Self-Regulatory Organizations; National Securities Clearing Corporation; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Certain Fees Relating to Mutual Fund Services, and Insurance and Retirement Processing Services, 64393-64397 [2018-27081]
Download as PDF
<![CDATA[
Federal Register / Vol. 83, No. 240 / Friday, December 14, 2018 / Notices
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
No written comments were solicited
or received with respect to the proposed
rule change.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The foregoing rule change is effective
upon filing pursuant to Section
19(b)(3)(A) 9 of the Act and
subparagraph (f)(2) of Rule 19b–4 10
thereunder, because it establishes a due,
fee, or other charge imposed by the
Exchange.
At any time within 60 days of the
filing of such proposed rule change, the
Commission summarily may
temporarily suspend 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. If the
Commission takes such action, the
Commission shall institute proceedings
under Section 19(b)(2)(B) 11 of the Act to
determine whether the proposed rule
change should be approved or
disapproved.
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:
amozie on DSK3GDR082PROD with NOTICES1
Electronic Comments
• Use the Commission’s internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include File Number SR–
NYSE–2018–57 on the subject line.
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE,
Washington, DC 20549–1090.
All submissions should refer to File
Number SR–NYSE–2018–57. This file
number should be included on the
subject line if email 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 website (https://www.sec.gov/
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(2).
11 15 U.S.C. 78s(b)(2)(B).
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 website 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
10:00 a.m. and 3:00 p.m. Copies of the
filing also will be available for
inspection and copying at the principal
office of the Exchange. All comments
received will be posted without change.
Persons submitting comments are
cautioned that we do not redact or edit
personal identifying information from
comment submissions. You should
submit only information that you wish
to make available publicly. All
submissions should refer to File
Number SR–NYSE–2018–57 and should
be submitted on or before January 4,
2019.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.12
Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2018–27084 Filed 12–13–18; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No 34–84771; File No. SR–NSCC–
2018–012]
Self-Regulatory Organizations;
National Securities Clearing
Corporation; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule Change To Amend Certain Fees
Relating to Mutual Fund Services, and
Insurance and Retirement Processing
Services
December 10, 2018.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’) 1 and Rule 19b–4 thereunder,2
notice is hereby given that on November
26, 2018, 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
9 15
12 17
10 17
1 15
VerDate Sep<11>2014
16:57 Dec 13, 2018
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
Jkt 247001
PO 00000
Frm 00083
Fmt 4703
Sfmt 4703
64393
below, which Items have been prepared
by the clearing agency. NSCC filed the
proposed rule change pursuant to
Section 19(b)(3)(A) of the Act 3 and
Rules 19b–4(f)(2) and (f)(4) thereunder.4
The Commission is publishing this
notice to solicit comments on the
proposed rule change from interested
persons.
I. Clearing Agency’s Statement of the
Terms of Substance of the Proposed
Rule Change
The proposed rule change consists of
modifications to Addendum A (Fee
Structure) (‘‘Addendum A’’) of NSCC’s
Rules & Procedures (‘‘Rules’’) in order to
make certain adjustments and
clarifications in the fee provisions for
NSCC’s Mutual Fund Services (‘‘MFS’’)
and Insurance and Retirement
Processing Services (‘‘I&RS’’), as
described below.5
II. Clearing Agency’s Statement of the
Purpose of, and Statutory Basis for, the
Proposed Rule Change
In its filing with the Commission, the
clearing agency 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
clearing agency has prepared
summaries, set forth in sections A, B,
and C below, of the most significant
aspects of such statements.
(A) Clearing Agency’s Statement of the
Purpose of, and Statutory Basis for, the
Proposed Rule Change
1. Purpose
The purpose of this proposed rule
change is to reduce certain fees for MFS
and I&RS set forth in Addendum A as
described below, in order to better align
fees with the costs of services provided
by NSCC by reducing the fees so that the
revenue received by NSCC would be
closer to the costs of providing the
services. In addition, certain fee
reductions as described below are also
intended to incentivize greater use of
certain MFS and I&RS products. The
proposed rule change would also clarify
the description of certain fees as
described below to improve clarity and
transparency of the Rules. NSCC expects
the proposed rule change would result
in a decrease in revenue of
3 15
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(2) and (f)(4).
5 Capitalized terms used herein and not otherwise
defined shall have the meaning assigned to such
terms in the Rules, available at https://dtcc.com/∼/
media/Files/Downloads/legal/rules/nscc_rules.pdf.
4 17
E:\FR\FM\14DEN1.SGM
14DEN1
64394
Federal Register / Vol. 83, No. 240 / Friday, December 14, 2018 / Notices
approximately 9.5% for each of the MFS
and I&RS services.
(i) Background
NSCC has undertaken a strategic
review of its pricing structure, and
developed a revenue and pricing
strategy with the goal of among other
things, reducing pricing complexity in
Addendum A and aligning pricing with
costs.6 As a result of the review, NSCC
has determined that certain fees in MFS
and I&RS have over time become
misaligned with the costs of services.
Such fees are misaligned because the
revenue that NSCC has been receiving
for such services has increased over
time more than the costs to provide the
services. NSCC believes that this is a
result of streamlined processes in such
services which have resulted in the
reduction of processing costs for NSCC
for such services. NSCC believes it is
reasonable and appropriate to assess
Members and Limited Members
(collectively, ‘‘NSCC Members’’) fees
that are commensurate with the costs of
services provided to NSCC Members.
Accordingly, the proposed changes
would adjust certain fees in MFS and
I&RS so that revenue for NSCC would
better align with the costs of the services
by reducing the revenue that NSCC
receives so that it is closer to the costs
of providing the services by NSCC.
NSCC believes that the proposed fee
reductions would allow NSCC to lower
the costs for services to NSCC Members
while still providing adequate funding
to enable NSCC to recover its costs in
providing the services.
NSCC is also proposing certain fee
changes as described below to
incentivize greater use of certain MFS
and I&RS products.
In addition, NSCC is proposing
certain clarifying changes to the
description of certain fees in Addendum
A as described below to enhance clarity
and transparency of the Rules.
(ii) Proposed Rule Changes
amozie on DSK3GDR082PROD with NOTICES1
A. Networking Omni/SERV® Fee
Reductions
Omni/SERV, which is a feature of the
MFS Networking service, provides a
streamlined communication platform
for the transmission of files for fund
accounts held in omnibus.7 NSCC is
6 NSCC is also proposing changes to fees for
NSCC services that are not MFS and I&RS services
in a separate proposal. In addition, NSCC’s
affiliates, The Depository Trust Company and Fixed
Income Clearing Corporation are proposing changes
to their respective fees.
7 An omnibus fund account is a fund account
held by a financial intermediary on behalf of
multiple underlying investors. Omni/SERV allows
NSCC Members to communicate information
relating to the underlying investors’ sub-accounts.
VerDate Sep<11>2014
16:57 Dec 13, 2018
Jkt 247001
proposing to reduce the monthly fee for
Omni/SERV file transmissions in
Section IV.H.3. of Addendum A from
$2,500 per month to $1,500 per month.
As discussed below, NSCC believes that
the proposed fee reduction would better
align the fees with the costs of providing
Omni/SERV.
B. Profile Phases I and II Fee Reductions
NSCC is proposing to reduce the
monthly fee for Phases I and II of the
Mutual Fund Profile Service (‘‘Profile’’)
in Section IV.J.b. of Addendum A from
$2,000 per month to $1,250 per month.8
In addition, NSCC is proposing to
change the credit that Profile II users
(with 25 or fewer Funds) receive in
footnote 1 of Addendum A from $1,150
to $1,000. Together, with the reduction
in the monthly fee from $2,000 to
$1,250, this proposed change would
reduce the overall net fee for such users
from $850 to $250.
As discussed below, NSCC believes
that the proposed fee reduction would
better align the fees with the costs of
providing Phases I and II.
In addition, NSCC believes that the
proposed reduction in the fees and the
credit for smaller firms for Phases I and
II would incentivize more firms to use
the service. NSCC believes that more
firms using the service would increase
the value of the service by providing
greater access to more Fund data to
NSCC Members.
C. Positions Fee Reductions
NSCC is proposing to reduce the fees
in three tiers for Positions (Full, New
and Retirement Plans) in Section
IV.K.2.a.(i) of Addendum A as follows:
(i) Reduce fees for 0 to 500,000 items/
month from $8 to $6 per 1,000 items, (ii)
reduce fees for 500,001 to 2,000,000
items/month from $4 to $3.50 per 1,000
items, and (iii) reduce fees for 4,000,001
or more items/month from $2 to $1.25
per 1,000 items. NSCC is not proposing
to reduce the fees for 2,000,001 to
4,000,000 items/month.9 As discussed
8 NSCC
offers two levels of service through
Profile, which are referred to in NSCC’s fee
schedule as ‘‘Phase I’’ and ‘‘Phase II.’’ Phase I is
used by NSCC Members to transmit price and rate
information for mutual funds and pooled
investment entities (each a ‘‘Fund’’ and collectively,
‘‘Funds’’). Phase II consists of three databases, (i)
the participant profile database, (ii) the security
issue profile database, and (iii) the distribution
declaration information profile database. Through
these three databases, NSCC offers a centralized
repository for prospectus and operational
information for securities of Funds, Fund
distributions and Fund processing capabilities. The
current fee to use both Phase I and Phase II is
$2,000 per month. See Section IV.J.b. of Addendum
A, supra note 5.
9 NSCC has determined that, based on the average
number of users and revenues generated for each
PO 00000
Frm 00084
Fmt 4703
Sfmt 4703
below, NSCC believes that the proposed
fee reduction would better align the fees
with the costs of providing Positions
(Full, New and Retirement Plans).
D. IFT Tiered Pricing Program Fee
Reductions and Revised Description
NSCC proposes to restructure the
current In Force Transactions (‘‘IFT’’) 10
tiered pricing program, including
certain fee reductions and certain
clarifications as described below.
(1) IFT Fee Reductions
Currently, NSCC Members engaged in
IFTs are required to choose an Activity
Level (Level 1, Level 2 or Level 3) based
on their projected activity. Each Activity
Level has a corresponding minimum
monthly fee. NSCC Members that
choose Level 2 and Level 3 benefit from
discounted fees per transaction after the
amount of fees incurred for the month
reaches the amount of the minimum
monthly fee. Once the respective
amount of the monthly fee is met, the
discount for Level 2 is 20% (i.e., from
$1.25/$.35 per transaction to $1.00/$.28
per transaction) and the discount for
Level 3 is 40% (i.e., from $1.25/$.35 per
transaction to $.75/$.21 per transaction).
The discounts are set forth in an IFT
Chart in Addendum A.
NSCC is proposing to decrease the
overall price of certain IFTs in Section
IV.K.3. of Addendum A from $1.25 per
request to $.65 per request, increase the
number of levels in the IFT tiered
pricing program from three to four, set
new monthly minimum fees for each
level and apply new discount
percentages for the proposed Level 2,
Level 3 and Level 4.
As discussed below, NSCC believes
that the proposed fee reduction would
better align the fees with the costs of
providing the IFT service.
In addition, the IFT tiered pricing
program is intended to incentivize
greater use of the IFT product by
discounting transaction fees once the
minimum monthly fee has been met for
tier, the intended overall revenue decrease for the
service could be accomplished by reducing the
three tiers as indicated without reducing the fees for
the tier for 2,000,001 to 4,000,000 items/month. In
addition, NSCC determined that the proposed tier
structure following the Fee Reductions would
continue to incentivize NSCC Members to increase
their use of the service which NSCC believes
increases efficiency in sending contract details. All
NSCC Members using the service would benefit
from the proposed fee reductions because the NSCC
Members who reach the tier for 2,000,001 to
4,000,000 items/month would benefit from the fee
reductions in the lower two tiers.
10 IFT is an I&RS offering that automates data
processing with respect to transactions relating to
‘‘in-force’’ contracts among participating NSCC
Members. ‘‘In-force’’ contract transactions are
transactions that occur after the underlying
insurance contract has become effective.
E:\FR\FM\14DEN1.SGM
14DEN1
Federal Register / Vol. 83, No. 240 / Friday, December 14, 2018 / Notices
higher Activity Level designations. The
proposed changes are intended to
further incentivize greater use by
reducing transaction pricing for IFTs
generally and increasing the number of
minimum monthly fee thresholds, and
thus discounts, from which NSCC
Members may choose.
(2) IFT Clarifications
NSCC is proposing to change the
description of the IFT chart in
Addendum A to clarify when the
discounts are applied and update the
description in the chart for readability,
including changing ‘‘Activity Level’’ to
64395
‘‘Threshold Level’’ and stating the
discounts as a percentage rather than a
dollar amount for each Level and
revising the description of the discount
in the table. Below is the proposed
updated chart:
* IN FORCE TRANSACTIONS CHART
Minimum
monthly fee
amozie on DSK3GDR082PROD with NOTICES1
Threshold level
Level 1 ........................................................................................
$250
Level 2 ........................................................................................
Level 3 ........................................................................................
Level 4 ........................................................................................
500
1,000
3,000
NSCC is also proposing to move the
fees for the IFTs that are currently listed
in TIER 5 ($1.25) to TIER 4 ($0.65) in
Section IV.K.3. of Addendum A with
other transactions that are $0.65 per
request to reflect the proposed fee
reductions set forth above. In addition,
NSCC is proposing to move the
description of the fee for Producer
Management Portal (per inquiry), which
is currently in TIER 5 in Section IV.K.3.
of Addendum A, to Section IV.K.2.h. of
Addendum A so that the fee is in the
same section as other Producer
Management Portal fees and to renumber the items in Section IV.K.2.h. of
Addendum A to reflect the addition of
the fee in this Section. NSCC is also
proposing to remove TIER 5 in Section
IV.K.3. of Addendum A since there
would no longer be any fees in that
TIER following the proposed changes
described above. In addition, NSCC is
proposing to rename the Producer
Management Portal fee to ‘‘Distributor
Subscription Fee’’ to clarify that the
$1.25 fee is for distributor inquiries for
Producer Management Portal and to add
a provision clarifying that the maximum
fee paid by Distributors is $6,000 per
month. There is a $6,000 per month
maximum because if the number of
inquiries would result in more than
$6,000 in fees in a month, the
distributor could pay the $6,000
Distributor Batch Service Fee for the
month rather than pay on a per inquiry
basis.
NSCC is proposing to revise the
description of the * In Force Transaction
Chart as described above, move the IFT
transaction fees to TIER 4 with other
transaction fees that are $0.65, delete
TIER 5, move and rename the Producer
Management Portal fee, re-number the
items in Section IV.K.2.h. of Addendum
A and add language relating to a $6,000
maximum per month for the Distributor
VerDate Sep<11>2014
16:57 Dec 13, 2018
Jkt 247001
Discount for transactions after fees exceed minimum monthly
fee amount
No Discount
(pay base price of $0.65/$0.35 for Requests/Inquiries).
5%.
10%.
20%.
Subscription Fee for enhanced clarity
and transparency of the Rules.
E. Decimals
In Section IV.H. through Section IV.K.
of Addendum A, where a dollar amount
is less than one and where there is not
currently a zero in front of the decimal
point, NSCC is proposing to place a zero
before the decimal point for enhanced
clarity and consistency with other
decimals contained in Addendum A.
The proposed changes set forth in
items II(A)(1)(ii)(A), (B), (C) and (D)(1)
above are proposed fee reductions and
are referred to herein as ‘‘Fee
Reductions.’’ For each of the services for
which Fee Reductions are being
proposed, NSCC has determined that
the revenue has increased over time
more than the overall costs to provide
the service. Since implementation of the
current fees, revenues have increased
for each of the services due to existing
NSCC Members increasing their use of
the services and new NSCC Members
using the services. In addition, costs to
provide the services are lower as a result
of streamlined processes which increase
efficiency in such services to allow
NSCC to provide the services for lower
costs than when the current fees were
implemented. NSCC has determined
that the revenue that it would receive
for each of the services above following
the proposed Fee Reductions would be
closer to the costs of providing the
services and sufficient to enable NSCC
to recover costs to NSCC to provide the
services. As such, NSCC believes that
the proposed Fee Reductions would
better align the fees with the costs of
providing each of the services for which
Fee Reductions are being proposed.
The proposed changes set forth herein
in items II(A)(1)(ii)(D)(2) and (E) are
proposed clarifying changes to the
description of the fees and are referred
PO 00000
Frm 00085
Fmt 4703
Sfmt 4703
to herein as ‘‘Clarifications.’’ Each of the
Clarifications are being proposed in
order to improve the clarity and
transparency of the Rules.
(iii) Implementation Timeframe
NSCC expects to implement the
proposed rule changes on January 1,
2019. As proposed, a legend would be
added to Addendum A stating there are
changes that became effective upon
filing with the Commission but have not
yet been implemented. The proposed
legend also would include January 1,
2019, as the date on which such changes
would be implemented and the file
number of this proposal, and state that,
once this proposal is implemented, the
legend would automatically be removed
from Addendum A.
2. Statutory Basis
NSCC believes this proposal is
consistent with the requirements of the
Act and the rules and regulations
thereunder applicable to a registered
clearing agency. Specifically, NSCC
believes this proposal is consistent with
Sections 17A(b)(3)(D) 11 and
17A(b)(3)(F) 12 of the Act and Rule
17Ad–22(e)(23)(ii),13 as promulgated
under the Act, for the reasons described
below.
Section 17A(b)(3)(D) of the Act 14
requires, in part, that the Rules provide
for the equitable allocation of reasonable
dues, fees, and other charges among its
participants.
The proposed Fee Reductions set
forth above are consistent with
17A(b)(3)(D) of the Act 15 because the
proposed fees would be allocated
equitably among the NSCC Members
11 15
U.S.C. 78q–1(b)(3)(D).
U.S.C. 78q–1(b)(3)(F).
13 17 CFR 240.17Ad–22(e)(23)(ii).
14 15 U.S.C. 78q–1(b)(3)(D).
15 Id.
12 15
E:\FR\FM\14DEN1.SGM
14DEN1
amozie on DSK3GDR082PROD with NOTICES1
64396
Federal Register / Vol. 83, No. 240 / Friday, December 14, 2018 / Notices
that subscribe for those services based
on each NSCC Member’s use of such
services. In addition, NSCC believes that
the proposed Fee Reductions are
reasonable because they would enable
NSCC to better align its revenue with
the costs and expenses required for
NSCC to provide the services to NSCC
Members. Specifically, NSCC has
determined that based on the current
usage and projected revenue for each of
the services listed above for which Fee
Reductions are proposed, the decrease
in fees would result in revenues for
those services that would be closer to
the costs of providing such services.
Therefore, by establishing fees that align
with the costs of delivery of these
products and services and allocating
those fees equitably among the
subscribing NSCC Members, the
proposed Fee Reductions are consistent
with the requirements of Section
17A(b)(3)(D) of the Act.16
NSCC also believes that the proposed
Clarifications above are consistent with
17A(b)(3)(D) of the Act 17 because each
of the proposed Clarifications would
clarify the meaning of the fees in the
Rules without affecting the amount of
the existing fee for such line item. The
amounts of the existing fees would
continue to be equitably allocated
among the subscribing NSCC Members
in accordance with their utilization of
the services. Therefore, NSCC believes
that the proposed Clarifications would
not affect the allocation or amount of
fees, and would thereby continue to
provide for the equitable allocation of
reasonable fees, consistent with Section
17A(b)(3)(D) of the Act.18
Section 17A(b)(3)(F) of the Act 19
requires, in part, that the Rules promote
the prompt and accurate clearance and
settlement of securities transactions.
NSCC believes that the proposed
Clarifications set forth above would
enhance NSCC Members’ ability to
understand the fees associated with the
MFS and I&RS services. Specifically, the
proposed Clarifications would clarify
the meaning of certain provisions of
Addendum A relating to the IFT tiered
pricing program and Producer
Management Portal and revise certain
decimals to be consistent with other
decimals in the Rules and enhance
clarity and transparency in the Rules in
this regard. As such, the proposed
Clarifications would allow NSCC
Members to have a better understanding
of the Rules in relation to their activities
and thereby assist in promoting the
requirements of Section 17A(b)(3)(F) of
the Act.20
Rule 17Ad–22(e)(23)(ii) under the
Act 21 requires NSCC to establish,
implement, maintain and enforce
written policies and procedures
reasonably designed to provide
sufficient information to enable
participants to identify and evaluate the
risks, fees, and other material costs they
incur by participating in the covered
clearing agency. The proposed
Clarifications set forth above would
help ensure that the fees set forth in
Addendum A are clear and transparent
to NSCC Members. Having a clear and
transparent Addendum A would help
NSCC Members to better understand
NSCC’s fees and help provide NSCC
Members with increased predictability
and certainty regarding the fees they
incur in participating in NSCC. As such,
by improving the clarity and
transparency of the Rules, NSCC
believes the proposed Clarifications are
consistent with Rule 17Ad–22(e)(23)(ii)
under the Act.22
(B) Clearing Agency’s Statement on
Burden on Competition
NSCC does not believe that the
proposed Fee Reductions would have an
adverse impact, or impose any burden,
on competition because, in each case,
the proposed Fee Reductions would be
a reduction in fees as currently set forth
in the Rules that would not
disproportionally impact any NSCC
Members. As a reduction to the fees
currently in the Addendum A for these
services, the proposed Fee Reductions
would not impede any NSCC Members
from engaging in the services or have an
adverse impact on any NSCC Members.
Moreover, the proposed Fee
Reductions may promote competition
because, in each case, the proposed Fee
Reductions would allow NSCC
Members to engage in a greater number
of transactions with lower costs than
they would incur today for the same
transactions. In addition, as described
above, NSCC believes that the proposed
fee changes to the Profile Phase I and
Phase II and the proposed fee reductions
and increased discount levels for the
IFT tiered pricing program would
incentivize greater use of those services
by NSCC Members. NSCC believes that
increased use of the NSCC services as a
result of the fee reductions would
enhance participation in the
marketplace by providing all NSCC
Members that use the services more data
which would increase the value of the
16 Id.
17 Id.
(C) Clearing Agency’s Statement on
Comments on the Proposed Rule Change
Received From Members, Participants,
or Others
NSCC has not received or solicited
any written comments relating to this
proposal. NSCC will notify the
Commission of any written comments
received by NSCC.
III. Date of Effectiveness of the
Proposed Rule Change, and Timing for
Commission Action
The foregoing rule change has become
effective pursuant to Section 19(b)(3)(A)
of the Act 23 and paragraph (f) of Rule
19b–4 thereunder.24 At any time within
60 days of the filing of the proposed rule
change, the Commission summarily may
temporarily suspend 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 email to rule-comments@
sec.gov. Please include File Number SR–
NSCC–2018–012 on the subject line.
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE,
Washington, DC 20549.
All submissions should refer to File
Number SR–NSCC–2018–012. This file
number should be included on the
subject line if email 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
20 Id.
18 Id.
19 15
services and promote competition
among NSCC Members that use the
services.
NSCC does not believe that the
proposed Clarifications would have any
impact on competition because such
changes are clarifications of the Rules
that would not affect the rights or
obligations of NSCC Members.
21 17
U.S.C. 78q–1(b)(3)(F).
VerDate Sep<11>2014
16:57 Dec 13, 2018
CFR 240.17Ad–22(e)(23)(ii).
22 Id.
Jkt 247001
PO 00000
Frm 00086
23 15
24 17
Fmt 4703
Sfmt 4703
E:\FR\FM\14DEN1.SGM
U.S.C 78s(b)(3)(A).
CFR 240.19b–4(f).
14DEN1
Federal Register / Vol. 83, No. 240 / Friday, December 14, 2018 / Notices
internet website (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 website 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
10:00 a.m. and 3:00 p.m. Copies of the
filing also will be available for
inspection and copying at the principal
office of NSCC and on DTCC’s website
(https://dtcc.com/legal/sec-rulefilings.aspx). All comments received
will be posted without change. Persons
submitting comments are cautioned that
we do not redact or edit personal
identifying information from comment
submissions. You should submit only
information that you wish to make
available publicly. All submissions
should refer to File Number SR–NSCC–
2018–012 and should be submitted on
or before January 4, 2019.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.25
Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2018–27081 Filed 12–13–18; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
Self-Regulatory Organizations; Cboe
BZX Exchange, Inc.; Notice of Filing
and Immediate Effectiveness of a
Proposed Rule Change Relating To
Amend Its Provision Related to Its Risk
Monitor Mechanism
amozie on DSK3GDR082PROD with NOTICES1
December 10, 2018.
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 November
29, 2018, Cboe BZX Exchange, Inc. (the
‘‘Exchange’’ or ‘‘BZX’’) filed with the
Securities and Exchange Commission
(the ‘‘Commission’’) the proposed rule
change as described in Items I and II
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
VerDate Sep<11>2014
16:57 Dec 13, 2018
Jkt 247001
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
Cboe BZX Exchange, Inc. (the
‘‘Exchange’’ or ‘‘BZX’’) proposes to
amend its provision related to its Risk
Monitor Mechanism. The text of the
proposed rule change is provided in
Exhibit 5.
The text of the proposed rule change
is also available on the Exchange’s
website (https://www.cboe.com/
AboutCBOE/CBOELegal
RegulatoryHome.aspx), at the
Exchange’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, 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
[Release No. 34–84777; File No. SRCboeBZX–2018–086]
25 17
below, which Items have been prepared
by the Exchange. The Exchange filed the
proposal as a ‘‘non-controversial’’
proposed rule change pursuant to
Section 19(b)(3)(A)(iii) of the Act 3 and
Rule 19b–4(f)(6) thereunder.4 The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
1. Purpose
The Exchange proposes to amend
Rule 21.16 which governs the Risk
Monitor Mechanism.
Background
By way of background, the Risk
Monitor Mechanism providers Users 5
with the ability to manage their order
and execution risk. Particularly, Rule
21.16 provides that the System will
maintain a counting program for each
3 15
U.S.C. 78s(b)(3)(A)(iii).
CFR 240.19b–4(f)(6).
5 See Exchange Rule 1.5(ee). The term ‘‘User’’
means any Member or Sponsored Participant who
is authorized to obtain access to the System
pursuant to Rule 11.3. As discussed below, the
Exchange is proposing to replace references to
‘‘Users’’ in Rule 21.16 with ‘‘Member’’.
4 17
PO 00000
Frm 00087
Fmt 4703
Sfmt 4703
64397
User. A User may configure a single
counting program or multiple counting
programs to govern its trading activity
(i.e., on a per port basis). The counting
program counts executions, contract
volume and notional value, within a
specified time period established by
each User (‘‘specified time period’’) and
on an absolute basis for the trading day
(‘‘absolute limits’’). The specified time
period will commence for an option
when a transaction occurs in any series
in such option. The counting program
will also count a User’s executions,
contract volume and notional value
across all options which a User trades
(‘‘Firm Category’’). When the system
determines that a User’s Specified
Engagement Trigger (i.e., a volume
trigger, notional trigger, count trigger
and percentage trigger) has reached its
established limit, the Risk Monitor
Mechanism cancels or rejects such
User’s orders or quotes 6 in all series of
the class and cancels or rejects any
additional orders or quotes from the
User in the class until the counting
program resets.
Proposed Rule Change
The Exchange proposes to amend
Rule 21.16 to (i) adopt the Risk Monitor
Mechanism rule language used by its
affiliated exchange, Cboe C2 Exchange,
Inc. (‘‘C2’’) (ii) provide the ability for
Users [sic] to configure limits applicable
to a group of EFIDs, and (iii) adopt a
new a new risk parameter.
Rule Harmonization
First, the Exchange proposes to
harmonize its Risk Monitor Mechanism
Rule to that of its affiliated Exchange,
C2. Particularly, C2 Rule 6.14 governs,
among other things, its Risk Monitor
Mechanism functionality. The Exchange
notes the functionality of the Risk
Monitor Mechanism is substantively the
same as the Risk Monitor Mechanism on
BZX. Indeed, the Exchange notes that
C2 just recently adopted Rule 6.14 in
connection with the technology
migration of C2 onto the options
platform of EDGX, and at such time
conformed its previous Risk Monitor
Mechanism functionality to the
functionality that already existed on
BZX.7 Although the functionality is
substantively the same, the rule
structure and terminology used in the
BZX and C2 rules differ. The Exchange
wishes to provide harmonization with
respect to this rule across the two
exchanges and accordingly proposes to
6 See infra discussion accompanying footnotes 6–
7 [sic].
7 See Securities Exchange Act Release No. 83214
(May 11, 2018), 83 FR 22796 (May 16, 2018) (SR–
C2–2018–005).
E:\FR\FM\14DEN1.SGM
14DEN1
]]>Agencies
[Federal Register Volume 83, Number 240 (Friday, December 14, 2018)]
[Notices]
[Pages 64393-64397]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-27081]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No 34-84771; File No. SR-NSCC-2018-012]
Self-Regulatory Organizations; National Securities Clearing
Corporation; Notice of Filing and Immediate Effectiveness of a Proposed
Rule Change To Amend Certain Fees Relating to Mutual Fund Services, and
Insurance and Retirement Processing Services
December 10, 2018.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on November 26, 2018, 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 by the clearing agency.
NSCC filed the proposed rule change pursuant to Section 19(b)(3)(A) of
the Act \3\ and Rules 19b-4(f)(2) and (f)(4) thereunder.\4\ 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\ 17 CFR 240.19b-4.
\3\ 15 U.S.C. 78s(b)(3)(A).
\4\ 17 CFR 240.19b-4(f)(2) and (f)(4).
---------------------------------------------------------------------------
I. Clearing Agency's Statement of the Terms of Substance of the
Proposed Rule Change
The proposed rule change consists of modifications to Addendum A
(Fee Structure) (``Addendum A'') of NSCC's Rules & Procedures
(``Rules'') in order to make certain adjustments and clarifications in
the fee provisions for NSCC's Mutual Fund Services (``MFS'') and
Insurance and Retirement Processing Services (``I&RS''), as described
below.\5\
---------------------------------------------------------------------------
\5\ Capitalized terms used herein and not otherwise defined
shall have the meaning assigned to such terms in the Rules,
available at https://dtcc.com/~/media/Files/Downloads/legal/rules/
nscc_rules.pdf.
---------------------------------------------------------------------------
II. Clearing Agency's Statement of the Purpose of, and Statutory Basis
for, the Proposed Rule Change
In its filing with the Commission, the clearing agency 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 clearing agency has prepared summaries,
set forth in sections A, B, and C below, of the most significant
aspects of such statements.
(A) Clearing Agency's Statement of the Purpose of, and Statutory Basis
for, the Proposed Rule Change
1. Purpose
The purpose of this proposed rule change is to reduce certain fees
for MFS and I&RS set forth in Addendum A as described below, in order
to better align fees with the costs of services provided by NSCC by
reducing the fees so that the revenue received by NSCC would be closer
to the costs of providing the services. In addition, certain fee
reductions as described below are also intended to incentivize greater
use of certain MFS and I&RS products. The proposed rule change would
also clarify the description of certain fees as described below to
improve clarity and transparency of the Rules. NSCC expects the
proposed rule change would result in a decrease in revenue of
[[Page 64394]]
approximately 9.5% for each of the MFS and I&RS services.
(i) Background
NSCC has undertaken a strategic review of its pricing structure,
and developed a revenue and pricing strategy with the goal of among
other things, reducing pricing complexity in Addendum A and aligning
pricing with costs.\6\ As a result of the review, NSCC has determined
that certain fees in MFS and I&RS have over time become misaligned with
the costs of services. Such fees are misaligned because the revenue
that NSCC has been receiving for such services has increased over time
more than the costs to provide the services. NSCC believes that this is
a result of streamlined processes in such services which have resulted
in the reduction of processing costs for NSCC for such services. NSCC
believes it is reasonable and appropriate to assess Members and Limited
Members (collectively, ``NSCC Members'') fees that are commensurate
with the costs of services provided to NSCC Members. Accordingly, the
proposed changes would adjust certain fees in MFS and I&RS so that
revenue for NSCC would better align with the costs of the services by
reducing the revenue that NSCC receives so that it is closer to the
costs of providing the services by NSCC. NSCC believes that the
proposed fee reductions would allow NSCC to lower the costs for
services to NSCC Members while still providing adequate funding to
enable NSCC to recover its costs in providing the services.
---------------------------------------------------------------------------
\6\ NSCC is also proposing changes to fees for NSCC services
that are not MFS and I&RS services in a separate proposal. In
addition, NSCC's affiliates, The Depository Trust Company and Fixed
Income Clearing Corporation are proposing changes to their
respective fees.
---------------------------------------------------------------------------
NSCC is also proposing certain fee changes as described below to
incentivize greater use of certain MFS and I&RS products.
In addition, NSCC is proposing certain clarifying changes to the
description of certain fees in Addendum A as described below to enhance
clarity and transparency of the Rules.
(ii) Proposed Rule Changes
A. Networking Omni/SERV[supreg] Fee Reductions
Omni/SERV, which is a feature of the MFS Networking service,
provides a streamlined communication platform for the transmission of
files for fund accounts held in omnibus.\7\ NSCC is proposing to reduce
the monthly fee for Omni/SERV file transmissions in Section IV.H.3. of
Addendum A from $2,500 per month to $1,500 per month. As discussed
below, NSCC believes that the proposed fee reduction would better align
the fees with the costs of providing Omni/SERV.
---------------------------------------------------------------------------
\7\ An omnibus fund account is a fund account held by a
financial intermediary on behalf of multiple underlying investors.
Omni/SERV allows NSCC Members to communicate information relating to
the underlying investors' sub-accounts.
---------------------------------------------------------------------------
B. Profile Phases I and II Fee Reductions
NSCC is proposing to reduce the monthly fee for Phases I and II of
the Mutual Fund Profile Service (``Profile'') in Section IV.J.b. of
Addendum A from $2,000 per month to $1,250 per month.\8\ In addition,
NSCC is proposing to change the credit that Profile II users (with 25
or fewer Funds) receive in footnote 1 of Addendum A from $1,150 to
$1,000. Together, with the reduction in the monthly fee from $2,000 to
$1,250, this proposed change would reduce the overall net fee for such
users from $850 to $250.
---------------------------------------------------------------------------
\8\ NSCC offers two levels of service through Profile, which are
referred to in NSCC's fee schedule as ``Phase I'' and ``Phase II.''
Phase I is used by NSCC Members to transmit price and rate
information for mutual funds and pooled investment entities (each a
``Fund'' and collectively, ``Funds''). Phase II consists of three
databases, (i) the participant profile database, (ii) the security
issue profile database, and (iii) the distribution declaration
information profile database. Through these three databases, NSCC
offers a centralized repository for prospectus and operational
information for securities of Funds, Fund distributions and Fund
processing capabilities. The current fee to use both Phase I and
Phase II is $2,000 per month. See Section IV.J.b. of Addendum A,
supra note 5.
---------------------------------------------------------------------------
As discussed below, NSCC believes that the proposed fee reduction
would better align the fees with the costs of providing Phases I and
II.
In addition, NSCC believes that the proposed reduction in the fees
and the credit for smaller firms for Phases I and II would incentivize
more firms to use the service. NSCC believes that more firms using the
service would increase the value of the service by providing greater
access to more Fund data to NSCC Members.
C. Positions Fee Reductions
NSCC is proposing to reduce the fees in three tiers for Positions
(Full, New and Retirement Plans) in Section IV.K.2.a.(i) of Addendum A
as follows: (i) Reduce fees for 0 to 500,000 items/month from $8 to $6
per 1,000 items, (ii) reduce fees for 500,001 to 2,000,000 items/month
from $4 to $3.50 per 1,000 items, and (iii) reduce fees for 4,000,001
or more items/month from $2 to $1.25 per 1,000 items. NSCC is not
proposing to reduce the fees for 2,000,001 to 4,000,000 items/month.\9\
As discussed below, NSCC believes that the proposed fee reduction would
better align the fees with the costs of providing Positions (Full, New
and Retirement Plans).
---------------------------------------------------------------------------
\9\ NSCC has determined that, based on the average number of
users and revenues generated for each tier, the intended overall
revenue decrease for the service could be accomplished by reducing
the three tiers as indicated without reducing the fees for the tier
for 2,000,001 to 4,000,000 items/month. In addition, NSCC determined
that the proposed tier structure following the Fee Reductions would
continue to incentivize NSCC Members to increase their use of the
service which NSCC believes increases efficiency in sending contract
details. All NSCC Members using the service would benefit from the
proposed fee reductions because the NSCC Members who reach the tier
for 2,000,001 to 4,000,000 items/month would benefit from the fee
reductions in the lower two tiers.
---------------------------------------------------------------------------
D. IFT Tiered Pricing Program Fee Reductions and Revised Description
NSCC proposes to restructure the current In Force Transactions
(``IFT'') \10\ tiered pricing program, including certain fee reductions
and certain clarifications as described below.
---------------------------------------------------------------------------
\10\ IFT is an I&RS offering that automates data processing with
respect to transactions relating to ``in-force'' contracts among
participating NSCC Members. ``In-force'' contract transactions are
transactions that occur after the underlying insurance contract has
become effective.
---------------------------------------------------------------------------
(1) IFT Fee Reductions
Currently, NSCC Members engaged in IFTs are required to choose an
Activity Level (Level 1, Level 2 or Level 3) based on their projected
activity. Each Activity Level has a corresponding minimum monthly fee.
NSCC Members that choose Level 2 and Level 3 benefit from discounted
fees per transaction after the amount of fees incurred for the month
reaches the amount of the minimum monthly fee. Once the respective
amount of the monthly fee is met, the discount for Level 2 is 20%
(i.e., from $1.25/$.35 per transaction to $1.00/$.28 per transaction)
and the discount for Level 3 is 40% (i.e., from $1.25/$.35 per
transaction to $.75/$.21 per transaction). The discounts are set forth
in an IFT Chart in Addendum A.
NSCC is proposing to decrease the overall price of certain IFTs in
Section IV.K.3. of Addendum A from $1.25 per request to $.65 per
request, increase the number of levels in the IFT tiered pricing
program from three to four, set new monthly minimum fees for each level
and apply new discount percentages for the proposed Level 2, Level 3
and Level 4.
As discussed below, NSCC believes that the proposed fee reduction
would better align the fees with the costs of providing the IFT
service.
In addition, the IFT tiered pricing program is intended to
incentivize greater use of the IFT product by discounting transaction
fees once the minimum monthly fee has been met for
[[Page 64395]]
higher Activity Level designations. The proposed changes are intended
to further incentivize greater use by reducing transaction pricing for
IFTs generally and increasing the number of minimum monthly fee
thresholds, and thus discounts, from which NSCC Members may choose.
(2) IFT Clarifications
NSCC is proposing to change the description of the IFT chart in
Addendum A to clarify when the discounts are applied and update the
description in the chart for readability, including changing ``Activity
Level'' to ``Threshold Level'' and stating the discounts as a
percentage rather than a dollar amount for each Level and revising the
description of the discount in the table. Below is the proposed updated
chart:
* In Force Transactions Chart
------------------------------------------------------------------------
Discount for
Minimum transactions after
Threshold level monthly fee fees exceed minimum
monthly fee amount
------------------------------------------------------------------------
Level 1........................... $250 No Discount
(pay base price of
$0.65/$0.35 for
Requests/
Inquiries).
Level 2........................... 500 5%.
Level 3........................... 1,000 10%.
Level 4........................... 3,000 20%.
------------------------------------------------------------------------
NSCC is also proposing to move the fees for the IFTs that are
currently listed in TIER 5 ($1.25) to TIER 4 ($0.65) in Section IV.K.3.
of Addendum A with other transactions that are $0.65 per request to
reflect the proposed fee reductions set forth above. In addition, NSCC
is proposing to move the description of the fee for Producer Management
Portal (per inquiry), which is currently in TIER 5 in Section IV.K.3.
of Addendum A, to Section IV.K.2.h. of Addendum A so that the fee is in
the same section as other Producer Management Portal fees and to re-
number the items in Section IV.K.2.h. of Addendum A to reflect the
addition of the fee in this Section. NSCC is also proposing to remove
TIER 5 in Section IV.K.3. of Addendum A since there would no longer be
any fees in that TIER following the proposed changes described above.
In addition, NSCC is proposing to rename the Producer Management Portal
fee to ``Distributor Subscription Fee'' to clarify that the $1.25 fee
is for distributor inquiries for Producer Management Portal and to add
a provision clarifying that the maximum fee paid by Distributors is
$6,000 per month. There is a $6,000 per month maximum because if the
number of inquiries would result in more than $6,000 in fees in a
month, the distributor could pay the $6,000 Distributor Batch Service
Fee for the month rather than pay on a per inquiry basis.
NSCC is proposing to revise the description of the * In Force
Transaction Chart as described above, move the IFT transaction fees to
TIER 4 with other transaction fees that are $0.65, delete TIER 5, move
and rename the Producer Management Portal fee, re-number the items in
Section IV.K.2.h. of Addendum A and add language relating to a $6,000
maximum per month for the Distributor Subscription Fee for enhanced
clarity and transparency of the Rules.
E. Decimals
In Section IV.H. through Section IV.K. of Addendum A, where a
dollar amount is less than one and where there is not currently a zero
in front of the decimal point, NSCC is proposing to place a zero before
the decimal point for enhanced clarity and consistency with other
decimals contained in Addendum A.
The proposed changes set forth in items II(A)(1)(ii)(A), (B), (C)
and (D)(1) above are proposed fee reductions and are referred to herein
as ``Fee Reductions.'' For each of the services for which Fee
Reductions are being proposed, NSCC has determined that the revenue has
increased over time more than the overall costs to provide the service.
Since implementation of the current fees, revenues have increased for
each of the services due to existing NSCC Members increasing their use
of the services and new NSCC Members using the services. In addition,
costs to provide the services are lower as a result of streamlined
processes which increase efficiency in such services to allow NSCC to
provide the services for lower costs than when the current fees were
implemented. NSCC has determined that the revenue that it would receive
for each of the services above following the proposed Fee Reductions
would be closer to the costs of providing the services and sufficient
to enable NSCC to recover costs to NSCC to provide the services. As
such, NSCC believes that the proposed Fee Reductions would better align
the fees with the costs of providing each of the services for which Fee
Reductions are being proposed.
The proposed changes set forth herein in items II(A)(1)(ii)(D)(2)
and (E) are proposed clarifying changes to the description of the fees
and are referred to herein as ``Clarifications.'' Each of the
Clarifications are being proposed in order to improve the clarity and
transparency of the Rules.
(iii) Implementation Timeframe
NSCC expects to implement the proposed rule changes on January 1,
2019. As proposed, a legend would be added to Addendum A stating there
are changes that became effective upon filing with the Commission but
have not yet been implemented. The proposed legend also would include
January 1, 2019, as the date on which such changes would be implemented
and the file number of this proposal, and state that, once this
proposal is implemented, the legend would automatically be removed from
Addendum A.
2. Statutory Basis
NSCC believes this proposal is consistent with the requirements of
the Act and the rules and regulations thereunder applicable to a
registered clearing agency. Specifically, NSCC believes this proposal
is consistent with Sections 17A(b)(3)(D) \11\ and 17A(b)(3)(F) \12\ of
the Act and Rule 17Ad-22(e)(23)(ii),\13\ as promulgated under the Act,
for the reasons described below.
---------------------------------------------------------------------------
\11\ 15 U.S.C. 78q-1(b)(3)(D).
\12\ 15 U.S.C. 78q-1(b)(3)(F).
\13\ 17 CFR 240.17Ad-22(e)(23)(ii).
---------------------------------------------------------------------------
Section 17A(b)(3)(D) of the Act \14\ requires, in part, that the
Rules provide for the equitable allocation of reasonable dues, fees,
and other charges among its participants.
---------------------------------------------------------------------------
\14\ 15 U.S.C. 78q-1(b)(3)(D).
---------------------------------------------------------------------------
The proposed Fee Reductions set forth above are consistent with
17A(b)(3)(D) of the Act \15\ because the proposed fees would be
allocated equitably among the NSCC Members
[[Page 64396]]
that subscribe for those services based on each NSCC Member's use of
such services. In addition, NSCC believes that the proposed Fee
Reductions are reasonable because they would enable NSCC to better
align its revenue with the costs and expenses required for NSCC to
provide the services to NSCC Members. Specifically, NSCC has determined
that based on the current usage and projected revenue for each of the
services listed above for which Fee Reductions are proposed, the
decrease in fees would result in revenues for those services that would
be closer to the costs of providing such services. Therefore, by
establishing fees that align with the costs of delivery of these
products and services and allocating those fees equitably among the
subscribing NSCC Members, the proposed Fee Reductions are consistent
with the requirements of Section 17A(b)(3)(D) of the Act.\16\
---------------------------------------------------------------------------
\15\ Id.
\16\ Id.
---------------------------------------------------------------------------
NSCC also believes that the proposed Clarifications above are
consistent with 17A(b)(3)(D) of the Act \17\ because each of the
proposed Clarifications would clarify the meaning of the fees in the
Rules without affecting the amount of the existing fee for such line
item. The amounts of the existing fees would continue to be equitably
allocated among the subscribing NSCC Members in accordance with their
utilization of the services. Therefore, NSCC believes that the proposed
Clarifications would not affect the allocation or amount of fees, and
would thereby continue to provide for the equitable allocation of
reasonable fees, consistent with Section 17A(b)(3)(D) of the Act.\18\
---------------------------------------------------------------------------
\17\ Id.
\18\ Id.
---------------------------------------------------------------------------
Section 17A(b)(3)(F) of the Act \19\ requires, in part, that the
Rules promote the prompt and accurate clearance and settlement of
securities transactions. NSCC believes that the proposed Clarifications
set forth above would enhance NSCC Members' ability to understand the
fees associated with the MFS and I&RS services. Specifically, the
proposed Clarifications would clarify the meaning of certain provisions
of Addendum A relating to the IFT tiered pricing program and Producer
Management Portal and revise certain decimals to be consistent with
other decimals in the Rules and enhance clarity and transparency in the
Rules in this regard. As such, the proposed Clarifications would allow
NSCC Members to have a better understanding of the Rules in relation to
their activities and thereby assist in promoting the requirements of
Section 17A(b)(3)(F) of the Act.\20\
---------------------------------------------------------------------------
\19\ 15 U.S.C. 78q-1(b)(3)(F).
\20\ Id.
---------------------------------------------------------------------------
Rule 17Ad-22(e)(23)(ii) under the Act \21\ requires NSCC to
establish, implement, maintain and enforce written policies and
procedures reasonably designed to provide sufficient information to
enable participants to identify and evaluate the risks, fees, and other
material costs they incur by participating in the covered clearing
agency. The proposed Clarifications set forth above would help ensure
that the fees set forth in Addendum A are clear and transparent to NSCC
Members. Having a clear and transparent Addendum A would help NSCC
Members to better understand NSCC's fees and help provide NSCC Members
with increased predictability and certainty regarding the fees they
incur in participating in NSCC. As such, by improving the clarity and
transparency of the Rules, NSCC believes the proposed Clarifications
are consistent with Rule 17Ad-22(e)(23)(ii) under the Act.\22\
---------------------------------------------------------------------------
\21\ 17 CFR 240.17Ad-22(e)(23)(ii).
\22\ Id.
---------------------------------------------------------------------------
(B) Clearing Agency's Statement on Burden on Competition
NSCC does not believe that the proposed Fee Reductions would have
an adverse impact, or impose any burden, on competition because, in
each case, the proposed Fee Reductions would be a reduction in fees as
currently set forth in the Rules that would not disproportionally
impact any NSCC Members. As a reduction to the fees currently in the
Addendum A for these services, the proposed Fee Reductions would not
impede any NSCC Members from engaging in the services or have an
adverse impact on any NSCC Members.
Moreover, the proposed Fee Reductions may promote competition
because, in each case, the proposed Fee Reductions would allow NSCC
Members to engage in a greater number of transactions with lower costs
than they would incur today for the same transactions. In addition, as
described above, NSCC believes that the proposed fee changes to the
Profile Phase I and Phase II and the proposed fee reductions and
increased discount levels for the IFT tiered pricing program would
incentivize greater use of those services by NSCC Members. NSCC
believes that increased use of the NSCC services as a result of the fee
reductions would enhance participation in the marketplace by providing
all NSCC Members that use the services more data which would increase
the value of the services and promote competition among NSCC Members
that use the services.
NSCC does not believe that the proposed Clarifications would have
any impact on competition because such changes are clarifications of
the Rules that would not affect the rights or obligations of NSCC
Members.
(C) Clearing Agency's Statement on Comments on the Proposed Rule Change
Received From Members, Participants, or Others
NSCC has not received or solicited any written comments relating to
this proposal. NSCC will notify the Commission of any written comments
received by NSCC.
III. Date of Effectiveness of the Proposed Rule Change, and Timing for
Commission Action
The foregoing rule change has become effective pursuant to Section
19(b)(3)(A) of the Act \23\ and paragraph (f) of Rule 19b-4
thereunder.\24\ At any time within 60 days of the filing of the
proposed rule change, the Commission summarily may temporarily suspend
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.
---------------------------------------------------------------------------
\23\ 15 U.S.C 78s(b)(3)(A).
\24\ 17 CFR 240.19b-4(f).
---------------------------------------------------------------------------
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 email to [email protected]. Please include
File Number SR-NSCC-2018-012 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE, Washington, DC 20549.
All submissions should refer to File Number SR-NSCC-2018-012. This file
number should be included on the subject line if email 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
[[Page 64397]]
internet website (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 website 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 10:00 a.m. and
3:00 p.m. Copies of the filing also will be available for inspection
and copying at the principal office of NSCC and on DTCC's website
(https://dtcc.com/legal/sec-rule-filings.aspx). All comments received
will be posted without change. Persons submitting comments are
cautioned that we do not redact or edit personal identifying
information from comment submissions. You should submit only
information that you wish to make available publicly. All submissions
should refer to File Number SR-NSCC-2018-012 and should be submitted on
or before January 4, 2019.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\25\
---------------------------------------------------------------------------
\25\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2018-27081 Filed 12-13-18; 8:45 am]
BILLING CODE 8011-01-P
