[Federal Register Volume 61, Number 52 (Friday, March 15, 1996)]
[Notices]
[Pages 10831-10832]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-6234]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-36942; File No. SR-NSCC-96-04]
Self-Regulatory Organizations; National Securities Clearing
Corporation; Notice of Filing of Proposed Rule Change to Establish the
Daily Price and Rate File Phase of the Mutual Fund Profile Service
March 7, 1996.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ notice is hereby given that on January 19, 1996, the
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 primarily by NSCC. On February 27, 1996, NSCC filed an
amendment to the proposed rule change.\2\ The Commission is publishing
this notice to solicit comments from interested persons.
\1\ 15 U.S.C. 78s(b)(1) (1988).
\2\ Letter from Julie Beyers, Associate Counsel, NSCC, to
Christine Sibille, Division of Market Regulation, Commission
(February 23, 1996).
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The proposed rule change seeks to amend NSCC's rules to establish a
mutual fund profile service (``MFPS'') and to seek approval for
implementation of the first phase of MFPS.
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 such
statements.\3\
\3\ The Commission has modified the text of the summaries
prepared by NSCC.
---------------------------------------------------------------------------
(A) Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
The purpose of the proposed rule change is to establish MFPS for
use by participating NSCC members and to implement the first phase of
MFPS, the daily price and rate file. MFPS will provide an automated
method of transmitting and receiving information pertaining to mutual
funds through a centralized and standardized facility on a timely
basis. MFPS will improve the flow of such data among participating NSCC
members and will enable such members to make additions, changes,
corrections, or deletions to such data as needed.
NSCC members will join the MFPS either as MFPS data providers, MFPS
data receivers, or both. MFPS data receivers most likely will consist
of broker-dealers. Mutual funds and fund complexes are likely to be
MFPS data providers but in many cases also may participate as MFPS data
receivers. MFPS data providers will transmit electronically MFPS data
to NSCC in a format developed by NSCC. MFPS data providers will have
the option as to the amount of data pertaining to them to include in
MFPS. NSCC then will group and consolidate MFPS data to fit the format
developed for distribution and will transmit the data to MFPS users.
MFPS data will be transmitted between NSCC and MFPS users via mainframe
and/or personal computer interfaces based on users' preferences, needs,
and capabilities. At this time, NSCC has not determined whether an
agreement will be necessary to permit an NSCC member to participate in
MFPS.
To ensure that MFPS users are capable of adequately using the
service, NSCC initially proposes to limit the scope of the MFPS data to
include only daily prices and rates of funds. MFPS users will be able
to deliver data relating to daily prices and daily dividend accrual
rates for individual securities for a specific date. NSCC will
consolidate all price and rate information received from MFPS data
providers on a given day into a daily price and rate file and will
distribute such file to MFPS data receivers. This file also will report
price and rate corrections to users as they are identified by a fund.
NSCC will maintain historical data within the database for a specified
period of time.
Currently, NSCC members obtain fund price and rate information in a
variety of ways including paper transmittals, facsimile, and telephone.
NSCC believes that such methods of obtaining information generally are
time consuming, labor intensive, and prone to error. Furthermore, NSCC
believes the lack of automation and standardization of the process by
which information is exchanged between NSCC members delays the receipt
of time-sensitive data and contributes to processing difficulties
resulting from incorrect or incomplete information. NSCC believes that
MFPS will support and will expedite the processing of mutual fund
transactions at the firms and funds.
Other components of MFPS will be implemented in one or more phases
after approval of the daily price and rate file.\4\ These other
components will include (i) the ``member profile'' which will maintain
data for each NSCC member participating in MFPS, including personnel
contacts, telephone numbers, addresses, commissions payment procedures,
and the processing capabilities and data for NSCC members which act as
agents for other NSCC members; (ii) the ``security issue profile''
which will maintain information on each individual fund maintained in
the profile, including minimum purchase or maintenance requirements,
fund features, and various fund processing characteristics; and (iii)
the ``distribution declaration information profile'' which will include
projected and/or actual record dates, ex-dates, reinvestment dates, and
payable dates for fund dividend and capital gain payments and also may
include Rule 12b-1 plan and other commission payout information. NSCC
anticipates that member profile information and security issue profile
information will be distributed only to specific NSCC members or to all
NSCC members, depending on the instructions of the MFPS data provider.
\4\ Pursuant to Section 19(b)(2) of the Act, NSCC will be
required to file with the Commission proposed rule changes regarding
all future phases of MFPS prior to the implementation of each such
phase.
---------------------------------------------------------------------------
Due to the limited number of initial MFPS users and the limited
value of the initial services, NSCC will not charge fees for MFPS at
this time. When NSCC believes it is providing a value added service,
NSCC will file with the Commission an appropriate rule change
[[Page 10832]]
proposal to implement fees and charges for MFPS.
NSCC believes the proposed rule change is consistent with Section
17A of the Act and the rules and regulations thereunder because it will
facilitate the prompt and accurate clearance and settlement of
securities transactions.\5\
\5\ 15 U.S.C. 78q-1 (1988).
---------------------------------------------------------------------------
(B) Self-Regulatory Organization's Statement on Burden on Competition
NSCC does not believe that the rule filing will have an impact on
or impose a burden on competition.
(C) Self-Regulatory Organization's Statement on Comments on the
Proposed Rule Change Received From Members, Participants or Others
NSCC solicited comments from its ICI Broker/Dealer Committee and
its Mutual Fund Profile Working Committee on July 5, August 18,
November 9, and November 21, 1995. NSCC received letters from Colonial
Investors Service Center, Inc. (dated July 21, 1995), AIM Fund
Services, Inc. (Dated July 24, 1995), Edgewood Services, Inc. (dated
July 31, 1995), Merrill Lynch (dated July 31, 1995), Securities
Industry Software Corporation (dated July 31, 1995), A.G. Edwards &
Sons, Inc. (dated August 4, 1995), DST Systems Inc. (dated September
11, 1995) and Funds Associates Ltd. (``FAL'') (dated September 22,
1995). Each responding firm expressed in its letter its commitment to
participate in and devote resources to the development of MFPS. In
addition, NSCC received a request from A.G. Edwards & Sons, Inc. (dated
August 9, 1995) that additional information be included in MFPS. NSCC
is in the process of determining whether to include this information,
which does not affect the implementation of the daily price and rate
file phase of MFPS.
NSCC also received a memorandum from FAL, dated December 1, 1995,
in which FAL requested that S.W.I.F.T. ISO formats be an option for
file transmission, that additional lead time be given for projects
utilizing S.W.I.F.T. formats, and that NSCC support transmission in
ASCII format. With regard to FAL's request, NSCC believes that the
standard data transmission procedures currently employed by NSCC meet
the concerns expressed therein. In addition, NSCC provided Franklin
Templeton Distributors, Inc. with the additional information concerning
interactive processing that it requested in its letter (dated November
30, 1995). NSCC will notify the Commission of any additional written
comments received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Within thirty-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 NSCC consents, the Commission will:
(a) by order approve 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. Persons making written submission
should file six copies thereof with the Secretary, Securities and
Exchange Commission, 450 Fifth Street, N.W., Washington, D.C. 20549.
Copies of the submissions, 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 inspection and copying in the
Commission's Public Reference Room, 450 Fifth Street, N.W., Washington,
D.C. 20549. Copies of such filing will also be available for inspection
and copying at the principal office of NSCC. All submissions should
refer to the file number SR-NSCC-96-04 and should be submitted by April
5, 1996.
For the Commission by the Division of Market Regulation,
pursuant to delegated authority.\6\
\6\ 17 CFR 200.30-3(a)(12) (1995).
---------------------------------------------------------------------------
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 96-6234 Filed 3-14-96; 8:45 am]
BILLING CODE 8010-01-M