Federal Register / Vol. 83, No. 169 / Thursday, August 30, 2018 / Notices 44353 

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

2 17 CFR 240.19b–4. 

3Securities Exchange Act Release No. 83666 (July 

18, 2018), 83 FR 35041 (July 24, 2018) (SR–NSCC– 

2018–004) (‘‘Notice’’). 

4Available at http://www.dtcc.com/legal/rulesand-procedures. 

5Floor brokerage firms are members of the New 

York Stock Exchange (‘‘NYSE’’) and NYSE 

American. Floor brokerage firms execute trades on 

behalf of their clients for a commission. 

6Notice, 83 FR at 35041. 

7 Id. 

8Notice, 83 FR at 35041–42. 

9Notice, 83 FR at 35042. 

10 Id. 

11 Id. 

12 Id. 

13 Id. 

14 15 U.S.C. 78s(b)(2)(C). 

15 15 U.S.C. 78q–1(b)(3)(F); 17 CFR 240.17Ad– 

22(e)(21)(iv). 

16 15 U.S.C. 78q–1(b)(3)(F). 

17 Id. 

18A ‘‘covered clearing agency’’ means, among 

other things, a clearing agency registered with the 

Commission under Section 17A of the Exchange 

Act (15 U.S.C. 78q–1 et seq.) that is designated 

systemically important by the Financial Stability 

Oversight Counsel (‘‘FSOC’’) pursuant to the 

Payment, Clearing, and Settlement Supervision Act 

of 2010 (12 U.S.C. 5461 et seq.). See 17 CFR 

240.17Ad–22(a)(5)–(6). On July 18, 2012, FSOC 

designated NSCC as systemically important. U.S. 

Department of the Treasury, ‘‘FSOC Makes First 

Designations in Effort to Protect Against Future 

Financial Crises,’’ available at https://

www.treasury.gov/press-center/press-releases/ 

Pages/tg1645.asp. Therefore, NSCC is a covered 

clearing agency. 

19 17 CFR 240.17Ad–22(e)(21)(iv). 

NSCC–2017–805, as modified by 

Amendment No. 1, and that NSCC is 

authorized to implement the proposal as 

of the date of this notice or the date of 

an order by the Commission approving 

proposed rule change SR–NSCC–2017– 

017, as modified by Amendment No. 1, 

whichever is later. 

By the Commission. 

Eduardo A. Aleman, 

Assistant Secretary. 

[FR Doc. 2018–18869 Filed 8–29–18; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–83937; File No. SR–NSCC– 

2018–004] 

Self-Regulatory Organizations; 

National Securities Clearing 

Corporation; Order Approving 

Proposed Rule Change To Terminate 

the Commission Billing Service and 

the Commission Billing Limited 

Membership 

August 24, 2018. 

On July 13, 2018, National Securities 

Clearing Corporation (‘‘NSCC’’) filed 

with the Securities and Exchange 

Commission (‘‘Commission’’) proposed 

rule change SR–NSCC–2018–004, 

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 July 24, 2018.3 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. 

I. Description of the Proposed Rule 

Change 

The proposed rule change would 

amend the Rules and Procedures of 

NSCC (‘‘Rules’’) 4 to terminate the 

Commission Billing service. Currently, 

the Commission Billing service 

facilitates the payment of commissions 

between NSCC’s members (‘‘Members’’) 

and floor brokerage firms 5 that charge 

commissions (‘‘Commission Billing 

Members’’).6 Commission Billing 

Members hold a limited membership at 

NSCC that allows such firms to 

participate in NSCC solely for the 

collection of commissions.7 NSCC 

tabulates all commission payment 

records received on a monthly basis, 

and either sends amounts to The 

Depository Trust Company (‘‘DTC’’) for 

payment (for Members that are also 

Participants of DTC) or processes 

payments through the Automated 

Clearing House.8

NSCC proposes to terminate the 

Commission Billing service and the 

associated membership category.9 NSCC 

states that over the years the volumes of 

trades handled by floor brokerage firms 

have decreased, leading to a significant 

decrease in the use of this service.10

NSCC states that the reduced volumes of 

transactions have caused this service to 

be provided at a financial loss to 

NSCC.11 Additionally, NSCC states that 

due to the use of legacy systems that 

lack automation and support features, 

the service continues to rely on manual 

processes and requires personnel 

involvement, which can lead to errors.12

NSCC would implement the proposed 

changes no later than November 30, 

2018.13

II. Discussion and Commission 

Findings 

Section 19(b)(2)(C) of the Act 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.14 The Commission 

believes the proposal is consistent with 

Act, specifically Section 17A(b)(3)(F) of 

the Act and Rules 17Ad–22(e)(21)(iv) 

under the Act.15

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

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

requires, in part, that the rules of a 

clearing agency, such as NSCC, be 

designed to promote the prompt and 

accurate clearance and settlement of 

securities transactions.16

As described above, the proposed rule 

change would terminate the 

Commission Billing service and the 

associated membership category. The 

proposed change is designed to 

eliminate an underutilized service that 

takes up NSCC resources (through its 

reliance on manual operations and by 

operating at a financial loss) and is no 

longer relied on by Members or the 

industry. As NSCC would no longer 

need to divert resources to the service, 

the proposed rule change would afford 

NSCC the opportunity to redeploy those 

resources in a manner that could better 

support NSCC’s other, more utilized 

clearance and settlement services. 

Accordingly, the Commission finds that 

the proposed rule change is designed to 

promote the prompt and accurate 

clearance and settlement of securities 

transactions, consistent with Section 

17A(b)(3)(F) of the Act.17

B. Rule 17Ad–22(e)(21)(iv) Under the 

Act 

Rule 17Ad–22(e)(21)(iv) under the Act 

requires a covered clearing agency 18 to 

establish, implement, maintain, and 

enforce written policies and procedures 

reasonably designed to be efficient and 

effective in meeting the requirements of 

its participants and the markets it 

serves.19 As described above, use of the 

Commission Billing service has 

significantly decreased, as the industry 

has change and the service no longer 

provides the same value that it had 

historically. As a result, NSCC currently 

operates the service at a financial loss. 

As such, NSCC has determined that it 

would be more efficient and effective in 

meeting the requirements of its 

Members and the market NSCC serves to 

eliminate the service. In doing so, NSCC 

would be able to redirect the resources 

being consumed by the Commission 

Billing service to other, more needed 

services. Therefore, the Commission 

finds that the proposed rule change is 

designed to help ensure that NSCC is 

efficient and effective in meeting the 

requirements of its participants, 


amozie on DSK3GDR082PROD with NOTICES1
44354 Federal Register / Vol. 83, No. 169 / Thursday, August 30, 2018 / Notices 

20 Id. 

21 15 U.S.C. 78q–1. 

22 In approving the proposed rule change, the 

Commission considered the proposals’ impact on 

efficiency, competition, and capital formation. 15 

U.S.C. 78c(f). 

23 17 CFR 200.30–3(a)(12). 

1 12 U.S.C. 5465(e)(1). 

2 17 CFR 240.19b–4(n)(1)(i). 

3On December 18, 2017, NSCC filed the advance 

notice as proposed rule change SR–NSCC–2017– 

018 with the Commission pursuant to Section 

19(b)(1) of the Act and Rule 19b–4 thereunder 

(‘‘Proposed Rule Change’’). 15 U.S.C. 78s(b)(1) and 

17 CFR 240.19b–4, respectively. The Proposed Rule 

Change was published in the Federal Register on 

January 8, 2018. Securities Exchange Act Release 

No. 82428 (January 2, 2018), 83 FR 897 (January 8, 

2018) (SR–NSCC–2017–018). On February 8, 2018, 

the Commission designated a longer period within 

which to approve, disapprove, or institute 

proceedings to determine whether to approve or 

disapprove the Proposed Rule Change. Securities 

Exchange Act Release No. 82670 (February 8, 2018), 

83 FR 6626 (February 14, 2018) (SR–DTC–2017– 

022, SR–FICC–2017–022, SR–NSCC–2017–018). On 

March 20, 2018, the Commission instituted 

proceedings to determine whether to approve or 

disapprove the Proposed Rule Change. Securities 

Exchange Act Release No. 82910 (March 20, 2018), 

83 FR 12968 (March 26, 2018) (SR–NSCC–2017– 

018). On June 25, 2018, the Commission designated 

a longer period for Commission action on the 

proceedings to determine whether to approve or 

disapprove the Proposed Rule Change. Securities 

Exchange Act Release No. 83510 (June 25, 2018), 83 

FR 30791 (June 29, 2018) (SR–DTC–2017–022, SR– 

FICC–2017–022, SR–NSCC–2017–018). On June 28, 

2018, NSCC filed Amendment No. 1 to the 

Proposed Rule Change, which was published in the 

Federal Register on July 19, 2018. Securities 

Exchange Act Release No. 83633 (July 13, 2018), 83 

FR 34227 (July 19, 2018) (SR–NSCC–2017–018). 

NSCC submitted a courtesy copy of Amendment 

No. 1 to the Proposed Rule Change through the 

Commission’s electronic public comment letter 

mechanism. Accordingly, Amendment No. 1 to the 

Proposed Rule Change has been publicly available 

on the Commission’s website at https://

www.sec.gov/rules/sro/nscc.htm since June 29, 

2018. The Commission did not receive any 

comments. The proposal, as set forth in both the 

advance notice and the Proposed Rule Change, each 

as modified by Amendments No. 1, shall not take 

effect until all required regulatory actions are 

completed. 

4Securities Exchange Act Release No. 82584 

(January 24, 2018), 83 FR 4377 (January 30, 2018) 

(SR–NSCC–2017–806) (‘‘Notice’’). 

5Pursuant to Section 806(e)(1)(H) of the Clearing 

Supervision Act, the Commission may extend the 

review period of an advance notice for an 

additional 60 days, if the changes proposed in the 

advance notice raise novel or complex issues, 

subject to the Commission providing the clearing 

agency with prompt written notice of the extension. 

12 U.S.C. 5465(e)(1)(H). The Commission found that 

the advance notice raised complex issues and, 

accordingly, extended the review period of the 

advance notice for an additional 60 days until April 

17, 2018. See Notice, supra note 4. 

6 12 U.S.C. 5465(e)(1)(D). 

7See 12 U.S.C. 5465(e)(1)(E)(ii) and (G)(ii); see 

Memorandum from the Office of Clearance and 

Settlement Supervision, Division of Trading and 

Markets, titled ‘‘Commission’s Request for 

Additional Information,’’ available at https://

www.sec.gov/rules/sro/nscc-an.htm. 

8Securities Exchange Act Release No. 83748 (July 

31, 2018), 83 FR 38375 (August 6, 2018) (SR– 

NSCC–2017–806) (‘‘Notice of Amendment No. 1’’). 

NSCC submitted a courtesy copy of Amendment 

No. 1 to the advance notice through the 

Commission’s electronic public comment letter 

mechanism. Accordingly, Amendment No. 1 to the 

advance notice has been publicly available on the 

Commission’s website at https://www.sec.gov/rules/ 

sro/nscc-an.htm since June 29, 2018. 

9 12 U.S.C. 5465(e)(1)(E) and (G); see 

Memorandum from the Office of Clearance and 

Settlement Supervision, Division of Trading and 

Markets, titled ‘‘Response to the Commission’s 

Request for Additional Information,’’ available at 

https://www.sec.gov/rules/sro/nscc-an.htm. 

10Each capitalized term not otherwise defined 

herein has its respective meaning as set forth in the 

Rules, available at http://www.dtcc.com/∼/media/ 

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

11 DTCC is a user-owned and user-governed 

holding company and is the parent company of 

DTC, FICC, and NSCC. DTCC operates on a shared 

services model with respect to the DTCC Clearing 

Agencies. Most corporate functions are established 

and managed on an enterprise-wide basis pursuant 

to intercompany agreements under which it is 

generally DTCC that provides a relevant service to 

a DTCC Clearing Agency. 

consistent with Rule 17Ad–22(e)(21)(iv) 

under the Act.20

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 21 and the rules 

and regulations thereunder. 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act, that 

proposed rule change SR–NSCC–2018– 

004 be, and hereby is, approved.22

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.23

Eduardo A. Aleman, 

Assistant Secretary. 

[FR Doc. 2018–18782 Filed 8–29–18; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–83952; File No. SR–NSCC– 

2017–806] 

Self-Regulatory Organizations; 

National Securities Clearing 

Corporation; Notice of No Objection to 

an Advance Notice, as Modified by 

Amendment No. 1, To Amend the Loss 

Allocation Rules and Make Other 

Changes 

August 27, 2018. 

On December 18, 2017, National 

Securities Clearing Corporation 

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

Exchange Commission (‘‘Commission’’) 

advance notice SR–NSCC–2017–806 

pursuant to Section 806(e)(1) of Title 

VIII of the Dodd-Frank Wall Street 

Reform and Consumer Protection Act 

entitled the Payment, Clearing, and 

Settlement Supervision Act of 2010 

(‘‘Clearing Supervision Act’’) 1 and Rule 

19b–4(n)(1)(i) under the Securities 

Exchange Act of 1934 (‘‘Act’’) 2 to 

amend NSCC’s loss allocation rules, 

accelerate the return of certain deposits 

to former Members, and make other 

conforming and technical changes.3 The 

advance notice was published for 

comment in the Federal Register on 

January 30, 2018.4 In that publication, 

the Commission also extended the 

review period of the advance notice for 

an additional 60 days, pursuant to 

Section 806(e)(1)(H) of the Clearing 

Supervision Act.5 On April 10, 2018, 

the Commission required additional 

information from NSCC pursuant to 

Section 806(e)(1)(D) of the Clearing 

Supervision Act,6 which tolled the 

Commission’s period of review of the 

advance notice until 60 days from the 

date the information required by the 

Commission was received by the 

Commission.7 On June 28, 2018, NSCC 

filed Amendment No. 1 to the advance 

notice to amend and replace in its 

entirety the advance notice as originally 

filed on December 18, 2017.8 On July 6, 

2018, the Commission received a 

response to its request for additional 

information in consideration of the 

advance notice, which, in turn, added a 

further 60 days to the review period 

pursuant to Section 806(e)(1)(E) and (G) 

of the Clearing Supervision Act.9 The 

Commission did not receive any 

comments. This publication serves as 

notice that the Commission does not 

object to the proposed changes set forth 

in the advance notice, as modified by 

Amendment No. 1 (hereinafter, 

‘‘Advance Notice’’). 

I. Description of the Advance Notice 

The Advance Notice consists of 

proposed changes to NSCC’s Rules and 

Procedures (‘‘Rules’’) 10 in order to (1) 

modify the loss allocation process; (2) 

align NSCC’s loss allocation rules with 

the three clearing agencies of The 

Depository Trust & Clearing Corporation 

(‘‘DTCC’’)—The Depository Trust 

Company (‘‘DTC’’), Fixed Income 

Clearing Corporation (‘‘FICC’’) 

(including the Government Securities 

Division (‘‘FICC/GSD’’) and the 

Mortgage-Backed Securities Division 

(‘‘FICC/MBSD’’)), and NSCC 

(collectively, the ‘‘DTCC Clearing 

Agencies’’); 11 (3) reduce the time within 

which NSCC is required to return a 

former Member’s Clearing Fund deposit; 

and (4) make conforming and technical 

changes. Each of these proposed 

changes is described below. A detailed 

description of the specific rule text 

changes proposed in this Advance 


amozie on DSK3GDR082PROD with NOTICES1