[Federal Register: January 16, 2004 (Volume 69, Number 11)]
[Notices]
[Page 2641-2642]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr16ja04-114]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-49061; File No. SR-NSCC-2003-03]
Self-Regulatory Organizations; The National Securities Clearing
Corporation; Notice of Filing of Proposed Rule Change Relating to
Execution Time for CNS Buy-Ins
January 12, 2004.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ notice is hereby given that on March 24, 2003, the
National Securities Clearing Corporation (``NSCC'') filed with the
Securities and Exchange Commission (``Commission'') and on March 14,
2003, amended the proposed rule change as 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 on the
proposed rule change from interested parties.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The proposed rule change would allow NSCC to amend Procedures VII
and X to allow NSCC to determine the timeframe for the execution of
continuous net settlement (``CNS'') buy-ins from time to time.
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\
---------------------------------------------------------------------------
\2\ 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 modify NSCC
Procedures VII.J. ``CNS Accounting Operation, Recording of CNS Buy-
Ins'' and X.A.1. ``Execution of Buy-Ins, CNS System, Equity Securities
and Corporate Debt Securities'' with regard to the execution time of
CNS buy-ins.
Except with respect to securities subject to a voluntary corporate
reorganization, a member having a long CNS position at the end of any
day may submit to NSCC a notice of intention to buy-in (``buy-in
notice'') specifying a quantity of securities (not exceeding such long
CNS positions) the member intends to buy-in (``buy-in position''). The
day the CNS buy-in notice is submitted is referred to as N, and N+1 and
N+2 refer to the succeeding days. Each day commences in the evening and
includes both an evening and daytime allocation. The CNS buy-in
position is given high priority for allocation through N+2.
Pursuant to NSCC Procedure VII, if a CNS buy-in position is not
satisfied at the end of the day cycle on N+2, the CNS buy-in may be
executed. In effect, members have from the completion of the day cycle
on N+2 to the close of the markets to execute the CNS buy-in.
Operationally, as the day cycle generally completes at 3:10 p.m.
eastern standard time (``EST''), participants face a narrow timeframe
within which they may execute CNS buy-ins. In the event that settlement
and recycle times are extended or delayed, that window of time is
further reduced.
At the request of participants and after consultation with the
Securities Industry Association Buy-In Committee, NSCC proposes to
modify Procedures VII and X to permit the execution of CNS buy-ins if
by 3 p.m. EST or such earlier time as established by NSCC with five
business days notice because of market events (e.g., days the
marketplaces close early). NSCC will advise participants of any earlier
execution time via important notice five business days in advance of
its effectiveness. This change in time is not intended to be a
requirement for executions, but is to serve as an opportunity for
participants to execute CNS buy-ins in a more efficient manner.
NSCC believes that the proposed rule change is consistent with
Section 17A of the Act \3\ and the rules and regulations thereunder
because it will facilitate the prompt and accurate clearance and
settlement of securities transactions by providing members sufficient
time to execute CNS buy-ins.
---------------------------------------------------------------------------
\3\ 15 U.S.C. 78q-1.
---------------------------------------------------------------------------
(B) Self-Regulatory Organization's Statement on Burden on Competition
NSCC does not believe that the proposed rule change 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
No written comments relating to the proposed rule change have been
solicited or received. NSCC will notify the Commission of any written
comments it receives.
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 the self-regulatory organization consents,
the Commission will:
(A) by order approve such proposed rule change or
[[Page 2642]]
(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. Persons making written submissions
should file six copies thereof with the Secretary, Securities and
Exchange Commission, 450 Fifth Street, NW., Washington, DC 20549-0609.
Comments may also be submitted electronically at the following e-mail
address: rule-comments@sec.gov. All comment letters should refer to
File No. SR-NSCC-2003-03. 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, comments should be sent in
hardcopy or by e-mail but not by both methods. 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 Section, 450 Fifth Street, NW., Washington, DC 20549.
Copies of such filing also will be available for inspection and copying
at the principal office of NSCC or on NSCC's Web site at http://www.nscc.com/legal/.
All submissions should refer to File No. SR-NSCC-
2003-03 and should be submitted by February 6, 2004.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\4\
---------------------------------------------------------------------------
\4\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 04-1013 Filed 1-15-04; 8:45 am]
BILLING CODE 8010-01-P