Self-Regulatory Organizations; The National Securities Clearing Corporation; Order Granting Approval of a Proposed Rule Change To Amend Rules Relating To Discontinuing Dividend Settlement Service, Funds Only Settlement Service, Data Distribution Box Services, and Changes to the Envelope Settlement Service, 49511-49512 [2011-20241]

Download as PDF Federal Register / Vol. 76, No. 154 / Wednesday, August 10, 2011 / Notices agencies with an opportunity to comment on proposed and/or continuing collections of information in accordance with the Paperwork Reduction Act of 1995 (PRA95) [44 U.S.C. 3506(c)(A)]. This program helps to ensure that requested data can be provided in the desired format, reporting burden (time and financial resources) is minimized, collection instruments are clearly understood, and the impact of collection requirements on respondents can be properly assessed. Currently, the NEA is soliciting comments concerning the proposed information collection on grant applicant satisfaction with application guidance and materials provided on the NEA Web site and by NEA staff. A copy of the current information collection request can be obtained by contacting the office listed below in the address section of this notice. DATES: Written comments must be submitted to the office listed in the address section below on or before October 8, 2011. The NEA is particularly interested in comments which: • Evaluate whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility; • Evaluate the accuracy of the agency’s estimate of the burden of the proposed collection of information including the validity of the methodology and assumptions used; • Enhance the quality, utility, and clarity of the information to be collected; and • Minimize the burden of the collection of information on those who are to respond, including through the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology, e.g., permitting electronic submissions of responses. Sunil Iyengar, National Endowment for the Arts, 1100 Pennsylvania Avenue, NW., Room 616, Washington, DC 20506–0001, telephone (202) 682–5424 (this is not a toll-free number), fax (202) 682–5677. emcdonald on DSK2BSOYB1PROD with NOTICES ADDRESSES: Kathleen Edwards, Director, Administrative Services, National Endowment for the Arts. [FR Doc. 2011–20255 Filed 8–9–11; 8:45 am] BILLING CODE 7537–01–P VerDate Mar<15>2010 17:48 Aug 09, 2011 Jkt 223001 POSTAL REGULATORY COMMISSION [Docket No. N2011–1; Order No. 778] Postal Service Initiative on Retail Postal Locations Postal Regulatory Commission. Notice; correction. AGENCY: ACTION: SUMMARY: The Postal Regulatory Commission published a notice in the Federal Register of August 4, 2011 concerning a Postal Service request for an advisory opinion on an initiative involving examination of the continuation of service at postal retail locations. The procedural schedule included an incorrect date for the close of discovery on the Postal Service’s direct case. FOR FURTHER INFORMATION CONTACT: Stephen L. Sharfman, General Counsel, 202–789–6820 or stephen.sharfman@prc.gov. Correction In the Federal Register of August 4, 2011, FR Doc. 2011–19725, on page 47276, in the Procedural Schedule table appearing after the signature block, correct the second line in the left-hand column to read: August 30, 2011 Close of discovery on Postal Service direct case. Dated: August 4, 2011. Ruth Ann Abrams, Acting Secretary. [FR Doc. 2011–20196 Filed 8–9–11; 8:45 am] BILLING CODE 7710–FW–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–65032; File No. SR–NSCC– 2011–04] Self-Regulatory Organizations; The National Securities Clearing Corporation; Order Granting Approval of a Proposed Rule Change To Amend Rules Relating To Discontinuing Dividend Settlement Service, Funds Only Settlement Service, Data Distribution Box Services, and Changes to the Envelope Settlement Service August 4, 2011. I. Introduction On June 15, 2011, The National Securities Clearing Corporation (‘‘NSCC’’) filed proposed rule change SR–NSCC–2011–04 with the Securities and Exchange Commission PO 00000 Frm 00081 Fmt 4703 Sfmt 4703 49511 (‘‘Commission’’) pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’).1 Notice of the proposed rule change was published in the Federal Register on July 6, 2011.2 The Commission received no comment letters. For the reasons discussed below, the Commission is granting approval of the proposed rule change. II. Description As operated prior to this rule change, the Dividend Settlement Service (‘‘DSS’’), the Funds Only Settlement Service (‘‘FOSS’’), and the Envelope Settlement Service (‘‘ESS’’) were nonguaranteed services of NSCC through which NSCC members were able to exchange physical envelopes through a centralized location at NSCC. Pursuant to Rule 43 of NSCC’s Rules and Procedures, DSS centralized claims processing for collection and payment of dividends and interest between NSCC members through the exchange of envelopes through the facilities of NSCC. Pursuant to Rule 41 of NSCC’s Rules and Procedures, FOSS centralized money-only settlements for NSCC members through the exchange of paperwork delivered to and received by NSCC members through NSCC’s facilities.3 Pursuant to Rule 9 and Addendum D of NSCC’s Rules and Procedures, ESS allowed an NSCC member to physically deliver a sealed envelope containing securities and such other items as NSCC from time to time permitted to a specified NSCC member. The money settlement associated with ESS, DSS, and FOSS transactions occurred through NSCC’s end-of-day settlement process. A. Consolidation and Elimination of Certain Services The use of each of these services has steadily declined in recent years due to increased dematerialization of securities and automation of transaction processing. In light of this decline and the elimination of the guaranty of ESS transactions, NSCC is amending its rules to discontinue the separate DSS and FOSS services and to allow members to 1 15 U.S.C. 78s(b)(1). Exchange Act Release No. 64769 (June 29, 2011), 76 FR 39463 (July 6, 2011). 3 FOSS was created in 1983 to remove moneyonly settlement activity, which prior to that time was included in ESS, from ESS in order to facilitate what was then NSCC’s guaranty of settlement of securities transactions processed through ESS. The guaranty of ESS settlement was in effect from 1983 until 2010. Exchange Act Release No. 61618 (March 1, 2010) (File No. SR–NSCC–2010–01), 75 FR 10542 (March 8, 2010). 2 Securities E:\FR\FM\10AUN1.SGM 10AUN1 49512 Federal Register / Vol. 76, No. 154 / Wednesday, August 10, 2011 / Notices delivering member includes an Obligation Warehouse control number with the respective envelope delivery to ESS. However, this feature will not be implemented concurrently with the other changes described in this approval order but instead will be implemented through announcement by Important Notice at a later date.6 Pursuant to this rule change, NSCC’s rules will be updated to change references to ESS deliveries and receives occurring through NSCC’s New York City facility to use general language allowing NSCC to provide this service through any NSCC facility as announced by Important Notice. As mentioned above, the rule change will also require that members not comingle different issues of securities in the same envelope or with other activity conducted through ESS. Accordingly, NSCC will also be allowed to prohibit comingling between funds-only and dividend settlement items. B. ESS Processing Changes NSCC performs certain regulatory tracking, monitoring, and reporting functions (e.g., OFAC screening) for securities transactions processed through NSCC. With respect to some NSCC services, such as Continuous Net Settlement (‘‘CNS’’),5 NSCC electronically receives information about security identification and transaction size that facilitates such tracking and reporting. However, similar electronic information is not available for securities transferred through ESS. In order to facilitate NSCC’s tracking, monitoring, and reporting, the rule change will allow NSCC (1) To require its members to provide a security identifier (i.e., CUSIP or ISIN) and to include quantity delivered for all securities delivered through ESS, (2) to restrict members to one security issue per envelope, and (3) to prohibit the comingling of securities with other items. The rule change will also allow NSCC to require its members to provide it with additional information that NSCC from time to time deems necessary to facilitate ESS processing. Additionally, the rule change will also allow for automatic updates to NSCC’s Obligation Warehouse service with respect to securities transactions that settle though ESS where the emcdonald on DSK2BSOYB1PROD with NOTICES process dividends and funds-only settlement activities through ESS.4 In addition, NSCC will amend its rules to discontinue its Data Distribution Box Service (‘‘DDBS’’). DDBS was traditionally used to distribute hard copy Important Notices, clearing reports, and other informational documents to NSCC members. Today members: (a) Receive Important Notices through the Web site of NSCC’s parent, The Depository Trust & Clearing Corporation, at https://www.dtcc.com, (b) receive clearing reports through electronic communications, and (c) exchange other information that previously might have been transferred through DDBS, by use of e-mail, facsimile transmission, courier services, the U.S. Postal Service, and other delivery mechanisms. The DDBS service has become obsolete as a result of the use of these other more efficient means of distribution and therefore will be eliminated. C. Fee Structure 4 In order to distinguish securities transfers from other ESS activity, NSCC is adding a required indicator for input by members to disclose whether or not a security is included in an envelope. 5 CNS is an automated accounting system operated by NSCC which nets today’s settling trades with yesterday’s closing positions in eligible securities to produce new short or long settlement positions per security issue for each NSCC member. VerDate Mar<15>2010 17:48 Aug 09, 2011 Jkt 223001 NSCC’s Fee Schedule will be revised to delete charges for the discontinued services mentioned above. Under the rule change, all services offered under the newly combined ESS will be subject to the existing ESS charge for deliveries and receives.7 D. Addendum D—Statement of Policy— Envelope Settlement Service, Mutual Fund Services, Insurance and Retirement Processing and Other Services Offered by the Corporation Addendum D, a statement of policy with regard to ESS and other NSCC services, provides, among other things, that money-only settlement charges should not be processed through ESS. NSCC will amend Addendum D to conform to the changes approved pursuant to this rule change. The revised Addendum D will also include a technical change that clarifies that NSCC may reverse a member’s debits or 6 For information on the Obligation Warehouse service, see Exchange Act Release No. 63588 (December 21, 2010), 75 FR 82112 (December 29, 2010) (File No. SR–NSCC–2010–11). 7 In addition, two separate line items relating to ESS fees will be consolidated into one to reflect that the combined fee applies to all ESS deliveries and receives (including intercity). Also, as a technical change, fees relating to the New York Window Service will be deleted from the Fee Schedule since that service is no longer being offered by NSCC and certain other fees relating to physical processing functions that have become obsolete (which appear in the Fee Schedule as items A through F under the heading ‘‘Other Service Fees’’) will also be deleted. For additional information on the discontinuation of the New York Window Service at NSCC, see Exchange Act Release No. 40179 (July 8, 1998), 63 FR 38221 (July 15, 1998) (File Nos. SR–DTC–98–09, SR–NSCC–98–05). PO 00000 Frm 00082 Fmt 4703 Sfmt 9990 credits that are related to the Commission Bill Service. E. Implementation Date The implementation date for the approved rule changes will be announced by Important Notice; however, the elimination of DDBS will not take effect until approximately, but no less than, 30 days from the date of this approval order. 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 and to remove impediments to and perfect the mechanism of a national system for the prompt and accurate clearance and settlement of securities transactions.8 The Commission finds that NSCC’s rule change should facilitate the prompt and accurate clearance and settlement of securities transactions by increasing processing efficiencies through the merger of several similar services for physical processing and by eliminating obsolete services. Accordingly, for the reasons stated above the Commission believes that the proposed rule change is consistent with NSCC’s obligation under Section 17A of the Exchange Act, as amended, and the rules and regulations thereunder.9 IV. Conclusion On the basis of the foregoing, the Commission finds that the proposed rule change is consistent with the requirements of the Act, particularly with the requirements of Section 17A of the Act, and the rules and regulations thereunder. It is therefore ordered, pursuant to Section 19(b)(2) of the Act, that the proposed rule change (File No. SR– NSCC–2011–04) be and hereby is approved. For the Commission by the Division of Trading and Markets, pursuant to delegated authority.10 Elizabeth M. Murphy, Secretary. [FR Doc. 2011–20241 Filed 8–9–11; 8:45 am] BILLING CODE 8011–01–P 8 15 U.S.C. 78q–1(b)(3)(F). approving this proposal, the Commission has considered its impact on efficiency, competition, and capital formation. 15 U.S.C. 78c(f). 9 In 10 17 E:\FR\FM\10AUN1.SGM CFR 200.30–3(a)(12). 10AUN1

Agencies

[Federal Register Volume 76, Number 154 (Wednesday, August 10, 2011)]
[Notices]
[Pages 49511-49512]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-20241]


=======================================================================
-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-65032; File No. SR-NSCC-2011-04]


Self-Regulatory Organizations; The National Securities Clearing 
Corporation; Order Granting Approval of a Proposed Rule Change To Amend 
Rules Relating To Discontinuing Dividend Settlement Service, Funds Only 
Settlement Service, Data Distribution Box Services, and Changes to the 
Envelope Settlement Service

August 4, 2011.

I. Introduction

    On June 15, 2011, The National Securities Clearing Corporation 
(``NSCC'') filed proposed rule change SR-NSCC-2011-04 with the 
Securities and Exchange Commission (``Commission'') pursuant to Section 
19(b)(1) of the Securities Exchange Act of 1934 (``Act'').\1\ Notice of 
the proposed rule change was published in the Federal Register on July 
6, 2011.\2\ The Commission received no comment letters. 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. 64769 (June 29, 2011), 
76 FR 39463 (July 6, 2011).
---------------------------------------------------------------------------

II. Description

    As operated prior to this rule change, the Dividend Settlement 
Service (``DSS''), the Funds Only Settlement Service (``FOSS''), and 
the Envelope Settlement Service (``ESS'') were non-guaranteed services 
of NSCC through which NSCC members were able to exchange physical 
envelopes through a centralized location at NSCC. Pursuant to Rule 43 
of NSCC's Rules and Procedures, DSS centralized claims processing for 
collection and payment of dividends and interest between NSCC members 
through the exchange of envelopes through the facilities of NSCC. 
Pursuant to Rule 41 of NSCC's Rules and Procedures, FOSS centralized 
money-only settlements for NSCC members through the exchange of 
paperwork delivered to and received by NSCC members through NSCC's 
facilities.\3\ Pursuant to Rule 9 and Addendum D of NSCC's Rules and 
Procedures, ESS allowed an NSCC member to physically deliver a sealed 
envelope containing securities and such other items as NSCC from time 
to time permitted to a specified NSCC member. The money settlement 
associated with ESS, DSS, and FOSS transactions occurred through NSCC's 
end-of-day settlement process.
---------------------------------------------------------------------------

    \3\ FOSS was created in 1983 to remove money-only settlement 
activity, which prior to that time was included in ESS, from ESS in 
order to facilitate what was then NSCC's guaranty of settlement of 
securities transactions processed through ESS. The guaranty of ESS 
settlement was in effect from 1983 until 2010. Exchange Act Release 
No. 61618 (March 1, 2010) (File No. SR-NSCC-2010-01), 75 FR 10542 
(March 8, 2010).
---------------------------------------------------------------------------

A. Consolidation and Elimination of Certain Services

    The use of each of these services has steadily declined in recent 
years due to increased dematerialization of securities and automation 
of transaction processing. In light of this decline and the elimination 
of the guaranty of ESS transactions, NSCC is amending its rules to 
discontinue the separate DSS and FOSS services and to allow members to

[[Page 49512]]

process dividends and funds-only settlement activities through ESS.\4\
---------------------------------------------------------------------------

    \4\ In order to distinguish securities transfers from other ESS 
activity, NSCC is adding a required indicator for input by members 
to disclose whether or not a security is included in an envelope.
---------------------------------------------------------------------------

    In addition, NSCC will amend its rules to discontinue its Data 
Distribution Box Service (``DDBS''). DDBS was traditionally used to 
distribute hard copy Important Notices, clearing reports, and other 
informational documents to NSCC members. Today members: (a) Receive 
Important Notices through the Web site of NSCC's parent, The Depository 
Trust & Clearing Corporation, at https://www.dtcc.com, (b) receive 
clearing reports through electronic communications, and (c) exchange 
other information that previously might have been transferred through 
DDBS, by use of e-mail, facsimile transmission, courier services, the 
U.S. Postal Service, and other delivery mechanisms. The DDBS service 
has become obsolete as a result of the use of these other more 
efficient means of distribution and therefore will be eliminated.

B. ESS Processing Changes

    NSCC performs certain regulatory tracking, monitoring, and 
reporting functions (e.g., OFAC screening) for securities transactions 
processed through NSCC. With respect to some NSCC services, such as 
Continuous Net Settlement (``CNS''),\5\ NSCC electronically receives 
information about security identification and transaction size that 
facilitates such tracking and reporting. However, similar electronic 
information is not available for securities transferred through ESS. In 
order to facilitate NSCC's tracking, monitoring, and reporting, the 
rule change will allow NSCC (1) To require its members to provide a 
security identifier (i.e., CUSIP or ISIN) and to include quantity 
delivered for all securities delivered through ESS, (2) to restrict 
members to one security issue per envelope, and (3) to prohibit the 
comingling of securities with other items. The rule change will also 
allow NSCC to require its members to provide it with additional 
information that NSCC from time to time deems necessary to facilitate 
ESS processing.
---------------------------------------------------------------------------

    \5\ CNS is an automated accounting system operated by NSCC which 
nets today's settling trades with yesterday's closing positions in 
eligible securities to produce new short or long settlement 
positions per security issue for each NSCC member.
---------------------------------------------------------------------------

    Additionally, the rule change will also allow for automatic updates 
to NSCC's Obligation Warehouse service with respect to securities 
transactions that settle though ESS where the delivering member 
includes an Obligation Warehouse control number with the respective 
envelope delivery to ESS. However, this feature will not be implemented 
concurrently with the other changes described in this approval order 
but instead will be implemented through announcement by Important 
Notice at a later date.\6\
---------------------------------------------------------------------------

    \6\ For information on the Obligation Warehouse service, see 
Exchange Act Release No. 63588 (December 21, 2010), 75 FR 82112 
(December 29, 2010) (File No. SR-NSCC-2010-11).
---------------------------------------------------------------------------

    Pursuant to this rule change, NSCC's rules will be updated to 
change references to ESS deliveries and receives occurring through 
NSCC's New York City facility to use general language allowing NSCC to 
provide this service through any NSCC facility as announced by 
Important Notice. As mentioned above, the rule change will also require 
that members not comingle different issues of securities in the same 
envelope or with other activity conducted through ESS. Accordingly, 
NSCC will also be allowed to prohibit comingling between funds-only and 
dividend settlement items.

C. Fee Structure

    NSCC's Fee Schedule will be revised to delete charges for the 
discontinued services mentioned above. Under the rule change, all 
services offered under the newly combined ESS will be subject to the 
existing ESS charge for deliveries and receives.\7\
---------------------------------------------------------------------------

    \7\ In addition, two separate line items relating to ESS fees 
will be consolidated into one to reflect that the combined fee 
applies to all ESS deliveries and receives (including intercity). 
Also, as a technical change, fees relating to the New York Window 
Service will be deleted from the Fee Schedule since that service is 
no longer being offered by NSCC and certain other fees relating to 
physical processing functions that have become obsolete (which 
appear in the Fee Schedule as items A through F under the heading 
``Other Service Fees'') will also be deleted. For additional 
information on the discontinuation of the New York Window Service at 
NSCC, see Exchange Act Release No. 40179 (July 8, 1998), 63 FR 38221 
(July 15, 1998) (File Nos. SR-DTC-98-09, SR-NSCC-98-05).
---------------------------------------------------------------------------

D. Addendum D--Statement of Policy--Envelope Settlement Service, Mutual 
Fund Services, Insurance and Retirement Processing and Other Services 
Offered by the Corporation

    Addendum D, a statement of policy with regard to ESS and other NSCC 
services, provides, among other things, that money-only settlement 
charges should not be processed through ESS. NSCC will amend Addendum D 
to conform to the changes approved pursuant to this rule change. The 
revised Addendum D will also include a technical change that clarifies 
that NSCC may reverse a member's debits or credits that are related to 
the Commission Bill Service.

E. Implementation Date

    The implementation date for the approved rule changes will be 
announced by Important Notice; however, the elimination of DDBS will 
not take effect until approximately, but no less than, 30 days from the 
date of this approval order.

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 and to 
remove impediments to and perfect the mechanism of a national system 
for the prompt and accurate clearance and settlement of securities 
transactions.\8\ The Commission finds that NSCC's rule change should 
facilitate the prompt and accurate clearance and settlement of 
securities transactions by increasing processing efficiencies through 
the merger of several similar services for physical processing and by 
eliminating obsolete services.
---------------------------------------------------------------------------

    \8\ 15 U.S.C. 78q-1(b)(3)(F).
---------------------------------------------------------------------------

    Accordingly, for the reasons stated above the Commission believes 
that the proposed rule change is consistent with NSCC's obligation 
under Section 17A of the Exchange Act, as amended, and the rules and 
regulations thereunder.\9\
---------------------------------------------------------------------------

    \9\ In approving this proposal, the Commission has considered 
its impact on efficiency, competition, and capital formation. 15 
U.S.C. 78c(f).
---------------------------------------------------------------------------

IV. Conclusion

    On the basis of the foregoing, the Commission finds that the 
proposed rule change is consistent with the requirements of the Act, 
particularly with the requirements of Section 17A of the Act, and the 
rules and regulations thereunder.
    It is therefore ordered, pursuant to Section 19(b)(2) of the Act, 
that the proposed rule change (File No. SR-NSCC-2011-04) be and hereby 
is approved.

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

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

Elizabeth M. Murphy,
Secretary.
[FR Doc. 2011-20241 Filed 8-9-11; 8:45 am]
BILLING CODE 8011-01-P
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.