National Securities Clearing Corporation ("NSCC") has filed a rule change with the Securities and Exchange Commission ("SEC") pursuant to Section 19(b)(3)(A) of the Securities Exchange Act of 1934 providing that, as the various securities markets move to assume the full responsibility to trade comparison, NSCC will discontinue providing trade comparison services for those trades executed in the relevant market.

Centralizing the trade comparison function and locking-in trades at the marketplace where the trades occur is a necessary step as the securities industry moves towards straight-through-processing and shortening the clearance and settlement cycle. Over the years, the stock exchanges and marketplaces have increasingly assumed this responsibility, because it is faster and more efficient for comparison to be done by the marketplace at the time of execution—discrepancies can be identified and resolved more quickly, thus reducing the risk of failed trades to counterparties. As a result, today close to 99% of all streetside equity trades are compared and locked-in at the time of execution on a real-time basis, and are submitted to NSCC as locked-in for trade recording.

In preparation for the move towards shortened settlement cycles, NSCC has been working with the securities exchanges and markets as they move to assume the entire responsibility for comparing their respective trades. The first entity that will assume full responsibility for comparing or locking-in all its equity trades is the New York Stock Exchange. As previously announced in Important Notice A 5243, P&S 4813 (March 27, 2001), The NYSE will take on this responsibility effective June 28, 2001. As a result, from and after June 28, 2001, NSCC will cease providing comparison services for equity transactions executed on the NYSE. (Additional Information about this event will be provided shortly in a separate Important Notice.)

Subsequently, it is anticipated that the other marketplaces will take on similar responsibilities. NSCC will cease providing trade comparison services as each takes on this responsibility.

Accordingly, NSCC has modified its Rules and Procedures to reflect this development and provide that, as the various markets and exchanges assume the responsibility for comparing trades executed in their respective markets, NSCC will cease providing comparison services with respect to the trades executed in that market. NSCC will notify its members by Important Notice prior to the occurrence of each such "discontinuance."

The full text of the rule change may be obtained by contacting the NSCC Legal Department at (212) 855-3207. Written comments on the proposed rule filing may be addressed to Lisa T. Siebold, Assistant Secretary, National Securities Clearing Corporation, 55 Water Street, New York, New York 10041, and your comments will be forwarded to the SEC. You may also address your written comments to the Secretary of the Commission, Securities and Exchange Commission, 450 Fifth Street, NW, Washington, D.C. 20549. We request that you provide NSCC with a copy of your comments.

Questions regarding trade comparison and recording should be directed to your Relationship Manager. Questions regarding the rule filing should be directed to Merrie Faye Witkin, Vice President and Senior Counsel, at (212) 855-3208.

Karen L. Saperstein
Managing Director and Secretary