Self-Regulatory Organizations; National Securities Clearing Corporation; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To clarify Its Rules & Procedures Regarding Its Alternative Investment Product Service, 61536-61538 [2010-24884]
Download as PDF
<![CDATA[
mstockstill on DSKH9S0YB1PROD with NOTICES
61536
Federal Register / Vol. 75, No. 192 / Tuesday, October 5, 2010 / Notices
execution obligations and FINRA
rules.17 Applicable exchange rules also
require that customers receive
appropriate disclosure before trading
Mini DAX options.18 Furthermore,
brokers opening accounts and
recommending options transactions
must comply with relevant customer
suitability standards.19
The trading of options on the Mini
DAX will be subject to the same rules
that currently govern the trading of
Exchange index options, as will the
trading of long-term Mini DAX options.
The Commission believes that the
listing rules proposed by ISE are
consistent with the Act. One point strike
price intervals for Mini DAX options
should provide investors with flexibility
in the trading of Mini DAX options and
further the public interest by allowing
investors to establish positions that are
better tailored to meet their investment
objectives. The listing of options on a
reduced value should provide an
opportunity for investors to hedge, or
speculate on, the market risk associated
with the stocks comprising the DAX
Index, and with the reduction in the
value of the DAX Index, investors will
be able to use this trading vehicle while
extending a smaller outlay of capital.
This may attract additional investors,
and, in turn, create a more active and
liquid trading environment.
The Commission notes that index
levels for options on the Mini DAX will
be calculated by DBAG, or its agent, and
updated on a real time basis, and will
be disseminated by ISE at 15-second
intervals to market information vendors
via OPRA.
The Commission believes that the
Exchange’s proposed position and
exercise limits for Mini DAX Options
are appropriate and consistent with the
Act. The Commission also notes that ISE
has represented that it has an adequate
surveillance program to monitor trading
of Mini DAX Options and intends to
apply its existing surveillance program
to support the trading for these options.
Finally, the Commission believes that
the proposal strikes a reasonable
balance between the Exchange’s desire
to offer a wider array of products with
the need to avoid unnecessary
proliferation of options series and the
corresponding increase in quotes. In
approving the proposed rule change, the
Commission has relied on the
Exchange’s representation that it has the
necessary systems capacity to support
17 See
NASD Rule 2320.
ISE Rule 616.
19 See ISE Rule 610. See also ISE Rulebook
Chapter Six for rules designed to protect public
customer trading that shall apply to the trading of
options on the Mini DAX.
18 See
VerDate Mar<15>2010
18:36 Oct 04, 2010
Jkt 223001
the new options series that will be listed
under this proposal. This approval order
is conditioned on ISE’s adherence to
this representation. The Commission
expects the Exchange to continue to
monitor for options with little or no
open interest and trading activity and to
act promptly to delist such options. In
addition, the Commission expects that
ISE will monitor the trading volume
associated with the additional options
series listed as a result of this proposal
and the effect of these additional series
on market fragmentation and on the
capacity of the Exchange’s, OPRA’s, and
vendors’ automated systems.
IV. Conclusion
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act,20 that the
proposed rule change (SR–ISE–2010–81)
be, and hereby is, approved.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.21
Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010–24882 Filed 10–4–10; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–63005; File No. SR–NSCC–
2010–10]
Self-Regulatory Organizations;
National Securities Clearing
Corporation; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change To clarify Its Rules &
Procedures Regarding Its Alternative
Investment Product Service
September 29, 2010.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’),1 notice is hereby given that on
September 20, 2010, the National
Securities Clearing Corporation
(‘‘NSCC’’) filed with the Securities and
Exchange Commission (‘‘Commission’’)
the proposed rule change as described
in Items I, II, and III below, which Items
have been prepared primarily by NSCC.
NSCC filed the proposed rule change
pursuant to Section 19(b)(3)(A)(iii) of
the Act 2 and Rule 19b–4(f)(4)
thereunder 3 so that the proposal was
effective upon filing with the
Commission. The Commission is
publishing this notice to solicit
20 15
U.S.C. 78s(b)(2).
CFR 200.30–3(a)(12).
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).
21 17
PO 00000
Frm 00126
Fmt 4703
Sfmt 4703
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 proposed rule change amends
NSCC’s rules to clarify that an
Alternative Investment Product (‘‘AIP’’)
Service prospective member is not
required to designate a settling bank in
order to become an AIP member.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission,
NSCC included statements concerning
the purpose of and basis for the
proposed rule change and discussed any
comments it received on the proposed
rule change. The text of these statements
may be examined at the places specified
in Item IV below. NSCC has prepared
summaries, set forth in sections A, B,
and C below, of the most significant
aspects of such statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. AIP Service
In 2007, NSCC filed a rule change
with the Commission that established
the AIP Service, which is a processing
platform for alternative investment
products such as hedge funds, fund of
hedge funds, commodities pools,
managed futures, and real estate
investment trusts.4 The AIP Service
provides for settlement of related
payments (‘‘AIP Payments’’) such as
subscriptions and redemptions, activity,
distributions, and commissions for
AIPs. The AIP Service also supports
communication of information and
settlement of AIP Payments between the
AIP Manufacturer 5 and the AIP
Distributor 6 to facilitate processing of
subscriptions and purchases, tenders
and redemptions, dividends and
distributions, commissions and fees,
positions reporting, product
information, account maintenance,
automated transmission of imaged
4 Securities and Exchange Act Release No. 57813
(May 12, 2008), 73 FR 28539 (May 16, 2008).
5 NSCC Rule 53 defines an AIP Manufacturer as
an AIP Member acting on behalf of or under
authority of the sponsor, general partner, or any
other party responsible for the creation or
manufacturing of an Eligible AIP Product.
6 NSCC Rule 53 defines an AIP Distributor as an
AIP Member acting on behalf of or under authority
of a customer or other investor in an Eligible AIP
Product, or otherwise as the contra-side to an AIP
Manufacturer in a transaction (including
information processing) with an AIP Manufacturer.
E:\FR\FM\05OCN1.SGM
05OCN1
Federal Register / Vol. 75, No. 192 / Tuesday, October 5, 2010 / Notices
documents, and such other services as
NSCC may determine from time to time.
AIP Members may transmit data in
connection with transactions for which
the payments are made outside of NSCC
or are made through NSCC at their
option.
2. AIP Settlement
Prior to this rule change, NSCC Rule
53, Section 7, paragraph (h), provided
that unless ‘‘otherwise permitted by
[NSCC], each AIP Member shall appoint
an AIP Settling Bank for the purpose of
settling with [NSCC] on behalf of the
AIP Member pursuant to an AIP Settling
Bank Agreement.’’ This settlement bank
provision was implemented in the
initial AIP Service rule filing to
accommodate the stringent settlement
rules implemented for the AIP Service.
AIP settlement is segregated from all
other NSCC settlement obligations and
is settled on a gross debit/gross credit
basis. In other words, each AIP Service
participant must fully fund its debits
before receiving its credit. In the event
of a failure, NSCC does not fund the
credits but rather begins the AIP
reversal process. The AIP Service’s
prefunded settlement mitigates NSCC’s
risk. This settling bank provision was
also included in the original AIP Service
filing because participants were initially
required to settle all NSCC invoices
with their settlement obligation.
mstockstill on DSKH9S0YB1PROD with NOTICES
3. Clarification of Settling Bank
Provision in Rule 53
Since the implementation of the AIP
Service, a significant number of
prospective participants view its
reporting functionality as a key first step
in use of the AIP Service. These AIP
prospects have expressed their interest
in becoming AIP members in order to
participate in the transmission of AIP
Data but not the settling functions of the
AIP Service.7
In response to this feedback, NSCC
has developed a functionality that can
designate AIP Service members as ‘‘nonsettling’’ members that use the AIP
Service for messaging only. Position and
Activity-Distribution and Commission
are typically ‘‘non-settling,’’ and strictly
reporting functions. Requiring these
prospective participants to designate a
settling bank simply for payment of
NSCC bills is a hindrance to product
adoption and is cost prohibitive.
7 NSCC Rule 53 provides that ‘‘AIP Data
transmitted through the AIP Service may include
data relating to subscriptions and purchases;
redemptions, withdrawals and tender offers;
commissions and other fees; distributions; exchange
transactions; transfers; position reporting; product
information; account maintenance, valuation, and
activity and such other data as may be established
by the Corporation from time to time.’’
VerDate Mar<15>2010
18:36 Oct 04, 2010
Jkt 223001
Additionally, the current list of NSCC
settling banks accepting new clients is
limited, and those settling banks willing
to accept new settlement business have
requested large monthly fees from the
AIP prospects.
The AIP Service has now been
appropriately configured to allow for
prospective members to apply for
membership without designating a
settling bank. If a participant is
established by NSCC’s Account
Administration department on the
Entity Master File (‘‘EMF’’) without a
settling bank’s ABA number, EMF
notifies the AIP Service that the
participant is non-settling. The AIP
Service retains a table of the nonsettling participants and validates all
settlement files created by the
application against the table. If a
participant without a settling bank
erroneously indicates settlement, no
settlement file will be created or sent to
settlement. The transaction will
continue through normal AIP processing
as non-settling.
AIP Service participants that do not
intend to use its settling function will
no longer be required to settle their
NSCC invoices in their settlement
obligations. Those participants that are
designated ‘‘non-settling’’ members will
be permitted to use alternative means of
payment as designated from time to
time by NSCC. Current methods of
payment include DTCC ePayment for
NSCC Invoices (which allows
participants without a settling bank to
authorize payment of NSCC Invoices
through debit to an ACH-accessible
commercial account at a U.S. bank) or
credit card.
4. Implementation Time Frame
NSCC will advise its members of the
changes to the Rule 53 clarification that
settling bank designation is not a
requirement for AIP Service
membership through the issuance of an
NSCC Important Notice.
NSCC states that Section 17A(b)(3)(F)
of the Act 8 requires, among other
things, that the rules of a clearing
agency be designed to remove
impediments to and perfect the
mechanism of a national system for
prompt and accurate clearance and
settlement of securities transactions.
NSCC believes that this proposed rule
change, which seeks to clarify NSCC
Rule 53, will remove an impediment to
the AIP Service membership process.
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
NSCC has not solicited or received
written comments relating to the
proposed rule change. NSCC will notify
the Commission of any written
comments it receives.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become
effective pursuant to Section
19(b)(3)(A)(iii) of the Act 9 and Rule
19b–4(f)(4) 10 thereunder because it
effects a change in an existing service of
a registered clearing agency that does
not adversely affect the safeguarding of
securities and funds in the custody or
control of the clearing agency or for
which it is responsible and does not
significantly affect the respective rights
or obligations of the clearing agency or
persons using the service. At any time
within 60 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:
Electronic Comments
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an e-mail to rulecomments@sec.gov. Please include File
No. SR–NSCC–2010–10 on the subject
line.
Paper Comments
• Send paper comments in triplicate
to Elizabeth M. Murphy, Secretary,
Securities and Exchange Commission,
9 Above
8 15
PO 00000
U.S.C. 78–1(b)(3)(F).
Frm 00127
Fmt 4703
note 2.
note 3.
10 Above
Sfmt 4703
61537
E:\FR\FM\05OCN1.SGM
05OCN1
61538
Federal Register / Vol. 75, No. 192 / Tuesday, October 5, 2010 / Notices
Station Place, 100 F Street, NE.,
Washington, DC 20549–1090.
SECURITIES AND EXCHANGE
COMMISSION
of the most significant parts of such
statements.
All submissions should refer to File No.
SR–NSCC–2010–10. 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 Web site viewing and
printing 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 NSCC’s principal office and
on NSCC’s Web site at https://
www.dtcc.com/legal/rule_filings/nscc/
2010.php. All comments received will
be posted without change; the
Commission does not edit personal
identifying information from
submissions. You should submit only
information that you wish to make
available publicly. All submissions
should refer to File No. SR–NSCC–
2010–10 and should be submitted on or
before October 26, 2010.
[Release No. 34–63001; File No. SR–CBOE–
2010–85]
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
For the Commission by the Division of
Trading and Markets, pursuant to delegated
authority.11
Florence E. Harmon,
Deputy Secretary .
[FR Doc. 2010–24884 Filed 10–4–10; 8:45 am]
mstockstill on DSKH9S0YB1PROD with NOTICES
BILLING CODE 8010–01–P
Self-Regulatory Organizations;
Chicago Board Options Exchange,
Incorporated; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change To Increase the Class
Quoting Limit in One Option Classes
September 28, 2010.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (the
‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on
September 16, 2010, the Chicago Board
Options Exchange, Incorporated
(‘‘CBOE’’ or ‘‘Exchange’’) filed with the
Securities and Exchange Commission
(‘‘Commission’’) the proposed rule
change as described in Items I and II,
which Items have been prepared by the
CBOE. The Exchange has designated
this proposal as one constituting a
stated policy, practice, or interpretation
with respect to the meaning,
administration, or enforcement of an
existing rule under Section
19(b)(3)(A)(i) of the Act,3 and Rule 19b–
4(f)(1) thereunder,4 which renders the
proposal effective upon filing with the
Commission. 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 proposes to increase
the class quoting limit in one option
class. The text of the proposed rule
change is available on CBOE’s Web site
(https://www.cboe.org/legal), at the
CBOE’s Office of the Secretary, and at
the Commission’s public reference
room.
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
Exchange 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 sections (A), (B), and (C) below,
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 15 U.S.C. 78s(b)(3)(A)(i).
4 17 CFR 240.19b–4(f)(1).
2 17
11 17
CFR 200.30–3(a)(12).
VerDate Mar<15>2010
18:36 Oct 04, 2010
Jkt 223001
PO 00000
Frm 00128
Fmt 4703
Sfmt 4703
1. Purpose
CBOE Rule 8.3A, Maximum Number
of Market Participants Quoting
Electronically per Product, establishes
class quoting limits (‘‘CQLs’’) for each
class traded on the Hybrid Trading
System.5 A CQL is the maximum
number of quoters that may quote
electronically in a given product and
Rule 8.3A, Interpretation .01(a) provides
that the current levels are generally
established at 50.
In addition, Rule 8.3A, Interpretation
.01(b) provides a procedure by which
the President of the Exchange may
increase the CQL for an existing or new
product. In this regard, the President of
the Exchange may increase the CQL in
a particular product when he deems it
appropriate. The effect of an increase in
the CQL is procompetitive in that it
increases the number of market
participants that may quote
electronically in a product. The purpose
of this filing is to increase the CQL in
options on the CBOE Volatility Index
(VIX) from its current limit of 50 to 60,
which CBOE’s President has determined
would be appropriate.6 Increasing the
CQL also may enhance the liquidity
offered in the option class. Lastly, CBOE
represents that it has the systems
capacity to support this increase in the
CQL.
2. Statutory Basis
CBOE believes the proposed rule
change is consistent with the Act and
the rules and regulations under the Act
applicable to a national securities
exchange and, in particular, the
requirements of section 6(b) of the Act.7
Specifically, the Exchange believes the
proposed rule change is consistent with
the Section 6(b)(5) 8 requirements that
the rules of an exchange be designed to
promote just and equitable principles of
trade, to prevent fraudulent and
manipulative acts and, in general, to
protect investors and the public interest.
As indicated above, the Exchange
believes that increasing the CQL in this
5 See
Rule 8.3A.01.
President has determined that this
increase would be appropriate, in part, due to the
relocation of several option classes, including VIX,
to a larger trading station on the trading floor which
may enhance the liquidity offered in the option
class. E-mail dated September 28, 2010, from
Patrick Sexton, Associate General Counsel, CBOE.
7 15 U.S.C. 78f(b).
8 15 U.S.C. 78f(b)(5).
6 CBOE’s
E:\FR\FM\05OCN1.SGM
05OCN1
]]>Agencies
[Federal Register Volume 75, Number 192 (Tuesday, October 5, 2010)]
[Notices]
[Pages 61536-61538]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-24884]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-63005; File No. SR-NSCC-2010-10]
Self-Regulatory Organizations; National Securities Clearing
Corporation; Notice of Filing and Immediate Effectiveness of Proposed
Rule Change To clarify Its Rules & Procedures Regarding Its Alternative
Investment Product Service
September 29, 2010.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ notice is hereby given that on September 20, 2010, the
National Securities Clearing Corporation (``NSCC'') filed with the
Securities and Exchange Commission (``Commission'') the proposed rule
change as described in Items I, II, and III below, which Items have
been prepared primarily by NSCC. NSCC filed the proposed rule change
pursuant to Section 19(b)(3)(A)(iii) of the Act \2\ and Rule 19b-
4(f)(4) 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 persons.
---------------------------------------------------------------------------
\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 proposed rule change amends NSCC's rules to clarify that an
Alternative Investment Product (``AIP'') Service prospective member is
not required to designate a settling bank in order to become an AIP
member.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, NSCC included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. NSCC has prepared summaries, set forth in sections A, B,
and C below, of the most significant aspects of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. AIP Service
In 2007, NSCC filed a rule change with the Commission that
established the AIP Service, which is a processing platform for
alternative investment products such as hedge funds, fund of hedge
funds, commodities pools, managed futures, and real estate investment
trusts.\4\ The AIP Service provides for settlement of related payments
(``AIP Payments'') such as subscriptions and redemptions, activity,
distributions, and commissions for AIPs. The AIP Service also supports
communication of information and settlement of AIP Payments between the
AIP Manufacturer \5\ and the AIP Distributor \6\ to facilitate
processing of subscriptions and purchases, tenders and redemptions,
dividends and distributions, commissions and fees, positions reporting,
product information, account maintenance, automated transmission of
imaged
[[Page 61537]]
documents, and such other services as NSCC may determine from time to
time. AIP Members may transmit data in connection with transactions for
which the payments are made outside of NSCC or are made through NSCC at
their option.
---------------------------------------------------------------------------
\4\ Securities and Exchange Act Release No. 57813 (May 12,
2008), 73 FR 28539 (May 16, 2008).
\5\ NSCC Rule 53 defines an AIP Manufacturer as an AIP Member
acting on behalf of or under authority of the sponsor, general
partner, or any other party responsible for the creation or
manufacturing of an Eligible AIP Product.
\6\ NSCC Rule 53 defines an AIP Distributor as an AIP Member
acting on behalf of or under authority of a customer or other
investor in an Eligible AIP Product, or otherwise as the contra-side
to an AIP Manufacturer in a transaction (including information
processing) with an AIP Manufacturer.
---------------------------------------------------------------------------
2. AIP Settlement
Prior to this rule change, NSCC Rule 53, Section 7, paragraph (h),
provided that unless ``otherwise permitted by [NSCC], each AIP Member
shall appoint an AIP Settling Bank for the purpose of settling with
[NSCC] on behalf of the AIP Member pursuant to an AIP Settling Bank
Agreement.'' This settlement bank provision was implemented in the
initial AIP Service rule filing to accommodate the stringent settlement
rules implemented for the AIP Service. AIP settlement is segregated
from all other NSCC settlement obligations and is settled on a gross
debit/gross credit basis. In other words, each AIP Service participant
must fully fund its debits before receiving its credit. In the event of
a failure, NSCC does not fund the credits but rather begins the AIP
reversal process. The AIP Service's prefunded settlement mitigates
NSCC's risk. This settling bank provision was also included in the
original AIP Service filing because participants were initially
required to settle all NSCC invoices with their settlement obligation.
3. Clarification of Settling Bank Provision in Rule 53
Since the implementation of the AIP Service, a significant number
of prospective participants view its reporting functionality as a key
first step in use of the AIP Service. These AIP prospects have
expressed their interest in becoming AIP members in order to
participate in the transmission of AIP Data but not the settling
functions of the AIP Service.\7\
---------------------------------------------------------------------------
\7\ NSCC Rule 53 provides that ``AIP Data transmitted through
the AIP Service may include data relating to subscriptions and
purchases; redemptions, withdrawals and tender offers; commissions
and other fees; distributions; exchange transactions; transfers;
position reporting; product information; account maintenance,
valuation, and activity and such other data as may be established by
the Corporation from time to time.''
---------------------------------------------------------------------------
In response to this feedback, NSCC has developed a functionality
that can designate AIP Service members as ``non-settling'' members that
use the AIP Service for messaging only. Position and Activity-
Distribution and Commission are typically ``non-settling,'' and
strictly reporting functions. Requiring these prospective participants
to designate a settling bank simply for payment of NSCC bills is a
hindrance to product adoption and is cost prohibitive. Additionally,
the current list of NSCC settling banks accepting new clients is
limited, and those settling banks willing to accept new settlement
business have requested large monthly fees from the AIP prospects.
The AIP Service has now been appropriately configured to allow for
prospective members to apply for membership without designating a
settling bank. If a participant is established by NSCC's Account
Administration department on the Entity Master File (``EMF'') without a
settling bank's ABA number, EMF notifies the AIP Service that the
participant is non-settling. The AIP Service retains a table of the
non-settling participants and validates all settlement files created by
the application against the table. If a participant without a settling
bank erroneously indicates settlement, no settlement file will be
created or sent to settlement. The transaction will continue through
normal AIP processing as non-settling.
AIP Service participants that do not intend to use its settling
function will no longer be required to settle their NSCC invoices in
their settlement obligations. Those participants that are designated
``non-settling'' members will be permitted to use alternative means of
payment as designated from time to time by NSCC. Current methods of
payment include DTCC ePayment for NSCC Invoices (which allows
participants without a settling bank to authorize payment of NSCC
Invoices through debit to an ACH-accessible commercial account at a
U.S. bank) or credit card.
4. Implementation Time Frame
NSCC will advise its members of the changes to the Rule 53
clarification that settling bank designation is not a requirement for
AIP Service membership through the issuance of an NSCC Important
Notice.
NSCC states that Section 17A(b)(3)(F) of the Act \8\ requires,
among other things, that the rules of a clearing agency be designed to
remove impediments to and perfect the mechanism of a national system
for prompt and accurate clearance and settlement of securities
transactions. NSCC believes that this proposed rule change, which seeks
to clarify NSCC Rule 53, will remove an impediment to the AIP Service
membership process.
---------------------------------------------------------------------------
\8\ 15 U.S.C. 78-1(b)(3)(F).
---------------------------------------------------------------------------
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
NSCC has not solicited or received written comments relating to the
proposed rule change. NSCC will notify the Commission of any written
comments it receives.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become effective pursuant to Section
19(b)(3)(A)(iii) of the Act \9\ and Rule 19b-4(f)(4) \10\ thereunder
because it effects a change in an existing service of a registered
clearing agency that does not adversely affect the safeguarding of
securities and funds in the custody or control of the clearing agency
or for which it is responsible and does not significantly affect the
respective rights or obligations of the clearing agency or persons
using the service. At any time within 60 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.
---------------------------------------------------------------------------
\9\ Above note 2.
\10\ Above note 3.
---------------------------------------------------------------------------
IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's Internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an e-mail to rule-comments@sec.gov. Please include
File No. SR-NSCC-2010-10 on the subject line.
Paper Comments
Send paper comments in triplicate to Elizabeth M. Murphy,
Secretary, Securities and Exchange Commission,
[[Page 61538]]
Station Place, 100 F Street, NE., Washington, DC 20549-1090.
All submissions should refer to File No. SR-NSCC-2010-10. 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 Web site viewing and
printing 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 NSCC's principal office and on NSCC's Web
site at https://www.dtcc.com/legal/rule_filings/nscc/2010.php. All
comments received will be posted without change; the Commission does
not edit personal identifying information from submissions. You should
submit only information that you wish to make available publicly. All
submissions should refer to File No. SR-NSCC-2010-10 and should be
submitted on or before October 26, 2010.
For the Commission by the Division of Trading and Markets,
pursuant to delegated authority.\11\
---------------------------------------------------------------------------
\11\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Florence E. Harmon,
Deputy Secretary .
[FR Doc. 2010-24884 Filed 10-4-10; 8:45 am]
BILLING CODE 8010-01-P
