I.      CNS Buy-In Enhancements

National Securities Clearing Corporation (NSCC), in response to feedback from our annual customer satisfaction survey and in its continuing effort to enhance and bring greater efficiency to the CNS Buy-In process, announces new functionality that will provide participants an electronic means of transmitting CNS Buy-In Execution information.     

DTC will be adding a new option on the PEXM function on the Participant Terminal System (PTS) to allow participants to communicate CNS Buy-In Execution information electronically to NSCC.  This new functionality will be available to participants on July 10, 2003.

Additionally, NSCC’s procedures for the timeframes to report CNS Buy-In Executions will be modified.

II.           New PTS Functionality

A new 3270 input screen on the Participant Terminal System (PTS) has been developed to allow participants to transmit CNS Buy-In Execution information to NSCC electronically.  The new input screen can be accessed on PTS through the PEX main menu, option 3, or by typing PEXM at the function prompt.  A new option (#19) has been added to the PEXM main menu for CNS Notice of Buy-In Execution.  Participants will not have the ability to utilize their CCF or MDH input capabilities for this new functionality.  The new input screen for CNS Buy-In Executions will be available to participants from 12:00 noon to 6:00 pm eastern time.

Effective August 1, 2003, participants will be required to use this new functionality on the Participant Terminal System (PTS) for submitting CNS Buy-In Execution information.  From and after that date, NSCC will no longer accept original CNS Buy-In Execution information via phone calls and fax transmissions from participants unless the Participant Terminal System (PTS) and the PEXM function are not accessible.  All modifications and corrections to CNS Buy-In Execution information transmitted to NSCC via the PEXM function must be handled manually through phone or fax.  NSCC will continue to contact all short brokers that have been held liable due to a CNS Buy-In Execution.  Original Buy-In Execution information received after 6:00 pm eastern time on the date of execution or prior to 9:30 am eastern time on the following business day must be communicated to NSCC via phone and fax.   

Note:  There has been an additional change to the PEXM main menu to accommodate this enhancement.  Effective July 10, 2003 the current option #19, Letters of Free Fund, will be moved to option #20 on the main menu screen. 

• Please refer to Exhibit 1 for details on the PEXM main menu modifications.
• Please refer to exhibit 2 for details on the CNS Notice of Buy-In Execution screen.
• Please refer to exhibit 3 for the details of the CNS Buy-In Execution Receipt.        
• Please refer to exhibit 4 for details of the Machine Readable Output File (MRO).

Exhibits 1-4 are available here as a downloadable Adobe Acrobat .pdf file

III.        New Timeframes

In addition to this new functionality, NSCC’s procedures for Buy-Ins will be modified.  Subject to SEC approval, NSCC plans to continue to process CNS Buy-In Executions free of charge provided they are reported no later than 5:00 pm eastern time on the day of execution.  Executing agents/participants reporting CNS Buy-In Execution information after 5:00 pm and until 6:00 pm eastern time, will be assessed a processing fee charge of  $25.00 per transaction.  Executing agents/participants reporting original CNS Buy-In Execution information the following business day by 9:30 am eastern time, will be assessed a processing fee charge of $100.00 per transaction.  Original CNS Buy-In Execution information reported after 9:30 am eastern time on the business day following the execution will not be accepted or processed by the corporation and it will be necessary for the originator to recommence the Buy-In process in order to have its long position bought in.  A subsequent important notice will be issued to notify participants of the SEC’s approval of these changes and the date of implementation.

IV.         Additional Information

A copy of this Important Notice can be obtained from NSCC’s web site http://www.nscc.com in the Important Notice section.  If you have any questions regarding these modifications, please contact Kevin Brennan at (212) 855-1608, Lou Recco at (212) 855-5708, or the undersigned at (212) 855-5667.

Bill J. Kapogiannis
Product Manager
Product Marketing & Development