Self-Regulatory Organizations; National Securities Clearing Corporation; Notice of Filing and Immediate Effectiveness of Proposed Rule To Amend the Rules With Regard to the Formula Used Within the Stock Borrow Program, 19918-19919 [E8-7696]

Download as PDF 19918 Federal Register / Vol. 73, No. 71 / Friday, April 11, 2008 / Notices 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, 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 FINRA. 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–FINRA–2008–012 and should be submitted on or before May 2, 2008. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.13 Florence E. Harmon, Deputy Secretary. [FR Doc. E8–7655 Filed 4–10–08; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–57609; File No. SR–NSCC– 2008–01] Self-Regulatory Organizations; National Securities Clearing Corporation; Notice of Filing and Immediate Effectiveness of Proposed Rule To Amend the Rules With Regard to the Formula Used Within the Stock Borrow Program mstockstill on PROD1PC66 with NOTICES April 3, 2008. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’),1 notice is hereby given that on March 18, 2008, 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. 13 17 1 15 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). VerDate Aug<31>2005 19:21 Apr 10, 2008 Jkt 214001 NSCC filed the proposal pursuant to Section 19(b)(3)(A)(iii) of the Act 2 and Rule 19b–4(f)(4) 3 thereunder so that the proposal was effective upon filing with the Commission. The Commission is publishing this notice to solicit comments on the 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 rule change is to modify Addendum C of NSCC’s rules with respect to the formula used in NSCC’s stock borrow program to determine the order of priority among members from whom NSCC will borrow securities made available by those members. 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 A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In the course of daily operations, NSCC’s Continuous Net Settlement System (‘‘CNS’’) may need more shares of a security than shares made available by member deliveries. In order to improve the efficiency of the clearing system in dealing with these situations, NSCC implemented automated stock borrow procedures to satisfy the need for shares that are not filled through normal deliveries from members. NSCC members that wish to participate in the stock borrow program notify NSCC each day of the securities those members have on deposit at The Depository Trust Company (‘‘DTC’’) that they intend to make available to NSCC through the stock borrow program. The stock borrow program has two separate cycles: the daytime cycle and the nighttime cycle.5 Members choose 2 15 U.S.C. 78s(b)(3)(A)(iii). CFR 240.19b–4(f)(4). 4 The Commission has modified the text of the summaries prepared by NSCC. 5 The daytime and nighttime cycles are separate processes. Securities made available to be borrowed during the nighttime processing cycle are not 3 17 PO 00000 Frm 00117 Fmt 4703 Sfmt 4703 whether to participate in the stock borrow program and whether to participate in one or both cycles. After NSCC processes regular deliveries, shares needed to satisfy CNS deliveries typically are borrowed from members who have made their securities available through the stock borrow program with the lending member’s DTC position being debited for the number of shares loaned in the stock borrow program. Borrowed shares are recorded as a long position in the lending member’s CNS subaccount until shares are delivered back to the lender. Prior to this rule change, NSCC had used a formula to determine the order of priority among members from which NSCC would borrow shares. First, NSCC assigned each member a random allocation number for each security the member made available for borrowing. Then a factor was developed for each member by dividing the percentage of the member’s average loans as they related to total NSCC borrowings by the percentage of the member’s average fees paid for trade comparison, trade recording, and clearance as they related to the total of these fees for all members. Each member’s random allocation number was multiplied by the factor to produce an adjusted random number per security for each member. Each potential borrow was then sequenced using the adjusted random number with the lowest adjusted random number having the first priority for borrowing. NSCC is proposing to simplify the process by eliminating the formula and using a random allocation algorithm to determine the order of priority among members from which NSCC will borrow shares.6 Using a random allocation algorithm to determine the order of priority in which NSCC will borrow securities made available by members within the stock borrow program would make processing more consistent with other current processing routines already utilized by NSCC. NSCC proposes to implement the changes set forth in this filing on March 28, 2008. Members will be advised of the implementation date through issuance of NSCC Important Notices. The proposed rule change is consistent with Section 17A of the Act,7 as amended, because it removes borrowed during the daytime processing cycle and vice versa. 6 This random allocation algorithm is already used by NSCC to determine other priorities. NSCC uses random allocation algorithms routinely. For example, CNS uses a random allocation methodology whereby, after securities are received by NSCC from members making deliveries to CNS, they are then allocated to other members that are expecting receipt of those securities. 7 15 U.S.C. 78q–1. E:\FR\FM\11APN1.SGM 11APN1 Federal Register / Vol. 73, No. 71 / Friday, April 11, 2008 / Notices Paper Comments impediments to and perfects the mechanism of a national system for prompt and accurate clearance and settlement of securities transactions. • 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 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 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 proposed 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 change effects a change in an existing service of a registered clearing agency 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 the 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: mstockstill on PROD1PC66 with NOTICES Electronic Comments SECURITIES AND EXCHANGE COMMISSION [Release No. 34–57627; File No. SR–NYSE– 2008–19] Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing and Immediate Effectiveness of All submissions should refer to File Proposed Rule Change and Number SR–NSCC–2008–01. This file Amendment No. 1 To Amend NYSE number should be included on the subject line if e-mail is used. To help the Rule 46 To Permit the Appointment of Qualified Exchange Employees To Act Commission process and review your as Floor Governors comments more efficiently, please use only one method. The Commission will April 4, 2008. post all comments on the Commission’s Pursuant to Section 19(b)(1) of the Internet Web site (https://www.sec.gov/ Securities Exchange Act of 1934 rules/sro.shtml). Copies of the (‘‘Act’’),1 and Rule 19b–4 thereunder,2 submission, all subsequent notice is hereby given that on March 14, 2008, the New York Stock Exchange, amendments, all written statements LLC (‘‘NYSE’’ or ‘‘Exchange’’), filed with respect to the proposed rule with the Securities and Exchange change that are filed with the Commission (‘‘Commission’’) the Commission, and all written proposed rule change as described in communications relating to the Items I, II, and III below, which Items proposed rule change between the Commission and any person, other than have been prepared by NYSE. On April 4, 2008 the Exchange filed Amendment those that may be withheld from the No. 1 to the proposed rule change. public in accordance with the NYSE has designated this proposal as provisions of 5 U.S.C. 552, will be concerned solely with the available for inspection and copying in administration of a self-regulatory the Commission’s Public Reference organization, pursuant to Section Section, 100 F Street, NE., Washington, 19(b)(3)(A)(iii) of the Act and Rule 19b– DC 20549, on official business days 4(f)(3) thereunder,3 which renders the between the hours of 10 am and 3 pm. proposed rule change effective upon Copies of such filings also will be filing. The Commission is publishing available for inspection and copying at this notice to solicit comments on the the principal office of NSCC and on proposed rule change, as amended, from NSCC’s Web site at https:// interested persons. www.dtcc.com/downloads/legal/ rule_filings/2008/nscc/2008–01.pdf. All I. Self-Regulatory Organization’s Statement of the Terms of Substance of comments received will be posted the Proposed Rule Change without change; the Commission does The Exchange proposes to amend not edit personal identifying NYSE Rule 46 to permit the information from submissions. You appointment of qualified Exchange should submit only information that you wish to make available publicly. All employees to act as Floor Governors. The text of the proposed rule change is submissions should refer to File Number SR–NSCC–2008–01 and should available at https://www.nyse.com, the Exchange and the Commission’s Public be submitted on or before May 2, 2008. Reference Room. For the Commission by the Division of Trading and Markets, pursuant to delegated authority.10 Florence E. Harmon, Deputy Secretary. [FR Doc. E8–7696 Filed 4–10–08; 8:45 am] BILLING CODE 8011–01–P • Use the Commission’s Internet comment form (https://www.sec.gov/ rules/sro.shtml) or • Send an e-mail to rulecomments@sec.gov. Please include File Number SR–NSCC–2008–01 on the subject line. II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, 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 Exchange has prepared summaries, set forth in 1 15 U.S.C. 78s(b)(3)(A)(iii). 9 17 CFR 240.19b–4(f)(4). 8 15 VerDate Aug<31>2005 19:21 Apr 10, 2008 U.S.C. 78s(b)(1). CFR 240.19b–4. 3 17 CFR 240.19b–4(f)(3). 2 17 10 17 Jkt 214001 19919 PO 00000 CFR 200.30–3(a)(12). Frm 00118 Fmt 4703 Sfmt 4703 E:\FR\FM\11APN1.SGM 11APN1

Agencies

SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 73, Number 71 (Friday, April 11, 2008)]
[Notices]
[Pages 19918-19919]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-7696]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-57609; File No. SR-NSCC-2008-01]


Self-Regulatory Organizations; National Securities Clearing 
Corporation; Notice of Filing and Immediate Effectiveness of Proposed 
Rule To Amend the Rules With Regard to the Formula Used Within the 
Stock Borrow Program

April 3, 2008.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on March 18, 2008, 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 proposal pursuant to Section 
19(b)(3)(A)(iii) of the Act \2\ and Rule 19b-4(f)(4) \3\ thereunder so 
that the proposal was effective upon filing with the Commission. The 
Commission is publishing this notice to solicit comments on the 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).
---------------------------------------------------------------------------

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

    The purpose of the rule change is to modify Addendum C of NSCC's 
rules with respect to the formula used in NSCC's stock borrow program 
to determine the order of priority among members from whom NSCC will 
borrow securities made available by those members.

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

    In the course of daily operations, NSCC's Continuous Net Settlement 
System (``CNS'') may need more shares of a security than shares made 
available by member deliveries. In order to improve the efficiency of 
the clearing system in dealing with these situations, NSCC implemented 
automated stock borrow procedures to satisfy the need for shares that 
are not filled through normal deliveries from members.
    NSCC members that wish to participate in the stock borrow program 
notify NSCC each day of the securities those members have on deposit at 
The Depository Trust Company (``DTC'') that they intend to make 
available to NSCC through the stock borrow program. The stock borrow 
program has two separate cycles: the daytime cycle and the nighttime 
cycle.\5\ Members choose whether to participate in the stock borrow 
program and whether to participate in one or both cycles.
---------------------------------------------------------------------------

    \5\ The daytime and nighttime cycles are separate processes. 
Securities made available to be borrowed during the nighttime 
processing cycle are not borrowed during the daytime processing 
cycle and vice versa.
---------------------------------------------------------------------------

    After NSCC processes regular deliveries, shares needed to satisfy 
CNS deliveries typically are borrowed from members who have made their 
securities available through the stock borrow program with the lending 
member's DTC position being debited for the number of shares loaned in 
the stock borrow program. Borrowed shares are recorded as a long 
position in the lending member's CNS subaccount until shares are 
delivered back to the lender.
    Prior to this rule change, NSCC had used a formula to determine the 
order of priority among members from which NSCC would borrow shares. 
First, NSCC assigned each member a random allocation number for each 
security the member made available for borrowing. Then a factor was 
developed for each member by dividing the percentage of the member's 
average loans as they related to total NSCC borrowings by the 
percentage of the member's average fees paid for trade comparison, 
trade recording, and clearance as they related to the total of these 
fees for all members. Each member's random allocation number was 
multiplied by the factor to produce an adjusted random number per 
security for each member. Each potential borrow was then sequenced 
using the adjusted random number with the lowest adjusted random number 
having the first priority for borrowing.
    NSCC is proposing to simplify the process by eliminating the 
formula and using a random allocation algorithm to determine the order 
of priority among members from which NSCC will borrow shares.\6\ Using 
a random allocation algorithm to determine the order of priority in 
which NSCC will borrow securities made available by members within the 
stock borrow program would make processing more consistent with other 
current processing routines already utilized by NSCC.
---------------------------------------------------------------------------

    \6\ This random allocation algorithm is already used by NSCC to 
determine other priorities. NSCC uses random allocation algorithms 
routinely. For example, CNS uses a random allocation methodology 
whereby, after securities are received by NSCC from members making 
deliveries to CNS, they are then allocated to other members that are 
expecting receipt of those securities.
---------------------------------------------------------------------------

    NSCC proposes to implement the changes set forth in this filing on 
March 28, 2008. Members will be advised of the implementation date 
through issuance of NSCC Important Notices.
    The proposed rule change is consistent with Section 17A of the 
Act,\7\ as amended, because it removes

[[Page 19919]]

impediments to and perfects the mechanism of a national system for 
prompt and accurate clearance and settlement of securities 
transactions.
---------------------------------------------------------------------------

    \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 will have any 
impact or impose any burden on competition.

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

    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 proposed 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 change effects a 
change in an existing service of a registered clearing agency 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 the 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.
---------------------------------------------------------------------------

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

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's Internet comment form (https://
www.sec.gov/rules/sro.shtml) or
     Send an e-mail to rule-comments@sec.gov. Please include 
File Number SR-NSCC-2008-01 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-2008-01. 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, on official business days between the hours 
of 10 am and 3 pm. 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 https://www.dtcc.com/downloads/legal/rule_filings/2008/
nscc/2008-01.pdf. 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-2008-01 and should be submitted on or before May 2, 2008.

    For the Commission by the Division of Trading and Markets, 
pursuant to delegated authority.\10\
---------------------------------------------------------------------------

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

Florence E. Harmon,
Deputy Secretary.
 [FR Doc. E8-7696 Filed 4-10-08; 8:45 am]
BILLING CODE 8011-01-P

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