Self-Regulatory Organizations; National Securities Clearing Corporation; Order Granting Approval of a Proposed Rule Change To Amend Its Operational Capability Requirement for Membership, 22167-22168 [E5-2003]
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Federal Register / Vol. 70, No. 81 / Thursday, April 28, 2005 / Notices
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
Nasdaq states that written comments
were neither solicited nor received.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The forgoing rule change is subject to
Section 19(b)(3)(A)(ii) of the Act 9 and
subparagraph (f)(2) of Rule 19b–410
thereunder because it establishes or
changes a due, fee, or other charge
imposed by the self-regulatory
organization. Accordingly, the proposal
is effective upon Commission receipt of
the filing. At any time within 60 days
of the filing of such 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.11
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 (https://www.sec.gov/
rules/sro.shtml); or
• Send an e-mail to rulecomments@sec.gov. Please include File
Number SR–NASD–2005–048 on the
subject line.
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
Room. Copies of the filing also will be
available for inspection and copying at
the principal office of the NASD. 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–NASD–2005–048 and
should be submitted on or before May
19, 2005.
For the Commission, by the Division of
Market Regulation, pursuant to delegated
authority.12
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. E5–2043 Filed 4–27–05; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–51600; File No. SR–NSCC–
2005–01]
Self-Regulatory Organizations;
National Securities Clearing
Corporation; Order Granting Approval
of a Proposed Rule Change To Amend
Its Operational Capability Requirement
for Membership
Paper Comments
April 22, 2005.
• Send paper comments in triplicate
to Jonathan G. Katz, Secretary,
Securities and Exchange Commission,
450 Fifth Street, NW., Washington, DC
20549–0609.
All submissions should refer to File
Number SR–NASD–2005–048. 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 (https://www.sec.gov/
rules/sro.shtml). Copies of the
I. Introduction
On January 19, 2005, the National
Securities Clearing Corporation
(‘‘NSCC’’) filed with the Securities and
Exchange Commission (‘‘Commission’’)
proposed rule change File No. SR–
NSCC–2005–01 pursuant to Section
19(b)(1) of the Securities Exchange Act
of 1934 (‘‘Act’’).1 Notice of the proposed
rule change was published in the
Federal Register on March 17, 2005.2
No comment letters were received. For
the reasons discussed below, the
12 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 Securities Exchange Act Release No. 51363
(March 11, 2005), 70 FR 13060.
9 15
U.S.C. 78s(b)(3)(A)(ii).
10 17 CFR 240.19b–4(f)(2).
11 15 U.S.C. 78s(b)(3)(C).
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22167
Commission is now granting approval of
the proposed rule change.
II. Description
The proposed rule change amends
Section I.A.3. of Addendum B, Section
I.A.3. of Addendum I, Section I.3. of
Addendum Q, and Section I.2. of
Addendum R of NSCC’s Rules and
Procedures concerning the operational
capability requirements of applicants for
membership. NSCC’s current rules
specify that an applicant must ‘‘have
adequate personnel capable of handling
transactions with the Corporation
[NSCC] and adequate physical facilities,
books and records and procedures to
fulfill anticipated commitments to and
to meet the operational requirements of
the Corporation [NSCC] * * *.’’ NSCC
believes that these provisions may be
interpreted to impose upon NSCC an
obligation to make determinations with
respect to these particular aspects of
applicants’ and members’ operational
capability. NSCC ordinarily leaves such
determinations to the applicants’ and
members’ designated examining
authorities. The operational capability
that NSCC ordinarily focused upon
during the application process is the
applicant’s ability to appropriately
communicate with NSCC; that is, the
applicant’s ability to input data to NSCC
and to receive output from NSCC on a
timely and accurate basis.
NSCC believes that it is appropriate to
clarify these sections of its Rules and
Procedures so that they reflect the
practices of NSCC and so that there will
be no misunderstandings as to their
meaning. The text of the abovereferenced sections of NSCC’s Rules and
Procedures will be amended to delete
references to adequate personnel and
adequate facilities, books, and records
that are extraneous to the ability of
applicants to communicate with NSCC.
In place, these sections will state that an
applicant must ‘‘be able to satisfactorily
communicate with the Corporation
[NSCC] * * *.’’ NSCC will continue to
retain the right to examine any aspect of
an applicant’s or member’s business
pursuant to the provisions of NSCC Rule
15.
III. Discussion
Section 17A(b)(3)(F) of the Act
requires among other things that the
rules of a clearing agency be designed to
assure the safeguarding of securities and
funds in its custody or control or for
which it is responsible.3 The
Commission finds that NSCC’s proposed
rule change is consistent with this
requirement because it eliminates a
3 15
E:\FR\FM\28APN1.SGM
U.S.C. 78q–1(b)(3)(F).
28APN1
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Federal Register / Vol. 70, No. 81 / Thursday, April 28, 2005 / Notices
potential misunderstanding with regard
to its membership requirements and
therefore helps NSCC better protect
itself and its members from undue risk.
IV. Conclusion
On the basis of the foregoing, the
Commission finds that the proposed
rule change is consistent with the
requirements of the Act and in
particular Section 17A of the Act and
the rules and regulations thereunder.
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act,4 that the
proposed rule change (File No. SR–
NSCC–2005–01) be and hereby is
approved.
For the Commission by the Division of
Market Regulation, pursuant to delegated
authority.5
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. E5–2003 Filed 4–27–05; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–51593; File Nos. SR–NYSE–
2004–24; SR–NASD–2004–141]
Self-Regulatory Organizations; Order
Approving Proposed Rule Changes by
the New York Stock Exchange, Inc.,
and the National Association of
Securities Dealers, Inc., To Prohibit
Participation by a Research Analyst in
a Road Show Related to an Investment
Banking Services Transaction and To
Require Certain Communications
About an Investment Banking Services
Transaction To Be Fair, Balanced and
Not Misleading
April 21, 2005.
I. Introduction
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Exchange Act’’ or ‘‘Act’’) 1 and Rule
19b–4 thereunder,2 on April 22, 2004
the New York Stock Exchange (‘‘NYSE’’
or the ‘‘Exchange’’), and on September
20, 2004, the National Association of
Securities Dealers, Inc. (‘‘NASD’’), filed
with the Securities and Exchange
Commission (‘‘SEC’’ or ‘‘Commission’’)
proposed rule changes including
proposals to prohibit participation by a
research analyst in a road show related
to an investment banking services
transaction and to require certain
communications about an investment
banking services transaction to be fair,
4 15
U.S.C. 78s(b)(2).
CFR 200.30–3(a)(12).
1 15 U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
5 17
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balanced and not misleading. On
February 11, 2005, NYSE filed
Amendment No. 1 to its proposed rule
change, which replaced the original rule
filing in its entirety. On February 4,
2005, NASD filed Amendment No. 1 to
its proposed rule change, which
replaced the original rule filing in its
entirety.3 The proposed rule changes, as
amended, were published for comment
in the Federal Register on March 17,
2005.4 The comment period expired on
April 7, 2005. The Commission received
one comment letter in response to the
Notice, which supported the proposed
rule changes.5 This order approves the
proposed rule changes, as amended.
II. Background
On May 10, 2002, the Commission
approved rule changes filed by the
NYSE and NASD (the ‘‘SROs’’)
governing research analyst conflicts of
interest.6 Those rules took considerable
steps towards promoting greater
independence of research analysts and
significantly enhanced the disclosure of
actual and potential conflicts of interest
to investors.
On July 30, 2002, President Bush
signed into law the Sarbanes-Oxley Act
of 2002 (‘‘SOA’’), which required,
among other things, that the
Commission, or upon authorization and
direction of the Commission, a
registered securities association or
national securities exchange, adopt
rules governing analyst conflicts.7
Certain of the SOA’s mandates were
satisfied by NASD and NYSE rule
provisions existing at the time of the
enactment of the SOA. Other of the
SOA’s mandates necessitated
amendments to the then existing rules.
Thus, the Commission directed the
NASD and NYSE to amend their analyst
conflicts rules to fulfill the mandates of
the SOA.8 The Commission approved
these rules on July 29, 2003.9
3 On March 9, 2005, NASD filed with the
Commission Amendment No. 2 to its proposed rule
change, which clarified that Amendment No. 1
replaced the original filing in its entirety.
4 See Securities Exchange Act Release No. 51358
(March 10, 2005), 70 FR 13061 (the ‘‘Notice’’).
5 See Letter to Jonathan G. Katz, Secretary,
Commission, from the Ohio Public Employees
Retirement System (April 1, 2005).
6 See Securities Exchange Act Release No. 45908,
67 FR 34968 (May 16, 2002) (the ‘‘Round I’’ rules).
7 See Pub. L. 107–204, 116 Stat. 745 (2002). The
SOA amended the Exchange Act by adding Section
15D. See 15 U.S.C. 78a et seq.; 15 U.S.C. 78o–6.
8 See Letter from Annette Nazareth, Director,
Division of Market Regulation, Commission, to
Mary Schapiro, Vice Chairman and President,
Regulatory Policy and Oversight, NASD, and
Richard Grasso, Chairman and Chief Executive
Officer, NYSE (March 13, 2003).
9 See Securities Exchange Act Release No. 48252,
68 FR 45875 (August 4, 2003) (the ‘‘Round II’’
rules).
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In the order approving the Round I
rules, the Commission directed the
SROs to prepare a report on the
operation and effectiveness of the rules
by November, 2003. The Commission
later postponed requiring the SROs to
submit the report in light of the SOA
and the approval of the Round II rules.10
The Round II rules have now been fully
implemented since April 26, 2004 and
the SROs have been instructed to jointly
submit a report on the operation and
effectiveness of all of the analyst rules
by November 4, 2005.11 It is possible
that the report may indicate additional
areas for rulemaking.
On April 28, 2003, the Commission,
along with other regulators, announced
a global settlement of enforcement
actions against certain investment firms
that followed joint investigations by
regulators of allegations of undue
influence of investment banking
interests on securities research at
brokerage firms.12 The Global
Settlement was approved by the court
on October 31, 2003. On September 24,
2004, the court approved amendments
to the Global Settlement, which, among
other things, amended the Addendum to
provide additional, more specific
guidelines relating to analyst
communications with members of a
settling firm’s sales force and
prospective investors in the context of
certain investment banking transactions,
and were intended to avoid research
analysts becoming, or being perceived
as, part of the investment banking team
or otherwise promoting a particular
transaction.13
A. Current NYSE and NASD Rules
Governing Disclosure of Conflicts of
Interest
The SROs’ research analyst conflicts
of interest rules were designed to foster
greater public confidence in securities
research and to protect the objectivity
and independence of securities analysts.
10 Id.
11 See Letter from Annette Nazareth, Director,
Division of Market Regulation, Commission, to
Mary Schapiro, Vice Chairman and President,
Regulatory Policy and Oversight, NASD, and
Richard Ketchum, Chief Regulatory Officer, NYSE
(April 8, 2005).
12 The terms of the settlement are available at
https://www.sec.gov/litigation/litreleases/
finaljudgadda.pdf (‘‘Global Settlement’’).
13 The SROs note that the proposed rule changes
are similar in certain aspects to provisions found in
the Global Settlement. The SROs have stated that
the proposed rule changes have not been proposed
for the purpose of conforming to the Global
Settlement, or addressing differences between the
Global Settlement and SRO rules. Rather, the SROs
believe that the proposed rules are appropriate in
that they would facilitate the goal of more objective
and reliable research.
E:\FR\FM\28APN1.SGM
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]]>Agencies
[Federal Register Volume 70, Number 81 (Thursday, April 28, 2005)]
[Notices]
[Pages 22167-22168]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E5-2003]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-51600; File No. SR-NSCC-2005-01]
Self-Regulatory Organizations; National Securities Clearing
Corporation; Order Granting Approval of a Proposed Rule Change To Amend
Its Operational Capability Requirement for Membership
April 22, 2005.
I. Introduction
On January 19, 2005, the National Securities Clearing Corporation
(``NSCC'') filed with the Securities and Exchange Commission
(``Commission'') proposed rule change File No. SR-NSCC-2005-01 pursuant
to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'').\1\ Notice of the proposed rule change was published in the
Federal Register on March 17, 2005.\2\ No comment letters were
received. For the reasons discussed below, the Commission is now
granting approval of the proposed rule change.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ Securities Exchange Act Release No. 51363 (March 11, 2005),
70 FR 13060.
---------------------------------------------------------------------------
II. Description
The proposed rule change amends Section I.A.3. of Addendum B,
Section I.A.3. of Addendum I, Section I.3. of Addendum Q, and Section
I.2. of Addendum R of NSCC's Rules and Procedures concerning the
operational capability requirements of applicants for membership.
NSCC's current rules specify that an applicant must ``have adequate
personnel capable of handling transactions with the Corporation [NSCC]
and adequate physical facilities, books and records and procedures to
fulfill anticipated commitments to and to meet the operational
requirements of the Corporation [NSCC] * * *.'' NSCC believes that
these provisions may be interpreted to impose upon NSCC an obligation
to make determinations with respect to these particular aspects of
applicants' and members' operational capability. NSCC ordinarily leaves
such determinations to the applicants' and members' designated
examining authorities. The operational capability that NSCC ordinarily
focused upon during the application process is the applicant's ability
to appropriately communicate with NSCC; that is, the applicant's
ability to input data to NSCC and to receive output from NSCC on a
timely and accurate basis.
NSCC believes that it is appropriate to clarify these sections of
its Rules and Procedures so that they reflect the practices of NSCC and
so that there will be no misunderstandings as to their meaning. The
text of the above-referenced sections of NSCC's Rules and Procedures
will be amended to delete references to adequate personnel and adequate
facilities, books, and records that are extraneous to the ability of
applicants to communicate with NSCC. In place, these sections will
state that an applicant must ``be able to satisfactorily communicate
with the Corporation [NSCC] * * *.'' NSCC will continue to retain the
right to examine any aspect of an applicant's or member's business
pursuant to the provisions of NSCC Rule 15.
III. Discussion
Section 17A(b)(3)(F) of the Act requires among other things that
the rules of a clearing agency be designed to assure the safeguarding
of securities and funds in its custody or control or for which it is
responsible.\3\ The Commission finds that NSCC's proposed rule change
is consistent with this requirement because it eliminates a
[[Page 22168]]
potential misunderstanding with regard to its membership requirements
and therefore helps NSCC better protect itself and its members from
undue risk.
---------------------------------------------------------------------------
\3\ 15 U.S.C. 78q-1(b)(3)(F).
---------------------------------------------------------------------------
IV. Conclusion
On the basis of the foregoing, the Commission finds that the
proposed rule change is consistent with the requirements of the Act and
in particular Section 17A of the Act and the rules and regulations
thereunder.
It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\4\ that the proposed rule change (File No. SR-NSCC-2005-01) be and
hereby is approved.
---------------------------------------------------------------------------
\4\ 15 U.S.C. 78s(b)(2).
For the Commission by the Division of Market Regulation,
pursuant to delegated authority.\5\
---------------------------------------------------------------------------
\5\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. E5-2003 Filed 4-27-05; 8:45 am]
BILLING CODE 8010-01-P
