Federal Register / Vol. 83, No. 154 / Thursday, August 9, 2018 / Notices 39481 

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). 

5 17 CFR 240.19b–4(f)(4). 

6Capitalized terms used herein and not otherwise 

defined shall have the meaning assigned to such 

terms in, available at http://dtcc.com/∼/media/ 

Files/Downloads/legal/rules/nscc_rules.pdf. 

to ensure that fund shareholders and 

directors receive adequate information 

to evaluate and approve a rule 12b–1 

plan and, thus, are necessary for 

investor protection. The requirement of 

quarterly reporting to the board is 

designed to ensure that the rule 12b–1 

plan continues to benefit the fund and 

its shareholders. The recordkeeping 

requirements of the rule are necessary to 

enable Commission staff to oversee 

compliance with the rule. The 

requirement that funds or their advisers 

implement, and fund boards approve, 

policies and procedures in order to 

prevent persons charged with allocating 

fund brokerage from taking distribution 

efforts into account is designed to 

ensure that funds’ selection of brokers to 

effect portfolio securities transactions is 

not influenced by considerations about 

the sale of fund shares. 

Commission staff estimates that there 

are approximately 7,858 fund portfolios 

that have at least one share class subject 

to a rule 12b–1 plan and approximately 

323 fund families with common boards 

of directors that have at least one fund 

with a 12b–1 plan. The Commission 

further estimates that the annual hour 

burden for complying with the rule is 

425 hours for each fund family with a 

portfolio that has a rule 12b–1 plan. We 

therefore estimate that the total hourly 

burden per year for all funds to comply 

with current information collection 

requirements under rule 12b–1 is 

137,275 hours. Commission staff 

estimates that approximately three 

funds per year prepare a proxy in 

connection with the adoption or 

material amendment of a rule 12b–1 

plan. The staff further estimates that the 

cost of each fund’s proxy is $34,849. 

Thus, the total annual cost burden of 

rule 12b–1 to the fund industry is 

$104,547. 

Estimates of average burden hours 

and costs are made solely for purposes 

of the Paperwork Reduction Act and are 

not derived from a comprehensive or 

even representative survey or study of 

the costs of Commission rules and 

forms. The collections of information 

required by Rule 12b–1 are necessary to 

obtain the benefits of the rule. Notices 

to the Commission will not be kept 

confidential. An agency may not 

conduct or sponsor, and a person is not 

required to respond to a collection of 

information unless it displays a 

currently valid OMB control number. 

The public may view the background 

documentation for this information 

collection at the following website, 

www.reginfo.gov. Comments should be 

directed to: (i) Desk Officer for the 

Securities and Exchange Commission, 

Office of Information and Regulatory 

Affairs, Office of Management and 

Budget, Room 10102, New Executive 

Office Building, Washington, DC 20503, 

or by sending an email to: Shagufta_

Ahmed@omb.eop.gov; and (ii) Pamela 

Dyson, Director/Chief Information 

Officer, Securities and Exchange 

Commission, c/o Candace Kenner, 100 F 

Street NE, Washington, DC 20549 or 

send an email to: PRA_Mailbox@

sec.gov. Comments must be submitted to 

OMB within 30 days of this notice. 

Dated: August 3, 2018. 

Eduardo A. Aleman, 

Assistant Secretary. 

[FR Doc. 2018–16998 Filed 8–8–18; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–83774; File No. SR–NSCC– 

2018–005] 

Self-Regulatory Organizations; 

National Securities Clearing 

Corporation; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change To Provide for the 

Delivery of Certain Transaction Data 

Relating to Variable Annuity and 

Variable Life Insurance Subaccounts 

and Implement Fees Associated With 

This Proposed Feature 

August 3, 2018. 

Pursuant to Section 19(b)(1) of the 

Securities Exchange Act of 1934, as 

amended (‘‘Act’’),1 and Rule 19b–4 

thereunder,2 notice is hereby given that 

on July 26, 2018, 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) 3

of the Act and subparagraphs (f)(2) 4 and 

(f)(4) 5 of Rule 19b–4 thereunder. The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change from interested persons. 

I. Clearing Agency’s Statement of the 

Terms of Substance of the Proposed 

Rule Change 

The proposed rule change consists of 

modifications to NSCC’s Rules & 

Procedures (‘‘Rules’’) in order to reflect 

proposed enhancements to NSCC’s 

Insurance and Retirement Processing 

Services (‘‘I&RS’’). The proposed rule 

change would enhance existing I&RS 

services to provide for the delivery of 

certain transaction data relating to 

variable annuity and variable life 

insurance subaccounts (‘‘variable 

product subaccounts’’) and implement 

fees associated with this proposed 

feature, as described in greater detail 

below.6

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 consists of 

modifications to the Rules in order to 

reflect proposed enhancements to I&RS 

services. The proposed rule change 

would enhance existing I&RS services to 

provide for the delivery of certain 

transaction data relating to variable 

product subaccounts and implement 

fees associated with this proposed 

feature, as described in greater detail 

below. 

(i) Variable Product Subaccounts 

An annuity is a contract between a 

holder and an insurance carrier 

pursuant to which the holder makes an 

upfront payment to an insurance carrier 

and the insurance carrier agrees to pay 

the holder periodic payments at a future 

date. A variable annuity is a type of 

annuity that allows the holder to choose 

from a selection of investment options, 

or ‘‘subaccounts,’’ within the annuity 

and the periodic payments paid by the 

insurance carrier are determined, in 

part, by the performance of the 

subaccounts selected by the holder. A 

variable life insurance contract operates 

in a similar manner. The variable life 

insurance carries a ‘‘cash value’’ and the 

purchaser can choose from a selection of 

investment subaccounts to invest the 

cash value. The subaccounts for variable 


sradovich on DSK3GMQ082PROD with NOTICES
39482 Federal Register / Vol. 83, No. 154 / Thursday, August 9, 2018 / Notices 

7Section 8 of Rule 57, supra note 6. FAR enables 

Insurance Carrier/Retirement Services Members to 

transmit IPS Data regarding financial transactions 

and related activity specific to an IPS Eligible 

Product to Members, Mutual Fund/Insurance 

Services Members and Data Services Only 

Members. Id. 

8 15 U.S.C. 78q–1(b)(3)(F). 

9 Id. 

10 15 U.S.C. 78q–1(b)(3)(D). 

products are frequently structured to be 

similar to mutual funds and are 

managed by mutual fund asset 

managers. 

Historically asset managers have 

received certain information relating to 

the affiliated subaccounts they manage 

on an aggregate basis from insurance 

carriers rather than on an individual 

transactional basis with respect to each 

subaccount. For instance, an insurance 

carrier will send settlement amounts to 

the asset manager reflecting the 

aggregate amounts invested in each 

subaccount at any given time but will 

not send any individual transactional 

data relating to how those amounts were 

invested in each subaccount. As an 

example, if two clients each invested in 

a subaccount in one day and another 

client transfers funds from the 

subaccount on the same day, the 

insurance carrier would provide the 

asset manager the aggregate amount of 

funds remaining in the subaccount at 

the end of the day and will not specify 

that two of its clients invested in the 

subaccount and one client removed 

funds from the subaccount or any 

details relating to the individual 

transactions. 

Asset managers would like access to 

the information specific to the 

individual transactions for the 

subaccounts that they manage to get a 

better understanding of the business of 

the subaccounts. The subaccount 

transaction-specific information that the 

asset managers would like to receive 

with respect to each subaccount 

transaction includes the name of the 

insurance carrier, the date of the 

transaction, the broker-dealer named on 

the transaction, the individual advisor 

listed on the transaction, the type of 

transaction (e.g., new purchase, death 

claim, rebalance, subaccount transfer to 

or from the subaccount, etc.) and the 

amount of the transaction. Asset 

managers get this information, as 

applicable, with respect to retail mutual 

funds that they manage and such 

information is useful to indicate the 

investment advisors that are working 

with clients purchasing their 

subaccounts, activities between mutual 

funds that they manage such as transfers 

by clients between mutual funds that 

they manage, individual transaction 

amounts and the reason funds are being 

moved from or to a particular account. 

Such information provides asset 

managers with a better understanding of 

the accounts that they manage and the 

reason that clients are investing within 

certain products. This understanding 

allows asset managers to better serve 

clients by providing products to address 

their requirements. Asset managers have 

indicated that such transaction-specific 

information does not need to include 

individual client information with 

respect to the transactions, such as the 

identity of the underlying clients. 

This daily subaccount transactional 

information is currently included 

within the file that insurance carriers 

send to distributors as part of the I&RS 

Financial Activity Reporting (‘‘FAR’’) 

service.7 FAR enables insurance carriers 

to provide distributors with daily 

individual and group annuity and life 

insurance financial transaction 

information, including information 

relating to subaccounts. Distributors use 

this information, including the 

subaccount transactional information, to 

manage their client’s accounts. 

NSCC is proposing to take the 

transaction-specific subaccount data 

that it receives within the FAR files and 

make it available to asset managers that 

sign up for the feature. In connection 

with sending the transaction-specific 

subaccount data, NSCC may send the 

data to third party service providers 

who have been engaged by the asset 

managers to take the data from NSCC 

and organize it on behalf of the asset 

managers and/or provide a central 

repository pursuant to which asset 

managers may retrieve such information 

from NSCC. NSCC may enter into a 

contract with such service providers to 

ensure among other things that the data 

is being used as contemplated by the 

Rules and that there are proper 

safeguards to ensure data security. 

NSCC is proposing to charge the asset 

managers that sign up for the feature 

and gain access to the subaccount data 

a monthly fee of $2,500. Asset managers 

that are not Members or Limited 

Members would also be required to 

enter into an agreement relating to the 

payment of the fees and such other 

conditions as determined by NSCC to 

gain access to the subaccount data, 

including system requirements. 

(ii) Proposed Rule Changes 

The proposed rule change would 

amend Rule 57 to provide that NSCC 

would make available transactionspecific subaccount data to asset 

managers and service providers engaged 

by them to process the applicable data. 

The proposed rule change would also 

provide that asset managers which are 

not Members or Limited Members 

would be required to enter into such 

agreements with the NSCC as 

determined by NSCC to gain access to 

the subaccount data which agreements 

would include an agreement to pay the 

fees set forth in in the Rules to access 

the data and to set up any system 

requirements necessary to access the 

data. The proposed rule change would 

also provide that service providers 

receiving the subaccount data on behalf 

of asset managers would also be 

required to enter into such agreements 

as determined by the Corporation in 

order to gain access to such subaccount 

data on behalf of such asset managers to 

ensure the data is being sent to asset 

managers as contemplated in the Rules 

and that there are proper safeguards by 

the service provider to ensure data 

security 

In addition, NSCC would amend 

Addendum A of the NSCC Rules to 

include the fees for subscription for the 

subaccount data feature. 

2. Statutory Basis 

Section 17A(b)(3)(F) of the Act 8

requires, in part, that the Rules be 

designed to foster cooperation and 

coordination with persons engaged in 

the clearance and settlement of 

securities transactions. The proposed 

rule change would enhance insurance 

carriers’ ability to send, and asset 

managers’ ability to access and retrieve, 

daily transaction-specific subaccount 

data relating to the assets and funds that 

such asset managers manage that are 

within variable annuities and variable 

life insurance contracts. Currently, there 

is not a structured method of providing 

transaction-specific subaccount 

information to asset managers, and 

insurance carriers historically have not 

consistently provided such information 

to asset managers. The proposed rule 

change would allow the transactionspecific subaccount information to be 

shared by insurance carriers with asset 

managers in a standardized format. As 

such, NSCC believes that the proposed 

rule change would foster cooperation 

and coordination among persons 

engaged in the clearance and settlement 

of securities, consistent with the 

requirements of Section 17A(b)(3)(F) of 

the Act.9

Section 17A(b)(3)(D) of the Act 10

requires that the Rules provide for the 

equitable allocation of reasonable dues, 

fees, and other charges among its 

participants. NSCC believes that the 

proposed rule change to Addendum A 

is consistent with this provision of the 

Act because the proposed fees would 


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Federal Register / Vol. 83, No. 154 / Thursday, August 9, 2018 / Notices 39483 

11 Id. 

12 15 U.S.C 78s(b)(3)(A). 

13 17 CFR 240.19b–4(f)(2). 

14 17 CFR 240.19b–4(f)(4). 15 17 CFR 200.30–3(a)(12). 

align with the cost of delivering the 

proposed subaccount data feature, and 

such fees would be allocated equitably 

among the entities that subscribe for 

access to the subaccount data. 

Specifically, the costs to NSCC for 

providing the feature would include 

building the capability to separate the 

subaccount data from the FAR files sent 

by insurance carriers, segregating such 

data by asset manager, drafting and 

negotiating agreements with asset 

managers relating to receiving the data 

and drafting and negotiating agreements 

with service providers who are 

receiving and distributing subaccount 

data on behalf of asset managers. NSCC 

believes that the costs for adding and 

operating the feature on behalf of asset 

managers would be approximately equal 

to the fees anticipated to be received by 

NSCC from the asset managers for use 

of this feature. In addition, such fees 

would be charged only to those asset 

managers that choose to subscribe to the 

feature. Therefore, by establishing fees 

that align with the cost of delivery of 

this feature and allocating those fees 

equitably among the subscribing asset 

managers, the proposed rule change 

would provide for the equitable 

allocation of reasonable dues, fees and 

other charges among its participants 

consistent with the requirements of 

Section 17A(b)(3)(D) of the Act.11

(B) Clearing Agency’s Statement on 

Burden on Competition 

NSCC does not believe that the 

proposed rule change would have any 

adverse impact, or impose any burden, 

on competition because the proposed 

rule change would add an optional 

feature to NSCC’s services that would 

provide access by asset managers to 

transaction-specific subaccount data 

that is included within the FAR files. As 

an optional feature available for 

subscription, the proposed rule change 

would not disproportionally impact any 

NSCC participants. 

Moreover, because the proposed rule 

change would allow asset managers to 

receive transaction-specific subaccount 

data and use that information to better 

service the funds and assets within 

variable products, NSCC believes the 

proposed rule change would have a 

positive effect on competition among 

asset managers. The proposed feature 

would provide these firms with a 

method of receiving transaction-specific 

subaccount data similar to the 

information that such asset managers 

currently receive with respect to retail 

mutual funds. Receiving transactionspecific subaccount information with 

respect to variable products would 

provide asset managers a better 

understanding of client requirements 

and allow asset managers to adjust their 

products so that they are better suited 

for clients of variable annuities and 

variable life insurance contracts. NSCC 

believes this would enhance 

competition among asset managers by 

enabling each to more quickly provide 

competing products meeting client 

requirements. 

(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) 12 of the Act and 

subparagraphs (f)(2) 13 and (f)(4) 14 of 

Rule 19b–4 thereunder. 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. 

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 rule-comments@

sec.gov. Please include File Number SR– 

NSCC–2018–005 on the subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Secretary, Securities and Exchange 

Commission, 100 F Street NE, 

Washington, DC 20549. 

All submissions should refer to File 

Number SR–NSCC–2018–005. 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 website (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 website 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 website 

(http://dtcc.com/legal/sec-rulefilings.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– 

2018–005 and should be submitted on 

or before August 30, 2018. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.15

Eduardo A. Aleman, 

Assistant Secretary. 

[FR Doc. 2018–17007 Filed 8–8–18; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

Submission for OMB Review; 

Comment Request 

Upon Written Request, Copies Available 

From: Securities and Exchange 

Commission, Office of FOIA Services, 

100 F Street NE, Washington, DC 

20549–2736 

Extension: 

Form ADV–E, SEC File No. 270–318, OMB 

Control No. 3235–0361 

Notice is hereby given that, pursuant 

to the Paperwork Reduction Act of 1995 

(44 U.S.C. 3501 et seq.), the Securities 

and Exchange Commission (the 


sradovich on DSK3GMQ082PROD with NOTICES