[Federal Register Volume 66, Number 103 (Tuesday, May 29, 2001)]
[Notices]
[Pages 29198-29199]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-13327]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-44322; File No. SR-NSCC-00-09]


Self-Regulatory Organizations; National Securities Clearing 
Corporation; Order Approving a Proposed Rule Change Relating to 
Processing Certain Securities Undergoing Reorganization

May 18, 2001.
    On July 12, 2000, the National Securities Clearing Corporation 
(``NSCC'') filed with the Securities and Exchange Commission 
(``Commission'') a proposed rule change (File No. SR-NSCC-00-09) 
pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'').\1\ Notice of the proposal was published in the Federal 
Register on March 9, 2001.\2\ 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. 78s(b)(1).
    \2\ Securities Exchange Act Release No. 44032 (March 3, 2001), 
66 FR 14237.
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I. Description

    NSCC's rules permit NSCC to continue to process certain securities 
undergoing reorganization or issuing dividends and specify how NSCC 
shall handle those issues. However, not all types of reorganizations or 
dividends fit the procedures specifically set forth in the rules. 
Ordinarily, this would require that the affected security be exited 
from the applicable system. Exiting the affected security from the 
applicable system poses a burden on the financial investment community 
when the issue is widely traded.
    The proposed rule change modifies NSCC's Rules and Procedures to 
give NSCC the flexibility to process in the continuous net settlement 
(``CNS''), balance order, or other related system, on an exception 
basis, securities that would not otherwise have been eligible for 
processing to the extent NSCC has the capability to do so. The proposed 
rule change provides that in such circumstance, NSCC would issue a 
notice to its members setting forth how NSCC would process the 
security.

II. Discussion

    The Commission finds that the proposed rule change is consistent 
with the requirements of the Act and the rules and regulations 
thereunder and particularly with the requirements of Section 
17A(b)(3)(F).\3\ Section 17A(b)(3)(F) requires that the rules of a 
clearing agency be designed to promote the prompt and accurate 
clearance and settlement of securities transactions. The Commission 
believes that NSCC's rule change meets this standard because the 
proposed rule change allows NSCC to process otherwise ineligible 
securities in NSCC's CNS system, balance order, or other related 
system, on an exception basis. By providing a means whereby these 
securities, which previously would not have been eligible for 
processing through NSCC, can be processed through and receive the 
benefits of NSCC's highly automated systems, the proposed rule change 
facilitates the prompt and accurate clearance and settlement of such 
securities transactions.
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    \3\ 15 U.S.C. 78q-1(b)(3)(F).
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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(b)(3)(F) 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-00-09) be an hereby is 
approved.


[[Page 29199]]


    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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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 01-13327 Filed 5-25-01; 8:45 am]
BILLING CODE 8010-01-M