[Federal Register Volume 69, Number 45 (Monday, March 8, 2004)]
[Notices]
[Pages 10789-10790]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-5116]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-49353; File No. SR-NSCC-2003-09]


Self-Regulatory Organizations; National Securities Clearing 
Corporation; Notice of Filing of Proposed Rule Change to Amend the 
Procedure for Determining Intraday Mark-to-the-Market Payments

March 2, 2004.
    Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on May 20, 2003, the National 
Securities Clearing Corporation (``NSCC'') filed with the Securities 
and Exchange Commission (``Commission'') and on October 20, 2003, 
amended the proposed rule change 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

    NSCC is proposing to amend Procedure XV to give NSCC more 
flexibility in determining the intraday mark-to-the-market amount it 
will collect from a member for unsettled positions.

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

    NSCC Rule 15 (Financial Responsibility and Operational Capability) 
provides that NSCC may obtain such adequate assurances of a member's 
financial responsibility and operational capability as NSCC may at any 
time or from time to time deem necessary or advisable in order to 
protect NSCC, Settling Members, Municipal Comparison Only Members, Fund 
Members, Insurance Carrier Members, creditors, or investors.
    Currently, Procedure XV (Clearing Fund Formula and Other Matters) 
describes the criteria for determining which securities meet 
classifications for additional mark-to-the-market payments for high 
risk/volatile issues and provides specific formulas that may be used to 
determine additional deposit amounts. Generally, NSCC assesses on an 
intraday basis an additional mark-to-the-market charge to a member when 
the member maintains a position in a security where the intraday 
exposure to NSCC is in excess of 10% of the member's excess net 
capital. In addition, with respect to illiquid unsettled positions, 
NSCC may request additional collateral if the member's net unsettled 
position in any one security is greater than 25% of the security's 
average daily volume.

[[Page 10790]]

    NSCC is replacing the formulas currently reflected in its 
procedures with a more generalized provision to give NSCC the 
flexibility to determine what amount, if any, should be collected based 
on conditions that exist at that time.\3\ In addition, the reference to 
the authority which permits this charge is being corrected to reflect 
NSCC Rule 15, section 4.
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    \3\ Additional factors that NSCC may use in determining intraday 
mark-to-the-market requirements include but are not limited to (1) 
percent of total security float, (2) average daily security volume, 
(3) position size (quantity and value), (4) portfolio concentration, 
and (5) industry/sector concentration.
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    NSCC believes that the proposed rule change is consistent with the 
requirements of section 17A of the Act \4\ and the rules and 
regulations thereunder applicable to NSCC because it will assure the 
safeguarding of funds and securities for which it is responsible by 
permitting NSCC to more appropriately collect collateral to cover its 
exposure from its members' unsettled positions.
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    \4\ 15 U.S.C. 78q-1.
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(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

    Within 35 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 90 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, NW., Washington, DC 20549-0609. 
Comments may also be submitted electronically at the following e-mail 
address: [email protected]. All comment letters should refer to 
File No. SR-NSCC-2003-09. This file number should be included on the 
subject line if e-mail is used. To help the Commission process and 
review your comments more efficiently, comments should be sent in 
either hardcopy or by e-mail but not by both methods. 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-2003-09 and should 
be submitted by March 29, 2004.

    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority.\5\
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    \5\ 17 CFR 200.30-3(a)(12).
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Jill M. Peterson,
Assistant Secretary.
[FR Doc. 04-5116 Filed 3-5-04; 8:45 am]
BILLING CODE 8010-01-P