[Federal Register Volume 69, Number 95 (Monday, May 17, 2004)]
[Notices]
[Pages 27964-27965]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-11097]



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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-49685; File No. SR-NSCC-2004-02]


Self-Regulatory Organizations; National Securities Clearing 
Corporation; Notice of Filing and Immediate Effectiveness of Proposed 
Rule Change Relating to the Acceptance of Non-Standard Settlement Input 
for Trade Recording Purposes

May 11, 2004.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on April 7, 2004, 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 purpose of the proposed rule change is to modify NSCC's 
procedures to provide for the acceptance of non-standard settlement 
input (i.e., cash, next day, and sellers-options transactions) from 
members that are either special representatives or self-regulatory 
organizations (``SROs'') submitting on behalf of NSCC members for the 
members'' over-the-counter (``OTC'') equity, regional exchange 
(``RIO''), and correspondent clearing (``CORR'') transactions.

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

    The purpose of the proposed rule change is to modify NSCC's 
Procedures II (Trade Comparison Service) and IV (Special Representative 
Service) to provide for the acceptance by NSCC of non-standard 
settlement input (i.e., cash, next day, and sellers-option 
transactions) from members that are either special representatives or 
SROs submitting on behalf of NSCC members for the members' OTC equity, 
RIO, and CORR transactions.\3\ These transactions will not settle 
through NSCC. They must be settled directly between the parties.\4\
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    \3\ Cash, next day, and sellers-option trades in foreign 
securities will not be accepted for reporting by NSCC as reflected 
in revised NSCC Procedure II.C.2.
    \4\ At this time, NSCC will only accept locked-in trade input 
for trade recording purposes. NSCC will not accept transaction input 
from members for trade comparison purposes. Data submitted by 
members that are special representatives is submitted as lock-in 
trade data, as provided in NSCC Rule 39. Members should also note 
that because these non-standard settlement transactions will be 
settled outside of NSCC, a non-standard settling trade and its 
related corresponding clearing transaction will not be netted. 
Rather these transactions will result in two separate transactions 
that must be settled separately by the related parties.
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    NSCC provides the same service for New York Stock Exchange 
(``NYSE'') and American Stock Exchange (``Amex'') equity securities and 
will offer a similar service for cash and next day settling 
transactions in fixed income securities through NSCC's real-time trade 
matching system (``RTTM'').\5\
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    \5\ Securities Exchange Act Release No. 49294 (February 23, 
2004), 69 FR 9668 (March 1, 2004) [File No. SR-NSCC-2003-15] (order 
approving NSCC's implementation of RTTM for fixed income 
securities). RTTM will commence receiving non-standard settlement 
input for comparison purposes in June 2004.
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    NSCC has determined to provide this additional service at the 
request of its participants. Like the current service provided for NYSE 
and Amex equity securities and the RTTM service for fixed income 
securities transactions, members will settle all non-standard equity 
OTC, RIO, and CORR transactions outside of NSCC. This should ensure 
that there is no increased risk to NSCC or its participants. NSCC 
believes that accepting such non-standard settlement input will provide 
increased efficiencies for members by enabling them to further automate 
their processes for such transactions.
    The proposed rule change is consistent with Section 17A(b)(3)(F) of 
the Act \6\ and the rules and regulations thereunder because it will 
allow NSCC to provide increased efficiencies to participants with 
regard to their automation of processes for non-standard OTC, RIO, and 
CORR transactions and thereby will promote the prompt and accurate 
clearance and settlement of securities transactions.
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    \6\ 15 U.S.C. 77(q-1)(b)(3)(F).
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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 has advised its members of the proposed 
changes in its Important Notice A5678, P&S5338 
(February 18, 2004). 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 took effect upon filing pursuant to 
Section 19(b)(3)(A)(iii) of the Act \7\ and Rule 19b-4(f)(4) \8\ 
thereunder because the proposed rule effects a change in an existing 
service of NSCC that does not adversely affect the safeguarding of 
securities or funds in the custody or control of NSCC or for which it 
is responsible and does not significantly affect the respective rights 
or obligations of NSCC 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, or otherwise in furtherance of the 
purposes of the Act.
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    \7\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \8\ 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. Comments may be submitted by any of 
the following methods:
    Electronic comments:
     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml) or
     Send an E-mail to [email protected]. Please include 
File

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Number SR-NSCC-2004-02 on the subject line.
    Paper comments:
     Send paper comments in triplicate to Jonathan G. Katz, 
Secretary, Securities and Exchange Commission, 450 Fifth Street, NW., 
Washington, DC 20549-0609.
    All submissions should refer to File Number SR-NSCC-2004-02. 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, please use only one method. The Commission will post all 
comments on the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). 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 
and on NSCC's Web site at http://www.nscc.com. All comments received 
will be posted without change. The Commission does not edit personal 
identifying information from submissions. You should submit only 
information that you wish to make available publicly. All submissions 
should refer to File Number SR-NSCC-2004-02 and should be submitted on 
or before June 7, 2004.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\9\
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    \9\ 17 CFR 200.30-3(a)(12).
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Jill M. Peterson,
Assistant Secretary.
[FR Doc. 04-11097 Filed 5-14-04; 8:45 am]
BILLING CODE 8010-01-P