Document ID: SEC-2007-0730-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: National Securities Clearing Corp.
Posted Date: 2007-05-22T04:00Z

[Federal Register: May 22, 2007 (Volume 72, Number 98)]
[Notices]               
[Page 28752-28753]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr22my07-123]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-55770; File No. SR-NSCC-2007-05]

 
Self-Regulatory Organizations; National Securities Clearing 
Corporation; Notice of Filing and Immediate Effectiveness of Proposed 
Rule Change Relating to Its Ability To Receive Transaction Data From 
Trade Reporting Facilities That Are Facilities of a Self-Regulatory 
Organization

May 15, 2007.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''), \1\ notice is hereby given that on March 26, 2007, the 
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. NSCC filed the proposed rule change 
pursuant to Section 19(b)(3)(A)(i) of the Act \2\ and Rule 19b-4(f)(1) 
thereunder \3\ 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 parties.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78s(b)(3)(A)(i).
    \3\ 17 CFR 240.19b-4(f)(1).
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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 clarify NSCC's Rule 
7, ``Comparison and Trade Recording Operation,'' in order to make clear 
that NSCC may accept transaction data on behalf of NSCC members from 
trade reporting facilities that are affiliated with and operated as a 
facility of a self-regulatory organization (``Trade Reporting 
Facilities'' or ``TRFs'').

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.\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

    The purpose of this filing is to clarify NSCC's Rule 7, 
``Comparison and Trade Recording Operation,'' in order to make clear 
that NSCC may accept transaction data on behalf of NSCC Members from 
Trade Reporting Facilities.
Background
    NSCC's Rule 7 permits NSCC in its discretion to accept transaction 
data from self-regulatory organizations (``SROs''), as defined in the 
Securities Exchange Act of 1934 (and, similarly, from derivatives 
clearing organizations registered or deemed registered with the 
Commodities Futures Trading Commission). Such data may be provided 
directly by an SRO or through subsidiary or affiliated organizations.
    In conjunction with the recent separation of the National 
Association of Securities Dealers, Inc. (``NASD'') and The Nasdaq Stock 
Market, Inc. (``Nasdaq''), the Commission approved the establishment by 
NASD and Nasdaq of the NASD/Nasdaq Trade Reporting Facility, which 
provides NASD members with an alternative means for reporting 
transactions in exchange-listed securities effected otherwise than on 
an exchange. Since then, NASD has established several additional new 
TRFs in conjunction with other registered securities exchanges, each of 
which provides NASD members with alternate means for reporting 
transactions in exchange-listed securities effected otherwise than on 
an exchange. All of these TRFs will operate as joint ventures with the 
relevant exchanges, but NASD, the ``SRO Member'' of each such venture, 
will have sole regulatory responsibility for each TRF. As such, the 
TRFs are facilities ``of NASD and subject to NASD's registration as a 
national securities association.''\5\
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    \5\ See e.g., Securities Exchange Act Release Nos. 54084 (June 
30, 2006), 71 FR 38935 (July 10, 2006) [SR-NASD-2005-087] 
(establishment of the NASD/Nasdaq TRF); 54715 (November 6, 2006), 71 
FR 66354 (November 14, 2006) [SR-NASD-2006-108] (establishment of 
the NASD/NSX TRF); and 54931 (December 13, 2006), 71 FR 76409 
(December 20, 2006) [SR-NASD-2006-115] (establishment of the NASD/
BSE TRF).
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    At the current time, NASD filed proposed rule changes with the 
Commission relating to the establishment of the following TRFs: The 
NASD/Nasdaq TRF; the NASD/National Securities Exchange (NSX) TRF; the 
NASD/Boston Stock Exchange (BSE) TRF; and the NASD/New York Stock 
Exchange (NYSE) TRF. Currently, all the TRFs are operational. The rules 
governing the operations of these facilities are contained in NASD Rule 
4000 and 6100 Series for the NASD/Nasdaq TRF, NASD Rule 4000C and 6000C 
Series for the NASD/NSX TRF, NASD Rule 4000D and 6000D Series for the 
NASD/BSE TRF, and NASD Rule 4000E and 6000E Series for the NASD/NYSE 
TRF. With the exception of the NASD/NYSE TRF, the applicable rules 
permit the TRFs, at the option of their NASD member participant, to 
submit the data relating to reported trades to NSCC for clearance and 
settlement.
    In order to accommodate the NASD and to promote the efficient 
processing of securities transactions, NSCC proposes to clarify its 
Rule 7, Section 5 \6\ to make clear that it may accept transaction data 
from such TRFs as facilities of the NASD, the applicable SRO. For this 
purpose, the proposed clarification provides that the TRF be affiliated 
with and operated as a facility of the SRO and that the rules and 
operation of the TRF be the subject of a rule change of the SRO that 
has been duly filed with the Commission and is effective.\7\ By 
allowing NSCC to receive transaction data for clearing purposes from 
these facilities with respect to NSCC's members, broker-dealers will be 
able to report transactions for both reporting/regulatory and clearing 
purposes in a single report to the TRFs.
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    \6\ Rule 7, Section 5 is proposed to be renumbered as part of 
other changes pending pursuant to File No. SR-NSCC-2006-04.
    \7\ NASD filed a proposed rule change relating to the 
establishment of the NASD/NYSE TRF for immediate effectiveness, 
asserting that such proposed rule change was ``non-controversial'' 
because it was substantially similar to the rules relating to the 
other TRFs, which were subject to notice and comment and approved by 
the Commission. Securities Exchange Act Release No. 55325 (February 
21, 2007), 72 FR 8820 (February 27, 2007) [SR-NASD-2007-011].

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[[Page 28753]]

    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 change is a clarification that 
does not adversely affect the safeguarding of securities and funds in 
the custody or control of the clearing agency or for which it is 
responsible and does not adversely affect the respective rights or 
obligations of the clearing agency or its members.
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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 upon filing pursuant 
to Section 19(b)(3)(A)(i) of the Act \9\ and Rule 19b-4(f)(1) \10\ 
thereunder because it constitutes a stated policy, practice, or 
interpretation with respect to the meaning, administration, or 
enforcement of an existing rule of NSCC. At any time within 60 days of 
the filing of the proposed 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)(i).
    \10\ 17 CFR 240.19b-4(f)(1).
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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

     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-2007-05 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-2007-05. 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. The text of the proposed rule change is 
available at NSCC, the Commission's Public Reference Room, and http://www.nscc.com/legal/2007/2007-05.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-2007-05 and should be submitted on 
or before June 11, 2007.

    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority.\11\
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    \11\ 17 CFR 200.30-3(a)(12).
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Nancy M. Morris,
Secretary.
[FR Doc. E7-9762 Filed 5-21-07; 8:45 am]

BILLING CODE 8010-01-P