[Federal Register Volume 67, Number 55 (Thursday, March 21, 2002)]
[Notices]
[Pages 13200-13201]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-6828]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-45560; File No. SR-NSCC-2001-18]


Self-Regulatory Organizations; National Securities Clearing 
Corporation; Notice of Filing and Immediate Effectiveness of a Proposed 
Rule Change Permitting Data Services Only Members to Access Fund/Serv

March 14, 2002.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on December 26, 2001, the 
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 
persons.
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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 Data Services Only Members to 
access Fund/Serv to process non-NSCC settling mutual fund purchase and 
redemption transactions and related instructions.

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 such 
statements.\2\
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    \2\ The Commission has modified parts of these statements.
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(A) Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    Data Services Only Members are permitted access only to those 
services which are specifically enumerated under NSCC's Rules and which 
do not involve money settlement through NSCC's facilities. The proposed 
rule permits Data Services Only Members to access Fund/Serv, provided 
as part of NSCC's Mutual Fund Services, to process non-NSCC settling 
mutual fund purchase and redemption transactions and related 
instructions. The proposed rule also extends this processing only 
functionality to those Settling Members and Fund Members who wish to 
utilize it.
    The ability of Data Services Only Members and Settling Members to 
utilize Fund/Serv for processing only is being added at the request of 
NSCC Fund Members and the Investment Company Institute (``ICI'') in 
order to permit broker-dealers and their financial planner 
representatives to be able to transmit transaction data to funds in an 
automated format. Such transmissions are currently being handled 
manually which is extremely time-intensive.\3\
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    \3\ Pursuant to Securities Exchange Act Release No. 44960 
(October 19, 2001), 66 FR 56383 (October 25, 2001) [File No. SR-
NSCC-2001-14], Data Services Only Members may utilize Mutual Fund 
Services' Networking in order to access and make inquiries regarding 
their customer accounts in an automated format. This inquiry 
functionality utilizes a communications-translation interface (in 
Extensible Markup Language or XML) that will also be used to 
transmit transaction data to Fund/Serv that will settle on a 
participant to participant basis. This functionality and the XML 
communications interface used to transmit transaction data to Fund/
Serv will be collectively marketed to participants under the name 
Fund/SPEED. The proposed Fund/SPEED fees, as well as the fees for 
transactions submitted through Fund/Serv that settle on a 
participant to participant basis, will be the subject of a separate 
rule filing. Until such time, these services will be provided 
without charge.
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    Accordingly, NSCC's Rule 52 (Mutual Fund Services), Section A 
(Fund/Serv) is being amended (1) to make Data Services Only Members 
eligible to utilize the service for the limited purpose of processing 
(but not settling through NSCC) transactions and related instructions 
and (2) to enable Settling Members to process transactions and related 
instructions through Fund/Serv that will settle outside of NSCC. 
Historically, Fund Members have always had the right to designate 
parameters within which their orders will be processed. Clarifying 
language is now being added to set forth this right explicitly. 
Accordingly, the functionality allowing Data Services Only Members and 
Settling Members to input transactions for Fund/Serv processing that 
will settle outside of NSCC will be available to the extent those 
parameters are selected by Fund Members.
    This rule change will increase automation of mutual fund 
transaction processing between Fund Members, broker-dealers, and other 
entities and thus facilitates the prompt and accurate clearance and 
settlement of securities transactions. The proposed rule change is 
therefore consistent with the requirements of the Act and the rules and 
regulations thereunder.

(B) Self-Regulatory Organization's Statement on Burden on Competition

    NSCC does not believe that the proposed rule change will impact 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 ICI 
and a representative group of mutual fund industry participants in 
developing this functionality, and all concur with the proposed 
changes. NSCC will notify the Commission of any written comments it 
receives.

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 \4\ and Rule 19b-4(f)(4) \5\ promulgated 
thereunder because the proposal effects a change in an existing service 
of NSCC that (A) does not adversely affect the safeguarding of 
securities or funds in the custody or control of NSCC or for which it 
is responsible and (B) does not significantly affect the respective 
rights or obligations of NSCC or persons using the service because the 
proposed rule change will allow entities to process transactions on an 
automated basis that are currently processed manually and does not 
involve the settlement of funds through NSCC. At any time within sixty 
days of the filing of the proposed 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,

[[Page 13201]]

or otherwise in furtherance of the purposes of the Act.
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    \4\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \5\ 17 CFR 240.19b-4(f)(4).
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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 will also be available for inspection 
and copying at the principal office of the NSCC. All submissions should 
refer to the File No. SR-NSCC-2001-18 and should be submitted by April 
11, 2002.

    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority.\6\
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    \6\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 02-6828 Filed 3-20-02; 8:45 am]
BILLING CODE 8010-01-P