2017-16740. Self-Regulatory Organizations; National Securities Clearing Corporation; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Establish the Effective Date of the Settlement Cycle Rule Changes  

  • Start Preamble Start Printed Page 37256 August 3, 2017.

    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 July 31, 2017, 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) of the Act [3] and Rule 19b-4(f)(4) thereunder.[4] 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

    NSCC is filing this proposed rule change to (i) establish September 5, 2017 as the effective date (“Effective Date”) of the settlement cycle rule changes (“T2 Changes”) submitted pursuant to rule filing SR-NSCC-2016-007 (“Prior Rule Filing”),[5] (ii) incorporate the T2 Changes into NSCC's Rules & Procedures (“Rules”) [6] as of the Effective Date, and (iii) amend the legend (“Legend”) on the cover page of the Rules in order to include the Effective Date and self-eliminating language for the Legend, and remove the Legend's current reference to NSCC making a subsequent rule filing with the Commission as this proposal is that subsequent rule filing.

    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

    On January 4, 2017, the Commission issued an order approving the Prior Rule Filing,[7] which was filed by NSCC pursuant to Section 19(b)(2) of the Act.[8]

    The purpose of the Prior Rule Filing was to amend the Rules to ensure that the Rules are consistent with the anticipated industry-wide move to a shorter standard settlement cycle from the third business day after the trade date (“T+3”) to the second business day after the trade date (“T+2”). Although approved by the Commission, the Prior Rule Filing stated that the T2 Changes would not become effective and would not be implemented until an effective date is established by a subsequent proposed rule change to be submitted by NSCC under Rule 19b-4 of the Act.[9]

    NSCC is filing this proposed rule change to (i) establish the Effective Date for the T2 Changes, which is also the compliance date for the Commission's amendment to Rule 15c6-1(a) under the Act,[10] (ii) incorporate the T2 Changes into the Rules as of the Effective Date, and (iii) amend the Legend on the cover page of the Rules in order to include the Effective Date and self-eliminating language for the Legend, and remove the Legend's current reference to NSCC making a subsequent rule filing with the Commission as this proposal is that subsequent rule filing.

    2. Statutory Basis

    Section 17A(b)(3)(F) of the Act requires, in part, that the Rules be designed to promote the prompt and accurate clearance and settlement of securities transactions.[11] The proposed rule change would establish the Effective Date for the T2 Changes and provide NSCC members (“Members”) with an understanding of when the T2 Changes will begin to affect them. Knowing when the T2 Changes will begin to affect Members would enable them to timely fulfill their obligations to NSCC, which would in turn ensure that securities transactions would be promptly and accurately cleared and settled within the industry standard settlement cycle and, by extension, facilitate the prompt and accurate clearance and settlement of securities transactions submitted to NSCC for clearing and settlement. Therefore, NSCC believes that the proposed rule change would promote the prompt and accurate clearance and settlement of securities transactions, consistent with Section 17A(b)(3)(F) of the Act cited above.

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

    NSCC does not believe that the proposed rule change to (i) establish the Effective Date for the T2 Changes, (ii) incorporate the T2 Changes into the Rules as of the Effective Date, and (iii) amend the Legend on the cover page of the Rules in order to include the Effective Date and self-eliminating language for the Legend, and remove the Legend's current reference to NSCC making a subsequent rule filing with the Commission would have any impact, or impose any burden, on competition because the proposed rule change is intended to provide additional clarity in the Rules regarding when the T2 Changes would become effective for Members. As such, the proposed rule change would not impact a particular category of Members nor would it impact particular types of Members' businesses.

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

    NSCC has not received or solicited any written comments relating to this proposal. 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

    The foregoing rule change has become effective pursuant to Section 19(b)(3)(A) of the Act [12] and paragraph (f) of Rule 19b-4 thereunder.[13] At any time within 60 days of the filing of the proposed rule Start Printed Page 37257change, 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:

    Electronic Comments

    Paper Comments

    • Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.

    All submissions should refer to File Number SR-NSCC-2017-014. 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 Web site (http://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 Web site viewing and printing in the Commission's Public Reference Room, 100 F Street NE., Washington, DC 20549-1090 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 Web site (http://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-2017-014 and should be submitted on or before August 30, 2017.

    Start Signature

    For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.[14]

    Eduardo A. Aleman,

    Assistant Secretary.

    End Signature End Preamble

    Footnotes

    5.  See Securities Exchange Act Release No. 79356 (November 18, 2016), 81 FR 85299 (November 25, 2016) (SR-NSCC-2016-007).

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    6.  Capitalized terms not defined herein are defined in the Rules, available at http://www.dtcc.com/​~/​media/​Files/​Downloads/​legal/​rules/​nscc_​rules.pdf.

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    7.  See Securities Exchange Act Release No. 79734 (January 4, 2017), 82 FR 3030 (January 10, 2017) (SR-NSCC-2016-007).

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    10.  The Commission adopted an amendment to the Settlement Cycle Rule (Rule 15c6-1(a)) under the Act to shorten the standard settlement cycle for most broker-dealer transactions from T+3 to T+2. See Amendment to Securities Transaction Settlement Cycle, Exchange Act Release No. 80295 (March 22, 2017), 82 FR 15564 (March 29, 2017).

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    [FR Doc. 2017-16740 Filed 8-8-17; 8:45 am]

    BILLING CODE 8011-01-P

Document Information

Published:
08/09/2017
Department:
Securities and Exchange Commission
Entry Type:
Notice
Document Number:
2017-16740
Pages:
37256-37257 (2 pages)
Docket Numbers:
Release No. 34-81306, File No. SR-NSCC-2017-014
EOCitation:
of 2017-08-03
PDF File:
2017-16740.pdf