Self-Regulatory Organizations; National Securities Clearing Corporation; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Make Certain Adjustments in the Fees for NSCC's I&RS Positions and Valuations Service and Certain Clarifications to Addendum A, 378-381 [2022-28542]

Download as PDF 378 Federal Register / Vol. 88, No. 2 / Wednesday, January 4, 2023 / Notices POLICIES AND PRACTICES FOR RETENTION AND DISPOSAL OF RECORDS: 1. Retention depends on the type of research project but does not exceed 10 years. 2. Data retained for surveys conducted by Customer insight, market research and survey records will be retained for 3 years. 3. Records for quick customer experience surveys administered on customer display units in Post Office locations will be retained for 3 fiscal years, representing the current fiscal year-to-date, plus the prior 2 fiscal years. Records existing on paper are destroyed by burning, pulping, or shredding. Records existing on computer storage media are destroyed according to the applicable USPS media sanitization practice. ADMINISTRATIVE, TECHNICAL, AND PHYSICAL SAFEGUARDS: Paper records, computers, and computer storage media are located in controlled-access areas under supervision of program personnel. Access to these areas is limited to authorized personnel, who must be identified with a badge. Access to records is limited to individuals whose official duties require such access. Contractors and licensees are subject to contract controls and unannounced on-site audits and inspections. Computers are protected by mechanical locks, card key systems, or other physical access control methods. The use of computer systems is regulated with installed security software, computer log-on identifications, and operating system controls, which includes access controls, terminal and transaction logging, and file management software. RECORD ACCESS PROCEDURES: Requests for access must be made in accordance with the Notification Procedure below and USPS Privacy Act regulations regarding access to records and verification of identity under 39 CFR 266.5. CONTESTING RECORD PROCEDURES: khammond on DSKJM1Z7X2PROD with NOTICES See Notification Procedure and Record Access Procedures. NOTIFICATION PROCEDURES: Individuals wanting to know if information about them is maintained in this system of records must address inquiries to the Vice President, Employee Resource Management, 475 L’Enfant Plaza SW, Washington, DC 20260. VerDate Sep<11>2014 16:55 Jan 03, 2023 Jkt 259001 In cases of studies involving information not collected through an examination, individuals must address inquiries to the system manager. Inquiries must contain full name; Candidate Identification Number, Employee Identification Number, or respondent identification code, and subject or purpose of research/survey; and date and location of their participation. EXEMPTIONS PROMULGATED FOR THE SYSTEM: Pursuant to 5 U.S.C. 552a(j) and (k), USPS has established regulations at 39 CFR 266.9 that exempt records in this system depending on their purpose. The USPS has also claimed exemption from certain provisions of the Act for several of its other systems of records at 39 CFR 266.9. To the extent that copies of exempted records from those other systems are incorporated into this system, the exemptions applicable to the original primary system continue to apply to the incorporated records. HISTORY: July 5, 2022: 87 FR 39876; July 19, 2013: 78 FR 43247; June 17, 2011: 76 FR 35483; and April 29, 2005: 70 FR 22516. * * * * * Sarah Sullivan, Attorney, Ethics and Legal Compliance. [FR Doc. 2022–28588 Filed 1–3–23; 8:45 am] BILLING CODE P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–96590; File No. SR–NSCC– 2022–017] Self-Regulatory Organizations; National Securities Clearing Corporation; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Make Certain Adjustments in the Fees for NSCC’s I&RS Positions and Valuations Service and Certain Clarifications to Addendum A December 28, 2022. 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 December 21, 2022, 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 1 15 2 17 PO 00000 U.S.C. 78s(b)(1). CFR 240.19b–4. Frm 00041 Fmt 4703 Sfmt 4703 proposed rule change pursuant to Section 19(b)(3)(A) 3 of the Act and subparagraph (f)(2) 4 of Rule 19b–4 thereunder. 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 of NSCC consists of modifications to Addendum A (Fee Structure) (‘‘Addendum A’’) of NSCC’s Rules & Procedures (‘‘Rules’’) in order to make certain adjustments in the fees for the Positions and Valuations service (‘‘Positions’’) in NSCC’s Insurance & Retirement Services (‘‘I&RS’’) and make certain clarifications to Addendum A, 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 Overview of Proposed Rule Change The purpose of this proposed rule change is to increase the fees for Positions, as described below, in order to align those fees more closely with the costs of providing the products and services to Members and Limited Members that use I&RS (collectively, ‘‘I&RS Members’’). The fee changes are being made to better align fees with the costs of services provided by NSCC by adjusting the fees so that the revenue received by NSCC would be closer to the costs of providing the services consistent with NSCC’s cost-based plus markup fee model.6 In general, fee 3 15 U.S.C. 78s(b)(3)(A). CFR 240.19b–4(f)(2). 5 Capitalized terms used herein and not otherwise defined have the meaning assigned to such terms in the Rules, available at https://dtcc.com/∼/media/ Files/Downloads/legal/rules/nscc_rules.pdf. 6 NSCC has in place procedures to control costs and to regularly review pricing levels against costs of operation. NSCC’s fees are cost-based plus a markup as approved by its Board of Directors or management (pursuant to authority delegated by the 4 17 E:\FR\FM\04JAN1.SGM 04JAN1 Federal Register / Vol. 88, No. 2 / Wednesday, January 4, 2023 / Notices khammond on DSKJM1Z7X2PROD with NOTICES levels for NSCC are set by NSCC after periodic reviews of a number of factors, including revenues, operating costs and potential service enhancements. Pursuant to Section 5 of Rule 57, NSCC provides a service to enable Insurance Carrier/Retirement Services Members to transmit data to other I&RS Members relating to positions and valuations specific to I&RS Eligible Products.7 Pursuant to this service, Insurance Carrier/Retirement Services Members can send data using four file types—(i) a focused file (‘‘Positions Focused’’) that includes underlying fund and current value information as well as a distributor’s entire book of business, which is typically sent daily; (ii) a full file (‘‘Positions Full’’) that includes information in the Positions Focused file as well as information pertaining to contract parties and service features, which is typically sent on a schedule agreed to by the trading partners; (iii) a new business file (‘‘Positions New’’) that provides data in the identical format to the Positions Full file but includes only new contract information, which is only sent once; and (iv) a retirement plan file (‘‘Positions for Retirement Plans’’) that provides data relating to insurancebased group annuities and mutual fundbased retirement accounts including detailed plan and participant level data. NSCC continuously engages in discussions with I&RS Members regarding proposed enhancements, proposed fee changes and potential impacts. As a result of these discussions, I&RS Members have requested enhancements to the current Positions file. The enhancements include modifying current records and adding a new record to accommodate data related to indexed life and annuity products. The proposed pricing increase was developed using a cost-plus pricing methodology and would be an increase in Positions fees of approximately 4% for Positions Full, Positions New and Positions for Retirement Plans and an increase of approximately 9.1% for Positions Focused. The estimated annual revenue increase for Positions Board of Directors), as applicable. This markup is applied to recover development costs and operating expenses, and to accumulate capital sufficient to meet regulatory and economic requirements. See NSCC Disclosure Framework for Covered Clearing Agencies and Financial Market Infrastructures, available at https://www.dtcc.com/-/media/Files/ Downloads/legal/policy-and-compliance/NSCC_ Disclosure_Framework.pdf, at 121. 7 Section 5 of Rule 57, supra note 5. The term ‘‘I&RS Eligible Product’’ means an insurance product or a retirement or other benefit plan or program included in the list for which provision is made in Section 1.(d) of Rule 3. Definition of ‘‘I&RS Eligible Product’’, Rule 1, supra note 5. VerDate Sep<11>2014 16:55 Jan 03, 2023 Jkt 259001 fees would cover development cost and maintenance for the proposed enhancements and related system developments. NSCC is also proposing to add abbreviations in Addendum A of the Rules to match descriptions of Positions Full, Positions New, Positions for Retirement Plans and Positions Focused used in marketing materials and client communications. Proposed Rule Change NSCC is proposing to increase the fees charged for the Positions Full, Positions New, Positions for Retirement Plans files that are currently set forth in Section IV.H.2.a.(i) of Addendum A as follows: (i) increase fees for 0 to 500,000 items/month from $6.00 to $6.25 per 1,000 items, (ii) increase fees for 500,001 to 2,000,000 items/month from $3.50 to $3.65 per 1,000 items, (iii) increase fees for 2,000,001 to 4,000,000 items/month from $3.00 to $3.10 per 1,000 items and (iv) increase fees for 4,000,001 or more items/month from $1.25 to $1.30 per 1,000 items. NSCC is also proposing to add the abbreviations PVF, PNF and PRP next to Full, New and Retirement Plans, respectively, to reflect the abbreviations used in marketing materials and client communications relating to these services. NSCC is proposing to increase the fees charged for the Positions Focused file that are currently set forth in Section IV.H.2.a.(ii) of Addendum A as follows: (i) increase fees for 0 to 500,000 items/ month from $3.00 to $3.25 per 1,000 items, (ii) increase fees for 500,001 to 2,000,000 items/month from $1.50 to $1.65 per 1,000 items, (iii) increase fees for 2,000,001 to 4,000,000 items/month from $1.00 to $1.10 per 1,000 items and (iv) increase fees for 4,000,001 or more items/month from $0.50 to $0.55 per 1,000 items. NSCC is also proposing to add the abbreviation PFF next to Positions Focused to reflect the abbreviations used in marketing materials and client communications relating to this services. Expected Member/NSCC Impact The proposed fee changes would impact all users of Positions. Based on a review of users in the second quarter of 2022, it is anticipated that approximately 82% of the I&RS Members receive files using Positions Full, Positions New or Positions for Retirement Plans and approximately 63% of I&RS Members receive files using Positions Focused. The proposed pricing increase is expected to result in an increase in Positions fees of approximately 4% for Positions Full, PO 00000 Frm 00042 Fmt 4703 Sfmt 4703 379 Positions New and Positions for Retirement Plans and an increase of approximately 9.1% for Positions Focused. The proposed fee increases are designed to cover the costs of enhancing and maintaining I&RS in accordance with NSCC’s cost-based plus markup fee model.8 Following the implementation of fees, assuming revenues and expenses remain constant,9 NSCC anticipates recouping the costs of building the enhancements within approximately two years of implementing the fees. Implementation Timeline NSCC expects to implement the proposed rule change on January 1, 2023. As proposed, a legend would be added to Addendum A stating that changes became effective upon filing with the Commission but have not yet been implemented. The proposed legend also would include January 1, 2023 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) 10 and 17A(b)(3)(F) 11 and Rule 17Ad– 22(e)(23)(ii),12 as promulgated under the Act, for the reasons described below. Section 17A(b)(3)(D) of the Act requires that the rules of a clearing agency provide for the equitable allocation of reasonable dues, fees, and other charges among its participants. NSCC believes the proposed fees would be allocated equitably among I&RS Members that use Positions.13 NSCC believes the proposed fee changes are reasonable because they are based on the expected investment costs to develop the Positions enhancements 8 See supra note 6. and expenses may not remain constant. Costs of providing the service may change if, for example, I&RS Members request further service enhancements or the costs of NSCC’s technology change. In addition, revenues may change depending on the number of users of the service. NSCC regularly reviews pricing levels against costs of operation. As with its other services, if NSCC determines that its operating margin is too high or too low, NSCC would propose changes to pricing levels accordingly. 10 15 U.S.C. 78q–1(b)(3)(D). 11 15 U.S.C. 78q–1(b)(3)(F). 12 17 CFR 240.17Ad–22(e)(23)(ii). 13 15 U.S.C. 78q–1(b)(3)(D). 9 Revenues E:\FR\FM\04JAN1.SGM 04JAN1 khammond on DSKJM1Z7X2PROD with NOTICES 380 Federal Register / Vol. 88, No. 2 / Wednesday, January 4, 2023 / Notices and related system developments, the projected annual costs to run the service (including both technology and nontechnology run costs) and projected revenues for the service. Such proposed fee changes are expected to recover such investment and operating costs in an appropriate timeframe. NSCC notes that once the proposed Positions fees are implemented, the fees would be periodically reviewed pursuant to NSCC’s procedures to determine whether they continue to appropriately reflect NSCC’s costs of operation.14 Section 17A(b)(3)(F) of the Act requires, in part, that the rules of a clearing agency promote the prompt and accurate clearance and settlement of securities transactions.15 NSCC believes that the proposed clarifications to add abbreviations for the services in Addendum A would enhance I&RS Members’ ability to understand which fees are associated with the with files within Positions. Specifically, the proposal would add abbreviations to the Rules that are currently used in marketing materials and other client communications to refer to these services. As such, the proposed clarifications would improve the clarity of the Fee Structure in Addendum A of the Rules and provide I&RS Members with a better understanding of those fees in relation to their activities. In this way, the proposed clarification are consistent with the requirements of Section 17A(b)(3)(F) of the Act.16 Rule 17Ad–22(e)(23)(ii) under the Act 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.17 The proposed fees would be clearly and transparently stated in Addendum A of the Rules, which are available on a public website,18 thereby enabling Members to identify the fees associated with participating in Positions. As such, NSCC believes the proposed rule change is consistent with Rule 17Ad– 22(e)(23)(ii) under the Act.19 The proposed clarifications to add abbreviations for services, as described above, would improve the transparency of the fees in Addendum A to I&RS Members. Having a clear and transparent Addendum A would help 14 See 15 15 supra note 6. U.S.C. 78q–1(b)(3)(F). I&RS Members to better understand NSCC’s fees and help provide I&RS Members with increased predictability and certainty regarding the fees they incur in participating in NSCC. As such, NSCC believes the proposed rule changes are also consistent with Rule 17Ad–22(e)(23)(ii) under the Act.20 (B) Clearing Agency’s Statement on Burden on Competition NSCC believes the proposed rule change to increase fees for Positions may have an impact on competition. NSCC believes the proposed rule change could burden competition by negatively affecting such I&RS Members’ operating costs. While these I&RS Members may experience increases in their fees when compared to their fees under the current fee structure, NSCC does not believe such change in fees would, in and of itself, mean that the burden on competition is significant. The proposed Positions fee increase would not advantage or disadvantage any particular member or user of Positions, or unfairly inhibit access to Positions. Further, the proposal would similarly affect all I&RS Members that utilize Positions based on each I&RS Member’s usage of Positions. Regardless of whether the burden on competition is deemed significant, NSCC believes any burden on competition that is created by the proposed rule change would be necessary and appropriate in furtherance of the purposes of the Act, as permitted by Section 17A(b)(3)(I) of the Act.21 The proposed rule change to increase fees for Positions would be necessary in furtherance of the purposes of the Act because the Rules must provide for the equitable allocation of reasonable dues, fees, and other charges among its participants.22 As described above, NSCC believes that the proposed rule change would result in fees that are equitably allocated because they are applied uniformly to all I&RS Members that use the applicable services. The proposal also would result in reasonable fees, because they would allow NSCC to recoup its expenses in building the proposed enhancements and related system developments and continue to operate Positions with a positive operating margin. As such, NSCC believes the proposed rule change would be necessary in furtherance of the purposes of the Act, as permitted by Section 17A(b)(3)(I) of the Act.23 NSCC also believes that the fees are appropriate in furtherance of the purposes of the Act because the fees are designed to align NSCC’s revenue with the costs of enhancing and providing the services, consistent with NSCC’s cost-based plus markup fee model. As noted above, the proposed fees are equitably allocated among I&RS Members.24 The fees would enable NSCC to pay for building the proposed enhancements to this service and would allow continue to operate Positions with a positive operating margin. As such, NSCC believes the proposed rule change would be appropriate in furtherance of the purposes of the Act, specifically Section 17A(b)(3)(I) of the Act.25 (C) Clearing Agency’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others NSCC has conducted outreach to I&RS Members in order to provide them with notice of the proposed rule change to the affected fees. NSCC has not received or solicited any written comments relating to this proposal. If any written comments are received by NSCC, they will be publicly filed as an Exhibit 2 to this filing, as required by Form 19b–4 and the General Instructions thereto. Persons submitting comments are cautioned that, according to Section IV (Solicitation of Comments) of the Exhibit 1A in the General Instructions to Form 19b–4, the Commission does not edit personal identifying information from comment submissions. Commenters should submit only information that they wish to make available publicly, including their name, email address, and any other identifying information. All prospective commenters should follow the Commission’s instructions on how to submit comments, available at https://www.sec.gov/regulatory-actions/ how-to-submit-comments. General questions regarding the rule filing process or logistical questions regarding this filing should be directed to the Main Office of the Commission’s Division of Trading and Markets at tradingandmarkets@sec.gov or 202– 551–5777. 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) 26 of the Act and paragraph 16 Id. 20 Id. 17 17 21 15 24 See 22 15 25 15 CFR 240.17Ad–22(e)(23)(ii). 18 See supra note 5. 19 17 CFR 240.17Ad–22(e)(23)(ii). VerDate Sep<11>2014 16:55 Jan 03, 2023 U.S.C. 78q–1(b)(3)(I). U.S.C. 78q–1(b)(3)(D). 23 15 U.S.C. 78q–1(b)(3)(I). Jkt 259001 PO 00000 Frm 00043 Fmt 4703 Sfmt 4703 supra note 6. U.S.C. 78q–1(b)(3)(I). 26 15 U.S.C 78s(b)(3)(A). E:\FR\FM\04JAN1.SGM 04JAN1 Federal Register / Vol. 88, No. 2 / Wednesday, January 4, 2023 / Notices (f) 27 of Rule 19b–4 thereunder. 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: khammond on DSKJM1Z7X2PROD with NOTICES 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–2022–017 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–2022–017. 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/ 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; the Commission does not edit personal 27 17 CFR 240.19b–4(f). VerDate Sep<11>2014 16:55 Jan 03, 2023 Jkt 259001 identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR–NSCC– 2022–017 and should be submitted on or before January 25, 2023. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.28 J. Matthew DeLesDernier, Deputy Secretary. [FR Doc. 2022–28542 Filed 1–3–23; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–96588; File No. SR–MIAX– 2022–47] Self-Regulatory Organizations; Miami International Securities Exchange LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Its Fee Schedule December 28, 2022. 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 December 20, 2022, Miami International Securities Exchange LLC (‘‘MIAX’’ or ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘Commission’’) a proposed rule change as described in Items I, II, and III below, which Items have been prepared by the Exchange. 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 is filing a proposal to amend the MIAX Options Fee Schedule (the ‘‘Fee Schedule’’) to: (1) extend the waiver period for certain nontransaction fees applicable to Market Makers 3 that trade solely in Proprietary Products 4 until June 30, 2023; and (2) extend the SPIKES Options Market Maker Incentive Program (the ‘‘Incentive Program’’) until March 31, 2023. 28 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 3 The term ‘‘Market Makers’’ refers to ‘‘Lead Market Makers’’, ‘‘Primary Lead Market Makers’’ and ‘‘Registered Market Makers’’ collectively. See Exchange Rule 100. 4 The term ‘‘Proprietary Product’’ means a class of options that is listed exclusively on the Exchange. See Exchange Rule 100. 1 15 PO 00000 Frm 00044 Fmt 4703 Sfmt 4703 381 The text of the proposed rule change is available on the Exchange’s website at https://www.miaxoptions.com/rulefilings, at MIAX’s principal office, 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 1. Purpose The Exchange proposes to amend the Fee Schedule to: (1) extend the waiver period for certain non-transaction fees applicable to Market Makers that trade solely in Proprietary Products until June 30, 2023; and (2) extend the Incentive Program until March 31, 2023. Background On October 12, 2018, the Exchange received approval from the Commission to list and trade on the Exchange options on the SPIKES® Index, a new index that measures expected 30-day volatility of the SPDR S&P 500 ETF Trust (commonly known and referred to by its ticker symbol, ‘‘SPY’’).5 The Exchange adopted its initial SPIKES options transaction fees on February 15, 2019 and adopted a new section of the Fee Schedule—Section (1)(a)(xi), SPIKES—for those fees.6 Options on the 5 See Securities Exchange Act Release No. 84417 (October 12, 2018), 83 FR 52865 (October 18, 2018) (SR–MIAX–2018–14) (Order Granting Approval of a Proposed Rule Change by Miami International Securities Exchange, LLC to List and Trade on the Exchange Options on the SPIKES® Index). 6 See Securities Exchange Release No. 85283 (March 11, 2019), 84 FR 9567 (March 15, 2019) (SR– MIAX–2019–11). The Exchange initially filed the proposal on February 15, 2019 (SR–MIAX–2019– 04). That filing was withdrawn and replaced with SR–MIAX–2019–11. On September 30, 2020, the Exchange filed its proposal to, among other things, reorganize the Fee Schedule to adopt new Section (1)(b), Proprietary Products Exchange Fees, and moved the fees and rebates for SPIKES options into new Section (1)(b)(i). See Securities Exchange Act Release Nos. 90146 (October 9, 2020), 85 FR 65443 (October 15, 2020) (SR–MIAX–2020–32) and 90814 E:\FR\FM\04JAN1.SGM Continued 04JAN1

Agencies

[Federal Register Volume 88, Number 2 (Wednesday, January 4, 2023)]
[Notices]
[Pages 378-381]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-28542]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-96590; File No. SR-NSCC-2022-017]


Self-Regulatory Organizations; National Securities Clearing 
Corporation; Notice of Filing and Immediate Effectiveness of a Proposed 
Rule Change To Make Certain Adjustments in the Fees for NSCC's I&RS 
Positions and Valuations Service and Certain Clarifications to Addendum 
A

December 28, 2022.
    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 December 21, 2022, 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) \3\ 
of the Act and subparagraph (f)(2) \4\ of Rule 19b-4 thereunder. The 
Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons.
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    \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).
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I. Clearing Agency's Statement of the Terms of Substance of the 
Proposed Rule Change

    The proposed rule change of NSCC consists of modifications to 
Addendum A (Fee Structure) (``Addendum A'') of NSCC's Rules & 
Procedures (``Rules'') in order to make certain adjustments in the fees 
for the Positions and Valuations service (``Positions'') in NSCC's 
Insurance & Retirement Services (``I&RS'') and make certain 
clarifications to Addendum A, as described below.\5\
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    \5\ Capitalized terms used herein and not otherwise defined have 
the meaning assigned to such terms in the Rules, available at 
https://dtcc.com/~/media/Files/Downloads/legal/rules/nscc_rules.pdf.
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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
Overview of Proposed Rule Change
    The purpose of this proposed rule change is to increase the fees 
for Positions, as described below, in order to align those fees more 
closely with the costs of providing the products and services to 
Members and Limited Members that use I&RS (collectively, ``I&RS 
Members''). The fee changes are being made to better align fees with 
the costs of services provided by NSCC by adjusting the fees so that 
the revenue received by NSCC would be closer to the costs of providing 
the services consistent with NSCC's cost-based plus markup fee 
model.\6\ In general, fee

[[Page 379]]

levels for NSCC are set by NSCC after periodic reviews of a number of 
factors, including revenues, operating costs and potential service 
enhancements.
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    \6\ NSCC has in place procedures to control costs and to 
regularly review pricing levels against costs of operation. NSCC's 
fees are cost-based plus a markup as approved by its Board of 
Directors or management (pursuant to authority delegated by the 
Board of Directors), as applicable. This markup is applied to 
recover development costs and operating expenses, and to accumulate 
capital sufficient to meet regulatory and economic requirements. See 
NSCC Disclosure Framework for Covered Clearing Agencies and 
Financial Market Infrastructures, available at https://www.dtcc.com/-/media/Files/Downloads/legal/policy-and-compliance/NSCC_Disclosure_Framework.pdf, at 121.
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    Pursuant to Section 5 of Rule 57, NSCC provides a service to enable 
Insurance Carrier/Retirement Services Members to transmit data to other 
I&RS Members relating to positions and valuations specific to I&RS 
Eligible Products.\7\ Pursuant to this service, Insurance Carrier/
Retirement Services Members can send data using four file types--(i) a 
focused file (``Positions Focused'') that includes underlying fund and 
current value information as well as a distributor's entire book of 
business, which is typically sent daily; (ii) a full file (``Positions 
Full'') that includes information in the Positions Focused file as well 
as information pertaining to contract parties and service features, 
which is typically sent on a schedule agreed to by the trading 
partners; (iii) a new business file (``Positions New'') that provides 
data in the identical format to the Positions Full file but includes 
only new contract information, which is only sent once; and (iv) a 
retirement plan file (``Positions for Retirement Plans'') that provides 
data relating to insurance-based group annuities and mutual fund-based 
retirement accounts including detailed plan and participant level data.
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    \7\ Section 5 of Rule 57, supra note 5. The term ``I&RS Eligible 
Product'' means an insurance product or a retirement or other 
benefit plan or program included in the list for which provision is 
made in Section 1.(d) of Rule 3. Definition of ``I&RS Eligible 
Product'', Rule 1, supra note 5.
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    NSCC continuously engages in discussions with I&RS Members 
regarding proposed enhancements, proposed fee changes and potential 
impacts. As a result of these discussions, I&RS Members have requested 
enhancements to the current Positions file. The enhancements include 
modifying current records and adding a new record to accommodate data 
related to indexed life and annuity products. The proposed pricing 
increase was developed using a cost-plus pricing methodology and would 
be an increase in Positions fees of approximately 4% for Positions 
Full, Positions New and Positions for Retirement Plans and an increase 
of approximately 9.1% for Positions Focused. The estimated annual 
revenue increase for Positions fees would cover development cost and 
maintenance for the proposed enhancements and related system 
developments.
    NSCC is also proposing to add abbreviations in Addendum A of the 
Rules to match descriptions of Positions Full, Positions New, Positions 
for Retirement Plans and Positions Focused used in marketing materials 
and client communications.
Proposed Rule Change
    NSCC is proposing to increase the fees charged for the Positions 
Full, Positions New, Positions for Retirement Plans files that are 
currently set forth in Section IV.H.2.a.(i) of Addendum A as follows: 
(i) increase fees for 0 to 500,000 items/month from $6.00 to $6.25 per 
1,000 items, (ii) increase fees for 500,001 to 2,000,000 items/month 
from $3.50 to $3.65 per 1,000 items, (iii) increase fees for 2,000,001 
to 4,000,000 items/month from $3.00 to $3.10 per 1,000 items and (iv) 
increase fees for 4,000,001 or more items/month from $1.25 to $1.30 per 
1,000 items. NSCC is also proposing to add the abbreviations PVF, PNF 
and PRP next to Full, New and Retirement Plans, respectively, to 
reflect the abbreviations used in marketing materials and client 
communications relating to these services.
    NSCC is proposing to increase the fees charged for the Positions 
Focused file that are currently set forth in Section IV.H.2.a.(ii) of 
Addendum A as follows: (i) increase fees for 0 to 500,000 items/month 
from $3.00 to $3.25 per 1,000 items, (ii) increase fees for 500,001 to 
2,000,000 items/month from $1.50 to $1.65 per 1,000 items, (iii) 
increase fees for 2,000,001 to 4,000,000 items/month from $1.00 to 
$1.10 per 1,000 items and (iv) increase fees for 4,000,001 or more 
items/month from $0.50 to $0.55 per 1,000 items. NSCC is also proposing 
to add the abbreviation PFF next to Positions Focused to reflect the 
abbreviations used in marketing materials and client communications 
relating to this services.
Expected Member/NSCC Impact
    The proposed fee changes would impact all users of Positions. Based 
on a review of users in the second quarter of 2022, it is anticipated 
that approximately 82% of the I&RS Members receive files using 
Positions Full, Positions New or Positions for Retirement Plans and 
approximately 63% of I&RS Members receive files using Positions 
Focused. The proposed pricing increase is expected to result in an 
increase in Positions fees of approximately 4% for Positions Full, 
Positions New and Positions for Retirement Plans and an increase of 
approximately 9.1% for Positions Focused.
    The proposed fee increases are designed to cover the costs of 
enhancing and maintaining I&RS in accordance with NSCC's cost-based 
plus markup fee model.\8\ Following the implementation of fees, 
assuming revenues and expenses remain constant,\9\ NSCC anticipates 
recouping the costs of building the enhancements within approximately 
two years of implementing the fees.
---------------------------------------------------------------------------

    \8\ See supra note 6.
    \9\ Revenues and expenses may not remain constant. Costs of 
providing the service may change if, for example, I&RS Members 
request further service enhancements or the costs of NSCC's 
technology change. In addition, revenues may change depending on the 
number of users of the service. NSCC regularly reviews pricing 
levels against costs of operation. As with its other services, if 
NSCC determines that its operating margin is too high or too low, 
NSCC would propose changes to pricing levels accordingly.
---------------------------------------------------------------------------

Implementation Timeline
    NSCC expects to implement the proposed rule change on January 1, 
2023. As proposed, a legend would be added to Addendum A stating that 
changes became effective upon filing with the Commission but have not 
yet been implemented. The proposed legend also would include January 1, 
2023 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) \10\ and 17A(b)(3)(F) \11\ and 
Rule 17Ad-22(e)(23)(ii),\12\ as promulgated under the Act, for the 
reasons described below.
---------------------------------------------------------------------------

    \10\ 15 U.S.C. 78q-1(b)(3)(D).
    \11\ 15 U.S.C. 78q-1(b)(3)(F).
    \12\ 17 CFR 240.17Ad-22(e)(23)(ii).
---------------------------------------------------------------------------

    Section 17A(b)(3)(D) of the Act requires that the rules of a 
clearing agency provide for the equitable allocation of reasonable 
dues, fees, and other charges among its participants. NSCC believes the 
proposed fees would be allocated equitably among I&RS Members that use 
Positions.\13\ NSCC believes the proposed fee changes are reasonable 
because they are based on the expected investment costs to develop the 
Positions enhancements

[[Page 380]]

and related system developments, the projected annual costs to run the 
service (including both technology and non-technology run costs) and 
projected revenues for the service. Such proposed fee changes are 
expected to recover such investment and operating costs in an 
appropriate timeframe. NSCC notes that once the proposed Positions fees 
are implemented, the fees would be periodically reviewed pursuant to 
NSCC's procedures to determine whether they continue to appropriately 
reflect NSCC's costs of operation.\14\
---------------------------------------------------------------------------

    \13\ 15 U.S.C. 78q-1(b)(3)(D).
    \14\ See supra note 6.
---------------------------------------------------------------------------

    Section 17A(b)(3)(F) of the Act requires, in part, that the rules 
of a clearing agency promote the prompt and accurate clearance and 
settlement of securities transactions.\15\ NSCC believes that the 
proposed clarifications to add abbreviations for the services in 
Addendum A would enhance I&RS Members' ability to understand which fees 
are associated with the with files within Positions. Specifically, the 
proposal would add abbreviations to the Rules that are currently used 
in marketing materials and other client communications to refer to 
these services. As such, the proposed clarifications would improve the 
clarity of the Fee Structure in Addendum A of the Rules and provide 
I&RS Members with a better understanding of those fees in relation to 
their activities. In this way, the proposed clarification are 
consistent with the requirements of Section 17A(b)(3)(F) of the 
Act.\16\
---------------------------------------------------------------------------

    \15\ 15 U.S.C. 78q-1(b)(3)(F).
    \16\ Id.
---------------------------------------------------------------------------

    Rule 17Ad-22(e)(23)(ii) under the Act 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.\17\ The proposed fees would be clearly and transparently stated 
in Addendum A of the Rules, which are available on a public 
website,\18\ thereby enabling Members to identify the fees associated 
with participating in Positions. As such, NSCC believes the proposed 
rule change is consistent with Rule 17Ad-22(e)(23)(ii) under the 
Act.\19\
---------------------------------------------------------------------------

    \17\ 17 CFR 240.17Ad-22(e)(23)(ii).
    \18\ See supra note 5.
    \19\ 17 CFR 240.17Ad-22(e)(23)(ii).
---------------------------------------------------------------------------

    The proposed clarifications to add abbreviations for services, as 
described above, would improve the transparency of the fees in Addendum 
A to I&RS Members. Having a clear and transparent Addendum A would help 
I&RS Members to better understand NSCC's fees and help provide I&RS 
Members with increased predictability and certainty regarding the fees 
they incur in participating in NSCC. As such, NSCC believes the 
proposed rule changes are also consistent with Rule 17Ad-22(e)(23)(ii) 
under the Act.\20\
---------------------------------------------------------------------------

    \20\ Id.
---------------------------------------------------------------------------

(B) Clearing Agency's Statement on Burden on Competition

    NSCC believes the proposed rule change to increase fees for 
Positions may have an impact on competition. NSCC believes the proposed 
rule change could burden competition by negatively affecting such I&RS 
Members' operating costs. While these I&RS Members may experience 
increases in their fees when compared to their fees under the current 
fee structure, NSCC does not believe such change in fees would, in and 
of itself, mean that the burden on competition is significant. The 
proposed Positions fee increase would not advantage or disadvantage any 
particular member or user of Positions, or unfairly inhibit access to 
Positions. Further, the proposal would similarly affect all I&RS 
Members that utilize Positions based on each I&RS Member's usage of 
Positions.
    Regardless of whether the burden on competition is deemed 
significant, NSCC believes any burden on competition that is created by 
the proposed rule change would be necessary and appropriate in 
furtherance of the purposes of the Act, as permitted by Section 
17A(b)(3)(I) of the Act.\21\ The proposed rule change to increase fees 
for Positions would be necessary in furtherance of the purposes of the 
Act because the Rules must provide for the equitable allocation of 
reasonable dues, fees, and other charges among its participants.\22\ As 
described above, NSCC believes that the proposed rule change would 
result in fees that are equitably allocated because they are applied 
uniformly to all I&RS Members that use the applicable services. The 
proposal also would result in reasonable fees, because they would allow 
NSCC to recoup its expenses in building the proposed enhancements and 
related system developments and continue to operate Positions with a 
positive operating margin. As such, NSCC believes the proposed rule 
change would be necessary in furtherance of the purposes of the Act, as 
permitted by Section 17A(b)(3)(I) of the Act.\23\
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    \21\ 15 U.S.C. 78q-1(b)(3)(I).
    \22\ 15 U.S.C. 78q-1(b)(3)(D).
    \23\ 15 U.S.C. 78q-1(b)(3)(I).
---------------------------------------------------------------------------

    NSCC also believes that the fees are appropriate in furtherance of 
the purposes of the Act because the fees are designed to align NSCC's 
revenue with the costs of enhancing and providing the services, 
consistent with NSCC's cost-based plus markup fee model. As noted 
above, the proposed fees are equitably allocated among I&RS 
Members.\24\ The fees would enable NSCC to pay for building the 
proposed enhancements to this service and would allow continue to 
operate Positions with a positive operating margin. As such, NSCC 
believes the proposed rule change would be appropriate in furtherance 
of the purposes of the Act, specifically Section 17A(b)(3)(I) of the 
Act.\25\
---------------------------------------------------------------------------

    \24\ See supra note 6.
    \25\ 15 U.S.C. 78q-1(b)(3)(I).
---------------------------------------------------------------------------

(C) Clearing Agency's Statement on Comments on the Proposed Rule Change 
Received From Members, Participants, or Others

    NSCC has conducted outreach to I&RS Members in order to provide 
them with notice of the proposed rule change to the affected fees.
    NSCC has not received or solicited any written comments relating to 
this proposal. If any written comments are received by NSCC, they will 
be publicly filed as an Exhibit 2 to this filing, as required by Form 
19b-4 and the General Instructions thereto.
    Persons submitting comments are cautioned that, according to 
Section IV (Solicitation of Comments) of the Exhibit 1A in the General 
Instructions to Form 19b-4, the Commission does not edit personal 
identifying information from comment submissions. Commenters should 
submit only information that they wish to make available publicly, 
including their name, email address, and any other identifying 
information.
    All prospective commenters should follow the Commission's 
instructions on how to submit comments, available at https://www.sec.gov/regulatory-actions/how-to-submit-comments. General 
questions regarding the rule filing process or logistical questions 
regarding this filing should be directed to the Main Office of the 
Commission's Division of Trading and Markets at 
[email protected] or 202-551-5777.

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) \26\ of the Act and paragraph

[[Page 381]]

(f) \27\ of Rule 19b-4 thereunder. 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.
---------------------------------------------------------------------------

    \26\ 15 U.S.C 78s(b)(3)(A).
    \27\ 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-2022-017 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-2022-017. 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/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; the Commission does not edit personal 
identifying information from submissions. You should submit only 
information that you wish to make available publicly. All submissions 
should refer to File Number SR-NSCC-2022-017 and should be submitted on 
or before January 25, 2023.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\28\
---------------------------------------------------------------------------

    \28\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2022-28542 Filed 1-3-23; 8:45 am]
BILLING CODE 8011-01-P
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