[Federal Register Volume 71, Number 99 (Tuesday, May 23, 2006)]
[Notices]
[Page 29699]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E6-7798]
[[Page 29699]]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-53811; File No. SR-NSCC-2005-17]
Self-Regulatory Organizations; National Securities Clearing
Corporation; Order Approving Proposed Rule Change to Modify Its Rules
and Procedures Related to the Collection of Commission Payments
May 16, 2006.
I. Introduction
On December 29, 2005, the National Securities Clearing Corporation
(``NSCC'') filed with the Securities and Exchange Commission
(``Commission'') and on February 3, 2006, amended proposed rule change
SR-NSCC-2005-17 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 March 13, 2006.\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. 53424 (March 6, 2006),
71 FR 12759.
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II. Description
As part of ongoing efforts to increase processing efficiencies,
NSCC is modifying its Rule 16, ``Settlement of Commissions,'' to
further standardize and automate the processing of commission bill
payments.
In 2001, NSCC modified Rule 16 to implement the use of Automated
Clearing House (``ACH'') wire transfers when making payments to non-
clearing members utilizing NSCC's Commission Bill Service. As a part of
NSCC's move to payment of credits by ACH wire transfer, all non-
clearing members were required to execute appropriate ACH documentation
in order to receive their credit payments.\3\ While NSCC automated the
payment of funds from NSCC to non-clearing members, the collection of
monies owed to NSCC by non-clearing members was not automated. Non-
clearing members continued to pay commission bill settlement funds to
NSCC by checks.
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\3\ Securities Exchange Act Release No. 44550 (July 12, 2001),
66 FR 37509 (July 18, 2001) [File No. SR-NSCC-2001-08].
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NSCC is now further modifying Rule 16 to require the use of ACH
preauthorized payments in the collection of funds from those non-
clearing members that are indebted to NSCC as a result of their
utilization of the Commission Bill Service. Accordingly, at the time as
determined and announced to users of the Commission Bill Service by
NSCC, NSCC will debit the bank account designated by each non-clearing
member an amount equal to the amount owed by the non-clearing member to
NSCC.\4\ All non-clearing members will be required to execute
appropriate ACH documentation.
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\4\ Currently, commission bill settlement takes place on the
15th day of each month or on the next preceding business day if the
15th is not a business day.
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In addition to the above change, NSCC is also making a technical
correction to Rule 16(3) to conform the Rule to practice. NSCC will
eliminate text that provides that non-clearing members must deliver
information to NSCC on the 10th day of each month. NSCC is eliminating
this text because this practice has been discontinued.
Implementation
NSCC will work with New York Stock Exchange (``NYSE'') and American
Stock Exchange (``AMEX'') staff to obtain new ACH documentation from
all non-clearing members that currently utilize the Commission Bill
Service. Within two weeks of approval by the SEC of this rule filing,
NSCC will begin implementing the ACH debit process on a rolling-basis.
NSCC anticipates that collection of funds by check from non-clearing
members to NSCC will be discontinued in its entirety by the end of the
second quarter of 2006.
III. Discussion
Section 17A(b)(3)(F) of the Act requires, among other things, that
the rules of a clearing agency be designed to remove impediments to and
perfect the mechanism of a national system for prompt and accurate
clearance and settlement of securities transactions.\5\ By requiring
electronic payment of funds from non-clearing members utilizing its
Commission Bill Service, NSCC should reduce processing errors and
delays that are typically associated with the manual processing of
checks. As such, the proposed rule change is consistent with NSCC's
statutory obligation to remove impediments to and perfect the mechanism
of a national system for 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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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,\6\ that the proposed rule change (File No. SR-NSCC-2005-17) be and
hereby is approved.
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\6\ 15 U.S.C. 78s(b)(2).
\7\ 17 CFR 200.30-3(a)(12).
For the Commission by the Division of Market Regulation,
pursuant to delegated authority.\7\
Nancy M. Morris,
Secretary.
[FR Doc. E6-7798 Filed 5-22-06; 8:45 am]
BILLING CODE 8010-01-P