[Federal Register Volume 61, Number 52 (Friday, March 15, 1996)]
[Notices]
[Pages 10831-10832]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-6234]



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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-36942; File No. SR-NSCC-96-04]


Self-Regulatory Organizations; National Securities Clearing 
Corporation; Notice of Filing of Proposed Rule Change to Establish the 
Daily Price and Rate File Phase of the Mutual Fund Profile Service

March 7, 1996.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on January 19, 1996, 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. On February 27, 1996, NSCC filed an 
amendment to the proposed rule change.\2\ The Commission is publishing 
this notice to solicit comments from interested persons.

    \1\ 15 U.S.C. 78s(b)(1) (1988).
    \2\ Letter from Julie Beyers, Associate Counsel, NSCC, to 
Christine Sibille, Division of Market Regulation, Commission 
(February 23, 1996).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The proposed rule change seeks to amend NSCC's rules to establish a 
mutual fund profile service (``MFPS'') and to seek approval for 
implementation of the first phase of MFPS.

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.\3\

    \3\ 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

    The purpose of the proposed rule change is to establish MFPS for 
use by participating NSCC members and to implement the first phase of 
MFPS, the daily price and rate file. MFPS will provide an automated 
method of transmitting and receiving information pertaining to mutual 
funds through a centralized and standardized facility on a timely 
basis. MFPS will improve the flow of such data among participating NSCC 
members and will enable such members to make additions, changes, 
corrections, or deletions to such data as needed.
    NSCC members will join the MFPS either as MFPS data providers, MFPS 
data receivers, or both. MFPS data receivers most likely will consist 
of broker-dealers. Mutual funds and fund complexes are likely to be 
MFPS data providers but in many cases also may participate as MFPS data 
receivers. MFPS data providers will transmit electronically MFPS data 
to NSCC in a format developed by NSCC. MFPS data providers will have 
the option as to the amount of data pertaining to them to include in 
MFPS. NSCC then will group and consolidate MFPS data to fit the format 
developed for distribution and will transmit the data to MFPS users. 
MFPS data will be transmitted between NSCC and MFPS users via mainframe 
and/or personal computer interfaces based on users' preferences, needs, 
and capabilities. At this time, NSCC has not determined whether an 
agreement will be necessary to permit an NSCC member to participate in 
MFPS.
    To ensure that MFPS users are capable of adequately using the 
service, NSCC initially proposes to limit the scope of the MFPS data to 
include only daily prices and rates of funds. MFPS users will be able 
to deliver data relating to daily prices and daily dividend accrual 
rates for individual securities for a specific date. NSCC will 
consolidate all price and rate information received from MFPS data 
providers on a given day into a daily price and rate file and will 
distribute such file to MFPS data receivers. This file also will report 
price and rate corrections to users as they are identified by a fund. 
NSCC will maintain historical data within the database for a specified 
period of time.
    Currently, NSCC members obtain fund price and rate information in a 
variety of ways including paper transmittals, facsimile, and telephone. 
NSCC believes that such methods of obtaining information generally are 
time consuming, labor intensive, and prone to error. Furthermore, NSCC 
believes the lack of automation and standardization of the process by 
which information is exchanged between NSCC members delays the receipt 
of time-sensitive data and contributes to processing difficulties 
resulting from incorrect or incomplete information. NSCC believes that 
MFPS will support and will expedite the processing of mutual fund 
transactions at the firms and funds.
    Other components of MFPS will be implemented in one or more phases 
after approval of the daily price and rate file.\4\ These other 
components will include (i) the ``member profile'' which will maintain 
data for each NSCC member participating in MFPS, including personnel 
contacts, telephone numbers, addresses, commissions payment procedures, 
and the processing capabilities and data for NSCC members which act as 
agents for other NSCC members; (ii) the ``security issue profile'' 
which will maintain information on each individual fund maintained in 
the profile, including minimum purchase or maintenance requirements, 
fund features, and various fund processing characteristics; and (iii) 
the ``distribution declaration information profile'' which will include 
projected and/or actual record dates, ex-dates, reinvestment dates, and 
payable dates for fund dividend and capital gain payments and also may 
include Rule 12b-1 plan and other commission payout information. NSCC 
anticipates that member profile information and security issue profile 
information will be distributed only to specific NSCC members or to all 
NSCC members, depending on the instructions of the MFPS data provider.

    \4\ Pursuant to Section 19(b)(2) of the Act, NSCC will be 
required to file with the Commission proposed rule changes regarding 
all future phases of MFPS prior to the implementation of each such 
phase.
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    Due to the limited number of initial MFPS users and the limited 
value of the initial services, NSCC will not charge fees for MFPS at 
this time. When NSCC believes it is providing a value added service, 
NSCC will file with the Commission an appropriate rule change

[[Page 10832]]
proposal to implement fees and charges for MFPS.
    NSCC believes the proposed rule change is consistent with Section 
17A of the Act and the rules and regulations thereunder because it will 
facilitate the prompt and accurate clearance and settlement of 
securities transactions.\5\

    \5\ 15 U.S.C. 78q-1 (1988).
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(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

    NSCC solicited comments from its ICI Broker/Dealer Committee and 
its Mutual Fund Profile Working Committee on July 5, August 18, 
November 9, and November 21, 1995. NSCC received letters from Colonial 
Investors Service Center, Inc. (dated July 21, 1995), AIM Fund 
Services, Inc. (Dated July 24, 1995), Edgewood Services, Inc. (dated 
July 31, 1995), Merrill Lynch (dated July 31, 1995), Securities 
Industry Software Corporation (dated July 31, 1995), A.G. Edwards & 
Sons, Inc. (dated August 4, 1995), DST Systems Inc. (dated September 
11, 1995) and Funds Associates Ltd. (``FAL'') (dated September 22, 
1995). Each responding firm expressed in its letter its commitment to 
participate in and devote resources to the development of MFPS. In 
addition, NSCC received a request from A.G. Edwards & Sons, Inc. (dated 
August 9, 1995) that additional information be included in MFPS. NSCC 
is in the process of determining whether to include this information, 
which does not affect the implementation of the daily price and rate 
file phase of MFPS.
    NSCC also received a memorandum from FAL, dated December 1, 1995, 
in which FAL requested that S.W.I.F.T. ISO formats be an option for 
file transmission, that additional lead time be given for projects 
utilizing S.W.I.F.T. formats, and that NSCC support transmission in 
ASCII format. With regard to FAL's request, NSCC believes that the 
standard data transmission procedures currently employed by NSCC meet 
the concerns expressed therein. In addition, NSCC provided Franklin 
Templeton Distributors, Inc. with the additional information concerning 
interactive processing that it requested in its letter (dated November 
30, 1995). NSCC will notify the Commission of any additional written 
comments received.

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

    Within thirty-five days of the date of publication of this notice 
in the Federal Register or within such longer period (i) as the 
Commission may designate up to ninety days of such date if it finds 
such longer period to be appropriate and publishes its reasons for so 
finding or (ii) as to which NSCC consents, the Commission will:
    (a) by order approve such proposed rule change or
    (b) institute proceedings to determine whether the proposed rule 
change should be disapproved.

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, N.W., Washington, D.C. 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. 552, will be available for inspection and copying in the 
Commission's Public Reference Room, 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 NSCC. All submissions should 
refer to the file number SR-NSCC-96-04 and should be submitted by April 
5, 1996.

    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority.\6\

    \6\ 17 CFR 200.30-3(a)(12) (1995).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 96-6234 Filed 3-14-96; 8:45 am]
BILLING CODE 8010-01-M