Document ID: SEC-2007-0443-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: National Securities Clearing Corp.
Posted Date: 2007-03-23T04:00Z

[Federal Register: March 23, 2007 (Volume 72, Number 56)]
[Notices]               
[Page 13846-13847]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr23mr07-136]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-55490; File No. SR-NSCC-2007-02]

 
Self-Regulatory Organizations; National Securities Clearing 
Corporation; Notice of Filing and Immediate Effectiveness of a Proposed 
Rule Change Related to Fees Charged to the CDS Clearing and Depository 
Services, Inc.

March 19, 2007.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on January 26, 2007, 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. 78s(b)(1).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The proposed rule change would permit NSCC, effective February 1, 
2007, to cease to charge fees for ``Covered Services'' in ``Omnibus 
Accounts'' (as each term is defined below) to the CDS Clearing and 
Depository Services, Inc. (``CDS''), formerly the Canadian Depository 
for Securities Ltd., in exchange for CDS agreeing not to charge NSCC 
for such services.\2\
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    \2\ The Depository Trust Company (``DTC'') has submitted a 
similar proposed rule change (File No. SR-DTC-2007-02).
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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 parts of these statements.
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(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 facilitate the 
efficient processing of cross-border securities transactions between 
the U.S. and Canada. CDS is a participant in both NSCC and DTC. CDS 
holds securities in the name of Cede & Co., DTC's nominee name, in one 
or more omnibus accounts at DTC, and also has a clearance account at 
NSCC (collectively the ``CDS Omnibus Accounts'').\4\
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    \4\ For purposes of this rule filing, the term ``CDS Omnibus 
Accounts'' shall not include CDS's additional accounts established 
pursuant to the Multiple Account Number Agreement, dated October 27, 
2006 between CDS and NSCC and the Additional Account Agreement, 
dated October 27, 2006 between DTC and CDS.

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[[Page 13847]]

    CDS operates the New York Link Service, which enables CDS 
Participants to clear and settle transactions with DTC Participants 
through sponsored accounts maintained by CDS with DTC and NSCC. Through 
such sponsored accounts, CDS Participants may clear and settle 
transactions on a trade for trade basis or on a continuous net 
settlement basis through the facilities of DTC and NSCC. DTC operates 
the Canadian-Link Service, which enables DTC Participants to clear and 
settle transactions with CDS Participants through an omnibus account 
maintained by DTC at CDS.\5\
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    \5\ Securities Exchange Act Release No. 52784 (November 16, 
2005), 70 FR 70902 (November 23, 2005) [File No. SR-DTC-2005-08].
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    In order to more efficiently facilitate cross-border clearance and 
settlement DTC, NSCC, and CDS have agreed not to charge each other for 
Covered Services \6\ in Omnibus Accounts.
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    \6\ ``Covered Services'' includes such services as: (a) 
Messaging and conversion of messages, (b) clearing, (c) monthly 
account charges, (d) deliveries/receives, (e) deposits and 
withdrawals, (f) custody, (g) asset servicing (dividends, 
reorganizations), (h) tax services, including U.S. and Canadian tax 
withholding, as applicable, and non-U.S. Tax Relief and Foreign 
Currency Payments via the Elective Dividend Service (EDS), (i) 
communications/networking, (j) money settlement (and roll-up), (k) 
reconciliation, and (l) any other services agreed to between DTC, 
NSCC, and CDS in writing.
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    Currently, DTC, NSCC, and CDS charge fees in accordance with their 
respective standard fee schedules for securities clearing, settlement, 
and asset servicing in their respective Omnibus Accounts. The proposed 
rule change would provide that instead of invoicing each other each 
month for services in the Omnibus Accounts, DTC and NSCC will no longer 
charge CDS for Covered Services in Omnibus Accounts in exchange for CDS 
no longer charging DTC and NSCC for similar services. As most of the 
activity processed in each of the Omnibus Accounts relates to 
reciprocal services which are charged to DTC, NSCC, and CDS at 
different rates (e.g., DTC would be charged in accordance with the 
standard CDS fee schedule and vice versa) not charging each other for 
Covered Services will ensure that the fees of NSCC and CDS are more 
equitably aligned.
    DTC, NSCC, and CDS will continue to charge their respective 
participants for activity in the Omnibus Accounts.
    This proposed rule change is consistent with the requirements 
Section 17A of the Act and the rules and regulations thereunder because 
it recognizes that most of the activity in the Omnibus Accounts 
represents the processing of reciprocal activity in similar services 
used by each of the entities which are charged to DTC, NSCC, and CDS at 
different rates. As such, it provides for a more equitable allocation 
of fees charged by DTC and NSCC.

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

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

    Because the foregoing rule change changes fees charged clearing 
members by NSCC, it has become effective pursuant to Section 
19(b)(3)(A)(ii) of the Act \7\ and Rule 19b-4(f)(2) \8\ thereunder. At 
any time within sixty days of the filing of the proposed 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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    \7\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \8\ 17 CFR 240.19b-4(f)(2).
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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-2007-02 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-2007-02. 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.org.

    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-2007-02 
and should be submitted on or before April 13, 2007.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\9\
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    \9\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
 [FR Doc. E7-5350 Filed 3-22-07; 8:45 am]

BILLING CODE 8010-01-P