Self-Regulatory Organizations; National Securities Clearing Corporation; Notice of Filing of Proposed Rule Change Relating to Buy-Ins in Its Continuous Net Settlement System, 76485-76487 [E5-7855]

Download as PDF Federal Register / Vol. 70, No. 247 / Tuesday, December 27, 2005 / Notices NASD will announce the effective date of the proposed rule change in a Notice to Members (‘‘NTM’’) to be published no later than 60 days following Commission approval. The effective date will be 30 days following publication of the NTM announcing Commission approval. 2. Statutory Basis NASD believes that the proposed rule change is consistent with the provisions of Section 15A(b)(6) of the Act,9 which requires, among other things, that NASD’s rules must be designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, and, in general, to protect investors and the public interest. NASD believes that the proposed rule change provides appropriate tailored relief to persons actively serving in the Armed Forces of the United States in a manner consistent with NASD’s goals of investor protection and market integrity. B. Self-Regulatory Organization’s Statement on Burden on Competition NASD does not believe that the proposed rule change will result in 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 Written comments were neither solicited nor received. bjneal on PROD1PC70 with NOTICES III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Within 35 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 90 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: ‘‘inactive’’ status for purposes of NASD registration. He then terminates his registration with Firm A on July 1, 2006 while still on active military duty. He returns from active military duty on December 1, 2006. In this example, NASD would remove his ‘‘inactive’’ status designation on July 1, 2006 because he has ceased to be registered with a member. However, NASD would toll the ‘‘two-year licensing expiration provisions’’ beginning on July 1, 2006, until March 1, 2007 (which is 90 days following completion of his active military duty). NASD would have to be notified of his period of active military service by no later than December 1, 2008 (which is two years following completion of his active military duty). 9 15 U.S.C. 78o–3(b)(6). VerDate Aug<31>2005 14:54 Dec 23, 2005 Jkt 208001 (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 76485 For the Commission, by the Division of Market Regulation, pursuant to delegated authority.10 Jonathan G. Katz, Secretary. [FR Doc. E5–7864 Filed 12–23–05; 8:45 am] BILLING CODE 8010–01–P 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 No. SR–NASD–2005–135 on the subject line. SECURITIES AND EXCHANGE COMMISSION [Release No. 34–52976; File No. SR–NSCC– 2005–15] Self-Regulatory Organizations; National Securities Clearing Corporation; Notice of Filing of Proposed Rule Change Relating to Buy-Ins in Its Continuous Net Settlement System December 19, 2005. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’),1 notice is hereby given that on • Send paper comments in triplicate December 1, 2005, the National to Jonathan G. Katz, Secretary, Securities Clearing Corporation Securities and Exchange Commission, (‘‘NSCC’’) filed with the Securities and Station Place, 100 F Street, NE., Exchange Commission (‘‘Commission’’) Washington, DC 20549–9303. the proposed rule change described in All submissions should refer to File Items I, II, and III below, which items Number SR–NASD–2005–135. This file have been prepared primarily by NSCC. number should be included on the subject line if e-mail is used. To help the The Commission is publishing this notice to solicit comments on the Commission process and review your proposed rule change from interested comments more efficiently, please use only one method. The Commission will parties. post all comments on the Commission’s I. Self-Regulatory Organization’s Internet Web site (https://www.sec.gov/ Statement of the Terms of Substance of rules/sro.shtml). Copies of the the Proposed Rule Change submission, all subsequent amendments, all written statements The purpose of this proposed rule with respect to the proposed rule change is to modify NSCC’s Rules with change that are filed with the regard to CNS Buy-Ins in an effort to Commission, and all written harmonize the buy-in rules of the communications relating to the industry and to assist NSCC members in proposed rule change between the reducing their exposure related to buyCommission and any person, other than ins. those that may be withheld from the II. Self-Regulatory Organization’s public in accordance with the Statement of the Purpose of, and provisions of 5 U.S.C. 552, will be Statutory Basis for, the Proposed Rule available for inspection and copying in Change the Commission’s Public Reference Room. Copies of such filing also will be In its filing with the Commission, available for inspection and copying at NSCC included statements concerning the principal office of the NASD. All the purpose of and basis for the comments received will be posted proposed rule change and discussed any without change; the Commission does comments it received on the proposed not edit personal identifying rule change. The text of these statements information from submissions. You may be examined at the places specified should submit only information that in Item IV below. NSCC has prepared you wish to make available publicly. All summaries, set forth in sections (A), (B), submissions should refer to File and (C) below, of the most significant Number SR–NASD–2005–135 and aspects of these statements.2 should be submitted on or before January 17, 2006. 1 15 U.S.C. 78s(b)(1). Paper Comments 10 17 PO 00000 CFR 200.30–3(a)(12). Frm 00044 Fmt 4703 Sfmt 4703 2 The Commission has modified the text of the summaries prepared by NSCC. E:\FR\FM\27DEN1.SGM 27DEN1 76486 Federal Register / Vol. 70, No. 247 / Tuesday, December 27, 2005 / Notices (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 modify NSCC’s Rules with regard to CNS BuyIns in an effort to harmonize the buy-in rules of the industry and to assist NSCC members in reducing their exposure related to buy-ins. At the request of participants and after consultation with the Buy-In Subcommittee of the Securities Industry Association, NSCC proposes to modify its Rules to create a new buy-in retransmittal procedure that may be utilized by NSCC Members receiving buy-in notices initiated outside of the CNS System (‘‘Buy-In Retransmittal Notice’’).3 Existing NSCC fees related to CNS Buy-Ins will remain unchanged. bjneal on PROD1PC70 with NOTICES Current Process for CNS Buy-Ins Currently under NSCC’s Rules (except with respect to securities subject to a voluntary corporate reorganization), a member having a long position at the end of any day (‘‘Originator’’) may submit to NSCC a Notice of Intention to Buy-In (‘‘Buy-In Notice’’) specifying the quantity of securities which it intends to buy-in (‘‘Buy-In Position’’). The Buy-In Position is given high priority for allocation from the night cycle on N+1 through completion of the CNS day cycle at approximately 3 p.m. eastern standard time on N+2.4 If the Buy-In Position (or a portion thereof) remains unfilled after the evening allocation on N+1, NSCC issues CNS Retransmittal Notices on the following morning (N+1) to a sufficient number of members with short positions. NSCC issues CNS Retransmittal Notices in an aggregate quantity at least equal to the Buy-In Position. In no case will the Buy-In liability of a member exceed the Buy-In Position or the total short position of the member. If several members have short positions with the same age, all such members are issued CNS Retransmittal Notices even if the total of their short position exceeds the Buy-In Position. If the Buy-In Position is not satisfied by 3 p.m. on N+2, the buy-in may be executed. This current process will remain in effect. Buy-In Notices transmitted by a member which is the original submitter 3 The specific rules being amended are Rule 11, ‘‘CNS System,’’ and Procedures VII, ‘‘CNS Accounting Operation,’’ and X, ‘‘Execution of CNS Buy-Ins.’’ 4 The day the Buy-In Notice is submitted to NSCC is referred to as N, with N+1 and N+2 referring to the succeeding days. Each CNS day begins in the evening and includes an evening allocation of securities and a daytime allocation of securities. VerDate Aug<31>2005 14:54 Dec 23, 2005 Jkt 208001 will be referred to as ‘‘Original Buy-In Notices.’’ Proposed Procedure for CNS Buy-In Retransmittals At times, an NSCC member will be in receipt of a buy-in notice initiated outside of the CNS system while at the same time be failing to receive shares from CNS in the same security. Recognizing that such externally initiated buy-ins may expire before the time the expiration period that NSCC’s Rules currently provide as the expiration for CNS buy-ins (i.e., the current N+2 expiration), NSCC is proposing a new procedure to permit retransmittals of such buy-ins with an appropriately shortened execution time frame. Accordingly, the new procedure would provide that an NSCC member which has a long position in CNS at the end of any day (i.e., a fail to receive) and which is in receipt of a buy-in notice for securities of the same CUSIP that was initiated outside of the CNS System may submit a ‘‘Buy-In Retransmittal Notice’’ to NSCC. If the Buy-In Position (or a portion thereof) that was the subject of the Buy-In Retransmittal Notice was not satisfied by 3 p.m. on N+1, the buy-in could be executed. The Buy-In Retransmittal Notice would identify the entity that initiated the buy-in against the member. The differences between a Buy-In Retransmittal Notice and an Original Buy-In Notice would be as follows: • An Original Buy-In Notice will refer to a Buy-In Notice transmitted by a member for which the member is the original submitter. A Buy-In Retransmittal Notice will refer to a BuyIn Notice submitted by a member where the member has received a buy-in notice outside of the CNS system with respect to securities of the same CUSIP. • The member submitting a Buy-In Retransmittal Notice will receive an elevated priority for CNS allocations upon NSCC’s receipt of the notice. The member submitting an Original Buy-In Notice will continue to receive elevated priority on the morning of N+1. • The member submitting a Buy-In Retransmittal Notice will be provided with five additional fields to be used to identify the entity or entities that initiated the buy-in against the member. At least one such entity other than the member must be identified or NSCC will reject the Buy-In Retransmittal Notice. • For Buy-In Retransmittal Notices, NSCC will transmit CNS Retransmittal Notices to CNS short members upon receipt of the Buy-In Retransmittal Notice on N. The CNS Retransmittal PO 00000 Frm 00045 Fmt 4703 Sfmt 4703 Notice will identify both the submitting member and the entity or entities that initiated the buy-in against the member. For Original Buy-In Notices, NSCC will continue to transmit CNS Retransmittal Notices to short members on the morning of N+1. • A buy-in based on a Buy-In Retransmittal Notice may be executed on N+1 if the Buy-In Position (or a portion thereof) is not satisfied by 3:00 p.m. on N+1. The execution of a buy-in based on an Original Buy-In Notice will continue to be at 3 p.m. on N+2. Technical Correction In addition to modifying NSCC’s Rules and Procedures to reflect the above changes, NSCC will also make a technical correction to Procedure X, ‘‘Execution of Buy-Ins—CNS System.’’ The procedure states that members who receive CNS Retransmittal Notices and do not satisfy them assume liability for the loss, if any, which occurs as a result of the buy-in and that those members with the oldest short positions after the evening cycle on N+2 will first be held liable for an executed buy-in. Procedure X should reflect that it is the oldest short positions after the day cycle on N+2 that will first be held liable for an executed buy-in. Implementation If approved by the Commission, NSCC plans to implement these changes on a pilot basis open to all members on the later to occur of January 13, 2006, or within one week of the Commission’s approval of the proposed rule filing. The pilot will be limited to buy-ins of CNS eligible NYSE listed securities. NSCC anticipates that the pilot phase will be completed within thirty calendar days of implementation at which time buyins of all other CNS eligible securities will be permitted under these proposed changes. At that time the pilot will cease. NSCC will notify its members by an Important Notice of the specific date on which the pilot will expire and the proposed buy-in procedures are available for use with all CNS eligible securities. 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 applicable to NSCC because it will assist NSCC members in reducing their buy-in related exposure, thereby promoting the prompt and accurate clearance and settlement of securities transactions. 5 15 E:\FR\FM\27DEN1.SGM U.S.C. 78q–1. 27DEN1 Federal Register / Vol. 70, No. 247 / Tuesday, December 27, 2005 / Notices (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 The proposed rule change was prepared after consultation with the Buy-In Committee of the Securities Industry Association. 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 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: bjneal on PROD1PC70 with NOTICES 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–NSCC–2005–15 in 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–2005–15. 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 VerDate Aug<31>2005 14:54 Dec 23, 2005 Jkt 208001 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 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, https:// www.nscc.com\legal. 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– 2005–15 and should be submitted on or before January 17, 2005. For the Commission by the Division of Market Regulation, pursuant to delegated authority.6 Jonathan G. Katz, Secretary. [FR Doc. E5–7855 Filed 12–23–05; 8:45 am] BILLING CODE 8010–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–52975; File No. SR–OCC– 2004–20] Self-Regulatory Organizations; The Options Clearing Corporation; Notice of Filing of a Proposed Rule Change Relating to a New Risk Management Methodology December 19, 2005. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’),1 notice is hereby given that on November 15, 2004, The Options Clearing Corporation (‘‘OCC’’) filed with the Securities and Exchange Commission (‘‘Commission’’), and on May 10, 2005, and December 13, 2005, amended the proposed rule change as described in Items I, II, and III below, which items have been prepared primarily by OCC. The Commission is publishing this notice to solicit 6 17 1 15 PO 00000 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). Frm 00046 Fmt 4703 76487 comments on the proposed rule change, as amended, from interested persons. 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 reflect the implementation of a new risk management methodology that OCC would use to determine the amount of margin assets required to be deposited by a clearing member with respect to each account. II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, OCC 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. OCC has prepared summaries, set forth in sections (A), (B), and (C) below, of the most significant aspects of such statements.2 (A) Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change The proposed new risk management methodology, the System for Theoretical Analysis and Numerical Simulations, will enhance OCC’s ability to measure the risk of the portfolios in a clearing member’s accounts more accurately and therefore, will enable OCC to calculate margin requirements more precisely. 1. The Existing Risk Management Methodology: The Theoretical Intermarket Margining System Currently, OCC applies the Theoretical Intermarket Margining System (‘‘TIMS’’) for the calculation of clearing members’ daily minimum margin requirements, for the determination of the size of OCC’s clearing fund, for the computation of additional margin requirements, and for assessing risk in the Hedge Program. TIMS is a univariate risk management methodology that evaluates historical data of approximately 3,000 underlying assets to identify the expected gain or loss on positions that would occur at ten price points for equity instruments and at twenty price points for non-equity instruments within a range of likely price movements of each underlying interest. TIMS requires that options, futures, and stock loan and borrow 2 The Commission has modified parts of these statements. Sfmt 4703 E:\FR\FM\27DEN1.SGM 27DEN1

Agencies

[Federal Register Volume 70, Number 247 (Tuesday, December 27, 2005)]
[Notices]
[Pages 76485-76487]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E5-7855]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-52976; File No. SR-NSCC-2005-15]


Self-Regulatory Organizations; National Securities Clearing 
Corporation; Notice of Filing of Proposed Rule Change Relating to Buy-
Ins in Its Continuous Net Settlement System

December 19, 2005.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on December 1, 2005, 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. 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).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The purpose of this proposed rule change is to modify NSCC's Rules 
with regard to CNS Buy-Ins in an effort to harmonize the buy-in rules 
of the industry and to assist NSCC members in reducing their exposure 
related to buy-ins.

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.\2\
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    \2\ The Commission has modified the text of the summaries 
prepared by NSCC.

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[[Page 76486]]

(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 modify NSCC's Rules with regard to 
CNS Buy-Ins in an effort to harmonize the buy-in rules of the industry 
and to assist NSCC members in reducing their exposure related to buy-
ins. At the request of participants and after consultation with the 
Buy-In Subcommittee of the Securities Industry Association, NSCC 
proposes to modify its Rules to create a new buy-in retransmittal 
procedure that may be utilized by NSCC Members receiving buy-in notices 
initiated outside of the CNS System (``Buy-In Retransmittal 
Notice'').\3\ Existing NSCC fees related to CNS Buy-Ins will remain 
unchanged.
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    \3\ The specific rules being amended are Rule 11, ``CNS 
System,'' and Procedures VII, ``CNS Accounting Operation,'' and X, 
``Execution of CNS Buy-Ins.''
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Current Process for CNS Buy-Ins
    Currently under NSCC's Rules (except with respect to securities 
subject to a voluntary corporate reorganization), a member having a 
long position at the end of any day (``Originator'') may submit to NSCC 
a Notice of Intention to Buy-In (``Buy-In Notice'') specifying the 
quantity of securities which it intends to buy-in (``Buy-In 
Position''). The Buy-In Position is given high priority for allocation 
from the night cycle on N+1 through completion of the CNS day cycle at 
approximately 3 p.m. eastern standard time on N+2.\4\
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    \4\ The day the Buy-In Notice is submitted to NSCC is referred 
to as N, with N+1 and N+2 referring to the succeeding days. Each CNS 
day begins in the evening and includes an evening allocation of 
securities and a daytime allocation of securities.
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    If the Buy-In Position (or a portion thereof) remains unfilled 
after the evening allocation on N+1, NSCC issues CNS Retransmittal 
Notices on the following morning (N+1) to a sufficient number of 
members with short positions. NSCC issues CNS Retransmittal Notices in 
an aggregate quantity at least equal to the Buy-In Position. In no case 
will the Buy-In liability of a member exceed the Buy-In Position or the 
total short position of the member. If several members have short 
positions with the same age, all such members are issued CNS 
Retransmittal Notices even if the total of their short position exceeds 
the Buy-In Position. If the Buy-In Position is not satisfied by 3 p.m. 
on N+2, the buy-in may be executed.
    This current process will remain in effect. Buy-In Notices 
transmitted by a member which is the original submitter will be 
referred to as ``Original Buy-In Notices.''
Proposed Procedure for CNS Buy-In Retransmittals
    At times, an NSCC member will be in receipt of a buy-in notice 
initiated outside of the CNS system while at the same time be failing 
to receive shares from CNS in the same security. Recognizing that such 
externally initiated buy-ins may expire before the time the expiration 
period that NSCC's Rules currently provide as the expiration for CNS 
buy-ins (i.e., the current N+2 expiration), NSCC is proposing a new 
procedure to permit retransmittals of such buy-ins with an 
appropriately shortened execution time frame.
    Accordingly, the new procedure would provide that an NSCC member 
which has a long position in CNS at the end of any day (i.e., a fail to 
receive) and which is in receipt of a buy-in notice for securities of 
the same CUSIP that was initiated outside of the CNS System may submit 
a ``Buy-In Retransmittal Notice'' to NSCC. If the Buy-In Position (or a 
portion thereof) that was the subject of the Buy-In Retransmittal 
Notice was not satisfied by 3 p.m. on N+1, the buy-in could be 
executed. The Buy-In Retransmittal Notice would identify the entity 
that initiated the buy-in against the member.
    The differences between a Buy-In Retransmittal Notice and an 
Original Buy-In Notice would be as follows:
     An Original Buy-In Notice will refer to a Buy-In Notice 
transmitted by a member for which the member is the original submitter. 
A Buy-In Retransmittal Notice will refer to a Buy-In Notice submitted 
by a member where the member has received a buy-in notice outside of 
the CNS system with respect to securities of the same CUSIP.
     The member submitting a Buy-In Retransmittal Notice will 
receive an elevated priority for CNS allocations upon NSCC's receipt of 
the notice. The member submitting an Original Buy-In Notice will 
continue to receive elevated priority on the morning of N+1.
     The member submitting a Buy-In Retransmittal Notice will 
be provided with five additional fields to be used to identify the 
entity or entities that initiated the buy-in against the member. At 
least one such entity other than the member must be identified or NSCC 
will reject the Buy-In Retransmittal Notice.
     For Buy-In Retransmittal Notices, NSCC will transmit CNS 
Retransmittal Notices to CNS short members upon receipt of the Buy-In 
Retransmittal Notice on N. The CNS Retransmittal Notice will identify 
both the submitting member and the entity or entities that initiated 
the buy-in against the member. For Original Buy-In Notices, NSCC will 
continue to transmit CNS Retransmittal Notices to short members on the 
morning of N+1.
     A buy-in based on a Buy-In Retransmittal Notice may be 
executed on N+1 if the Buy-In Position (or a portion thereof) is not 
satisfied by 3:00 p.m. on N+1. The execution of a buy-in based on an 
Original Buy-In Notice will continue to be at 3 p.m. on N+2.
Technical Correction
    In addition to modifying NSCC's Rules and Procedures to reflect the 
above changes, NSCC will also make a technical correction to Procedure 
X, ``Execution of Buy-Ins--CNS System.'' The procedure states that 
members who receive CNS Retransmittal Notices and do not satisfy them 
assume liability for the loss, if any, which occurs as a result of the 
buy-in and that those members with the oldest short positions after the 
evening cycle on N+2 will first be held liable for an executed buy-in. 
Procedure X should reflect that it is the oldest short positions after 
the day cycle on N+2 that will first be held liable for an executed 
buy-in.
Implementation
    If approved by the Commission, NSCC plans to implement these 
changes on a pilot basis open to all members on the later to occur of 
January 13, 2006, or within one week of the Commission's approval of 
the proposed rule filing. The pilot will be limited to buy-ins of CNS 
eligible NYSE listed securities. NSCC anticipates that the pilot phase 
will be completed within thirty calendar days of implementation at 
which time buy-ins of all other CNS eligible securities will be 
permitted under these proposed changes. At that time the pilot will 
cease. NSCC will notify its members by an Important Notice of the 
specific date on which the pilot will expire and the proposed buy-in 
procedures are available for use with all CNS eligible securities.
    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 applicable to NSCC because it will assist NSCC 
members in reducing their buy-in related exposure, thereby promoting 
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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[[Page 76487]]

(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

    The proposed rule change was prepared after consultation with the 
Buy-In Committee of the Securities Industry Association. 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

    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 (https://
www.sec.gov/rules/sro.shtml) or
     Send an e-mail to rule-comments@sec.gov. Please include 
File Number SR-NSCC-2005-15 in 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-2005-15. 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 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, https://www.nscc.com\legal. 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-2005-15 and should be 
submitted on or before January 17, 2005.

    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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Jonathan G. Katz,
Secretary.
[FR Doc. E5-7855 Filed 12-23-05; 8:45 am]
BILLING CODE 8010-01-P
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