[Federal Register: September 13, 2007 (Volume 72, Number 177)]
[Notices]
[Page 52416-52418]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr13se07-91]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-56372; File No. SR-NSCC-2007-13]
Self-Regulatory Organizations; National Securities Clearing
Corporation; Notice of Filing of a Proposed Rule Change To Amend Its
Rules and Procedures With Regard to the Automated Customer Account
Transfer Service (ACATS) and ACATS Fund/SERV Processing
September 7, 2007.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ notice is hereby given that on August 15, 2007, National
Securities Clearing Corporation (``NSCC'') filed with the Securities
and Exchange Commission (``Commission'') the proposed rule change
described in Items I, II, and III below, which items have been prepared
primarily by NSCC. The Commission is publishing this notice to solicit
comments from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The proposed rule change consists of modifications to NSCC's Rules
and Procedures relating to its Automated Customer Account Transfer
Service (``ACATS'') and ACATS Fund/SERV processing.
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.\2\
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\2\ 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
The purpose of the proposed rule change is to modify NSCC's Rules
as necessary to shorten the account transfer time frame with respect to
certain types of ACATS and ACATS Fund/SERV transfers.\3\
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\3\ Rule 50 (Automated Customer Account Transfer Service) is
generally nonspecific with respect to account transfer time frames.
Rule 52 (Mutual Fund Services), Section 16 (ACAT/Transfers) is
nonspecific with respect to account transfer time frames and does
not require modification.
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1. Background
ACATS enables members of NSCC to effect automated transfers of
customer accounts among themselves. In operation since 1985, ACATS was
designed to facilitate compliance with New York Stock Exchange
(``NYSE'') Rule 412 and National Association of Securities Dealers
(``NASD'') \4\ Uniform
[[Page 52417]]
Practice Code Section 11870 that require NYSE and NASD members to use
automated clearing agency customer account transfer services and to
effect customer account transfers within specified time frames. ACATS
has been modified over time, with its most significant redesign in
1999, to provide NSCC members with a more seamless and timely customer
account transfer process.\5\
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\4\ Rule 50 (Automated Customer Account Transfer Service) is
generally nonspecific with respect to account transfer time frames.
Rule 52 (Mutual Fund Services), Section 16 (ACAT/Transfers) is
nonspecific with respect to account transfer time frames and does
not require modification.
\5\ The NASD is now known as The Financial Industry Regulatory
Authority, Inc. (``FINRA'').
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2. Proposed Modifications
NSCC, its members, the Customer Account Division of the Securities
Industry and Financial Markets Association (``SIFMA''), NYSE, and NASD
believe that because technology and processing has improved since the
1999 redesign additional modifications to ACATS processing can be made
that will further enhance the timeliness and efficiency of customer
account transfers. FINRA has submitted a comparable rule filing on
behalf of the NYSE and NASD with the Commission.\6\
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\6\ Securities Exchange Act Release No. 56373 (September 7,
2007) (notice of filing of proposed rule change) [File No. SR-FINRA-
2007-005].
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(a) Standard ACATS Transfers
Standard ACATS transfers currently include a three business day
``Request'' period. The proposed change will reduce the ``Request''
time frame from three business days to one business day. The time frame
within which an account transfer may be responded to (i.e., accepted or
rejected) will accordingly be shortened.\7\
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\7\ In addition to changes to the ``Request'' period, NSCC
proposes to modify the ACATS ``status'' time frames for Request-
Adjust, Request-Adjust Past, Request-Past, and Review-Error, from a
maximum of three business days to a maximum of one business day.
Rule 50 is nonspecific with respect to these time frames.
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(b) Nonstandard ACATS Transfers--Partial Transfer Receiver
Partial Transfers may be generated by either the Receiving Member
(Partial Transfer Receiver or ``PTR'') or the Delivering Member
(Partial Transfer Deliverer or ``PTD''). PTRs currently have a two
business day ``Request'' period. The proposed change will reduce the
``Request'' time frame from two business days to one business day. The
time frame within which an account transfer may be responded to (i.e.,
accepted or rejected) will accordingly be shortened.\8\
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\8\ Other non-standard transfers are: fail reversals, reclaims,
and residual credits (see Rule 50, Sec. 12). PTD's do not have a
``Request'' status.
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(c) ACAT Fund/SERV
In an ACAT transfer that includes mutual fund assets, during the
``Review'' period the Receiving Member (or if applicable its ACATS-
Fund/SERV Agent) requests the reregistration of mutual fund assets by
submitting a Fund Registration input record through ACATS to the Fund
Member/Mutual Fund Processor. The Fund Member/Mutual Fund Processor
then has four business days to either reject or acknowledge the
request.
NSCC has found that the majority of Fund Member/Mutual Fund
Processors act upon such requests during the first day of receipt.
Therefore, NSCC is proposing to reduce the time frame from four
business days to one business day.
3. Technical Correction to Rule 50
NSCC is also making a technical correction to Rule 50, Section 13.
Section 13 (which addresses Receiving Member initiated Partial
Transfers) states that a Delivering Member may respond to a request at
any time by following the procedure set forth in Section 12. However,
Section 12 addresses actions taken with respect to Delivering Member
initiated transactions. NSCC is correcting this text accordingly.
4. Implementation of the Proposed Changes:
NSCC is coordinating implementation of the proposed changes with
FINRA and SIFMA. Contingent upon the Commission's approval of the NSCC
and FINRA proposed changes, NSCC anticipates that implementation of the
changes set forth in this rule filing will take place in October of
2007. Members will be advised of the implementation through 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 remove impediments to and
perfect the mechanism of a national system for prompt and accurate
clearance and settlement of securities transactions.\9\ By reducing the
time frame for the transfer of customer accounts between NSCC members,
the proposed amendments will bring enhanced efficiency to members and
benefit their customers. 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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\9\ 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 will have any
impact or 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 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 35 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 90 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 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 e-mail to rule-comments@sec.gov. Please include
File Number SR-NSCC-2007-13 on the subject line.
Paper Comments
Send paper comments in triplicate to Nancy M. Morris,
Secretary, Securities and Exchange Commission, 100 F Street, NE.,
Washington, DC 20549-1090.
All submissions should refer to File Number SR-NSCC-2007-13. 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/
[[Page 52418]]
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 inspection
and copying in the Commission's Public Reference Room, 100 F Street,
NE., Washington, DC 20549, on official business days between the hours
of 10 a.m. and 3 p.m. Copies of such filing also will 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/2007/nscc/2007-13.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-2007-13 and should be submitted on or before October 4, 2007.
For the Commission by the Division of Market Regulation,
pursuant to delegated authority.\10\
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\10\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7-18077 Filed 9-12-07; 8:45 am]
BILLING CODE 8010-01-P