Document ID: SEC-2006-1667-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: National Securities Clearing Corp.
Posted Date: 2006-12-20T05:00Z

[Federal Register: December 20, 2006 (Volume 71, Number 244)]
[Notices]               
[Page 76414-76415]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr20de06-146]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-54928; File No. SR-NSCC-2006-05]

 
Self-Regulatory Organizations; National Securities Clearing 
Corporation; Notice of Filing of a Proposed Rule Change Relating to the 
Wind-Down of a Member

December 13, 2006.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on March 28, 2006, National 
Securities Clearing Corporation (``NSCC'') filed with the Securities 
and Exchange Commission (``Commission'') and on September 28, 2006, 
amended the proposed rule change as 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 persons.
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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 proposed rule change would add a new Rule 42, Wind-Down of a 
Member, Fund Member, or Insurance Carrier Member,\2\ to NSCC's Rules to 
address a situation where a member notifies NSCC that it intends to 
wind down its activities and NSCC determines in its discretion that it 
must take special action in order to protect itself and its 
participants.\3\
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    \2\ The text of NSCC's proposed Rule 42 can be found on NSCC's 
Web site at http://www.nscc.com.

    \3\ Similar proposed rule changes have been filed by The 
Depository Trust Company [File No. SR-DTC-2006-07] and the Fixed 
Income Clearing Corporation [File No. SR-FICC-2006-05].
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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.\4\
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    \4\ The Commission has modified parts of these statements.
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A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    The proposed rule would allow NSCC to determine that a member is a 
wind-down member and would set forth the conditions NSCC using its 
discretion could place on a wind-down member and the actions NSCC using 
its discretion could take with respect to a wind-down member to protect 
itself and its members. Such actions would include restricting or 
modifying the wind-down member's use of any or all of NSCC's services 
and requiring the wind-down member to post increased clearing fund 
deposits. NSCC would retain all of its other rights set forth in its 
rules and membership agreements, including the right to declare the 
wind-down member insolvent, if applicable, and to cease to act for the 
member.
    NSCC believes that the proposed rule would ensure that it has the 
needed flexibility to appropriately manage the risks presented by an 
entity in crisis that remains a member of NSCC. This is

[[Page 76415]]

particularly important to preserve orderly settlement in the 
marketplace and to minimize the risk of loss to NSCC and its members. 
The proposed rule summarizes in a single rule NSCC's rights and the 
actions it may take in such a situation. These rights and actions are 
either permitted elsewhere in NSCC's rules or are permitted pursuant to 
NSCC's emergency authority. By summarizing them in a single rule, 
however, the proposed rule change should provide clarity and a clear 
legal basis for NSCC's rights or actions taken with respect to a wind-
down member. NSCC also believes that the proposed rule is designed to 
minimize the need for rule waivers.
    NSCC believes that the proposed rule change is consistent with the 
requirements of the Act and the rules and regulations thereunder 
because it will enhance NSCC's rules regarding actions that NSCC may 
take with respect to a wind-down of a member that presents risk to 
NSCC.

B. Self-Regulatory Organization's Statement on Burden on Competition

    NSCC does not believe that the proposed rule change would 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 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

    Within 35 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 90 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 the 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-2006-05 on 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-2006-05. 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 filing also will be available 
for inspection and copying at the principal office of NSCC and on 
NSCC's Web site at http://www.nscc.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 Number SR-NSCC-2006-05 and should be submitted on 
or before January 10, 2007.

    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority.\5\
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    \5\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
 [FR Doc. E6-21706 Filed 12-19-06; 8:45 am]

BILLING CODE 8011-01-P