Document ID: SEC-2007-0084-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: National Securities Clearing Corp.
Posted Date: 2007-01-18T05:00Z

[Federal Register: January 18, 2007 (Volume 72, Number 11)]
[Notices]               
[Page 2319-2320]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr18ja07-117]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-55082; File No. SR-NSCC-2006-18]

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

January 10, 2007.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on December 21, 2006, the National Securities Clearing Corporation 
(``NSCC'') filed with the Securities and Exchange Commission 
(``Commission'') and on January 5, 2007, amended \3\ 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 on the proposed rule change from interested parties.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ The amendment added the number of the new rule inadvertently 
omitted in the original filing.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The proposed rule change seeks to modify NSCC's Rules to provide 
for a service to facilitate the exchange of account related information 
on an automated basis during the movement of correspondent broker 
accounts between members or during other material events that result in 
the bulk movement of accounts between members.

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

    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 proposes to modify 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 proposes to develop and introduce AIT in two phases. The first 
phase will be to create the mechanism by which members may transmit 
data between themselves. Subject to final approval, NSCC intends to 
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 
proposing to amend its rules to clarify that NSCC will neither be 
responsible for the accuracy or completeness of any information 
transmitted through AIT nor for any omissions or delays that may occur 
in the transmission of AIT data. Finally, NSCC is proposing a $200 
monthly subscription fee for participation in AIT during phase one. 
NSCC will reevaluate AIT service fees as subsequent enhancements are 
completed.
    NSCC believes that the proposed rule change is consistent with the 
requirements of Section 17A of the Act \5\ and the rules and 
regulations thereunder because by reducing costs, increasing accuracy, 
and accelerating delivery time of bulk movement of accounts between 
members, it will enable NSCC to facilitate the prompt and accurate 
clearance and settlement of securities transactions.
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    \5\ 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.

[[Page 2320]]

(C) Self-Regulatory Organization's Statement on Comments on the 
Proposed Rule Change Received From Members, Participants, or Others

    The SIA Data Conversion Privacy Working Group initially requested 
NSCC provide this service. No written comments relating to the proposed 
rule change have been solicited or received. On November 3, 2006, NSCC 
notified members of the terms of AIT by Important Notice 
A6334, P&S5904. NSCC will notify the Commission of 
any written comments it receives.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Within thirty-five 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 ninety 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-2006-18 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-2006-18. 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 filings 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/legal/2006/2006-18-amendment.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-2006-18 and should be submitted on or before February 2, 2007.

    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority.\6\
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    \6\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
 [FR Doc. E7-585 Filed 1-17-07; 8:45 am]

BILLING CODE 8011-01-P