Document ID: SEC-2011-1668-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: National Securities Clearing Corp.
Posted Date: 2011-11-01T04:00Z

[Federal Register Volume 76, Number 211 (Tuesday, November 1, 2011)]
[Notices]
[Pages 67525-67526]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-28200]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-65623; File No. SR-NSCC-2011-09]

Self-Regulatory Organizations; The National Securities Clearing 
Corporation; Notice of Filing and Immediate Effectiveness of Proposed 
Rule Change To Revise NSCC's Fee Schedule as It Applies to Certain 
Hedge Fund Products Within NSCC's Alternative Investment Products 
Service

October 26, 2011.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on October 12, 2011, the 
National Securities Clearing Corporation (``NSCC'') filed with the 
Securities and Exchange Commission (``Commission'') the proposed rule 
change described in Items I and II below, which Items have been 
prepared primarily by NSCC. NSCC filed the proposal pursuant to Section 
19(b)(3)(A)(ii) of the Act,\2\ and Rule 19b-4(f)(2) \3\ thereunder so 
that the proposal was effective upon filing with the Commission. The 
Commission is publishing this notice to solicit comments on the 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)(ii).
    \3\ 17 CFR 240.19b-4(f)(2).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The proposed rule change will revise NSCC's fee schedule as it 
applies to certain hedge fund products within NSCCs Alternative 
Investment Products Service (``AIP'').

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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(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 revise NSCC's fee 
schedule (Addendum A of the NSCC Rules and Procedures) as it applies to 
certain hedge fund products within AIP to align the application of 
those fees with the cost of delivering the services. The proposed 
revisions to NSCC's fee schedule can be viewed at http://www.dtcc.com/downloads/legal/rule_filings/2011/nscc/2011-09.pdf.
    The current AIP fee schedule is based upon previously projected 
transaction volumes for the various AIP eligible product types, where 
fees for higher volume products were intended to be lower than were 
fees for lower volume products.\5\ In general, products such as non-
traded Real Estate Investment Trusts and Managed Futures funds are 
higher volume products based on their distribution strategy, number of 
client accounts, and investment minimums. NSCC had previously projected 
that all hedge fund products would be lower volume as they are 
generally less broadly distributed, the number of investors is 
generally limited, and the investment minimums are quite high.
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    \5\ Securities Exchange Act Release No. 34-59285 (January 23, 
2009), 74 FR 5875 (February 2, 2009) and Securities Exchange Act 
Release No. 34-63634 (January 3, 2011), 76 FR 1475 (January 10, 
2011).
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    NSCC has since recognized that certain hedge funds are distributed 
through third party channels and are structured to be more attractive 
to the market. In general, these hedge funds are registered under the 
Investment Company Act of 1940, as amended (``1940 Act'') and as such, 
generally have lower investment minimums and no statutory limit on the 
number of

[[Page 67526]]

investors, factors which tend to increase their transaction volume over 
traditional hedge funds. The AIP fee schedule, as it was originally 
intended and filed with the Commission, contemplated a fee 
differentiation based on volume. Accordingly, NSCC seeks to apply the 
lower fee structure to hedge funds that are registered under the 1940 
Act.
    NSCC believes that the proposed rule change is consistent with the 
requirements of Section 17A of the Act \6\ and the rules and 
regulations thereunder applicable to NSCC because it updates the NSCC 
fee schedule and provides for the equitable allocation of fees among 
NSCC's members. In addition, this proposed rule change is consistent 
with CPSS/IOSCO recommendations because it provides NSCC members with 
sufficient information for them to identify and evaluate accurately the 
costs associated with using NSCC's services.
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    \6\ 15 U.S.C. 78q-1.
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(B) Self-Regulatory Organization's Statement on Burden on Competition

    NSCC does not believe that the proposed rule change will 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 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 proposed rule change has become effective upon filing 
pursuant to Section 19(b)(3)(A)(ii) of the Act \7\ and Rule 19b-4(f)(2) 
\8\ 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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    \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 email to rule-comments@sec.gov. Please include 
File Number SR-NSCC-2011-09 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-2011-09. 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 
a.m. and 3 p.m. Copies of such filings also will 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/2011/nscc/2011-09.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-2011-09 
and should be submitted on or before November 22, 2011.
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    \9\ 17 CFR 200.30-3(a)(12).

    For the Commission by the Division of Trading and Markets, 
pursuant to delegated authority.\9\
Kevin O'Neill,
Deputy Secretary.
[FR Doc. 2011-28200 Filed 10-31-11; 8:45 am]
BILLING CODE 8011-01-P