[Federal Register Volume 70, Number 81 (Thursday, April 28, 2005)]
[Notices]
[Pages 22167-22168]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E5-2003]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-51600; File No. SR-NSCC-2005-01]


Self-Regulatory Organizations; National Securities Clearing 
Corporation; Order Granting Approval of a Proposed Rule Change To Amend 
Its Operational Capability Requirement for Membership

April 22, 2005.

I. Introduction

    On January 19, 2005, the National Securities Clearing Corporation 
(``NSCC'') filed with the Securities and Exchange Commission 
(``Commission'') proposed rule change File No. SR-NSCC-2005-01 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 March 17, 2005.\2\ No comment letters were 
received. For the reasons discussed below, the Commission is now 
granting approval of the proposed rule change.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ Securities Exchange Act Release No. 51363 (March 11, 2005), 
70 FR 13060.
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II. Description

    The proposed rule change amends Section I.A.3. of Addendum B, 
Section I.A.3. of 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 
applicants' and members' operational capability. NSCC ordinarily leaves 
such determinations to the applicants' and 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 
its Rules and Procedures 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 and Procedures 
will 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.

III. Discussion

    Section 17A(b)(3)(F) of the Act requires among other things that 
the rules of a clearing agency be designed to assure the safeguarding 
of securities and funds in its custody or control or for which it is 
responsible.\3\ The Commission finds that NSCC's proposed rule change 
is consistent with this requirement because it eliminates a

[[Page 22168]]

potential misunderstanding with regard to its membership requirements 
and therefore helps NSCC better protect itself and its members from 
undue risk.
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    \3\ 15 U.S.C. 78q-1(b)(3)(F).
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IV. 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-2005-01) be and 
hereby is approved.
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    \4\ 15 U.S.C. 78s(b)(2).

    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. E5-2003 Filed 4-27-05; 8:45 am]
BILLING CODE 8010-01-P