[Federal Register Volume 69, Number 45 (Monday, March 8, 2004)]
[Notices]
[Pages 10790-10791]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-5117]


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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-49352; File No. SR-NSCC-2003-03]


Self-Regulatory Organizations; The National Securities Clearing 
Corporation; Order Granting Approval of a Proposed Rule Change Relating 
to Execution Time for CNS Buy-Ins

March 2, 2004.
    On March 24, 2003, the National Securities Clearing Corporation 
(``NSCC'') filed with the Securities and Exchange Commission 
(``Commission'') and on March 14, 2003, amended proposed rule change 
File No. SR-NSCC-2003-03 pursuant to section 19(b)(1) of the Securities 
Exchange Act of 1934 (``Act'').\1\ Notice of the proposed rule change 
was published in the Federal Register on January 16, 2004.\2\ No 
comment letters were received. For the reasons discussed below, the 
Commission is granting approval of the proposed rule change.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ Securities Exchange Act Release No. 49061 (January 12, 
2004), 69 FR 2641 (January 16, 2004).
---------------------------------------------------------------------------

I. Description

    The purpose of the proposed rule change is to modify NSCC 
Procedures VII.J. ``CNS Accounting Operation, Recording of CNS Buy-
Ins'' and X.A.1. ``Execution of Buy-Ins, CNS System, Equity Securities 
and Corporate Debt Securities'' with regard to the execution time of 
CNS buy-ins. Except with respect to securities subject to a voluntary 
corporate reorganization, a member having a long CNS position at the 
end of any day may submit to NSCC a notice of intention to buy-in 
(``buy-in notice'') specifying a quantity of securities (not exceeding 
such long CNS positions) the member intends to buy-in (``buy-in 
position''). The day the CNS buy-in notice is submitted is referred to 
as N, and N+1 and N+2 refer to the succeeding days. Each day commences 
in the evening and includes both an evening and daytime allocation. The 
CNS buy-in position is given high priority for allocation through N+2.
    Pursuant to NSCC Procedure VII, if a CNS buy-in position is not 
satisfied at the end of the day cycle on N+2, the CNS buy-in may be 
executed. In effect, members have from the completion of the day cycle 
on N+2 to the close of the markets to execute the CNS buy-in. 
Operationally, as the day cycle generally completes at 3:10 p.m. 
eastern standard time (``e.s.t.''), participants face a narrow 
timeframe within which they may execute CNS buy-ins. In the event that 
settlement and recycle times are extended or delayed, that window of 
time is further reduced.
    At the request of participants and after consultation with the 
Securities Industry Association Buy-In Committee, NSCC is modifying 
Procedures VII and X to permit the execution of CNS buy-ins beginning 
at 3 p.m. e.s.t. or at such time as established by NSCC because of 
market events (e.g., days the marketplaces close early). NSCC will 
advise participants of any earlier execution time through an important 
notice five business days in advance. The change in time is not a 
requirement for executions of buy-ins but is to give

[[Page 10791]]

participants the ability to execute CNS buy-ins in a more efficient 
manner.

II. Discussion

    Section 17A(b)(3)(F) \3\ of the Act requires that the rules of a 
clearing agency be designed to promote the prompt and accurate 
clearance and settlement of securities transactions. By allowing NSCC 
to establish an earlier and standard timeframe for CNS buy-ins, the 
proposed rule change provides NSCC members with a longer and consistent 
time period in which to execute CNS buy-ins to satisfy their CNS long-
positions. As such, the proposed rule change is consistent with NSCC's 
obligation to facilitate the prompt and accurate clearance and 
settlement of securities transactions. Therefore, the Commission finds 
that NSCC's proposed rule change is consistent with its obligations 
under section 17A(b)(3)(F) of the Act.
---------------------------------------------------------------------------

    \3\ 15 U.S.C. 78q-1(b)(3)(F).
---------------------------------------------------------------------------

III. Conclusion

    On the basis of the foregoing, the Commission finds that the 
proposed rule change is consistent with the requirements of the Act and 
in particular section 17A of the Act and the rules and regulations 
thereunder.
    It is therefore ordered, pursuant to section 19(b)(2) of the 
Act,\4\ that the proposed rule change (File No. SR-NSCC-2003-03) be and 
hereby is approved.
---------------------------------------------------------------------------

    \4\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\5\
---------------------------------------------------------------------------

    \5\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Jill M. Peterson,
Assistant Secretary.
[FR Doc. 04-5117 Filed 3-5-04; 8:45 am]
BILLING CODE 8010-01-P