[Federal Register Volume 61, Number 13 (Friday, January 19, 1996)]
[Notices]
[Pages 1418-1419]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-510]



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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-36697; File No. SR-NSCC-95-16]


Self-Regulatory Organizations; National Securities Clearing 
Corporation; Notice of Filing and Order Granting Accelerated Approval 
of a Proposed Rule Change Regarding an Agreement Between the National 
Securities Clearing Corporation (``NSCC'') and the New York Stock 
Exchange, Inc. and the National Association of Securities Dealers, Inc. 
Concerning the Provision of Financial and Operation Information With 
Respect to NSCC Members and Correspondent Broker-Dealers of Such 
Members

January 11, 1996.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on December 11, 1995, the 
National Securities Clearing Corporation (``NSCC'') filed with the 
Securities and Exchange Commission (``Commission'') the proposed rule 
change as described in Items I and II below, which items have been 
prepared primarily by NSCC. The Commission is publishing this notice 
and order to solicit comments from interested persons and to grant 
accelerated approval of the proposed rule change.

    \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

    The proposed rule change relates to agreements between NSCC and the 
National Association of Securities Dealers, Inc. (``NASD'') and between 
NSCC and the New York Stock Exchange, Inc. (``NYSE'') concerning the 
provision of financial and operational information to NSCC with respect 
to its members and its members' correspondent broker-dealers.

II. Self-Regulatory 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.\2\

    \2\ The Commission has modified the text of the summaries 
prepared by NSCC.
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(A) Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    NSCC has entered into agreements (``Agreements'') with the NASD and 
with the NYSE pursuant to which the NASD and the NYSE are to provide 
certain information directly to NSCC.\3\ The information to be provided 
will include, without limitation, financial, trading, and operational 
information relating to NSCC members and correspondent broker-dealers 
of such members. Under its rules, NSCC is entitled to obtain such 
information directly from its members.

    \3\ Copies of the Agreements are attached as Exhibit A to NSCC's 
proposed rule change filed with the Commission.
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    The Agreements are based on NSCC's existing Rule 2 and Rule 15. 
NSCC Rule 2, Section 2(f) provides that each applicant seeking to 
become a member of NSCC shall agree in writing that its books and 
records shall at all times be open to inspection by the duly authorized 
representatives of NSCC and that NSCC shall be furnished with all such 
information with respect to its business and transactions as NSCC may 
require. Rule 15, Section 2 provides that NSCC shall have the authority 
to examine the financial responsibility and operational capability of 
any settling member. Rule 15, Section 2 further provides that in 
conducting such examinations NSCC may require a settling member to 
furnish such information, to make its books and records available, and 
to demonstrate the financial responsibility and operational capability 
of the settling member. Rule 15 also provides that NSCC may require 
adequate assurances of the financial responsibility or operational 
capability of a settling member.
    The information contemplated by NSCC Rules 2 and 15 includes 
information relating to correspondent broker-dealers that clear through 
settling members. Under these rules, NSCC also may require a settling 
member to obtain information on its correspondent broker-dealers and 
provide it to NSCC. NSCC has routinely asked for and received such 
information from its settling members. By having the NASD and the NYSE 
directly provide NSCC with information regarding its members and their 
correspondent broker-dealers that NSCC is entitled to obtain from its 
settling members under NSCC Rules 2 and 15, the Agreements will permit 
a more rapid integration of such information into NSCC's risk 
management system and will alleviate the administrative burdens on its 
members of providing this information.
    NSCC believes the proposed rule change is consistent with Section 
17A of the Act and the rules and regulations thereunder because it is 
intended to foster cooperation and coordination with persons engaged in 
the clearance and settlement of securities transactions and to assure 
the safeguarding of securities and funds which are in the custody or 
control of NSCC or for which it is responsible.

(B) Self-Regulatory Organization's Statement on Burden on Competition

    NSCC does not believe that the rule filing 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

    No written comments relating to the rule filing have been solicited 
or received. NSCC will notify the Commission of any written comments 
received by NSCC.

III. Date of Effectiveness of the Proposed Rule Change and Timing 
for Commission Action

    Section 17A(b)(3)(F) of the Act\4\ requires the rules of a clearing 
agency be designed to foster cooperation and coordination with persons 
engaged in the clearance and settlement of securities transactions and 
to assure the safeguarding of securities and funds which are in the 
custody or control of 

[[Page 1419]]
NSCC or for which it is responsible. The Commission believes the 
proposed rule change is consistent with these requirements because it 
will allow NSCC faster and more efficient access to critical risk-based 
data of its members and its members' correspondent broker-dealers which 
should allow for more rapid integration of such information into NSCC's 
risk management system. Moreover, because NSCC now will have direct 
access to this information from the NASD and the NYSE, NSCC should be 
able to better monitor the activities of its members and their 
correspondent broker-dealers which should assist NSCC in fulfilling its 
obligation under Section 17A to safeguard securities and funds under 
NSCC's custody or control or for which it is responsible

    \4\ 15 U.S.C. 78q-1(b)(3)(F) (1988).
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    NSCC has requested that the Commission find good cause for 
approving the proposed rule change prior to the thirtieth day after 
publication of the notice of filing. The Commission finds good cause 
because accelerated approval will permit NSCC to receive the risk-based 
information regarding its members and their correspondent broker-
dealers directly from the NASD and the NYSE thus enabling NSCC to 
include the information in its risk management system in a more timely 
fashion. Furthermore, because the risk-based information NSCC will 
receive from the NASD and the NYSE is information NSCC's members are 
obligated to and already do submit to NSCC, the Commission does not 
expect to receive any adverse comments on the proposed rule change.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing. Persons making written submission 
should file six copies thereof with the Secretary, Securities and 
Exchange Commission, 450 Fifth Street NW., Washington, DC 20549. Copies 
of the submissions, 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. Sec. 552, will be available for inspection and copying in 
the Commission's Public Reference Room, 450 Fifth Street, NW., 
Washington, DC 20549. Copies of such filings will also be available for 
inspection and copying at the principal office of NSCC. All submissions 
should refer to the file number SR-NSCC-95-16 and should be submitted 
by February 9, 1996.
    It is therefore ordered, pursuant to Section 19(b)(2) of the Act, 
that the proposed rule change (File No. SR-NSCC-95-16) be, and hereby 
is, approved on an accelerated basis.

    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority.\5\

    \5\ 17 CFR 200.30-3(a)(12)(1994).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 96-510 Filed 1-18-96; 8:45 am]
BILLING CODE 8010-01-M