File No. SR-NSCC-00-12

Securities and Exchange Commission

Washington, D.C. 20549

_____________________________________

Form 19b-4

Proposed Rule Change

By

NATIONAL SECURITIES CLEARING CORPORATION

 

Pursuant to Rule 19b-4 under the

Securities Exchange Act of 1934

1. Text of Proposed Rule Change.

(b) Not applicable.

(c) Not applicable.

2. Procedures of the Self-Regulatory Organization.

(a) The proposed rule change has been approved pursuant to delegated authority.

3. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change.

(a) The purpose of the proposed rule change is to further automate and add functionality to the Corporation’s Mutual Fund Services’ Fund/Serv service by modifying NSCC’s Rules in regards the submission of extended corrections.

At present, only a Settling Member or TPA Member may submit extended correction instructions. (See Section 12 of Rule 52A.) Extended correction instructions are submitted when a Settling Member or TPA Member determines that data previously transmitted to a Fund Member or Mutual Fund Processor, in respect of a settled order, is in need of correction.

Proposed Section 13 of Rule 52A will now afford Fund Members and Mutual Fund Processors the opportunity to submit extended corrections to Settling Members or TPA Members. No action will be required by a Settling Member or TPA Member if it determines to accept the extended correction of a Fund Member or Mutual Fund Processor. A Settling Member or TPA Member will be able to reject the extended correction instruction within the time frame established by NSCC.

Further, the proposed rule change will (1) permit extended corrections in respect of exchange orders; (2) allow NSCC to delete certain orders, corrections and extended corrections that have not been confirmed or rejected, respectively, within a time frame established by NSCC; and, (3) permit NSCC to establish a maximum time frame within which a Delivering Fund Member must confirm the value of Fund/Serv eligible mutual fund shares, Investment Funds or UIT units.

NSCC intends to implement these changes, subject to SEC approval, on November 20, 2000.

(b) The proposed rule change is consistent with the requirements of the Securities Exchange Act of 1934, as amended (the "Act"), and the rules and regulations thereunder, since it will facilitate the prompt and accurate clearance and settlement of securities transactions and, in general, protect investors and the public interest.

4. Self-Regulatory Organization's Statement on Burden on Competition.

NSCC does not believe that the proposed rule change will have an impact on or impose a burden on competition.

5. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received from Members, Participants, or Others.

The Investment Company Institute’s Enhancement Subcommittee of its Broker/Dealer Committee was advised of and concurs in these modifications to NSCC’s Rules. No written comments relating to the proposed rule change have been solicited or received. NSCC will notify the Securities and Exchange Commission (the "Commission") of any written comments received by NSCC.

6. Extension of Time Period for Commission Action.

NSCC does not consent to an extension of the time period specified in Section 19(b)(2) of the Act for Commission action.

7. Basis for Summary Effectiveness Pursuant to Section 19(b)(3) or for Accelerated Effectiveness Pursuant to Section 19(b)(2).

(a) Not applicable.

(b) Not applicable.

(c) Not applicable.

(d) Not applicable.

8. Proposed Rule Change Based on Rules of Another Self-Regulatory Organization or of the Commission.

9. Exhibits.

Exhibit A - Text of the proposed rule change.

Exhibit B - Notice of the proposed rule change for publication in the Federal Register.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the self-regulatory organization has duly caused this filing to be signed on its behalf by the undersigned thereunto duly authorized.

NATIONAL SECURITIES CLEARING CORPORATION

By:_____________________________________

Karen L. Saperstein

Managing Director

Modify NSCC's Rules as follows:

* * *

MUTUAL FUND SERVICES

Rule 52.

SEC. 1. The Corporation may provide a service to enable Settling Members, TPA Members and Fund Members to process and/or settle, as the case may be, on an automated basis mutual fund and Investment Fund purchase and redemption orders and unit investment trust ("UIT") transactions, transmit registration instructions and/or to enable, as the case may be, the transfer on an automated basis of the value of Fund/Serv eligible mutual fund shares and Investment Fund and UIT units. Such automated processing of mutual fund and Investment Fund orders and UIT transactions, transmission of registration instructions and transfer of the value of Fund/Serv eligible mutual fund shares and Investment Fund and UIT units shall be known as the Fund/Serv and will be accomplished in accordance with the provisions of this Rule.

SEC. 2. A Settling Member or a TPA Member who desires to submit a mutual fund order (e.g. purchase, redemption, exchange) or UIT transaction to another Settling Member (referred to as a Mutual Fund Processor) or a Fund Member may do so by submitting order data to the Corporation on the day the order is intended to take place ("Trade Date") or, to the extent established by each Fund Member, any day thereafter (hereinafter referred to as "As-Of" orders) in such form and by such times as established by the Corporation from time to time.

SEC. 3. Upon receipt of the order data, the Corporation will review the order data for such information which the Corporation determines from time to time to be necessary. If such order data does not contain the information required by the Corporation, the Corporation will reject the order data and will advise the Settling Member or the TPA Member, as the case may be, of such rejection in such form and by such times as established by the Corporation from time to time. If the order data appears to contain the information required by the Corporation, subject to any rights the Corporation may have as provided in the Rules generally, the Corporation will transmit the order data to the Mutual Fund Processor or Fund Member and, if submitted by a TPA Member, to the corresponding Settling Member with the obligation to settle the order (hereinafter referred to as the TPA Settling Entity), in such form and by such times as established by the Corporation from time to time. To the extent the Corporation has knowledge that it is unable to transmit the order data to the Mutual Fund Processor or Fund Member, the Corporation will use its best efforts to contact the Mutual Fund Processor or Fund Member and so advise. Notwithstanding the foregoing, to the extent a Mutual Fund Processor or Fund Member fails to receive the order data, the Mutual Fund Processor or Fund Member, as soon as practicable, must contact the Corporation. Upon request by the Mutual Fund Processor or Fund Member, the Corporation may make summary order data available to the Mutual Fund Processor or Fund Member to the extent the Corporation has such data available. A Settling Member or a TPA Member who desires to resubmit an order that has been rejected must resubmit the order as if it had never been submitted and such order shall be submitted within the time frames established by the Corporation from time to time.

SEC. 4. A Mutual Fund Processor or Fund Member may confirm or reject a mutual fund or Investment Fund order or UIT transaction received from a Settling Member or a TPA Member by transmitting such confirmation or rejection to the Corporation in such form and by such time as established by the Corporation from time to time. If the order was submitted by a TPA Member, the corresponding TPA Settlement Entity will be notified of the action taken by the Mutual Fund Processor or Fund Member. All orders (except money market purchase orders) [will pend in the system indefinitely until] not confirmed or rejected within such time will be deleted from the Fund/Serv system. Upon receipt of a rejection from a Mutual Fund Processor or Fund Member, the Corporation will delete the unsettled order from Fund/Serv. Responsibility for adjusting any orders which are deleted from Fund/Serv is between the Settling Member or the TPA Member, as the case may be, and the Mutual Fund Processor or Fund Member. In addition to the foregoing, if a Mutual Fund Processor or Fund Member recognizes that he has incorrectly priced orders, other than exchange orders, that were confirmed through Fund/Serv, in order to adjust the price for all such orders (other than money market orders) he may, until the day prior to settlement day, submit a reconfirmation in such form and by such time as established by the Corporation from time to time and with respect to money market orders settling on a same day basis he may on settlement day submit a reconfirmation in such form and by such time as established by the Corporation from time to time; provided, however, that no reconfirmation may be submitted if a Settling Member or a TPA Member has submitted a correction, as provided for in Section 7 of this Rule, instead, the procedures set forth in Section 7 of this Rule shall apply.

SEC. 5. A Mutual Fund Processor or Fund Member who desires to originate a confirmed order (including an As-Of order) to a Settling Member or a TPA Member (other than for money market and exchange orders) may do so by submitting such confirmed order data to the Corporation in such form and by such time as established by the Corporation from time to time (any such confirmed order originated by a Mutual Fund Processor or Fund Member will hereinafter be referred to as a "Fund Originated Order").

SEC. 6. Upon receipt of a Fund Originated Order, the Corporation will review the order data for such information as the Corporation determines from time to time to be necessary. If the order data does not contain the information required by the Corporation, the Corporation will reject the order data and will advise the Mutual Fund Processor or Fund Member of such rejection in such form and by such time as established by the Corporation from time to time. A Fund Member or Mutual Fund Processor who desires to resubmit a Fund Originated Order that has been rejected must resubmit the order as if it never had been submitted and such order must be submitted within the time frames established by the Corporation from time to time. If the order data appears to contain the information required by the Corporation, subject to any rights which the Corporation may have as provided in the Rules generally, the Corporation will report such confirmed Fund Originated Order to the Settling Member or the TPA Member and the corresponding TPA Settling Entity, as the case may be, in such form and by such time as established by the Corporation from time to time.

SEC. 7. A Settling Member or a TPA Member who does not agree with the terms of an order (including confirmed, reconfirmed and As-Of orders), other than an exchange order or a money market order, may, submit a correction. A Settling Member, TPA Member or TPA Settling Entity who does not agree with the terms of a Fund Originated Order (including As-Of Fund Originated Orders) may submit a deletion. Corrections and deletions must be submitted in such form and by such time as established by the Corporation from time to time. In the case of exchanges and money market orders, corrections and deletions are not accepted. Exchange and money market orders will settle as confirmed by the Mutual Fund Processor or Fund Member. Money Market purchase orders will settle as submitted by the Settling Member or the TPA Member if not rejected by the Fund Member or Mutual Fund Processor. A deletion of a Fund Originated Order pursuant to this subsection will cause the Fund Originated Order to be deleted from Fund/Serv, and such order must be adjusted directly between the Settling Member or the TPA Member, as the case may be, and the Mutual Fund Processor or Fund Member.

SEC. 8. A Mutual Fund Processor or Fund Member may either accept or reject a correction in such form and by such time as established by the Corporation from time to time. A Mutual Fund Processor or Fund Member must submit a correction confirmation in order to accept a correction. Corrections which are not confirmed or rejected [will be pended in the system] within such time will be deleted from the Fund/Serv system. Upon receipt of a rejection, the Corporation will delete the order from Fund/Serv. Any orders which are deleted from Fund/Serv must be adjusted directly between the Settling Member or the TPA Member, as the case may be, and the Mutual Fund Processor or Fund Member.

SEC. 9. A Settling Member or a TPA Member may submit a money only related charge against a Mutual Fund Processor or Fund Member, and a Mutual Fund Processor or Fund Member may submit a money only related charge against a Settling Member or another Mutual Fund Processor or Fund Member in such form and by such time as established by the Corporation from time to time. Upon receipt of a money only related charge, the Corporation will review the data for such information as the Corporation determines from time to time to be necessary. If the data does not contain the information required by the Corporation, the Corporation will reject the money only related charge and will advise the Settling Member, TPA Member, Mutual Fund Processor or Fund Member as the case may be in such form and by such time, as established by the Corporation from time to time. If the money only related charge appears to contain the information required by the Corporation, subject to any rights which the Corporation may have as provided in the Rules generally, the Corporation will report such money only related charge to the appropriate contra party in such form and by such time, as established by the Corporation from time to time. A Settling Member, TPA Member or TPA Settling Entity, Mutual Fund Processor or Fund Member who does not agree with the terms of a money only related charge may submit a deletion in such form and by such time, as established by the Corporation from time to time.

SEC. 10. A Settling Member, TPA Member or TPA Settling Entity who does not want an order (including an exchange order) to settle within the Fund/Serv Service, may submit an exit instruction in such form and by such time as established by the Corporation from time to time. Upon receipt of an exit instruction the Corporation will review the data for such information as the Corporation determines from time to time to be necessary. If the data does not contain the information required by the Corporation, the Corporation will reject the exit and advise the Settling Member, TPA Member or TPA Settling Entity, as the case may be, in such form and by such time as established by the Corporation from time to time. If the exit instruction appears to contain the information required by the Corporation, the Corporation will report such exit to a Fund Member, Mutual Fund Processor or TPA Member and corresponding TPA Settling Entity, as the case may be, within such time as established by the Corporation from time to time. A properly submitted exit instruction will cause such order to be deleted from the Fund/Serv Service and such order must be adjusted directly between the Settling Member and Fund Member or Mutual Fund Processor. If a TPA Settling Entity does not submit an exit instruction in such form and by such time as established by the Corporation from time to time, the TPA Settling Entity shall be responsible for the settlement of such order in accordance with the provisions of these Rules.

SEC. 11. (a) All money market purchase orders and all other confirmed or reconfirmed orders and money only related charges except for orders that have been deleted, rejected or exited, or for which releases to settlement have not been submitted by the Fund Member or Mutual Fund Processor, will settle in accordance with the time frames as established by the Corporation from time to time, or in such extended or shortened time frame as established by agreement of the submitting parties; provided however, that such modified time frame shall be no shorter than T and no longer than T+7. On settlement date, the Corporation will debit and credit the appropriate Settling Members', Mutual Fund Processors' or Fund Members' account for the value of the orders and money only related charges.

(b) Settlement of money payments between Fund Members, Mutual Fund Processors and Settling Members arising out of orders and money only related charges for Mutual Fund Services transactions submitted through Fund/Serv shall be made in accordance with Rule 12 and other provisions of these Rules.

SEC. 13-14. (Section numbers reserved for future use.)

SEC. 15. A Settling Member or a TPA Member may submit registration data for mutual fund and Investment Fund orders and UIT transactions settled through Fund/Serv by transmitting such data to the Corporation in such form and by such time as established by the Corporation from time to time. Upon receipt of the registration data, the Corporation will review the data for such information which the Corporation determines from time to time to be necessary. If such data does not contain the information required by the Corporation, the Corporation will reject the data and report such rejection to the Settling Member and the TPA Member, as the case may be, in such form and by such time as established by the Corporation from time to time. A Settling Member or a TPA Member who desires to resubmit registration data that has been rejected must resubmit the registration data as if it had never been submitted. If the registration data appears to contain the information required by the Corporation, the Corporation will transmit the data to the Mutual Fund Processor or Fund Member in such form and by such time as established by the Corporation from time to time. The Mutual Fund Processor or Fund Member must accept or reject the registration data in such form and by such time as established by the Corporation.

SEC. 16. ACAT/TRANSFERS - Within the time frame established by the Corporation, the Corporation may transmit, to a Mutual Fund Processor or Fund Member, Fund/Serv eligible book share mutual fund or Investment Fund customer account transfer data in such form and by such time as established by the Corporation from time to time. The Mutual Fund Processor or Fund Member must reject or confirm the transfer in such format and by such time as established by the Corporation. Transfers not confirmed or rejected within such time frame will be deleted from the Fund/Serv system by the Corporation.

The processing of orders during an underwriting or tender offer will be same as specified in this Rule except as modified below in Section 17.

SEC. 17. Underwritings/Tender Offers

(a) A Mutual Fund Processor or Fund Member who desires orders to be processed as part of an underwriting or tender offer (hereinafter called "Event") shall, in such form and by such time as established by the Corporation from time to time, submit to the Corporation such details of the Event as the Corporation may require or permit, including but not limited to the Settling Members or the TPA Members and corresponding TPA Settling Entities entitled to participate in the Event as established by the Mutual Fund Processor or Fund Member, duration of the Event (hereinafter called the "Acceptance Period"), the type of order data that may be accepted and, the settlement date of the Event. Order data received by the Corporation for Mutual Funds, Investment Funds or UITs undergoing an Event for which the Corporation has not received details of the Event will not be processed in accordance with this Section.

(b) Upon receipt of the details, the Corporation will review the details for such information as the Corporation determines from time to time to be necessary. If the details do not include the required data the Corporation will reject the details. If the settlement date provided is not a business day, the data shall not be rejected but the next valid business day will be assigned by the Corporation as the settlement date.

(c) It shall be the obligation of a Mutual Fund Processor or Fund Member to determine the appropriateness of any order submitted during an Event and to take such action necessary to reject any invalid orders.

(d) A Settling Member, TPA Member or TPA Settling Entity may submit, during the Acceptance Period, a deletion of an underwriting order in such form and by such time as established by the Corporation.

(e) A Mutual Fund Processor or Fund Member may submit a reconfirmation beginning two days after the first day of the Acceptance Period until three days prior to settlement date.

(f) Settlement will occur in accordance with the time frames as established by the Corporation from time to time based upon data provided by a Mutual Fund Processor or Fund Member provided, however, that in no event shall settlement occur earlier than three (3) business days after the date the Corporation receives notice of the settlement date from the Mutual Fund Processor or Fund Member.

(g) If notice of cancellation of an Event is not received by the Corporation in such form and by such time as established by the Corporation and in no event later than three (3) business days prior to settlement date, settlement shall occur as previously established and it shall be the responsibility of the Settling Member or TPA Settling Entity and Mutual Fund Processor or Fund Member to adjust the item directly.

SEC. 18-20. (Section numbers reserved for future use.)

SEC. 21. Transfers of Fund/Serv Eligible Mutual Fund Shares and Investment Fund and UIT Units.

(a) A Fund Member or Mutual Fund Processor to whom the value of Fund/Serv eligible mutual fund shares, or Investment Fund or UIT units is to be transferred (hereinafter referred to as the "Receiving Fund Member") may initiate the process by submitting a transfer request to the Corporation in such form and by such time on the submission date as established by the Corporation from time to time.

(b) The Fund Member or Mutual Fund Processor indicated by the Receiving Fund Member (hereinafter referred to as the "Delivering Fund Member") must acknowledge or reject a transfer request by submitting either an acknowledgment containing such information and in such form as established by the Corporation from time to time or a rejection instruction containing such information and in such form as established by the Corporation from time to time. The Delivering Fund Member will have up to two (2) business days after the submission of a transfer request to acknowledge or reject the transfer request. A transfer request that is not responded to timely by a Delivering Fund Member, and a transfer request that is rejected by a Delivering Fund Member, will be deleted from Fund/Serv.

(c) A Delivering Fund Member that has acknowledged a transfer request must confirm the value of the Fund/Serv eligible mutual fund shares, or Investment Fund or UIT units to be transferred by submitting a confirmation to the Corporation in such form as established by the Corporation from time to time. The Delivering Fund Member must submit the confirmation no earlier than one (1) business day and no later than [sixty (60) business days] such time as established by the Corporation from time to time after the submission of an acknowledgment. Failure to timely submit a confirmation will cause the transfer request to be deleted from Fund/Serv

(d) A Delivering Fund Member that has confirmed a transfer request may submit a reconfirmation to change any information submitted in the confirmation by transmitting such reconfirmation to the Corporation in such form as established by the Corporation from time to time prior to the inclusion of the value of the transfer in the settlement cycle of the Corporation as provided in paragraph (h) below.

(e) A Receiving Fund Member may cancel a transfer request by submitting an exit instruction in such form as established by the Corporation from time to time prior to the inclusion of the value of the transfer in the settlement cycle of the Corporation as provided in paragraph (h) below. A properly submitted exit instruction will cause such transfer to be deleted from Fund/Serv.

(f) The Corporation will review transmissions received from Receiving Fund Members and Delivering Fund Members for such information as the Corporation determines from time to time to be necessary. If the transmission does not contain the information required by the Corporation, the Corporation will reject the transmission and will advise the appropriate Receiving Fund Member or Delivering Fund Member. If the transmission appears to contain the information required by the Corporation, subject to any rights the Corporation may have as provided in the Rules generally, the Corporation will send the transmission to the appropriate Receiving Fund Member or Delivering Fund Member.

(g) A Receiving Fund Member who desires to resubmit a transfer request that has been rejected, deleted or exited, or an exit instruction that has been rejected by the Corporation, must resubmit such transfer request or exit instruction as if it had never been submitted. A Delivering Fund Member who has an acknowledgment, rejection, confirmation or reconfirmation rejected by the Corporation must resubmit such acknowledgment, rejection, confirmation or reconfirmation.

(h) All confirmed and reconfirmed transfer requests, except for transfer requests that have been rejected, deleted or exited, will settle in the next settlement cycle of the Corporation after such confirmation or reconfirmation. On settlement date, the Corporation will debit the Delivering Fund Member’s account and credit the Receiving Fund Member’s account for the value of the Fund/Serv eligible mutual fund shares, or Investment Fund or UIT units transferred. Settlement of money payments between Receiving Fund Members and Delivering Fund Members arising out of transfer requests submitted through Fund/Serv shall be made in accordance with Rule 12 and other provisions of these Rules.

(i) Credits and debits arising after the settlement of a transfer of the value of Fund/Serv eligible mutual fund shares, or Investment Fund or UIT units will be processed in accordance with Section 9 of this Rule.

SEC. 22- 45. (Section numbers reserved for future use.)

SEC. 46. Notwithstanding the foregoing, the submission of a transaction or instruction through Fund/Serv and settlement, deletion, rejection and exit of such transaction or instruction from or through Fund/Serv shall not otherwise relinquish, extinguish or affect any legal rights, remedies or obligations of the Settling Member, TPA Member, Mutual Fund Processor or Fund Member arising out of such transaction or instruction.

SEC. 47. Each business day, the Corporation will make data available to Settling Members, TPA Members, TPA Settling Entities, Mutual Fund Processors and Fund Members, indicating the status of all Fund/Serv transactions and instructions submitted to the Corporation. On a daily basis, Settling Members, TPA Members, TPA Settling Entities, Mutual Fund Processors and Fund Members must compare the data against their records and any discrepancies must be immediately reported to the Corporation. To the extent necessary or appropriate, the Corporation may cause an adjustment to be made to the data within such time as the Corporation determines to be necessary.

SEC. 48. At any time, the Corporation may prohibit one or more orders, money only related charges or transfer requests from settling through Fund/Serv if the Corporation, in its discretion, determines that such action is necessary for the protection of the Corporation, Settling Members, Fund Members, creditors or investors.

SEC. 49. The Corporation may delete from Fund/Serv any incompleted Fund/Serv items, with the exception of incompleted ACAT-Fund/Serv items, upon the withdrawal of a Settling Member from participation in Fund/Serv, but not earlier than five business days following notification to Settling Members of such Settling Member's intention to withdraw from Fund/Serv, where such Settling Member continues as a Settling Member or is merged into or acquired by another Settling Member which is not a participant in Fund/Serv.

(b) The Corporation may delete from Fund/Serv any incompleted Fund/Serv items upon the withdrawal of a TPA Member from participation in Fund/Serv, but not earlier than five business days following notification to the TPA Settling Entity of such TPA Member’s intention to withdraw from Fund/Serv.

SEC. 50. The Corporation will not be responsible for the completeness or accuracy of any transaction or instruction received from or transmitted to a Settling Member, TPA Member, TPA Settling Entity, Mutual Fund Processor or Fund Member through Fund/Serv nor for any errors, omissions or delays which may occur, without gross negligence on the Corporation's part, in the transmission of a transaction or instruction to or from a Settling Member, TPA Member, TPA Settling Entity, Mutual Fund Processor or Fund Member.

Exhibit B

SECURITIES AND EXCHANGE COMMISSION

(Release No. 34- ; File No. SR-NSCC-00-12)

Proposed rule change by NATIONAL SECURITIES CLEARING CORPORATION ("NSCC") consisting of modifications to NSCC’s Rules relating to NSCC’s Mutual Fund Services. Comments requested within days after the date of this publication.

_____________________________________

Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the "Act"), 15 U.S.C. 78s(b)(1), notice is hereby given that on , NSCC 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 by NSCC. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons.

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

The proposed rule change consists of modifications to NSCC’s Rules relating to the NSCC’s Mutual Fund Services and is attached hereto as Exhibit A.

II. Self-Regulatory Organization'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) Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change.

(a) The purpose of the proposed rule change is to further automate and add functionality to the Corporation’s Mutual Fund Services’ Fund/Serv service by modifying NSCC’s Rules in regards the submission of extended corrections.

At present, only a Settling Member or TPA Member may submit extended correction instructions. (See Section 12 of Rule 52A.) Extended correction instructions are submitted when a Settling Member or TPA Member determines that data previously transmitted to a Fund Member or Mutual Fund Processor, in respect of a settled order, is in need of correction.

Proposed Section 13 of Rule 52A will now afford Fund Members and Mutual Fund Processors the opportunity to submit extended corrections to Settling Members or TPA Members. No action will be required by a Settling Member or TPA Member if it determines to accept the extended correction of a Fund Member or Mutual Fund Processor. A Settling Member or TPA Member will be able to reject the extended correction instruction within the time frame established by NSCC.

Further, the proposed rule change will (1) permit extended corrections in respect of exchange orders; (2) allow NSCC to delete certain orders, corrections and extended corrections that have not been confirmed or rejected, respectively, within a time frame established by NSCC; and, (3) permit NSCC to establish a maximum time frame within which a Delivering Fund Member must confirm the value of Fund/Serv eligible mutual fund shares, Investment Funds or UIT units.

NSCC intends to implement these changes, subject to SEC approval, on November 6, 2000.

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

NSCC 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.

The Investment Company Institute’s Enhancement Subcommittee of its Broker/Dealer Committee was advised of and concurs in these modifications to NSCC’s Rules. No written comments relating to the proposed rule change have been solicited or received. NSCC will notify the Securities and Exchange Commission (the "Commission") of any written comments received by NSCC.

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

Within 35 days of the date of publication of this notice in the Federal Register or within such longer period (i) as the Commission may designate up to 90 days of such date 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 such rule filing, or

(B) institute proceedings to determine whether the rule filing should be disapproved.

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 rule filing that are filed with the Commission, and all written communications relating to the rule filing between the Commission and any person, other than those that may be withheld from the public in accordance with provisions of 5 U.S.C. 552, will be available for inspection and copying in the Commission's Public Reference Room in Washington, D.C. Copies of such filing will also be available for inspection and copying at the principal office of the above-mentioned self-regulatory organization. All submissions should refer to the file number in the caption above and should be submitted within days after the date of this publication.

For the Commission by the Division of Market Regulation, pursuant to delegated authority.

Jonathan G. Katz
Secretary

Dated: