Document ID: SEC-2007-0231-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: National Securities Clearing Corp.
Posted Date: 2007-02-14T05:00Z

[Federal Register: February 14, 2007 (Volume 72, Number 30)]
[Notices]               
[Page 7104]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr14fe07-140]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-55259; File No. SR-NSCC-2006-18]

 
Self-Regulatory Organizations; National Securities Clearing 
Corporation; Order Granting Accelerated Approval of a Proposed Rule 
Change To Create Service To Facilitate the Exchange of Account Related 
Information on an Automated Basis Between Members

February 8, 2007.

I. Introduction

    On December 21, 2006, the National Securities Clearing Corporation 
(``NSCC'') filed with the Securities and Exchange Commission 
(``Commission'') and on January 5, 2007, amended \1\ proposed rule 
change SR-NSCC-2006-18 pursuant to Section 19(b)(1) of the Securities 
Exchange Act of 1934 (``Act'').\2\ Notice of the proposal was published 
in the Federal Register on January 18, 2007.\3\ The Commission received 
no comment letters. For the reasons discussed below, the Commission is 
approving the proposed rule change on an accelerated basis.
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    \1\ The amendment added the number of the new rule inadvertently 
omitted in the original filing.
    \2\ 15 U.S.C. 78s(b)(1).
    \3\ Securities Exchange Act Release No. 55082 (January 10, 
2007), 72 FR 2319.
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II. Description

    Currently, when a correspondent firm chooses to move its book of 
business from one NSCC member to another, there is no standard method 
for transmitting the detailed customer data between the members. This 
information is currently exchanged through tapes, CDs, and other means 
and is dependent on the proprietary data format and values defined by 
the clearing firm from which the correspondent is moving. The process 
is time-consuming and prone to incorrect interpretation of data values. 
It is made more inefficient because clearing firms maintain separate 
code for each other clearing firm for which they convert data.
    NSCC is modifying its rules to create the Account Information 
Transmission Service (``AIT'') to facilitate the exchange of account 
related information during the movement of correspondent broker 
accounts between members or during other material events that result in 
the bulk movement of accounts between members. AIT will provide members 
with a standard mechanism to transmit customer data that will reduce 
the potential for lost and incorrectly interpreted data and will 
provide members with a secure facility for the exchange of data. The 
standard data model also will allow for the adoption of a single code 
base that is applicable for all conversion events. NSCC believes the 
single standard format could reduce costs, increase accuracy, and 
accelerate delivery time.
    NSCC will develop and introduce AIT in two phases. The first phase 
is to create the mechanism by which members may transmit data between 
themselves. NSCC will implement the first phase on Monday, February 12, 
2007. The second phase will involve the development of standardized 
data formats. NSCC will notify the Commission of phase two enhancements 
prior to their implementation.
    Since AIT is only an information transmission service, NSCC is also 
amending its rules to clarify that NSCC is not responsible for the 
accuracy or completeness of any information transmitted through AIT or 
for any omissions or delays that may occur in the transmission of AIT 
data. Finally, NSCC is implementing a $200 monthly subscription fee for 
participation in AIT during phase one. NSCC will reevaluate AIT service 
fees as subsequent enhancements are completed.

III. Discussion

    Section 19(b) of the Act directs the Commission to approve a 
proposed rule change of a self-regulatory organization if it finds that 
such proposed rule change is consistent with the requirements of the 
Act and the rules and regulations thereunder applicable to such 
organization.\4\ Section 17A(b)(3)(F) of the Act requires that the 
rules of a clearing agency be designed to promote the prompt and 
accurate clearance and settlement of securities transactions.\5\ The 
Commission finds that NSCC's rule change is consistent with these 
requirements because by reducing costs, increasing accuracy, and 
accelerating delivery time of bulk movement of accounts between 
members, the proposed rule change should better enable NSCC to promote 
the prompt and accurate clearance and settlement of securities 
transactions.\6\
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    \4\ 15 U.S.C. 78s(b).
    \5\ 15 U.S.C. 78q-1(b)(3)(F).
    \6\ In approving the proposed rule change, the Commission 
considered the proposal's impact on efficiency, competition, and 
capital formation. 15 U.S.C. 78c(f).
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    The Commission believes there is good cause for approving the 
proposed rule change prior to the thirtieth day after the date of 
publication of notice of filing because doing such will allow NSCC to 
implement AIT according to its system implementation schedule.

IV. Conclusion

    On the basis of the foregoing, the Commission finds that the 
proposed rule change is consistent with the requirements of the Act and 
in particular Section 17A of the Act and the rules and regulations 
thereunder.
    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\7\ that the proposed rule change (File No. SR-NSCC-2006-18) be and 
hereby is approved on an accelerated basis.
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    \7\ 15 U.S.C. 78s(b)(2).

    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority.\8\
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    \8\ 17 CFR 200.30-3(a)(12).
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Nancy M. Morris,
Secretary.
 [FR Doc. E7-2540 Filed 2-13-07; 8:45 am]

BILLING CODE 8010-01-P