Document ID: SEC-2006-0317-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: National Securities Clearing Corp.
Posted Date: 2006-03-13T05:00Z

[Federal Register: March 13, 2006 (Volume 71, Number 48)]
[Notices]               
[Page 12759-12761]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr13mr06-94]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-53424; File No. SR-NSCC-2005-17]

 
Self-Regulatory Organizations; National Securities Clearing 
Corporation; Notice of Filing of Proposed Rule Change To Modify Its 
Rules and Procedures Related to the Collection of Commission Payments

March 6, 2006.
    Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on December 29, 2005, the 
National Securities Clearing Corporation (``NSCC'') filed with the 
Securities and Exchange Commission (``Commission'') and on February 3, 
2006, amended, the proposed rule change 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 parties.
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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 purpose of this proposed rule change is to modify NSCC's Rules 
and Procedures with regard to the collection of commission payments.

[[Page 12760]]

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.\2\
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    \2\ 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

    As part of ongoing efforts to increase processing efficiencies, 
NSCC is proposing to modify its Rule 16, ``Settlement of Commissions,'' 
to further standardize and automate the processing of commission bill 
payments.
    In 2001, NSCC modified Rule 16 to implement the use of Automated 
Clearing House (``ACH'') wire transfers when making payments to non-
clearing members utilizing the commission bill service. As a part of 
NSCC's move to payment of credits by ACH wire transfer, all non-
clearing members were required to execute appropriate ACH documentation 
in order to receive their credit payments.\3\ While NSCC automated the 
payment of funds from NSCC to non-clearing members, the collection of 
monies owed to NSCC by non-clearing members was not automated. Non-
clearing members continue to pay commission bill settlement funds to 
NSCC by checks.
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    \3\ Securities Exchange Act Release No. 44550 (July 12, 2001), 
66 FR 37509 (July 18, 2001) [File No. SR-NSCC-2001-08].
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    NSCC proposes to further modify Rule 16 to require the use of ACH 
preauthorized payments in the collection of funds from those non-
clearing members that are indebted to NSCC as a result of utilizing the 
service. Accordingly, within the timeframe determined by NSCC, NSCC 
would debit the bank account designated by each non-clearing member an 
amount equal to the debit owed by the non-clearing member to NSCC.\4\ 
All non-clearing members would be required to execute appropriate ACH 
documentation.
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    \4\ Currently, commission bill settlement takes place on the 
15th day of each month or on the next preceding business day if the 
15th is not a business day.
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    In addition to the above change, NSCC would also make a technical 
correction to Rule 16(3) to conform the Rule to practice. NSCC would 
eliminate text that provides that non-clearing members deliver 
information to NSCC on the 10th day of each month, as this practice has 
been discontinued.
Implementation
    NSCC will work with New York Stock Exchange (``NYSE'') and American 
Stock Exchange (``AMEX'') staff to obtain new ACH documentation from 
all non-clearing members that currently utilize the commission bill 
service. By March 15, 2006 (or within two weeks of approval by the SEC 
of this rule filing, whichever is later) NSCC will begin implementing 
the ACH debit process on a rolling-basis. NSCC anticipates that 
collection of funds by check from non-clearing members to NSCC would be 
discontinued in its entirety by the end of the second quarter of 2006.
    NSCC believes that the proposed rule change is consistent with the 
requirements of Section 17A of the Act \5\ and the rules and 
regulations thereunder applicable to NSCC because it will facilitate 
the prompt and accurate payment of commission bill transactions, 
thereby promoting the prompt and accurate clearance and settlement of 
securities transactions.
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    \5\ 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

    NSCC has worked with and has received the support of the NYSE and 
AMEX with respect to these proposed changes. No written comments 
relating to the proposed rule change have 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

    Within thirty-five days of the date of publication of this notice 
in the Federal Register or within such longer period: (i) As the 
Commission may designate up to ninety days of such date if it finds 
such longer period to be appropriate and publishes its reasons for so 
finding; or (ii) as to which the self-regulatory organization consents, 
the Commission will:
    (A) By order approve such proposed rule change; or
    (B) Institute proceedings to determine whether the proposed rule 
change should be disapproved.

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-2005-17 in 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-2005-17. 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 filings also will be 
available for inspection and copying at the principal office of NSCC 
and on NSCC's Web site, http://www.nscc.com\legal. 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

[[Page 12761]]

should refer to File Number SR-NSCC-2005-17 and should be submitted on 
or before April 3, 2006.

    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority.\6\
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    \6\ 17 CFR 200.30-3(a)(12).
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Nancy M. Morris,
Secretary.
 [FR Doc. E6-3483 Filed 3-10-06; 8:45 am]

BILLING CODE 8010-01-P