[Federal Register Volume 83, Number 18 (Friday, January 26, 2018)]
[Notices]
[Pages 3804-3807]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-01359]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-82544; File No. SR-NSCC-2017-019]


Self-Regulatory Organizations; National Securities Clearing 
Corporation; Order Approving Proposed Rule Change To Enhance the 
Process for Submitting and Accepting ETF Creations and Redemptions

January 19, 2018.
    On November 28, 2017, National Securities Clearing Corporation 
(``NSCC'') filed with the Securities and Exchange Commission 
(``Commission'') proposed rule change SR-NSCC-2017-019, pursuant to 
Section 19(b)(1) of the Securities Exchange Act of 1934 (``Act'') \1\ 
and Rule 19b-4 thereunder.\2\ The proposed rule change was published 
for comment in the Federal Register on December 7, 2017.\3\ The 
Commission did not receive any comment letters on the proposed rule 
change. For the reasons discussed below, the Commission approves the 
proposed rule change.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 82193 (December 1, 
2017), 82 FR 57791 (December 7, 2017) (SR-NSCC-2017-019) 
(``Notice'').
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I. Description of the Proposed Rule Change

    This proposed rule change would modify NSCC's Rules & Procedures 
(``Rules'') \4\ to add two new time frames during which exchange traded 
fund (``ETF'') agents may submit creation and redemption instructions, 
including as-of instructions, reversals, and corrections (``ETF 
Instructions'') \5\ to NSCC on behalf of ETF sponsors and ETF 
authorized participants.\6\ The existing time frame during which ETF 
agents can submit ETF Instructions to NSCC extends from 2:00 p.m. to 
8:00 p.m. (the ``Primary Cycle'').\7\ The two proposed time frames 
would extend from 12:30 a.m. to 2:00 p.m. (the ``Intraday Cycle'') and 
from 9:00 p.m. to 11:30 p.m. (the ``Supplemental Cycle'').\8\
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    \4\ Available at http://www.dtcc.com/en/legal/rules-and-procedures.
    \5\ An as-of instruction is an instruction that is submitted 
with a trade date as of an earlier date. As-of reversal instructions 
and as-of corrections are types of as-of instructions. An as-of 
reversal instruction is an instruction that is submitted with a 
trade date as of an earlier date that reverses an instruction that 
was already processed by NSCC. Reversals and corrections are 
submitted on the same business day as the incorrect instruction, 
whereas as-of reversal instructions and as-of correction 
instructions are submitted on a business day after the date on which 
the incorrect instruction was submitted (but they would have the 
same trade date as the incorrect instruction). Notice, 82 FR at 
57792.
    \6\ ETF sponsors are issuers of ETFs. ETF authorized 
participants are (1) broker/dealers that have authorized participant 
agreements with ETF sponsors, and/or (2) broker/dealers that are 
NSCC members with an established ETF trading relationship with an 
ETF agent that is representing the ETF. See Rule 2, supra note 4.
    \7\ All times referenced herein are Eastern Standard Time.
    \8\ Notice, 82 FR at 57792-94.
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    The two proposed cycles would enable ETF agents to submit ETF 
Instructions to NSCC later in the day, or earlier on the following day 
than currently possible, in order to make corrections to prior 
submissions.\9\ The ability to make such new submission would help to 
avoid a situation where the NSCC member (``Member'') would need to post 
margin \10\ to cover exposures from the prior erroneous submission.\11\ 
Specifically, the proposed Intraday Cycle would enable NSCC to receive, 
on an intraday basis, (1) ETF Instructions that are marked as-of a 
prior trade date,\12\ and (2) ETF Instructions for same-day settlement 
until the designated cut-off time of 11:30 a.m.\13\ Meanwhile, the 
proposed Supplemental Cycle would enable ETF agents to submit ETF 
Instructions later than the Primary Cycle cut-off of 8:00 p.m.\14\
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    \9\ Id. at 57793.
    \10\ Rules, supra note 4. One way that NSCC mitigates its risk 
exposure to its Members is through a number of risk-based component 
charges (such as margin) that are calculated and assessed on Members 
daily. Each of the component charges collectively constitutes a 
Member's daily required deposit (``Required Deposit''). The 
objective of the Required Deposit is to mitigate potential losses to 
NSCC associated with liquidation of the Member's portfolio in the 
event that NSCC ceases to act for a Member (hereinafter referred to 
as a ``Default''). The aggregate of all Members' Required Deposits 
constitutes the Clearing Fund, which NSCC would be able to access 
should a defaulting Member's own Required Deposit be insufficient to 
satisfy losses to NSCC caused by the liquidation of that Member's 
portfolio.
    \11\ Notice, 82 FR at 57793.
    \12\ Id.
    \13\ Id.
    \14\ Id. at 57792.
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    In connection with the two proposed cycles, NSCC also proposes to 
revise the standardized input files, which are submitted by ETF agents 
to NSCC, and the output files, which are sent by NSCC to ETF agents and 
ETF authorized participants, to include additional information, such as 
a reversal/correction indicator and transaction time.\15\
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    \15\ Id. at 57794.
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    NSCC also proposes an ``automated threshold value reasonability 
check.'' This check would hold any ETF Instructions in a ``pending'' 
status if such instructions exceed certain thresholds established by 
NSCC when compared to the most recent closing price.\16\
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    \16\ Id. at 57795-96.
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    Finally, NSCC proposes a technical correction to the Rules to 
clarify that next-day settling ETF Instructions are no longer processed 
differently than other ETF Instructions when submitted to NSCC.\17\
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    \17\ Id. at 57794-95.
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A. Current ETF Submission Processes

    According to NSCC, ETF sponsors have processes outside of NSCC that 
allow the sponsors to create or redeem ETF shares with ETF authorized 
participants intraday. The details of the creations or redemptions are 
then recorded by ETF agents.\18\ The processes conducted outside of 
NSCC are not uniformly automated and may involve manual data entry that 
the ETF agent eventually submits to NSCC using the standardized ETF 
create-and-redeem input file.\19\
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    \18\ Id. at 57791.
    \19\ Id.
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    Currently, the Primary Cycle is the only time in which ETF agents 
can submit the input file to NSCC.\20\ However, according to NSCC, a 
risk exists that the manually entered data may contain errors that 
could result in incorrectly valued transactions.\21\ NSCC states that 
any errors in the manually entered data contained in the input file may 
result in NSCC recording ETF Instructions that may be materially 
different than the value upon which the ETF sponsor and ETF authorized 
participant agreed.\22\ Nevertheless, NSCC uses that information when 
calculating both the ETF agent's and the ETF authorized participant's 
daily

[[Page 3805]]

Required Deposit.\23\ If the input file contained incorrect 
information, then the applicable Member's Required Deposit may reflect 
the error.\24\ ETF agents currently do not have an opportunity to 
submit correcting ETF Instructions to NSCC until the next Primary 
Cycle, which is after the deadline for Members to satisfy their 
Required Deposit.\25\
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    \20\ Id. at 57792.
    \21\ Id. at 57791-92.
    \22\ Id. at 57792.
    \23\ Id.
    \24\ Id.
    \25\ Id.
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B. Proposed New Cycles

    NSCC proposes to add two new cycles during which ETF agents may 
submit ETF Instructions to NSCC: The Intraday Cycle and the 
Supplemental Cycle.\26\ These proposed cycles would enable ETF agents 
to submit (1) creation and redemption instructions that would either 
reverse or correct creation and redemption instructions previously 
processed by NSCC that day (i.e., reversals and corrections), or (2) 
as-of instructions (e.g., as-of reversal instructions and as-of 
correction instructions) intended to correct as-of instructions 
processed by NSCC on an earlier day. In either case, ETF agents would 
have an opportunity to submit the applicable ETF Instruction prior to 
the 10:00 a.m. deadline for satisfying any Required Deposit.\27\
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    \26\ Id. at 57792-94.
    \27\ Id. at 57797.
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    NSCC would continue to maintain its current deadline of 8:00 p.m. 
for the submission of the input files during the Primary Cycle on trade 
date (``T'').\28\ Any late ETF Instructions that are submitted to NSCC 
between 8:00 p.m. and 9:00 p.m. would be held until 9:00 p.m. and then 
processed at 9:00 p.m. during the Supplemental Cycle.\29\ The 
Supplemental Cycle would remove the need for manual extensions to the 
existing deadline of 8:00 p.m. for the Primary Cycle because ETF 
Instructions received by NSCC after 8:00 p.m. would be held and 
processed during the Supplemental Cycle, which would begin at 9:00 
p.m.\30\
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    \28\ NSCC states that maintaining the current 8:00 p.m. deadline 
will help ensure that the existing end of day reconciliation 
processes conducted by ETF agents and ETF authorized participants 
continue to be conducted timely, and will also help prevent 
unnecessary delays to the end of day reconciliation processes. Id. 
at 57793.
    \29\ Id.
    \30\ Id.
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    The proposed Intraday Cycle would enable NSCC to receive, on an 
intraday basis, ETF Instructions that are marked as-of a prior trade 
date.\31\ Furthermore, ETF agents would be able to submit ETF 
Instructions (corrections or otherwise) to NSCC for same-day settlement 
during the Intraday Cycle until the designated cut-off time of 11:30 
a.m.\32\ However, ETF agents would not be able to submit ETF 
Instructions to NSCC for same-day settlement during the Primary Cycle 
because NSCC lacks the functionality to process such same-day 
transactions.\33\ Upon implementation of the two proposed cycles, NSCC 
would be able to receive ETF Instructions in the standardized input 
file from 12:30 a.m. to 11:30 p.m. each business day.\34\
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    \31\ Id.
    \32\ The cut-off time of 11:30 a.m. would align the deadline for 
same-day settling creation and redemption instructions with the 
11:30 a.m. deadline for other same-day settling non-ETF activity. 
For example, same-day settling corporate bond trades and 
transactions in municipal securities are subject to the 11:30 a.m. 
deadline. NSCC believes aligning these deadlines would streamline 
the processing of same-day settling items for NSCC and its Members. 
Id.
    \33\ NSCC would reject ETF Instructions submitted for same-day 
settlement during the Primary Cycle instead of assigning such ETF 
Instructions a new settlement date. Id. Currently, ETF agents are 
able to settle same-day transactions outside of NSCC, and this 
proposal would preserve that ability. Id.
    \34\ Id.
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    According to NSCC, ETF agents currently submit ETF Instructions to 
NSCC using a standardized electronic input file.\35\ NSCC states that 
adding the Intraday Cycle and Supplemental Cycle would require some 
coding changes to the existing standardized input file and the output 
files distributed by NSCC to ETF agents and ETF authorized 
participants.\36\ Specifically, NSCC proposes to add additional 
information to the input file, such as the reversal/correction 
indicator and transaction time.\37\ NSCC would also revise the format 
of the input file to accommodate the additional information.\38\
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    \35\ Id. at 57792-94.
    \36\ Id. at 57793-94.
    \37\ Id. at 57792-94.
    \38\ Id. at 57793-94.
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    As a result of these changes, ETF agents, ETF sponsors, and any 
third party service providers they may use would be required to make 
coding changes to their systems to submit the standardized input file 
during any of the cycles.\39\ Although ETF agents would not be required 
to submit input files during all of the cycles, they would still be 
required to make coding changes to their systems because one 
standardized input file would be submitted to NSCC.\40\ The additional 
information that would be included in the output files, such as the 
reversal/correction indicator and transaction time, would either be 
appended to the output files or would appear in fields in the output 
files that are currently reserved and do not contain any 
information.\41\
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    \39\ Id.
    \40\ Id.
    \41\ Id. at 57794.
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    ETF agents would be responsible for communicating these changes to 
their clients (i.e., ETF sponsors) or any third party service providers 
that they utilize.\42\ NSCC would continue to distribute all existing 
output files during the Primary Cycle and would also distribute output 
files during the two proposed cycles.\43\
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    \42\ Id.
    \43\ Id.
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C. Automated Threshold Value Reasonability Check

    NSCC proposes an ``automated threshold value reasonability check'' 
that would hold in a ``pending'' status certain potentially mis-valued 
ETF Instructions (whether due to mistakes in manual entry or otherwise) 
that exceed certain thresholds established by NSCC.\44\
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    \44\ Id. at 57795-96.
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    The automated threshold value reasonability check would apply to 
all submissions of ETF Instructions.\45\ NSCC would perform automated 
threshold value reasonability checks using the most recently available 
closing price from the primary listing marketplace compared to the per-
share value for every individual ETF Instruction submitted.\46\ NSCC 
would mark and assign a pended status to an ETF Instruction in which 
the per-share values exceed established thresholds compared to the most 
recently available closing price.\47\ NSCC would automatically notify 
the ETF agent of a pended ETF Instruction via email and through the 
output files.\48\ NSCC would also notify NSCC's internal operations of 
the pended ETF Instruction.\49\ The ETF Instruction would remain in a 
pended status while awaiting confirmation for reinstatement (or 
rejection) by the submitting ETF agent.\50\
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    \45\ Id.
    \46\ Id.
    \47\ Id.
    \48\ Id.
    \49\ Id.
    \50\ Id.
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    A submitting ETF agent could authorize NSCC to process a pended ETF 
Instruction by affirmatively confirming the ETF Instruction.\51\ The 
ETF Instruction would then be processed as long as NSCC received the 
confirmation by the end of the Supplemental Cycle.\52\ If the 
submitting ETF agent does not respond by the specified time or responds 
that the ETF Instruction should be rejected, then

[[Page 3806]]

NSCC would reject the ETF Instruction.\53\
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    \51\ Id.
    \52\ Id.
    \53\ Id.
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    NSCC proposes to establish the following threshold values 
initially:
     For ETFs with a Current Market Price equal to or greater 
than $3.00: The ETF contract value (i.e., the calculated effective 
price per share) is greater than or equal to a 98 percent variance from 
the market closing price from the trade date provided on the order; and
     for ETFs with a Current Market Price less than $3.00: The 
ETF contract value (i.e., the calculated effective price per share) is 
greater than or equal to a 98 percent variance from the market closing 
price from the trade date provided on the order.\54\
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    \54\ Id. at 57796.
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    NSCC believes that setting the initial threshold value at 98 
percent would capture overvalued and undervalued ETF Instructions while 
not being an excessively narrow control.\55\ NSCC would retain the 
flexibility and discretion to adjust the price range and the threshold 
values described above.\56\ NSCC may consider market conditions and 
feedback from Members and internal NSCC stakeholders (i.e., product 
management, risk management, and operations management) when 
considering threshold adjustments.\57\
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    \55\ Id.
    \56\ Id.
    \57\ Id.
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    NSCC believes that threshold adjustments might be warranted under 
specific scenarios: (1) If requested by Members and/or internal NSCC 
stakeholders, or (2) in response to a future market event.\58\ In the 
first scenario, NSCC could make threshold adjustments upon the request 
of Members and/or internal NSCC stakeholders to set thresholds closer 
to an ETF's closing market price than the initial setting.\59\ Such 
threshold adjustments may prevent unnecessary reversals and margining 
on orders that contain errors because the threshold check would be 
triggered at smaller value differences.\60\ Internal NSCC stakeholders 
would discuss the necessity of a threshold adjustment, with the final 
decision left to NSCC product management.\61\
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    \58\ Id.
    \59\ Id.
    \60\ Id.
    \61\ Id.
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    In the second scenario, NSCC could make threshold adjustments in 
response to a future market event that results in a significant number 
of ETFs trading at market prices below the initial price range setting 
of $3.00.\62\ NSCC would notify Members of any adjustment via Important 
Notice.\63\ NSCC expects that changes to either setting would be 
rare.\64\
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    \62\ Id.
    \63\ Id.
    \64\ Id.
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D. Technical Correction

    NSCC proposes to make a technical correction to clarify how NSCC 
processes next-day settling instructions.\65\ Since implementation of 
NSCC's accelerated trade guaranty,\66\ NSCC no longer processes next-
day settling instructions differently than other instructions when 
submitted to NSCC.\67\ As such, next-day settling index receipts (with 
a Settlement Date of T+1) are no longer treated differently than 
regular-way instructions (i.e., those with a Settlement Date of 
T+2).\68\ The proposed correction would remove repetitive language 
regarding such instructions.\69\
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    \65\ Id. at 57794-95.
    \66\ See Securities Exchange Act Release No. 79598 (December 19, 
2016), 81 FR 94462 (December 23, 2016) (SR-NSCC-2016-005). NSCC's 
accelerated trade guaranty, among other things, accelerated NSCC's 
trade guaranty from midnight of trade date plus one day (``T+1'') to 
the point of trade comparison and validation for bilateral 
submissions or to the point of trade validation for locked-in 
submissions.
    \67\ Id.
    \68\ Id.
    \69\ Notice, 82 FR at 57794-95.
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II. Discussion and Commission Findings

    Section 19(b)(2)(C) of the Act \70\ directs the Commission to 
approve a proposed rule change of a self-regulatory organization if it 
finds that such proposed rule change is consistent with the 
requirements of the Act and rules and regulations thereunder applicable 
to such organization. The Commission believes the proposal is 
consistent with Act, specifically Section 17A(b)(3)(F) of the Act and 
Rules 17Ad-22(e)(6) and (21) under the Act.\71\
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    \70\ 15 U.S.C. 78s(b)(2)(C).
    \71\ 15 U.S.C. 78q-1(b)(3)(F); 17 CFR 240.17Ad-22(e)(6) and 
(21).
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    Section 17A(b)(3)(F) of the Act requires, in part, that the Rules 
be designed to promote the prompt and accurate clearance and settlement 
of securities transactions.\72\ As discussed above, under NSCC's 
current processes, ETF agents may submit ETF Instructions to NSCC only 
during the Primary Cycle. Therefore, in the event that an ETF 
Instruction was incorrectly entered, the ETF agent must wait until the 
Primary Cycle on the following day to submit a new ETF Instruction to 
correct the error. In the meantime, the erroneous instruction might 
affect the amount of an ETF agent's and/or the ETF authorized 
participant's Required Deposit. This situation occurs because Required 
Deposits are updated daily at 7:05 a.m., with any outstanding deposits 
due to NSCC by 10:00 a.m., before the next Primary Cycle.
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    \72\ 15 U.S.C. 78q-1(b)(3)(F).
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    To help address this issue, NSCC proposes to add two new cycles 
(i.e., the Intraday Cycle and Supplemental Cycle, as described above) 
during the day, thereby expanding the time frame within which ETF 
agents may submit ETF Instructions to NSCC. The proposed cycles would 
enable ETF agents to submit new ETF Instructions to correct previously 
submitted ETF Instructions that were incorrect before the next Required 
Deposits were due. As such, the proposal would provide ETF agents with 
an opportunity to address erroneous ETF Instructions before needing to 
satisfy their next Required Deposit. Accordingly, the proposed Intraday 
Cycle and Supplemental Cycle would help ensure that Members' Required 
Deposits more closely reflect the risk presented by their intended 
transactions. Therefore, the Commission finds the proposed addition of 
the Intraday and Supplemental Cycles would help promote the prompt and 
accurate clearance and settlement of securities transactions, 
consistent with Section 17A(b)(3)(F) of the Act.\73\
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    \73\ Id.
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    The Intraday Cycle also would enable NSCC to receive same-day 
settling ETF Instructions (corrections or otherwise), which NSCC cannot 
do under its current processes. Consequently, the proposed change would 
allow such same-day settling ETF Instructions to receive the benefits 
of NSCC processing. These same-day settling instructions would also 
allow netting reversals and corrections with other primary and 
secondary market activity. Due to the increased opportunities described 
above for accurate same-day settling ETF Instructions, the Commission 
finds that NSCC's proposed change to add the Intraday Cycle would help 
promote the prompt and accurate clearance and settlement of securities 
transactions, consistent with Section 17A(b)(3)(F) of the Act.\74\
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    \74\ Id.
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    The Commission also finds that NSCC's proposal to implement the 
automated threshold value reasonability check would promote the prompt 
and accurate clearance and settlement of securities transactions, 
consistent with Section 17A(b)(3)(F) of the Act.\75\ As describe above, 
the automated threshold value reasonability check would hold

[[Page 3807]]

certain potentially erroneous ETF Instructions (whether due to mistakes 
in manual entry or otherwise) in a pending status until confirmed by 
the submitting ETF agent. Holding potentially erroneous ETF 
Instructions in a ``pending'' status would help minimize the potential 
impact of erroneous ETF Instructions on Members' Required Deposits by 
preventing such ETF Instructions from being processed without 
confirmation from the submitting ETF agent. Thus, the automated 
threshold value reasonability check would help to ensure that Members 
are subject to Required Deposits that more closely reflect the Members' 
intended trading activity and not erroneously entered information 
because Members would be required to confirm that the entered 
information is in fact correct. Therefore, the Commission finds that 
the proposed change to add the automated threshold value reasonability 
check would help promote the prompt and accurate clearance and 
settlement of securities transactions, consistent with Section 
17A(b)(3)(F) of the Act.\76\
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    \75\ Id.
    \76\ Id.
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    Finally, the Commission finds that NSCC's proposal to remove the 
repetitive language regarding next-day settling creates and redeems 
would promote the prompt and accurate clearance and settlement of 
securities transactions, consistent with Section 17A(b)(3)(F) of the 
Act.\77\ Removing such repetitive language would help make the Rules 
more accurate and clear. Maintaining accurate and clear Rules would 
enable Members and other stakeholders to better understand their 
respective rights and obligations regarding NSCC's clearance and 
settlement of securities transactions. Accordingly, the Commission 
finds that the proposed change to remove repetitive language from the 
Rules would promote the prompt and accurate clearance and settlement of 
securities transactions, consistent with the requirements of Section 
17A(b)(3)(F) of the Act.\78\
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    \77\ Id.
    \78\ Id.
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    Rule 17Ad-22(e)(6)(i) under the Act requires NSCC to cover its 
credit exposures to its Members by establishing a risk-based margin 
system that, at a minimum considers, and produces margin levels 
commensurate with, the risks and particular attributes of each relevant 
product, portfolio, and market.\79\ As described above, ETF agents 
submit ETF Instructions to NSCC using a standardized input file, which 
involves manual data entry that poses an inherent risk of communicating 
potentially erroneous information. The proposed Intraday Cycle and 
Supplemental Cycle would enable ETF agents to submit new ETF 
Instructions to correct previously submitted ETF Instructions before 
Members need to satisfy their next Required Deposit. Similarly, the 
automated threshold value reasonability check would help minimize the 
potential impact of erroneous ETF Instructions on Members' Required 
Deposits by preventing such ETF Instructions from being processed 
absent confirmation from the submitting ETF agent. Thus, the proposed 
cycles and automated threshold value reasonability check are ETF-
specific proposals designed to better produce margin levels 
commensurate with the risk and particular attributes of ETFs. 
Accordingly, the Commission finds that the proposed cycles and 
automated threshold value reasonability check would enhance NSCC's 
risk-based margin system in a manner that considers the risks and 
particular attributes specific to ETFs, consistent with Rule 17Ad-
22(e)(6)(i).\80\
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    \79\ 17 CFR 240.17Ad-22(e)(6)(i).
    \80\ Id.
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    Rule 17Ad-22(e)(21) under the Act requires NSCC to be efficient and 
effective in meeting the requirements of its Members and the markets it 
serves, and regularly review the efficiency and effectiveness of its 
(1) clearing and settlement arrangements, (2) operating structure, 
including risk management policies, procedures, and systems, and (3) 
use of technology and communication procedures.\81\ As stated above, 
the proposed cycles would enable ETF agents to submit new ETF 
Instructions to correct previously submitted ETF Instructions before 
Members need to satisfy their next Required Deposit. Similarly, the 
automated threshold value reasonability check would help minimize the 
potential impact of erroneous ETF Instructions on Members' Required 
Deposits by preventing such ETF Instructions from being processed 
absent confirmation from the submitting ETF agent. The Intraday Cycle 
also would enable NSCC to receive same-day settling ETF Instructions 
(corrections or otherwise), and thereby allow such same-day settling 
ETF Instructions to receive the benefits of NSCC processing. The 
proposed cycles and automated threshold reasonability check constitute 
changes designed to improve the efficiency and effectiveness of NSCC's 
ETF clearance and settlement arrangements, NSCC's related operating 
structure, and NSCC's communications with ETF agents and authorized 
participants via the input and output reports. The proposal would 
enhance the efficiency and effectiveness of NSCC's provision of ETF-
related services by (1) enabling ETF agents to correct previously 
submitted errors before additional Required Deposits are required, (2) 
preventing potentially erroneous ETF Instructions from being processing 
until confirmed, and (3) enabling same-day settling ETF Instructions to 
receive the benefits of NSCC processing. Accordingly, the Commission 
finds that the proposal would enhance NSCC's efficiency and 
effectiveness in meeting the requirements of its Members, as well as 
the efficiency and effectiveness of NSCC's ETF-related clearing and 
settlement arrangements, operating structure, and communication 
procedures, consistent with Rule 17Ad-22(e)(21).\82\
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    \81\ 17 CFR 240.17Ad-22(e)(21).
    \82\ Id.
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III. Conclusion

    On the basis of the foregoing, the Commission finds that the 
proposal is consistent with the requirements of the Act, in particular 
the requirements of Section 17A of the Act \83\ and the rules and 
regulations thereunder.
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    \83\ 15 U.S.C. 78q-1.
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    It is therefore ordered, pursuant to Section 19(b)(2) of the Act, 
that proposed rule change SR-NSCC-2017-019 be, and hereby is, 
approved.\84\
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    \84\ In approving the proposed rule change, the Commission 
considered the proposals' impact on efficiency, competition, and 
capital formation. 15 U.S.C. 78c(f).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\85\
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    \85\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-01359 Filed 1-25-18; 8:45 am]
 BILLING CODE 8011-01-P