81 FR 85299 - Self-Regulatory Organizations; National Securities Clearing Corporation; Notice of Filing of Proposed Rule Change To Accommodate Shorter Standard Settlement Cycle and Make Other Changes
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 81, Issue 227 (November 25, 2016)
Federal Register Volume 81, Issue 227 (November 25, 2016)
| Page Range | 85299-85302 | |
| FR Document | 2016-28312 |
[Federal Register Volume 81, Number 227 (Friday, November 25, 2016)] [Notices] [Pages 85299-85302] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2016-28312] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-79356; File No. SR-NSCC-2016-007] Self-Regulatory Organizations; National Securities Clearing Corporation; Notice of Filing of Proposed Rule Change To Accommodate Shorter Standard Settlement Cycle and Make Other Changes November 18, 2016. 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 7, 2016, 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 the clearing agency. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. --------------------------------------------------------------------------- \1\ 15 U.S.C. 78s(b)(1). \2\ 17 CFR 240.19b-4. --------------------------------------------------------------------------- I. Clearing Agency's Statement of the Terms of Substance of the Proposed Rule Change The proposed rule change consists of amendments to NSCC's Rules & Procedures (``Rules'') \3\ in order to ensure that the Rules are consistent with the anticipated industry-wide move to a shorter standard settlement cycle for certain securities \4\ from the third business day after the trade date (``T+3'') to the second business day after the trade date (``T+2''), as described below. The proposed rule change would not become effective until NSCC has submitted a subsequent proposed rule change under Rule 19b-4.\5\ Therefore, NSCC would not implement this version of the Rules until an effective date is established by the subsequent proposed rule change.\6\ --------------------------------------------------------------------------- \3\ Capitalized terms not defined herein are defined in the Rules, available at http://dtcc.com/~/media/Files/Downloads/legal/ rules/nscc_rules.pdf. \4\ The financial services industry, in coordination with its regulators, is planning to shorten the standard settlement cycle for equities, corporate and municipal bonds, unit investment trusts and financial instruments comprised of the foregoing products traded on the secondary market from T+3 to T+2 (the ``Shortened Settlement Cycle''). See Securities Exchange Act Release No. 78962 (September 28, 2016), 81 FR 69240 (October 5, 2016) (S7-22-16) (Amendment to Securities Transaction Settlement Cycle). \5\ 17 CFR 240.19b-4. \6\ NSCC will post a version of the relevant sections of the Rules reflecting the changes as they would appear upon the effectiveness of the subsequent proposed rule change mentioned above and will include a note on the cover page of the Rules to advise Members of these changes. --------------------------------------------------------------------------- II. Clearing Agency's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the clearing agency 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. The clearing agency 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 (i) Background The standard settlement cycle has not changed since 1993, when the Commission adopted the current version of Rule 15c6-1(a) under the Securities Exchange Act of 1934, as amended (the ``Act''), which (subject to certain exceptions) prohibits any broker-dealer from entering into a contract for the purchase or sale of a security that provides for payment and delivery later than three business days after the trade date, unless otherwise expressly agreed to by the parties at the time of the transaction.\7\ --------------------------------------------------------------------------- \7\ 17 CFR 240.15c6-1. --------------------------------------------------------------------------- In an effort to reduce counterparty risk, decrease clearing capital requirements, reduce liquidity demands and harmonize the settlement cycle globally, the financial services industry has been working on shortening the standard settlement cycle from T+3 to T+2. In connection therewith, the Commission has proposed a rule change to shorten the standard settlement cycle from T+3 to T+2.\8\ --------------------------------------------------------------------------- \8\ Supra note 4. --------------------------------------------------------------------------- A number of provisions in the Rules currently define ``regular way'' settlement as occurring on T+3 and, as such, would need to be amended in connection with shortening the standard settlement cycle to T+2. Further, certain timeframes or cutoff times in the Rules key off the current settlement date of T+3, either expressly or indirectly. In such cases, these timeframes and cutoff times would also need to be amended in connection with the Shortened Settlement Cycle. Therefore, to facilitate the anticipated industry-wide move to the Shortened Settlement Cycle, NSCC proposes to make certain amendments to the Rules. (ii) Proposed Changes to the Rules The primary purpose of the proposed rule change is to modify the Rules to accommodate the anticipated industry-wide move to a two-day settlement cycle.\9\ While the core functions of NSCC will continue to operate in the same way in the Shortened Settlement Cycle, NSCC has determined that the move to T+2 would necessitate certain amendments to the Rules because currently the Rules are designed to accommodate a T+3 settlement cycle. In particular, NSCC has identified and is proposing to change (i) rules that have timeframes and/or cutoff times that are tied to the standard settlement cycle and (ii) rules affected by process changes relating to the Shortened Settlement Cycle. In addition, NSCC is proposing to make a number of technical changes and corrections to the Rules. --------------------------------------------------------------------------- \9\ Id. --------------------------------------------------------------------------- A. Rules Tied to the Standard Settlement Cycle Certain provisions in the Rules are tied to the standard settlement cycle because they reference timeframes and/or cutoff times that are based on the timing of settlement. These are provisions that (i) directly track the timeframe and/or Settlement Date of the standard settlement cycle, (ii) address non-standard settlement cycles or (iii) provide for timeframes and/or cutoff times that are connected to or are affected by the timing of the standard settlement cycle, and they would need to be changed in order to accommodate the Shortened Settlement Cycle. As an example, the Rules contain a number of provisions that refer to ``three days'' or ``T+3'' as the timeframe and Settlement Date of the standard settlement cycle. These provisions would need to be updated to reflect ``two days'' or ``T+2'' to be in conformance with the Shortened Settlement Cycle. Similarly, a number of provisions in the Rules refer to timeframes and Settlement Dates that are intended to be shorter or earlier, as applicable, than the timeframe and/or Settlement Date of the standard [[Page 85300]] settlement cycle. These provisions would also need to be changed in order to accommodate the Shortened Settlement Cycle. Likewise, the length and timing of certain cutoff times are based on either a standard settlement cycle or a non-standard settlement cycle. Therefore, when the timeframe and Settlement Date of the standard settlement cycle and non-standard settlement cycle are changed, these cutoff times would also need to be revised accordingly. NSCC is proposing changes to the following Rules because they contain provisions that are tied to the standard settlement cycle and would need to be changed to facilitate the move to Shortened Settlement Cycle: 1. Rule 4A (Supplemental Liquidity Deposits) In Section 2, delete references to the ``third Settlement Day'' and replace them with references to the ``second Settlement Day'' in the definition of ``Options Expiration Activity Period.'' 2. Procedure II (Trade Comparison and Recording Service) In Section C.1.(p), with regards to trade input and comparison of debt securities transactions submitted for non-standard settlement, delete the reference to ``T+2 and T+1 settlement'' and replace it with ``T+1 settlement.'' In Section D.2.(A)(1)(b), with regards to municipal and corporate debt securities, delete the reference to ``two days'' and replace it with ``one day.'' In Section F.2, with regards to the Settlement Date for the Index Receipts, delete the reference to ``T+1, T+2 or T+3'' and replace it with ``T+1 or T+2.'' In Section G, with regards to the eligibility of trades to be settled in the normal settlement cycle and the cutoff time for updating the totals reported for such trades, delete references to ``T+3'' and replace them with ``T+2.'' 3. Procedure III (Trade Recording Service (Interface With Qualified Clearing Agencies)) In Section B, with regards to the Settlement Date for the exercise or assignment of options at OCC, delete the reference to ``three days'' and replace it with ``two days.'' 4. Procedure V (Balance Order Accounting Operation) In Section C, (i) with regards to the timing for the netting of trades in Balance Order Securities, delete references to ``T and T+1'' and replace them with ``T'' and (ii) with regards to the listing of the Clearance Cash Adjustment amount for all Balance Orders on the Consolidated Trade Summary, delete the reference to the Consolidated Trade Summary being available on T+2. 5. Procedure VII (CNS Accounting Operation) In Section B, (i) with regards to the timing of the comparison or recording of trades in CNS Securities for inclusion on the Consolidated Trade Summary, delete the words ``T+1 up to'' and (ii) with regards to the timing of as-of trades in CNS Securities that are reported on the Consolidated Trade Summary, delete references to ``T+2'' and ``T+3'' and replace them with ``T+1'' and ``T+2,'' respectively. In Section G.3, with regards to the time period for determining the rate of the split for adjustments to Current Market Price in the case of stock splits, delete the reference to ``last two days'' and replace it with ``one day.'' In Section H.4(b), (i) with regards to timing related to securities subject to voluntary reorganizations, delete references to protect periods of ``two days'', ``three days'' and ``greater than three days'' and replace them with ``one day'', ``two days'' and ``greater than two days'', respectively and delete references to ``E+2'', ``E+3'' and ``E+4'' and replace them with ``E+1'', ``E+2'' and ``E+3,'' respectively, (ii) in the table listing the time frames for the processing of securities subject to voluntary reorganizations with a protect period, delete the reference to ``two days or less'' and replace it with ``one day or less'' as well as delete the entries for the 2 day protect period and (iii) with regards to the timing for the recording of ID Net Service eligible transactions on the Miscellaneous Activity Report, delete the words ``on the night of T+2.'' In Section K, with regards to the timing for advising a Member about its potential liability with respect to a short position or a short Settling Trade position in a security to which an exercise privilege attaches, delete the reference to ``T+2'' and replace it with ``T+1.'' 6. Procedure XIII (Definitions) In the definition for ``T,'' delete the reference to ``T+3'' and replace it with ``T+2.'' 7. Procedure XVI (ID Net Service) In Procedure XVI, with regards to the timing for processing by NSCC of ID Net Service transactions, delete references to ``the evening of T+2'' and ``the night of T+2'' and replace them with ``the evening prior to Settlement Date'' and ``the night prior to Settlement Date,'' respectively. 8. Addendum A (Fee Structure) In Section E.1, with regards to the fee for Index Creation and Redemption instructions submitted for regular way settlement, delete the explanatory parenthetical ``(T+3)'' and replace it with ``(T+2).'' 9. Addendum K (Interpretation of the Board of Directors Application of Clearing Fund In Section I.2, with regards to the endpoint of NSCC's guaranty for balance order transactions, delete the reference to ``T+3'' and replace it with ``T+2.'' B. Rules Covering Processes Affected by a Shortened Settlement Cycle NSCC conducted an in-depth review of its internal operational processes to identify those processes that would require changes in order to accommodate the Shortened Settlement Cycle. In connection with that review, NSCC has identified the following provisions in the Rules that would need to be updated in connection with such process changes: 1. Procedure V (Balance Order Accounting Operation) In Section B, with regards to trades that are to be processed on a trade-for-trade basis, clarify that such processing occurs for trades that are compared or otherwise entered into the Balance Order Accounting Operation on SD-1, ``after the cutoff time established by the Corporation.'' This is because under the Shortened Settlement Cycle, trades that are compared or otherwise entered into the Balance Order Accounting Operation on SD-1 would be processed as multilaterally netted balance orders when reported on the Consolidated Trade Summary issued at approximately 12:00 p.m. ET on SD-1. Trades compared and reported thereafter would continue to be processed on a trade-for-trade basis. Similarly, in Section B, with regards to trades that are to be processed on a trade-for-trade basis, clarify that such process occurs for securities that are subject to a voluntary corporate reorganization which have a trade date on or before the expiration of the voluntary corporate reorganization and which are compared or received ``on SD-1, after the cutoff time established by the Corporation'' and not ``after SD-1.'' This shift in cutoff time is because ``as of'' regular way trades compared and received prior to 11:30 a.m. on SD-1 would be processed as multilaterally netted balance orders when reported on the Consolidated Trade Summary issued at approximately 12:00 p.m. ET on SD- 1. ``As of'' regular way trades compared [[Page 85301]] and reported thereafter would continue to be processed on a trade-for- trade basis. 2. Procedure VII (CNS Accounting Operation) In Section D.1, with regards to the timing of the distribution of Projection Reports, delete the reference to ``[e]ach morning'' and replace it with ``[t]wice a day'' because currently NSCC distributes the Projection Report only once a day; however, after the implementation of the Shortened Settlement Cycle, NSCC would be distributing the Projection Reports twice a day to enable Members to view their updated positions on a more timely basis. C. Other Technical Changes and Corrections During its review of the Rules in connection with the Shortened Settlement Cycle, NSCC has identified the following technical changes and/or corrections that it proposes to make to the Rules in order to ensure that the Rules remain consistent and accurate. 1. In Rule 3, Section 1(c), add a footnote that identifies the term ``CUSIP'' as a registered trademark of the American Bankers Association. 2. In Procedure II, Section G, correct a grammatical error. 3. In Procedure VII, Sections B and D, correct grammatical errors. 4. In Procedure X, Section B, delete the reference to the timeframe for the delivery of Liability Notices to the contra party by Members holding the receive balance orders for warrants, rights, convertible securities or certain other securities so the Members would remain solely subject to the schedules of the relevant exchanges. 5. In Procedure XIII, delete the incorrect reference to ``Settlement Day'' and replace it with ``Settlement Date'' in the definition for ``T'' to clarify that T+2 would normally be the Settlement Date after the implementation of the Shortened Settlement Cycle. 6. In Procedure XVI, correct a grammatical error. Implementation Timeframe The proposed rule change would not become effective until NSCC has submitted a subsequent proposed rule change under Rule 19b-4.\10\ Therefore, NSCC would not implement this version of the Rules until an effective date is established by the subsequent proposed rule change. NSCC anticipates that the implementation date would correspond with the industry's transition to a T+2 settlement cycle, which is currently anticipated to be in September 2017. --------------------------------------------------------------------------- \10\ 17 CFR 240.19b-4. --------------------------------------------------------------------------- 2. Statutory Basis NSCC believes the proposed rule change is consistent with the requirements of the Act and the rules and regulations thereunder applicable to NSCC. In particular, Section 17A(b)(3)(F) of the Act requires, in part, that NSCC's Rules be designed to promote the prompt and accurate clearance and settlement of securities transactions and to protect investors and the public interest.\11\ NSCC believes that the proposed changes are consistent with the requirements of Section 17A(b)(3)(F) because by changing the timeframes and/or cutoff times that are based on timing of settlement to accommodate the Shortened Settlement Cycle, the proposal would ensure that securities transactions would be promptly and accurately cleared and settled within the industry standard settlement cycle. Similarly, the related process changes proposed are designed to update NSCC's operations in order to facilitate the move to the Shortened Settlement Cycle and, by extension, facilitate the prompt and accurate clearance and settlement of securities transactions submitted to NSCC for clearing and settlement. Therefore, NSCC believes the proposed rule change promotes the prompt and accurate clearance and settlement of securities transactions, consistent with Section 17A(b)(3)(F) of the Act.\12\ --------------------------------------------------------------------------- \11\ 15 U.S.C. 78q-1(b)(3)(F). \12\ Id. --------------------------------------------------------------------------- In addition, the proposed changes to (i) update the Rules to remove references to the settlement timeframes or Settlement Dates that would be rendered incorrect by the Shortened Settlement Cycle and (ii) make other technical changes and corrections as described in detail above would provide additional clarity to Members of their rights and obligations under the Rules and ensure technical accuracy of the Rules. Therefore, NSCC believes these proposed changes would protect investors and the public interest, consistent with the requirements of Section 17A(b)(3)(F) of the Act.\13\ --------------------------------------------------------------------------- \13\ Id. --------------------------------------------------------------------------- For the reasons noted above, NSCC believes that the proposed rule change is consistent with the requirements of the Act and the rules and regulations thereunder applicable to NSCC. (B) Clearing Agency's Statement on Burden on Competition NSCC does not believe that the proposed rule changes would impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act.\14\ While the anticipated industry-wide move to the Shortened Settlement Cycle would likely have an impact on competition because the cost of required system changes for individual firms to shift from a T+3 to T+2 settlement may have a disproportionate impact on those firms with relatively smaller revenue bases, NSCC does not believe that the proposed rule changes themselves would have a significant impact on competition because they are operational in nature and consist of changes to processing timeframes and cutoff times for NSCC's services. Moreover, NSCC believes that the proposed rule changes are necessary because they are required to facilitate and accommodate the anticipated move to the Shortened Settlement Cycle and are appropriate in that they have been specifically tailored to be in conformance with the requirements of the Shortened Settlement Cycle. Therefore, NSCC does not believe that the proposed rule changes would impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. --------------------------------------------------------------------------- \14\ 15 U.S.C. 78q-1(b)(3)(I). --------------------------------------------------------------------------- (C) Clearing Agency's Statement on Comments on the Proposed Rule Change Received from Members, Participants, or Others NSCC has not received any written comments relating to this proposal. NSCC will notify the Commission of any written comments received. 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. [[Page 85302]] Comments may be submitted by any of the following methods: Electronic CommentsUse 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-2016-007 on the subject line. Paper Comments Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549. All submissions should refer to File Number SR-NSCC-2016-007. 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 DTCC's Web site (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-2016-007 and should be submitted on or before December 16, 2016. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\15\ --------------------------------------------------------------------------- \15\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Brent J. Fields, Secretary. [FR Doc. 2016-28312 Filed 11-23-16; 8:45 am] BILLING CODE 8011-01-P
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submitted on or before December 16, The proposed rule change would not connection with shortening the standard
2016. become effective until NSCC has settlement cycle to T+2. Further, certain
For the Commission, by the Division of submitted a subsequent proposed rule timeframes or cutoff times in the Rules
Trading and Markets, pursuant to delegated change under Rule 19b–4.5 Therefore, key off the current settlement date of
authority.17 NSCC would not implement this version T+3, either expressly or indirectly. In
Brent J. Fields, of the Rules until an effective date is such cases, these timeframes and cutoff
Secretary. established by the subsequent proposed times would also need to be amended in
rule change.6 connection with the Shortened
[FR Doc. 2016–28310 Filed 11–23–16; 8:45 am]
Settlement Cycle. Therefore, to facilitate
BILLING CODE 8011–01–P II. Clearing Agency’s Statement of the the anticipated industry-wide move to
Purpose of, and Statutory Basis for, the the Shortened Settlement Cycle, NSCC
Proposed Rule Change proposes to make certain amendments
SECURITIES AND EXCHANGE
In its filing with the Commission, the to the Rules.
COMMISSION
clearing agency included statements
(ii) Proposed Changes to the Rules
[Release No. 34–79356; File No. SR–NSCC– concerning the purpose of and basis for
2016–007] the proposed rule change and discussed The primary purpose of the proposed
any comments it received on the rule change is to modify the Rules to
Self-Regulatory Organizations; proposed rule change. The text of these accommodate the anticipated industry-
National Securities Clearing statements may be examined at the wide move to a two-day settlement
Corporation; Notice of Filing of places specified in Item IV below. The cycle.9 While the core functions of
Proposed Rule Change To clearing agency has prepared NSCC will continue to operate in the
Accommodate Shorter Standard summaries, set forth in sections A, B, same way in the Shortened Settlement
Settlement Cycle and Make Other and C below, of the most significant Cycle, NSCC has determined that the
Changes aspects of such statements. move to T+2 would necessitate certain
amendments to the Rules because
November 18, 2016. (A) Clearing Agency’s Statement of the currently the Rules are designed to
Pursuant to Section 19(b)(1) of the Purpose of, and Statutory Basis for, the accommodate a T+3 settlement cycle. In
Securities Exchange Act of 1934 Proposed Rule Change particular, NSCC has identified and is
(‘‘Act’’) 1 and Rule 19b–4 thereunder,2 proposing to change (i) rules that have
notice is hereby given that on November 1. Purpose
timeframes and/or cutoff times that are
7, 2016, National Securities Clearing (i) Background tied to the standard settlement cycle and
Corporation (‘‘NSCC’’) filed with the (ii) rules affected by process changes
The standard settlement cycle has not
Securities and Exchange Commission relating to the Shortened Settlement
changed since 1993, when the
(‘‘Commission’’) the proposed rule Cycle. In addition, NSCC is proposing to
Commission adopted the current
change as described in Items I, II and III make a number of technical changes and
version of Rule 15c6–1(a) under the
below, which Items have been prepared corrections to the Rules.
Securities Exchange Act of 1934, as
by the clearing agency. The Commission
amended (the ‘‘Act’’), which (subject to A. Rules Tied to the Standard
is publishing this notice to solicit
certain exceptions) prohibits any broker- Settlement Cycle
comments on the proposed rule change
dealer from entering into a contract for
from interested persons. Certain provisions in the Rules are
the purchase or sale of a security that
I. Clearing Agency’s Statement of the provides for payment and delivery later tied to the standard settlement cycle
Terms of Substance of the Proposed than three business days after the trade because they reference timeframes and/
Rule Change date, unless otherwise expressly agreed or cutoff times that are based on the
to by the parties at the time of the timing of settlement. These are
The proposed rule change consists of provisions that (i) directly track the
amendments to NSCC’s Rules & transaction.7
In an effort to reduce counterparty timeframe and/or Settlement Date of the
Procedures (‘‘Rules’’) 3 in order to standard settlement cycle, (ii) address
risk, decrease clearing capital
ensure that the Rules are consistent with non-standard settlement cycles or (iii)
requirements, reduce liquidity demands
the anticipated industry-wide move to a provide for timeframes and/or cutoff
and harmonize the settlement cycle
shorter standard settlement cycle for times that are connected to or are
globally, the financial services industry
certain securities 4 from the third affected by the timing of the standard
has been working on shortening the
business day after the trade date (‘‘T+3’’) settlement cycle, and they would need
standard settlement cycle from T+3 to
to the second business day after the to be changed in order to accommodate
T+2. In connection therewith, the
trade date (‘‘T+2’’), as described below. the Shortened Settlement Cycle. As an
Commission has proposed a rule change
to shorten the standard settlement cycle example, the Rules contain a number of
17 17 CFR 200.30–3(a)(12).
from T+3 to T+2.8 provisions that refer to ‘‘three days’’ or
1 15 U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4. A number of provisions in the Rules ‘‘T+3’’ as the timeframe and Settlement
3 Capitalized terms not defined herein are defined currently define ‘‘regular way’’ Date of the standard settlement cycle.
in the Rules, available at http://dtcc.com/∼/media/ settlement as occurring on T+3 and, as These provisions would need to be
Files/Downloads/legal/rules/nscc_rules.pdf. such, would need to be amended in updated to reflect ‘‘two days’’ or ‘‘T+2’’
to be in conformance with the
asabaliauskas on DSK3SPTVN1PROD with NOTICES
4 The financial services industry, in coordination
with its regulators, is planning to shorten the 5 17 Shortened Settlement Cycle. Similarly, a
standard settlement cycle for equities, corporate CFR 240.19b–4.
and municipal bonds, unit investment trusts and
6 NSCC will post a version of the relevant sections number of provisions in the Rules refer
financial instruments comprised of the foregoing of the Rules reflecting the changes as they would to timeframes and Settlement Dates that
products traded on the secondary market from T+3 appear upon the effectiveness of the subsequent are intended to be shorter or earlier, as
to T+2 (the ‘‘Shortened Settlement Cycle’’). See proposed rule change mentioned above and will
include a note on the cover page of the Rules to applicable, than the timeframe and/or
Securities Exchange Act Release No. 78962
(September 28, 2016), 81 FR 69240 (October 5, advise Members of these changes. Settlement Date of the standard
7 17 CFR 240.15c6–1.
2016) (S7–22–16) (Amendment to Securities
Transaction Settlement Cycle). 8 Supra note 4. 9 Id.
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and reported thereafter would continue settlement cycle, which is currently any burden on competition that is not
to be processed on a trade-for-trade anticipated to be in September 2017. necessary or appropriate in furtherance
basis. of the purposes of the Act.14 While the
2. Statutory Basis
anticipated industry-wide move to the
2. Procedure VII (CNS Accounting NSCC believes the proposed rule Shortened Settlement Cycle would
Operation) change is consistent with the likely have an impact on competition
In Section D.1, with regards to the requirements of the Act and the rules because the cost of required system
timing of the distribution of Projection and regulations thereunder applicable to changes for individual firms to shift
Reports, delete the reference to ‘‘[e]ach NSCC. from a T+3 to T+2 settlement may have
morning’’ and replace it with ‘‘[t]wice a In particular, Section 17A(b)(3)(F) of a disproportionate impact on those
day’’ because currently NSCC the Act requires, in part, that NSCC’s firms with relatively smaller revenue
distributes the Projection Report only Rules be designed to promote the bases, NSCC does not believe that the
once a day; however, after the prompt and accurate clearance and proposed rule changes themselves
implementation of the Shortened settlement of securities transactions and would have a significant impact on
Settlement Cycle, NSCC would be to protect investors and the public competition because they are
distributing the Projection Reports twice interest.11 NSCC believes that the operational in nature and consist of
a day to enable Members to view their proposed changes are consistent with changes to processing timeframes and
updated positions on a more timely the requirements of Section 17A(b)(3)(F) cutoff times for NSCC’s services.
basis. because by changing the timeframes Moreover, NSCC believes that the
and/or cutoff times that are based on proposed rule changes are necessary
C. Other Technical Changes and timing of settlement to accommodate
Corrections because they are required to facilitate
the Shortened Settlement Cycle, the and accommodate the anticipated move
During its review of the Rules in proposal would ensure that securities to the Shortened Settlement Cycle and
connection with the Shortened transactions would be promptly and are appropriate in that they have been
Settlement Cycle, NSCC has identified accurately cleared and settled within specifically tailored to be in
the following technical changes and/or the industry standard settlement cycle. conformance with the requirements of
corrections that it proposes to make to Similarly, the related process changes the Shortened Settlement Cycle.
the Rules in order to ensure that the proposed are designed to update NSCC’s Therefore, NSCC does not believe that
Rules remain consistent and accurate. operations in order to facilitate the the proposed rule changes would
1. In Rule 3, Section 1(c), add a move to the Shortened Settlement Cycle impose any burden on competition that
footnote that identifies the term and, by extension, facilitate the prompt is not necessary or appropriate in
‘‘CUSIP’’ as a registered trademark of and accurate clearance and settlement of furtherance of the purposes of the Act.
the American Bankers Association. securities transactions submitted to
2. In Procedure II, Section G, correct NSCC for clearing and settlement. (C) Clearing Agency’s Statement on
a grammatical error. Therefore, NSCC believes the proposed Comments on the Proposed Rule Change
3. In Procedure VII, Sections B and D, rule change promotes the prompt and Received from Members, Participants, or
correct grammatical errors. accurate clearance and settlement of Others
4. In Procedure X, Section B, delete securities transactions, consistent with NSCC has not received any written
the reference to the timeframe for the Section 17A(b)(3)(F) of the Act.12 comments relating to this proposal.
delivery of Liability Notices to the In addition, the proposed changes to NSCC will notify the Commission of any
contra party by Members holding the (i) update the Rules to remove written comments received.
receive balance orders for warrants, references to the settlement timeframes
rights, convertible securities or certain or Settlement Dates that would be III. Date of Effectiveness of the
other securities so the Members would rendered incorrect by the Shortened Proposed Rule Change, and Timing for
remain solely subject to the schedules of Settlement Cycle and (ii) make other Commission Action
the relevant exchanges. technical changes and corrections as Within 45 days of the date of
5. In Procedure XIII, delete the described in detail above would provide publication of this notice in the Federal
incorrect reference to ‘‘Settlement Day’’ additional clarity to Members of their Register or within such longer period
and replace it with ‘‘Settlement Date’’ in rights and obligations under the Rules up to 90 days (i) as the Commission may
the definition for ‘‘T’’ to clarify that T+2 and ensure technical accuracy of the designate if it finds such longer period
would normally be the Settlement Date Rules. Therefore, NSCC believes these to be appropriate and publishes its
after the implementation of the proposed changes would protect reasons for so finding or (ii) as to which
Shortened Settlement Cycle. investors and the public interest,
6. In Procedure XVI, correct a the self- regulatory organization
consistent with the requirements of consents, the Commission will:
grammatical error. Section 17A(b)(3)(F) of the Act.13 (A) By order approve or disapprove
Implementation Timeframe For the reasons noted above, NSCC such proposed rule change, or
believes that the proposed rule change
The proposed rule change would not (B) institute proceedings to determine
is consistent with the requirements of
become effective until NSCC has whether the proposed rule change
the Act and the rules and regulations
submitted a subsequent proposed rule should be disapproved.
thereunder applicable to NSCC.
change under Rule 19b–4.10 Therefore,
asabaliauskas on DSK3SPTVN1PROD with NOTICES
IV. Solicitation of Comments
NSCC would not implement this version (B) Clearing Agency’s Statement on
of the Rules until an effective date is Burden on Competition Interested persons are invited to
established by the subsequent proposed NSCC does not believe that the submit written data, views and
rule change. NSCC anticipates that the proposed rule changes would impose arguments concerning the foregoing,
implementation date would correspond including whether the proposed rule
with the industry’s transition to a T+2 11 15 U.S.C. 78q–1(b)(3)(F). change is consistent with the Act.
12 Id.
10 17 CFR 240.19b–4. 13 Id. 14 15 U.S.C. 78q–1(b)(3)(I).
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![85302 Federal Register / Vol. 81, No. 227 / Friday, November 25, 2016 / Notices
Comments may be submitted by any of DEPARTMENT OF STATE subject to the Order who might have a
the following methods: constitutional presence in the United
[Public Notice: 9797] States would render ineffectual the
Electronic Comments
Notice of Meeting of Advisory blocking and other measures authorized
• Use the Commission’s Internet Committee on International Law in the Order because of the ability to
comment form (http://www.sec.gov/ transfer funds instantaneously, I
rules/sro.shtml); or A meeting of the Department of determine that no prior notice needs to
State’s Advisory Committee on be provided to any person subject to this
• Send an email to rule-comments@ determination who might have a
International Law will take place on
sec.gov. Please include File Number SR– constitutional presence in the United
Tuesday, December 13, from 9:30 a.m.
NSCC–2016–007 on the subject line. States, because to do so would render
to 5:00 p.m. at the George Washington
Paper Comments University Law School, Michael K. ineffectual the measures authorized in
Young Faculty Conference Center, 716 the Order.
• Send paper comments in triplicate 20th Street NW., 5th Floor, Washington, This notice shall be published in the
to Secretary, Securities and Exchange DC. Legal Adviser Brian Egan will chair Federal Register.
Commission, 100 F Street NE., the meeting, which will be open to the Dated: October 6, 2016.
Washington, DC 20549. public up to the capacity of the John F. Kerry,
All submissions should refer to File conference room. It is anticipated that Secretary of State.
Number SR–NSCC–2016–007. This file the meeting will include discussions on
[FR Doc. 2016–28404 Filed 11–23–16; 8:45 am]
number should be included on the the Foreign Sovereign Immunities Act,
BILLING CODE 4710–AD–P
subject line if email is used. To help the state and individual responsibility for
Commission process and review your arms sales, ‘‘Brexit,’’ and effective
comments more efficiently, please use international lawyering during DEPARTMENT OF STATE
only one method. The Commission will transitions.
Members of the public who wish to [Public Notice: 9800]
post all comments on the Commission’s
Internet Web site (http://www.sec.gov/ attend should contact the Office of the
Legal Adviser by December 9 at E.O. 13224 Designation of Abdelilah
rules/sro.shtml). Copies of the Himich, aka Abu Suleyman al-Faransi,
submission, all subsequent simcockjc@state.gov or (202) 776–8477
and provide their name, professional aka Abu Suleyman al-Firansi, aka Abu
amendments, all written statements Sulaiyman al Fransi, aka Abu
with respect to the proposed rule affiliation, address, and phone number.
A valid photo ID is required for Sulaiyman, aka Abu Suleyman, aka
change that are filed with the Abou Souleiman Al-Firansi, aka Abu
Commission, and all written admission to the meeting. Attendees
who require reasonable accommodation Sulayman al-Faransi, aka Abu
communications relating to the Souleymane, aka Abu Souleymane al-
proposed rule change between the should make their requests by December
7. Late requests will be considered but Faransi, aka Abu Souleymane the
Commission and any person, other than Frenchman, aka Abu Suleiman as a
those that may be withheld from the might not be possible to accommodate.
Specially Designated Global Terrorist
public in accordance with the Dated: November 17, 2016.
provisions of 5 U.S.C. 552, will be Julian C. Simcock, Office of the Legal Acting under the authority of and in
available for Web site viewing and Adviser, accordance with section 1(b) of E.O.
printing in the Commission’s Public Executive Director, Advisory Committee on 13224 of September 23, 2001, as
Reference Room, 100 F Street NE., International Law, United States Department amended by E.O. 13268 of July 2, 2002,
Washington, DC 20549 on official of State. and E.O. 13284 of January 23, 2003, I
business days between the hours of [FR Doc. 2016–28398 Filed 11–23–16; 8:45 am] hereby determine that the person known
10:00 a.m. and 3:00 p.m. Copies of the BILLING CODE 4710–08–P as Abdelilah Himich, also known as
filing also will be available for Abu Suleyman al-Faransi, also known
inspection and copying at the principal as Abu Suleyman al-Firansi, also known
office of NSCC and on DTCC’s Web site DEPARTMENT OF STATE as Abu Sulaiyman al Fransi, also known
(http://dtcc.com/legal/sec-rule- as Abu Sulaiyman, also known as Abu
[Public Notice: 9798]
filings.aspx). All comments received Suleyman, also known as Abou
will be posted without change; the E.O. 13224 Designation of Basil Souleiman Al-Firansi, also known as
Commission does not edit personal Hassan as a Specially Designated Abu Sulayman al-Faransi, also known
identifying information from Global Terrorist as Abu Souleymane, also known as Abu
submissions. You should submit only Souleymane al-Faransi, also known as
information that you wish to make Acting under the authority of and in Abu Souleymane the Frenchman, also
available publicly. All submissions accordance with section 1(b) of E.O. known as Abu Suleiman, committed, or
should refer to File Number SR–NSCC– 13224 of September 23, 2001, as poses a significant risk of committing,
2016–007 and should be submitted on amended by E.O. 13268 of July 2, 2002, acts of terrorism that threaten the
or before December 16, 2016. and E.O. 13284 of January 23, 2003, I security of U.S. nationals or the national
hereby determine that the person known security, foreign policy, or economy of
For the Commission, by the Division of
as Basil Hassan committed, or poses a the United States.
asabaliauskas on DSK3SPTVN1PROD with NOTICES
Trading and Markets, pursuant to delegated
authority.15 significant risk of committing, acts of Consistent with the determination in
terrorism that threaten the security of section 10 of E.O. 13224 that prior
Brent J. Fields,
U.S. nationals or the national security, notice to persons determined to be
Secretary. foreign policy, or economy of the United subject to the Order who might have a
[FR Doc. 2016–28312 Filed 11–23–16; 8:45 am] States. constitutional presence in the United
BILLING CODE 8011–01–P Consistent with the determination in States would render ineffectual the
section 10 of E.O. 13224 that prior blocking and other measures authorized
15 17 CFR 200.30–3(a)(12). notice to persons determined to be in the Order because of the ability to
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Document Created: 2016-11-23 23:18:12
Document Modified: 2016-11-23 23:18:12
| Category | Regulatory Information | |
| Collection | Federal Register | |
| sudoc Class | AE 2.7: GS 4.107: AE 2.106: | |
| Publisher | Office of the Federal Register, National Archives and Records Administration | |
| Section | Notices | |
| FR Citation | 81 FR 85299 |
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