[Federal Register Volume 75, Number 235 (Wednesday, December 8, 2010)]
[Notices]
[Pages 76515-76517]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-30880]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-63404; File No. SR-NSCC-2010-16]


Self-Regulatory Organizations; National Securities Clearing 
Corporation; Notice of Filing of Proposed Rule Change To Amend 
Procedure II of the NSCC Rules & Procedures To Modify the Money 
Tolerance Comparison Provisions for Fixed Income Securities

December 1, 2010.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'') \1\ and Rule 19b-4 thereunder \2\ notice is hereby given that 
on November 19, 2010, the National Securities

[[Page 76516]]

Clearing Corporation (``NSCC'') filed with the Securities and Exchange 
Commission (``Commission'') the proposed rule change as described in 
Items I and II below, which items have been prepared primarily by 
NSCC.\3\ The Commission is publishing this notice to solicit comments 
on the proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ The text of the proposed rule change is attached as Exhibit 
5 to NSCC's filing and is available at http://www.dtcc.com/downloads/legal/rule_filings/2010/nscc/2010-16.pdf.
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I. Self-Regulatory Organization's Statement of the Terms of the 
Substance of the Proposed Rule Change

    The purpose of this proposed rule change is to amend Procedure II 
(``Trade Comparison and Recording Service'') of the NSCC Rules & 
Procedures to modify the money tolerance comparison provisions for 
fixed income securities.

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.\4\
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    \4\ 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

Trade Comparison and Recording Service
    NSCC provides a Real-Time Trade Matching (``RTTM'') service for 
trade input and comparison of corporate bond, municipal bond, and unit 
investment trust (collectively ``CMU'') fixed income securities. 
Matching requires that the two trade counterparties submit certain 
required trade details to RTTM that either match exactly or fall within 
predefined parameters. If the trade details are matched within RTTM, a 
valid and binding contract between the submitting trade parties 
results. If the purchaser and seller submit trade data that matches in 
all required aspects except for trade value, NSCC uses the seller's 
money (referred to as ``seller's value'') as the trade value and deems 
the trade compared as long as the difference between the seller's 
submitted trade value and the buyer's submitted trade value falls 
within prescribed dollar values as more fully described below.
    Currently, Procedure II of NSCC's Rules & Procedures provides two 
scenarios in which trades are compared using the seller's value. In the 
first scenario, NSCC will use the seller's value to match a trade 
submitted prior to the cut-off time for intraday comparison if the 
respective trade parties have submitted contract amounts that are 
within (1) a net $2 difference for trades of $1 million or less and (2) 
$2 per million for trades greater than $1 million. In the second 
scenario, NSCC will also use the seller's value during the end-of-day 
enhanced comparison process to match a trade that remained uncompared 
after the intraday comparison process if the contract amounts are 
within (i) a net $10.00 difference for trades of $100,000 or less and 
(ii) $.10 per $1,000 for trades greater than $100,000.
Proposed Amendments to NSCC Procedure II
    Since the establishment of these CMU money tolerance amounts in 
1995, member firms have significantly improved the timing and accuracy 
of fixed income trade reporting. In 2005, the Municipal Securities 
Rulemaking Board (``MSRB'') instituted a requirement that firms report 
trades in municipal securities to the RTTM engine within 15 minutes. 
This, in turn, required member firms to improve their reporting 
accuracy and technology. As a result, RTTM is matching a greater 
percentage of CMU trades upon initial trade input from the buyer and 
seller.
    NSCC believes that because of these improvements, the current money 
tolerance is wider than needed. NSCC believes that best practices 
dictates that the money tolerance be modified to reflect current 
business conditions. Accordingly, NSCC is proposing to amend the CMU 
money tolerance for the second scenario in which trades are compared 
using the seller's value. Transactions that remain uncompared after the 
intraday comparison process shall be deemed compared during the end-of-
day enhanced comparison process if the seller's value has a net $10.00 
difference for trades of $250,000 or less and $0.04 per $1,000 for 
trades greater than $250,000. NSCC members will be advised of the 
implementation date through the issuance of an NSCC Important Notice.
    Section 17A(b)(3)(F) of the Act requires, among other things, that 
the rules of a clearing agency be designed to promote the prompt and 
accurate clearance and settlement of securities transactions.\5\ The 
proposed rule change is consistent with the requirements of the Act and 
the rules and regulations thereunder applicable to NSCC because it 
should enhance the efficiency of NSCC's clearance and settlement 
processes and should therefore better enable NSCC to facilitate the 
prompt and accurate clearance and settlement of securities 
transactions.
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    \5\ 15 U.S.C. 78q-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 would 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 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 forty-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 or disapprove the 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-2010-16 on the subject line.

Paper Comments

     Send paper comments in triplicate to Elizabeth M. Murphy, 
Secretary,

[[Page 76517]]

Securities and Exchange Commission, 100 F Street, NE., Washington, DC 
20549-1090.

All submissions should refer to File Number SR-NSCC-2010-16. 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 Web site viewing and 
printing in the Commission's Public Reference Section, 100 F Street, 
NE., Washington, DC 20549-1090, on official business days between the 
hours of 10 a.m. and 3 p.m. Copies of such filings will also be 
available for inspection and copying at the principal office of NSCC 
and on NSCC's Web site at http://www.dtcc.com/downloads/legal/rule_filings/2010/nscc/2010-16.pdf. 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-2010-16 and should be submitted on or before 
December 29, 2010.

    For the Commission by the Division of Trading and Markets, 
pursuant to delegated authority.\6\
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    \6\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-30880 Filed 12-7-10; 8:45 am]
BILLING CODE 8011-01-P