[Federal Register Volume 61, Number 213 (Friday, November 1, 1996)]
[Notices]
[Pages 56595-56596]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-28078]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-37877; File No. SR-NSCC-96-18]
Self-Regulatory Organizations; National Securities Clearing
Corporation; Notice of Filing of a Proposed Rule Change To Modify
Procedures Relating to the Reconfirmation and Pricing Service
October 28, 1996.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ notice is hereby given that on September 30, 1996, the
National Securities Clearing Corporation (``NSCC'') filed with the
Securities and Exchange Commission (``Commission'') the proposed rule
change (File No. SR-NSCC-96-18) as described in Items I, II, and III
below, which Items have been prepared primarily by NSCC. 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)(1988).
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The purpose of the proposed rule change is to modify NSCC's
procedures relating to supplemental input into the Reconfirmation and
Pricing Service (``RECAPS'').
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, NSCC included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments that it received on the proposed rule change.
The text of these statements may be examined at the places specified in
Item IV below. NSCC has prepared summaries, set forth in sections (A),
(B), and (C) below, of the most significant aspects of such
statements.\2\
---------------------------------------------------------------------------
\2\ The Commission has modified the text of the summaries
submitted by NSCC.
---------------------------------------------------------------------------
(A) Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
The purpose of the proposed rule change is to modify NSCC's
procedures relating to RECAPS.\3\ The proposed rule change will
implement a request by the RECAPS Subcommittee of the Securities
Operations Division of the Securities Industry Association to have
members respond more effectively to transactions processed through
RECAPS.
---------------------------------------------------------------------------
\3\ RECAPS is NSCC's automated fail clearance system for
eligible securities. RECAPS provides members an opportunity on a
quarterly basis to reconfirm and reprice transactions that already
have been compared.
---------------------------------------------------------------------------
NSCC's Procedure II(G) currently provides that members with
transactions that have not been reconfirmed after the processing of
initial RECAPS input have an opportunity to submit supplemental input
during the same RECAPS cycle. Supplemental input includes advisories,
deletes, and as-of trades. An advisory allows a member to acknowledge a
contraside submission that has not been reconfirmed after processing of
initial RECAPS input. A delete permits a member to delete its own
submission
[[Page 56596]]
from RECAPS. An as-of trade enables a member to submit a transaction to
RECAPS if it failed to submit the transaction as initial RECAPS input
at the start of the RECAPS cycle.
The proposed rule change will make several modifications to NSCC's
Procedure II(G) regarding RECAPS supplemental input. First, the
proposed rule change will expand the range of responses by a member to
a transaction submitted by a contraside that has not been reconfirmed
after processing of initial RECAPS input (``unreconfirmed RECAP'') by
adding ``don't knows'' (``DKs'') and rejects. The proposed rule change
will require a member to respond to an unreconfirmed RECAP by
submitting an advisory, a DK, or a reject and in the case of a reject
by also indicating the reasons for the rejection (e.g., trade
previously settled or different quantity).
The proposed rule change will provide that failure to respond to an
unreconfirmed RECAP will result in the transaction being deemed DK'ed.
The proposed rule change also will provide that a DK'ed transaction
will extinguish the rights, if any, of the DK'ing member with respect
to the transaction. Transactions of a member that have been DK'ed will
be subject to the rules of the appropriate marketplace.
Second, the proposed rule change will eliminate deletes as a type
of RECAPS supplemental input. The delete function is being removed
because members do not use it, and therefore, there is no longer a need
to maintain the delete function as part of the RECAPS system.
Third, the proposed rule change will add a new report to RECAPS.
NSCC will make available to members a RECAPS activity report at the end
of the RECAPS cycle. The RECAPS activity report will contain summary
information regarding the member's overall activity during a particular
RECAPS cycle, including the number of transactions submitted, the
number of transactions that were reconfirmed, and the number of
transactions that were DK'ed, rejected, or for which there was no
response.
NSCC believes the proposed rule change is consistent with the
requirements of Section 17A of the Act and the rules and regulations
thereunder because the rule proposal will promote the prompt and
accurate clearance and settlement of securities transactions and will
assure the safeguarding of securities and funds in the custody or
control of NSCC or for which NSCC is responsible.
(B) Self-Regulatory Organization's Statement on Burden on Competition
NSCC does not believe that the proposed rule change will impact or
impose a burden on competition.
(C) Self-Regulatory Organization's Statement on Comments on the
Proposed Rule Change Received from Members, Participants, or Others
No written comments have been solicited or received. 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
Within thirty-five days of the date of publication of this notice
in the Federal Register or within such longer period (i) as the
Commission may designate up to ninety days of such date if it finds
such longer period to be appropriate and publishes its reasons for so
finding or (ii) as to which NSCC consents, the Commission will:
(a) By order approve such proposed rule change or
(b) Institute proceedings to determine whether the proposed rule
change should be disapproved.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing. Persons making written submissions
should file six copies thereof with the Secretary, Securities and
Exchange Commission, 450 Fifth Street, NW., Washington, DC 20549.
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 inspection and copying in the
Commission's Public Reference Room, 450 Fifth Street, NW., Washington,
DC 20549. Copies of such filing will also be available for inspection
and copying at the principal office of NSCC.
All submissions should refer to the file number SR-NSCC-96-18 and
should be submitted by November 22, 1996.
For the Commission by the Division of Market Regulation,
pursuant to delegated authority. \4\
---------------------------------------------------------------------------
\4\ 17 CFR 200.30-3(a)(12)(1996).
---------------------------------------------------------------------------
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 96-28078 Filed 10-31-96; 8:45 am]
BILLING CODE 8010-01-M
