NSCC’s Important Notice A5234, P&S 4804 dated March 9, 2001, announced that in order to allow NSCC Participants sufficient time to successfully complete testing of the enhancements, the production implementation date for these two ACATS enhancements will begin with ACATS processing of Monday, September 10, 2001. NSCC also announced that the two ACATS Enhancements scheduled for production implementation on Monday, September 10, 2001 have been available for testing within the Participant Service Environment (PSE) since Monday, June 25, 2001. The two ACATS enhancements are as follows:

1. MUTUAL FUND RECEIVER ADJUSTMENT CAPABILITY:

The Mutual Fund Receiver Adjustment enhancement will be the first time ACATS allows a receiving firm to delete assets. Some important facts that should be considered when testing the Mutual Fund Receiver Adjustment enhancement are:

• These delete transactions are only valid when the account transfer is a Full (FUL) transfer type and the account transfer is in the status of, Review, Review-adjust, Review-error or Review-accelerate. In ACATS, an asset will be placed into Review-error if there is an error condition on a particular asset submitted by the deliverer.
  
• The following details the different statuses and results that could appear as the result of a Receiver Delete being processed in ACATS. Attachment A is enclosed with this Important Notice to assist ACATS participants in explaining the different statuses and the different results that can occur when processing a receiver delete.

1. Receiver submitted AT delete transactions will be valid only when the asset has been identified as a mutual fund by the deliverer, through the asset pricing category code field – Mutual Fund Money Market (MFMM) and Mutual Fund Non-Money Market (MFNM).
2. The transfer will automatically be accelerated by the submission of a valid receiver submitted AT delete. Additionally, the status Review-adjust-rec-acl (code 240 - RARA) will be added to the list of valid statuses ACATS participants will receive on the cycle (M" and E") reports and files. The ACATS end -of-day transfer status will be Settle-prep (see Attachment A).
3. The existing transfer status Review-adjust, used to indicate the processing of a valid deliverer submitted AT, will be renamed Review-adjust-del (code 210). The receiver submitted AT deletes will have a status of Review-adjust-receiver-accelerate code 240 (RARA) (refer to Attachment A).
4. To determine whether the receiver or the deliverer has submitted the asset delete transaction, participants must compare the AT Submitting Participant number with the Receiver and Deliverer Participant Numbers.
5. When the ACATS account transfer is for the same participant (receiver and deliverer participant numbers are the same), asset deletes will be processed as deliverer asset deletes in ACATS cycles one through ACATS cycle four and will be processed as receiver deletes in ACATS cycle five.
6. When receiver and deliverer submit AT transactions in the same cycle, ACATS will always process the receiver AT transaction first and then the deliverer AT transaction.
7. Since the receiver adjustment is always processed first, the status will be Review-adjust-deliverer, days in status one, when the receiver and deliverer both submit AT transactions in same cycle, for different assets within the same transfer. (refer to Attachment A).
8. When both the receiver and the deliverer submit AT transactions in the same cycle, for the same asset, the receiver submitted AT delete transaction would be processed first and the deliverer submitted AT transaction will be rejected. The receiver's action has eliminated the asset from the ACATS system and therefore the deliverer cannot submit an ACATS transaction against a deleted asset (refer to Attachment A).
9. When the account is in the ACATS status of Review-error and the receiver submits an AT delete against the same asset causing the review-error status, the review-error status will be removed and the asset deleted as well as automatically accelerating the account for settlement (refer to Attachment A).
10. When the account is in the ACATS status of Review-error and the receiver submits an AT delete against a different asset than the one causing the review-error status, the asset will be deleted, but the account will remain in the ACATS status of Review-error. (refer to Attachment A).
11. The cutoff time for receiver submitted AT delete transactions will be cycle 5, 4:00 P.M. ET.

1. MUTUAL FUND CLEAN-UP

The ACATS Mutual Fund Clean-Up (MFC) is a new ACAT transfer type. This transfer type will be used by a deliverer to clean up mutual fund assets that were included in an earlier ACATS transfer, but were subsequently re-registered outside of ACATS. The cleanup action will be to reverse the settlement incentive money charged the deliverer (and credited to the receiver) when the original transfer was prepared for settlement. Some important facts that should be considered when testing the Mutual Fund Clean-Up enhancement are:

• A MFC is a non-standard transfer type, so the deliverer inputs to ACATS TIF (TI) information, and one to many associated assets (ATs) - cutoff time will be 12:00 Noon ET.

• The deliverer will provide the new Fund Customer Account Number of the Receiver, which the deliverer has received from the fund, as verification that the new Mutual Fund asset has been re-registered into the receivers' account at the fund.
  
• The receiver can reject the MFC transaction only on the same day it is entered. A new reject code will be created and cutoff time is 4:00 P.M.ET. No other actions by the deliverer or the receiver are allowed. The receiver will use an MFC-specific reject code, ACATS reject code 27 = Mutual Fund Cleanup Reject, when the account transfer is to be rejected.

• Only assets (ATs) identified by the deliverer as mutual funds, Mutual Fund Money Market (MFMM) and Mutual Fund Non-Money Market (MFNM) are valid.

• The settling location of all MFC assets will be set to 50 NSET, unless the deliverer specifies the location 50 XSET, which will then be the location.

• The ACATS system will not validate the MFC charge amount against the asset value amount of the asset that originally settled in ACATS.

All participant testing for ACATS will be conducted in NSCC’s test facility the Participant Service Environment (PSE). NSCC has developed the PSE as a test environment to be used by participants to test certain applications. This environment contains the functionality of the production ACATS System and as enhancements are made to the system, participants will be able to test these changes prior to production implementation.

Prior to testing with the PSE, participants who wish to submit input via DataTrak or PCWeb Direct and/or receive output via AutoRoute or PCWeb Direct must contact NSCC’s Participant Test Group (PTG) at (212) 855-5630. The PTG will assist the participants in establishing connectivity to the PSE. Please note that all ACATS DataTrak SYSIDs and AutoRoute Product IDs used for testing will have unique numbers. Testing will be available in either the fixed or variable length file formats. Refer to Attachment B for a list of the Production SYSIDs and Product IDs and their corresponding numbers to be used for test input and output. When contacting NSCC’s PTG to setup ACATS testing in PSE, the participants must indicate whether they will be using DataTrak and AutoRoute directly or will be using PCWeb Direct to submit and receive data from NSCC.

PCWeb Direct will be available for use by participants for ACATS testing. NSCC participants will then be able to test ACATS by using PCWeb Direct to submit data to and/or receiving testing information from the PSE. To gain access to the PCWeb Direct PSE Test site, NSCC Participants will need to obtain a special user ID and password. This is the same ID and Password issued to firms for Y2K, Decimals and previous ACATS testing. If your firm already has a password and ID for the test site obtained from previous testing, you will not have to make a new request. Participants must also have a valid production Digital Certificate and be entitled to use PCWeb Direct for ACATS in order to test ACATS using PCWeb Direct within the PSE.

To obtain your PSE test user ID and Password or any questions on PCWeb Direct, Participants should contact the PCWeb Direct Hotline at (888) 382-2721. Please send your requests as soon as possible if you intend to use the PCWeb Direct for ACATS testing. Setup work must be completed prior to performing ACATS testing. Participants using PCWeb Direct exclusively do not need to complete the connectivity test as mentioned earlier. PCWeb Direct users are required to contact our PTG to schedule any and all ACATS testing as outlined above.

This is how participants should access test PCWeb Direct for the PSE:

1. Go to http://www.nscc.com/apps
2. Click on the link "Access PCWeb for PSE" on the left bar
3. On the preceding page, go to bottom of page click the button that reads "PCWeb Direct for Participant Service (PSE)" to access PSE test site.
4. On the "NSCC Participant Test" page, enter your PCWeb Direct testing ID and Password
5. Select ACATS from the list of NSCC products
6. After gaining entry, conduct ACATS testing via PCWeb Direct following the same procedures as you would in production.

** A = When both the receiver and deliverer submit deletes in the same ACATS cycle for a different asset - Participants must compare the AT Submitting Participant Number to the Receiver and Deliverer Participant Number to determine who submitted the delete.

** B = If Receiver delete is processed in an earlier ACATS cycle then a Deliverer AT transaction is submitted, the cycle that has the Receiver delete cycle will have a status of Code 240 Review-Adjust-Receiver-Accelerate (RARA) on the Cycle and End-of -Day files ("M and E") and then the Deliverer cycle will change the status to Code 210 Review-Adjust-Deliverer.

** C =If the receiver submits an acceleration on the account in a previous cycle and then submits a Receiver Delete, the account status will change to Review-Adjust-Receiver-Accelerate (Code 240 RARA) on the Cycle and End-of -Day files ("M and E") but would still be in the Settle-Prep status on the Position file.

** D = For the Review-Err Code 220 - Same Asset / Different Asset refers to the same or different asset then the asset causing the Review-Err condition in ACATS.

** E = When the account is in the Review-Err Code 220 and the receiver deletes a different asset other then the one causing the Review-Err status, the ACATS status will remain in Review-Err Code 220. In order to determine that the receiver deleted an asset, participants must look at the transaction code (D = Delete) and compare the Submitting Participant Number on the AT record to the Receiver and Deliverer Participant Number to determine who submitted the delete