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Notice

Self-Regulatory Organizations; National Securities Clearing Corporation; Notice of Filing of Proposed Rule Change Relating to Buy-In Rules and Procedures

Document Details

Information about this document as published in the Federal Register.

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This document has been published in the Federal Register. Use the PDF linked in the document sidebar for the official electronic format.

Start Preamble August 22, 2001.

Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”),[1] notice is hereby given that on April 27, 2001, the National Securities Clearing Corporation (“NSCC”) filed with the Securities and Exchange Commission (“Commission”) and on April 30, 2001, amended 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 parties.

I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change

The proposed rule change (i) further automates the buy-in process of CNS positions, (ii) allows for a Notice of Intention to Buy-In (“Buy-In Notice”) to be filed on successive days provided that the quantity of securities representing the sum of the Buy-In Notices does not exceed the member's total long position, and (iii) revises Retransmittal Notices to include the identity of the member with the long position (“originator”).

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 these statements.[2]

(A) Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change

NSCC is modifying its buy-in rules and procedures to further automate and Start Printed Page 45716improve the processing of buy-ins of CNS positions.[3] The proposed procedures provide that a Buy-In Notice may be filed by an originator on successive days provided the succeeding Buy-In Notice does not specify a quantity of securities covered by the prior Buy-In Notice and the quantity of securities representing the sum of all Buy-In Notices does not exceed the member's total long position.[4]

The Retransmittal Notice would be revised to include the identity of the originator on the Retransmittal Notice so that the member owing securities can contact the originator to arrange delivery.[5] Regardless of any agreements that may have been entered into between a member owing securities and an originator, unless the originator notifies NSCC in a timely manner that its Buy-In Order should not be executed, members who receive Retransmittal Notices and do not satisfy them assume liability for the loss, if any, which occurs as a result of an originator's Buy-In Order.[6]

The proposed rule change also would require members to electronically transmit Buy-In Notices and Buy-In Orders through an automated format determined by NSCC thereby eliminating the practice of hand and facsimile deliveries. Similarly, NSCC proposes to transmit through an automated format Retransmittal Notices to members.[7]

NSCC has determined that subject to SEC approval it will target implementation of the proposed Buy-In changes for the third quarter of 2001. Members will be advised of the specific date prior to implementation.[8]

NSCC believes that the proposed rule change is consistent with the requirements of Section 17A of the Act [9] and the rules and regulations thereunder applicable to NSCC because it will facilitate the prompt and accurate clearance and settlement of buy-in transactions by automating and improving the processing of buy-ins.

(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.[10] 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 the self-regulatory organization 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, including whether the proposed rule change is consistent with the Act. Persons making written submissions should file six copies thereof with the Secretary, Securities and Exchange Commission, 450 Fifth Street, N.W., Washington, D.C. 20459-0609. 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 Section, 450 Fifth Street, NW., Washington, DC 20549. Copies of such filing also will be available for inspection and copying at the principal office of NSCC. All submissions should refer to File No. SR-NSCC-2001-07 and should be submitted by September 19, 2001.

Start Signature

For the Commission by the Division of Market Regulation, pursuant to delegated authority.[11]

Margaret H. McFarland,

Deputy Secretary.

End Signature End Preamble

Footnotes

2.  The Commission has modified the text of the summaries prepared by NSCC.

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3.  Proposed changes to NSCC Rule 11, Sections 7(b) and (c); NSCC Procedure VII, Section J; and NSCC Procedure X, Section A. Also, proposed changes to NSCC Procedure VII, Section E3 to conform its language to the language proposed in NSCC Procedure VII, Section J.

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4.  Proposed changes to NSCC Procedure VII, Section J.

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5.  Proposed changes to NSCC Rule 11, Section 7(b).

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6.  Proposed changes to NSCC Procedure X, Section A 1.

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7.  Proposed changes to NSCC Rule 11, Sections 7(b) and (c).

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8.  As originally filed, the proposed Buy-In changes were to be implemented by NSCC on June 8, 2001.

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10.  In 1998 the Securities Operations Division of the Securities Industry Association formed a committee that studied, worked with, and supported NSCC in its enhancement of the its buy-in rules and procedures.

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[FR Doc. 01-21790 Filed 8-28-01; 8:45 am]

BILLING CODE 8010-01-M