[Federal Register Volume 70, Number 107 (Monday, June 6, 2005)]
[Notices]
[Pages 32859-32860]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E5-2873]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-51753; File No. SR-NSCC-2005-02]


Self-Regulatory Organizations; National Securities Clearing 
Corporation; Order Approving 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

May 27, 2005.

I. Introduction

    On April 4, 2005, the National Securities Clearing Corporation 
(``NSCC'') filed with the Securities and Exchange Commission 
(``Commission'') and on April 12, 2005, amended proposed rule change 
SR-NSCC-2005-02 pursuant to Section 19(b)(1) of the Securities Exchange 
Act of 1934 (``Act'').\1\ Notice of the proposal was published in the 
Federal Register on April 20, 2005.\2\ No comment letters were 
received. For the reasons discussed below, the Commission is approving 
the proposed rule change.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ Securities Exchange Act Release No. 51541 (April 13, 2005), 
70 FR 20609 (April 20, 2005).
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II. Description

    NSCC is enhancing 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.
    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, the delivering and receiving broker-
dealers for annuities or life insurance products will be able to 
communicate information regarding the change of broker-dealer of record 
through the ACAT Service. The ACAT Service will communicate the 
information through a link to a new product of NSCC's Insurance 
Processing Services (``IPS'') called Inforce Transactions (``IFT''). 
IFT

[[Page 32860]]

will relay the information to the issuer insurance company and will 
also provide a means of communicating to the ACAT Service whether the 
insurance company has confirmed, rejected, or requested a modification 
of the change. NSCC will not debit or credit a delivering or receiving 
broker-dealer 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 an account 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.
    NSCC is also making certain technical changes to Rule 50, which 
governs the ACAT Service. For purposes of bringing efficiencies to the 
financial marketplace, NSCC's Rule 50 will cover all asset types 
regardless of whether NSCC has the operational capability to effect the 
transfer of such assets. NSCC either will undertake to cause the asset 
transfer or asset reregistration to occur or will issue a document 
evidencing each delivering firm's obligation and each receiving firm's 
entitlement that will result from the transfer. Such instructions, 
regardless of their form, are commonly referred to as receive and 
deliver instructions. NSCC is adding a definition, ``ACAT Receive and 
Deliver Instruction,'' \3\ relating to these instructions. NSCC also is 
making certain technical changes to the ACATS rule.
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    \3\ As defined in NSCC Rule 1:
    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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III. Discussion

    Section 17A(b)(3)(F) 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.\4\ The Commission 
finds that NCCC's proposed rule change is consistent with this 
requirement because by automating and facilitating the change in 
broker-dealer of record for eligible insurance products associated with 
account transfers, the enhancements to the ACAT Service and the new IFT 
product should reduce processing errors and delays that are typically 
associated with manual processing.
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    \4\ 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, 
that the proposed rule change (File No. SR-NSCC-2005-02) be and hereby 
is approved.

    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. E5-2873 Filed 6-3-05; 8:45 am]
BILLING CODE 8010-01-P