[Federal Register Volume 61, Number 125 (Thursday, June 27, 1996)]
[Notices]
[Pages 33564-33566]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-16451]


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[[Page 33565]]


SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-37347; File No. SR-NSCC-96-08]


Self-Regulatory Organizations: National Securities Clearing 
Corporation; Notice of Filing of Proposed Rule Change Modifying Rules 
and Procedures Relating to the New York Window System

June 21, 1996.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on April 3, 1996, 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.
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    \1\ 15 U.S.C. Sec. 78s(b)(1) (1988).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The purpose of the proposed rule change is to modify NSCC's rules 
regarding the New York Window (``NYW'') service to (i) allow members to 
use the NYW through their individual systems, (ii) modify the terms and 
conditions which NYW services are provided with respect to the use of 
the NYW through NSCC's proprietary system, and (ii) clarify that 
members may elect to use all or some of the services offered under the 
NYW service.\2\
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    \2\ For a complete description of NYW services, refer to 
Securities Exchange Act Release No. 34629 (September 1, 1994), 59 FR 
46680 [File No. SR-NSCC-94-12] (order granting permanent approval of 
the NYW service).
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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 such 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 NYW service provides for the processing of receives and 
deliveries of physical securities and for related services. The NYW 
service also provides custodial services and custodial related 
services. When NSCC sought permanent approval of the NYW service, it 
anticipated that members accessing the NYW through their own systems 
eventually would migrate to using NSCC's proprietary system. However, 
because of the number of industry initiatives currently underway and 
the resulting demand on members' technological resources, a number of 
participants continue to access the NYW through their own systems. This 
proposed rule change seeks to clarify NSCC's NYW rules to explicitly 
allow members to take advantage of the NYW through the use of their 
individual systems.
    Presently, reimbursement for losses related to the use of the NYW 
service is within the sole discretion of NSCC. In order to encourage 
members to use NSCC's proprietary system for the NYW service, NSCC will 
accept responsibility for certain categories of losses where members 
use NSCC's proprietary system. Under the proposed rule change, NSCC 
will be responsible for: (1) the replacement cost of certificates lost 
while in the care, custody, or control of NSCC employees or agents, (2) 
with respect to a lost security, the cost to carry the lost security 
from the date of the scheduled delivery or the redemption date until 
the date when replacement securities are delivered or presented,\4\ and 
(3) the cost to carry for the number of days the NSCC is unable to 
complete a delivery-verse-payment instruction if such failure is due to 
circumstances other than those set forth in clause (1) above. However, 
with respect to the NSCC's obligations under clauses (2) and (3) above, 
NSCC will have no obligations unless (a) instructions regarding 
delivery and the subject securities are delivered to NSCC within time 
parameters established by NSCC from time to time, (b) the final 
delivery destination is within the New York City downtown financial 
district, and (c) other operational criteria, as established by NSCC 
from time to time, are met. Notwithstanding clauses (1), (2), and (3) 
above, NSCC will not be liable for (a) special, incidental, or 
consequential damages or any direct or indirect damages other than the 
cost to carry or (b) the cost to carry resulting from any failure or 
delay arising out of conditions beyond its reasonable control 
including, but not limited to, work stoppages, fire, civil 
disobedience, riots, rebellions, storms, electrical failures, acts of 
God, and similar occurrences. These revised terms will be offered to 
current users of NSCC's NYW services as well as prospective NYW service 
users that access the NYW service through NSCC's proprietary system. 
NSCC is adding a section to Addendum K, Interpretation of the Board of 
Directors, Application of Clearing Fund to Excess Losses and Losses 
Outside of a System, which will provide that if NSCC were to have an 
unsatisfied loss due to a member's use of the NYW service, the loss may 
be satisfied from the entire clearing fund.
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    \4\ The cost to carry a security represents the interest costs 
associated with a participant's failure to receive timely payment.
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    The proposed rule change also clarifies that members may choose to 
use only some of the NYW services (e.g., custodial and custodial 
related services). Members may enter into agreement(s) limiting their 
access to specified NYW services which they desire to access.
    NSCC believes that the proposed rule changes will provide greater 
access to the services provided by NYW. NSCC also believes that the 
proposed rule change relates to its capacity to safeguard securities 
and funds in its custody or control and to protect the public interest 
and is therefore consistent with the requirements of Section 17A \5\ of 
the Act and the rules and regulations thereunder applicable to NSCC.
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    \5\ 15 U.S.C. Sec. 78q-1 (1988).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    NSCC does not believe 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

[[Page 33566]]

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. Sec. 552, will be available for inspection and copying in 
the Commission's Public Reference Room, 450 Fifth Street N.W., 
Washington, D.C. 20549. 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-96-08 and should be 
submitted by July 18, 1996.

    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority.\6\
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    \6\ 17 CFR 200.30-3(a)(12) (1995).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 96-16451 Filed 6-26-96; 8:45 am]
BILLING CODE 8010-01-M