[Federal Register Volume 66, Number 168 (Wednesday, August 29, 2001)]
[Notices]
[Pages 45715-45716]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-21790]


-----------------------------------------------------------------------

 SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-44736; File No. SR-NSCC-2001-07]


Self-Regulatory Organizations; National Securities Clearing 
Corporation; Notice of Filing of Proposed Rule Change Relating to Buy-
In Rules and Procedures

August 22, 2001.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on April 27, 2001, the 
National Securities Clearing Corporation (``NSCC'') filed with the 
Securities and Exchange Commission (``Commission'') and on April 30, 
2001, amended 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.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of 
Substance of the Proposed Rule Change

    The proposed rule change (i) further automates the buy-in process 
of CNS positions, (ii) allows for a Notice of Intention to Buy-In 
(``Buy-In Notice'') to be filed on successive days provided that the 
quantity of securities representing the sum of the Buy-In Notices does 
not exceed the member's total long position, and (iii) revises 
Retransmittal Notices to include the identity of the member with the 
long position (``originator'').

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\
---------------------------------------------------------------------------

    \2\ The Commission has modified the text of the summaries 
prepared by NSCC.
---------------------------------------------------------------------------

(A) Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    NSCC is modifying its buy-in rules and procedures to further 
automate and

[[Page 45716]]

improve the processing of buy-ins of CNS positions.\3\ The proposed 
procedures provide that a Buy-In Notice may be filed by an originator 
on successive days provided the succeeding Buy-In Notice does not 
specify a quantity of securities covered by the prior Buy-In Notice and 
the quantity of securities representing the sum of all Buy-In Notices 
does not exceed the member's total long position.\4\
---------------------------------------------------------------------------

    \3\ Proposed changes to NSCC Rule 11, Sections 7(b) and (c); 
NSCC Procedure VII, Section J; and NSCC Procedure X, Section A. 
Also, proposed changes to NSCC Procedure VII, Section E3 to conform 
its language to the language proposed in NSCC Procedure VII, Section 
J.
    \4\ Proposed changes to NSCC Procedure VII, Section J.
---------------------------------------------------------------------------

    The Retransmittal Notice would be revised to include the identity 
of the originator on the Retransmittal Notice so that the member owing 
securities can contact the originator to arrange delivery.\5\ 
Regardless of any agreements that may have been entered into between a 
member owing securities and an originator, unless the originator 
notifies NSCC in a timely manner that its Buy-In Order should not be 
executed, members who receive Retransmittal Notices and do not satisfy 
them assume liability for the loss, if any, which occurs as a result of 
an originator's Buy-In Order.\6\
---------------------------------------------------------------------------

    \5\ Proposed changes to NSCC Rule 11, Section 7(b).
    \6\ Proposed changes to NSCC Procedure X, Section A 1.
---------------------------------------------------------------------------

    The proposed rule change also would require members to 
electronically transmit Buy-In Notices and Buy-In Orders through an 
automated format determined by NSCC thereby eliminating the practice of 
hand and facsimile deliveries. Similarly, NSCC proposes to transmit 
through an automated format Retransmittal Notices to members.\7\
---------------------------------------------------------------------------

    \7\ Proposed changes to NSCC Rule 11, Sections 7(b) and (c).
---------------------------------------------------------------------------

    NSCC has determined that subject to SEC approval it will target 
implementation of the proposed Buy-In changes for the third quarter of 
2001. Members will be advised of the specific date prior to 
implementation.\8\
---------------------------------------------------------------------------

    \8\ As originally filed, the proposed Buy-In changes were to be 
implemented by NSCC on June 8, 2001.
---------------------------------------------------------------------------

    NSCC believes that the proposed rule change is consistent with the 
requirements of Section 17A of the Act \9\ and the rules and 
regulations thereunder applicable to NSCC because it will facilitate 
the prompt and accurate clearance and settlement of buy-in transactions 
by automating and improving the processing of buy-ins.
---------------------------------------------------------------------------

    \9\ 15 U.S.C. 78q-1.
---------------------------------------------------------------------------

(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.\10\ NSCC will notify the Commission of any 
written comments received by NSCC.
---------------------------------------------------------------------------

    \10\ In 1998 the Securities Operations Division of the 
Securities Industry Association formed a committee that studied, 
worked with, and supported NSCC in its enhancement of the its buy-in 
rules and procedures.
---------------------------------------------------------------------------

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 the self-regulatory organization 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, 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, N.W., Washington, D.C. 20459-
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-2001-07 and should be submitted by 
September 19, 2001.

    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority.\11\
---------------------------------------------------------------------------

    \11\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 01-21790 Filed 8-28-01; 8:45 am]
BILLING CODE 8010-01-M