[Federal Register Volume 61, Number 94 (Tuesday, May 14, 1996)]
[Notices]
[Pages 24343-24344]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-12037]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-37171; File No. SR-NSCC-96-04]
Self-Regulatory Organizations; National Securities Clearing
Corporation; Order Approving a Proposed Rule Change To Establish the
Daily Price and Rate File Phase of the Mutual Fund Profile Service
May 8, 1996.
On January 19, 1996, the National Securities Clearing Corporation
(``NSCC'') filed with the Securities and Exchange Commission
(``Commission'') a proposed rule change (File No. SR-NSCC-96-04)
pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'') to establish the daily price and rate file phase of the
mutual fund profile service.\1\ On February 27, 1996, NSCC filed an
amendment to the proposed rule change.\2\ Notice of the proposal was
published in the Federal Register on March 15, 1996.\3\ No comment
letters were received. For the reasons discussed below, the Commission
is approving the proposed rule change.
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\1\ 15 U.S.C. Sec. 78s(b)(1) (1988).
\2\ Letter from Julie Beyers, Associate Counsel, NSCC, to
Christine Sibille, Division of Market Regulation, Commission
(February 23, 1996).
\3\ Securities Exchange Act Release No. 36942 (March 7, 1996),
61 FR 10831.
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I. Description
Under the rule change, NSCC will establish a mutual fund profile
service (``MFPS'') for use by participating NSCC members and will
implement the first phase of MFPS, the daily price and rate file. MFPS
is intended to provide an automated method of transmitting and
receiving information pertaining to mutual funds through a centralized
and standardized facility.
NSCC members will join the MFPS either as MFPS data providers, MFPS
data receivers, or both.\4\ MFPS data providers will transmit
electronically MFPS data to NSCC in a format developed by NSCC.\5\ MFPS
data providers will have the option as to the amount of data pertaining
to them to include in MFPS. NSCC then will group and consolidate MFPS
data to fit the format developed for distribution and will transmit the
data to MFPS data receivers.\6\ MFPS data will be transmitted between
NSCC and MFPS users through mainframe and/or personal computer
interfaces based on users' preferences, needs, and capabilities.
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\4\ Mutual funds and fund complexes are likely to be MFPS data
providers but in many cases also may participate as MFPS data
receivers. MFPS data receivers most likely will consist of broker-
dealers or service bureaus.
\5\ NSCC will accept batch input files between 4:00 a.m. and
8:00 p.m. E.S.T. Interactive participants can input data between
4:00 a.m. and 9:00 p.m. E.S.T. The system will be available Monday
through Friday.
\6\ For single and multibatch participants, NSCC will make
available MFPS output every two hours between 6:00 a.m. and 4:00
p.m. E.S.T. and hourly from 4:00 p.m. to 9:00 p.m. E.S.T. Between
5:00 p.m. and 8:00 p.m. E.S.T., MFPS output also will be made
available every half hour. Interactive participants will receive
output as soon as it has been processed by the system.
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To ensure that MFPS users are capable of adequately using the
service, NSCC proposes to limit initially the scope of the MFPS data to
include only daily prices and dividend accrual rates
[[Page 24344]]
of funds.\7\ After MFPS data providers deliver the daily price and rate
data to NSCC, NSCC will consolidate all such information into a daily
price and rate file and will distribute such file to MFPS data
receivers.\8\ This file also will report price and rate corrections as
they are identified by data providers.
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\7\ Currently, NSCC members obtain fund price and rate
information in a variety of ways including paper transmittals,
facsimile, and telephone.
\8\ Once submitted, price and rate information cannot be deleted
but can be corrected.
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MFPS data receivers also may elect to receive a file containing
prices received from the National Association of Securities Dealers
(``NASD'') for the current day. This file will include the net asset
value for approximately 6,000 funds. NSCC will maintain historical data
other than NASD price information within the database for a period of
ninety days. NASD price information will be maintained for thirty days.
Other components of MFPS will be implemented in one or more phases
after approval of the daily price and rate file.\9\ These other
components will include (i) the ``member profile'' which will maintain
for each NSCC member participating in MFPS data such as personnel
contacts, telephone numbers, addresses, commissions payment procedures,
processing capabilities and information regarding NSCC members which
act as agents for other NSCC members; (ii) the ``security issue
profile'' which will maintain on each individual fund included in the
profile information such as minimum purchase or maintenance
requirements, fund features, and various fund processing
characteristics; and (iii) the ``distribution declaration information
profile'' which will include projected and/or actual record dates, ex-
dates, reinvestment dates, and payable dates for fund dividend and
capital gain payments and also may include Rule 12b-1 plan and other
commission payout information. Member profile information and security
issue profile information will be distributed only to specific NSCC
members or to all NSCC members, depending on the instructions of the
MFPS data provider. Due to the limited number of initial MFPS users and
the limited value of the initial services, NSCC will not charge fees
for MFPS at this time.\10\
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\9\ Pursuant to Section 19(b)(3)(A) of the Act, NSCC will be
required to file with the Commission proposed rule changes regarding
all future phases of MFPS prior to the implementation of each such
phase, which will be effective upon filing, as long as
implementation and use of subsequent MFPS phases will occur as
described in this order. Any deviations in the manner of
implementation or in the use of subsequent MFPS phases will require
proposed rule changes to be filed in accordance with Section
19(b)(2) of the Act.
\10\ NSCC will file with the Commission an appropriate rule
change proposal to implement fees and charges for MFPS.
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II. Discussion
Section 17A(b)(3)(F) \11\ of the Act requires that the rules of a
clearing agency be designed to foster cooperation and coordination with
persons engaged in the clearance and settlement of securities
transactions and to remove impediments to and perfect the mechanism of
a national system for the prompt and accurate clearance and settlement
of transactions. Furthermore, Section 17A(a)(1)(C) of the Act \12\ sets
forth a Congressional finding that new data processing and
communications techniques create the opportunity for more efficient,
effective, and safe procedures for clearance and settlement. As
discussed below, the Commission believes that NSCC's proposed rule
change is consistent with NSCC's obligations under the Act.
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\11\ 15 U.S.C. Sec. 78q-1(b)(3)(F) (1988).
\12\ 15 U.S.C. Sec. 78q-1(a)(1)(C) (1988).
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Implementation of MFPS will allow NSCC participants to have access
to up-to-date information on mutual fund daily prices and dividend
accrual rates. This should assist NSCC participants in the timely
processing of mutual fund transactions. The Commission believes that
the use of MFPS should thus aid in the overall processing efficiency of
mutual fund transactions and thereby should help remove impediments to
and enhance the mechanism of a national market system for the clearance
and settlement of securities transactions. Furthermore, automation and
standardization of mutual fund information should help to reduce
processing difficulties resulting from the use of inaccurate or
incomplete mutual fund information. MFPS also should improve the flow
of mutual fund information among participating NSCC members as the
current methods of obtaining such information tend to be time
consuming, labor intensive, and prone to error. This should assist in
fostering cooperation and coordination among persons engaged in the
clearance and settlement of securities transactions.
III. Conclusion
On the basis of the foregoing, the Commission finds that the
proposal is consistent with the requirements of the Act and in
particular with the requirements of Section 17A of the Act and the
rules and regulations thereunder.
It is therefore ordered, pursuant to Section 19(b)(2) of the Act,
that the proposed rule change (File No. SR-NSCC-96-04) be, and hereby
is, approved.
For the Commission by the Division of Market Regulation,
pursuant to delegated authority.\13\
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\13\ 17 CFR 200.30-3(a)(12) (1995).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 96-12037 Filed 5-13-96; 8:45 am]
BILLING CODE 8010-01-M
