[Federal Register Volume 75, Number 235 (Wednesday, December 8, 2010)]
[Notices]
[Pages 76515-76517]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-30880]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-63404; File No. SR-NSCC-2010-16]
Self-Regulatory Organizations; National Securities Clearing
Corporation; Notice of Filing of Proposed Rule Change To Amend
Procedure II of the NSCC Rules & Procedures To Modify the Money
Tolerance Comparison Provisions for Fixed Income Securities
December 1, 2010.
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 November 19, 2010, the National Securities
[[Page 76516]]
Clearing Corporation (``NSCC'') filed with the Securities and Exchange
Commission (``Commission'') the proposed rule change as described in
Items I and II below, which items have been prepared primarily by
NSCC.\3\ The Commission is publishing this notice to solicit comments
on the proposed rule change from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ The text of the proposed rule change is attached as Exhibit
5 to NSCC's filing and is available at http://www.dtcc.com/downloads/legal/rule_filings/2010/nscc/2010-16.pdf.
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I. Self-Regulatory Organization's Statement of the Terms of the
Substance of the Proposed Rule Change
The purpose of this proposed rule change is to amend Procedure II
(``Trade Comparison and Recording Service'') of the NSCC Rules &
Procedures to modify the money tolerance comparison provisions for
fixed income securities.
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.\4\
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\4\ The Commission has modified the text of the summaries
prepared by NSCC.
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(A) Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
Trade Comparison and Recording Service
NSCC provides a Real-Time Trade Matching (``RTTM'') service for
trade input and comparison of corporate bond, municipal bond, and unit
investment trust (collectively ``CMU'') fixed income securities.
Matching requires that the two trade counterparties submit certain
required trade details to RTTM that either match exactly or fall within
predefined parameters. If the trade details are matched within RTTM, a
valid and binding contract between the submitting trade parties
results. If the purchaser and seller submit trade data that matches in
all required aspects except for trade value, NSCC uses the seller's
money (referred to as ``seller's value'') as the trade value and deems
the trade compared as long as the difference between the seller's
submitted trade value and the buyer's submitted trade value falls
within prescribed dollar values as more fully described below.
Currently, Procedure II of NSCC's Rules & Procedures provides two
scenarios in which trades are compared using the seller's value. In the
first scenario, NSCC will use the seller's value to match a trade
submitted prior to the cut-off time for intraday comparison if the
respective trade parties have submitted contract amounts that are
within (1) a net $2 difference for trades of $1 million or less and (2)
$2 per million for trades greater than $1 million. In the second
scenario, NSCC will also use the seller's value during the end-of-day
enhanced comparison process to match a trade that remained uncompared
after the intraday comparison process if the contract amounts are
within (i) a net $10.00 difference for trades of $100,000 or less and
(ii) $.10 per $1,000 for trades greater than $100,000.
Proposed Amendments to NSCC Procedure II
Since the establishment of these CMU money tolerance amounts in
1995, member firms have significantly improved the timing and accuracy
of fixed income trade reporting. In 2005, the Municipal Securities
Rulemaking Board (``MSRB'') instituted a requirement that firms report
trades in municipal securities to the RTTM engine within 15 minutes.
This, in turn, required member firms to improve their reporting
accuracy and technology. As a result, RTTM is matching a greater
percentage of CMU trades upon initial trade input from the buyer and
seller.
NSCC believes that because of these improvements, the current money
tolerance is wider than needed. NSCC believes that best practices
dictates that the money tolerance be modified to reflect current
business conditions. Accordingly, NSCC is proposing to amend the CMU
money tolerance for the second scenario in which trades are compared
using the seller's value. Transactions that remain uncompared after the
intraday comparison process shall be deemed compared during the end-of-
day enhanced comparison process if the seller's value has a net $10.00
difference for trades of $250,000 or less and $0.04 per $1,000 for
trades greater than $250,000. NSCC members will be advised of the
implementation date through the issuance of an NSCC Important Notice.
Section 17A(b)(3)(F) of the Act requires, among other things, that
the rules of a clearing agency be designed to promote the prompt and
accurate clearance and settlement of securities transactions.\5\ The
proposed rule change is consistent with the requirements of the Act and
the rules and regulations thereunder applicable to NSCC because it
should enhance the efficiency of NSCC's clearance and settlement
processes and should therefore better enable NSCC to facilitate the
prompt and accurate clearance and settlement of securities
transactions.
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\5\ 15 U.S.C. 78q-1(b)(3)(F).
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(B) Self-Regulatory Organization's Statement on Burden on Competition
NSCC does not believe that the proposed rule change would impose
any burden on competition.
(C) Self-Regulatory Organization's Statement on Comments on the
Proposed Rule Change Received From Members, Participants or Others
Written comments relating to the proposed rule change have not been
solicited or received. 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 forty-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 or disapprove the 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. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml) or
Send an e-mail to [email protected]. Please include
File Number SR-NSCC-2010-16 on the subject line.
Paper Comments
Send paper comments in triplicate to Elizabeth M. Murphy,
Secretary,
[[Page 76517]]
Securities and Exchange Commission, 100 F Street, NE., Washington, DC
20549-1090.
All submissions should refer to File Number SR-NSCC-2010-16. 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 Web site viewing and
printing in the Commission's Public Reference Section, 100 F Street,
NE., Washington, DC 20549-1090, on official business days between the
hours of 10 a.m. and 3 p.m. Copies of such filings will also be
available for inspection and copying at the principal office of NSCC
and on NSCC's Web site at http://www.dtcc.com/downloads/legal/rule_filings/2010/nscc/2010-16.pdf. 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-2010-16 and should be submitted on or before
December 29, 2010.
For the Commission by the Division of Trading and Markets,
pursuant to delegated authority.\6\
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\6\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-30880 Filed 12-7-10; 8:45 am]
BILLING CODE 8011-01-P