Federal Register / Vol. 65, No. 91 / Wednesday, May 10, 2000 / Notices 30167

6 15 U.S.C. 78o–3(b)(6).

7 15 U.S.C. 78o–3(b)(7).

8 15 U.S.C. 78o–3(b)(8). 9 17 CFR 200.30–3(a)(12).

generally only involve the issue of what

type of supervisory plan is appropriate

for the disqualified member or person.

Under proposed NASD Rule 9523, the

member would be required to file an

MC–400 application with the NASD.

Member Regulation, however, would

have the discretion to recommend the

approval of the application in the event

an appropriate supervisory plan is

established. The member would be

required to execute a letter consenting

to the imposition of the supervisory

plan. The letter and the supervisory

plan would then be submitted to the

Office of General Counsel and/or the

Chairman of the Statutory

Disqualification Committee for review

and possible approval. While both the

Office of General Counsel and the

Committee Chairman would have

authority to approve the application or

refer it to the NAC, only the Committee

Chairman would be permitted to reject

the application.

Failure To Respond. As noted above

(under the heading ‘‘Investigations’’),

proceedings initiated under the Rule

8220 Series are designed to address the

most serious on-going violations

concerning associated persons and

members that are failing to provide the

Association with information. For this

reason, these proceedings are brought

on an accelerated basis.

The Association is proposing to create

a new Rule 9540 Series that could be

used against those who fail to provide

the Association with information,

required filings, or keep membership

applications or supporting documents

current. Under the proposed NASD Rule

9540 Series, the Association would send

notices informing respondents that

failure to provide the Association with

previously requested information or

required filings or the failure to keep its

membership application or supporting

documents current will result in

suspensions, unless the information is

provided to the Association within 20

days. Respondents would have five days

to request hearings to challenge

proposed suspensions. These hearings

would be conducted before threemember hearing panels, and the hearing

panels would have the authority to

order any fitting sanctions, including

expulsions and bars. Respondents who

fail to request hearings to challenge the

suspension during the six-month period

following the receipt of notices

initiating proceedings under this rule

series will be automatically barred or

expelled.

Further, the Association is proposing

to include in the proposed NASD Rule

9540 Series a process by which the

Department of Member Regulation

could quickly cancel the memberships

of firms that fail to meet the

Association’s eligibility and

qualification standards. Under the

proposal, the Association would send

letters to members informing them that

their memberships will be canceled

within 20 days of receipt of the letters,

unless the firm becomes eligible for

continuance in membership within this

time period. The members will be

provided opportunities to request

hearings within five days of service of

the notices to challenge the proposed

cancellations. The hearings would be

held before Hearings Officers.

2. Statutory Basis

NASD Regulation believes that the

proposed rule change is consistent with

the provisions of Section 15A(b)(6) of

the Act,6 which require that the rules of

an association be designed to prevent

fraudulent and manipulative acts and

practices, to promote just and equitable

principles of trade and, in general, to

protect investors and the public interest.

The NASD believes that the proposed

rule change is consistent with Section

15A(b)(7) of the Act 7 in that it works to

adequately safeguard the interests of

investors while establishing fair and

reasonable rules for its members and

persons associated with its members.

The rule change is consistent with

Section 15A(b)(8) of the Act 8 in that it

furthers the statutory goals of providing

a fair procedure for disciplining

members and associated persons.

B. Self-Regulatory Organization’s

Statement on Burden on Competition

NASD Regulation does not believe

that the proposed rule change will

impose any burden on competition that

is not necessary or appropriate in

furtherance of the purposes of the Act.

C. Self-Regulatory Organization’s

Statement on Comments on the

Proposed Rule Change Received From

Members, Participants, or Others

On August 10, 1999, the proposed

rule change was published for comment

in NASD Notice to Members Number

99–73. No comments were received in

response to the Notice to Members.

III. Date of Effectiveness of the

Proposed Rule Change and Timing for

Commission Action

Within 35 days of the publication of

this notice in the Federal Register or

within such longer period (i) as the

Commission may designate up to 90

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 NASD consents, the

Commission will:

(A) By order approve 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 proposal is

consistent with the Act. Persons making

written submissions should file six

copies thereof with the Secretary,

Securities and Exchange Commission,

450 Fifth Street, N.W., Washington, D.C.

20549–0609. 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 inspection and copying at

the Commission’s Public Reference

Room. Copies of such filing will also be

available for inspection and copying at

the principal office of the NASD. All

submissions should refer to File No.

SR–NASD–99–76 and should be

submitted by May 31, 2000.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.9

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 00–11610 Filed 5–9–00; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–42754; File No. SR–NASD–

00–18]

Self-Regulatory Organizations; Notice

of Filing of Proposed Rule Change by

the National Association of Securities

Dealers, Inc. and Amendment No. 1

thereto Relating to the Entry of

Locking/Crossing Quotations Prior to

the Nasdaq Market Opening

May 3, 2000.

Pursuant to Section 19(b0(1) of the

Securities Exchange Act of 1934

30168 Federal Register / Vol. 65, No. 91 / Wednesday, May 10, 2000 / Notices

1 15 U.S.C. 78s(b)(1).

2 17 CFR 240.19b–4

3See letter from Robert E. Aber, General Counsel

and Senior Vice President, Nasdaq, to Katherine A.

England, Assistant Director, Division of Market

Regulation, Commission, dated April 14, 2000

(‘‘Amendment No. 1’’). In Amendment No. 1,

Nasdaq corrected an inadvertent misstatement

contained in an example describing the proposal’s

operation.

4See Exchange Act Release No. 42400 (February

7, 2000), 65 FR 7407 (February 14, 2000) (order

approving File No. SR–NASD–99–23 to amend

NASD Rule 4613(e)).

5 Id.

6 Id.

7Under the current rule, a market participant

would be prohibited from locking/crossing the

market in the ten minute period prior to the open

unless the actively locking/crossing market

participant is willing to trade at least 5,000 shares.

8See note 4, above.

9 Id.

(‘‘Act’’),1 and Rule 19b–4 thereunder,2

notice is hereby given that on April 13,

2000, the National Association of

Securities Dealers, Inc. (‘‘NASD’’ or

‘‘Association;’’), through its wholly

owned subsidiary, the Nasdaq Stock

Market, Inc. (‘‘Nasdaq’’, 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 Nasdaq. On April 18, 2000,

the NASD and Nasdaq submitted

Amendment No. 1 to the proposal.3 The

Commission is publishing this notice, as

amended, to solicit comments on the

proposed rule change from interested

persons.

I. Self-Regulatory Organization’s

Statement of the Terms of Substance of

the Proposed Rule Change

Nasdaq proposes to amend NASD

Rule 4613(e) as it relates to the entry of

locking/crossing quotations prior to the

market’s open. Proposed new language

is italicized.

4613. Character of Quotations

(a)–(d) No Changes

(e) Locked and Crossed Markets

(1) A market maker shall not, except

under extraordinary circumstances,

enter or maintain quotations in Nasdaq

during normal business hours if:

(A) the bid quotation entered is equal

to (‘‘lock’’) or greater than (‘‘cross’’) the

asked quotation of another market

maker entering quotations in the same

security; or

(B) the asked quotation is equal to

(‘‘lock’’) or less than (‘‘cross’’) the bid

quotation of another market maker

entering quotations in the same security.

(C) Obligations Regarding Locked/

Crossed Market Conditions Prior to

Market Opening

(i) No Change.

(ii) Locked/Crossed market Between

9:20 and 9:29:59 a.m.—If a market

maker locks or crosses the market

between 9:20 and 9:29:59 a.m. Eastern

Time, the market maker must

immediately send through SelectNet to

the market maker whose quotes it is

locking or crossing a Trade-or-move

Message that is at the receiving market

maker’s quoted price and that is for at

least 5,000 shares (in instances where

there are multiple market makers to a

lock/cross, the locking/crossing market

maker must send a message to each

party the lock/cross and the aggregate

size of all such messages must be at

least 5,000 shares); provided, however,

that if a market participant is

representing an agency order (as

defined in subparagraph (iv) of this

rule), the market participant shall be

required to send a Trade-or-Move

Message(s) in an amount equal to the

agency order, even if that order is less

than 5,000 shares. A market maker that

receives a Trade-or-Move Message

during this period and that is a party to

a lock/cross, must within 30 seconds of

receiving such message either: fill the

incoming Trade-or-Move Message for

the full size of the message; or move its

bid down (offer up) by a quotation

increment that unlocks/uncrosses the

market. A market participant shall not

be subject to the 5,000 share

requirement of this rule if the market

participant is representing agency

interest only.

(iii) No Change.

(iv) For the purposes of this rule

‘‘agency order’’shall mean an order(s)

that is for the benefit of the account of

a natural person executing securities

transactions with or through or

receiving investment banking services

from a broker/dealer, or for the benefit

of an ‘‘institutional account’’ as defined

in NASD Rule 3110. An agency order

shall not include an order(s) that is for

the benefit of a market maker in the

security at issue, but shall include an

order(s) that is for the benefit of a

broker/dealer that is not a market maker

in the security at issue.

(2)–(3) No Change.

II. Self-Regulatory Organization’s

Statement of the Purpose of, and

Statutory Basis for, the Proposed Rule

Change

In its filing with the Commission,

Nasdaq 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. Nasdaq has prepared

summaries, set forth in Sections (A), (B),

and (C) below, of the most significant

aspects of such statements.

(A) Self-Regulatory Organization’s

Statement of the Purpose of, and

Statutory Basis for, the Proposed Rule

Change

Nasdaq is proposing a rule to amend

NASD Rule 4613(e), to permit market

participants, when representing agency

interests, to lock/cross the market at the

actual size of the agency order, instead

of 5,000 shares as currently required by

rule.

1. Background

On February 7, 2000, the Commission

approved amendments to NASD Rule

4613(e), which relate to the entry of

locking/crossing quotes by Nasdaq

market participants—market maker and

electronic communications networks

(‘‘ECNs’’)—prior to the market’s open.4

As amended and approved by the

Commission, NASD Rule 4613(e)

provides that if a market participant

locks/crosses the market between 9:20

a.m. and 9:29:59 a.m. Eastern Time, the

market participant must send the market

maker(s) or ECN(s) being locked/

crossed, a SelectNet message that has

appended to it a ‘‘TRD OR MOV’’

administrative message (‘‘Trade-orMove Message’’) 5 The aggregate size of

these Trade-or-Move Messages must be

at least 5,000 shares.6 (Thus, in order to

lock/cross the market during this 10

minute before the market opens, a

market participant must send a Tradeor-Move Message for 5,000 shares and

be willing to trade at least this amount.)7

The party being locked or crossed must

respond to the Trade-or Move Message

within 30 seconds by trading in full

with the incoming message or moving

its quotation to a price level that

resolves the locked/crossed market.8

2. Purpose

The 5,000 share requirement that is

currently in the rule requires market

makers, ECNs, and customers thereof,

who initiate a lock/cross to send a

Trade-or Move(s) for a total of a least

5,000 shares. This requirement applies

even if the market maker or ECN is

representing an agency order for less

than 5,000 shares. Therefore, as

currently written and approved, an

ECN, market maker, and customer

thereof, may not lock/cross the market

unless he/she is willing to trade at least

5,000 shares. Some market participants

have raised concerns that NASD Rule

4613(e) may exclude certain agency

interests from being reflected in the preopening market if that interest is less

than 5,000 shares.9

Federal Register / Vol. 65, No. 91 / Wednesday, May 10, 2000 / Notices 30169

10Under the prior language of NASD Rule

4613(e), ECN1 would have been required to send

5,000 shares along with its Trade-or Move SelectNet

message. This 5,000 share size requirement of the

Trade-or-Move SelectNet message would have

effectively precluded agency orders from

participating in the opening market.

11This assumes that the customer has an

agreement with MMG that its limit order will be

represented and potentially executed prior to the

market’s open.

12 15 U.S.C. 78o–3(b)(6).

13 15 U.S.C. 78k–1(a).

14 15 U.S.C. 78o–3(b)(6).

15 15 U.S.C. 78k–1(a)(1)(C).

16 15 U.S.C. 78o–3(b)(6) and 15 U.S.C. 78k–

1(a)(1)(C).

17 15 U.S.C. 78o–3(b)(6) and 15 U.S.C. 78k–

1(a)(1)(C).

In light of these concerns, Nasdaq

proposes to amend NASD Rule 4613(e)

to allow a market participant to lock/

cross the market for less than 5,000

shares if they are representing only

agency orders. Under the amendment, if

between 9:20 a.m. and 9:29:59 a.m., a

market participant receives an agency

order that would lock/cross the market,

the market participant may lock/cross

the market and sent a Trade-or Move

Message for the ‘‘actual size’’ of the

agency order, instead of 5,000 shares.

(For purposes of the amended rule, an

agency order would not include an

order for the account of a market maker

in the issue, but would include orders

for individuals, institutions and broker/

dealers whoa re not market makers in

the security at issue). In essence, agency

orders would be ‘‘exempt’’ from the

5,000 share requirement. Market

participant whose proprietary quotes

lock/cross the market between 9:20 and

9:29:59 a.m., would still be subject to

the 5,000 aggregate share size

requirement for Trade-or Move

Messages. Thus, if a market participant

wishes to lock/cross the market while

acting as principal, the market

participant must send an aggregate of at

least 5,000 shares, through a Trade-or

Move Message, to the parties being

locket/crossed.

For example, at 9:21 a.m. the market

is $20 to $201⁄8, and MMA is alone at

the inside offer. ECN1 receives an order

from a public customer to sell shares at

$201⁄8. Under the current rule, ECN1

would be required to lock the market

and then send a Trade-or Move Message

to MMA for 5,000 shares. Under the

proposed amendment, ECN1 would be

required to send MMA a Trade-or Move

message for the actual size of the agency

order—800 shares.10 If the order that

ECN1 received at 9:21 a.m. represented

an order that was for the account of

MMB, ECN1 would be prohibited from

locking for only 800 shares.

As a second example, at 9:21 a.m. the

market is $20 to $291⁄8, with MMA along

at the inside offer. MMG receives an 800

share customer limit order to sell at

$201⁄4, which the customer has

requested be displayed in the preopening. MMG also wishes to cross the

market at the $201⁄4 price, while acting

in a proprietary capacity. Note that only

the agency interest is exempt from the

5,000 share requirement. Accordingly,

MMG must send a Trade-or Move

Message for at least 5,800 shares—5,000

covering his proprietary interest and

800 covering the customer limit order/

agency.11 In short a market maker is not

permitted to meet the 5,000 share

requirement by ‘‘free-riding’’ off of its

customer orders that customers

specifically have requested be displayed

and executed in the market prior to the

open.

The requirement that a market maker

send a Trade-or Move Message for the

actual size of agency interest plus 5,000

shares, only applies when a market

maker wishes to lock/cross the market

proprietary and simultaneously is

displaying agency interest pursuant to

an understanding with the customer.

This requirement does not apply when

the marker maker is holding agency

interest where there is not

understanding with the customer to

have its order displayed and/or

executed prior to the market’s open, and

the market maker otherwise is engaging

in bona fide market making activity

during the pre-opening period.

3. Statutory Basis

Nasdaq believes that the proposed

rule change is consistent with the

provisions of Section 15A(b)(6) 12 and

Sections 11A of the Act.13 Section

15A(b)(6) 14 requires that the rules of a

registered national securities association

are designed to prevent fraudulent and

manipulative acts and practices, to

promote just and equitable principals of

trade, to foster cooperation and

coordination with persons engaged in

regulating, clearing, settling, processing

information with respect to, and

facilitating transactions in securities, to

remove impediments to and perfect the

mechanism of a free and open market

and a national market system, and, in

general, to protect investors and the

public interest; and are not designed to

permit unfair discrimination between

customers, issuers, brokers, or dealers.

Section 11A(a)(1)(C) 15 provides that it is

in the public interest and appropriate

for the protection of investors and the

maintenance of fair and orderly markets

to assure: (1) Economically efficient

execution of securities transactions; (2)

fair competition among brokers and

dealers; (3) the availability to brokers,

dealers and investors of information

with respect to quotations and

transactions in securities; (4) and the

practicability of brokers executing

investors orders in the best market; and

(5) an opportunity for investors orders

to be executed without the participation

of a dealer.

Nasdaq believes that the amendment

to NASD Rule 4613(e) is consistent with

Sections 15A(b)(6) and 11A(a)(1)(C).16

The proposed amendments create equal

access among market participants

(market makers and ECNs) consistent

with Sections 15A(b)(6) and

11A(a)(1)(C).17 Locked/crossed markets

present serious market integrity and

investor protection issues, as they

disrupt the orderly function of the

market and in turn have an impact on

the processing of investor orders.

Nasdaq believes that by allowing agency

orders to be displayed in the market at

their actual share sizes for purposes of

resolving locked/crossed markets will

increase investor protection by

providing; (1) Greater access to the

market, (2) increased liquidity, and (3)

transparency of orders in the

marketplace. Nasdaq believes that these

benefits will provide greater trading,

processing, and pricing efficiency and

stability in the pre-opening market.

Nasdaq also believes that by allowing

agency quotes to be sent at ‘‘actual size’’

rather than at the 5,000 share size,

market participants will have increased

opportunities to evaluate and access the

depth and liquidity of securities prior to

the opening of the market.

(B) Self-Regulatory Organization’s

Statement on Burden on Competition

Nasdaq does not believe that the

proposed rule change will result in any

burden on competition that is not

necessary or appropriate in furtherance

of the purposes of the Act, as amended.

(C) Self-Regulatory Organization’s

Statement on Comments on the

Proposed Rule Change Received From

Members, Participants, or Others

Written comments were neither

solicited nor received.

III. Date of Effectiveness of the

Proposed Rule Change and Timing for

Commission Action

Within 35 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

90 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

30170 Federal Register / Vol. 65, No. 91 / Wednesday, May 10, 2000 / Notices

18See 17 CFR 200.30–3(a)(12).

1 15 U.S.C. 78s(b)(1).

2Securities Exchange Act Release No. 41504

(June 9, 1999), 64 FR 32586 (June 17, 1999).

organization consents, the Commission

will:

A. By order approve such 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 proposal,

including whether the proposed rule

change is consistent with the Act.

Persons making written submissions

should file six copies thereof with the

Secretary, Securities and Exchange

Commission, 450 Fifth Street, N.W.,

Washington, D.C. 20549–0609. 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 inspection and copying in

the Commission’s Public Reference

Room. Copies of such filing will also be

available for inspection and copying at

the principal office of the NASD. All

submissions should refer to the File No.

SR–NASD–00–18 and should be

submitted by May 31, 2000.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.18

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 00–11683 Filed 5–9–00; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–42747; File No. SR–NSCC–

98–14]

Self-Regulatory Organization; National

Securities Clearing Corporation; Order

Approving a Proposed Rule Change

Relating to Ceasing to Act for a

Member

May 2, 2000.

On December 8, 1998, the National

Securities Clearing Corporation

(‘‘NSCC’’) filed with the Securities and

Exchange Commission (‘‘Commission’’)

a proposed rule change (File No. SR–

NSCC–98–14) 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 June 17, 1999.2 No comment letters

were received. For the reasons

discussed below, the Commission is

approving the proposed rule change.

I. Description

The rule change eliminates the

distinction between those instances

where NSCC declines or ceases to act for

a member because the member is

insolvent and where NSCC declines or

ceases to act for a member for another

reason. The rule change also permits

NSCC to complete certain open RVP/

DVP transactions of an insolvent brokerdealer that is a member or clears

through a member.

a. Declining or Ceasing To Act

NSCC’s procedures for ceasing to act

for an insolvent member were set forth

in former Section 3 of Rule 18. Its

procedures for ceasing to act when the

member is not insolvent were set forth

in Section 2 of Rule 18. Former Sections

2(a) and (b) (non-insolvency scenario)

and Sections 3(a) and (b) (insolvency

scenario) set forth the transactions

which could be eliminated by NSCC

from its processing when it ceased to act

for a member. Generally, these sections

provided that if NSCC gave notice that

it was ceasing to act for a member before

NSCC issued the security balance orders

in a pending balance order accounting

operation or before NSCC issued the

consolidated trade summary in a

pending continuous net settlement

accounting operation for that member’s

pending trades. NSCC could in its

discretion exclude that member’s trades

from the balance order or continuous

net settlement accounting operation.

Trades so executed would have to be

settled between the parties outside of

NSCC.

Under the rule change, new Sections

2(a)(i) and (ii) replace Sections 2(a) and

(b) and Sections 3(a) and (b) and

specifically tie the exclusion of a trade

to whether or not the trade has been

guaranteed by NSCC. New Section

2(a)(iii) addresses the exclusion of

security orders issued with respect to

‘‘special trades’’ and transactions in

foreign securities. Prior to the rule

change, the exclusion of these trades

was only addressed in the insolvency

portion of NSCC’s rules, former Section

3(c)(iii).

Former Section 2(c) set forth NSCC’s

procedures for handling envelope

transactions when it ceased to act for a

solvent member. Former Section 3 of

NSCC’s rules did not address envelop

transactions when NSCC ceased to act

for an insolvent member. New Section

4 mirrors former Section 2(c) and

addresses the completion of envelope

transactions of a member for whom

NSCC has ceased to act regardless of the

solvency status of the member.

Former Sections 2(d)(i) and (ii) and

Section 3(b)(ii) governed the completion

of CNS trades. According to NSCC,

when it ceases to act for a member, it

completes CNS trades through a

qualified securities depository

regardless of whether the member was

solvent. However, only former Section 2

(non-insolvency scenario) specifically

addressed the completion of these

trades through a qualified securities

depository. Accordingly, new Section 5

clarifies that CNS transactions will be

completed through a qualified securities

depository regardless of the solvency

status of the relevant member unless in

an insolvency scenario the rules of the

relevant insolvency regime doe not

allow NSCC to take certain actions with

respect to the completion of CNS trades.

Former Sections 2(d)(iii) and 3(c)(ii)

addressed the closing out of any

remaining CNS transactions. Under the

rule change, this is now covered in new

Section 6(a).

Former Sections 2(b) and 3(c)(ii)

pertained to the completion of balance

order transactions after NSCC ceases to

act for a member. Although NSCC’s

procedures for completing balance order

transactions are the same regardless of

whether NSCC is ceasing to act for a

solvent or insolvent member, only

former Section 3 detailed how NSCC

would close-out balance order

transactions and how members were to

submit related close-out losses to NSCC.

The rule change adopts new Section

6(b), which is similar to former Sections

3(c) and (d). New Section 6(b) governs

the close-out of balance order

transactions regardless of whether an

insolvency situation exists.

The language contained in former

Section 2(e), which set forth NSCC’s

rights with respect to any balance due

to it from a member after NSCC had

ceased to act for the member,

technically only applied in noninsolvency scenarios. Under the rule

change, the language of Section 2(e)

now appears in Section 7(a) and applies

to both insolvency and non-insolvency

scenarios. The language set forth in

former Sections 2(f) and (f), which

provided that NSCC would maintain a

lien on all property a member places

with NSCC as security for any and all

liabilities of the member to NSCC now

appears in Section 7(f).