[Federal Register Volume 62, Number 60 (Friday, March 28, 1997)]
[Notices]
[Pages 14954-14955]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-7872]


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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-38428; File No. SR-NSCC-97-02]


Self-Regulatory Organizations; National Securities Clearing 
Corporation; Notice of Filing of a Proposed Rule Change To Modify 
NSCC's Rules To Permit Unit Investment Trusts To Be Processed Through 
Fund/SERV, Networking, and Mutual Fund Commission Settlement Services

March 21, 1997.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on February 10, 1997, the 
National Securities Clearing Corporation (``NSCC'') filed with the 
Securities and Exchange Commission (``Commission'') the proposed rule 
change (File No. SR-NSCC-97-02) as described in Items I, II, and III 
below, which items have been prepared primarily by NSCC. 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).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The proposed rule change consists of modifications to NSCC's rules 
in order to permit unit investment trusts (``UITs'') to be processed 
through NSCC's Fund/SERV, Networking, and Mutual Fund Commission 
Settlement Services, which collectively constitute NSCC's Mutual Fund 
Services.

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

    A group of NSCC participants, bank trustees, and industry 
organizations such as the Securities Industry Association's Securities 
Operation Division, the Regional Municipal Operations Association, and 
National Unit Trust Association have requested that NSCC permit UITs to 
be eligible for processing through its Fund/SERV, Networking, and 
Mutual Fund Commission Settlement Services.\3\ Such eligibility will 
allow broker-dealers that are Mutual Fund Services only members (i.e., 
primarily bank broker-dealers and insurance company subsidiaries) and 
therefore, that are not permitted to process these transactions through 
NSCC's continuous net settlement (``CNS'') system to process UIT trades 
through the Fund/SERV, Networking, and Mutual Fund Commission 
Settlement systems. Currently, UITs are eligible for NSCC processing 
through NSCC's CNS system only. However, because Mutual Fund Services 
only members are not permitted access to NSCC's CNS system, they must 
settle UIT trades ex-clearing with their UIT

[[Page 14955]]

positions held with a trustee in book-entry form.
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    \3\ For a complete description of NSCC's Fund/SERV, Networking, 
and Mutual Fund Commission Services, refer to Securities Exchange 
Act Release Nos. 31937 (March 1, 1993), 58 FR 12609 [File No. SR-
NSCC-92-14] (order approving proposed rule change regarding Fund/
SERV system); 26376 (December 20, 1988), 53 FR 52546 [File No. SR-
NSCC-88-08] (order approving Networking); and 31579 (December 17, 
1992), 57 FR 60018 [File No. SR-NSCC-92-13] (order approving the 
Mutual Fund Commissions Settlement System and consolidating the 
Mutual Fund Commissions Settlement, Fund/SERV, and Networking 
Systems under NSCC's Mutual Fund Services.
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    In terms of the settlement process, UIT transactions will be 
processed through NSCC's Mutual Fund Services in the same manner as 
they are processed in the CNS system. However, UIT transactions 
processed through any Mutual Fund Services will not be guaranteed. If a 
Mutual Fund Services only member wants its UIT transactions submitted 
to NSCC to be guaranteed, such member must apply to NSCC for a full-
service membership, meet the applicable membership requirements, and 
submit such transactions to NSCC's CNS system.
    NSCC believes that by permitting these transactions to be processed 
through NSCC's Fund/SERV, Networking, and Mutual Fund Commissions 
Settlement systems, Mutual Fund Services only members will no longer 
have to handle UIT trades through exception processing, which will 
result in reduced processing costs and increased standardization.
    NSCC believes that the proposed rule change is consistent with the 
requirements of the Act and the rules and regulations thereunder since 
it will facilitate the prompt and accurate clearance and settlement of 
securities transactions and, in general, will protect investors and the 
public interest.

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

    NSCC 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

    No written comments relating to the proposed rule change 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

    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 submissions 
should file six copies thereof with the Secretary, Securities and 
Exchange Commission, 450 Fifth Street, NW., Washington, DC 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 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-97-02 and should be submitted by April 
18, 1997.

    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority.\4\
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    \4\ 17 CFR 200.30-3(a)(12).
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Jonathan G. Katz,
Secretary.
[FR Doc. 97-7872 Filed 3-27-97; 8:45am]
BILLING CODE 8010-01-M