Document ID: SEC-2014-0953-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: National Securities Clearing Corp
Posted Date: 2014-06-10T04:00Z

[Federal Register Volume 79, Number 111 (Tuesday, June 10, 2014)]
[Notices]
[Pages 33250-33252]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-13452]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-72307; File No. SR-NSCC-2014-06]

Self-Regulatory Organizations; National Securities Clearing 
Corporation; Notice of Filing and Immediate Effectiveness of Proposed 
Rule Change To Modify Its Fee Schedule

June 4, 2014.
    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 May 28, 2014, 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. NSCC 
filed the proposed rule change pursuant to Section 19(b)(3)(A)(ii) \3\ 
of the Act and Rule 19b-4(f)(2) \4\ thereunder. 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)(ii).
    \4\ 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 consists of amendments to the Rules & 
Procedures (``Rules'') of NSCC to modify its fee schedule, as more 
fully described below.

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.

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

(i) Purpose
    The purpose of the proposed rule changes is to revise NSCC's fee 
schedule (as listed in Addendum A of the Rules) in order to update the 
fees related to processing voluntary reorganizations, and to update the 
fees related to reporting certain Index Receipt Portfolio Composition 
Files.
    NSCC has recently enhanced the system that applies corporate 
actions to Members' open failed positions within its Continuous Net 
Settlement (``CNS'') system (``CAD Enhancement'').\5\ In

[[Page 33251]]

connection with these enhancements, NSCC is proposing to charge a US 
$500.00 fee each time a Member submits instructions to place a 
``protect'' on an open fail position in CNS in order to participate in 
an upcoming corporate action, or to add shares to a voluntary corporate 
action either on ``protect'' expiration date or, when there is no 
``protect'' for that corporate action, on the expiration date of the 
corporate action (``Late Protect''). This fee will cover the costs 
incurred by NSCC to enhance its corporate action system to process Late 
Protects, and is intended to encourage Members to submit a ``protect'' 
by the earlier submission date. Under the Rules a lower fee of US 
$15.00 is charged if Members submit a ``protect'' instruction either on 
or prior to the business day prior to ``protect'' expiration date or, 
when there is no ``protect'' for that corporate action, on the business 
day prior to the expiration date of the corporate action.
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    \5\ See Release No. 34-71725; File No. SR-NSCC-2014-03 (March 
14, 2014), 79 FR 15780 (March 21, 2014).
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    NSCC is also proposing to update the fees for the enhanced 
Portfolio Composition File reports which contain information on the 
Index Receipt portfolios that the subscribing Member requests 
(``Subscription-Based Portfolio Composition File reports''). These 
reports are available as a machine readable output (``MRO'') file, as 
well as through a web-based interface from which Members may download 
and print reports. The existing fees for these reports are charged in 
relation to the number of portfolios received by the Member on an 
average daily basis per month.\6\ Since NSCC introduced the 
Subscription-Based Portfolio Composition File reports it has been able 
to recover the costs of developing these reports earlier than it had 
expected. As a result, NSCC is proposing to reduce the fees for the 
Subscription-Based Portfolio Composition File reports, as reflected on 
Exhibit 5, to more accurately reflect the costs of delivering this 
service to subscribing Members. NSCC will also introduce a maximum and 
minimum monthly fee related to this service. The minimum monthly fee 
will cover the costs to NSCC of providing this service to Members on an 
on-going basis; however, as the number of units being reported 
increases over time with the growth of the market, NSCC will realize an 
economies of scale, which it will pass on to its Members by capping the 
monthly fees.
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    \6\ See Release No. 34-69596; File No. SR-NSCC-2013-06 (May 16, 
2013), 78 FR 30362 (May 22, 2013).
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Implementation Timeframe
    The implementation date of the fee change with respect to the Late 
Protect will coincide with the implementation date of the CAD 
Enhancement, and will be announced by an NSCC Important Notice. The fee 
change with respect to Subscription-Based Portfolio Composition File 
reports will be effective on June 2, 2014.
Proposed Rule Changes
    NSCC proposes to amend Addendum A as marked on Exhibit 5 hereto. No 
other changes to the Rules are contemplated by this proposed rule 
change.
(ii) Statutory Basis
    The proposed rule changes will be applied equitably to the NSCC 
Members that submit a Late Protect or that subscribe for the 
Subscription-Based Portfolio Composition File reports, respectively. 
The proposed fee for Late Protects is reasonable as it will cover the 
costs incurred by NSCC to enhance its corporate action system to 
process Late Protects, and is intended to encourage Members to submit a 
``protect'' by the earlier submission date. Furthermore, the maximum 
and minimum monthly fees related to the Subscription-Based Portfolio 
Composition File reports will ensure that NSCC is able to charge fees 
that reflect the costs of providing this service, and will pass on to 
NSCC Members any economies of scale. Therefore, the proposed rule 
changes are each consistent with the requirements of the Securities 
Exchange Act of 1934, as amended (``Act'') and the rules and 
regulations thereunder applicable to NSCC, in particular Section 
17A(b)(3)(D) of the Act, which requires that NSCC's Rules provide for 
the equitable allocation of reasonable dues, fees, and other charges 
among its participants.

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

    NSCC does not believe that the proposed rule changes will have any 
impact, or impose any burden, on competition. As stated above, the 
proposed changes will be applied equitably to NSCC Members that use the 
respective services, and will not disproportionally impact any NSCC 
Members.

(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 changes 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 forgoing rule change 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 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 No. SR-NSCC-2014-06 on the subject line.

Paper Comments

     Send in triplicate to Secretary, Securities and Exchange 
Commission, 100 F Street NE., Washington, DC 20549-1090.
    All submissions should refer to File No. SR-NSCC-2014-06. 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

[[Page 33252]]

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 its Web site (http://www.dtcc.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 No. SR-NSCC-2014-06 and 
should be submitted on or before July 1, 2014.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\9\
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    \9\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-13452 Filed 6-9-14; 8:45 am]
BILLING CODE 8011-01-P