508 Federal Register / Vol. 87, No. 3 / Wednesday, January 5, 2022 / Notices 

11 17 CFR 240.19b–4(f)(6). 

12 17 CFR 240.19b–4(f)(6)(iii). 

13For purposes only of waiving the 30-day 

operative delay, the Commission also has 

considered the proposed rule’s impact on 

efficiency, competition, and capital formation. See 

15 U.S.C. 78c(f). 14 17 CFR 200.30–3(a)(12). 

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) and (f)(4). 

5Capitalized terms used herein and not otherwise 

defined shall have the meaning assigned to such 

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

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

A proposed rule change filed under 

Rule 19b–4(f)(6) 11 normally does not 

become operative prior to 30 days after 

the date of the filing. However, pursuant 

to Rule 19b–4(f)(6)(iii),12 the 

Commission may designate a shorter 

time if such action is consistent with the 

protection of investors and the public 

interest. The Exchange has asked the 

Commission to waive the 30-day 

operative delay. Waiver of the operative 

delay would allow the Exchange to 

immediately delay the implementation 

of SR–NASDAQ–2021–009 and provide 

the Exchange additional time to test and 

implement new LULD closing cross 

functionalities. The Commission 

believes that waiving the 30-day 

operative delay is consistent with the 

protection of investors and the public 

interest. Accordingly, the Commission 

hereby waives the operative delay and 

designates the proposed rule change 

operative upon filing.13

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. If the 

Commission takes such action, the 

Commission shall institute proceedings 

to determine whether the proposed rule 

change should be approved or 

disapproved. 

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 (https://www.sec.gov/ 

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include File Number SR– 

NASDAQ–2021–105 on the subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Secretary, Securities and Exchange 

Commission, 100 F Street NE, 

Washington, DC 20549–1090. 

All submissions should refer to File 

Number SR–NASDAQ–2021–105. 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 (https://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 the Exchange. All comments 

received will be posted without change. 

Persons submitting comments are 

cautioned that we do not redact or edit 

personal identifying information from 

comment submissions. You should 

submit only information that you wish 

to make available publicly. All 

submissions should refer to File 

Number SR–NASDAQ–2021–105 and 

should be submitted on or before 

January 26, 2022. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.14

Eduardo A. Aleman, 

Deputy Secretary. 

[FR Doc. 2021–28570 Filed 1–4–22; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–93873; File No. SR–NSCC– 

2021–017] 

Self-Regulatory Organizations; 

National Securities Clearing 

Corporation; Notice of Filing and 

Immediate Effectiveness of a Proposed 

Rule Change To Add Fees for NSCC’s 

MF Info Xchange Service, Modify Fees 

for NSCC’s Alternative Investment 

Product Service and Make Certain 

Other Clarification Changes to 

Addendum A of the NSCC Rules 

December 29, 2021. 

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

Securities Exchange Act of 1934 

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

notice is hereby given that on December 

27, 2021, 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 

primarily 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) and (f)(4) 4 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 

(a) The proposed rule change of 

National Securities Clearing Corporation 

(‘‘NSCC’’) is annexed hereto as Exhibit 

5 and consists of modifications to 

Addendum A (Fee Structure) 

(‘‘Addendum A’’) of NSCC’s Rules & 

Procedures (‘‘Rules’’) in order to (i) add 

fees for NSCC’s MF Info Xchange 

service, (ii) make certain adjustments in 

the fees for NSCC’s Alternative 

Investment Product service (‘‘AIP’’) and 

(iii) make certain other clarification 

changes to Addendum A, as described 

below.5

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 


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Federal Register / Vol. 87, No. 3 / Wednesday, January 5, 2022 / Notices 509 

6NSCC has in place procedures to control costs 

and to regularly review pricing levels against costs 

of operation. NSCC’s fees are cost-based plus a 

markup as approved by its Board of Directors. This 

markup is applied to recover development costs 

and operating expenses, and to accumulate capital 

sufficient to meet regulatory and economic 

requirements. See NSCC Disclosure Framework for 

Covered Clearing Agencies and Financial Market 

Infrastructures, available at https://www.dtcc.com/- 

/media/Files/Downloads/legal/policy-andcompliance/NSCC_Disclosure_Framework.pdf, at 

120. 

7See Securities Exchange Act Release No. 84611 

(November 16, 2018), 83 FR 59427 (November 23, 

2018) (SR–NSCC–2018–010). The initial 3 event 

types were Fund Merger, Fund Closure—Hard Close 

and Fund Closure—Soft Close. 

8 Id. 

9 Id. 

10For purposes of this filing, NSCC Members 

refers to Members and Limited Members. 

11Fund/SERV Eligible Fund means a fund or 

other pooled investment entity which are subject of 

orders processed through Mutual Fund Services. 

See definition of ‘‘Fund/SERV Eligible Fund, Rule 

1, supra note 5 and Section 1(c) of Rule 3, supra 

note 5. 

12See Section 1(c) of Rule 3, supra note 5, which 

requires that unless otherwise required by NSCC, 

each Fund/SERV Eligible Fund be assigned a CUSIP 

number. CUSIP is a registered trademark of the 

American Bankers Association. 

13Phases I & II are also known as MFPS I (Daily 

Price and Rate File) and MFPS II (Security Issue 

Database and Distribution Database). The terms 

Phase I and Phase II are used in the Rules because 

MFPS I and MFPS II were implemented in phases 

with MFPS I implemented first in 1996 and MFPS 

II implemented in 1999. See Securities Exchange 

Act Release No. 37171 (May 8, 1996), 61 FR 24344 

(May 14, 1996) (SR–NSCC–96–04) (order approving 

MFPS I implementation) and Securities Exchange 

Act Release No. 40614 (October 28, 1998), 63 FR 

59615 (November 4, 1998) (SR–NSCC–98–09) 

(notice of filing of rule change implementing MFPS 

II). 

14Section IV.J.b. of Addendum A and 

accompanying footnote 5 in Addendum A, supra 

note 5. See also Securities Exchange Act Release 

No. 61413 (January 25, 2010), 75 FR 4894 (January 

29, 2010) (SR–NSCC–2009–12) (NSCC introduced 

the credit for MFPS for smaller fund families that 

had 25 or fewer funds in their fund family) and 

Securities Exchange Act Release No. 84771 

(December 10, 2018), 83 FR 64393 (December 14, 

2018) (SR–NSCC–2018–012) (NSCC reduced the 

fees in MFPS to current levels) (‘‘2018 Filing’’). 

15After NSCC lowered its fees in 2019 for funds 

with 25 or fewer Security IDs on MFPS from $850 

to $250, the number of such funds using MFPS has 

doubled. See 2018 Filing, Id. 

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 purpose of this proposed rule 

change is to (i) add fees for MF Info 

Xchange, (ii) make certain adjustments 

in the fees for AIP and (iii) make certain 

clarifications to Addendum A, as 

described below. The fee changes are 

being made to better align fees with the 

costs of services provided by NSCC by 

adjusting the fees so that the revenue 

received by NSCC would be closer to 

the costs of building and providing the 

services consistent with NSCC’s costbased plus markup fee model.6 In 

general, fee levels for NSCC are set by 

NSCC after periodic reviews of a 

number of factors, including revenues, 

operating costs and potential service 

enhancements. NSCC also continuously 

engages in discussions with NSCC 

Members regarding proposed fee 

changes and potential impacts. 

(i) MF Info Xchange Fees 

MF Info Xchange facilitates and 

centralizes the delivery and receipt of 

time-critical notifications, including 

corporate actions, service disruptions, 

large trade notifications and other 

critical alerts. The service was launched 

on November 30, 2018 with 3 event 

types.7 Given the limited number of 

event types available for event 

notifications upon the launch of MF 

Info Xchange, NSCC did not charge fees 

initially for the use of the service.8

NSCC indicated that it would file with 

the Commission an appropriate rule 

change proposal to implement any fees 

for MF Info Xchange if NSCC added fees 

for the service.9 Fund Members are 

typically funds or asset managers of 

funds and use MF Info Xchange to send 

notifications regarding the funds to their 

distribution partners. NSCC Members 

that are not Fund Members are typically 

broker/dealers or other distributors that 

use MF Info Xchange to receive and 

track such notifications sent by the 

Fund Members as well as send 

notifications to Fund Members about 

their funds. 

Since the launch, MF Info Xchange 

has been enhanced with an additional 

25 event types and additional user 

interface capabilities. NSCC believes 

that it is appropriate to begin charging 

fees for the service given the added 

capabilities and in order to offset the 

costs of building and maintaining the 

service. 

NSCC is proposing to implement a 

two-tiered billing structure for MF Info 

Xchange based on the anticipated 

amount of use of the service by NSCC 

Members.10 Based on a review of the 

usage by NSCC Members, NSCC 

believes that NSCC Members that are 

not Fund Members and larger Fund 

Members use the service more than 

smaller Fund Members. NSCC believes 

that the number of Security Issue IDs 

that a Fund Member maintains on 

Fund/SERV® is a good indication of the 

size of the Fund Member and the level 

of usage of MF Info Xchange by such 

Fund Member. Most notifications in MF 

Info Xchange relate to a specific security 

issuance and each Security Issue ID 

represents a security issuance. 

Therefore, Fund Members that maintain 

more Security Issue IDs, will have a 

greater number of security issuances for 

which notifications will need to be sent. 

NSCC Members that are not Fund 

Members typically receive notifications 

from multiple Fund Members and often 

benefit from receiving notifications for a 

large number of security issuances. 

Fund/SERV is an NSCC service 

providing for the processing and settling 

of Fund/SERV Eligible Funds.11 Each 

Fund/SERV Eligible Fund that is 

processed through Fund/SERV is 

required to be assigned a Security Issue 

ID, such as a CUSIP.12 NSCC is 

proposing to charge NSCC Members that 

are not Fund Members that use MF Info 

Xchange and Fund Members that 

maintain more than 25 Security Issue 

IDs on Fund/SERV that use MF Info 

Xchange, $1,500 per month (‘‘Tier 1’’). 

NSCC is proposing to charge Fund 

Members that maintain 25 or fewer 

Security Issue IDs on Fund/SERV that 

use MF Info Xchange $250 per month 

(‘‘Tier 2’’). 

NSCC believes that the tiered 

structure will align the fees with the 

costs of services provided by NSCC by 

setting the fees so that the revenue 

received by NSCC would be sufficient to 

recover the costs of building and 

maintaining the service. The tiered 

billing structure is similar to NSCC’s 

billing structure for its Mutual Fund 

Profile Service (‘‘MFPS’’). Users of 

MFPS that use Phases I & II 13 that have 

greater than 25 Security Issue IDs in 

MFPS pay $1,250.00 per month whereas 

users that have 25 or fewer Security 

Issue IDs registered in MFPS that use 

Phases I & II pay $250.00 per month.14

Based on its experience with MFPS 15

and discussions with Fund Members, 

NSCC believes that the threshold of 

greater than 25 Security Issue IDs has 

been a good estimation of the size of the 

Fund Member and the amount of use of 

the service by each Fund Member. Also 

based on pricing levels and usage in 

MFPS and discussions with NSCC 

Members, NSCC believes that the $1,500 

and $250 pricing levels are sufficient to 

recover the costs of building and 

maintaining the service without being 

so excessive as to materially 

disincentivize use of MF Info Xchange. 


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510 Federal Register / Vol. 87, No. 3 / Wednesday, January 5, 2022 / Notices 

16AIP has a tiered billing system based on 

whether services are being used for higher volume 

products or lower volume products. See Section 

L.O.3 of Addendum A, supra note 5, which 

indicates which products are considered higher 

volume and which are considered lower volume. 

Fees are lower with respect to higher volume 

products. 

17See Section IV.O.3. of Addendum A and 

accompanying footnote 12 of Addendum A, supra 

note 5. 

18 Id. 

19See Securities Exchange Act Release No. 63634 

(January 3, 2011), 76 FR 1475 (January 10, 2011) 

(SR–NSCC–2010–19) (stating that the fee cap was 

implemented to ‘‘encourage broker-dealers to use 

the service and expand coverage of these products 

and increase the value of the overall market’’). 

20For instance, since the fee cap was put in place 

in 2010, the number of Eligible AIP Products on the 

AIP platform has grown from under 500 to over 

7000. 

21Section IV.O.1.ii of Addendum A, supra note 

5. 

22Section IV.O.2.ii of Addendum A, supra note 

5. 

(ii) AIP Fee Changes 

AIP is a standardized, trading and 

reporting platform that links the 

alternative investments industry to 

securely and efficiently exchange data 

and money relating to alternative 

investment products, including hedge 

funds, funds of funds, private equity, 

non-traded real estate investment trusts, 

managed futures and limited 

partnerships. NSCC has undertaken a 

strategic review of its pricing structure 

for AIP, and developed a revenue and 

pricing strategy with the goal of aligning 

the pricing of AIP with costs of 

providing the service. As a result of the 

review, NSCC has determined that 

certain fees in AIP have, over time, 

become misaligned with the costs of 

service as a result of increased 

technology run costs relating to the 

service. NSCC would also like to lower 

certain fees relating to capital calls and 

lower volume transfers 16 to incentivize 

greater use of those products. In 

connection with the realignment, NSCC 

is proposing to eliminate a cap of 

$250,000 currently in place for AIP 

Distributors. Currently, there are certain 

products for which a $250,000 fee cap 

applies for AIP Distributors.17 Once an 

AIP Distributor has been charged 

$250,000 for transactions relating to 

such products in a calendar year, it will 

not pay with respect to transactions in 

those products for the remainder of the 

calendar year.18 The fee cap was put in 

place to incentivize greater use of AIP 

with respect to certain products for AIP 

Distributors.19

NSCC believes that the fee cap has 

been successful in incentivizing AIP 

Distributors to use AIP and to require 

more of their fund counterparties (i.e., 

AIP Manufacturers) to use AIP.20 Given 

the growth of AIP and to readjust the 

overall revenues, NSCC no longer 

believes that the fee cap is necessary as 

an incentive or appropriate given AIP’s 

operating margin. 

NSCC is also proposing to increase 

lower volume record transaction fees for 

AIP Manufacturers from $1 to $2 (AIP 

Distributors will continue to pay $1) in 

order to better align revenues of AIP 

with the costs of providing the services. 

NSCC is proposing to lower fees 

relating to capital calls to incentivize 

use of AIP with respect to capital calls. 

Capital calls are considered ‘‘Trades’’ in 

the Rules and higher volume Trades are 

currently priced at a range from $5 per 

trade to $4 per trade depending on the 

number of trades in each calendar 

year 21 and lower volume Trades are $10 

per trade.22 In addition to capital calls, 

Trades include initial purchases, 

subsequent purchases, partial 

redemption requests, full redemption 

requests and commitments. NSCC has 

received feedback from AIP Members 

indicating that capital calls are 

performed more frequently than other 

types of Trades and as a result, AIP 

Members have not been using AIP for 

capital calls because the AIP Members 

believe the price is currently too high 

for both higher volume products and 

lower volume products with respect to 

capital calls. As a result, NSCC is 

proposing to reduce the price for all 

capital calls to $2 to incentivize use of 

AIP for capital calls. This reduction 

would apply to capital calls with 

respect to higher volume products and 

lower volume products. 

NSCC is also proposing to lower fees 

relating to lower volume transfers to 

incentivize use of AIP with respect to 

lower volume transfers. NSCC has 

received feedback from AIP Members 

that lower volume transfers are also 

priced too high and as a result AIP 

Members have not been using AIP for 

lower volume transfers. NSCC is 

proposing to reduce lower volume 

transfers from $5 to $2 in order to 

incentivize use of AIP for lower volume 

transfers. 

(iii) Clarification Changes 

NSCC is also proposing to add a 

heading for Mutual Fund Services in 

Addendum A and renumber the 

headings in Addendum A to reflect that 

a number of services listed in 

Addendum A fall within Mutual Fund 

Services. NSCC would also renumber 

other sections of Addendum A to reflect 

the renumbering for Mutual Fund 

Services. 

(iv) Proposed Rule Changes 

A. MF Info Xchange Fees 

NSCC is proposing to add the fees to 

MF Info Xchange in new proposed 

section IV.G.5 of Addendum A. 

B. AIP Fee Changes 

NSCC is proposing to state that all 

capital calls are $2 per trade in new 

proposed Section IV.L.1.c (for higher 

volume capital calls) and new proposed 

Section IV.L.2.c (for lower volume 

capital calls) of Addendum A. NSCC 

would add ‘‘(other than capital calls)’’ 

in proposed sections IV.L.1.b. and 

IV.L.2.b. of Addendum A to reflect that 

capital calls would be separately 

covered in other sections. NSCC is 

proposing to increase the lower volume 

record transactions fees for AIP 

Manufacturers in new proposed section 

IV.L.2.a. of Addendum A from $1 dollar 

per trade to $2 dollar per trade. NSCC 

is also proposing to reduce lower 

volume transfers from $5 to $2 in new 

proposed Section IV.L.2.d. of 

Addendum A. NSCC is proposing to 

remove the $250,000 fee cap for AIP 

Distributors in new proposed Section 

IV.L.3. and to remove the accompanying 

footnote 12 of Addendum A. 

Based on feedback from NSCC 

Members and a review of other pricing 

levels, NSCC believes that: 

• Reducing fees to $2 for all capital 

calls and reducing lower volume 

transfers to $2 would incentivize 

NSCC Members to begin using AIP 

with respect to capital calls and with 

respect to lower volume transfers 

• increasing the lower volume record 

transaction fees from $1 to $2 and 

removing the fee cap for AIP 

Distributors would raise revenue to an 

appropriate level to help ensure that 

AIP operates with a positive operating 

margin without being so excessive as 

to materially disincentivize the use of 

AIP for lower volume record 

transactions or the use of AIP by AIP 

Distributors 

C. Clarification Changes 

NSCC is proposing to add a heading 

‘‘Mutual Fund Services’’ in Section 

IV.G. of Addendum A and proposing to 

renumber Mutual Fund Services under 

that heading to reflect the services that 

fall within Mutual Fund Services. NSCC 

is also proposing to renumber sections 

following Section IV.G. to reflect the 

renumbering within Section IV.G. of 

Addendum A. 

(iii) Expected Member/NSCC Impact 

A. MF Info Xchange Fees 

The fee changes for MF Info Xchange 

would impact all users of the service. 


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23See note 6, supra. 

24 It is not certain that revenues and expenses will 

remain constant. Costs of providing the service may 

change, for instance, if NSCC Members request 

service enhancements or NSCC’s technology costs 

change. In addition, revenues may change 

depending on the number of users of the service. 

NSCC regularly reviews pricing levels against costs 

of operation. As with its other services, if NSCC 

determines that its operating margin is too high or 

too low, NSCC would change pricing levels 

accordingly. See 2018 Filing, supra note 14. 

25 Id. 

26 15 U.S.C. 78q–1(b)(3)(D). 

27 15 U.S.C. 78q–1(b)(3)(F). 

28 17 CFR 240.17Ad–22(e)(23)(ii). 

29 15 U.S.C. 78q–1(b)(3)(D). 

30 Id. 

31See note 6, supra. 

32See note 24, supra. 

33 15 U.S.C. 78q–1(b)(3)(D). 

34 15 U.S.C. 78q–1(b)(3)(F). 

35 Id. 

36 17 CFR 240.17Ad–22(e)(23)(ii). 

37 Id. 

Based on a review of users in the first 

quarter of 2021, it is anticipated that 

initially approximately 67% of the users 

will fall within Tier 1 and be charged 

$1,500 per month and approximately 

33% of the users will fall within Tier 2 

and be charged $250 per month. Of the 

users in Tier 1, approximately 67% are 

expected to be Fund Members that 

maintain more than 25 Security Issue 

IDs and approximately 33% are 

expected to be NSCC Members that are 

not Fund Members. 

The fees are intended to cover the 

costs of developing and maintaining MF 

Info Xchange in accordance with 

NSCC’s cost-based plus markup fee 

model.23 Following the implementation 

of fees, assuming revenues and expenses 

remain constant,24 NSCC anticipates 

recouping the costs of building MF Info 

Xchange within approximately three 

years of implementing the fees and 

expects to have a positive operating 

margin thereafter. 

B. AIP Fee Changes 

In general, NSCC anticipates that, as 

result of the proposed changes to 

remove the $250,000 fee cap, four AIP 

Distributors will see a fee increase for 

use of the affected products. Based on 

a review of client invoices in June 2021, 

which NSCC believes is representative 

of typical AIP usage, NSCC anticipates 

that as a result of all of the fee changes 

approximately 59% of AIP users 

comprised of mainly AIP Manufacturers 

engaging in lower volume activity will 

see a fee increase, approximately 40% of 

AIP users comprised of mainly AIP 

users engaging in higher volume activity 

will see no fee impact and less than 1% 

of AIP users will see a fee decrease. 

The fee changes are intended to 

realign AIPs revenue with its costs. AIP 

had a negative operating margin in 2020 

and it is anticipated to have a negative 

operating margin in 2021. Following the 

fee changes, AIP anticipates that it will 

have a positive operating margin in 

2022 and going forward, consistent with 

NSCC’s cost-based plus markup fee 

model.25

(iv) Implementation Timeline 

NSCC expects to implement the 

proposed rule changes on January 1, 

2022. As proposed, a legend would be 

added to Addendum A stating there are 

changes that became effective upon 

filing with the Commission but have not 

yet been implemented. The proposed 

legend also would include January 1, 

2022, as the date on which such changes 

would be implemented and the file 

number of this proposal, and state that, 

once this proposal is implemented, the 

legend would automatically be removed 

from Addendum A. 

2. Statutory Basis 

NSCC believes this proposal is 

consistent with the requirements of the 

Act and the rules and regulations 

thereunder applicable to a registered 

clearing agency. Specifically, NSCC 

believes this proposal is consistent with 

Sections 17A(b)(3)(D) 26 and 

17A(b)(3)(F) 27 of the Act and Rule 

17Ad–22(e)(23)(ii),28 as promulgated 

under the Act, for the reasons described 

below. 

Section 17A(b)(3)(D) of the Act 29

requires, in part, that the Rules provide 

for the equitable allocation of reasonable 

dues, fees, and other charges among its 

participants. The proposed fee changes 

set forth above are consistent with 

17A(b)(3)(D) of the Act 30 because the 

proposed fees would be allocated 

equitably among the NSCC Members 

that subscribe for those services based 

on each NSCC Member’s use of such 

services. In addition, NSCC believes that 

the proposed fee changes are reasonable 

because they would enable NSCC to 

better align its revenue with the costs 

and expenses required for NSCC to 

provide the services to NSCC Members 

consistent with NSCC’s cost-based plus 

markup fee model.31 Specifically, NSCC 

has determined that assuming revenue 

and expenses remain constant,32 adding 

the fee for MF Info Xchange would 

allow NSCC to recoup the investments 

it has made in building the service 

within approximately three years and 

allow it to operate with a positive 

operating margin going forward. Based 

on the current usage and projected 

revenue for AIP, the realignment of fees 

would result in overall revenue that 

would be closer to the costs of providing 

the service and at the same time provide 

incentives for users to use AIP for 

capital calls and lower volume transfers. 

Therefore, by establishing fees that align 

with the costs of delivery of these 

products and services and allocating 

those fees equitably among the 

subscribing NSCC Members, the 

proposed fee changes are consistent 

with the requirements of Section 

17A(b)(3)(D) of the Act.33

Section 17A(b)(3)(F) of the Act 34

requires, in part, that the Rules promote 

the prompt and accurate clearance and 

settlement of securities transactions. 

NSCC believes that the proposed 

clarifications adding the Mutual Fund 

Services heading in Addendum A and 

renumbering Addendum A as forth 

above would enhance NSCC Members’ 

ability to understand the fees associated 

with Mutual Fund Services. 

Specifically, the proposed clarifications 

would clarify which services fall within 

Mutual Fund Services, similar to the 

structure for Insurance & Retirement 

Services and AIP in Addendum A. As 

such, the proposed clarifications would 

allow NSCC Members to have a better 

understanding of the Rules in relation to 

their activities and thereby assist in 

promoting the requirements of Section 

17A(b)(3)(F) of the Act.35

Rule 17Ad–22(e)(23)(ii) under the 

Act 36 requires NSCC to establish, 

implement, maintain and enforce 

written policies and procedures 

reasonably designed to provide 

sufficient information to enable 

participants to identify and evaluate the 

risks, fees, and other material costs they 

incur by participating in the covered 

clearing agency. The proposed 

clarifications adding the Mutual Fund 

Services heading in Addendum A and 

renumbering Addendum A as set forth 

above would help ensure that the fees 

set forth in Addendum A are clear and 

transparent to NSCC Members. Having a 

clear and transparent Addendum A 

would help NSCC Members to better 

understand NSCC’s fees and help 

provide NSCC Members with increased 

predictability and certainty regarding 

the fees they incur in participating in 

NSCC. As such, by improving the clarity 

and transparency of the Rules, NSCC 

believes the proposed clarifications are 

consistent with Rule 17Ad–22(e)(23)(ii) 

under the Act.37

(B) Clearing Agency’s Statement on 

Burden on Competition 

NSCC believes the proposed rule 

changes to add fees for MF Info Xchange 


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512 Federal Register / Vol. 87, No. 3 / Wednesday, January 5, 2022 / Notices 

38 15 U.S.C. 78q–1(b)(3)(I). 

39 15 U.S.C. 78q–1(b)(3)(D). 

40 15 U.S.C. 78q–1(b)(3)(I). 

41See note 6, supra. 

42 15 U.S.C. 78q–1(b)(3)(I). 

43 15 U.S.C 78s(b)(3)(A). 

44 17 CFR 240.19b–4(f). 

and increase certain fees for AIP, may 

have an impact on competition. NSCC 

believes these proposed rule changes 

could burden competition by negatively 

affecting such NSCC Members’ 

operating costs. While these NSCC 

Members may experience increases in 

their fees when compared to their fees 

under the current fee structure, NSCC 

does not believe such change in fees 

would in and of itself mean that the 

burden on competition is significant. 

This is because even though the amount 

of the fee increase may seem significant 

in some instances to certain NSCC 

Members (e.g., charging $1,500/mo for 

MF Info Xchange when it is free now 

and removing the AIP $250,000 fee cap), 

NSCC believes the increase in fees 

would similarly affect all NSCC 

Members that utilize the services, and 

therefore the burden on competition 

would not be significant. 

Regardless of whether the burden on 

competition is deemed significant, 

NSCC believes any burden on 

competition that is created by these 

proposed rule changes would be 

necessary and appropriate in 

furtherance of the purposes of the Act, 

as permitted by Section 17A(b)(3)(I) of 

the Act.38

The proposed rule changes to add fees 

for MF Info Xchange and increase 

certain fees for AIP would be necessary 

in furtherance of the purposes of the Act 

because the Rules must provide for the 

equitable allocation of reasonable dues, 

fees, and other charges among its 

participants.39 As described above, 

NSCC believes that the proposed rule 

changes would result in fees that are 

equitably allocated (by applying 

uniformly to all NSCC Members that use 

the applicable services) and would 

result in reasonable fees (by allowing 

NSCC to recoup its expenses in building 

MF Info Xchange and allow both MF 

Info Xchange and AIP to operate with a 

positive operating margin). As such, 

NSCC believes these proposed rule 

changes would be necessary in 

furtherance of the purposes of the Act, 

as permitted by Section 17A(b)(3)(I) of 

the Act.40

NSCC also believes that the fees are 

appropriate in furtherance of the 

purposes of the Act because the fees are 

set so that the revenue received by 

NSCC would be closer to the costs of 

building and providing the services 

consistent with NSCC’s cost-based plus 

markup fee model and are being 

equitably allocated among NSCC 

Members.41 Moreover, NSCC believes 

that the fees will enable NSCC to pay for 

building and continue to operate MF 

Info Xchange. NSCC believes MF Info 

Xchange has a positive effect on 

competition among users because the 

service allows data providers to more 

effectively communicate event 

notifications relating to funds and other 

pooled investment entities (‘‘Funds’’). 

The service provides data providers 

with a more efficient method of 

distributing event notifications to 

parties that need to see such 

information in order to facilitate the 

trading and processing of Fund 

securities. NSCC believes this enhances 

competition among Funds and Fund 

participants by allowing parties to 

distribute such information more 

quickly and in a more streamlined 

manner. Based on experiences with the 

similar billing structure used in MFPS 

and discussions with NSCC Members, 

NSCC does not believe that that the 

addition of the proposed fees for MF 

Info Xchange would materially 

disincentivize use of MF Info Xchange. 

As such, NSCC believes these proposed 

rule changes would be appropriate in 

furtherance of the purposes of the Act, 

as permitted by Section 17A(b)(3)(I) of 

the Act.42

NSCC does not believe that any 

proposed fee reductions would have a 

burden on competition and may 

promote competition because the 

proposed fee reductions would allow 

NSCC Members to engage in a greater 

number of transactions with lower costs 

than the prices they would incur today 

for the same transactions. 

NSCC does not believe that the 

proposed clarifications to add the 

Mutual Fund Services heading to 

Addendum A and to renumber 

Addendum A would have any impact 

on competition because such changes 

are clarifications of the Rules that would 

not affect the rights or obligations of 

NSCC Members. 

(C) Clearing Agency’s Statement on 

Comments on the Proposed Rule 

Change Received From Members, 

Participants, or Others 

NSCC has conducted ongoing 

outreach to NSCC Members in order to 

provide them with notice of the 

proposed changes to the affected fees. 

NSCC has not received or solicited 

any written comments relating to this 

proposal. If any written comments are 

received by NSCC, they will be publicly 

filed as an Exhibit 2 to this filing, as 

required by Form 19b–4 and the General 

Instructions thereto. 

Persons submitting comments are 

cautioned that, according to Section IV 

(Solicitation of Comments) of the 

Exhibit 1A in the General Instructions to 

Form 19b–4, the Commission does not 

edit personal identifying information 

from comment submissions. 

Commenters should submit only 

information that they wish to make 

available publicly, including their 

name, email address, and any other 

identifying information. 

All prospective commenters should 

follow the Commission’s instructions on 

how to submit comments, available at 

https://www.sec.gov/regulatory-actions/ 

how-to-submit-comments. General 

questions regarding the rule filing 

process or logistical questions regarding 

this filing should be directed to the 

Main Office of the Commission’s 

Division of Trading and Markets at 

tradingandmarkets@sec.gov or 202– 

551–5777. 

NSCC reserves the right not to 

respond to any comments received. 

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) 43 of the Act and paragraph 

(f) 44 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–2021–017 on the subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Secretary, Securities and Exchange 


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Federal Register / Vol. 87, No. 3 / Wednesday, January 5, 2022 / Notices 513 

45 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3Because the CC Risk Policy and CC Risk 

Procedures would incorporate the information 

currently found in the Capital to Margin Policy and 

Unsecured Credit Limits Procedures in 

substantially the same form, the proposed rule 

change would retire those two documents. 

4Self-Regulatory Organizations; ICE Clear Europe 

Limited; Notice of Filing of Proposed Rule Change 

Relating to Amendments to the Counterparty Credit 

Risk Policy and Counterparty Credit Risk 

Procedures, Exchange Act Release No. 93668 (Nov. 

24, 2021); 86 FR 68014 (Nov. 30, 2021) (SR–ICEEU– 

2021–015) (‘‘Notice’’). 

5Capitalized terms not otherwise defined herein 

have the meanings assigned to them in the CC Risk 

Policy and CC Risk Procedures. 

6As noted further below, ICE Clear Europe is 

taking the processes described in section vi from 

the existing Capital to Margin Policy and Unsecured 

Credit Limits Procedures. 

7 ICE Clear Europe included the Counterparty 

Credit Risk Parameters and Reviews document as a 

confidential Exhibit 3 to the filing. 

Commission, 100 F Street NE, 

Washington, DC 20549. 

All submissions should refer to File 

Number SR–NSCC–2021–017. 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 

(https://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– 

2021–017 and should be submitted on 

or before January 26, 2022. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.45

Vanessa A. Countryman, 

Secretary. 

[FR Doc. 2021–28518 Filed 1–4–22; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–93880; File No. SR–ICEEU– 

2021–015] 

Self-Regulatory Organizations; ICE 

Clear Europe Limited; Order Approving 

Proposed Rule Change Relating to 

Adoption of the Counterparty Credit 

Risk Policy and Counterparty Credit 

Risk Procedures 

December 30, 2021. 

I. Introduction 

On November 15, 2021, ICE Clear 

Europe Limited (‘‘ICE Clear Europe’’) 

filed with the Securities and Exchange 

Commission (‘‘Commission’’), pursuant 

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

Exchange Act of 1934 (the ‘‘Act’’),1 and 

Rule 19b–4,2 a proposed rule change to 

adopt a new Counterparty Credit Risk 

Policy (the ‘‘CC Risk Policy’’) and new 

Counterparty Credit Risk Procedures 

(the ‘‘CC Risk Procedures’’) and retire 

the existing Futures and Options Capital 

to Margin and Shortfall Margin Policy 

(the ‘‘Capital to Margin Policy’’) and 

existing Unsecured Credit Limits 

Procedures.3 The proposed rule change 

was published for comment in the 

Federal Register on November 30, 

2021.4 The Commission did not receive 

comments regarding the proposed rule 

change. For the reasons discussed 

below, the Commission is approving the 

proposed rule change. 

II. Description of the Proposed Rule 

Change 

i. Background 

Both the CC Risk Policy and CC Risk 

Procedures would describe how ICE 

Clear Europe monitors and mitigates 

counterparty credit risk.5 Both 

documents would define counterparty 

credit risk as (i) the risk that a Clearing 

Member misses its next payment to ICE 

Clear Europe, leaving ICE Clear Europe 

under-collateralized and therefore 

increasing the risk of using the Guaranty 

Fund contributions of other Clearing 

Members and ICE Clear Europe to 

manage a potential default of that 

Clearing Member and (ii) the risk that a 

Financial Service Provider (‘‘FSP’’) 

defaults without returning cash to ICE 

Clear Europe, leaving ICE Clear Europe 

with a loss on its investments or 

expected return of cash. Both the CC 

Risk Policy and CC Risk Procedures also 

would define ICE Clear Europe’s overall 

objective with respect to counterparty 

credit risk as managing and minimizing 

this risk. 

To achieve this objective, ICE Clear 

Europe, under both the CC Risk Policy 

and CC Risk Procedures, would (i) set 

and monitor credit eligibility criteria for 

Clearing Members and FSPs; (ii) 

establish credit scores for Clearing 

Members and FSPs; (iii) take mitigating 

actions to reduce ICE Clear Europe’s 

exposure; (iv) perform trigger-based and 

periodic risk reviews of Clearing 

Members and FSPs; and (v) set and 

monitor exposure limits for Clearing 

Members and FSPs. The CC Risk Policy 

would explain in general how ICE Clear 

Europe would carry out these actions, 

and the CC Risk Procedures would 

supplement the CC Risk Policy with 

further detail regarding these actions. 

Thus, the description below is 

organized according to these five steps, 

with an explanation of those actions 

under both the CC Risk Policy and CC 

Risk Procedures.6

ii. Credit Eligibility Criteria 

ICE Clear Europe would first assess 

prospective entities against certain 

credit eligibility criteria. The criteria 

that ICE Clear Europe would use for this 

assessment would be set forth in a new 

Counterparty Credit Risk Parameters 

and Reviews document, which would 

be a supporting document of the CC 

Risk Policy and CC Risk Procedures.7

Overall, ICE Clear Europe would use 

this assessment against the credit 

criteria to assess the financial stability 

of Clearing Members and FSPs. ICE 

Clear Europe would assess prospective 

Clearing Members and FSPs against 

such criteria during onboarding and 

review existing Clearing Members and 

FSPs against such criteria at least 

annually. 

After conducting the assessment, ICE 

Clear Europe would produce a credit 

recommendation for prospective 

Clearing Members based on financial 


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