[Federal Register Volume 65, Number 229 (Tuesday, November 28, 2000)]
[Notices]
[Pages 70862-70864]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-30194]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-43597; File No. SR-NSCC-00-11]


Self-Regulatory Organizations; National Securities Clearing 
Corporation; Notice of Filing and Order Granting Accelerated Approval 
of a Proposed Rule Change Relating to Automated Customer Account 
Transfer Services Procedures

November 20, 2000.
    Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on August 28, 2000, the 
National Securities Clearing Corporation (``NSCC'') filed with the 
Securities and Exchange Commission (``Commission'') and on September 
25, 2000, amended the proposed rule change as described in

[[Page 70863]]

Items I and II below, which items have been prepared primarily by NSCC. 
The Commission is publishing this notice and order to solicit comments 
from interested parties and to grant accelerated approval of the 
proposed rule change.
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    \1\ 15 U.S.C. 78s(b)(1).
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I. Self-Regulatory Organization's Statement of the Terms of 
Substance of the Proposed Rule Change

    The proposed rule change modifies NSCC's rules and procedures 
pertaining to acceptance procedures for partial accounts, initiating 
partial account transfers, and reclaim transfer procedures in the 
Automated Customer Account Transfer Service (``ACAT Service'').\2\
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    \2\ A copy of the text of NSCC's proposed rule change and the 
attached exhibits are available at the Commission's Public Reference 
Section or through NSCC. Please note that Exhibit A also contains 
rule text additions previously submitted by NSCC in SR-NSCC-00-05, 
which is pending review by the Commission.
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II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, NSCC 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. NSCC has prepared summaries, set forth in sections (A), 
(B), and (C) below, of the most significant aspects of these 
statements.\3\
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    \3\ The Commission has modified the text of the summaries 
prepared by NSCC.
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(A) Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    NSCC's ACAT Service facilitates the automated transfer of customer 
accounts between members.\4\ In operation since 1985, the ACAT Service 
was designed to complement the New York Stock Exchange (``NYSE'') and 
the National Association of Securities Dealers (``NASD'') rules that 
require NYSE and NASD members to use automated clearing agency customer 
account transfer services and to affect customer account transfers 
within specified timeframes.\5\ Under the proposed rule change, NSCC 
proposes to make three enhancements to the ACAT Service rules and 
procedures.
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    \4\ Rule 50 of NSCC's Rules and Procedures governs the use of 
the ACAT Service by members.
    \5\ NYSE Rule 412 and NASD Rule 11870.
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    The first enhancement relates to the rejection by Receiving Members 
of account assets transferred through the ACAT Service. Pursuant to 
section 8 of Rule 50, Receiving Members may not reject individual 
account assets but rather they may only accept or reject accounts in 
their entirety. The proposed rule change will modify Section 8 by 
providing a Receiving Member with the ability to either accept all 
assets in the account being transferred or to the extent permitted by 
the Receiving Member's designated examining authority accept only some 
of the assets in the account. NSCC proposes to implement these changes 
in January 2001 and will notify members through distribution of an 
Important Notice.
    The second enhancement relates to transfer requests initiated by a 
Delivering Member. Under section 12(1), NSCC will reject a Delivering 
Member initiated transfer if the details contain an edit or format 
error. The proposed rule change will add language stating that NSCC 
will report to both the Delivering Member and the Receiving Member the 
details of the account if no edit or format errors in the asset data 
are discovered by NSCC.
    NSCC also proposes to amend section 12(2) of Rule 50 relating to 
the treatment of reclaim procedures.\6\ Currently, if a Receiving 
Member is going to reject any transfer request initiated by a 
Delivering Member, the Receiving Member must do so on the same day it 
receives the request. In connection with reclaim transfer requests 
only, NSCC has determined that Receiving Members need additional time 
to research these types of transfer requests. The proposed rule change 
will permit a Receiving Member to reject a reclaim transfer request no 
later than two business days following the day the reclaim transfer 
request is received. No action is required by the Receiving Member if 
it determines to accept the reclaim transfer request. Settlement date 
for all reclaim transfer requests will be one business day following 
the day the Receiving Member accepts or is deemed to accept the reclaim 
transfer request. NSCC proposes to implement these changes to section 
12(2) in January 2001. NSCC will notify members by Important Notice.
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    \6\ A reclaim occurs when cash or certain securities are 
mistakenly delivered as part of the ACAT Service transfer.
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    The third enhancement relates to the ability of Receiving Members 
to initiate transfers for partial customer accounts. Section 13 of Rule 
50 currently provides that a Receiving Member may submit a request to a 
Delivering Member to initiate the transfer of a partial customer 
account. The Receiving Member's request is delivered by NSCC to the 
Delivering Member on the same day that it is received by NSCC. Each day 
NSCC produces a report that reflects all requests received by it for 
that day. The Delivering Member is not required to take any action if 
it determines not to respond.
    Under the proposed rule change, section 13 will be revised to 
provide additional time for a Delivering Member to review a Receiving 
Member's request for a partial account transfer. NSCC will continue to 
produce a report reflecting outstanding transfer requests for a period 
not to exceed three days. NSCC will also require a Delivering Member to 
indicate a reason for any requests rejected by the member. Pending 
approval, NSCC plans to implement the revisions to section 13 in 
November 2000 and will notify members by Important Notices.
    NSCC believes the proposed rule change is consistent with Section 
17A(b)(3)(F) of the Act and the rules thereunder because it will 
facilitate the prompt and accurate clearance and settlement of 
securities transactions and in general, protect investors and the 
public interest.

(B) Self-Regulatory Organization's Statement on Burden on Competition

    NSCC does not believe that the proposed rule change will have an 
impact or impose a burden on competition.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants or Others

    Industry groups, including the Executive Committee of the 
Securities Industry Association's Customer Account Transfer Division 
and the Investment Company Institute's Mutual Fund User Group, were 
advised of and concur with these modifications to NSCC's rules. No 
written comments relating to the proposed rule change have been 
solicited or received. 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

    Section 17A(b)(3)(F) \7\ of the Act requires that the rules of a 
clearing agency by designed to remove impediments to and perfect the 
mechanism of a national system for the prompt and accurate clearance 
and settlement of securities transactions. For these reasons set forth 
below, the

[[Page 70864]]

Commission believes that NSCC's rule change is consistent with this 
obligation.
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    \7\ 15 U.S.C. 78q-1(b)(3)(F).
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    The rule change will permit NSCC to make certain enhancements to 
its ACAT Service that will afford members more specificity in the 
manner in which they accept, reject, or initiate transfers of customer 
account assets. These enhancements should improve the mechanism by 
which members transfer customer account assets and should improve the 
communication between members using the ACAT Service. Therefore, the 
Commission finds that the proposed rule change is consistent with 
NSCC's obligations to remove impediments to and perfect the mechanism 
of a national system for the prompt and accurate clearance and 
settlement of securities transactions.
    NSCC has requested that the Commission find good cause for 
approving the proposed rule change prior to the thirtieth day after the 
date of publication of notice of the filing. The Commission finds good 
cause for so approving the proposed rule change because accelerated 
approval will permit NSCC to implement it and members and their 
customers to benefit from these enhancements to the ACAT Service as 
soon as possible.

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. Persons making written submissions 
should file six copies thereof with the Secretary, Securities and 
Exchange Commission, 450 Fifth Street, NW., Washington, DC 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 Section, 450 Fifth Street, NW., 
Washington, DC 20549. Copies of such filing also will be available for 
inspection and copying at the principal office of NSCC. All submissions 
should refer to File No. SR-NSCC-00-11 and should be submitted by 
December 19, 2000.
    It Is Therefore Ordered, pursuant to section 19(b)(2) of the Act, 
that the proposed rule change (File No. SR-NSCC-00-11) be and hereby is 
approved.

    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority.\8\
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    \8\ 17 CFR 200.30-3(a)(12).
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Jonathan G. Katz
Secretary.
[FR Doc. 00-30194 Filed 11-27-00; 8:45 am]
BILLING CODE 8010-01-M