65546 Federal Register / Vol. 75, No. 205 / Monday, October 25, 2010 / Notices 

4 15 U.S.C. 78f(b). 

5 15 U.S.C. 78f(b)(5). 

6 15 U.S.C. 78s(b)(3)(A). 

7 17 CFR 240.19b–4(f)(6). In addition, Rule 

19b–4(f)(6)(iii) requires the Exchange to give the 

Commission written notice of the Exchange’s intent 

to file the proposed rule change, along with a brief 

description and text of the proposed rule change, 

at least five business days prior to the date of filing 

of the proposed rule change, or such shorter time 

as designated by the Commission. The Exchange 

has satisfied this requirement. 

8See supra note 3. 

9For purposes only of waiving the 30-day 

operative delay, the Commission has considered the 

proposed rule’s impact on efficiency, competition, 

and capital formation. See 15 U.S.C. 78c(f). 

10 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3The text of the proposed rule change is attached 

as Exhibit 5 to NSCC’s filing and is available at 

http://www.dtcc.com/downloads/legal/rule_filings/ 

2010/nscc/2010-11.pdf. 

2. Statutory Basis 

The Exchange believes that its 

proposal is consistent with Section 6(b) 

of the Securities Exchange Act of 1934 4

(the ‘‘Act’’) in general, and furthers the 

objectives of Section 6(b)(5) of the Act 5

in particular, in that it is designed to 

promote just and equitable principles of 

trade, to remove impediments to and 

perfect the mechanism of a free and 

open market and a national market 

system, and, in general to protect 

investors and the public interest. In 

particular, the Exchange believes listing 

additional near-term expiration months 

will offer investors more variety in 

trading options series that were 

previously not available. The Exchange 

believes this proposal will also generate 

additional volume in these options 

classes without significantly taxing 

system resources. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Exchange does not believe that 

the proposed rule change will impose 

any burden on competition that is not 

necessary or appropriate in furtherance 

of the purposes of the Act. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

No written comments were solicited 

or received with respect to the proposed 

rule change. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

Because the foregoing proposed rule 

change does not significantly affect the 

protection of investors or the public 

interest, does not impose any significant 

burden on competition, and, by its 

terms, does not become operative for 30 

days from the date on which it was 

filed, or such shorter time as the 

Commission may designate, it has 

become effective pursuant to Section 

19(b)(3)(A) of the Act 6 and Rule 19b– 

4(f)(6) thereunder.7

The Exchange has requested that the 

Commission waive the 30-day operative 

delay. The Commission believes that 

waiver of the operative delay is 

consistent with the protection of 

investors and the public interest 

because the proposal is substantially 

similar to that of another exchange that 

has been approved by the Commission.8

Therefore, the Commission designates 

the proposal operative upon filing.9

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 e-mail to rulecomments@sec.gov. Please include File 

Number SR–NYSEArca–2010–93 on the 

subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Elizabeth M. Murphy, Secretary, 

Securities and Exchange Commission, 

100 F Street, NE., Washington, DC 

20549–1090. 

All submissions should refer to File 

Number SR–NYSEArca–2010–93. This 

file number should be included on the 

subject line if e-mail 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 Web site (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 Web site 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 a.m. and 3 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; 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– 

NYSEArca–2010–93 and should be 

submitted on or before November 15, 

2010. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.10

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. 2010–26926 Filed 10–22–10; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–63126; File No. SR–NSCC– 

2010–11] 

Self-Regulatory Organizations; 

National Securities Clearing 

Corporation; Notice of Filing of 

Proposed Rule Change To Enhance 

the Reconfirmation and Pricing 

Service, Including the Creation of the 

Obligation Warehouse 

October 18, 2010. 

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 October 

5, 2010, the National Securities Clearing 

Corporation (‘‘NSCC’’) filed with the 

Securities and Exchange Commission 

(‘‘Commission’’) the proposed rule 

change as described in Items I and II 

below, which Items have been prepared 

primarily by NSCC.3 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 the Substance 

of the Proposed Rule Change 

The purpose of this proposed rule 

change is to enhance the Reconfirmation 

and Pricing Service (‘‘RECAPS’’) process, 


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Federal Register / Vol. 75, No. 205 / Monday, October 25, 2010 / Notices 65547 

4The Commission has modified the text of the 

summaries prepared by NSCC. 

5Only non-CNS eligible ACATS items and CNSeligible ACATS items that have been designated as 

ex-CNS shall be forwarded to the OW. Non-CNS 

ACATS items for mutual funds, limited 

partnerships, and safekeeping items, however, will 

not be eligible for OW. 

6Balance Orders will be forwarded to the OW 

after netting and allotting has occurred in 

accordance with NSCC’s Procedures. 

7These functionalities will be made available at 

a date no less than ten business days following 

announcement of implementation by Important 

Notice. 

8FINRA Rule 11190(a). 

9See Procedure II (Trade Comparison and 

Recording Service) which sets forth the procedures 

for comparison of direct submissions by members 

and trade recording of locked-in transactions. In 

accordance with Municipal Securities Rulemaking 

Board (‘‘MSRB’’) rules, NSCC reports transactions in 

municipal securities compared through its Realtime Trade Matching (‘‘RTTM’’) service to the MSRB 

on behalf of members; however, transactions 

submitted through the OW will not be reported to 

the MSRB. In order to remain compliant with MSRB 

reporting requirements, members will have to 

continue to make submissions subject to MSRB 

rules through RTTM. 

to modify RECAPS to run on a more 

frequent basis, and to rename RECAPS 

as the Obligation Warehouse (‘‘OW’’) 

service. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, 

NSCC included statements concerning 

the purpose of and basis for the 

proposed rule change and discussed any 

comments it received on the proposed 

rule change. The text of these statements 

may be examined at the places specified 

in Item IV below. NSCC has prepared 

summaries, set forth in sections (A), (B), 

and (C) below, of the most significant 

aspects of these statements.4

(A) Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

Background 

RECAPS is NSCC’s automated fail 

clearance system for eligible securities. 

Through RECAPS, members are 

provided with an opportunity on a 

quarterly basis to reconfirm and reprice 

compared transactions which remain 

unsettled (i.e., fail transactions). The 

rule change proposes to modify RECAPS 

to run on a more frequent basis, enhance 

the RECAPS process, and rename the 

RECAPS process the Obligation 

Warehouse (‘‘OW’’ or ‘‘OW Service’’). As 

more fully described below, the 

proposed enhanced service will 

provide: (1) Comparison of transactions 

that are not otherwise submitted by the 

applicable marketplaces or members 

themselves for trade comparison or 

recording through other NSCC trade 

capture services; (2) tracking, storage, 

and maintenance of unsettled 

obligations either compared through the 

service or forwarded to it from other 

NSCC services in accordance with 

NSCC rules (including securities exited 

from NSCC’s Continuous Net Settlement 

(‘‘CNS’’) system, non-CNS Automated 

Customer Account Transfer Service 

(‘‘ACATS’’) items,5 NSCC Balance Order 

transactions and Special Trades) 

(collectively ‘‘OW Obligations’’); 6 and 

(3) repricing and netting of fail 

obligations. The tracking, storage, and 

maintenance functionality of the OW 

will provide transparency, will make 

information available to its users while 

serving as a central depository of open 

(i.e., failed or unsettled) broker-tobroker obligations, and will allow users 

to manage and to resolve exceptions 

(e.g., ‘‘don’t know’’ or ‘‘DK’’ obligations) 

in an efficient and timely manner. As 

proposed, OW will simultaneously 

provide on-going maintenance and 

servicing of open OW Obligations, such 

as adjustments for corporate actions and 

regular scans of OW Obligations for CNS 

eligibility.7

Current RECAPS Service 

RECAPS allows members to 

periodically reconfirm open, aged fails 

(i.e., fails that are five days or older), 

reprice such fails to the current market 

value, and when possible, net the 

reconfirmed and repriced fails. All 

NSCC members that are also members of 

the Financial Industry Regulatory 

Authority (‘‘FINRA’’) are required to 

participate in the RECAPS service; 8

however, the service is available to all 

members. As part of the RECAPS 

process, those CNS-eligible recompared 

fails are forwarded to CNS for 

processing and settlement. Transactions 

in non-CNS eligible issues are repriced, 

netted, and allotted, when applicable, 

and Balance Orders generated for them 

or they are designated to settle trade-fortrade. 

RECAPS provides reject and DK 

capabilities for advisories received and 

requires members to effectively respond 

to all open fails submitted by a 

contraparty through a batch overnight 

submission. Advisories that are either 

‘‘unresponded to’’ or ‘‘DK’d’’ are subject 

to close-out action under the rules of the 

appropriate marketplace. RECAPS 

provides for a one-day settlement 

capability for all compared fails. 

Currently, the RECAPS processing 

procedures are as follows: 

1. On a Friday evening at the time and 

in the manner established by NSCC, 

members submit RECAPS fail 

information (‘‘RECAPS Input’’). 

2. On the following Monday morning, 

NSCC produces RECAPS Contracts 

indicating compared, uncompared, and 

advisory items. Members: (i) Must 

respond to all advisories that they 

receive as a result of the initial fail 

submission (either by submitting an 

advisory, a ‘‘DK,’’ or a reject) and (ii) 

may submit an ‘‘as-of’’ trade if the 

member failed to timely submit a 

transaction to RECAPS. As-of trades are 

compared only if there is an exact 

match, and no trade resolution process 

is available. NSCC produces 

supplemental RECAPS Contracts 

showing items compared on Monday’s 

input and CNS and non-CNS Compared 

Trade Summaries for those items that 

compared as a result of Monday’s 

submission. 

3. Fails that compared on the Friday 

submission will settle on Monday. Fails 

that compared on the Monday 

submission will settle on Tuesday. 

4. A RECAPS Activity Report is made 

available to members at the end of the 

RECAPS cycle. 

5. The net cash adjustment (the 

difference between the aggregate value 

of the original fails and the aggregate 

value of the reconfirmed trades) will 

settle the day the underlying RECAPS 

Contract settles and is included as part 

of the member’s daily money settlement 

with NSCC. 

6. Because RECAPS is not a 

guaranteed service of NSCC, if NSCC 

does not receive payment from a 

member, NSCC may, in its discretion, 

reverse in whole or part any credit 

previously given to a member that is the 

contra side to a trade reconfirmed and 

repriced through RECAPS. 

Obligation Warehouse 

Currently, many of the transactions 

submitted to RECAPS by members are 

subject to noncentralized, manual 

processes for purposes of comparison of 

fail details and fail confirmation. Under 

this proposed rule change, NSCC 

proposes to enhance and rename the 

RECAPS service as the OW to which 

members may submit and may 

subsequently maintain and manage their 

unsettled transactions. As part of these 

enhancements, NSCC proposes to 

provide a trade matching and 

confirmation process pursuant to which 

members may submit to NSCC 

information on certain obligations that 

are not otherwise submitted to NSCC by 

the applicable marketplaces or members 

themselves through NSCC’s other trade 

comparison or recording services.9


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65548 Federal Register / Vol. 75, No. 205 / Monday, October 25, 2010 / Notices 

10Such items will be subject to the validation 

criteria of the systems/services that forwarded them 

to the OW; therefore, the matching/validation 

criteria (which are set forth in footnote 9 below) 

will not apply. 

11Adjustments for mandatory reorganization 

events are expected to be available shortly after 

February 4, 2011, or a date no less than 10 business 

days following announcement of its 

implementation by Important Notice. 

12This functionality is anticipated to be rolled 

out in early March 2011. 

13 Data required for a valid submission will 

include security identification, quantity to which 

party is deliverer or receiver, contra-broker, 

deliverer’s final money, settlement date, market 

participation identification (MPID) (if applicable), 

Member’s unique reference number (‘‘x-ref’’), 

whether a transaction should be excluded from CNS 

processing and other identifying details as NSCC 

may require or permit. 

14Obligations will be able to be submitted to the 

OW in real-time. Required matching criteria will 

include the specific criteria listed in the 

immediately preceding footnote (except for the xref), and other identifying details as NSCC may 

require or permit. Any submission of a DK must 

include the applicable reason code pertaining to the 

Member’s disagreement with the transaction. 

15 If the deliverer and receiver submit trade data 

that matches in all required respects, the trade will 

be deemed compared if it meets an initial money 

tolerance of $5 per million. The amount of the 

money tolerance may change from time to time 

following the filing of a proposed rule change by 

NSCC. 

16Modification of transaction details will result 

in the cancellation of the existing entry and the 

opening of a new submission. Transaction details 

that have been DK’d by a contraparty will be 

deleted from processing in accordance with time 

frames specified by NSCC from time to time. 

Initially, such transaction details will be deleted on 

the fifth business day following submission of the 

DK by the contraparty. 

17 In the event that NSCC ceases to act for a 

member pursuant to Rule 18, NSCC will reverse 

credits and debits relating to such a cash 

adjustment. 

18This functionality is expected to be rolled out 

by March 2011 or on a date no less than 10 business 

days following announcement of its 

implementation by Important Notice. 

Comparison of transactions submitted 

through the OW will occur in real-time. 

Obligations will be tracked and 

maintained within the OW and will be 

made available for RECAPS processing 

(as described below) until settled or 

otherwise cancelled. In addition, 

transactions exited from CNS, non-CNSeligible ACATS items, and Balance 

Orders, and Special Trades will also be 

forwarded to the OW for storage and 

maintenance and RECAPS processing.10

Compared items stored in the OW 

(whether compared by the OW or 

forwarded to it from other NSCC 

services or systems) will be referred to 

as ‘‘OW Obligations.’’ As more fully 

described below, in order to further 

reduce manual processing by members, 

NSCC may automatically adjust any OW 

Obligations for certain mandatory 

reorganization events, which will 

initially be limited to adjustments for 

forward splits, name changes, 

redemptions, mergers (both cash and 

stock), and full calls with respect to 

bonds.11

The proposed OW Service will 

forward to CNS on a daily basis (or such 

other time frame as NSCC determines 

from time to time) OW Obligations in 

CNS-eligible securities.12 However, the 

OW will not be a guaranteed service, 

and an obligation forwarded to CNS will 

only be guaranteed to the extent that the 

member meets its settlement obligation 

on the date the item is originally 

scheduled to settle in CNS. Transactions 

eligible for submission will have to have 

a valid CUSIP or ISIN and be 

denominated in U.S. Dollars or such 

other currencies as NSCC may designate 

from time to time. NSCC may determine 

from time to time and shall announce by 

Important Notice which items are 

eligible for submission to OW. Initially, 

government, mortgage-backed, and 

foreign securities will all specifically 

not be eligible. Further, cash trades will 

be processed by OW only after 

settlement failure of these trades. 

OW Comparison and Trade Resolution 

Procedures 

As proposed, once a party enters the 

required transaction information,13 the 

contraparty will receive an advisory to 

which it must respond by submitting 

identical transaction details to facilitate 

a compared obligation or by submitting 

a DK.14 If a member does not act on an 

advisory submitted against it by the 

close of business on the day after 

submission, NSCC may impose a fee 

upon the member. If the deliverer and 

receiver submit trade data that matches 

in all required respects, the trade will be 

deemed compared.15 NSCC may permit 

uncompared trade details to be modified 

or cancelled by the submitter on the 

submission date through the use of the 

appropriate instruction.16 Upon 

comparison, NSCC may permit 

obligations to be cancelled if both 

receiver and deliverer agree by 

submitting a cancel request or if one 

party accepts the other party’s cancel 

request. Each OW Obligation will 

receive an ‘‘OW Control Number’’ to 

facilitate tracking the obligation through 

its settlement, cancellation, or closure. 

NSCC will have no responsibility for 

determining whether any trade 

submission is duplicative of an earlier 

trade submission, and any such input 

will be treated as a separate submission. 

NSCC may delete trade input which is 

not matched by such time frames as it 

determines from time to time. 

Maintenance and Tracking 

The proposed OW service will permit 

members to track each OW Obligation 

for the life of the obligation until it has 

been (i) Settled, (ii) cancelled by 

members party to the obligation, or (iii) 

otherwise closed in the OW Service by 

NSCC pursuant to NSCC Rules (e.g., 

when the obligation becomes CNSeligible and is sent to CNS for 

settlement). 

NSCC may adjust any compared OW 

Obligation with respect to certain 

mandatory reorganization events, which 

will initially be limited to forward 

splits, name changes, redemptions, 

mergers (both cash and stock), and full 

calls with respect to bonds. In the case 

of such a mandatory reorganization, at 

such time on or after the effective date 

of the reorganization as NSCC shall 

determine and to the extent NSCC has 

the relevant information, the affected 

OW Obligation may be adjusted in 

accordance with the terms of the 

reorganization event. With respect to 

name changes and forward splits, OW 

positions in the subject security will be 

converted into the equivalent positions 

of the new securities and/or cash, and 

a new obligation will be created 

automatically as part of the processing 

in the OW. Any cash component 

associated with a mandatory 

reorganization will be included as part 

of the member’s daily money settlement 

with NSCC.17

Unless otherwise excluded by a 

member, all CNS-eligible OW 

Obligations that reach the status of 

settlement date minus one (‘‘SD–1’’) or 

that have reached or passed their 

scheduled settlement date, may be 

forwarded to CNS by NSCC on a daily 

basis.18 However, the settlement of any 

such item forwarded to CNS will be 

guaranteed only to the extent that the 

member pays its full settlement 

obligation on the date the item is 

scheduled to settle in CNS. An item 

forwarded to CNS from the OW may be 

exited from the CNS Accounting 

Operation to the extent the member fails 

to complete its settlement obligation. If 

NSCC exits an item, any credits received 

by a member arising from the 

corresponding payment obligation shall 

be reversed, and settlement of the item 

shall be effected between the receiving 

and delivering member outside the 

facilities of NSCC. 

OW Obligations for which deliveries 

are made through The Depository Trust 

Company (‘‘DTC’’) through either The 

New York Window (‘‘NYW’’) or 

electronic book-entry deliver order that 

include the OW Control Number will be 

updated to indicate that they have 

settled in accordance with proper 

instructions from DTC or the member, 


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Federal Register / Vol. 75, No. 205 / Monday, October 25, 2010 / Notices 65549 

19Transaction details required will be identical to 

those required when comparing an obligation, set 

out in note 9 above. 

20 It is expected that the first RECAPS process in 

the OW will run in late March or early April 2011. 

21Upon implementation of the changes described 

herein, NSCC anticipates operating the RECAPS 

process on a monthly cycle. Members will be 

notified of changes in the processing cycle, if any, 

by an NSCC Important Notice. 

22Obligations that are matched and have a 

settlement date of at least two days prior to the date 

on which the RECAPS process commences will be 

considered for inclusion in the RECAPS process, 

and therefore, fail items not already in the OW and 

eligible for RECAPS processing must be submitted 

by the Member prior to RECAPS processing. 

23 In the event that the current market price for 

a security is not available, the obligation will be 

priced at the amount at which the obligation was 

previously matched. 

respectively. In order to give effect to 

such an update, members must provide 

DTC with instructions in accordance 

with DTC’s procedures and must 

include the OW Control Number. In the 

event of a partial delivery through DTC, 

NSCC will update the records for the 

respective OW Obligation accordingly 

based on information received either 

from DTC or the member’s update to 

their own OW Obligation records. Other 

items will be recorded as settled upon 

the submission of appropriate 

instructions by the counterparties. 

Obligations that have been reflected in 

the OW as settled may be reopened 

(either partially or fully) as a result of 

a delivery reclaim message sent by 

either party to the obligation to OW. 

Updates to reflect reclaims of settled 

transactions will be made once one 

party enters details of the original 

transaction and the original 

transaction’s OW Control Number.19

Once these details are submitted, an 

advisory of the reclaim will be sent to 

the contraparty that must then submit 

either identical transaction details to 

facilitate the reclaim and reopening of 

the obligation in OW or notification that 

it does not accept the reclaim details 

entered by the initiating party. Updates 

for reclaims may only be submitted to 

the OW for a period of two business 

days following the actual settlement 

date of the relevant obligation. If the 

reclaim message is not accepted by the 

contraparty, it will be deleted from the 

OW, and the parties will need to 

generate a new reclaim message in OW. 

If the original obligation has been 

settled for longer than two business 

days, any reclaim message will be 

rejected. 

Under the proposal, if NSCC ceases to 

act for a member, all open activity 

relating to that member will be deleted 

from the OW. However, the reports 

relating to such activity will be 

maintained in accordance with NSCC’s 

record retention requirements. 

Modified RECAPS Process 

As proposed, the existing RECAPS 

process will continue to function in a 

modified form.20 NSCC proposes that 

upon implementation of OW, the 

RECAPS process will be incorporated 

into OW and will require one day to 

complete. It is anticipated that the 

process will occur more frequently than 

the current quarterly schedule.21

On a day specified by NSCC, each OW 

Obligation eligible for RECAPS 22 will 

be re-priced, if appropriate,23 renetted 

and allotted, if appropriate, the 

settlement date will be updated to the 

next business date, and a new OW 

Obligation will be opened. Securities 

that are not CNS-eligible or are 

designated as trade-for-trade will not be 

netted and allotted. Obligations eligible 

for RECAPS in the OW can be excluded 

from the RECAPS process if so 

designated by the member. 

All new obligations arising from the 

RECAPS process will be tracked and 

processed in accordance with the OW 

procedures described above. If a fail was 

open over an interest payment date, the 

parties to the trade will be required to 

settle that interest payment outside of 

the OW. Any net cash adjustments 

resulting from the RECAPS process will 

be sent to NSCC Settlement as they are 

under the current process. 

Reporting 

The rule change proposes that each 

member will receive real-time updates 

regarding its OW activity. In addition, 

NSCC proposes to make available to 

each member an end-of-day report that 

reflects all end-of-day positions of such 

member in OW, which may be accessed 

by members through NSCC’s systems. 

Accordingly, NSCC will discontinue 

issuance of all RECAPS reports (e.g., 

RECAPS Contracts/Supplemental 

Contracts and RECAPS Compared Trade 

Summaries). 

Proposed Rule Changes 

The rule change also proposes that 

NSCC will create a new Rule 51 

(Obligation Warehouse) and Procedure 

IIA (Obligation Warehouse) to reflect the 

changes and enhancements as described 

above. Rule 51 would provide: (i) A 

general description of the OW service, 

(ii) a provision relating to the settlement 

of OW Obligations and the nonguaranteed nature of the service, and 

(iii) a limitation of liability on the part 

of NSCC with respect to obligations 

processed through the OW. 

Furthermore, the provisions of 

Procedure IIA will supersede those set 

forth in Procedure II, Section F 

(RECAPS) and thus Section F will be 

deleted. 

In addition, NSCC proposes to make 

conforming changes to: 

a. Rule 1 (Definitions) to add a 

definition for ‘‘Obligation Warehouse’’ 

and ‘‘OW Obligation’’; 

b. Rule 7 (Comparison and Trade 

Recording Operation) to remove 

language from the rule relating to 

submission of data to NSCC for 

reconfirmation and repricing of trade 

data with respect to transactions already 

compared through the facilities of NSCC 

or other facilities, as this service will 

now occur pursuant to Rule 51 and 

Procedure XVII; 

c. Rule 11 (CNS System) to provide 

that obligations arising from Special 

Trades will be automatically entered 

into the OW; 

d. Rule 18 (Procedures for When 

NSCC Ceases to Act) to reflect that (i) 

the OW Obligations that have been 

forwarded to CNS for settlement relating 

to a member for which NSCC has ceased 

to act will be removed from the CNS 

Accounting Operation and that any 

outstanding OW Obligations of the 

member will be removed from the OW 

service and (ii) NSCC will reverse any 

cash adjustments that were forwarded to 

settlement relating to the OW activity of 

a member for which NSCC has ceased 

to act; 

e. Rule 50 (Automated Customer 

Account Transfer Service) to reflect that 

non-CNS ACATS items (as well as CNSeligible items designated to be delivered 

ex-CNS) will be automatically entered 

into the OW; 

e. Procedure V (Balance Order 

Accounting Operation) to reflect that 

Balance Orders will be automatically 

entered into the OW; and 

f. Procedure VII (CNS Accounting 

Operation) to reflect (i) the addition of 

CNS-eligible OW activity to the CNS 

Miscellaneous Activity Report and (ii) 

securities removed from CNS that result 

in a CNS Receive and Deliver 

Instructions will be entered into the 

Obligation Warehouse service. 

Pilot and Participant Testing 

NSCC implemented a pilot program of 

the OW process in early February 2010 

for firms that had completed systems 

changes necessary to participate in the 

process. This pilot program ended at the 

beginning of June 2010, as additional 

discussions ensued between NSCC and 

its participant members regarding the 

additional functionalities sought to be 

included within the service, which are 

described in this filing. Prior to 

implementation of OW, NSCC proposes 

that a participant testing period will 


emcdonald on DSK2BSOYB1PROD with NOTICES
65550 Federal Register / Vol. 75, No. 205 / Monday, October 25, 2010 / Notices 

24 17 CFR 200.30–3(a)(12). 

take place between November 2010 and 

January 2011. An industry-wide test of 

the OW RECAPS process would be 

scheduled for March 11, 2011. 

Implementation Timeframe 

NSCC proposes to implement the 

changes set forth in this filing for all 

members during the first quarter of 2011 

with the first settlement date expected 

to be on January 24, 2011. Mandatory 

reorganization events are anticipated to 

be applied to OW Obligations shortly 

after February 4, 2011, on a date no less 

than 10 business days following 

announcement of its implementation by 

Important Notice. Similarly, at the 

request of the industry, the functionality 

providing for OW Obligations in CNSeligible securities to be reviewed and 

sent to CNS will be implemented 

several weeks after the initial launch to 

give members time to familiarize 

themselves with the OW settlement 

tracking functionality. Accordingly, 

after March 4, 2011, or on a date no less 

than 10 business days following 

announcement of its implementation by 

Important Notice obligations in the OW 

will be reviewed for CNS-eligibility and 

if eligible, will be closed and sent to 

CNS. The first RECAPS process in the 

OW will be run in late March or early 

April 2011. Pending Commission 

approval, members will be advised of 

the implementation dates through 

issuance of NSCC’s Important Notices. 

The proposed rule change is 

consistent with the requirements of the 

Securities Exchange Act of 1934, as 

amended (‘‘Act’’) and the rules and 

regulations thereunder applicable to 

NSCC because it facilitates the prompt 

and accurate clearance and settlement of 

securities transactions by providing for 

greater efficiency and transparency with 

respect to securities transaction 

obligations processed through the OW. 

In addition, the proposal is consistent 

with the CPSS/IOSCO 

Recommendations for Central 

Counterparties in that it facilitates the 

prompt and automated confirmation 

and comparison of trades, and the 

tracking of fail transactions by the 

parties thereto through settlement. 

(B) Self-Regulatory Organization’s 

Statement on Burden on Competition 

NSCC does not believe that the 

proposed rule change would impose any 

burden on competition. 

(C) Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants or Others 

Written comments relating to the 

proposed rule change have not 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 forty-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 or disapprove 

the 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, 

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 e-mail to rulecomments@sec.gov. Please include File 

Number SR–NSCC–2010–11 on the 

subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Elizabeth M. Murphy, Secretary, 

Securities and Exchange Commission, 

100 F Street, NE., Washington, DC 

20549–1090. 

All submissions should refer to File 

Number SR–NSCC–2010–11. This file 

number should be included on the 

subject line if e-mail 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 Web site (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 Web site viewing and 

printing in the Commission’s Public 

Reference Section, 100 F Street, NE., 

Washington, DC 20549–1090, on official 

business days between the hours of 10 

a.m. and 3 p.m. Copies of such filings 

will also be available for inspection and 

copying at the principal office of NSCC 

and on NSCC’s Web site at http:// 

www.dtcc.com/downloads/legal/ 

rule_filings/2010/nscc/2010-11.pdf. 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–2010–11 and should 

be submitted on or before November 15, 

2010. 

For the Commission by the Division of 

Trading and Markets, pursuant to delegated 

authority.24

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. 2010–26805 Filed 10–22–10; 8:45 am] 

BILLING CODE P 

DEPARTMENT OF STATE 

[Public Notice: 7166] 

Overseas Security Advisory Council 

(OSAC) Meeting Notice 

Closed Meeting 

The Department of State announces a 

meeting of the U.S. State Department— 

Overseas Security Advisory Council on 

November 16, 17, and 18 at the U.S. 

Department of State, Washington DC. 

Pursuant to Section 10(d) of the Federal 

Advisory Committee Act (5 U.S.C. 

Appendix), 5 U.S.C. 552b(c)(4), and 

5 U.S.C. 552b(c)(7)(E), it has been 

determined that the meeting will be 

closed to the public. The meeting will 

focus on an examination of corporate 

security policies and procedures and 

will involve extensive discussion of 

trade secrets and proprietary 

commercial information that is 

privileged and confidential, and will 

discuss law enforcement investigative 

techniques and procedures. The agenda 

will include updated committee reports, 

a global threat overview, and other 

matters relating to private sector 

security policies and protective 

programs and the protection of U.S. 

business information overseas. 

For more information, contact Marsha 

Thurman, Overseas Security Advisory 

Council, U.S. Department of State, 

Washington, DC 20522–2008, phone: 

571–345–2214. 


emcdonald on DSK2BSOYB1PROD with NOTICES