[Federal Register Volume 64, Number 64 (Monday, April 5, 1999)]
[Notices]
[Pages 16513-16514]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-8238]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-41218; File No. SR-NSCC-99-02]


Self-Regulatory Organizations; National Securities Clearing 
Corporation; Notice of Filing and Order Granting Accelerated Approval 
of a Proposed Rule Change Regarding Exit Instructions for Exchange 
Orders

March 26, 1999.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on February 12, 1999, 
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 to 
solicit comments from interested persons on the proposed rule change.
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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 permits Mutual Fund Services (``Fund/
SERV'') members to submit exit instructions for exchange orders.

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,

[[Page 16514]]

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 
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

    Under the proposed rule change, NSCC will modify its rules relating 
to Fund/SERV.\3\ Among other things, Fund/SERV enables eligible members 
to electronically process and settle mutual fund orders. These orders 
include purchases, redemptions, and exchanges.
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    \3\ Specifically, NSCC is amending Rule 52, A. Fund/SERV, SEC. 
10.
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    The proposed rule change permits NSCC to implement a request by a 
users advisory group to modify NSCC's Rule 52 to provide members with 
the option of submitting exit instructions for exchange orders they 
determine not to settle within Fund/SERV.\4\
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    \4\ See letter from Colleen Daly, Chairperson of the Investment 
Company Institute's NSCC Fund/SERV Enhancement Committee (February 
4, 1999). A copy of the letter is included with NSCC's filing.
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    Fund/SERV was originally established to provide a once-a-day or 
single-cycle processing service that executed a member's instructions 
only at the end of each business day. Since exchange orders are 
immediately set for settlement the night they are received, exit 
instructions to delete outstanding exchange orders were not permitted 
under NSCC rules because Fund/SERV's single-cycle processing 
environment did not provide an opportunity for exit instructions to be 
executed.
    However, Fund/SERV's intra day or multi-cycle processing now allows 
a member to submit instructions throughout the day. Under the proposed 
rule change an exchange order will continue to settle on the next 
business day unless a member submits an exit instruction on the same 
day it is received. NSCC plans to notify members by an ``Important 
Notice'' on March 29, 1999, that it intends to implement the rule 
change.
    NSCC believes the proposed rule change is consistent with Section 
17A of the Act \5\ and the rules and regulations thereunder because it 
facilitates the prompt and accurate clearance and settlement of 
securities transactions.
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    \5\ 15 U.S.C. 78q-1.
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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 other than from the chairperson of the Investment 
Company Institute's NSCC Fund/SERV Enhancement Committee. Her comments 
are attached to the proposal as Exhibit C. NSCC will notify the 
Commission of any other 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 requires that the rules of a 
clearing agency be designed to promote the prompt and accurate 
clearance and settlement of securities transactions.\6\ The Commission 
believes that the rule change is consistent with this obligation 
because the proposal provides Fund/SERV members with an automated 
method for deleting erroneous exchange orders. As a result, the 
proposed rule change reduces the likelihood that Fund/SERV members will 
need to go outside of Fund/SERV to correct an exchange order. Thus, the 
proposal promotes the prompt and accurate clearance and settlement of 
securities transactions.
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    \6\ 15 U.S.C. 78q-1(b)(3)(F).
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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 
for approving the proposed rule change prior to the thirtieth day after 
publication of the notice of filing because accelerated approval will 
permit NSCC to implement this feature of Fund/SERV in a timely manner.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. 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. Sec. 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 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-99-02 and should be 
submitted by April 26, 1999.
    It is therefore ordered, pursuant to Section 19(b)(2) of the Act, 
that the proposed rule change (File No. SR-NSCC-99-02) be, and hereby 
is, approved on an accelerated basis.

    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority.\7\
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    \7\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 99-8238 Filed 4-2-99; 8:45 am]
BILLING CODE 8010-01-M