Document ID: SEC-2006-1662-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: National Securities Clearing Corp.
Posted Date: 2006-12-20T05:00Z

[Federal Register: December 20, 2006 (Volume 71, Number 244)]
[Notices]               
[Page 76415-76417]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr20de06-147]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-54921; File No. SR-NSCC-2006-14]

 
Self-Regulatory Organizations; National Securities Clearing 
Corporation; Notice of Filing and Immediate Effectiveness of Proposed 
Rule Change Relating to Clarifying and Technical Changes to its 
Insurance Processing Service

December 12, 2006.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on November 2, 2006, the 
National Securities Clearing Corporation (``NSCC'') filed with the 
Securities and Exchange Commission (``Commission'') the proposed rule 
change described in Items I, II, and III below, which items have been 
prepared primarily by NSCC. NSCC filed the proposed rule change 
pursuant to Section 19(b)(3)(A)(iii) of the Act\2\ and Rule 19b-4(f)(4) 
thereunder\3\ so that the proposal was effective upon filing with the 
Commission. The Commission is publishing this notice to solicit 
comments on the proposed rule change from interested parties.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \3\ 17 CFR 240.19b-4(f)(4).
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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 make clarifying and 
technical changes to NSCC's Rule 57 regarding NSCC's Insurance 
Processing Service (``IPS'').

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\
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    \4\ The Commission has modified the text of the summaries 
prepared by NSCC.

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[[Page 76416]]

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    The purpose of the proposed rule change is to make clarifying and 
technical changes to Rule 57 of NSCC's Rules regarding IPS. NSCC 
proposes to reformat Rule 57 for clarity. References to services or 
functionalities that are not currently offered would be deleted and to 
those that have changed since the rule was initially written would be 
revised accordingly. These changes are explained below.
    Reformatting of Rule 57 Rule 57 is being reorganized such that (i) 
Section 1 of the rule now consolidates all of the general provisions 
that will generally apply to all IPS services and (ii) each subsequent 
section (Sections 2 through 10) applies to a separate service offering 
within IPS. This differs from the format of the current rule in which 
some of the services are referenced in a list contained in Section 1 of 
the rule and certain other of the services are described in separate, 
individual sections of the rule.
    Section 1 Section 1 will contain all of the general provisions that 
apply to all services within IPS. Most of these general provisions are 
contained in Sections 1 and 2 of the current Rule 57 and with some 
exceptions are repeated in subsequent sections of the current rule with 
respect to specific services.
    The statement currently contained in Addendum D of NSCC's Rules, 
which states that that NSCC does not guarantee money settlement of IPS 
transactions, is being restated in Subsection (l) of Section 1 of the 
rule. Repositioning the statement in the rule which governs the 
insurance services will help clarify to applicants and members that IPS 
is not a ``guaranteed service.''
    The last two sentences of current Subsection (d) of Section 2 of 
Rule 57, which state that NSCC would adjust IPS data on the instruction 
of a participant, are being deleted. Because NSCC acts as a pass-
through of IPS data, it would not generally be expected to make 
adjustments on such data.
    Provisions contained in Sections 1 and 2, which are specific to a 
particular service offering within IPS, of the current Rule 57 are 
being deleted and moved to subsequent sections that are dedicated to 
that particular service offering. For example, the material regarding 
application information is being moved to Section 3, ``Applications and 
Premiums.''
    Section 2, ``Commissions and Compensation'' Section 2 will set 
forth the provisions specific to the commission service offered in IPS, 
which provisions are currently in Section 3. The service, currently 
named ``Commissions and Charge Backs,'' is being renamed ``Commissions 
and Compensation'' to reflect that the service currently accommodates 
other types of compensation payable between insurance carriers and 
distributors such as bonus amounts. General provisions that are not 
specific to the Commissions and Charge Backs service and that apply 
generally to all IPS services are being deleted from this section and 
placed in Section 1 as discussed above.
    Sections 3(d) and (e) of the current rule, which state that NSCC 
may offer members the ability to cancel commission transactions, are 
being deleted. At the time the commission service was originally 
proposed, NSCC anticipated that it would develop such an 
enhancement.\5\ The enhancement has not been developed and there are no 
plans to develop it at this time.
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    \5\ Securities Exchange Act Release No. 39096 (September 19, 
1997), 62 FR 50416 (September 25, 1997) [File No. SR-NSCC-96-21].
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    The provisions in the current rule regarding the date on which 
commission transactions may settle are being rewritten to use 
terminology consistent with analogous provisions elsewhere in the 
rules.
    Section 3, ``Applications and Premiums'' Section 3 will set forth 
the provisions that are specific to the applications and premiums 
services in IPS, which provisions are currently in Sections 2 and 4. 
The provisions of the current Sections 2 and 4 that are of general 
applicability to all IPS services are deleted from these sections and 
placed in Section 1 as discussed above.
    Section 2 (e) of the current rule, which states that NSCC will 
reject application data if it has four or more errors, is being 
deleted. The precise data requirements of the various services change 
from time to time as new fields are added or deleted or made mandatory 
or optional, and the data requirements therefore are more typically 
contained in the NSCC user guides and other documentation rather than 
being set forth in the text of the NSCC Rules.
    Section 4, ``Licensing and Appointments'' Section 4 will set forth 
the provisions specific to the licensing and appointments services 
within IPS. In the current rule, the reference to the licensing and 
appointments service is contained in Sections 1 and 4 in the list of 
types of data that may be transmitted through IPS.
    Section 5, ``Positions and Valuations'' Section 5 will set forth 
the provisions specific to the positions and valuations services within 
IPS. Section 5 of the current rule, which regards a product repository 
service which may be offered by NSCC, is being deleted. NSCC determined 
not to offer this service after the proposed rule change for the 
service had been filed and approved.\6\ NSCC has no plans to offer such 
a service at this time and would file a proposed rule change should it 
determine to do so after this provision is deleted from the rules.
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    \6\ Securities Exchange Act Release No. 47644 (April 7, 2003), 
68 FR 17850 (April 11, 2003) [File No. SR-NSCC-2003-04].
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    Section 6, ``ACATS/Transfers'' Section 6 will set forth the 
provisions specific to the ACATS transfer service within IPS and is 
reworded slightly differently from the current Section 6 in order to 
use terminology that is consistent with analogous terminology elsewhere 
in NSCC's rules.
    Section 7, ``Asset Pricing'' Section 6 sets forth the provisions 
specific to the asset pricing service within IPS.
    Section 8, ``Financial Activity Reporting'' Section 7 will set 
forth the provisions specific to the financial activity reporting 
service within IPS, which service is referenced in Section 1 of the 
current rule in the list of types of data that may be transmitted 
through IPS.
    Section 9,``In Force Transactions'' Section 9 will set forth the 
provisions specific to the In Force Transactions services within IPS.
    Section 10, ``InsurExpress'' Section 10 will set forth the 
provisions specific to the InsurExpress service within IPS. This 
service was the subject of a proposed rule change regarding the 
insurance service that was proposed to be offered under the name 
``Portal.''\7\
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    \7\ Securities Exchange Act Release No. 48896 (December 9, 
2003), 68 FR 70553 (December 18, 2003) [File No. SR-NSCC-2003-18].
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    The proposed rule change is consistent with the requirements of 
Section 17A of the Act and the rules and regulations thereunder because 
in clarifying NSCC's Rules to more accurately and clearly set forth the 
nature of the insurance processing services already offered by NSCC, 
the proposed rule change effects a change in an existing service of 
NSCC that (i) does not adversely affect the safeguarding of securities 
or funds in the custody or control of NSCC and (ii) does not 
significantly affect the respective rights or obligations of NSCC or 
those members using the service.

B. Self-Regulatory Organization's Statement on Burden on Competition

    NSCC does not believe that the proposed rule change will have any

[[Page 76417]]

impact or 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 yet 
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

    The foregoing rule change has become effective upon filing pursuant 
to Section 19(b)(3)(A)(iii) of the Act\8\ and Rule 19b-4(f)(4) 
thereunder\9\ because the proposed rule effects a change in an existing 
service of NSCC that (i) Does not adversely affect the safeguarding of 
securities or funds in the custody or control of NSCC and (ii) does not 
significantly affect the respective rights or obligations of NSCC or 
those members using the service. At any time within sixty days of the 
filing of such rule change, the Commission may summarily abrogate 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.
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    \8\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \9\ 17 CFR 240.19b-4(f)(4).
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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

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml.
) or     Send an e-mail to rule-comments@sec.gov. Please include 

File Number SR-NSCC-2006-14 on the subject line.

Paper Comments

     Send paper comments in triplicate to Nancy M. Morris, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-NSCC-2006-14. 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 inspection and 
copying in the Commission's Public Reference Section, 100 F Street, 
NE., Washington, DC 20549. Copies of such filing also will be available 
for inspection and copying at the principal office of NSCC and on 
NSCC's Web site at http://www.nscc.com. 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-2006-14 and should be submitted on 
or before January 10, 2007.

    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority.\10\
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    \10\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E6-21717 Filed 12-19-06; 8:45 am]

BILLING CODE 8011-01-P