[Federal Register Volume 79, Number 227 (Tuesday, November 25, 2014)]
[Notices]
[Pages 70250-70251]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-27842]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-73644; File No. SR-NSCC-2014-10]
Self-Regulatory Organizations; National Securities Clearing
Corporation; Notice of Filing and Immediate Effectiveness of Proposed
Rule Change To Clarify That Federal Reserve Banks, Central
Counterparties, and Central Securities Depositories Shall Not Be
Considered Either ``Mandatory Purchaser Participants'' or ``Voluntary
Purchaser Participants''
November 19, 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
on November 12, 2014, National Securities Clearing Corporation
(``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 by NSCC. NSCC filed the
proposed rule change pursuant to Section 19(b)(3)(A) \3\ of the Act and
Rule 19b-4(f)(1) \4\ thereunder. The proposed rule change was effective
upon filing with the Commission. 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\ 15 U.S.C. 78s(b)(3)(A).
\4\ 17 CFR 240.19b-4(f)(1).
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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 Rule 64 Rules &
Procedures (``Rules'') of NSCC in order to clarify that Federal Reserve
Banks, central counterparties, and central securities depositories
shall not be considered either ``Mandatory Purchaser Participants'' or
``Voluntary Purchaser Participants'' as such terms are defined therein,
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
Pursuant to the Third Amended and Restated Shareholders Agreement,
dated as of December 7, 2005 (``Shareholders Agreement''), by and among
The Depository Trust & Clearing Corporation (``DTCC''), The Depository
Trust Company (``DTC''), NSCC, Fixed Income Clearing Corporation
(``FICC'') and the other parties thereto, and NSCC Rule 64: (1) Members
(as such term is defined in the Rules \5\) other than non-U.S. based
central securities depositories are required to be ``Mandatory
Purchaser Participants'' (as such term is defined in Rule 64) and be
parties to the Shareholders Agreement; (2) users whose use of NSCC is
more limited and does not include the guaranteed services, i.e., Fund
Members, Insurance Carrier/Retirement Services Members, Municipal
Comparison Only Members, and Mutual Fund/Insurance Services Members (as
such terms are defined in the Rules), are permitted, but not required,
to purchase and own shares of DTCC common stock (``Common Shares'') and
be parties to the Shareholders Agreement; and (3) all other users i.e.,
Data Services Only Members, Commission Billing Members, Settling Bank
Only Members, Investment Manager/Agent Members, TPP Members, TPA
Members, AIP Members, and AIP Settling Bank Only Members (as such terms
are defined in the Rules), are not permitted to purchase and own Common
Shares or be parties to the Shareholders Agreement.
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\5\ NSCC's Rules are available at http://dtcc.com/legal/rules-and-procedures.aspx.
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NSCC is proposing to amend Rule 64, as marked on Exhibit 5 hereto,
in order to make clear Federal Reserve Banks, central counterparties,
and central securities depositories shall not be considered either
Mandatory Purchaser Participants or Voluntary Purchaser Participants
(as such terms are defined in Rule 64). NSCC has interpreted Rule 64 to
exclude from its provisions: (1) Federal Reserve Banks, because it was
never intended that such governmental authorities should be required to
own shares in DTCC notwithstanding that they may use certain services
of NSCC; and (2) central counterparties and central securities
depositories, because link arrangements between NSCC and these entities
are for the purpose of extending clearing agency services across
borders or among closely related activities and products, but not for
ownership purposes.
2. Statutory Basis
The proposed rule change is consistent with the Act, and the rules
and regulations thereunder, in particular Section 17A(b)(3)(C) which
requires that the rules of NSCC ``assure a fair representation of its
shareholders (or members) and participants in the selection of its
directors and administration of its affairs . . . [and the Commission]
may determine that the representation of participants is fair if they
are afforded a reasonable opportunity to acquire voting stock of the
clearing agency, directly or indirectly, in reasonable proportion to
their use of such clearing agency.'' \6\ NSCC implements and meets this
requirement through NSCC Rule 64, which afford NSCC's Members a
reasonable opportunity to acquire voting stock indirectly in the
clearing agency in reasonable proportion to their use of the clearing
agency.\7\ The proposed rule change constitutes a stated policy,
practice, or interpretation with respect to the meaning,
administration, or enforcement of this existing rule.
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\6\ 15 U.S.C. 78q-1(b)(3)(C).
\7\ See Commission orders approving NSCC and DTC's rule filings
which implemented the current stock ownership structure that
satisfies the fair representation requirements. Securities Exchange
Act Release No. 41800 (August 27, 1999), 64 FR 48694 (September 7,
1999) (SR-NSCC-1999-10); and Securities Exchange Act Release No.
41786 (August 24, 1999), 64 FR 47882 (September 1, 1999) (SR-DTC-
1999-17).
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(B) Clearing Agency's Statement on Burden on Competition
The proposed rule change will not have any impact, or impose any
burden, on competition.
(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
[[Page 70251]]
the Commission of any written comments received by NSCC.
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) \8\ of the Act and paragraph (f) of Rule 19b-4 \9\
thereunder. At any time within 60 days of the filing of the proposed
rule change, the Commission summarily may temporarily suspend 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.
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\8\ 15 U.S.C. 78s(b)(3)(A).
\9\ 17 CFR 240.19b-4(f).
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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-2014-10 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-2014-10. 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 at http://dtcc.com/legal/sec-rule-filings.aspx. 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-2014-10 and should be
submitted on or before December 16, 2014.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\10\
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\10\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-27842 Filed 11-24-14; 8:45 am]
BILLING CODE 8011-01-P