service including the establishment of time 
periods. MCC's proposal is consistent with NSCC's recent amendments to 
NSCC Rule 50, Section 9 shortening NSCC's recent amendments to NSCC 
Rule 50, Section 9 shortening the period in which a participant that is 
to receive a transferred account has to review the transfer 
instructions and reply thereto. The completed transfer cycle will be 
reduced from ten business days to seven business days for transferring 
cash or margin accounts and from fifteen business days to seven 
business days for transferring retirement accounts. The portion of 
MCC's filing containing these procedures is consistent with the NYSE 
and NSCC proposals; therefore, MCC's procedures also will take effect 
on December 2, 1994.
    MCC's proposed rule change also proposes to make minor changes to 
the ACAT-Fund/SERV interface\5\ to comply with the NYSE requirement 
that generally all mutual fund account transfers must be accomplished 
by using the automated systems of a registered clearing agency where 
both the receiving broker-dealer and the delivering broker-dealer are 
participants in a registered clearing agency which has such a 
facility.\6\ In accordance with a NYSE Rule 412, this change will be 
effective March 3, 1995. In addition, under its proposal MCC no longer 
will treat account transfers containing option positions differently 
from transfers of accounts without option positions.
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    \5\For a detailed description of NSCC's ACAT-Fund/SERV 
interface, refer to Securities Exchange Act Release No. 27454 
(November 20, 1989), 54 FR 48962 [File No. SR-NSCC-89-12] (order 
approving modification of NSCC's ACAT Service rules to provide for 
the automated transfer of eligible book share mutual fund assets).
    \6\Supra note 2.
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    MCC believes the proposed rule change is consistent with Section 
17A of the Act in that it promotes the prompt and accurate clearance 
and settlement of securities transactions. MCC's procedures setting 
forth the shortened time period for transferring accounts are 
appropriate because they properly reflect the changes set forth by the 
NYSE and NSCC in their efforts to enhance automation of the transfer 
process. In addition, the revised procedures are consistent with the 
Commission's effort to reduce the settlement cycle as required by Rule 
15c6-1\7\ which mandates a three business day settlement cycle for most 
broker-dealer transactions effective June 7, 1995.\8\
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    \7\For a complete description of Rule 15c6-1, refer to 
Securities Exchange Act Release No. 33023 (October 6, 1993), 58 FR 
52891 [File No. S7-5-93] (adopting Commission Rule 52c6-1).
    \8\Securities Exchange Act Release No. 34952 (November 9, 1994), 
59 FR 59137 [File No. S7-5-93] (change of effective date of Rule 
15c6-1).
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(B) Self-Regulatory Organization's Statement on Burden on Competition

    MCC does not believe that the proposed rule change will have an 
impact on or impose a burden on competition.

(C) Self-Regulatory Organization's Statement on Comments on the 
Proposed Rule Change Received From Members, Participants or Others

    MCC has not solicited or received comments on the proposed rule 
change.

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)\9\ of the Act and pursuant to Rule 19b-4(e)(4)\10\ 
promulgated thereunder because the proposal effects a change in an 
existing service of MCC that does not adversely affect the safeguarding 
of securities or funds in the custody or control of MCC and does not 
significantly affect the respective rights or obligations of MCC or 
persons using the service. At any time within 60 days of the filing of 
such rule change, the Commission may summarily abrogate such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act.
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    \9\15 U.S.C. 78s(b)(3)(A)(iii) (1988).
    \10\17 CFR 240.19b-4(e)(4) (1994).
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IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing. Persons making written submissions 
should file six copies thereof with the Secretary, Securities and 
Exchange Commission, 450 Fifth Street, N.W., Washington, D.C. 20549. 
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, N.W., 
Washington, D.C. 20549. Copies of such filing will also be available 
for inspection and copying at the principal office of MCC. All 
submissions should refer to File No. SR-MCC-94-14 and should be 
submitted by January 6, 1995.

    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority.\11\
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    \11\17 CFR 200.30-3(a)(12) (1994).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 94-30913 Filed 12-15-94; 8:45 am]
BILLING CODE 8010-01-M