Document ID: SEC-2016-0016-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: National Securities Clearing Corp.
Posted Date: 2016-01-05T05:00Z

[Federal Register Volume 81, Number 2 (Tuesday, January 5, 2016)]
[Notices]
[Pages 283-286]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-33114]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-76787; File No. SR-NSCC-2015-009]

Self-Regulatory Organizations; National Securities Clearing 
Corporation; Notice of Filing and Immediate Effectiveness of Proposed 
Rule Change To Adjust Fees Related to Automated Customer Account 
Transfer Service, Obligation Warehouse, Fund/SERV[supreg], Insurance 
and Retirement Processing Services, and Alternative Investment Product 
Services

December 29, 2015.
    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 December 16, 2015, 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 by NSCC. NSCC filed the 
proposed rule change pursuant to section 19(b)(3)(A) of the Act \3\ and 
Rule 19b-4(f)(2) thereunder.\4\ The proposed rule change was effective 
upon filing with the Commission. 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).
    \2\ 17 CFR 240.19b-4.
    \3\ 15 U.S.C. 78s(b)(3)(A).
    \4\ 17 CFR 240.19b-4(f)(2).
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I. Clearing Agency's Statement of the Terms of Substance of the 
Proposed Rule Change

    The proposed rule change consists of changes to Addendum A (Fee 
Structure) of the Rules & Procedures (``Rules'') of NSCC in order to 
adjust fees related to NSCC's Automated Customer Account Transfer 
Service, Obligation Warehouse, Fund/SERV[supreg], Insurance and 
Retirement Processing Services, and Alternative Investment Product 
Services, as more fully described below.\5\
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    \5\ Terms not otherwise defined herein have the meaning set 
forth in the Rules, available at http://dtcc.com/~/media/Files/
Downloads/legal/rules/nscc_rules.pdf.
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II. Clearing Agency'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

[[Page 284]]

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.

(A) Clearing Agency's Statement of the Purpose of, and Statutory Basis 
for, the Proposed Rule Change

1. Purpose
Fee Changes for Automated Customer Account Transfer Service
    The proposed rule change would adjust fees associated with NSCC's 
Automated Customer Account Transfer Service (``ACATS'') in order to 
align these fees with the costs of providing these services. ACATS is a 
non-guaranteed service offered by NSCC that enables its Members to 
effect automated transfers of customer accounts among themselves.\6\ 
Currently, the anticipated revenue for ACATS for 2016, based on revenue 
for the service in 2015 and the existing fee structure, is not expected 
to meet the budgeted expenses associated with providing this service. 
The proposed fee adjustments would allow NSCC to meet expenses 
associated with this service, which include costs of maintenance, 
future development projects, and amortization of past enhancements to 
the service.
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    \6\ See Rule 50 (Automated Customer Account Transfer Service) of 
NSCC's Rules, supra note 5.
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    Therefore, NSCC is proposing to increase the following fees: (1) 
Fee for transfer initiation input, per submission, from $0.15 to $0.18; 
(2) settling fee for assets received, per item settled, from $0.05 to 
$0.06; (3) fee for adding, changing or deleting assets from a record, 
per asset entered, from $0.05 to $0.06; (4) fee for each receive/
deliver instruction, per instruction issued, from $0.10 to $0.12; and 
(5) fee for each account transfer reject, per full account per side, 
from $1.00 to $1.20.
Fee Changes for Obligation Warehouse
    The proposed rule change would also adjust fees associated with 
NSCC's Obligation Warehouse (``OW''), a non-guaranteed, automated 
service that tracks, stores, and maintains unsettled ex-clearing and 
failed obligations, as well as obligations exited from NSCC's 
Continuous Net Settlement (``CNS'') system, non-CNS ACATS Receive and 
Deliver Instructions, Balance Orders, and Special Trades, as such terms 
are defined in the Rules.\7\ The OW service provides transparency, 
serves as a central storage of open (i.e., failed or unsettled) broker-
to-broker obligations, and allows users to manage and resolve 
exceptions in an efficient and timely manner.
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    \7\ See Rule 51 (Obligation Warehouse) and Procedure IIA 
(Obligation Warehouse), supra note 5.
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    NSCC is proposing to adjust the fee for matching within OW to align 
this fee with the fees charged for matching through NSCC's Real Time 
Trade Matching platform through which fixed income securities 
(corporate and municipal bonds, and unit investment trusts) are 
validated and matched.\8\ Therefore, NSCC is proposing to increase the 
fee for matching within OW from $0.75 to $0.85.
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    \8\ See Section C of Procedure II (Trade Comparison and 
Recording Service), supra note 5.
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    NSCC is also proposing to align the fees associated with closing 
obligations from OW. Obligations that are identified as eligible for 
NSCC's CNS service may be closed from OW to be processed through CNS, 
for a fee of $0.20. Obligations may also be closed from OW as a result 
of the Reconfirmation and Pricing Service (``RECAPS''), for a fee of 
$0.20. Obligations may also be closed from OW if paired off with other 
obligations in the same CUSIP, pursuant to NSCC's Pair Off function, 
for a $1.50 fee.\9\ Finally, obligations may be closed from OW if they 
are settled through NSCC's Envelope Settlement Service, and currently 
no fee is charged for this service.\10\ Therefore, NSCC is proposing to 
align each of these fees by (1) increasing the fees for closing 
obligations that are processed through CNS or as a result of RECAPS 
processing from $0.20 to $0.35, (2) decreasing the fee for closing 
obligations in connection with the OW Pair Off service from $1.50 to 
$0.35, and (3) adding a fee for closing obligations that settle through 
its Envelope Settlement Service for $0.35.
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    \9\ See Section E of Procedure IIA (Obligation Warehouse), supra 
note 5.
    \10\ See Rule 9 (Envelope Settlement Service) and Procedure IIA 
(Obligation Warehouse), supra note 5.
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    Finally, NSCC is proposing to adjust the fee charged to the 
recipient of a delivery notification request advisory that informs the 
recipient that the submitting party has acknowledged that an OW 
obligation between those parties has settled, if that notification is 
aged two days or older (``Aged Delivery Advisories''); and the fee 
charged to the recipient of a pending cancel request advisory that 
requests that the recipient cancel a previously compared OW obligation, 
if that request is aged two days or older (``Aged Cancel Advisories''). 
NSCC is proposing to increase these fees from $2.00 to $2.50. NSCC is 
also proposing to adjust the fee charged to the recipient of a 
comparison advisory that requests that the recipient affirm the 
comparison of an obligation, if that advisory is aged five days or 
older (``Aged Comparison Advisories''). NSCC is proposing to increase 
this fee from $5.00 to $5.50.
    The proposed increase in fees for Aged Delivery Advisories, Aged 
Cancel Advisories, and Aged Comparison Advisories would encourage more 
timely action by the recipients of these advisories, which, in turn, 
would reduce the frequency of these fees and align the fees associated 
with the OW service with the costs of delivering that service to NSCC's 
Members.
Fee Changes for Fund/SERV
    The proposed rule change would also reduce the transaction fees 
associated with NSCC's Fund/SERV (``Fund/SERV'') service, a non-
guaranteed service offering within NSCC's Mutual Fund Services that 
enables its members to process and settle mutual fund transactions 
through automated, standardized formats and a centralized platform.\11\ 
NSCC is proposing to reduce Fund/SERV transaction fees from $0.07 to 
$0.06, per side, per order or transfer request, as it has determined 
that the reduction aligns these fees with the costs of providing this 
service.
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    \11\ See Rule 52 (Mutual Fund Services), A (Fund/Serv), and 
Addendum D (Statement of Policy/Envelope Settlement Service, Mutual 
Fund Services, Insurance and Retirement Processing Services and 
Other Services Offered by the Corporation), supra note 5.
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Fee Changes for Insurance and Retirement Processing Services
    The proposed rule change would also adjust the fee schedule, as 
well as introduce new fees, associated with NSCC's Insurance and 
Retirement Processing Services (``I&RS''), as more fully described 
below. NSCC's I&RS is a suite of non-guaranteed services that enables 
its members to exchange information, and settle payments, with respect 
to insurance products, retirement plans or programs, and other benefit 
plans or programs.\12\ NSCC proposes the following changes for the 
reasons described below:
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    \12\ See Rule 57 (Insurance and Retirement Processing Services) 
and Addendum D (Statement of Policy/Envelope Settlement Service, 
Mutual Fund Services, Insurance and Retirement Processing Services 
and Other Services Offered by the Corporation), supra note 5.
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    Implement Monthly Membership Fee--NSCC proposes to introduce a $250 
minimum monthly account fee for all I&RS accounts. NSCC would waive 
this minimum fee if the aggregate transaction and other service fees 
attributable to I&RS activity in a given month equals or exceeds $250. 
The proposed change is intended to

[[Page 285]]

encourage I&RS activity with respect to dormant I&RS accounts.
    Implement Multiple Destination Fee--NSCC proposes to charge members 
directing NSCC to deliver I&RS files to more than two destinations an 
additional monthly fee. NSCC members directing NSCC to deliver I&RS 
files to three or four destinations would be charged an additional $50 
per month, per I&RS product. NSCC members directing NSCC to deliver 
I&RS files to five or more destinations would be charged an additional 
$100 per month, per I&RS product. The proposed change would align the 
fees charged with the cost of providing these products and services to 
members with multiple file destinations.
    In Force Transactions (``IFT'') Adjustments--IFT is an I&RS 
offering that automates data processing with respect to ``in force'' 
policy transactions among participating NSCC members. In force policy 
transactions are transactions that take place after the underlying 
insurance contract has become effective. NSCC proposes the following 
adjustments to the IFT product offering:

     Eliminate Broker Identification Number (``BIN'')/
Representative of Record (``REP'') Incentives. Currently, NSCC 
members who utilize IFT's BIN/REP product are given a monthly credit 
of up to $350 toward their BIN/REP charges, as well as a 30% credit 
of their BIN/REP transaction costs to be applied to NSCC fees with 
respect to other I&RS products. These BIN/REP credit programs were 
originally implemented in 2009 to encourage growth and adoption of 
the BIN/REP product. As BIN/REP is now widely utilized, the proposed 
change would eliminate these incentive credits.
     Reduce REP Change Request Fee. The current fee for REP 
change requests is $0.65, per transaction, per side. The proposed 
change would reduce this fee to $0.35, per transaction, per side. 
The proposed change is consistent with the fees currently charged 
for similar I&RS transactions.
     Introduce New IFT Transaction Functionality Fees. NSCC 
proposes to introduce the fees applicable to three new IFT 
transaction functionalities: Policy Administration Inquiries would 
be $0.35 (per inquiry/per side); Policy Administration Requests 
would be $1.25 (per inquiry/per side); and Death Notification 
Requests would be $1.25 (per request/per side).

    Implement IFT Tiered Pricing Program (other than BIN/REP). NSCC 
proposes to implement a new tiered pricing program, which includes 
member directed activity level designations correlating to identified 
monthly minimum fees. The proposed change is intended to incentivize 
greater use of the IFT product by discounting transaction fees after 
once [sic] the chosen level's minimum monthly fee has been met for 
higher activity level designations. Set forth below are the transaction 
fees that would apply to IFT transactions (not including BIN/REP) until 
the Minimum Monthly Fee is met for the chosen Activity Level (as 
reflected in the chart below). Thereafter, the transaction fees would 
be as reflected in the chart. Thus, the transaction fees applicable to 
Level 1 designations are the same whether before meeting the Minimum 
Monthly Fee of $1,000 or after. However, Level 2 or Level 3 
designations will benefit from discounted fees per transaction once 
their Minimum Monthly Fee is met.

----------------------------------------------------------------------------------------------------------------
 
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Values Inquiry..................................  $0.35 (per inquiry, per side).
Policy Administration Inquiry...................  $0.35 (per inquiry, per side).
Policy Administration Request...................  $1.25 (per request, per side).
Death Notification Request......................  $1.25 (per request, per side).
Fund Transfer...................................  $1.25 (per request, per side).
Withdrawals.....................................  $1.25 (per request, per side).
Arrangements....................................  $1.25 (per request, per side).
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------------------------------------------------------------------------
                                                            Fee per
                                    Minimum monthly    transaction over
         Activity level                   fee         minimum  requests/
                                                           inquiries
------------------------------------------------------------------------
Level 1.........................              $1,000         $1.25/$0.35
Level 2.........................               3,000         $1.00/$0.28
Level 3.........................               5,000         $0.75/$0.21
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Fee Changes for Alternative Investment Product Services
    The proposed rule change would also adjust the fee schedule 
associated with NSCC's Alternative Investment Product (``AIP'') 
Services, a non-guaranteed processing platform for the exchange of 
information and settlement of payments with respect to alternative 
investment products such as hedge funds, funds of hedge funds, 
commodities pools, managed futures, and real estate investment 
trusts.\13\ NSCC proposes the following changes for the reasons 
described below:
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    \13\ See Rule 53 (Alternative Investment Product Services and 
Members) and Addendum D (Statement of Policy/Envelope Settlement 
Service, Mutual Fund Services, Insurance and Retirement Processing 
Services and Other Services Offered by the Corporation), supra note 
5.
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    Reduce Fee for Higher Volume Eligible AIP Product Account 
Transfers--Currently, there is no transaction activity with respect to 
higher volume Eligible AIP Product transfers. To encourage activity, 
NSCC proposes to reduce higher volume Eligible AIP Product transfer 
fees from $1.50 per transaction to $0.50 per transaction.
    Reduce Fee for Lower Volume Eligible AIP Product Fee Trades--
Currently, there is no transaction activity with respect to lower 
volume Eligible AIP Product trades. To encourage activity, NSCC 
proposes to reduce lower volume Eligible AIP Product trade fees from 
$30 per trade to $10 per trade.
    Increase AIP Distributor Cap--The AIP Distributor cap of $50,000 
per calendar year with respect to certain Eligible AIP Product 
transactions was initially introduced to encourage AIP adoption by 
broker/dealers and has been successful. The cap continues to be an 
effective enticement for additional activity, but NSCC believes it 
should be increased to align AIP fees with the cost of providing the 
service. Accordingly, NSCC is proposing to increase the AIP Distributor 
cap from $50,000 per calendar year to $250,000 per calendar year.
    No other changes to the Rules are contemplated by this proposed 
rule change. The proposed changes would take effect on January 1, 2016.
2. Statutory Basis
    Section 17A(b)(3)(D) of the Act \14\ requires that NSCC's Rules 
provide for the equitable allocation of reasonable

[[Page 286]]

dues, fees, and other charges among its participants. The proposed rule 
changes would align NSCC's fees with the costs of delivering services 
to NSCC members, and would allocate those fees equitably among the NSCC 
members that use those services. Further, the proposed increase to fees 
for Aged Delivery Advisories, Aged Cancel Advisories, and Aged 
Comparison Advisories would encourage more timely action by the 
recipients of these advisories, which, in turn, would reduce the 
frequency of these fees and align the fees associated with the OW 
service with the costs of delivering that service to NSCC's Members. 
Therefore, the proposed rule changes would comply with section 
17A(b)(3)(D).\15\
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    \14\ 15 U.S.C. 78q-1(b)(3)(D).
    \15\ 15 U.S.C. 78q-1(b)(3)(D).
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(B) Clearing Agency's Statement on Burden on Competition

    The proposed rule changes would not have any impact, or impose any 
burden, on competition. As stated above, the proposed changes would 
align NSCC's fees with the costs of delivering associated services to 
its members, and would not disproportionally impact any NSCC members.

(C) Clearing Agency'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 pursuant to section 
19(b)(3)(A) \16\ of the Act and paragraph (f) of Rule 19b-4 \17\ 
thereunder. 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.
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    \16\ 15 U.S.C. 78s(b)(3)(A).
    \17\ 17 CFR 240.19b-4(f).
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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 email to rule-comments@sec.gov. Please include 
File Number SR-NSCC-2015-009 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-NSCC-2015-009. This file 
number should be included on the subject line if email 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 
10:00 a.m. and 3:00 p.m. Copies of the filing also will be available 
for inspection and copying at the principal office of NSCC and on 
DTCC's Web site (http://dtcc.com/legal/sec-rule-filings.aspx). 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-2015-009 and should be 
submitted on or before January 26, 2016.
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    \18\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\18\
Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2015-33114 Filed 1-4-16; 8:45 am]
 BILLING CODE 8011-01-P