[Federal Register Volume 70, Number 51 (Thursday, March 17, 2005)]
[Notices]
[Pages 13060-13061]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E5-1164]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-51363; File No. SR-NSCC-2005-01]


Self-Regulatory Organizations; National Securities Clearing 
Corporation; Notice of Filing of Proposed Rule Change To Amend Its 
Operational Capability Requirement for Membership

March 11, 2005.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on January 19, 2005, the 
National Securities Clearing Corporation (``NSCC'') filed with the 
Securities and Exchange Commission (``Commission'') 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

    The purpose of this proposed rule change is to amend NSCC's Rules 
and Procedures regarding the operational capability requirement for 
membership.

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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[[Page 13061]]

(A) Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    NSCC is proposing to amend Section I(A)(3) of Addendum B and 
Addendum I, Section I(3) of Addendum Q, and Section I(2) of Addendum R 
of NSCC's Rules and Procedures concerning the operational capability 
requirements of applicants for membership.
    NSCC's current rules specify that an applicant must ``have adequate 
personnel capable of handling transactions with the Corporation [NSCC] 
and adequate physical facilities, books and records and procedures to 
fulfill anticipated commitments to and to meet the operational 
requirements of the Corporation [NSCC].'' NSCC believes that these 
provisions may be interpreted to impose upon NSCC an obligation to make 
determinations with respect to these particular aspects of members' 
operational capability. NSCC ordinarily leaves such determinations to 
the members' designated examining authorities. The operational 
capability that NSCC ordinarily focused upon during the application 
process is the applicant's ability to appropriately communicate with 
NSCC; that is, the applicant's ability to input data to NSCC and to 
receive output from NSCC on a timely and accurate basis.
    NSCC believes that it is appropriate to clarify these sections of 
the rules so that they reflect the practices of NSCC and so that there 
will be no misunderstandings as to their meaning. The text of the 
above-referenced sections of NSCC's Rules would be amended to delete 
references to adequate personnel and adequate facilities, books, and 
records that are extraneous to the ability of applicants to communicate 
with NSCC. In place, these sections will state that an applicant must 
``be able to satisfactorily communicate with the Corporation [NSCC] * * 
*.'' NSCC will continue to retain the right to examine any aspect of an 
applicant's or member's business pursuant to the provisions of NSCC 
Rule 15.
    NSCC believes that the proposed rule change is consistent with the 
requirements of Section 17A of the Act \3\ and the rules and 
regulations thereunder applicable to NSCC because the proposed rule 
change will clarify NSCC's rules and procedures with regard to 
requirements imposed on applicants for membership. By eliminating a 
potential misinterpretation of its membership requirements, NSCC 
believes that it will thereby provide enhanced protections to NSCC and 
its members and will assist NSCC in assuring the safeguarding of funds 
and securities in NSCC's control or for which NSCC is responsible.
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    \3\ 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 any 
impact or impose any burden on competition.

(C) Self-Regulatory Organization's Statement on Comments on the 
Proposed Rule Change Received From Members, Participants or Others

    Written comments relating to the proposed rule change have not yet 
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 thirty-five 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 ninety 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. 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 Number SR-NSCC-2005-01 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-2005-01. 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/legal. 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-2005-01 and should be 
submitted on or before April 7, 2005.

    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority.
Jill M. Peterson,
Assistant Secretary.
[FR Doc. E5-1164 Filed 3-16-05; 8:45 am]
BILLING CODE 8010-01-P