Document ID: SEC-2010-0468-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: National Securities Clearing Corp.
Posted Date: 2010-03-29T04:00Z

[Federal Register: March 29, 2010 (Volume 75, Number 59)]
[Notices]               
[Page 15479-15480]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr29mr10-106]                         

[[Page 15479]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-61762; File No. SR-NSCC-2010-02]

 
Self-Regulatory Organizations; The National Securities Clearing 
Corporation; Notice of Filing and Immediate Effectiveness of Proposed 
Rule Change to Aggregate Obligations in Certain Securities Transactions 
Designated for Settlement on a Trade-for-Trade Basis

March 23, 2010.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on March 4, 2010, 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 proposal pursuant to 
Section 19(b)(3)(A)(iii) of the Act \2\ and Rule 19b-4(f)(4) \3\ 
thereunder so that the proposal 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\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \3\ 17 CFR 240.19b-4(f)(4).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The purpose of the proposed rule change is to allow NSCC to 
aggregate obligations in certain securities transactions designated for 
settlement on a trade-for-trade basis.

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 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

    NSCC may designate some or all transactions in a security to settle 
on a trade-for-trade basis.\5\ In such cases, NSCC marks the 
transaction as a Special Trade and provides the counterparties with 
corresponding receive and deliver instructions to settle the 
transaction between themselves. Independent of action by NSCC, members 
may also agree to settle a transaction on a trade-for-trade basis and 
mark it as a Special Trade.
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    \5\ This practice is addressed by NSCC's Rules and Procedures in 
the section titled ``Procedure II. Trade Comparison and Recording 
Service.''
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    NSCC proposes amending its Rules so that when NSCC is responsible 
for designating a transaction to settle as a Special Trade it may 
aggregate the daily receive and deliver obligations in that security 
between the counterparties. As a result, each counterparty at the end 
of the day would have only one aggregate receive obligation and one 
aggregate deliver obligation in the designated security as opposed to 
individually settling the multiple transactions.\6\ The resulting buy 
order obligation and sell order obligation between the counterparties 
would not be netted against each other.\7\ Receive and deliver orders 
for transactions designated by Members as Special Trades would continue 
to be issued on an individual transaction basis.
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    \6\ As is currently the case for trade-for-trade items, NSCC 
would not guaranty the settlement of transactions aggregated 
pursuant to this proposal.
    \7\ For example, if on a given day Broker A has 15 buys against 
Broker B in Security X, the transactions would be aggregated into 
one receive obligation for A and one deliver obligation for B. 
Likewise, if Broker A has 20 sells with Broker B on that same day 
for the same security, those items would also be aggregated into one 
deliver obligation for A and one receive obligation for B. In this 
example, A and B would each have two settlement obligations with the 
other party for Security X rather than the 35 obligations each would 
have without aggregation.
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    To facilitate this proposal, NSCC would amend Procedure II of its 
Rules to provide for aggregated receive and deliver instructions for 
trade-for-trade items and to clarify that receive and deliver 
instructions for trade-for-trade items are reported on the Consolidated 
Trade Summary. The proposed changes to NSCC's Rules can be found in 
Exhibit 5 to proposed rule change SR-NSCC-2010-02 at http://
www.dtcc.com/downloads/legal/rule_filings/2010/nscc/2010-02.pdf.
    NSCC believes that the proposed rule change is consistent with the 
requirements of Section 17A of the Act \8\ and the rules and 
regulations thereunder applicable to NSCC because the proposed rule 
change promotes efficiencies in the clearance and settlement of 
securities transactions by modifying NSCC's Rules to reduce the number 
of settlement obligations for members when NSCC designates a 
transaction as a Special Trade.
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    \8\ 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

    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

    The foregoing rule change has become effective pursuant to Section 
19(b)(3)(A)(iii) of the Act \9\ and Rule 19b-4(f)(4) \10\ thereunder 
because the proposed rule change effects a change in an existing 
service of a registered clearing agency that: (i) Does not adversely 
affect the safeguarding of securities or funds in the custody or 
control of the clearing agency or for which it is responsible and (ii) 
does not significantly affect the respective rights or obligations of 
the clearing agency or persons using the service. At any time within 
sixty days of the filing of such rule change, the Commission may 
summarily abrogate 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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    \9\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \10\ 17 CFR 240.19b-4(f)(4).
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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

     Electronic comments may be submitted by using the 
Commission's

[[Page 15480]]

Internet comment form (http://www.sec.gov/rules/sro.shtml), or
     Send an e-mail to rule-comments@sec.gov. Please include 
File No. SR-NSCC-2010-02 on the subject line.

Paper Comments

     Send paper comments in triplicate to Elizabeth M. Murphy, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-NSCC-2010-02. 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 Web site viewing and 
printing in the Commission's Public Reference Section, 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 filings 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/2010/
nscc/2010-02.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-2010-02 
and should be submitted on or before April 19, 2010.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\11\
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    \11\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-6873 Filed 3-26-10; 8:45 am]
BILLING CODE 8011-01-P