[Federal Register Volume 66, Number 207 (Thursday, October 25, 2001)]
[Notices]
[Pages 54045-54046]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-26896]



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SECURITIES AND EXCHANGE COMMISSION

[Release No. 344-44960; File No. SR-NSCC-2001-14]


Self-Regulatory Organizations; National Securities Clearing 
Corporation; Notice of Filing and Immediate Effectiveness of Proposed 
Rule Change Relating to Data Services Only Members

October 19, 2001.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``ACT'') \1\, notice is hereby given that on September 24, 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 would allow NSCC to add a new membership 
category (``Data Services Only Member'') to its rules. Data Services 
Only Members would be able to use certain non-clearing services 
available at NSCC.

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, for Proposed Rule Change

    The proposed rule change creates a new category of member that its 
eligible to access certain limited data and information services of 
NSCC. Such entities will be known as ``Data Services Only Members'' and 
would only be permitted access to those services specifically 
enumerated under NSCC's rules. They would not be permitted to settle 
any transactions through NSCC's facilities.
    Entities seeking access as a Data Services Only Member must only 
meet the requirements of any of clauses (i) through (vi) of Section 1 
of Rule 2; that is, they must be either a registered broker-dealer, 
bank or trust company, registered clearing agency, insurance company or 
entity licensed to sell insurance products, an investment company 
registered under the Investment Company Act of 1940, as amended, or an 
entity that has demonstrated to NSCC's Board of Directors that its 
business and capabilities are such that it could reasonably expect 
material benefit from access to such services in order to be accepted 
as a Data Services Only Member.\3\
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    \3\ Since Data Services Only Members will not be inputting 
transactions for settlement through NSCC's facilities and since NSCC 
will thus not be subject to settlement exposure by these members. 
Data Services Only Members will not be required to make a clearing 
fund deposit, and they will not be subject to NSCC's current 
membership standards.
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    Initially, the only NSCC service that Data Services Only Members 
would be permitted to access the networking service provided as part of 
NSCC's Mutual Fund Services.
    This new membership category is being added at the request of 
NSCC's Fund Members and the Investment Company Institute, in order to 
permit broker-dealers who otherwise do not qualify to be NSCC members 
to obtain access to customers' account data in an automated format.
    NSCC's Rule 52 (Mutual Fund Services) is being amended to permit 
Data Services Only Members to utilize networking only to request and 
transmit mutual fund, investment fund and UIT customer account data. 
(They would not, however, be permitted to settle dividend or other 
networking payments through NSCC.) \4\
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    \4\ Subsequently, it is anticipated that such members would also 
be permitted to transmit data regarding mutual fund purchase and 
redemption transaction, which transactions would be settled outside 
the Corporation's facilities. Such extension would be the subject of 
a separate rule filing.
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    The proposed rule change also makes technical conforming changes to 
other existing rules in order to include references to Data Services 
Only Members. In addition, certain technical corrections are being made 
to update certain cross-references as a result of other recent rule 
changes.\5\
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    \5\ Since recently Addendum M has been deleted (with the 
applicable provisions now being contained in Addendum K), the 
reference to Addendum M in Rule 18 has been corrected to refer to 
Addendum K. In addition, the reference to ``TPA Member'' in Rule 29 
has been deleted as an incorrect reference.
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    A proposed fee schedule for Data Services Only Members' use of 
networking is being developed and will be the subject of a separate 
rule filing.\6\
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    \6\ Until such time as a fee schedule has been agreed upon, this 
limited service will be provided free.
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    The proposed rule change is consistent with the requirements of 
Section 17A of the Act and the rules and regulations thereunder 
applicable to NSCC because the rule change will increase the automation 
of data transmission between fund members, broker-dealers, and other 
entities and will permit greater access to such information, thus 
facilitating the prompt and accurate clearance and settlement of 
securities 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 has, however, worked closely with the 
Investment Company Institute and a representative group of mutual fund 
industry participants in developing the proposed Data Services Only 
Membership category. 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)(iii) of the Act and Rule 19b-4(f)(4) thereunder because the 
proposed rule change effects a change in an existing service that does 
not adversely affect the safeguarding of securities or funds in the 
custody or control of the clearing agency or for which it is 
responsible and it 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,

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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 fix 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-2001-14 and should be submitted by 
November 15, 2001.
    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).

Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 01-26896 Filed 10-24-01; 8:45 am]
BILLING CODE 8010-01-M