[Federal Register Volume 87, Number 3 (Wednesday, January 5, 2022)]
[Notices]
[Pages 508-513]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-28518]


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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.
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    \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).
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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\
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    \5\ Capitalized 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.
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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

[[Page 509]]

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 cost-based 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.
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    \6\ NSCC 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-and-compliance/NSCC_Disclosure_Framework.pdf, at 120.
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(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.
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    \7\ See 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.
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    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[supreg] 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.
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    \10\ For purposes of this filing, NSCC Members refers to Members 
and Limited Members.
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    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'').
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    \11\ Fund/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.
    \12\ See 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.
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    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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    \13\ Phases 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).
    \14\ Section 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'').
    \15\ After 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.

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[[Page 510]]

(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\
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    \16\ AIP 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.
    \17\ See Section IV.O.3. of Addendum A and accompanying footnote 
12 of Addendum A, supra note 5.
    \18\ Id.
    \19\ See 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'').
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    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.
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    \20\ For 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.
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    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.
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    \21\ Section IV.O.1.ii of Addendum A, supra note 5.
    \22\ Section IV.O.2.ii of Addendum A, supra note 5.
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    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:

<bullet> 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
<bullet> 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.

[[Page 511]]

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.
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    \23\ See 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.
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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\
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    \25\ Id.
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(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.
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    \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).
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    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\
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    \29\ 15 U.S.C. 78q-1(b)(3)(D).
    \30\ Id.
    \31\ See note 6, supra.
    \32\ See note 24, supra.
    \33\ 15 U.S.C. 78q-1(b)(3)(D).
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    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\
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    \34\ 15 U.S.C. 78q-1(b)(3)(F).
    \35\ Id.
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    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\
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    \36\ 17 CFR 240.17Ad-22(e)(23)(ii).
    \37\ Id.
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(B) Clearing Agency's Statement on Burden on Competition

    NSCC believes the proposed rule changes to add fees for MF Info 
Xchange

[[Page 512]]

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\
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    \38\ 15 U.S.C. 78q-1(b)(3)(I).
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    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\
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    \39\ 15 U.S.C. 78q-1(b)(3)(D).
    \40\ 15 U.S.C. 78q-1(b)(3)(I).
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    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\
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    \41\ See note 6, supra.
    \42\ 15 U.S.C. 78q-1(b)(3)(I).
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    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 
<a href="/cdn-cgi/l/email-protection#394d4b585d50575e58575d54584b525c4d4a794a5c5a175e564f"><span class="__cf_email__" data-cfemail="fc888e9d9895929b9d9298919d8e9799888fbc8f999fd29b938a">[email protected]</span></a> 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.
---------------------------------------------------------------------------

    \43\ 15 U.S.C 78s(b)(3)(A).
    \44\ 17 CFR 240.19b-4(f).
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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

    <bullet> Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or
    <bullet> Send an email to <a href="/cdn-cgi/l/email-protection#c3b1b6afa6eea0acaeaea6adb7b083b0a6a0eda4acb5"><span class="__cf_email__" data-cfemail="e99b9c858cc48a8684848c879d9aa99a8c8ac78e869f">[email protected]</span></a>. Please include 
File Number SR-NSCC-2021-017 on the subject line.

Paper Comments

    <bullet> Send paper comments in triplicate to Secretary, Securities 
and Exchange

[[Page 513]]

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-rule-filings.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\
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    \45\ 17 CFR 200.30-3(a)(12).
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Vanessa A. Countryman,
Secretary.
[FR Doc. 2021-28518 Filed 1-4-22; 8:45 am]
BILLING CODE 8011-01-P


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