[Federal Register Volume 79, Number 113 (Thursday, June 12, 2014)]
[Notices]
[Pages 33793-33794]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-13695]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-72344; File No. SR-NSCC-2014-07]
Self-Regulatory Organizations; National Securities Clearing
Corporation; Notice of Filing of Proposed Rule Change To Implement a
New Scorecard Feature to the Mutual Fund Profile Service
June 6, 2014.
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
May 30, 2014, National Securities 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 by the clearing agency. 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.
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I. Clearing Agency's Statement of the Terms of Substance of the
Proposed Rule Change
The proposed rule change consists of amendments to the Rules &
Procedures (``Rules'') of NSCC to implement a new scorecard feature to
its Mutual Fund Profile Service, as more fully described below.
II. Clearing Agency'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) Clearing Agency's Statement of the Purpose of, and Statutory Basis
for, the Proposed Rule Change
1. Purpose
In 1996, NSCC launched its Mutual Fund Profile Service
(``MFPS''),\3\ providing participating members with an automated method
of transmitting and receiving information pertaining to funds and other
pooled investment vehicles through a centralized and standard facility.
Such funds and other pooled investment vehicles are collectively
referred to herein as ``Funds''.
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\3\ See, Release No. 34-37171 (May 8, 1996), 61 FR 24343 (May
14, 1996) (SR-NSCC-1996-04).
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In 1998, NSCC implemented three new databases as part of MFPS, (i)
the participant profile database, (ii) the security issue profile
database and (iii) the distribution declaration information profile
database.\4\ Through these three databases, MFPS offers the Funds
industry a centralized repository for prospectus and operational
information relating to Fund securities, Fund distributions and Fund
processing capabilities.
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\4\ See, Release No. 34-40614 (October 28, 1998), 63 FR 59615
(November 4, 1998) (SR-NSCC-1998-09).
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The ``security issue profile database'' contains Fund information,
including, but not limited to, security ID number, security name, fee
structure, investment objectives, breakpoint schedule data and blue sky
eligibility (collectively, ``Security Issue Data'').\5\ Participating
members using the security issue profile database are either data
providers or data receivers. Data providers populate the security issue
profile database with their applicable Security Issue Data and are
generally the Funds themselves, their principal underwriters or,
otherwise, entities authorized to process transactions on behalf of the
Funds (collectively, ``Data Providers''). Data receivers retrieve such
populated Security Issue Data for use and are generally the
distribution partners to the Funds (collectively, ``Data Receivers'').
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\5\ See, Release No. 34-59321 (January 30, 2009), 74 FR 6933
(February 11. 2009) (SR-NSCC-2008-08).
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Over the last several months, some Data Receivers have noted that
Security Issue Data, on occasion, does not match the associated
information set forth in the applicable Data Provider's public filings.
Such variances and other noted potential discrepancies (collectively,
``Discrepancies'') have caused certain Data Receivers to express
concerns about Security Issue Data reliability. As a result, Data
Receivers have requested NSCC's assistance in creating a mechanism for
encouraging more reliable Security Issue Data within the security issue
profile database.
To address these concerns, NSCC proposes to amend Rule 52.D of its
Rules & Procedures to implement a new feature in the security issue
profile database--a scorecard--that would be distributed to MFPS
members on a regularly scheduled basis, as determined by the
Corporation. The scorecards will set forth (i) the numerical score
issued to each applicable Data Provider and (ii) the combined average
numerical score of all Data Providers. The various types of Discrepancy
categories and number of identified Discrepancies within each category
will form the basis from which the individual Data Provider's score and
the combined average scores of all Data Providers will be calculated.
Each Data Provider's scorecard will contain (i) the individual,
numerical score issued to it, (ii) the number of identified
Discrepancies within each category attributable to such Data Provider
and (iii) the combined average numerical score of all Data Providers.
Data Providers will not see the individual, numerical scores issued to
other Data Providers nor the identified Discrepancies of other Data
Providers. A Data Provider that has no identified Discrepancies with
respect to its Security Issue Data, or that otherwise addresses all of
its identified Discrepancies, will be issued a perfect score as
reflected on its scorecard, while a Data Provider that fails to take
action with respect to its identified Discrepancies will have its
individual score reduced. As new Discrepancies are identified to the
Data Provider or the Data Provider reviews and addresses identified
Discrepancies, its individual score will be recalculated on a regularly
scheduled basis. The industry average score will recalculate according
to the same schedule as well.
Scorecards distributed to Data Receivers will contain (i) the
individual, numerical score issued to each Data Provider participant,
(ii) the number of identified Discrepancies within each category
attributable to each such Data Provider and (iii) the combined average
numerical score of all Data Providers. The Data Receivers' scorecards
will recalculate according to the same schedule as the Data Providers'
scorecards.
Because the scores are based solely on action or inaction of Data
Providers, the rule, as amended, will provide that the Corporation
makes no representation or warranty with respect to the value or
usefulness of any score or scorecard, nor will the Corporation be
subject to any
[[Page 33794]]
damages or liabilities whatsoever with respect to any person's use of
or reliance upon any score or scorecard. In addition, because the
scorecards are intended solely for members' use and are not intended to
be made public, the rule, as amended, will state that all information
contained in the scorecards is copyrighted and any form of copying,
other than for each NSCC member's personal reference, without the
express written permission of the Corporation, is prohibited, and
further distribution or redistribution of the scorecard or any
information contained therein by any means or in any manner is strictly
prohibited.
2. Statutory Basis
NSCC believes that the proposed rule change is consistent with the
requirements of the Securities Exchange Act of 1934, as amended (the
``Act''), specifically Section 17A(b)(3)(F),\6\ and the rules and
regulations thereunder applicable to NSCC. The proposed new feature
encourages accuracy and consistency of communications with respect to
information about securities. Accordingly, NSCC believes that the
proposed rule change fosters cooperation and coordination with persons
engaged in the clearance and settlement of securities transactions.
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\6\ 15 U.S.C. 78q-1(b)(3)(F).
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(B) Clearing Agency'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. As stated above, the
proposed change adds a scorecard feature to facilitate accurate
securities information exchange, which will benefit all participating
members equally and should have no effect on competition within or
without NSCC.
(C) Clearing Agency'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 yet
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 45 days of the date of publication of this notice in the
Federal Register or within such longer period up to 90 days (i) as the
Commission may designate 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 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. 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 email to [email protected]. Please include
File Number SR-NSCC-2014-07 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.
All submissions should refer to File Number SR-NSCC-2014-07. This file
number should be included on the subject line if email 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 Room, 100 F Street NE.,
Washington, DC 20549 on official business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of the filing also will be available
for inspection and copying at the principal office of NSCC and on
NSCC's Web site (http://www.dtcc.com). 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-2014-07 and should be submitted on
or before July 3, 2014.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\7\
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\7\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-13695 Filed 6-11-14; 8:45 am]
BILLING CODE 8011-01-P