Self-Regulatory Organizations; National Securities Clearing Corporation; Order Approving Proposed Rule Change To Allow As-of Fixed Income Trades To Be Processed in the Continuous Net Settlement System, 54498-54499 [E7-18825]

Download as PDF 54498 Federal Register / Vol. 72, No. 185 / Tuesday, September 25, 2007 / Notices by the Exchange for all other Premium Products. Specifically, the Exchange is proposing to adopt an execution fee and a comparison fee for all transactions in options on ILF.7 The amount of the execution fee and comparison fee for products covered by this filing shall be $0.15 and $0.03 per contract, respectively, for all Public Customer Orders 8 and Firm Proprietary orders. The amount of the execution fee and comparison fee for all ISE Market Maker transactions shall be equal to the execution fee and comparison fee currently charged by the Exchange for ISE Market Maker transactions in equity options.9 Finally, the amount of the execution fee and comparison fee for all non-ISE Market Maker transactions shall be $0.37 and $0.03 per contract, respectively. Further, since options on ILF are multiply-listed, the Payment for Order Flow fee shall apply to this product. The Exchange believes the proposed rule change will further the Exchange’s goal of introducing new products to the marketplace that are competitively priced. 2. Basis The Exchange believes that the proposed rule change is consistent with the objectives of Section 6 of the Act,10 in general, and furthers the objectives of Section 6(b)(4),11 in particular, in that it is designed to provide for the equitable allocation of reasonable dues, fees, and other charges among its members and other persons using its facilities. B. Self-Regulatory Organization’s Statement on Burden on Competition The proposed rule change does not impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. yshivers on PROD1PC62 with NOTICES C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants or Others The Exchange has not solicited, and does not intend to solicit, comments on 7 These fees will be charged only to Exchange members. Under a pilot program that is set to expire on July 31, 2008, these fees will also be charged to Linkage Orders (as defined in ISE Rule 1900). See Securities Exchange Act Release No. 56128 (July 24, 2007), 72 FR 42161 (August 1, 2007) (SR–ISE–2007– 55). 8 ‘‘Public Customer Order’’ is defined in Exchange Rule 100(a)(39) as an order for the account of a Public Customer. ‘‘Public Customer’’ is defined in Exchange Rule 100(a)(38) as a person that is not a broker or dealer in securities. 9 The execution fee is currently between $.21 and $.12 per contract side, depending on the Exchange Average Daily Volume, and the comparison fee is currently $.03 per contract side. 10 15 U.S.C. 78f(b). 11 15 U.S.C. 78f(b)(4). VerDate Aug<31>2005 15:20 Sep 24, 2007 Jkt 211001 this proposed rule change. The Exchange has not received any unsolicited written comments from members or other interested parties. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Because it establishes or changes a due, fee, or other charge applicable only to a member, the foregoing rule change has become effective pursuant to section 19(b)(3)(A) of the Act 12 and Rule 19b– 4(f)(2) 13 thereunder. 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. 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–ISE–2007–84 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–ISE–2007–84. 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 Commissions 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, 100 F Street, NE., Washington DC 20549, on official business days between the hours of 10 a.m. and 3 p.m. Copies of such filing also will be available for inspection and copying at the principal office of the ISE. 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–ISE–2007–84 and should be submitted on or before October 16, 2007. For the Commission, by the Division of Market Regulation, pursuant to delegated authority.14 Florence E. Harmon, Deputy Secretary. [FR Doc. E7–18820 Filed 9–24–07; 8:45 am] BILLING CODE 8010–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–56468; File No. SR–NSCC– 2007–11] Self-Regulatory Organizations; National Securities Clearing Corporation; Order Approving Proposed Rule Change To Allow As-of Fixed Income Trades To Be Processed in the Continuous Net Settlement System September 19, 2007. I. Introduction On July 12, 2007, the National Securities Clearing Corporation (‘‘NSCC’’) filed with the Securities and Exchange Commission (‘‘Commission’’) proposed rule change SR–NSCC–2007– 11 pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’).1 Notice of the proposal was published in the Federal Register on August 20, 2007.2 The Commission received no comment letters. For the reasons discussed below, the Commission is approving the proposed rule change. II. Description NSCC is modifying its procedures to allow as-of fixed income trades to be 14 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 Securities Exchange Act Release No. 56250(August 14, 2007), 72 FR 46528. 1 15 12 15 13 17 PO 00000 U.S.C. 78s(b)(3)(A). CFR 19b–4(f)(2). Frm 00082 Fmt 4703 Sfmt 4703 E:\FR\FM\25SEN1.SGM 25SEN1 Federal Register / Vol. 72, No. 185 / Tuesday, September 25, 2007 / Notices yshivers on PROD1PC62 with NOTICES processed in NSCC’s Continuous Net Settlement (‘‘CNS’’) system. When NSCC revised and updated CNS in 2004 (referred to as the ‘‘CNS Rewrite’’), it provided the capability on any settlement day to take in and process transactions due for settlement that day provided the trades are recorded or compared prior to an established cut-off time in the morning.3 This capability is currently provided for as-of equity transactions but has not yet been expanded to as-of fixed income transactions.4 Rather, settlement of as-of fixed income corporate debt, municipal, and unit investment trust (‘‘UIT’’) trades (corporate debt, municipal, and UIT trades are collectively referred to as ‘‘CMU’’ trades) compared on or after their designated settlement date currently occurs on the business day following the day they are compared. Given that settlement risks associated with CMU trades would be reduced if they settled on an accelerated basis in the same manner that as-of equity trades are settled, NSCC is enhancing its fixed income processing to permit same day settlement of as-of fixed income transactions.5 To accomplish this, NSCC is amending Procedure II (Trade Comparison and Recording Service) so that CNS-eligible as-of CMU trades matched on or after their originally designated settlement date will be processed in CNS on the day they are submitted for comparison so long as they compare prior to the cut-off time established for same day settlement, which currently is 11:30 a.m.6 As-of trades not eligible for CNS processing will settle on a trade-for-trade basis. Trades that match after the designated cut-off time will continue to be assigned a settlement date of the next business day. In addition, because these trades are effectively guaranteed upon comparison, risk associated with the trades will be mitigated through the existing component of the Clearing Fund formula, as set forth in Procedure XV (Clearing Fund Formula and Other Matters), that is designed to mitigate the risk to NSCC associated with trades that are processed on a settlement cycle shorter than three days. Under this 3 Securities Exchange Act Release No. 50026 (July15, 2004), 69 FR 43650 [File No. SR–NSCC– 2004–01]. 4 NSCC’s systems did not have the capacity forsame day settling trades for fixed income transactions in 2004. 5 The settlement of cash and next day CMU tradeswhich are compared by NSCC will continue to be the responsibility of the parties to the trades. 6 In addition, references in Procedure VII (CNSAccounting Operation) that currently note that debt securities are not eligible for such accelerated settlement will be removed. VerDate Aug<31>2005 15:20 Sep 24, 2007 Jkt 211001 54499 component, activity specified for a shortened settlement cycle is isolated, and a charge is calculated.7 SECURITIES AND EXCHANGE COMMISSION III. Discussion [Release No. 34–56455; File No. SR–NYSE– 2007–83] Section 19(b) of the Act directs the Commission to approve a proposed rule change of a self-regulatory organization if it finds that such proposed rule change is consistent with the requirements of the Act and the rules and regulations thereunder applicable to such organization. Section 17A(b)(3)(F) of the Act requires that the rules of a clearing agency be designed to promote the prompt and accurate clearance and settlement of securities transactions.8 The Commission believes that NSCC’s rule change is consistent with this Section because it should facilitate the prompt and accurate clearance and settlement of securities by increasing automated trade processing and by expanding the types of trades eligible for CNS netting and NSCC settlement. 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. In approving the proposed rule change, the Commission considered the proposal’s impact on efficiency, competition, and capital formation. It is therefore ordered, pursuant to Section 19(b)(2) of the Act, that the proposed rule change (File No. SR– NSCC–2007–11) be and hereby is approved. For the Commission by the Division of Market Regulation, pursuant to delegated authority.9 Florence E. Harmon, Deputy Secretary. [FR Doc. E7–18825 Filed 9–24–07; 8:45 am] BILLING CODE 8010–01–P 7 The component calculates a charge based on theaverage of a member’s charges for the specified activity on the three days with the highest charges calculated for the specified activity over the most recent twenty day period. Securities Exchange Act Release No. 54816 (November 27, 2006), 71 FR 69604 [File No. SR–NSCC–2006–09]. 8 15 U.S.C. 78q–1(b)(3)(F). 9 17 CFR 200.30–3(a)(12). PO 00000 Frm 00083 Fmt 4703 Sfmt 4703 Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing of Proposed Rule Change Relating to NYSE Rule 104.10 (‘‘Dealings by Specialists’’) September 18, 2007. 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 September 14, 2007 the New York Stock Exchange LLC (‘‘NYSE’’ or ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘Commission’’ or ‘‘SEC’’) the proposed rule change as described in Items I, II, and III below, which Items have been substantially prepared by the Exchange. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange is proposing to amend NYSE Rule 104.10 to: (i) Extend the duration of the pilot program applicable to Conditional Transactions as defined in Rule 104.10(6)(iv) to March 31, 2008; (ii) remove the ‘‘active securities’’ limitation on Conditional Transactions that establish or increase a specialist’s position and reach across the market to transact with the NYSE’s published quote; and (iii) make certain conforming changes to Rule 104.10(5). The text of the proposed rule change is available at NYSE, the Commission’s Public Reference Room, and https:// www.nyse.com. II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the NYSE 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. The NYSE has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements. 1 15 2 17 E:\FR\FM\25SEN1.SGM U.S.C 78s(b)(1). CFR 240.19b–4. 25SEN1

Agencies

SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 72, Number 185 (Tuesday, September 25, 2007)]
[Notices]
[Pages 54498-54499]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E7-18825]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-56468; File No. SR-NSCC-2007-11]


Self-Regulatory Organizations; National Securities Clearing 
Corporation; Order Approving Proposed Rule Change To Allow As-of Fixed 
Income Trades To Be Processed in the Continuous Net Settlement System

 September 19, 2007.

I. Introduction

    On July 12, 2007, the National Securities Clearing Corporation 
(``NSCC'') filed with the Securities and Exchange Commission 
(``Commission'') proposed rule change SR-NSCC-2007-11 pursuant to 
Section 19(b)(1) of the Securities Exchange Act of 1934 (``Act'').\1\ 
Notice of the proposal was published in the Federal Register on August 
20, 2007.\2\ The Commission received no comment letters. For the 
reasons discussed below, the Commission is approving the proposed rule 
change.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ Securities Exchange Act Release No. 56250(August 14, 2007), 
72 FR 46528.
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II. Description

    NSCC is modifying its procedures to allow as-of fixed income trades 
to be

[[Page 54499]]

processed in NSCC's Continuous Net Settlement (``CNS'') system.
    When NSCC revised and updated CNS in 2004 (referred to as the ``CNS 
Rewrite''), it provided the capability on any settlement day to take in 
and process transactions due for settlement that day provided the 
trades are recorded or compared prior to an established cut-off time in 
the morning.\3\ This capability is currently provided for as-of equity 
transactions but has not yet been expanded to as-of fixed income 
transactions.\4\ Rather, settlement of as-of fixed income corporate 
debt, municipal, and unit investment trust (``UIT'') trades (corporate 
debt, municipal, and UIT trades are collectively referred to as ``CMU'' 
trades) compared on or after their designated settlement date currently 
occurs on the business day following the day they are compared. Given 
that settlement risks associated with CMU trades would be reduced if 
they settled on an accelerated basis in the same manner that as-of 
equity trades are settled, NSCC is enhancing its fixed income 
processing to permit same day settlement of as-of fixed income 
transactions.\5\ To accomplish this, NSCC is amending Procedure II 
(Trade Comparison and Recording Service) so that CNS-eligible as-of CMU 
trades matched on or after their originally designated settlement date 
will be processed in CNS on the day they are submitted for comparison 
so long as they compare prior to the cut-off time established for same 
day settlement, which currently is 11:30 a.m.\6\ As-of trades not 
eligible for CNS processing will settle on a trade-for-trade basis. 
Trades that match after the designated cut-off time will continue to be 
assigned a settlement date of the next business day.
---------------------------------------------------------------------------

    \3\ Securities Exchange Act Release No. 50026 (July15, 2004), 69 
FR 43650 [File No. SR-NSCC-2004-01].
    \4\ NSCC's systems did not have the capacity forsame day 
settling trades for fixed income transactions in 2004.
    \5\ The settlement of cash and next day CMU tradeswhich are 
compared by NSCC will continue to be the responsibility of the 
parties to the trades.
    \6\ In addition, references in Procedure VII (CNSAccounting 
Operation) that currently note that debt securities are not eligible 
for such accelerated settlement will be removed.
---------------------------------------------------------------------------

    In addition, because these trades are effectively guaranteed upon 
comparison, risk associated with the trades will be mitigated through 
the existing component of the Clearing Fund formula, as set forth in 
Procedure XV (Clearing Fund Formula and Other Matters), that is 
designed to mitigate the risk to NSCC associated with trades that are 
processed on a settlement cycle shorter than three days. Under this 
component, activity specified for a shortened settlement cycle is 
isolated, and a charge is calculated.\7\
---------------------------------------------------------------------------

    \7\ The component calculates a charge based on theaverage of a 
member's charges for the specified activity on the three days with 
the highest charges calculated for the specified activity over the 
most recent twenty day period. Securities Exchange Act Release No. 
54816 (November 27, 2006), 71 FR 69604 [File No. SR-NSCC-2006-09].
---------------------------------------------------------------------------

III. Discussion

    Section 19(b) of the Act directs the Commission to approve a 
proposed rule change of a self-regulatory organization if it finds that 
such proposed rule change is consistent with the requirements of the 
Act and the rules and regulations thereunder applicable to such 
organization. Section 17A(b)(3)(F) of the Act requires that the rules 
of a clearing agency be designed to promote the prompt and accurate 
clearance and settlement of securities transactions.\8\ The Commission 
believes that NSCC's rule change is consistent with this Section 
because it should facilitate the prompt and accurate clearance and 
settlement of securities by increasing automated trade processing and 
by expanding the types of trades eligible for CNS netting and NSCC 
settlement.
---------------------------------------------------------------------------

    \8\ 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. In approving the proposed rule change, the Commission 
considered the proposal's impact on efficiency, competition, and 
capital formation.
    It is therefore ordered, pursuant to Section 19(b)(2) of the Act, 
that the proposed rule change (File No. SR-NSCC-2007-11) be and hereby 
is approved.

    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority.\9\
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    \9\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
 [FR Doc. E7-18825 Filed 9-24-07; 8:45 am]
BILLING CODE 8010-01-P

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