[Federal Register Volume 66, Number 152 (Tuesday, August 7, 2001)]
[Notices]
[Pages 41287-41288]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-19702]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-44635; File No. SR-NSCC-2001-10]


Self-Regulatory Organizations; National Securities Clearing 
Corporation; Notice of Filing and Immediate Effectiveness of Proposed 
Rule Change Relating to Enhancing the Insurance Processing Service

August 1, 2001.
    Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on June 5, 2001, 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. The Commission is publishing this notice to solicit 
comments on the proposed rule change from interested parties.
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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 an enhancement to the 
Insurance Processing Service (``IPS''). The enhancement will allow 
members and insurance carrier members of NSCC to transmit data and 
information to each other regarding their state licensing and 
appointments activities and to settle payments between themselves 
relating thereto.

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 these 
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

    The purpose of the proposed rule change is to enhance IPS to allow 
members and insurance carrier members of NSCC to transmit data and 
information to each other regarding their state licensing and 
appointments activities and to settle payments between themselves 
related thereto.
    A license is an authorization from a state insurance department 
permitting the licensee to sell insurance under the guidelines 
established by the insurance laws of that state. Insurance carriers 
sponsor certain agents (also known in the industry as producers) to be 
licensed by particular states. The enhancement to IPS related to 
licensing (``Licensing enhancement'') will allow insurance distributors 
who are members to request insurance carrier members to sponsor 
licenses for agents. Licensing will allow members and insurance carrier 
members to electronically exchange standardized relevant information 
about the agent. The insurance carrier members can then use the 
information (to the extent permitted by applicable state law) to 
sponsor licenses with state insurance departments. The contacts between 
insurance carrier members and state insurance departments will not be 
made through NSCC. In addition, the Licensing enhancement will allow 
insurance carrier members and members to communicate information to 
each other regarding the status of a license request.
    An appointment is an authorization from an insurance carrier 
permitting the appointee to sell the products of that particular 
carrier in a particular state. Appointments are periodically renewed. 
The enhancement to IPS related to appointments and renewals and 
terminations thereof (``Appointments'') will allow insurance 
distributors who are members to request insurance carrier members to 
appoint agents to sell products in a particular state, renew and 
terminate appointments, and change demographic information relating to 
agents (collectively ``appointment activity''). Appointments will also 
allow members and insurance carrier members to electronically exchange 
standardized, relevant information about the agents. The insurance 
carrier members can use the information (to the extent permitted by 
applicable state law) to help them carry out appointment activity with 
the relevant state insurance departments. The contacts between 
insurance carrier members and state insurance departments will not be 
made through NSCC. In addition, the appointments enhancement will allow 
insurance carrier members and members to communicate information to 
each other regarding the status of a request relating to appointment 
activity.
    The processing of data and information described above will be 
substantially similar to the processing of data and information that 
IPS carries out today.
    There will be money settlements associated with Licensing and 
Appointments. For example, insurance distributors who are members may 
from time to time reimburse insurance carrier members for licensing 
fees that the insurance carrier members pay to state insurance 
departments with respect to agents. The processing of settlement of 
payments for licensing and appointments will be similar to IPS's 
processing of settlement payments for its Applications (APP) and 
Subsequent Premiums (SUB) functions.
    NSCC's Rule 57, Sec. 1 states that NSCC ``may provide a service to 
enable Members and Insurance Carrier members to (i) transmit such data 
and

[[Page 41288]]

information as the Corporation may determine from time to time * * * 
and (ii) settle payments relating to insurance products between 
themselves.'' The Licensing and Appointments enhancements fall within 
this description.
    Licensing and Appointments can be used by members and insurance 
carrier members for the following lines of insurance: Disability/
health, fixed annuity, life, long-term care, pre-need (funeral), 
variable annuity, and variable life. The processing for data and 
information and the settlement of payments with respect to all of these 
lines of business will be substantially similar.
    The proposed rule change is consistent with Section 17A of the Act 
and the rules and regulations thereunder since it will facilitate the 
prompt and accurate processing of transactions.

(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

    The foregoing rule change has become effective pursuant to Section 
19(b)(3)(A) of the Act and Rule 19b-4(f)(4) thereunder because the 
proposed rule change is effecting a change in an existing service of a 
registered clearing agency that does not adversely affect the 
safeguarding of securities or funds in the custody or control of 
securities of the clearing agency or for which it is responsible and 
does not significantly affect the respective rights or obligations of 
the clearing agency or persons using the service. At any time within 
sixty days of the filing of such rule change, the Commission may 
summarily abrogate such rule change if it appears to the Commission 
that such action is necessary or appropriate in the public interest, 
for the protection of investors, or otherwise in furtherance of the 
purposes of the Act.

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 submissions 
should file six copies thereof with the Secretary, Securities and 
Exchange Commission, 450 Fifth Street, NW., Washington, DC 20549-0609. 
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 Section, 450 Fifth street, NW., 
Washington, DC 20549. Copies of such filing also will be available for 
inspection and copying at the principal office of NSCC. All submissions 
should refer to File No. SR-NSCC-2001-10 and should be submitted by 
August 28, 2001.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 01-19702 Filed 8-6-01; 8:45 am]
BILLING CODE 8010-01-M