[Federal Register Volume 64, Number 64 (Monday, April 5, 1999)]
[Notices]
[Pages 16513-16514]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-8238]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-41218; File No. SR-NSCC-99-02]
Self-Regulatory Organizations; National Securities Clearing
Corporation; Notice of Filing and Order Granting Accelerated Approval
of a Proposed Rule Change Regarding Exit Instructions for Exchange
Orders
March 26, 1999.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ notice is hereby given that on February 12, 1999,
National Securities Clearing Corporation (``NSCC'') filed with the
Securities and Exchange Commission (``Commission'') the proposed rule
change as described in Items I and II below, which items have been
prepared primarily by NSCC. The Commission is publishing this notice to
solicit comments from interested persons on the proposed rule change.
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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 change permits Mutual Fund Services (``Fund/
SERV'') members to submit exit instructions for exchange orders.
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,
[[Page 16514]]
and C below, of the most significant aspects of such statements.\2\
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\2\ The Commission has modified the text of the summaries
prepared by NSCC.
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A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
Under the proposed rule change, NSCC will modify its rules relating
to Fund/SERV.\3\ Among other things, Fund/SERV enables eligible members
to electronically process and settle mutual fund orders. These orders
include purchases, redemptions, and exchanges.
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\3\ Specifically, NSCC is amending Rule 52, A. Fund/SERV, SEC.
10.
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The proposed rule change permits NSCC to implement a request by a
users advisory group to modify NSCC's Rule 52 to provide members with
the option of submitting exit instructions for exchange orders they
determine not to settle within Fund/SERV.\4\
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\4\ See letter from Colleen Daly, Chairperson of the Investment
Company Institute's NSCC Fund/SERV Enhancement Committee (February
4, 1999). A copy of the letter is included with NSCC's filing.
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Fund/SERV was originally established to provide a once-a-day or
single-cycle processing service that executed a member's instructions
only at the end of each business day. Since exchange orders are
immediately set for settlement the night they are received, exit
instructions to delete outstanding exchange orders were not permitted
under NSCC rules because Fund/SERV's single-cycle processing
environment did not provide an opportunity for exit instructions to be
executed.
However, Fund/SERV's intra day or multi-cycle processing now allows
a member to submit instructions throughout the day. Under the proposed
rule change an exchange order will continue to settle on the next
business day unless a member submits an exit instruction on the same
day it is received. NSCC plans to notify members by an ``Important
Notice'' on March 29, 1999, that it intends to implement the rule
change.
NSCC believes the proposed rule change is consistent with Section
17A of the Act \5\ and the rules and regulations thereunder because it
facilitates the prompt and accurate clearance and settlement of
securities transactions.
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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 other than from the chairperson of the Investment
Company Institute's NSCC Fund/SERV Enhancement Committee. Her comments
are attached to the proposal as Exhibit C. NSCC will notify the
Commission of any other written comments received by NSCC.
III. Date of Effectiveness of the Proposed Rule Change and Timing
for Commission Action
Section 17A(b)(3)(F) of the Act requires that the rules of a
clearing agency be designed to promote the prompt and accurate
clearance and settlement of securities transactions.\6\ The Commission
believes that the rule change is consistent with this obligation
because the proposal provides Fund/SERV members with an automated
method for deleting erroneous exchange orders. As a result, the
proposed rule change reduces the likelihood that Fund/SERV members will
need to go outside of Fund/SERV to correct an exchange order. Thus, the
proposal promotes the prompt and accurate clearance and settlement of
securities transactions.
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\6\ 15 U.S.C. 78q-1(b)(3)(F).
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NSCC has requested that the Commission find good cause for
approving the proposed rule change prior to the thirtieth day after
publication of the notice of filing. The Commission finds good cause
for approving the proposed rule change prior to the thirtieth day after
publication of the notice of filing because accelerated approval will
permit NSCC to implement this feature of Fund/SERV in a timely manner.
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. Persons making written submission
should file six copies thereof with the Secretary, Securities and
Exchange Commission, 450 Fifth Street, N.W., Washington D.C. 20549.
Copies of the submissions, 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. Sec. 552, will be available for inspection and copying in
the Commission's Public Reference Room, 450 Fifth Street, N.W.,
Washington, D.C. 20549. Copies of such filings will also be available
for inspection and copying at the principal office of NSCC. All
submissions should refer to the file number SR-NSCC-99-02 and should be
submitted by April 26, 1999.
It is therefore ordered, pursuant to Section 19(b)(2) of the Act,
that the proposed rule change (File No. SR-NSCC-99-02) be, and hereby
is, approved on an accelerated basis.
For the Commission by the Division of Market Regulation,
pursuant to delegated authority.\7\
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\7\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 99-8238 Filed 4-2-99; 8:45 am]
BILLING CODE 8010-01-M
