[Federal Register Volume 62, Number 68 (Wednesday, April 9, 1997)]
[Notices]
[Pages 17274-17275]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-9005]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-38453; File No. SR-NSCC-97-3]


Self-Regulatory Organizations; National Securities Clearing 
Corporation; Notice of Filing of Proposed Rule Change Regarding 
Exemption Processing

March 28, 1997.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(the ``Act''), notice is hereby given that on March 7, 1997, the 
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 NSCC. The Commission is publishing this 
notice to solicit comments on the proposed rule change from interested 
persons.

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The proposed rule change consists of modifications to NSCC's 
procedures regarding exemption processing in NSCC's Continuous Net 
Settlement (``CNS'') system.

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 such 
statements.\1\
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    \1\ The Commission has modified the text of the summaries 
submitted by NSCC.
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(A) Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    (1) The purpose of the proposed rule change is to modify the 
methods of submitting exemptions under NSCC's procedures. As a part of 
the NSCC's CNS Accounting Operation, members may control the delivery 
of their securities to NSCC through the use of exemptions. CNS is an 
on-going accounting system that nets a member's securities obligations 
on a daily basis to produce a new short or long position in each issue.
    A short position in CNS represents the quantity owed to NSCC by the 
member. To satisfy short positions for purposes of settlement, 
securities are delivered from the member's account at The Depository 
Trust Company (``DTC'') to NSCC's account at DTC. These deliveries are 
subject to exemption limitations imposed by the member, which may elect 
to deliver to NSCC all, part, or none of any short position.
    Exemptions assist members in complying with the segregation 
provisions of Rule 15c3-3 of the Act and in meeting other delivery 
needs. NSCC presently requires members to input exemption instructions 
on a daily basis. Currently, NSCC also permits but does not require 
members to input standing instructions.
    In addition to submitting exemption instructions to NSCC, members 
may also manage their segregation and delivery needs through the use of 
DTC's ``Memo Segregation'' facility. Since a member may either use 
NSCC's or DTC's systems to control delivery requirements, the proposed 
rule change will no longer mandate that exemption instructions be 
submitted to NSCC every day.
    If a daily instruction is not submitted, not received, or is 
received but cannot be processed by NSCC, the member's standing 
exemption instructions will be used. As a result, members will now be 
required to submit standing exemption instructions to NSCC since they 
will serve as the member's default instructions under the proposed 
procedures.
    (2) The proposed rule change is consistent with Section 17A of the 
Act and the rules and regulations thereunder since it will facilitate 
the prompt and accurate clearance and settlement of securities 
transactions and in general protect investors and the public interest.

[[Page 17275]]

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

    NSCC does not believe that the proposed rule change will have an 
impact on 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

    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

    Within thirty-five days of the date of publication of this notice 
in the Federal Register or within such longer period (i) as the 
Commission may designate up to ninety days of such date if it finds 
such longer period to be appropriate and publishes its reasons for so 
finding or (ii) as to which the self-regulatory organization consents, 
the Commission will:
    (A) By order approve such proposed rule change; or
    (B) institute proceedings to determine whether the proposed rule 
change should be disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing. Persons making written submissions 
should file six copies thereof with the Secretary, Securities and 
Exchange Commission, 450 Fifth Street N.W., Washington, D.C. 20549. 
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 Room in Washington, D.C. Copies of such 
filing will also be available for inspection and copying at the 
principal office of NSCC. All submissions should refer to File No. SR-
NSCC-97-03 and should be submitted by April 30, 1997.

    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 97-9005 Filed 4-8-97; 8:45 am]
BILLING CODE 8010-01-M