[Federal Register Volume 61, Number 94 (Tuesday, May 14, 1996)]
[Notices]
[Pages 24343-24344]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-12037]



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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-37171; File No. SR-NSCC-96-04]


Self-Regulatory Organizations; National Securities Clearing 
Corporation; Order Approving a Proposed Rule Change To Establish the 
Daily Price and Rate File Phase of the Mutual Fund Profile Service

May 8, 1996.
    On January 19, 1996, the National Securities Clearing Corporation 
(``NSCC'') filed with the Securities and Exchange Commission 
(``Commission'') a proposed rule change (File No. SR-NSCC-96-04) 
pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'') to establish the daily price and rate file phase of the 
mutual fund profile service.\1\ On February 27, 1996, NSCC filed an 
amendment to the proposed rule change.\2\ Notice of the proposal was 
published in the Federal Register on March 15, 1996.\3\ 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. Sec. 78s(b)(1) (1988).
    \2\ Letter from Julie Beyers, Associate Counsel, NSCC, to 
Christine Sibille, Division of Market Regulation, Commission 
(February 23, 1996).
    \3\ Securities Exchange Act Release No. 36942 (March 7, 1996), 
61 FR 10831.
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I. Description

    Under the rule change, NSCC will establish a mutual fund profile 
service (``MFPS'') for use by participating NSCC members and will 
implement the first phase of MFPS, the daily price and rate file. MFPS 
is intended to provide an automated method of transmitting and 
receiving information pertaining to mutual funds through a centralized 
and standardized facility.
    NSCC members will join the MFPS either as MFPS data providers, MFPS 
data receivers, or both.\4\ MFPS data providers will transmit 
electronically MFPS data to NSCC in a format developed by NSCC.\5\ 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 data receivers.\6\ MFPS data will be transmitted between 
NSCC and MFPS users through mainframe and/or personal computer 
interfaces based on users' preferences, needs, and capabilities.
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    \4\ 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 receivers most likely will consist of broker-
dealers or service bureaus.
    \5\ NSCC will accept batch input files between 4:00 a.m. and 
8:00 p.m. E.S.T. Interactive participants can input data between 
4:00 a.m. and 9:00 p.m. E.S.T. The system will be available Monday 
through Friday.
    \6\ For single and multibatch participants, NSCC will make 
available MFPS output every two hours between 6:00 a.m. and 4:00 
p.m. E.S.T. and hourly from 4:00 p.m. to 9:00 p.m. E.S.T. Between 
5:00 p.m. and 8:00 p.m. E.S.T., MFPS output also will be made 
available every half hour. Interactive participants will receive 
output as soon as it has been processed by the system.
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    To ensure that MFPS users are capable of adequately using the 
service, NSCC proposes to limit initially the scope of the MFPS data to 
include only daily prices and dividend accrual rates

[[Page 24344]]

of funds.\7\ After MFPS data providers deliver the daily price and rate 
data to NSCC, NSCC will consolidate all such information into a daily 
price and rate file and will distribute such file to MFPS data 
receivers.\8\ This file also will report price and rate corrections as 
they are identified by data providers.
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    \7\ Currently, NSCC members obtain fund price and rate 
information in a variety of ways including paper transmittals, 
facsimile, and telephone.
    \8\ Once submitted, price and rate information cannot be deleted 
but can be corrected.
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    MFPS data receivers also may elect to receive a file containing 
prices received from the National Association of Securities Dealers 
(``NASD'') for the current day. This file will include the net asset 
value for approximately 6,000 funds. NSCC will maintain historical data 
other than NASD price information within the database for a period of 
ninety days. NASD price information will be maintained for thirty days.
    Other components of MFPS will be implemented in one or more phases 
after approval of the daily price and rate file.\9\ These other 
components will include (i) the ``member profile'' which will maintain 
for each NSCC member participating in MFPS data such as personnel 
contacts, telephone numbers, addresses, commissions payment procedures, 
processing capabilities and information regarding NSCC members which 
act as agents for other NSCC members; (ii) the ``security issue 
profile'' which will maintain on each individual fund included in the 
profile information such as 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. 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. 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.\10\
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    \9\ Pursuant to Section 19(b)(3)(A) 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, which will be effective upon filing, as long as 
implementation and use of subsequent MFPS phases will occur as 
described in this order. Any deviations in the manner of 
implementation or in the use of subsequent MFPS phases will require 
proposed rule changes to be filed in accordance with Section 
19(b)(2) of the Act.
    \10\ NSCC will file with the Commission an appropriate rule 
change proposal to implement fees and charges for MFPS.
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II. Discussion

    Section 17A(b)(3)(F) \11\ of the Act requires that 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 remove impediments to and perfect the mechanism of 
a national system for the prompt and accurate clearance and settlement 
of transactions. Furthermore, Section 17A(a)(1)(C) of the Act \12\ sets 
forth a Congressional finding that new data processing and 
communications techniques create the opportunity for more efficient, 
effective, and safe procedures for clearance and settlement. As 
discussed below, the Commission believes that NSCC's proposed rule 
change is consistent with NSCC's obligations under the Act.
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    \11\ 15 U.S.C. Sec. 78q-1(b)(3)(F) (1988).
    \12\ 15 U.S.C. Sec. 78q-1(a)(1)(C) (1988).
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    Implementation of MFPS will allow NSCC participants to have access 
to up-to-date information on mutual fund daily prices and dividend 
accrual rates. This should assist NSCC participants in the timely 
processing of mutual fund transactions. The Commission believes that 
the use of MFPS should thus aid in the overall processing efficiency of 
mutual fund transactions and thereby should help remove impediments to 
and enhance the mechanism of a national market system for the clearance 
and settlement of securities transactions. Furthermore, automation and 
standardization of mutual fund information should help to reduce 
processing difficulties resulting from the use of inaccurate or 
incomplete mutual fund information. MFPS also should improve the flow 
of mutual fund information among participating NSCC members as the 
current methods of obtaining such information tend to be time 
consuming, labor intensive, and prone to error. This should assist in 
fostering cooperation and coordination among persons engaged in the 
clearance and settlement of securities transactions.

III. Conclusion

    On the basis of the foregoing, the Commission finds that the 
proposal is consistent with the requirements of the Act and in 
particular with the requirements of Section 17A 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-96-04) be, and hereby 
is, approved.

    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority.\13\
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    \13\ 17 CFR 200.30-3(a)(12) (1995).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 96-12037 Filed 5-13-96; 8:45 am]
BILLING CODE 8010-01-M