Self-Regulatory Organizations; National Securities Clearing Corporation; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to Enhancements to ACATS-Fund/SERV Processing Capabilities, 41852-41853 [E6-11681]

Download as PDF 41852 Federal Register / Vol. 71, No. 141 / Monday, July 24, 2006 / Notices SECURITIES AND EXCHANGE COMMISSION [Release No. 34–54163; File No. SR–NSCC– 2006–06] Self-Regulatory Organizations; National Securities Clearing Corporation; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to Enhancements to ACATS-Fund/SERV Processing Capabilities July 17, 2006. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’),1 notice is hereby given that on May 30, 2006, 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. NSCC filed the proposed rule change pursuant to Section 19(b)(3)(A)(iii) of the Act 2 and Rule 19b–4(f)(4) thereunder 3 so that the proposal was effective upon filing with the Commission. The Commission is publishing this notice to solicit comments on the proposed rule change from interested parties. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The proposed rule change would modify NSCC’s Rules to enhance the Automated Customer Account Transfer Service (‘‘ACATS’’) processing capabilities for NSCC members that outsource some or all of their mutual fund processing services. sroberts on PROD1PC70 with NOTICES 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 1 15 U.S.C. 78s(b)(1). U.S.C. 78s(b)(3)(A)(iii). 3 17 CFR 240.19b–4(f)(4). 4 The Commission has modified the text of the summaries prepared by NSCC. (A) Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change The proposed rule change would modify NSCC’s Rules to enhance the ACATS processing capabilities for NSCC members that outsource some or all of their mutual fund processing services. ACATS enables members of NSCC to effect automated transfers of customer accounts among themselves.5 In operation since 1985, ACATS was designed to facilitate compliance with New York Stock Exchange (‘‘NYSE’’) and National Association of Securities Dealers (‘‘NASD’’) rules that require NYSE and NASD members to use clearing agency automated customer account transfer services and to effect customer account transfers within specified time frames.6 In 1989, ACATS was enhanced to permit the automated transfer of book share mutual fund assets for mutual funds associated with NSCC fund members and mutual fund processors (‘‘ACATS-Fund/SERV’’). In an account transfer containing eligible book share mutual fund assets, account reregistration information is routed from the NSCC member through ACATS to fund members through ACATS-Fund/ SERV. The Current Process In a standard ACATS transfer, the member receiving the customer account initiates the account transfer by electronically submitting data from the Transfer Initiation Form to NSCC. The account status then moves to ‘‘request’’ status, during which time the member delivering the customer account may validate the transfer by submitting to NSCC a detailed listing of the account assets or may reject the transfer. By submitting the asset listing, the delivering member acknowledges the transfer, and the status changes from ‘‘request’’ to ‘‘review.’’ During the review status, the receiving member examines the account/assets for creditworthiness, etc., while the delivering member reviews the account to ensure the assets are properly listed. If mutual fund assets are listed, the receiving member submits a fund registration input record through ACATS. The purpose of this record is to request that the delivering member reregister the mutual fund assets in the name of the receiving member. During this process, the account status then progresses to ‘‘sett prep.’’ 2 15 VerDate Aug<31>2005 17:54 Jul 21, 2006 Jkt 208001 Rule 50. Rule 412 and NASD Uniform Practice Code Section 11870. PO 00000 5 NSCC 6 NYSE Frm 00099 Fmt 4703 Sfmt 4703 At the beginning of sett prep, the fund registration input record is sent through ACATS-Fund/SERV to the delivering member which must either reject or acknowledge the reregistration request in accordance with the provisions of NSCC’s Rules. During the sett prep stage, the account is frozen in ACATS (i.e., no adjustments or rejects are permitted) and the following business day the transfer status moves to ‘‘settle close,’’ and the account transfer settles. At this time, NSCC moves continuous net settlement (‘‘CNS’’)-eligible securities into CNS, and for all nonCNS-eligible positions (such as mutual fund assets) and cash balances, the asset value is debited to the delivering member and credited to the receiving member. Proposed Modification NSCC understands that a number of its members outsource or are seeking to outsource some or all of their mutual fund processing using the services of some third party such as another brokerdealer or a bank or trust company. NSCC believes that the outsourcing has or will cause processing issues with regard to mutual fund assets that are part of an ACATS transfer because it is the third party processing entity and not the NSCC receiving member that has or will have the direct contractual relationship with the delivering member. Currently, the NSCC receiving member (and not its third party processing entity) is identified on account transfer/registration instructions. Therefore, if the receiving member uses a third party processing entity, the delivering member will reject such request/instructions. In these instances, all transfers of customer positions in eligible mutual funds would need to be processed manually and affected members would be unable to benefit from the efficiency of automated transfers through ACATS. To accommodate these members, NSCC proposes modifying Section 16 of Rule 52 (Mutual Fund Services) to permit one NSCC member to appoint another NSCC member or a Mutual Fund/Insurance Services Member as its ACATS-Fund/SERV Agent with regard to the reregistration of eligible mutual fund assets. There will be no change to the ACATS process or to the requirements and obligations of ACATS receiving members and delivering members. An ACATS-Fund/SERV Agent must be another NSCC member or Mutual Fund/ Insurance Services Member. An ACATS-Fund/SERV Agent may act on behalf of multiple NSCC members, but E:\FR\FM\24JYN1.SGM 24JYN1 Federal Register / Vol. 71, No. 141 / Monday, July 24, 2006 / Notices each member may designate only one ACATS-Fund/SERV Agent. A member must notify NSCC of its designation of an ACATS-Fund/SERV Agent in such form and within such timeframe as is acceptable to NSCC, and the ACATS-Fund/SERV Agent must acknowledge to NSCC its consent to this designation. The receiving member must acknowledge to NSCC that the receiving member shall at all times continue to be responsible for all provisions of NSCC’s Rules, specifically with regard to ACATS and ACATSFund/SERV transactions, including any and all actions taken by its ACATSFund/SERV Agent. NSCC will maintain a relationship table of those members that designate an ACATS-Fund/SERV Agent. In instances where an ACATS-Fund/SERV Agent has been appointed, NSCC will substitute the receiving member’s clearing number and member name on registration/ transfer instructions transmitted to the delivering member with those of the ACATS-Fund/SERV Agent. Conversely, on acknowledgements/instructions from the delivering member, NSCC will replace the ACATS-Fund/SERV Agent’s clearing number and member name with those of the receiving member. No additional ACATS or ACATS-Fund/ SERV fees will be incurred in connection with this process. NSCC believes that the proposed rule change is consistent with the requirements of Section 17A of the Act 7 and the rules thereunder because it will further automate and facilitate the customer account transfer process, which can be expected to reduce processing errors and delays that are typically associated with manual processes. These changes would foster cooperation and coordination with persons engaged in account transfers and furthers the protection of investors and the public interest. (B) Self-Regulatory Organization’s Statement on Burden on Competition NSCC does not believe that the proposed rule change would impose any burden on competition. sroberts on PROD1PC70 with NOTICES (C) Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others 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 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 the proposed rule effects a change in an existing service of NSCC that (i) 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 (ii) 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. 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 rulecomments@sec.gov. Please include File Number SR–NSCC–2006–06 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–2006–06. 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 8 7 15 U.S.C. 78q–1. VerDate Aug<31>2005 17:54 Jul 21, 2006 15 U.S.C. 78s(b)(3)(A)(i). CFR 240.19b–4(f)(1). 9 17 Jkt 208001 PO 00000 Frm 00100 Fmt 4703 Sfmt 4703 41853 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 the principal office of NSCC and on NSCC’s Web site at http:// www.nscc.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–2006–06 and should be submitted on or before August 14, 2006. For the Commission by the Division of Market Regulation, pursuant to delegated authority.10 Nancy M. Morris, Secretary. [FR Doc. E6–11681 Filed 7–21–06; 8:45 am] BILLING CODE 8010–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–54158; File No. SR–Phlx– 2006–17] Self-Regulatory Organizations; Philadelphia Stock Exchange, Inc.; Notice of Filing and Order Granting Accelerated Approval of a Proposed Rule Change and Amendment Nos. 1 and 2 Thereto Relating to Listing Standards for Broad-Based Index Options July 17, 2006. 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 March 1, 2006, the Philadelphia Stock Exchange, Inc. (‘‘Phlx’’ or ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘Commission’’) the proposed rule change as described in Items I and II below, which Items have been prepared by the Phlx. On April 12, 2006, the Phlx filed Amendment No. 1 to the proposed rule change.3 On July 14, 2006, the Phlx filed Amendment No. 2 to the proposed rule change.4 The 10 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 3 Amendment No. 1 replaced and superseded the original filing in its entirety. 4 In Amendment No. 2, the Phlx made technical and clarifying changes to the proposal. 1 15 E:\FR\FM\24JYN1.SGM 24JYN1

Agencies

[Federal Register Volume 71, Number 141 (Monday, July 24, 2006)]
[Notices]
[Pages 41852-41853]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E6-11681]



[[Page 41852]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-54163; File No. SR-NSCC-2006-06]


Self-Regulatory Organizations; National Securities Clearing 
Corporation; Notice of Filing and Immediate Effectiveness of Proposed 
Rule Change Relating to Enhancements to ACATS-Fund/SERV Processing 
Capabilities

July 17, 2006.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on May 30, 2006, 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. NSCC filed the proposed rule change pursuant to 
Section 19(b)(3)(A)(iii) of the Act \2\ and Rule 19b-4(f)(4) thereunder 
\3\ so that the proposal was effective upon filing with the Commission. 
The Commission is publishing this notice to solicit comments on the 
proposed rule change from interested parties.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \3\ 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 would modify NSCC's Rules to enhance the 
Automated Customer Account Transfer Service (``ACATS'') processing 
capabilities for NSCC members that outsource some or all of their 
mutual fund processing 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.\4\
---------------------------------------------------------------------------

    \4\ The Commission has modified the text of the summaries 
prepared by NSCC.
---------------------------------------------------------------------------

(A) Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    The proposed rule change would modify NSCC's Rules to enhance the 
ACATS processing capabilities for NSCC members that outsource some or 
all of their mutual fund processing services.
    ACATS enables members of NSCC to effect automated transfers of 
customer accounts among themselves.\5\ In operation since 1985, ACATS 
was designed to facilitate compliance with New York Stock Exchange 
(``NYSE'') and National Association of Securities Dealers (``NASD'') 
rules that require NYSE and NASD members to use clearing agency 
automated customer account transfer services and to effect customer 
account transfers within specified time frames.\6\ In 1989, ACATS was 
enhanced to permit the automated transfer of book share mutual fund 
assets for mutual funds associated with NSCC fund members and mutual 
fund processors (``ACATS-Fund/SERV''). In an account transfer 
containing eligible book share mutual fund assets, account 
reregistration information is routed from the NSCC member through ACATS 
to fund members through ACATS-Fund/SERV.
---------------------------------------------------------------------------

    \5\ NSCC Rule 50.
    \6\ NYSE Rule 412 and NASD Uniform Practice Code Section 11870.
---------------------------------------------------------------------------

The Current Process
    In a standard ACATS transfer, the member receiving the customer 
account initiates the account transfer by electronically submitting 
data from the Transfer Initiation Form to NSCC. The account status then 
moves to ``request'' status, during which time the member delivering 
the customer account may validate the transfer by submitting to NSCC a 
detailed listing of the account assets or may reject the transfer. By 
submitting the asset listing, the delivering member acknowledges the 
transfer, and the status changes from ``request'' to ``review.''
    During the review status, the receiving member examines the 
account/assets for creditworthiness, etc., while the delivering member 
reviews the account to ensure the assets are properly listed. If mutual 
fund assets are listed, the receiving member submits a fund 
registration input record through ACATS. The purpose of this record is 
to request that the delivering member reregister the mutual fund assets 
in the name of the receiving member. During this process, the account 
status then progresses to ``sett prep.''
    At the beginning of sett prep, the fund registration input record 
is sent through ACATS-Fund/SERV to the delivering member which must 
either reject or acknowledge the reregistration request in accordance 
with the provisions of NSCC's Rules. During the sett prep stage, the 
account is frozen in ACATS (i.e., no adjustments or rejects are 
permitted) and the following business day the transfer status moves to 
``settle close,'' and the account transfer settles. At this time, NSCC 
moves continuous net settlement (``CNS'')-eligible securities into CNS, 
and for all non-CNS-eligible positions (such as mutual fund assets) and 
cash balances, the asset value is debited to the delivering member and 
credited to the receiving member.
Proposed Modification
    NSCC understands that a number of its members outsource or are 
seeking to outsource some or all of their mutual fund processing using 
the services of some third party such as another broker-dealer or a 
bank or trust company. NSCC believes that the outsourcing has or will 
cause processing issues with regard to mutual fund assets that are part 
of an ACATS transfer because it is the third party processing entity 
and not the NSCC receiving member that has or will have the direct 
contractual relationship with the delivering member. Currently, the 
NSCC receiving member (and not its third party processing entity) is 
identified on account transfer/registration instructions. Therefore, if 
the receiving member uses a third party processing entity, the 
delivering member will reject such request/instructions. In these 
instances, all transfers of customer positions in eligible mutual funds 
would need to be processed manually and affected members would be 
unable to benefit from the efficiency of automated transfers through 
ACATS.
    To accommodate these members, NSCC proposes modifying Section 16 of 
Rule 52 (Mutual Fund Services) to permit one NSCC member to appoint 
another NSCC member or a Mutual Fund/Insurance Services Member as its 
ACATS-Fund/SERV Agent with regard to the reregistration of eligible 
mutual fund assets.
    There will be no change to the ACATS process or to the requirements 
and obligations of ACATS receiving members and delivering members. An 
ACATS-Fund/SERV Agent must be another NSCC member or Mutual Fund/
Insurance Services Member. An ACATS-Fund/SERV Agent may act on behalf 
of multiple NSCC members, but

[[Page 41853]]

each member may designate only one ACATS-Fund/SERV Agent.
    A member must notify NSCC of its designation of an ACATS-Fund/SERV 
Agent in such form and within such timeframe as is acceptable to NSCC, 
and the ACATS-Fund/SERV Agent must acknowledge to NSCC its consent to 
this designation. The receiving member must acknowledge to NSCC that 
the receiving member shall at all times continue to be responsible for 
all provisions of NSCC's Rules, specifically with regard to ACATS and 
ACATS-Fund/SERV transactions, including any and all actions taken by 
its ACATS-Fund/SERV Agent.
    NSCC will maintain a relationship table of those members that 
designate an ACATS-Fund/SERV Agent. In instances where an ACATS-Fund/
SERV Agent has been appointed, NSCC will substitute the receiving 
member's clearing number and member name on registration/transfer 
instructions transmitted to the delivering member with those of the 
ACATS-Fund/SERV Agent. Conversely, on acknowledgements/instructions 
from the delivering member, NSCC will replace the ACATS-Fund/SERV 
Agent's clearing number and member name with those of the receiving 
member. No additional ACATS or ACATS-Fund/SERV fees will be incurred in 
connection with this process.
    NSCC believes that the proposed rule change is consistent with the 
requirements of Section 17A of the Act \7\ and the rules thereunder 
because it will further automate and facilitate the customer account 
transfer process, which can be expected to reduce processing errors and 
delays that are typically associated with manual processes. These 
changes would foster cooperation and coordination with persons engaged 
in account transfers and furthers the protection of investors and the 
public interest.
---------------------------------------------------------------------------

    \7\ 15 U.S.C. 78q-1.
---------------------------------------------------------------------------

(B) Self-Regulatory Organization's Statement on Burden on Competition

    NSCC does not believe that the proposed rule change would impose 
any burden on competition.

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

    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

    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 the proposed rule effects a change in an existing 
service of NSCC that (i) 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 (ii) 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.
---------------------------------------------------------------------------

    \8\ 15 U.S.C. 78s(b)(3)(A)(i).
    \9\ 17 CFR 240.19b-4(f)(1).
---------------------------------------------------------------------------

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-2006-06 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-2006-06. 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 filing 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.
    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-2006-06 
and should be submitted on or before August 14, 2006.

    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority.\10\
---------------------------------------------------------------------------

    \10\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Nancy M. Morris,
Secretary.
[FR Doc. E6-11681 Filed 7-21-06; 8:45 am]
BILLING CODE 8010-01-P