
[Federal Register Volume 79, Number 113 (Thursday, June 12, 2014)]
[Notices]
[Pages 33793-33794]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-13695]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-72344; File No. SR-NSCC-2014-07]


Self-Regulatory Organizations; National Securities Clearing 
Corporation; Notice of Filing of Proposed Rule Change To Implement a 
New Scorecard Feature to the Mutual Fund Profile Service

June 6, 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 
May 30, 2014, National Securities Clearing Corporation (``NSCC'') filed 
with the Securities and Exchange Commission (``Commission'') the 
proposed rule change as described in Items I and II 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.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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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 the Rules & 
Procedures (``Rules'') of NSCC to implement a new scorecard feature to 
its Mutual Fund Profile Service, 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
    In 1996, NSCC launched its Mutual Fund Profile Service 
(``MFPS''),\3\ providing participating members with an automated method 
of transmitting and receiving information pertaining to funds and other 
pooled investment vehicles through a centralized and standard facility. 
Such funds and other pooled investment vehicles are collectively 
referred to herein as ``Funds''.
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    \3\ See, Release No. 34-37171 (May 8, 1996), 61 FR 24343 (May 
14, 1996) (SR-NSCC-1996-04).
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    In 1998, NSCC implemented three new databases as part of MFPS, (i) 
the participant profile database, (ii) the security issue profile 
database and (iii) the distribution declaration information profile 
database.\4\ Through these three databases, MFPS offers the Funds 
industry a centralized repository for prospectus and operational 
information relating to Fund securities, Fund distributions and Fund 
processing capabilities.
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    \4\ See, Release No. 34-40614 (October 28, 1998), 63 FR 59615 
(November 4, 1998) (SR-NSCC-1998-09).
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    The ``security issue profile database'' contains Fund information, 
including, but not limited to, security ID number, security name, fee 
structure, investment objectives, breakpoint schedule data and blue sky 
eligibility (collectively, ``Security Issue Data'').\5\ Participating 
members using the security issue profile database are either data 
providers or data receivers. Data providers populate the security issue 
profile database with their applicable Security Issue Data and are 
generally the Funds themselves, their principal underwriters or, 
otherwise, entities authorized to process transactions on behalf of the 
Funds (collectively, ``Data Providers''). Data receivers retrieve such 
populated Security Issue Data for use and are generally the 
distribution partners to the Funds (collectively, ``Data Receivers'').
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    \5\ See, Release No. 34-59321 (January 30, 2009), 74 FR 6933 
(February 11. 2009) (SR-NSCC-2008-08).
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    Over the last several months, some Data Receivers have noted that 
Security Issue Data, on occasion, does not match the associated 
information set forth in the applicable Data Provider's public filings. 
Such variances and other noted potential discrepancies (collectively, 
``Discrepancies'') have caused certain Data Receivers to express 
concerns about Security Issue Data reliability. As a result, Data 
Receivers have requested NSCC's assistance in creating a mechanism for 
encouraging more reliable Security Issue Data within the security issue 
profile database.
    To address these concerns, NSCC proposes to amend Rule 52.D of its 
Rules & Procedures to implement a new feature in the security issue 
profile database--a scorecard--that would be distributed to MFPS 
members on a regularly scheduled basis, as determined by the 
Corporation. The scorecards will set forth (i) the numerical score 
issued to each applicable Data Provider and (ii) the combined average 
numerical score of all Data Providers. The various types of Discrepancy 
categories and number of identified Discrepancies within each category 
will form the basis from which the individual Data Provider's score and 
the combined average scores of all Data Providers will be calculated.
    Each Data Provider's scorecard will contain (i) the individual, 
numerical score issued to it, (ii) the number of identified 
Discrepancies within each category attributable to such Data Provider 
and (iii) the combined average numerical score of all Data Providers. 
Data Providers will not see the individual, numerical scores issued to 
other Data Providers nor the identified Discrepancies of other Data 
Providers. A Data Provider that has no identified Discrepancies with 
respect to its Security Issue Data, or that otherwise addresses all of 
its identified Discrepancies, will be issued a perfect score as 
reflected on its scorecard, while a Data Provider that fails to take 
action with respect to its identified Discrepancies will have its 
individual score reduced. As new Discrepancies are identified to the 
Data Provider or the Data Provider reviews and addresses identified 
Discrepancies, its individual score will be recalculated on a regularly 
scheduled basis. The industry average score will recalculate according 
to the same schedule as well.
    Scorecards distributed to Data Receivers will contain (i) the 
individual, numerical score issued to each Data Provider participant, 
(ii) the number of identified Discrepancies within each category 
attributable to each such Data Provider and (iii) the combined average 
numerical score of all Data Providers. The Data Receivers' scorecards 
will recalculate according to the same schedule as the Data Providers' 
scorecards.
    Because the scores are based solely on action or inaction of Data 
Providers, the rule, as amended, will provide that the Corporation 
makes no representation or warranty with respect to the value or 
usefulness of any score or scorecard, nor will the Corporation be 
subject to any

[[Page 33794]]

damages or liabilities whatsoever with respect to any person's use of 
or reliance upon any score or scorecard. In addition, because the 
scorecards are intended solely for members' use and are not intended to 
be made public, the rule, as amended, will state that all information 
contained in the scorecards is copyrighted and any form of copying, 
other than for each NSCC member's personal reference, without the 
express written permission of the Corporation, is prohibited, and 
further distribution or redistribution of the scorecard or any 
information contained therein by any means or in any manner is strictly 
prohibited.
2. Statutory Basis
    NSCC believes that the proposed rule change is consistent with the 
requirements of the Securities Exchange Act of 1934, as amended (the 
``Act''), specifically Section 17A(b)(3)(F),\6\ and the rules and 
regulations thereunder applicable to NSCC. The proposed new feature 
encourages accuracy and consistency of communications with respect to 
information about securities. Accordingly, NSCC believes that the 
proposed rule change fosters cooperation and coordination with persons 
engaged in the clearance and settlement of securities transactions.
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    \6\ 15 U.S.C. 78q-1(b)(3)(F).
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(B) Clearing Agency'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. As stated above, the 
proposed change adds a scorecard feature to facilitate accurate 
securities information exchange, which will benefit all participating 
members equally and should have no effect on competition within or 
without NSCC.

(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 the Commission of any 
written comments received by NSCC.

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. 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 rule-comments@sec.gov. Please include 
File Number SR-NSCC-2014-07 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-2014-07. 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 (http://www.dtcc.com). 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-2014-07 and should be submitted on 
or before July 3, 2014.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\7\
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    \7\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-13695 Filed 6-11-14; 8:45 am]
BILLING CODE 8011-01-P


