Self-Regulatory Organizations; National Securities Clearing Corporation; Order Granting Approval of a Proposed Rule Change To Amend Rules To Add an Agreement From Fund Members That Submit Mutual Fund Profile Information, 6933-6934 [E9-2854]
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Federal Register / Vol. 74, No. 27 / Wednesday, February 11, 2009 / Notices
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
• 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–Phlx–2009–10 on the
subject line.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.12
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9–2858 Filed 2–10–09; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–59321; File No. SR–NSCC–
2008–08]
Self-Regulatory Organizations;
National Securities Clearing
Corporation; Order Granting Approval
of a Proposed Rule Change To Amend
Rules To Add an Agreement From
Fund Members That Submit Mutual
Fund Profile Information
January 30, 2009.
I. Introduction
On September 30, 2008, the National
Paper Comments
Securities Clearing Corporation
• Send paper comments in triplicate
(‘‘NSCC’’) filed with the Securities and
to Elizabeth M. Murphy, Secretary,
Exchange Commission (‘‘Commission’’)
Securities and Exchange Commission,
proposed rule change SR–NSCC–2008–
100 F Street, NE., Washington, DC
08 pursuant to Section 19(b)(1) of the
20549–1090.
Securities Exchange Act of 1934
(‘‘Act’’).1 Notice of the proposal was
All submissions should refer to File
published in the Federal Register on
Number SR–Phlx–2009–10. This file
December 29, 2008.2 For the reasons
number should be included on the
subject line if e-mail is used. To help the discussed below, the Commission is
granting approval of the proposed rule
Commission process and review your
change.
comments more efficiently, please use
only one method. The Commission will II. Description
post all comments on the Commission’s
The Mutual Fund Profile Service
Internet Web site (https://www.sec.gov/
(‘‘Profile’’) is a central data source for
rules/sro.shtml). Copies of the
comprehensive fund prospectus and
submission, all subsequent
operational information relating to
amendments, all written statements
mutual funds. The repository is a
with respect to the proposed rule
recognized industry standard for
change that are filed with the
information critical to the distribution
Commission, and all written
of mutual funds in the third-party
communications relating to the
market.
proposed rule change between the
Profile is organized into three
Commission and any person, other than
databases: (1) Security Issue Database
those that may be withheld from the
(containing information such as
public in accordance with the
Security ID number, security name, fee
provisions of 5 U.S.C. 552, will be
structure, investment objectives,
available for inspection and copying in
breakpoint schedule data, and blue sky
the Commission’s Public Reference
eligibility); (2) Participant Database
Room, on official business days between
(containing contact information, NSCC
the hours of 10 a.m. and 3 p.m. Copies
processing capabilities and restrictions
of the filing also will be available for
or requirements); and (3) Distribution
inspection and copying at the principal
Database (containing projected or actual
office of the Exchange. All comments
distributions, capital gains and dividend
received will be posted without change;
amounts and details, and commission
the Commission does not edit personal
information). NSCC fund members
identifying information from
input data regarding their mutual funds
submissions. You should submit only
into the Security Issue and Participant
information that you wish to make
available publicly. All submissions
12 17 CFR 200.30–3(a)(12).
should refer to File Number SR–Phlx–
1 15 U.S.C. 78s(b)(1).
2009–10 and should be submitted on or
2 Securities Exchange Act Release No. 59105
(December 16, 2008), 73 FR 79530.
before March 4, 2009.
VerDate Nov<24>2008
17:58 Feb 10, 2009
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PO 00000
Frm 00079
Fmt 4703
Sfmt 4703
6933
Profile databases. Profile is then
accessed by the NSCC members that are
mutual fund distributors.
NSCC has recently enhanced the
Security Issue Database in Profile to
include new data fields needed by
distributors and to re-engineer the
structure of the data hierarchy to be
easier for fund members to populate
their data. Some of the enhancements to
the Profile database were initiated in
response to a recommendation in the
Report (‘‘Report’’) of The Joint NASD/
Industry Task Force on Breakpoints
(‘‘Task Force’’).3 NSCC has also adopted
measures to assist funds members in
validating their data once it is in the
Profile database by developing reports
that note probable inconsistencies
among related data fields, by arranging
for free access by fund members to a
vendor tool that verifies Profile data,
and by reaching out to fund members in
the form of personal contacts and an online web demonstration on populating
data into the Profile database.
Consistent with its efforts to expand
Profile’s capabilities as a comprehensive
and accurate source for the mutual fund
distribution industry, NSCC is now
amending its rules to add an agreement
that requires NSCC fund members to
have taken reasonable steps to validate
the accuracy of their data they submit to
the Profile database. This agreement is
not intended to be either a basis for
independent legal rights against the
fund member or is any third party
intended or permitted to rely upon it as
a representation to a third party or upon
which a third-party can base any legal
rights. NSCC requires similar
agreements from its members elsewhere
in its rules and in its membership
agreement, such as the agreement
required of a fund member in Section 2
of Rule 51 to not submit a transaction
through NSCC’s Mutual Fund Services
in contravention of any applicable
regulatory requirements.
3 The Task Force was formed in 2003 by the
National Association of Securities Dealers
(‘‘NASD’’, now ‘‘FINRA’’) with the participation of
major fund companies, broker-dealers, NSCC, the
Securities Industries Association and the
Investment Company Institute, in response to the
NASD examination findings in which it was
discovered that investors frequently failed to
receive appropriate breakpoint discounts in frontend sales load mutual fund transactions.
Recommendation (B) of the report stated that
NSCC’s Profile database should be expanded to
include breakpoint aggregation terms and rules for
all fund families and should include identification
of both link-eligible products (for example,
retirement plans, annuities, and insurance products
and college savings plans with mutual fund
holdings). The Report also noted that for this
database to be effective, it must also be
comprehensive. Accordingly, mutual funds must
fully and accurately populate the database and must
update the database on a timely basis.
E:\FR\FM\11FEN1.SGM
11FEN1
6934
Federal Register / Vol. 74, No. 27 / Wednesday, February 11, 2009 / Notices
III. Discussion
Section 17A(b)(3)(F) of the Act
requires, among other things, that the
rules of a clearing agency be designed to
promote the prompt and accurate
clearance and settlement of securities
transactions, assure the safeguarding of
securities and funds which are in the
custody or control of the clearing agency
or for which it is responsible, to foster
cooperation and coordination with
persons engaged in the clearance and
settlement of securities transactions, to
remove impediments to and perfect the
mechanism of a national system for the
prompt and accurate clearance and
settlement of securities transactions,
and, in general, to protect investors and
the public interest.4 The rule change is
consistent with the requirements of
Section 17A of the Act, because it
should promote the prompt and
accurate clearance and settlement of
securities transactions by modifying an
NSCC service in order to reduce the
inherent risks associated with securities
certificates. Since NSCC’s Profile
database is widely used by mutual fund
distributors in processing the
distribution of mutual fund shares, the
proposed rule change should facilitate
the prompt and accurate clearance and
settlement of securities transactions by
assisting in the overall processing
efficiency of mutual fund transactions
and reducing processing difficulties
resulting from incomplete or inaccurate
information.
Accordingly, for the reasons stated
above the Commission believes that the
rule change is consistent with NSCC’s
obligation under Section 17A of the Act.
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 with the requirements of
Section 17A of the Act and the rules and
regulations thereunder.5
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act, that the
proposed rule change (File No. SR–
NSCC–2008–08) be and hereby is
approved.
mstockstill on PROD1PC66 with NOTICES
For the Commission by the Division of
Trading and Markets, pursuant to delegated
authority.6
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9–2854 Filed 2–10–09; 8:45 am]
BILLING CODE 8011–01–P
4 15
U.S.C. 78q–1(b)(3)(F).
approving the proposed rule change, the
Commission considered the proposal’s impact on
efficiency, competition, and capital formation.
6 17 CFR 200.30–3(a)(12).
5 In
VerDate Nov<24>2008
17:58 Feb 10, 2009
Jkt 217001
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–59320; File No. SR–NYSE–
2008–112]
Self-Regulatory Organizations; New
York Stock Exchange LLC; Order
Granting Approval of Proposed Rule
Change To Discontinue Policy of
Prohibiting Transfer Agents From
Charging Fees for Issuing Stock
Certificates
January 30, 2009.
I. Introduction
On October 30, 2008, the New York
Stock Exchange LLC (‘‘NYSE’’) filed
with the Securities and Exchange
Commission (‘‘Commission’’) proposed
rule change SR–NYSE–2008–112
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
December 29, 2008.2 The Commission
received two comment letters.3 For the
reasons discussed below, the
Commission is granting approval of the
proposed rule change.
II. Description
As a part of the securities industry
moving towards eliminating the use of
physical certificates (i.e.,
dematerialization) by encouraging
investors to hold securities positions in
book-entry form either in street name at
a broker-dealer or through the Direct
Registration System (‘‘DRS’’), the NYSE
is discontinuing its long-standing,
unwritten policy of prohibiting NYSE
listed companies from charging for the
issuance of stock certificates. DRS
allows investors to have securities
directly registered in book-entry form on
the records of the issuer or its transfer
agent without having a certificate
issued.4
In its letter to the NYSE, the
Securities Industry and Financial
Markets Association (‘‘SIFMA’’), which
1 15
U.S.C. 78s(b)(1).
Exchange Act Release No. 59106
(December 16, 2008), 73 FR 79531.
3 Letters from Charles V. Rossi, President, The
Securities Transfer Association, Inc. (January 16,
2009); and Martin J. McHale, Jr., President, U.S.
Equity Services, Computershare (January 20, 2009).
4 DRS allows securities positions to be
electronically transferred to a broker-dealer in order
to effect a transaction without the risk and delay
associated with the use of paper certificates. Since
March 31, 2008, Section 501.00 of NYSE’s Listed
Company Manual has required that all securities
listed on the NYSE must be eligible for
participation in DRS. Approximately 2,428 NYSE
listed securities currently participate in DRS.
Securities Exchange Act Release No. 58398 (August
20, 2008), 73 FR 51546 (September 3, 2008) [File
No. SR-NYSE–2008–069).
2 Securities
PO 00000
Frm 00080
Fmt 4703
Sfmt 4703
is one of the leaders in the movement
towards dematerialization, requested
that the NYSE discontinue its
prohibition of issuers or their transfer
agents charging fees in connection with
the issuance of securities certificates
(‘‘SIFMA Letter’’).5 SIFMA noted that
almost 75% of physical certificates
deposited by broker-dealers and bank
custodians at The Depository Trust
Company (‘‘DTC’’), a registered clearing
agency that is the primary custodian of
securities traded in the United States,
were issued within the last six months.
SIFMA stated its beliefs that these
recent deposits indicate that DTC
participants (i.e., broker-dealers and
banks) are providing physical
certificates to their customers only to
have the securities moved back into
street name in a short period of time. In
SIFMA’s view, this activity results in
unnecessary expense and in the risk that
the certificates may be lost, destroyed,
or stolen. SIFMA stated that it had
recently conducted a survey that
showed that more than 1.2 million
certificates each year need to be
replaced because of loss, destruction, or
theft at an approximate cost to the
transfer agents of $65 million.6
NYSE believes that securityholders
derive no apparent benefit from
continuing to hold their securities in
certificated form rather than in
uncertificated form in street name or
through DRS and that the inability of
the issuers or their transfer agents to
charge for the issuance of securities
certificates imposes a considerable cost
on issuers and transfer agents.
Therefore, NYSE is discontinuing its
prohibition of issuers or their transfer
agents charging fees for the issuance of
new certificates. Allowing transfer
agents to charge for the issuance of
certificates should not only shift the
cost of the issuance of certificates from
the issuers and transfer agents to the
requesting securityholders but should
also have the added effect of
encouraging more securityholders to
hold their securities in street name or
through DRS, which should further the
dematerialization movement. NYSE
listed companies that want their
investors to continue to have access to
the free issuance of new certificates will
be able to ensure the continuation of
such practice through their contractual
arrangements with their transfer agents.
5 Letter to Stephen Walsh, Vice President, NYSE
Euronext, from Lawrence Morillo, SIFMA
Operations Legal & Regulatory Sub-Committee
Chair. (August 26, 2008).
6 ‘‘Securities Industry Immobilization &
Dematerialization Implementation Guide—The
Phase-Out of the Stock Certificate’’ (SIFMA, 2008).
E:\FR\FM\11FEN1.SGM
11FEN1
]]>Agencies
[Federal Register Volume 74, Number 27 (Wednesday, February 11, 2009)]
[Notices]
[Pages 6933-6934]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E9-2854]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-59321; File No. SR-NSCC-2008-08]
Self-Regulatory Organizations; National Securities Clearing
Corporation; Order Granting Approval of a Proposed Rule Change To Amend
Rules To Add an Agreement From Fund Members That Submit Mutual Fund
Profile Information
January 30, 2009.
I. Introduction
On September 30, 2008, the National Securities Clearing Corporation
(``NSCC'') filed with the Securities and Exchange Commission
(``Commission'') proposed rule change SR-NSCC-2008-08 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
December 29, 2008.\2\ For the reasons discussed below, the Commission
is granting approval of the proposed rule change.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ Securities Exchange Act Release No. 59105 (December 16,
2008), 73 FR 79530.
---------------------------------------------------------------------------
II. Description
The Mutual Fund Profile Service (``Profile'') is a central data
source for comprehensive fund prospectus and operational information
relating to mutual funds. The repository is a recognized industry
standard for information critical to the distribution of mutual funds
in the third-party market.
Profile is organized into three databases: (1) Security Issue
Database (containing information such as Security ID number, security
name, fee structure, investment objectives, breakpoint schedule data,
and blue sky eligibility); (2) Participant Database (containing contact
information, NSCC processing capabilities and restrictions or
requirements); and (3) Distribution Database (containing projected or
actual distributions, capital gains and dividend amounts and details,
and commission information). NSCC fund members input data regarding
their mutual funds into the Security Issue and Participant Profile
databases. Profile is then accessed by the NSCC members that are mutual
fund distributors.
NSCC has recently enhanced the Security Issue Database in Profile
to include new data fields needed by distributors and to re-engineer
the structure of the data hierarchy to be easier for fund members to
populate their data. Some of the enhancements to the Profile database
were initiated in response to a recommendation in the Report
(``Report'') of The Joint NASD/Industry Task Force on Breakpoints
(``Task Force'').\3\ NSCC has also adopted measures to assist funds
members in validating their data once it is in the Profile database by
developing reports that note probable inconsistencies among related
data fields, by arranging for free access by fund members to a vendor
tool that verifies Profile data, and by reaching out to fund members in
the form of personal contacts and an on-line web demonstration on
populating data into the Profile database.
---------------------------------------------------------------------------
\3\ The Task Force was formed in 2003 by the National
Association of Securities Dealers (``NASD'', now ``FINRA'') with the
participation of major fund companies, broker-dealers, NSCC, the
Securities Industries Association and the Investment Company
Institute, in response to the NASD examination findings in which it
was discovered that investors frequently failed to receive
appropriate breakpoint discounts in front-end sales load mutual fund
transactions. Recommendation (B) of the report stated that NSCC's
Profile database should be expanded to include breakpoint
aggregation terms and rules for all fund families and should include
identification of both link-eligible products (for example,
retirement plans, annuities, and insurance products and college
savings plans with mutual fund holdings). The Report also noted that
for this database to be effective, it must also be comprehensive.
Accordingly, mutual funds must fully and accurately populate the
database and must update the database on a timely basis.
---------------------------------------------------------------------------
Consistent with its efforts to expand Profile's capabilities as a
comprehensive and accurate source for the mutual fund distribution
industry, NSCC is now amending its rules to add an agreement that
requires NSCC fund members to have taken reasonable steps to validate
the accuracy of their data they submit to the Profile database. This
agreement is not intended to be either a basis for independent legal
rights against the fund member or is any third party intended or
permitted to rely upon it as a representation to a third party or upon
which a third-party can base any legal rights. NSCC requires similar
agreements from its members elsewhere in its rules and in its
membership agreement, such as the agreement required of a fund member
in Section 2 of Rule 51 to not submit a transaction through NSCC's
Mutual Fund Services in contravention of any applicable regulatory
requirements.
[[Page 6934]]
III. Discussion
Section 17A(b)(3)(F) of the Act requires, among other things, that
the rules of a clearing agency be designed to promote the prompt and
accurate clearance and settlement of securities transactions, assure
the safeguarding of securities and funds which are in the custody or
control of the clearing agency or for which it is responsible, to
foster cooperation and coordination with persons engaged in the
clearance and settlement of securities transactions, to remove
impediments to and perfect the mechanism of a national system for the
prompt and accurate clearance and settlement of securities
transactions, and, in general, to protect investors and the public
interest.\4\ The rule change is consistent with the requirements of
Section 17A of the Act, because it should promote the prompt and
accurate clearance and settlement of securities transactions by
modifying an NSCC service in order to reduce the inherent risks
associated with securities certificates. Since NSCC's Profile database
is widely used by mutual fund distributors in processing the
distribution of mutual fund shares, the proposed rule change should
facilitate the prompt and accurate clearance and settlement of
securities transactions by assisting in the overall processing
efficiency of mutual fund transactions and reducing processing
difficulties resulting from incomplete or inaccurate information.
---------------------------------------------------------------------------
\4\ 15 U.S.C. 78q-1(b)(3)(F).
---------------------------------------------------------------------------
Accordingly, for the reasons stated above the Commission believes
that the rule change is consistent with NSCC's obligation under Section
17A of the Act.
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 with the requirements of Section 17A of the Act and the
rules and regulations thereunder.\5\
---------------------------------------------------------------------------
\5\ 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-2008-08) be and hereby
is approved.
For the Commission by the Division of Trading and Markets,
pursuant to delegated authority.\6\
---------------------------------------------------------------------------
\6\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-2854 Filed 2-10-09; 8:45 am]
BILLING CODE 8011-01-P
