[Federal Register Volume 70, Number 107 (Monday, June 6, 2005)]
[Notices]
[Pages 32859-32860]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E5-2873]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-51753; File No. SR-NSCC-2005-02]
Self-Regulatory Organizations; National Securities Clearing
Corporation; Order Approving Proposed Rule Change To Enhance Automated
Customer Account Transfer Service To Permit the Automated Notification
of Changes to the Broker-Dealer of Record for Applicable Insurance
Products
May 27, 2005.
I. Introduction
On April 4, 2005, the National Securities Clearing Corporation
(``NSCC'') filed with the Securities and Exchange Commission
(``Commission'') and on April 12, 2005, amended proposed rule change
SR-NSCC-2005-02 pursuant to Section 19(b)(1) of the Securities Exchange
Act of 1934 (``Act'').\1\ Notice of the proposal was published in the
Federal Register on April 20, 2005.\2\ 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. 78s(b)(1).
\2\ Securities Exchange Act Release No. 51541 (April 13, 2005),
70 FR 20609 (April 20, 2005).
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II. Description
NSCC is enhancing its Automated Customer Account Transfer Service
(``ACAT Service'') to permit the automated notification of changes to
the broker-dealer of record for applicable insurance products.
Information regarding the broker-dealer of record for an annuity or
life insurance product is maintained by the insurance company that is
the issuer of the product. Currently there is no mechanism within the
ACAT Service that can automate notification of changes to the broker-
dealer of record. Annuity and life insurance products have a manually-
intensive processing stream connected with account transfers relative
to the automated processing of assets such as equity and debt
securities and mutual fund shares.
Under the proposed rule, the delivering and receiving broker-
dealers for annuities or life insurance products will be able to
communicate information regarding the change of broker-dealer of record
through the ACAT Service. The ACAT Service will communicate the
information through a link to a new product of NSCC's Insurance
Processing Services (``IPS'') called Inforce Transactions (``IFT'').
IFT
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will relay the information to the issuer insurance company and will
also provide a means of communicating to the ACAT Service whether the
insurance company has confirmed, rejected, or requested a modification
of the change. NSCC will not debit or credit a delivering or receiving
broker-dealer for the value of any applicable insurance product that is
part of a customer account transfer.
In order for the receiving and delivering broker-dealers and the
issuer insurance company to be able to effect an account change through
the ACAT Service, the insurance company must participate in IPS, the
receiving broker-dealer must participate in the ACAT Service and IPS,
and the delivering broker-dealer must participate in the ACAT Service.
NSCC is also making certain technical changes to Rule 50, which
governs the ACAT Service. For purposes of bringing efficiencies to the
financial marketplace, NSCC's Rule 50 will cover all asset types
regardless of whether NSCC has the operational capability to effect the
transfer of such assets. NSCC either will undertake to cause the asset
transfer or asset reregistration to occur or will issue a document
evidencing each delivering firm's obligation and each receiving firm's
entitlement that will result from the transfer. Such instructions,
regardless of their form, are commonly referred to as receive and
deliver instructions. NSCC is adding a definition, ``ACAT Receive and
Deliver Instruction,'' \3\ relating to these instructions. NSCC also is
making certain technical changes to the ACATS rule.
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\3\ As defined in NSCC Rule 1:
The term ``ACAT Receive and Deliver Instruction'' shall mean
such document, form, file, report or other information issued by the
Corporation [NSCC] to a Member or to a QSD (as defined in Rule 50),
on behalf of such QSD's participants, which identifies Automated
Customer Account Transfer receive and deliver obligations.
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III. Discussion
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.\4\ The Commission
finds that NCCC's proposed rule change is consistent with this
requirement because by automating and facilitating the change in
broker-dealer of record for eligible insurance products associated with
account transfers, the enhancements to the ACAT Service and the new IFT
product should reduce processing errors and delays that are typically
associated with manual processing.
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\4\ 15 U.S.C. 78q-1(b)(3)(F).
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IV. Conclusion
On the basis of the foregoing, the Commission finds that the
proposed rule change is consistent with the requirements of the Act and
in particular 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-2005-02) be and hereby
is approved.
For the Commission by the Division of Market Regulation,
pursuant to delegated authority.\5\
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\5\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. E5-2873 Filed 6-3-05; 8:45 am]
BILLING CODE 8010-01-P