Self-Regulatory Organizations; Midwest Clearing Corporation; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to the Automated Customer Account Transfer Service and the ACAT-Fund/SERV Interface

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-35078; File No. SR-MCC-94-14]

Self-Regulatory Organizations; Midwest Clearing Corporation;

Notice of Filing and Immediate Effectiveness of Proposed Rule Change

Relating to the Automated Customer Account Transfer Service and the

ACAT-Fund/SERV Interface

December 9, 1994.

Pursuant to Section 19(b)(1) of the Securities Exchange Act of

1934\1\ (``Act''), notice is hereby given that on November 8, 1994, the

Midwest Clearing Corporation (``MCC'') 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 MCC. 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) (1988).

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I. Self-Regulatory Organization's Statement of the Terms of Substance

of the Proposed Rule Change

MCC proposes to amend its procedures to comply with New York Stock

Exchange (``NYSE'') Rule 412 which sets forth the time for transferring

customer accounts\2\ and with National Securities Clearing Corporation

(``NSCC'') Rule 50, Section 9\3\ regarding NSCC's Automated Customer

Account Transfer (``ACAT'') Service.\4\ MCC also proposes to amend its

procedures regarding the ACAT-Fund/SERV interface to comply with the

NYSE requirement that all mutual fund account transfers be accomplished

by use of an automated system where the NYSE member organizations are

participants in a registered clearing agency which has such a facility.

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\2\For a complete description of the recent amendments to NYSE

Rule 412, refer to Securities Exchange Act Release No. 34633

(September 2, 1994), 59 FR 46872 [File No. SR-NYSE-94-21] (order

approving amendments to NYSE Rule 412).

\3\For a complete description of the recent amendments to NSCC's

Rule 50, Section 9, refer to Securities Exchange Act Release No.

34879 (October 21, 1994), 59 FR 54229 [File No. SR-NSCC-94-13]

(order approving modifications to NSCC's ACAT Service to accelerate

the time in which customer accounts are transferred).

\4\For a complete description of NSCC's ACAT system, refer to

Securities Exchange Act Release No. 22481 (September 30, 1985), 50

FR 41274 [File No. SR-NSCC-85-7] (order approving proposed rule

change establishing ACAT Service).

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II. Self-Regulatory Organization's Statement of the Purpose of, and

Statutory Basis for, the Proposed Rule Change

In its filng with the Commission, MCC 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. MCC has prepared summaries, set forth in Sections (A),

(B), and (C) below, of the most significant aspects of such statements.

(A) Self-Regulatory Organization's Statement of the Purpose of and

Statutory Basis for, the Proposed Rule Change

NSCC's ACAT Service is an input, comparison, and settlement service

for customer account transfers from one brokerage firm to another. MCC

Article VI, Rule 3 authorizes MCC to establish procedures for its

linkage to NSCC's ACAT Service including the establishment of time

periods. MCC's proposal is consistent with NSCC's recent amendments to

NSCC Rule 50, Section 9 shortening NSCC's recent amendments to NSCC

Rule 50, Section 9 shortening the period in which a participant that is

to receive a transferred account has to review the transfer

instructions and reply thereto. The completed transfer cycle will be

reduced from ten business days to seven business days for transferring

cash or margin accounts and from fifteen business days to seven

business days for transferring retirement accounts. The portion of

MCC's filing containing these procedures is consistent with the NYSE

and NSCC proposals; therefore, MCC's procedures also will take effect

on December 2, 1994.

MCC's proposed rule change also proposes to make minor changes to

the ACAT-Fund/SERV interface\5\ to comply with the NYSE requirement

that generally all mutual fund account transfers must be accomplished

by using the automated systems of a registered clearing agency where

both the receiving broker-dealer and the delivering broker-dealer are

participants in a registered clearing agency which has such a

facility.\6\ In accordance with a NYSE Rule 412, this change will be

effective March 3, 1995. In addition, under its proposal MCC no longer

will treat account transfers containing option positions differently

from transfers of accounts without option positions.

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\5\For a detailed description of NSCC's ACAT-Fund/SERV

interface, refer to Securities Exchange Act Release No. 27454

(November 20, 1989), 54 FR 48962 [File No. SR-NSCC-89-12] (order

approving modification of NSCC's ACAT Service rules to provide for

the automated transfer of eligible book share mutual fund assets).

\6\Supra note 2.

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MCC believes the proposed rule change is consistent with Section

17A of the Act in that it promotes the prompt and accurate clearance

and settlement of securities transactions. MCC's procedures setting

forth the shortened time period for transferring accounts are

appropriate because they properly reflect the changes set forth by the

NYSE and NSCC in their efforts to enhance automation of the transfer

process. In addition, the revised procedures are consistent with the

Commission's effort to reduce the settlement cycle as required by Rule

15c6-1\7\ which mandates a three business day settlement cycle for most

broker-dealer transactions effective June 7, 1995.\8\

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\7\For a complete description of Rule 15c6-1, refer to

Securities Exchange Act Release No. 33023 (October 6, 1993), 58 FR

52891 [File No. S7-5-93] (adopting Commission Rule 52c6-1).

\8\Securities Exchange Act Release No. 34952 (November 9, 1994),

59 FR 59137 [File No. S7-5-93] (change of effective date of Rule

15c6-1).

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(B) Self-Regulatory Organization's Statement on Burden on Competition

MCC 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

MCC has not solicited or received comments on the proposed rule

change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for

Commission Action

The foregoing rule change has become effective pursuant to Section

19(b)(3)(A)(iii)\9\ of the Act and pursuant to Rule 19b-4(e)(4)\10\

promulgated thereunder because the proposal effects a change in an

existing service of MCC that does not adversely affect the safeguarding

of securities or funds in the custody or control of MCC and does not

significantly affect the respective rights or obligations of MCC or

persons using the service. At any time within 60 days of the filing of

such rule change, the Commission may summarily abrogate such rule

change if it appears to the Commission that such action is necessary or

appropriate in the public interest, for the protection of investors, or

otherwise in furtherance of the purposes of the Act.

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\9\15 U.S.C. 78s(b)(3)(A)(iii) (1988).

\10\17 CFR 240.19b-4(e)(4) (1994).

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IV. Solicitation of Comments

Interested persons are invited to submit written data, views, and

arguments concerning the foregoing. Persons making written submissions

should file six copies thereof with the Secretary, Securities and

Exchange Commission, 450 Fifth Street, N.W., Washington, D.C. 20549.

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, N.W.,

Washington, D.C. 20549. Copies of such filing will also be available

for inspection and copying at the principal office of MCC. All

submissions should refer to File No. SR-MCC-94-14 and should be

submitted by January 6, 1995.

For the Commission by the Division of Market Regulation,

pursuant to delegated authority.\11\

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\11\17 CFR 200.30-3(a)(12) (1994).

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Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 94-30913 Filed 12-15-94; 8:45 am]

BILLING CODE 8010-01-M