Self-Regulatory Organizations; National Securities Clearing Corporation; Notice of Filing and Immediate Effectiveness of Proposed Rule Change as Modified by Amendment Nos. 1 and 2 To Provide Clarification With Respect to the Correspondent Clearing Service and To Make Technical Changes to the Rules and Procedures Relative to Trade Recording and Special Representative Services, 5617-5618 [E8-1597]

Download as PDF Federal Register / Vol. 73, No. 20 / Wednesday, January 30, 2008 / Notices SECURITIES AND EXCHANGE COMMISSION [Release No. 34–57194; File No. SR–NSCC– 2007–16] Self-Regulatory Organizations; National Securities Clearing Corporation; Notice of Filing and Immediate Effectiveness of Proposed Rule Change as Modified by Amendment Nos. 1 and 2 To Provide Clarification With Respect to the Correspondent Clearing Service and To Make Technical Changes to the Rules and Procedures Relative to Trade Recording and Special Representative Services January 24, 2008. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’),1 notice is hereby given that on December 18, 2007, the National Securities Clearing Corporation (‘‘NSCC’’) filed with the Securities and Exchange Commission (‘‘Commission’’) and on January 15, 2008, and on January 22, 2008, amended 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. 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: (1) Clarify the appropriate use of NSCC’s Correspondent Clearing Service and (2) make technical corrections, clarification, and organizational changes relative to its Trade Recording and Special Representative Services. mstockstill on PROD1PC66 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.2 1 15 U.S.C. 78s(b)(1). 2 The Commission has modified the text of the summaries prepared by NSCC. VerDate Aug<31>2005 18:49 Jan 29, 2008 Jkt 214001 A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change The purpose of the proposed rule change is to: (1) Clarify the appropriate use of NSCC’s Correspondent Clearing Service and (2) make technical corrections, clarification, and organizational changes relative to its Trade Recording and Special Representative Services. 1. Clarification of Correspondent Clearing Service NSCC is modifying its Procedure IV (Special Representative Service) to clarify the appropriate use of the Correspondent Clearing Service. The Correspondent Clearing Service is designed to provide an automated vehicle by which a Member, acting as a Special Representative, may move a position that it has in the process of clearance at NSCC to the account of another Member (its correspondent) on whose behalf the original trade was executed. The Correspondent Clearing Service is not a mechanism for original trade submission.3 For example, Member A that sold securities for Member B (its correspondent) on the NYSE would have the sell side of the transaction submitted by the NYSE in the normal Trade Recording Operation thereby incurring a CNS obligation to deliver the shares sold. Acting as Special Representative for its correspondent Member B, Member A would submit transaction data showing itself as the buyer of those securities and its correspondent Member B as the seller. As a result, Member A would net out in the CNS System (its sell side netting against its buy side) and its correspondent Member B would incur a CNS obligation to deliver. In other words, the service provides for the correspondent’s obligation to be substituted for that of the Special Representative. The Correspondent Clearing Service was not designed as a mechanism to permit a Special Representative, acting as a Qualified Special Representative (‘‘QSR’’), to submit original locked-in trade data, and it should not be used as such. A QSR is a Member that either (i) operates an automated execution system where it is always the contra-side of every trade, (ii) is the parent or affiliate of an entity operating such an 3 The term ‘‘original trade’’ is used here solely to distinguish between a trade executed in the marketplace by the Special Representative and a transaction booked for accounting purposes to accommodate the movement of positions between Members as permitted in Procedure IV (Special Representative Service). PO 00000 Frm 00124 Fmt 4703 Sfmt 4703 5617 automated system, where it is the contra-side of every trade, or (iii) clears for a broker-dealer that operates such a system, and the subscribers to the system acknowledge the clearing Member’s role in the clearance and settlement of these trades. Accordingly, the proposed revisions provide that the Correspondent Clearing Service may only be used in the following situations: (1) To accommodate a Member with multiple affiliate accounts that wishes to move a position resulting from an ‘‘original trade’’ in the process of clearance from one affiliate account to another and (2) to accommodate a Member that relies on its Special Representative to execute a trade in a market that the Member is precluded from due either to membership requirements (e.g., membership requirement for access to markets) or applicable regulation, in order that the resulting position be moved from the Special Representative to that Member (including direct market access offsets). 2. Technical Corrections At this time, as part of updating its Rules and Procedures relative to the Trade Recording and Special Representative Services, NSCC is making certain technical corrections, clarifications, and organizational changes to: (1) Rule 7, including moving the definitions of ‘‘Special Representative,’’ ‘‘Qualified Special Representative,’’ and ‘‘Index Receipt Agent’’ from Rule 39 (where they currently appear) to Rule 7 (where these terms are first used) and renumbering the rules accordingly; and (2) Procedure II (Trade Comparison and Recording Service) to (i) add clarifying language to the introductory paragraph to describe the procedure used by NSCC to confirm locked-in trade data and (ii) add back language relating to receipt of locked-in trade data from QSRs that was inadvertently deleted in error in rule change SR– NSCC SR–2003–12.4 NSCC believes that the proposed rule change is consistent with the requirements of Section 17A(b)(3)(A) of the Act 5 and the rules and regulations thereunder applicable to NSCC because it should better enable NSCC to facilitate the prompt and accurate clearance and settlement of securities transactions by clarifying the purpose of its Correspondent Clearing Service and by making needed changes to its Trade 4 Securities Exchange Act Release No. 48141 (July 8, 2003), 68 FR 42153 [File No. SR–NSCC–2003– 12]. 5 15 U.S.C. 78q–1. E:\FR\FM\30JAN1.SGM 30JAN1 5618 Federal Register / Vol. 73, No. 20 / Wednesday, January 30, 2008 / Notices Paper Comments Recording and Special Representative Services. • Send paper comments in triplicate to Nancy M. Morris, Secretary, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549–1090. B. Self-Regulatory Organization’s Statement on Burden on Competition NSCC does not believe that the proposed rule change will have any impact on 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 No written comments relating to the proposed rule change have 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)(i) of the Act 6 and Rule 19b– 4(f)(1) 7 thereunder because the proposed rule change constitutes a stated policy, practice, or interpretation with respect to the meaning, administration, or enforcement of an existing rule. At any time within sixty days of the filing of the proposed rule changes, the Commission may summarily abrogate such rule changes 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 IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule changes are 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–2007–16 on the subject line. U.S.C. 78s(b)(3)(A)(i). CFR 240.19b–4(f)(1). 8 For purposes of calculating the 60-day period within which the Commission may summarily abrogate the proposed rule change under Section 19(b)(3)(C) of the Act, the Commission considers the period to commence on January 22, 2008, the date on which the last amendment to the proposed rule change was filed with the Commission. 15 U.S.C. 78s(b)(3)(C). All submissions should refer to File Number SR–NSCC–2007–16. 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 changes that are filed with the Commission, and all written communications relating to the proposed rule changes 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, on official business days between the hours of 10 a.m. and 3 p.m. Copies of such filings 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/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– 2007–16 and should be submitted on or before February 20, 2008. For the Commission by the Division of Trading and Markets, pursuant to delegated authority.9 Florence E. Harmon, Deputy Secretary. [FR Doc. E8–1597 Filed 1–29–08; 8:45 am] BILLING CODE 8011–01–P mstockstill on PROD1PC66 with NOTICES 7 17 18:49 Jan 29, 2008 Jkt 214001 [Release No. 34–57192; File No. SR–OCC– 2007–17] Self-Regulatory Organizations; The Options Clearing Corporation; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to Its Clearing Fee Schedule January 24, 2008. Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’),1 notice is hereby given that on December 7, 2007, The Options Clearing Corporation (‘‘OCC’’) 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 OCC. OCC filed the proposed rule change pursuant to section 19(b)(3)(A)(ii) of the Act 2 and Rule 19b-4(f)(2) 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 implement a new discounted fee schedule and continue the market maker scratch fee discount with all changes being effective January 1, 2008. 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 these statements.4 (A) Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change Effective May 1, 2007, OCC adopted a new permanent reduced clearing fee schedule for (i) securities options and 6 15 VerDate Aug<31>2005 SECURITIES AND EXCHANGE COMMISSION 1 15 U.S.C. 78s(b)(1). U.S.C. 78s(b)(3)(A)(ii). 3 17 CFR 240.19b–4(f)(2). 4 The Commission has modified the text of the summaries prepared by OCC. 2 15 9 17 PO 00000 cfr 200.30√3(A)(12). Frm 00125 Fmt 4703 Sfmt 4703 E:\FR\FM\30JAN1.SGM 30JAN1

Agencies

[Federal Register Volume 73, Number 20 (Wednesday, January 30, 2008)]
[Notices]
[Pages 5617-5618]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-1597]



[[Page 5617]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-57194; File No. SR-NSCC-2007-16]


Self-Regulatory Organizations; National Securities Clearing 
Corporation; Notice of Filing and Immediate Effectiveness of Proposed 
Rule Change as Modified by Amendment Nos. 1 and 2 To Provide 
Clarification With Respect to the Correspondent Clearing Service and To 
Make Technical Changes to the Rules and Procedures Relative to Trade 
Recording and Special Representative Services

January 24, 2008.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on December 18, 2007, the 
National Securities Clearing Corporation (``NSCC'') filed with the 
Securities and Exchange Commission (``Commission'') and on January 15, 
2008, and on January 22, 2008, amended 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.
---------------------------------------------------------------------------

    \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 purpose of the proposed rule change is to: (1) Clarify the 
appropriate use of NSCC's Correspondent Clearing Service and (2) make 
technical corrections, clarification, and organizational changes 
relative to its Trade Recording and Special Representative 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.\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 the proposed rule change is to: (1) Clarify the 
appropriate use of NSCC's Correspondent Clearing Service and (2) make 
technical corrections, clarification, and organizational changes 
relative to its Trade Recording and Special Representative Services.
1. Clarification of Correspondent Clearing Service
    NSCC is modifying its Procedure IV (Special Representative Service) 
to clarify the appropriate use of the Correspondent Clearing Service.
    The Correspondent Clearing Service is designed to provide an 
automated vehicle by which a Member, acting as a Special 
Representative, may move a position that it has in the process of 
clearance at NSCC to the account of another Member (its correspondent) 
on whose behalf the original trade was executed. The Correspondent 
Clearing Service is not a mechanism for original trade submission.\3\ 
For example, Member A that sold securities for Member B (its 
correspondent) on the NYSE would have the sell side of the transaction 
submitted by the NYSE in the normal Trade Recording Operation thereby 
incurring a CNS obligation to deliver the shares sold. Acting as 
Special Representative for its correspondent Member B, Member A would 
submit transaction data showing itself as the buyer of those securities 
and its correspondent Member B as the seller. As a result, Member A 
would net out in the CNS System (its sell side netting against its buy 
side) and its correspondent Member B would incur a CNS obligation to 
deliver. In other words, the service provides for the correspondent's 
obligation to be substituted for that of the Special Representative.
---------------------------------------------------------------------------

    \3\ The term ``original trade'' is used here solely to 
distinguish between a trade executed in the marketplace by the 
Special Representative and a transaction booked for accounting 
purposes to accommodate the movement of positions between Members as 
permitted in Procedure IV (Special Representative Service).
---------------------------------------------------------------------------

    The Correspondent Clearing Service was not designed as a mechanism 
to permit a Special Representative, acting as a Qualified Special 
Representative (``QSR''), to submit original locked-in trade data, and 
it should not be used as such. A QSR is a Member that either (i) 
operates an automated execution system where it is always the contra-
side of every trade, (ii) is the parent or affiliate of an entity 
operating such an automated system, where it is the contra-side of 
every trade, or (iii) clears for a broker-dealer that operates such a 
system, and the subscribers to the system acknowledge the clearing 
Member's role in the clearance and settlement of these trades.
    Accordingly, the proposed revisions provide that the Correspondent 
Clearing Service may only be used in the following situations: (1) To 
accommodate a Member with multiple affiliate accounts that wishes to 
move a position resulting from an ``original trade'' in the process of 
clearance from one affiliate account to another and (2) to accommodate 
a Member that relies on its Special Representative to execute a trade 
in a market that the Member is precluded from due either to membership 
requirements (e.g., membership requirement for access to markets) or 
applicable regulation, in order that the resulting position be moved 
from the Special Representative to that Member (including direct market 
access offsets).
2. Technical Corrections
     At this time, as part of updating its Rules and Procedures 
relative to the Trade Recording and Special Representative Services, 
NSCC is making certain technical corrections, clarifications, and 
organizational changes to:
    (1) Rule 7, including moving the definitions of ``Special 
Representative,'' ``Qualified Special Representative,'' and ``Index 
Receipt Agent'' from Rule 39 (where they currently appear) to Rule 7 
(where these terms are first used) and renumbering the rules 
accordingly; and
    (2) Procedure II (Trade Comparison and Recording Service) to (i) 
add clarifying language to the introductory paragraph to describe the 
procedure used by NSCC to confirm locked-in trade data and (ii) add 
back language relating to receipt of locked-in trade data from QSRs 
that was inadvertently deleted in error in rule change SR-NSCC SR-2003-
12.\4\
---------------------------------------------------------------------------

    \4\ Securities Exchange Act Release No. 48141 (July 8, 2003), 68 
FR 42153 [File No. SR-NSCC-2003-12].
---------------------------------------------------------------------------

     NSCC believes that the proposed rule change is consistent with the 
requirements of Section 17A(b)(3)(A) of the Act \5\ and the rules and 
regulations thereunder applicable to NSCC because it should better 
enable NSCC to facilitate the prompt and accurate clearance and 
settlement of securities transactions by clarifying the purpose of its 
Correspondent Clearing Service and by making needed changes to its 
Trade

[[Page 5618]]

Recording and Special Representative Services.
---------------------------------------------------------------------------

    \5\ 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 on 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

     No written comments relating to the proposed rule change have 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)(i) of the Act \6\ and Rule 19b-4(f)(1) 
\7\ thereunder because the proposed rule change constitutes a stated 
policy, practice, or interpretation with respect to the meaning, 
administration, or enforcement of an existing rule. At any time within 
sixty days of the filing of the proposed rule changes, the Commission 
may summarily abrogate such rule changes 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\
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    \6\ 15 U.S.C. 78s(b)(3)(A)(i).
    \7\ 17 CFR 240.19b-4(f)(1).
    \8\ For purposes of calculating the 60-day period within which 
the Commission may summarily abrogate the proposed rule change under 
Section 19(b)(3)(C) of the Act, the Commission considers the period 
to commence on January 22, 2008, the date on which the last 
amendment to the proposed rule change was filed with the Commission. 
15 U.S.C. 78s(b)(3)(C).
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IV. Solicitation of Comments

     Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
changes are 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-2007-16 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-2007-16. 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 changes that are 
filed with the Commission, and all written communications relating to 
the proposed rule changes 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, on official business days between the hours 
of 10 a.m. and 3 p.m. Copies of such filings 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/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-2007-16 and should be submitted on 
or before February 20, 2008.

    For the Commission by the Division of Trading and Markets, 
pursuant to delegated authority.\9\
---------------------------------------------------------------------------

    \9\ 17 cfr 200.303(A)(12).
---------------------------------------------------------------------------

Florence E. Harmon,
Deputy Secretary.
 [FR Doc. E8-1597 Filed 1-29-08; 8:45 am]
BILLING CODE 8011-01-P