Document ID: SEC-2010-1052-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: National Securities Clearing Corp.
Posted Date: 2010-07-12T04:00Z

[Federal Register: July 12, 2010 (Volume 75, Number 132)]
[Notices]               
[Page 39721-39722]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr12jy10-80]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-62435; File No. SR-NSCC-2010-06]

 
Self-Regulatory Organizations; National Securities Clearing 
Corporation; Notice of Filing and Immediate Effectiveness of Proposed 
Rule Change To Amend Rules Regarding Membership and Mutual Fund 
Services

July 1, 2010.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on June 11, 2010, 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.\2\ NSCC filed the proposed rule change 
pursuant to Section 19(b)(3)(A)(iii) and Rule 19b-4(f)(4) thereunder so 
that the proposed rule change was effective upon filing with the 
Commission.\3\ 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\ The text of the proposed rule change is attached as Exhibit 
5 to NSCC's filing and is available at http://www.dtcc.com/
downloads/legal/rule_filings/2010/nscc/2010-06.pdf.
    \3\ 15 U.S.C. 78s(b)(3)(A)(iii) and 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 proposed rule change will amend NSCC rules to create a new 
membership category that will allow third party administrators access 
to NSCC's mutual fund services.

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.\5\
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    \5\ The Commission has modified the text of the summaries 
prepared by the NSCC.
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(A) Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In an effort to improve efficiencies in the processing and 
settlement of mutual fund transactions, NSCC is proposing to establish 
a new member category called the Third Party Provider member (``TPP 
Member'') that will allow certain financial intermediaries to access 
NSCC's mutual fund services, including FundSERV.\6\ The TPP Member will 
act as a routing platform that will link the TPP Member's customers to 
NSCC's Mutual Fund Services. This will allow the TPP Member's customers 
to gain automated access to funds participating in NSCC's Mutual Fund 
Services without having to build multiple systems and connections to 
NSCC. Permitting the TPP Member to act as a

[[Page 39722]]

routing platform should streamline the processing and settlement of 
fund transactions by allowing access to NSCC's services through a 
single interface in a seamless automated manner.
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    \6\ Fund/SERV provides standardized formats and centralized 
processing of purchase, redemption, and exchange orders and account 
registrations of mutual fund shares and provides participants with a 
single daily net settlement.
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    Each TPP Member's customer transacting business with an NSCC fund 
member will be required to enter into a selling group agreement with 
such fund. Further, because the TPP Member will be a non-settling 
member with access to Fund/SERV and NSCC's other mutual fund services, 
the TPP Member must have an NSCC full service member (``settling 
member'') to settle transactions on behalf of the TPP Member's 
customers. The settling member will receive notice of the settlement 
obligation for each TPP customer. Each TPP Member's customer will be 
required to maintain an account relationship with its settling member 
for the purpose of settling the transactions. Consequently, each TPP 
Member's customer will be subject to its settling member's customer 
identification program, due diligence, and where appropriate enhanced 
due diligence requirements. Because the settling member must be an NSCC 
full service member, it will be subject to NSCC's standards of 
membership as if it were to be settling its own transactions in mutual 
fund services at NSCC.
    NSCC believes that the proposed rule change is consistent with the 
requirements of Section 17A of the Act \7\ and the rules and 
regulations thereunder that are applicable to NSCC because the proposed 
rule should streamline the processing and settlement of mutual fund 
transactions by allowing greater access to its services through a 
single interface in a seamless automated manner, which should increase 
efficiencies related to the clearing and settling of mutual fund 
transactions.
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    \7\ 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 impose any 
burden on competition that is not necessary or appropriate in 
furtherance of the purposes of the Act.

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

    No written comments relating to the proposed rule change have been 
solicited or received. NSCC will notify the Commission of any written 
comments received by the 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)(iii) of the Act \8\ and Rule 19b-4(f)(4) \9\ 
thereunder because it effects a change in an existing service of a 
registered clearing agency that 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 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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    \8\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \9\ 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

     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-2010-06 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-2010-06. 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, http://www.dtcc.com. 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-2010-06 and should be submitted on 
or before August 2, 2010.

    For the Commission by the Division of Trading and Markets, 
pursuant to delegated authority.\10\
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    \10\ 17 CFR 200.30-3(a)(12).
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Elizabeth M. Murphy,
Secretary.
[FR Doc. 2010-16847 Filed 7-9-10; 8:45 am]
BILLING CODE 8010-01-P