Document ID: SEC-2007-1270-0001
Agency: sec
Document Type: Notice
Title: (c) ACAT Fund/SERV   In an ACAT transfer that includes mutual fund assets, during the ``Review period the Receiving Member (or if applicable its ACATS- Fund/SERV Agent) requests the reregistration of mutual fund assets by submitting a Fund Registration input record through ACATS to the Fund Member/Mutual Fund Processor. The Fund Member/Mutual Fund Processor then has four business days to either re
Posted Date: 2007-09-13T04:00Z

[Federal Register: September 13, 2007 (Volume 72, Number 177)]
[Notices]               
[Page 52416-52418]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr13se07-91]                         

-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-56372; File No. SR-NSCC-2007-13]

 
Self-Regulatory Organizations; National Securities Clearing 
Corporation; Notice of Filing of a Proposed Rule Change To Amend Its 
Rules and Procedures With Regard to the Automated Customer Account 
Transfer Service (ACATS) and ACATS Fund/SERV Processing

September 7, 2007.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on August 15, 2007, National 
Securities Clearing Corporation (``NSCC'') filed with the Securities 
and Exchange Commission (``Commission'') 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 from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The proposed rule change consists of modifications to NSCC's Rules 
and Procedures relating to its Automated Customer Account Transfer 
Service (``ACATS'') and ACATS Fund/SERV processing.

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\
---------------------------------------------------------------------------

    \2\ The Commission has modified the text of the summaries 
prepared by NSCC.
---------------------------------------------------------------------------

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 modify NSCC's Rules 
as necessary to shorten the account transfer time frame with respect to 
certain types of ACATS and ACATS Fund/SERV transfers.\3\
---------------------------------------------------------------------------

    \3\ Rule 50 (Automated Customer Account Transfer Service) is 
generally nonspecific with respect to account transfer time frames. 
Rule 52 (Mutual Fund Services), Section 16 (ACAT/Transfers) is 
nonspecific with respect to account transfer time frames and does 
not require modification.
---------------------------------------------------------------------------

1. Background
    ACATS enables members of NSCC to effect automated transfers of 
customer accounts among themselves. In operation since 1985, ACATS was 
designed to facilitate compliance with New York Stock Exchange 
(``NYSE'') Rule 412 and National Association of Securities Dealers 
(``NASD'') \4\ Uniform

[[Page 52417]]

Practice Code Section 11870 that require NYSE and NASD members to use 
automated clearing agency customer account transfer services and to 
effect customer account transfers within specified time frames. ACATS 
has been modified over time, with its most significant redesign in 
1999, to provide NSCC members with a more seamless and timely customer 
account transfer process.\5\
---------------------------------------------------------------------------

    \4\ Rule 50 (Automated Customer Account Transfer Service) is 
generally nonspecific with respect to account transfer time frames. 
Rule 52 (Mutual Fund Services), Section 16 (ACAT/Transfers) is 
nonspecific with respect to account transfer time frames and does 
not require modification.
    \5\ The NASD is now known as The Financial Industry Regulatory 
Authority, Inc. (``FINRA'').
---------------------------------------------------------------------------

2. Proposed Modifications
    NSCC, its members, the Customer Account Division of the Securities 
Industry and Financial Markets Association (``SIFMA''), NYSE, and NASD 
believe that because technology and processing has improved since the 
1999 redesign additional modifications to ACATS processing can be made 
that will further enhance the timeliness and efficiency of customer 
account transfers. FINRA has submitted a comparable rule filing on 
behalf of the NYSE and NASD with the Commission.\6\
---------------------------------------------------------------------------

    \6\ Securities Exchange Act Release No. 56373 (September 7, 
2007) (notice of filing of proposed rule change) [File No. SR-FINRA-
2007-005].
---------------------------------------------------------------------------

(a) Standard ACATS Transfers
    Standard ACATS transfers currently include a three business day 
``Request'' period. The proposed change will reduce the ``Request'' 
time frame from three business days to one business day. The time frame 
within which an account transfer may be responded to (i.e., accepted or 
rejected) will accordingly be shortened.\7\
---------------------------------------------------------------------------

    \7\ In addition to changes to the ``Request'' period, NSCC 
proposes to modify the ACATS ``status'' time frames for Request-
Adjust, Request-Adjust Past, Request-Past, and Review-Error, from a 
maximum of three business days to a maximum of one business day. 
Rule 50 is nonspecific with respect to these time frames.
---------------------------------------------------------------------------

(b) Nonstandard ACATS Transfers--Partial Transfer Receiver
    Partial Transfers may be generated by either the Receiving Member 
(Partial Transfer Receiver or ``PTR'') or the Delivering Member 
(Partial Transfer Deliverer or ``PTD''). PTRs currently have a two 
business day ``Request'' period. The proposed change will reduce the 
``Request'' time frame from two business days to one business day. The 
time frame within which an account transfer may be responded to (i.e., 
accepted or rejected) will accordingly be shortened.\8\
---------------------------------------------------------------------------

    \8\ Other non-standard transfers are: fail reversals, reclaims, 
and residual credits (see Rule 50, Sec. 12). PTD's do not have a 
``Request'' status.
---------------------------------------------------------------------------

(c) ACAT Fund/SERV
    In an ACAT transfer that includes mutual fund assets, during the 
``Review'' period the Receiving Member (or if applicable its ACATS-
Fund/SERV Agent) requests the reregistration of mutual fund assets by 
submitting a Fund Registration input record through ACATS to the Fund 
Member/Mutual Fund Processor. The Fund Member/Mutual Fund Processor 
then has four business days to either reject or acknowledge the 
request.
    NSCC has found that the majority of Fund Member/Mutual Fund 
Processors act upon such requests during the first day of receipt. 
Therefore, NSCC is proposing to reduce the time frame from four 
business days to one business day.
3. Technical Correction to Rule 50
    NSCC is also making a technical correction to Rule 50, Section 13. 
Section 13 (which addresses Receiving Member initiated Partial 
Transfers) states that a Delivering Member may respond to a request at 
any time by following the procedure set forth in Section 12. However, 
Section 12 addresses actions taken with respect to Delivering Member 
initiated transactions. NSCC is correcting this text accordingly.
4. Implementation of the Proposed Changes:
    NSCC is coordinating implementation of the proposed changes with 
FINRA and SIFMA. Contingent upon the Commission's approval of the NSCC 
and FINRA proposed changes, NSCC anticipates that implementation of the 
changes set forth in this rule filing will take place in October of 
2007. Members will be advised of the implementation through an NSCC 
Important Notice.
    Section 17A(b)(3)(F) of the Act requires, among other things, that 
the rules of a clearing agency be designed to remove impediments to and 
perfect the mechanism of a national system for prompt and accurate 
clearance and settlement of securities transactions.\9\ By reducing the 
time frame for the transfer of customer accounts between NSCC members, 
the proposed amendments will bring enhanced efficiency to members and 
benefit their customers. As such, the proposed rule change is 
consistent with NSCC's statutory obligation to remove impediments to 
and perfect the mechanism of a national system for prompt and accurate 
clearance and settlement of securities transactions.
---------------------------------------------------------------------------

    \9\ 15 U.S.C. 78q-1(b)(3)(F).
---------------------------------------------------------------------------

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 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 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-2007-13 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-2007-13. 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/

[[Page 52418]]

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 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 filing 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/2007/nscc/2007-13.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-2007-13 and should be submitted on or before October 4, 2007.

    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority.\10\
---------------------------------------------------------------------------

    \10\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Florence E. Harmon,
Deputy Secretary.
 [FR Doc. E7-18077 Filed 9-12-07; 8:45 am]

BILLING CODE 8010-01-P