[Federal Register Volume 62, Number 240 (Monday, December 15, 1997)]
[Notices]
[Pages 65728-65729]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-32654]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-39416; File No. SR-NSCC-97-10]
Self-Regulatory Organizations; National Securities Clearing
Corporation; Notice of Filing of a Proposed Rule Change Establishing a
New Category of Fund Member for Investment Advisers in Mutual Fund
Services
December 9, 1997.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ notice is hereby given that on August 25, 1997, the
National Securities Clearing Corporation (``NSCC'') filed with the
Securities and Exchange Commission (``Commission'') the proposed rule
change as described in Items I, II, and III below, which items have
been prepared primarily by NSCC. 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).
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I. Self-Regulatory Organization's Statement of the Terms of
Substance of the Proposed Rule Change
The proposed rule will establish a new category of fund member in
NSCC's mutual fund services (``MFS'') for registered investment
advisers.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, NSCC included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. NSCC has prepared summaries, set forth in sections (A),
(B), and (C) below, of the most significant aspects of such
statements.\2\
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\2\ The Commission has modified parts of these statements.
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(A) Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
NSCC's MFS is designed to enable NSCC members to process and to
settle on an automated basis mutual fund purchase and redemption orders
and to transmit registration instructions. Currently, NSCC's rules and
procedures permit two categories of fund member in MFS: (1) principal
underwriters
[[Page 65729]]
which are registered broker-dealers under the Act and (2) investment
companies which are registered under the Investment Company Act of
1940.\3\
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\3\ See NSCC Rule 51, Section 1 (``Fund Member'') and Procedure
Addendum I(B)(2) (``Standards of Financial Responsibility and
Operational Capability for Fund Members'').
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Although mutual funds which have no broker-dealer distributor may
join MFS as individual fund members, it can be a cumbersome and
inefficient process. For example, families of these self-distributed no
load funds currently may only join MFS through each of their separate
investment companies. To take full advantage of the benefits of a
single membership, such as net settlement, reduced costs, operational
efficiencies, and oversight by a single board of directors, these funds
prefer to join MFS through an investment adviser.
The proposed rule change will expand the fund member category to
include registered investment advisers as defined in Section 202(a)(11)
of the Investment Advisers Act of 1940. To be eligible for membership
in MFS, a nonguaranteed service of NSCC, investment advisers will need
to be registered with the Commission and to have a minimum of $25
million in assets under management and $100,000 in total net worth.
In addition, the proposed rule change will make a technical
amendment to conform NSCC's procedures with its rules. Specifically,
Procedure Addendum I(B)(2) sets forth the standards of financial
responsibility and operational capability for the investment company
fund member applicant. Because the list of eligible fund members
contained in Rule 51 inadvertently omits investment companies, Rule 51
Section 1 will be amended to include this existing category of fund
member.\4\
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\4\ Investment companies were permitted to join MFS as fund
member pursuant to a rule change filing approved by the Commission.
Securities Exchange Act Release No. 33525 (January 26, 1994), 59 FR
4759.
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NSCC believes that the proposed rule change is consistent with
Section 17A of the Act and the rules and regulations promulgated
thereunder because it will facilitate the prompt and accurate clearance
and settlement of securities transactions and will protect investors
and the public interest.\5\
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\5\ 15 U.S.C. 78q-1.
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(B) Self-Regulatory Organization's Statement on Burden on Competition
NSCC does not believe that the proposed rule change will have an
impact on 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 relating to the proposed rule change 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 reason for so
finding or (ii) as to which NSCC consents, the Commission will:
(A) by order approve such rule filing
(B) institute proceedings to determine whether the rule filing
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 N.W., Washington, D.C. 20549.
Copies of the submission, all subsequent amendments, all written
statements with respect to the rule filing that are filed with the
Commission, and all written communications relating to the rule filing
between the Commission and any person, other than those that may be
withheld from the public in accordance with provisions of 5 U.S.C. 552,
will be available for inspection and copying in the Commission's Public
Reference Room in Washington, D.C. 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 No. SR-NSCC-97-10 and should
be submitted by January 5, 1998.
For the Commission by the Division of Market Regulation,
pursuant to delegated authority.\6\
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\6\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 97-32654 Filed 12-12-97; 8:45 am]
BILLING CODE 8010-01-M
