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Notice

Self-Regulatory Organizations; National Securities Clearing Corporation; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Relating to the Mutual Fund Commission Settlement Service

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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 September 16, 2005.

Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”),[1] notice is hereby given that on August 11, 2005, 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.

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

The proposed rule change will permit an NSCC Rule 2 member [2] to submit fee data through NSCC to another NSCC Rule 2 member and have the payments settle through NSCC. Prior to this rule change, the Mutual Fund Commission Settlement service allowed such members to submit only commission data.

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.

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

The purpose of the proposed rule change is to amend NSCC Rule 52, Section C regarding NSCC's Mutual Fund Commission Settlement service by permitting a Rule 2 member to submit fee data through NSCC to another NSCC Rule 2 member and have the payment settle through NSCC. Prior to this rule change, the Mutual Fund Commission Settlement service allowed such members to submit only commission data.

NSCC believes that the new functionality to submit fee data should be useful in the context of processing mutual fund transactions for retirement plans in which a Rule 2 member may offer plan programs involving multiple mutual funds for which it acts as a recordkeeper or as a broker-dealer for multiple funds offered in the plan program. In this capacity, the Rule 2 member may receive a fee from the funds in connection with transactions in such funds for which it seeks to pay an amount over to another Rule 2 member that directed the purchase of certain of the fund shares in the plan.

Prior to this rule change, fees were frequently paid by checks sent through the mail. This practice carried the risk that checks may be lost or misdirected and errors may occur during the costly and manually intensive processing and reconciliation of check payments. Permitting settlement of these broker-to-broker fees through NSCC in the same manner that fund-to-broker fees are paid through NSCC should enable the fee payments to be made with greater efficiency and transparency in a secure, automated, and operationally efficient process.

The proposed rule change also deletes Rule 52(C), Section 4, which set forth procedures for members to correct a prior commission payment because NSCC's system processes correction data in the same manner that all other commission and fee related data is processed and the special provisions are not applicable.

NSCC believes that the proposed rule change is consistent with the requirements of the Act and the rules and regulations thereunder because it Start Printed Page 56201will facilitate the accurate clearance and settlement of transactions.

B. Self-Regulatory Organization's Statement on Burden on Competition

NSCC does not believe that the proposed rule change will have any impact or impose any burden on competition.

C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others

NSCC has not solicited or received written comments relating to the proposed rule change. NSCC will notify the Commission if it receives any written comments.

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)(iii) [3] of the Act and Rule 19b-4(f)(4) [4] thereunder because it effects a change in an existing service of NSCC that does not adversely affect the safeguarding of securities or funds in NSCC's control or for which NSCC is responsible and does not significantly affect NSCC's or its participants' respective rights or obligations. At any time within 60 days of the filing of the proposed rule change, the Commission may summarily abrogate 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, as amended, 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 Jonathan G. Katz, Secretary, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549-9303. All submissions should refer to File Number SR-NSCC-2005-10. This file number should be included on the subject line if e-mail 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 inspection and copying in the Commission's Public Reference Section, 100 F Street, NE., Washington, DC 20549. Copies of such filing also will be available for inspection and copying at NSCC's principal office and on NSCC's Web site (http://www.nscc.com/​legal/​index.html). 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-2005-10 and should be submitted on or before October 17, 2005.

Start Signature

For the Commission by the Division of Market Regulation, pursuant to delegated authority.5

Jonathan G. Katz,

Secretary.

End Signature End Preamble

Footnotes

2.  Members admitted under NSCC Rule 2 may be admitted to use all NSCC services or they may be admitted to use NSCC's mutual fund and insurance processing services only.

Back to Citation

3.  15 U.S.C. 78s(b)(3)(A)(iii).

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[FR Doc. E5-5172 Filed 9-23-05; 8:45 am]

BILLING CODE 8010-01-P