[Federal Register Volume 82, Number 6 (Tuesday, January 10, 2017)]
[Notices]
[Pages 3032-3034]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-00223]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-79739; File No. SR-NSCC-2016-009]


Self-Regulatory Organizations; National Securities Clearing 
Corporation; Notice of Filing and Immediate Effectiveness of Proposed 
Rule Change To Adjust Fees Related to Insurance and Retirement 
Processing Services

January 4, 2017.
    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 December 28, 2016, National Securities Clearing Corporation 
(``NSCC'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change as described in Items I, II 
and III below, which Items have been prepared by the clearing agency. 
NSCC filed the proposed rule change pursuant to Section 19(b)(3)(A) of 
the Act \3\ and Rule 19b-4(f)(2) thereunder.\4\ The proposed rule 
change was effective upon filing with the Commission. The Commission is 
publishing this notice to solicit comments on the proposed rule change 
from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 15 U.S.C. 78s(b)(3)(A).
    \4\ 17 CFR 240.19b-4(f)(2).

---------------------------------------------------------------------------

[[Page 3033]]

I. Clearing Agency's Statement of the Terms of Substance of the 
Proposed Rule Change

    The proposed rule change consists of modifications to Addendum A 
(Fee Structure) of Rules & Procedures (``Rules'') of NSCC in order to 
implement a tiered pricing structure for the Settlement Processing for 
Insurance (``STL'')[hairsp]\SM\ feature of NSCC's Insurance and 
Retirement Processing Services (``I&RS''), as described below.\5\
---------------------------------------------------------------------------

    \5\ Capitalized terms not defined herein are defined in the 
Rules, available at http://www.dtcc.com/~/media/Files/Downloads/
legal/rules/nscc_rules.pdf.
---------------------------------------------------------------------------

II. Clearing Agency's Statement of the Purpose of, and Statutory Basis 
for, the Proposed Rule Change

    In its filing with the Commission, the clearing agency 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. The clearing agency has prepared summaries, 
set forth in sections A, B, and C below, of the most significant 
aspects of such statements.

(A) Clearing Agency's Statement of the Purpose of, and Statutory Basis 
for, the Proposed Rule Change

1. Purpose
    The proposed rule change would adjust the fee schedule associated 
with NSCC's I&RS.\6\ Specifically, NSCC proposes to implement a tiered 
pricing structure for the STL feature.\7\ Currently, NSCC charges a 
flat rate of $0.65 per transaction per side for the STL feature.\8\ The 
proposed tiered structure would reduce the monthly fees for increased 
STL volumes. Therefore, under the proposed tiered pricing structure, a 
monthly transaction volume between 0-20,000 items would be charged a 
fee of $0.65 per transaction, per side; a monthly transaction volume 
between 20,001-30,000 items would be charged a fee of $0.35 per 
transaction, per side; a monthly transaction volume between 30,001-
40,000 items would be charged a fee of $0.25 per transaction, per side; 
and a monthly transaction volume over 40,000 items would be charged a 
fee of $0.15 per transaction, per side. As with all I&RS products, 
volume would be calculated on an aggregate basis among qualified 
insurance carrier members or qualified distributor members, as 
applicable.\9\
---------------------------------------------------------------------------

    \6\ I&RS is a suite of non-guaranteed services that enables NSCC 
members using I&RS to exchange information and settle payments with 
respect to insurance products, retirement plans or programs, and 
other benefit plans or programs. See Rule 57 (Insurance and 
Retirement Processing Services), supra note 5.
    \7\ STL automates and centralizes the settlement of money/
funding activities between insurance companies and their 
intermediaries, such as broker-dealers, banks, and insurance 
agencies, that distribute participating insurance products. STL is a 
service within the In Force Transaction suite of services within 
I&RS. See Section 9 of Rule 57 (Insurance and Retirement Processing 
Services), supra note 5.
    \8\ See Section IV(K)(3), TIER 4 of Addendum A of the Rules, 
supra note 5.
    \9\ See note 6 to Section IV(K) of Addendum A of the Rules, 
supra note 5.
---------------------------------------------------------------------------

    The proposed fee structure is intended to incentivize use of the 
STL feature by discounting transaction fees for members that reach the 
defined transaction tier volume thresholds. In addition, by basing the 
fee on each member's utilization of the STL feature, the proposed rule 
change would reduce STL fees to further align these fees with the costs 
of providing the service because, as volumes increase the cost of 
providing this service decreases.
    The proposed changes would take effect on January 1, 2017.
2. Statutory Basis
    Section 17A(b)(3)(D) of the Act \10\ requires that NSCC's Rules 
provide for the equitable allocation of reasonable dues, fees, and 
other charges among its members. The proposed fee is equitably 
allocated among members because it is based on each member's 
utilization of the STL feature, as measured by their monthly STL 
volume.
---------------------------------------------------------------------------

    \10\ 15 U.S.C. 78q-1(b)(3)(D).
---------------------------------------------------------------------------

    In addition, NSCC believes that the proposed fee is reasonable 
because it would enable NSCC to better align its revenue for STL with 
the costs and expenses required for NSCC to provide this service to its 
members, while also providing this service to members at a lower cost. 
Specifically, as STL volumes increase, the costs of providing the STL 
feature decreases. NSCC has determined that reducing the fees as 
volumes increase would better align the revenue from STL to the cost of 
providing this service to members.
    Therefore, NSCC believes the proposed rule change is consistent 
with Section 17A(b)(3)(D).\11\
---------------------------------------------------------------------------

    \11\ Id.
---------------------------------------------------------------------------

(B) Clearing Agency's Statement on Burden on Competition

    NSCC believes that the proposed rule change could have an impact on 
competition because the proposed rule change would charge a lower fee 
for higher STL volumes. NSCC believes, however, that any burden on 
competition that would be created by the proposed rule change would be 
necessary and appropriate in furtherance of the Act. Specifically, the 
proposed rule change is necessary to better align the fees charged for 
the STL feature with the costs and expenses required for NSCC to 
provide this service to its members, because, as volumes increase the 
cost of providing this service decreases. The proposed rule change is 
appropriate because, as stated, the proposed fee would be equitably 
allocated among members based on each member's utilization of the STL 
feature, as measured by their monthly STL volume.

(C) Clearing Agency's Statement on Comments on the Proposed Rule Change 
Received From Members, Participants, or Others

    NSCC has not received or solicited any written comments relating to 
this proposal. 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

    The foregoing rule change has become effective pursuant to Section 
19(b)(3)(A) of the Act \12\ and subparagraph (f) of Rule 19b-4 
thereunder.\13\ At any time within 60 days of the filing of the 
proposed rule change, the Commission summarily may temporarily suspend 
such rule change if it appears to the Commission that such action is 
necessary or appropriate in the public interest, for the protection of 
investors, or otherwise in furtherance of the purposes of the Act.
---------------------------------------------------------------------------

    \12\ 15 U.S.C. 78s(b)(3)(A).
    \13\ 17 CFR 240.19b-4(f).
---------------------------------------------------------------------------

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 email to [email protected]. Please include 
File Number SR-NSCC-2016-009 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities 
and Exchange Commission, 100 F Street NE., Washington, DC 20549.


[[Page 3034]]


All submissions should refer to File Number SR-NSCC-2016-009. This file 
number should be included on the subject line if email 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 Room, 100 F Street NE., 
Washington, DC 20549, on official business days between the hours of 
10:00 a.m. and 3:00 p.m. Copies of the filing also will be available 
for inspection and copying at the principal office of NSCC and on 
DTCC's Web site (http://dtcc.com/legal/sec-rule-filings.aspx). 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-2016-009 and should be 
submitted on or before January 31, 2017.
---------------------------------------------------------------------------

    \14\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\14\
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-00223 Filed 1-9-17; 8:45 am]
 BILLING CODE 8011-01-P