Self-Regulatory Organizations; National Securities Clearing Corporation; Notice of Filing of a Proposed Rule Change Relating to Buy-Ins of Municipal Securities, 75286-75287 [E6-21281]

Download as PDF 75286 Federal Register / Vol. 71, No. 240 / Thursday, December 14, 2006 / Notices rwilkins on PROD1PC63 with NOTICES 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–NASD–2006–128. 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 Room. Copies of such filing also will be available for inspection and copying at the principal office of 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 the File Number SR–NASD–2006–128 and should be submitted on or before January 4, 2007. IV. Commission’s Findings and Order Granting Accelerated Approval of the Proposed Rule Change NASD has requested that the Commission find good cause pursuant to Section 19(b)(2) of the Act 8 for approving the proposed rule change prior to the 30th day after publication in the Federal Register. After careful consideration, the Commission finds that the proposed rule change is consistent with the Act, and in particular, with Section 15A(b)(6) of the Act,9 which provides, among other things, that NASD 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. In particular, by conforming the effective date of this disclosure requirement with the effective date of similar disclosure requirements of NASD and the NYSE, the proposal will reduce the possibility of confusion and will promote the effective implementation of these disclosure requirements. Pursuant to Section 19(b)(2) of the Act,10 the Commission finds good cause for approving the proposed rule change before the thirtieth day after the date of publication of notice of filing thereof. Accelerating approval will give NASD additional time to notify its members about the revised effective date for these amendments and help to ensure that firms have sufficient time to efficiently make the changes to their account statements and procedures needed to comply with this and related disclosure requirements. V. Conclusion It is therefore ordered, pursuant to Section 19(b)(2) of the Act,11 that the proposed rule change (SR–NASD–2006– 128) is hereby approved on an accelerated basis. For the Commission, by the Division of Market Regulation, pursuant to delegated authority.12 Florence E. Harmon, Deputy Secretary. [FR Doc. E6–21236 Filed 12–13–06; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–54900; File No. SR–NSCC– 2006–12] Self-Regulatory Organizations; National Securities Clearing Corporation; Notice of Filing of a Proposed Rule Change Relating to Buy-Ins of Municipal Securities December 8, 2006. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’),1 notice is hereby given that on October 16, 2006, the National Securities Clearing Corporation (‘‘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. 10 15 U.S.C. 78s(b)(2). U.S.C. 78s(b)(2). 12 17 CFR 200.30–3(a)(12). 1 15 U.S.C. 78s(b)(1). I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The proposed rule change consists of modifications to NSCC’s rules concerning buy-ins of municipal securities. 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.2 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 amend NSCC’s rules to streamline the processing of continuous net settlement (‘‘CNS’’) buy-ins of municipal securities. At the request of members and after consultation with the Buy-In Subcommittee of the Securities Industry Association, NSCC proposes to modify Rule 11 (CNS System), Procedure VII (CNS Accounting Operation) and Procedure X (Execution of CNS Buy-Ins) with respect to CNS buy-ins of municipal securities as set forth below. Executions of buy-ins in municipal securities are governed by the rules of the Municipal Securities Rulemaking Board (‘‘MSRB’’) and have a ten-day cycle from notification of intent to buyin to buy-in execution. In contrast, buyins for equity and corporate bond securities have a two-day cycle. Under NSCC’s rules (except with respect to securities subject to a voluntary corporate reorganization), an NSCC member that has 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 a quantity of securities not exceeding such long position that it intends to buy-in (‘‘Buy-In Position’’). The day the Buy-In Notice is submitted is referred to as N, and the succeeding days are referred to as N+1 and N+2. The BuyIn Position is given high priority for CNS allocations until expiration of the buy-in. 11 15 8 15 9 15 U.S.C. 78s(b)(2). U.S.C. 78o–3(b)(6). VerDate Aug<31>2005 17:54 Dec 13, 2006 Jkt 211000 PO 00000 Frm 00060 Fmt 4703 Sfmt 4703 2 The Commission has modified the text of the summaries prepared by NSCC. E:\FR\FM\14DEN1.SGM 14DEN1 Federal Register / Vol. 71, No. 240 / Thursday, December 14, 2006 / Notices rwilkins on PROD1PC63 with NOTICES However, while increased priority is provided to facilitate the allocation of the Buy-In Position in CNS, municipal securities are thinly traded and, as such, the increased allocation priority has not been generally effective in accelerating the delivery process. Accordingly, when a municipal security Buy-In Position is not satisfied by a CNS allocation, the long member must have its Buy-In Position exited from CNS in order to be able to proceed under the MSRB rules, which entail issuing a new buy-in notice and then waiting an additional ten days before executing the buy-in. As a result, members typically ask NSCC to exit the municipal security Buy-In Position from CNS after they issue a Buy-In Notice to CNS. NSCC then submits manual instructions that produce receive and deliver obligations to the affected parties two days after the notice is issued.3 To assist members in their timely processing of buy-ins in municipal securities, NSCC proposes to modify its rules and procedures to automatically exit from CNS the Buy-In Position of a long member that has submitted a BuyIn Notice in a municipal security. CNS will automatically exit such position prior to the night cycle on N+1, creating a broker-to-broker close-out receive and deliver obligation between the long member and the oldest short member(s). The net result will be that the Buy-In Position will be automatically exited from CNS one day earlier than is currently the case, which will allow the buy-in process to commence one day earlier. NSCC plans to implement these changes as soon as practicable after the Commission’s approval of this filing. NSCC will advise its members of the implementation through an Important Notice. NSCC believes that the proposed rule change is consistent with Section 17A of the Act 4 and the rules and regulations thereunder because it should result in municipal securities buy-ins being executed more expeditiously thereby fostering cooperation and coordination with persons engaged in the clearance and settlement of securities transactions and removing impediments to and perfecting the mechanism of a national system for the prompt and accurate clearance and settlement of securities transactions. B. Self-Regulatory Organization’s Statement on Burden on Competition NSCC does not believe that the proposed rule change will have any 3 Current 4 15 NSCC Procedure X.A.2. U.S.C. 78q–1. VerDate Aug<31>2005 17:54 Dec 13, 2006 Jkt 211000 impact or impose any burden on competition. NSCC will notify the Commission of any comments it receives. 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 of any written comments it receives. 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 rulecomments@sec.gov. Please include File No. SR–NSCC–2006–12 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 No. SR–NSCC–2006–12. 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 PO 00000 Frm 00061 Fmt 4703 Sfmt 4703 75287 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 at 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 No. SR–NSCC–2006–12 and should be submitted on or before January 4, 2007. For the Commission by the Division of Market Regulation, pursuant to delegated authority.5 Florence E. Harmon, Deputy Secretary. [FR Doc. E6–21281 Filed 12–13–06; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–54898; File No. SR–OCC– 2006–08] Self-Regulatory Organizations; The Options Clearing Corporation; Notice of Filing of Proposed Rule Change To Revise Stock Futures Adjustment Methodology December 8, 2006. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’),1 notice is hereby given that on May 19, 2006, The Options Clearing Corporation (‘‘OCC’’) 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 by OCC. The Commission is publishing this notice to solicit comments on the proposed rule change from interested parties. 5 17 1 15 E:\FR\FM\14DEN1.SGM CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 14DEN1

Agencies

SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 71, Number 240 (Thursday, December 14, 2006)]
[Notices]
[Pages 75286-75287]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E6-21281]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-54900; File No. SR-NSCC-2006-12]


Self-Regulatory Organizations; National Securities Clearing 
Corporation; Notice of Filing of a Proposed Rule Change Relating to 
Buy-Ins of Municipal Securities

December 8, 2006.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on October 16, 2006, the 
National Securities Clearing Corporation (``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.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The proposed rule change consists of modifications to NSCC's rules 
concerning buy-ins of municipal securities.

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.\2\
---------------------------------------------------------------------------

    \2\ 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 purpose of this filing is to amend NSCC's rules to streamline 
the processing of continuous net settlement (``CNS'') buy-ins of 
municipal securities. At the request of members and after consultation 
with the Buy-In Subcommittee of the Securities Industry Association, 
NSCC proposes to modify Rule 11 (CNS System), Procedure VII (CNS 
Accounting Operation) and Procedure X (Execution of CNS Buy-Ins) with 
respect to CNS buy-ins of municipal securities as set forth below.
    Executions of buy-ins in municipal securities are governed by the 
rules of the Municipal Securities Rulemaking Board (``MSRB'') and have 
a ten-day cycle from notification of intent to buy-in to buy-in 
execution. In contrast, buy-ins for equity and corporate bond 
securities have a two-day cycle.
    Under NSCC's rules (except with respect to securities subject to a 
voluntary corporate reorganization), an NSCC member that has 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 a quantity 
of securities not exceeding such long position that it intends to buy-
in (``Buy-In Position''). The day the Buy-In Notice is submitted is 
referred to as N, and the succeeding days are referred to as N+1 and 
N+2. The Buy-In Position is given high priority for CNS allocations 
until expiration of the buy-in.

[[Page 75287]]

    However, while increased priority is provided to facilitate the 
allocation of the Buy-In Position in CNS, municipal securities are 
thinly traded and, as such, the increased allocation priority has not 
been generally effective in accelerating the delivery process. 
Accordingly, when a municipal security Buy-In Position is not satisfied 
by a CNS allocation, the long member must have its Buy-In Position 
exited from CNS in order to be able to proceed under the MSRB rules, 
which entail issuing a new buy-in notice and then waiting an additional 
ten days before executing the buy-in. As a result, members typically 
ask NSCC to exit the municipal security Buy-In Position from CNS after 
they issue a Buy-In Notice to CNS. NSCC then submits manual 
instructions that produce receive and deliver obligations to the 
affected parties two days after the notice is issued.\3\
---------------------------------------------------------------------------

    \3\ Current NSCC Procedure X.A.2.
---------------------------------------------------------------------------

    To assist members in their timely processing of buy-ins in 
municipal securities, NSCC proposes to modify its rules and procedures 
to automatically exit from CNS the Buy-In Position of a long member 
that has submitted a Buy-In Notice in a municipal security. CNS will 
automatically exit such position prior to the night cycle on N+1, 
creating a broker-to-broker close-out receive and deliver obligation 
between the long member and the oldest short member(s). The net result 
will be that the Buy-In Position will be automatically exited from CNS 
one day earlier than is currently the case, which will allow the buy-in 
process to commence one day earlier.
    NSCC plans to implement these changes as soon as practicable after 
the Commission's approval of this filing. NSCC will advise its members 
of the implementation through an Important Notice.
    NSCC believes that the proposed rule change is consistent with 
Section 17A of the Act \4\ and the rules and regulations thereunder 
because it should result in municipal securities buy-ins being executed 
more expeditiously thereby fostering cooperation and coordination with 
persons engaged in the clearance and settlement of securities 
transactions and removing impediments to and perfecting the mechanism 
of a national system for the prompt and accurate clearance and 
settlement of securities transactions.
---------------------------------------------------------------------------

    \4\ 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 will have any 
impact or impose any burden on competition. NSCC will notify the 
Commission of any comments it receives.

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 of any written 
comments it receives.

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 No. SR-NSCC-2006-12 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 No. SR-NSCC-2006-12. 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 filing also will be available for 
inspection and copying at NSCC's principal office and on NSCC's Web 
site at 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 No. SR-NSCC-2006-12 and should be submitted on or 
before January 4, 2007.

    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority.\5\
---------------------------------------------------------------------------

    \5\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Florence E. Harmon,
Deputy Secretary.
 [FR Doc. E6-21281 Filed 12-13-06; 8:45 am]
BILLING CODE 8011-01-P

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