Document ID: SEC-2005-0022-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: National Securities Clearing Corp.
Posted Date: 2005-09-26T04:00Z

[Federal Register: September 26, 2005 (Volume 70, Number 185)]
[Notices]               
[Page 56200-56201]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr26se05-75]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-52458; File No. SR-NSCC-2005-10]

 
Self-Regulatory Organizations; National Securities Clearing 
Corporation; Notice of Filing and Immediate Effectiveness of a Proposed 
Rule Change Relating to the Mutual Fund Commission Settlement Service

September 16, 2005.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on August 11, 2005, 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. The Commission is 
publishing this notice to solicit comments on the proposed rule change 
from interested persons.
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    \1\ 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 will permit an NSCC Rule 2 member \2\ to 
submit fee data through NSCC to another NSCC Rule 2 member and have the 
payments settle through NSCC. Prior to this rule change, the Mutual 
Fund Commission Settlement service allowed such members to submit only 
commission data.
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    \2\ Members admitted under NSCC Rule 2 may be admitted to use 
all NSCC services or they may be admitted to use NSCC's mutual fund 
and insurance processing services only.
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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.

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 amend NSCC Rule 52, 
Section C regarding NSCC's Mutual Fund Commission Settlement service by 
permitting a Rule 2 member to submit fee data through NSCC to another 
NSCC Rule 2 member and have the payment settle through NSCC. Prior to 
this rule change, the Mutual Fund Commission Settlement service allowed 
such members to submit only commission data.
    NSCC believes that the new functionality to submit fee data should 
be useful in the context of processing mutual fund transactions for 
retirement plans in which a Rule 2 member may offer plan programs 
involving multiple mutual funds for which it acts as a recordkeeper or 
as a broker-dealer for multiple funds offered in the plan program. In 
this capacity, the Rule 2 member may receive a fee from the funds in 
connection with transactions in such funds for which it seeks to pay an 
amount over to another Rule 2 member that directed the purchase of 
certain of the fund shares in the plan.
    Prior to this rule change, fees were frequently paid by checks sent 
through the mail. This practice carried the risk that checks may be 
lost or misdirected and errors may occur during the costly and manually 
intensive processing and reconciliation of check payments. Permitting 
settlement of these broker-to-broker fees through NSCC in the same 
manner that fund-to-broker fees are paid through NSCC should enable the 
fee payments to be made with greater efficiency and transparency in a 
secure, automated, and operationally efficient process.
    The proposed rule change also deletes Rule 52(C), Section 4, which 
set forth procedures for members to correct a prior commission payment 
because NSCC's system processes correction data in the same manner that 
all other commission and fee related data is processed and the special 
provisions are not applicable.
    NSCC believes that the proposed rule change is consistent with the 
requirements of the Act and the rules and regulations thereunder 
because it

[[Page 56201]]

will facilitate the accurate clearance and settlement of transactions.

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

    NSCC has not solicited or received written comments relating to the 
proposed rule change. NSCC will notify the Commission if it receives 
any written comments.

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) \3\ of the Act and Rule 19b-4(f)(4) \4\ thereunder 
because it effects a change in an existing service of NSCC that does 
not adversely affect the safeguarding of securities or funds in NSCC's 
control or for which NSCC is responsible and does not significantly 
affect NSCC's or its participants' respective rights or obligations. 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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    \3\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \4\ 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, as amended, 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-2005-10 on the subject line.

Paper Comments

    Send paper comments in triplicate to Jonathan G. Katz, Secretary, 
Securities and Exchange Commission, 100 F Street, NE., Washington, DC 
20549-9303. All submissions should refer to File Number SR-NSCC-2005-
10. 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 NSCC's principal office and on NSCC's Web 
site (http://www.nscc.com/legal/index.html). 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-2005-10 and should be submitted on 
or before October 17, 2005.
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    \5\ 17 CFR 200.30-3(a)(12).

    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority.\5\
Jonathan G. Katz,
Secretary.
 [FR Doc. E5-5172 Filed 9-23-05; 8:45 am]

BILLING CODE 8010-01-P