[Federal Register Volume 70, Number 75 (Wednesday, April 20, 2005)]
[Notices]
[Pages 20609-20611]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E5-1849]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-51541; File No. SR-NSCC-2005-02]


Self-Regulatory Organizations; National Securities Clearing 
Corporation; Notice of Filing of Proposed Rule Change To Enhance 
Automated Customer Account Transfer Service To Permit the Automated 
Notification of Changes to the Broker-Dealer of Record for Applicable 
Insurance Products

April 13, 2005.
    Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on April 4, 2005, the 
National Securities Clearing Corporation (``NSCC'') filed with the 
Securities and Exchange Commission (``Commission'') and on April 12, 
2005, 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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[[Page 20610]]

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    NSCC is seeking to enhance its Automated Customer Account Transfer 
Service (``ACAT Service'') to permit the automated notification of 
changes to the broker-dealer of record for applicable insurance 
products.

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

    Information regarding the broker-dealer of record for an annuity or 
life insurance product is maintained by the insurance company that is 
the issuer of the product. Currently there is no mechanism within the 
ACAT Service that can automate notification of changes to the broker-
dealer of record. Annuity and life insurance products have a manually-
intensive processing stream connected with account transfers relative 
to the automated processing of assets such as equity and debt 
securities and mutual fund shares.
    Under the proposed rule change, the delivering and receiving 
broker-dealers for annuities or life insurance products would be able 
to communicate information regarding the change of broker-dealer of 
record through the ACAT Service. The ACAT Service would communicate the 
information through a link to a new product of NSCC's Insurance 
Processing Services (``IPS'') called Inforce Transactions (``IFT''). 
IFT would relay the information to the issuer insurance company and 
would also communicate to the ACAT Service whether the insurance 
company had confirmed, rejected, or requested a modification of the 
change. NSCC would not debit or credit a receiving or delivering firm 
for the value of any applicable insurance product that is part of a 
customer account transfer.
    In order for the receiving and delivering broker-dealers and the 
issuer insurance company to be able to effect the change through the 
ACAT Service, the insurance company must participate in IPS, the 
receiving broker-dealer must participate in the ACAT Service and IPS, 
and the delivering broker-dealer must participate in the ACAT Service.
    Although the proposed rule change relates to the ACAT Service as it 
interfaces with IPS, NSCC is also proposing to make certain technical 
changes to the ACAT Service rule. For purposes of bringing efficiencies 
to the financial marketplace, NSCC's Rule 50, which governs the ACAT 
Service, would cover all asset types regardless of whether NSCC has the 
operational capability to effect the transfer of such assets. As 
proposed, NSCC either would undertake to cause the asset transfer or 
asset reregistration to occur or would issue a document evidencing each 
delivering firm's obligation and each receiving firm's entitlement that 
would result from an ACAT Service transfer. Such instructions, 
regardless of their form, are commonly referred to as receive and 
deliver instructions, and NSCC would add a definition, ``ACAT Receive 
and Deliver Instruction,'' \3\ relating to there instructions. NSCC is 
also proposing certain technical changes to the ACATS rule.
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    \3\ As proposed, ``ACAT Receive and Deliver Instruction'' would 
be defined in NSCC Rule 1 as follows:
    ``The term `ACAT Receive and Deliver Instruction' shall mean 
such document, form, file, report or other information issued by the 
Corporation [NSCC] to a Member or to a QSD (as defined in Rule 50), 
on behalf of such QSD's participants, which identifies Automated 
Customer Account Transfer receive and deliver obligations. ''
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    NSCC believes 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 automate and 
facilitate the change in broker-dealer of record for eligible insurance 
products associated with account transfers, which can be expected to 
reduce processing errors and delays that are typically associated with 
manual processes. This fosters cooperation and coordination with 
persons engaged in account transfers and furthers the protection of 
investors and the public interest.
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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 impose a 
burden on competition not necessary or appropriate in furtherance of 
the purposes of the Act.

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

    NSCC has worked closely with an industry business advisory group in 
developing the enhancements that are the subject of this rule filing. 
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, as amended, 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-2005-02 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-2005-02. 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

[[Page 20611]]

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 filings 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-2005-02 and should be submitted on or before May 11, 2005.

    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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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. E5-1849 Filed 4-19-05; 8:45 am]
BILLING CODE 8010-01-P