File No. SR-NSCC-00-03

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.

(a) The text of the proposed rule change is attached hereto as Exhibit A

(b) Not applicable.

(c) Not applicable.

2. Procedures of the Self-Regulatory Organization.

(a) NSCC’s Board of Directors has not taken, and is not required to take, action on the proposed rule change.

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

(a) The purpose of this filing is to modify the Rules and Procedures of National Securities Clearing Corporation ("NSCC" or the "Corporation") so that NSCC may: receive trade data in respect of government security transactions on the American Stock Exchange ("AMEX"); record trade information about those transactions on NSCC Contract Lists; and, at the request of Members transmit such trade information to Government Securities Clearing Corporation ("GSCC") for processing. As further described below, the rule filing will permit Members to automate the clearance and settlement process for government securities traded on the AMEX through the AMEX Order File ("AOF") System.

NSCC currently accepts trade data from the AMEX and other self-regulatory organizations on behalf of its Members. (See Rule 7, Section 5). By this rule filing, AMEX trade input to NSCC and NSCC’s recording of such input will function as follows:

The AMEX may submit locked-in trade data for regular way (T + 3) government security transactions included in its AOF System to the Corporation. Such securities, referred to in the Rules of NSCC as "Eligible Government Securities", must be: unmatured, marketable debt securities in book-entry form that are direct obligations of the United States Government; such other securities issued or guaranteed by the United States, a U.S. government agency or instrumentality, or a U.S. government-sponsored corporation; or, such other securities as determined by the Corporation from time to time. (See Rule 3, Section 10).

The AMEX may submit its trade data throughout T until a time specified by NSCC. Such data will include quantity, security identification, identification of the marketplace of execution, contra-broker, trade value and other identifying details that the Corporation may require or permit.

NSCC will report back to Members their AOF trade data items, including final contract amount as calculated by the Corporation, on the morning of T+1 on a separate section of NSCC’s Regular Way T+1 Contract List.

Unless otherwise processed through GSCC, as described below, the settlement of AOF trade data items will be the responsibility of parties to the trade. Such items will not be settled through the facilities of NSCC.

The rule permits the Corporation to transmit, at the request of Members, AOF trade data items to GSCC for processing as follows:

Each Member that would like to settle these trades through GSCC must complete and deliver to the Corporation an authorization agreement within the time set by NSCC.

In respect of the authorization agreements, NSCC will submit AOF trade data items to GSCC that will meet the requirements of GSCC.

NSCC understands that GSCC will process the trade data items in accordance with the rules of GSCC.

In coordination with GSCC and the AMEX, NSCC intends to implement these changes on June 2, 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. In particular, the proposed rule change is consistent with Section 17A(b)(3)(F) of the Act, which requires that the rules of a clearing agency be designed to promote the prompt and accurate clearance and settlement of securities transactions and, in general, to 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 impact or impose a burden on competition.

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

No written comments have been solicited or received. NSCC will notify 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) NSCC requests accelerated effectiveness of the proposed rule change pursuant to Section 19(b)(2) of the Act in order to meet a June 2, 2000 implementation date. NSCC understands that this coordinated date was chosen by the AMEX, GSCC and NSCC, in part, based upon systems availability and planning considerations.

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

The proposed rule change is not based on a rule either of another self-regulatory organization or of the Commission.

9. Exhibits.

Exhibit A - Not applicable.

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

Pursuant to the requirements of the Act, 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

Underlined, boldface text indicates additions.

[Bracketed, bold, strikeout] text indicates deletions.

RULES

DEFINITIONS AND DESCRIPTIONS

Rule 1. Unless the context requires otherwise, the terms defined in this Rule shall, for all purposes of these Rules, have the meanings herein specified.

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RULE 3

LISTS TO BE MAINTAINED

Rule 3. SEC. 1. (a) The Corporation shall maintain a list of the securities which may be the subject of contracts cleared through the Corporation (hereinafter referred to as "Cleared Securities"), and may from time to time add securities to such list or remove securities therefrom. Unless the Corporation shall otherwise determine, Cleared Securities may only be those issues of securities the issuer of which is subject to, or regularly complies with, Rule 10b-17 of the Securities and Exchange Commission, promulgated pursuant to the Securities Exchange Act of 1934, as amended. The Corporation shall accept an issue of securities as a Cleared Security only upon a determination by the Corporation that it has the existing operational capability to do so and to continue successfully to provide its services to Members.

A Cleared Security that the Corporation in its discretion determines no longer meets the requirements imposed pursuant to this Section 1 shall cease to be a Cleared Security. In addition, the Corporation may determine that a Cleared Security shall cease to be a Cleared Security in the event that: (1) such Cleared Security shall have been suspended from trading in the over-the- counter market or on any national securities exchange by the Securities and Exchange Commission pursuant to Section 12(k) of the Securities Exchange Act of 1934, as amended, or has been suspended from trading by another regulatory authority or by a self-regulatory organization (as defined in Section 3(a)(26) of the Securities Exchange Act of 1934, as amended), which has authority to suspend such activity; or (2) the Corporation finds that the level of activity in the security during the period of three consecutive months preceding that determination is insufficient to produce benefits commensurate with the costs to the Settling Members arising from its continued inclusion as a Cleared Security; or (3) the Corporation determines that there may exist a legal impediment to the validity or legality of the issuance or continued transfer or delivery of the security; or (4) the Corporation determines, after discussion with the appropriate marketplace regulator, where possible, that continued clearance and settlement by the Corporation presents unacceptable risks to the Corporation and/or its participants; or (5) the Corporation determines that the location of the transfer agent(s) for the security or such transfer agent's capability for reissuing certificates for the security is such as to impair the efficient operation of clearing procedures.

(b) The Corporation shall also maintain a list of Cleared Securities that are eligible for book-entry transfer on the books of each Qualified Securities Depository and are subject to clearance and settlement in the CNS System and may from time to time add Cleared Securities to such list or remove Cleared Securities therefrom.

SEC. 2. The Corporation shall maintain a list of those persons who are entitled under the provisions of New York law to pay New York State stock transfer taxes through the facilities of the Corporation.

The Corporation shall maintain a list of those persons who are not Members and who meet the requirements of any clauses (i) through (vi) of Section 1 of Rule 2, who shall apply to the Corporation to act for them and who shall have entered into an agreement in the form prescribed by the Corporation to comply with these Rules, so that the Corporation may act for them with respect to the collection and payment of commissions and such other transactions with respect to which the Corporation shall make rules.

The Corporation shall maintain a list of those municipal securities brokers and municipal securities dealers, registered under the Securities Exchange Act of 1934, as amended, who are not Members but who have applied to the Corporation to act for them and who shall have entered into an agreement in the form prescribed by the Corporation to comply with these Rules, so that the Corporation may act for them with respect to the comparison of municipal securities transactions.

Entities accepted by the Corporation for the collection and payment of commissions shall be termed "Non-Clearing Members". Municipal securities brokers and municipal securities dealers accepted by the Corporation pursuant to this section for the comparison of municipal securities transactions shall be termed "Municipal Comparison Only Members".

SEC. 3. The Corporation shall maintain a list of broker dealers and others on whose behalf Members have indicated they will act in comparing, clearing and/or settling trades. Members shall provide the Corporation with such information, in accordance with the Procedures as may be adopted from time to time by the Corporation, or pursuant to agreement.

SEC. 4. The Corporation shall maintain a list of those banks, trust companies and United States branches or agencies of foreign banks that have been approved by the Corporation, pursuant to Rule 4, to issue Letters of Credit in favor of the Corporation.

SEC. 5. Before denying an application to become a Non- Clearing Member pursuant to Section 2 of this Rule, the Corporation shall furnish the applicant with a concise written statement setting forth the specific grounds under consideration upon which any such denial may be based and shall notify the applicant of its right to request a hearing, such request to be filed by the applicant with the Corporation pursuant to Rule 37 within seven business days of the applicant's receipt of such notice from the Corporation.

SEC. 6. An applicant to become a Non-Clearing Member shall submit to such examinations by the Corporation of its financial responsibility and operational capability as the Corporation is authorized to conduct pursuant to Rule 15.

SEC. 7. The Corporation shall maintain a list of Mutual Funds which may be the subject of orders processed through the Mutual Fund Services (hereinafter referred to as "Eligible Mutual Funds") and may from time to time add Mutual Funds to such list or remove Mutual Funds therefrom. Unless the Corporation shall otherwise determine, an Eligible Mutual Fund may only be a "management company", as defined by Section 4(3) of the Investment Company Act of 1940, as amended, whose shares have been assigned a CUSIP number.

SEC. 8. The Corporation shall maintain a list of Members and Settling Bank Only Members that have agreed to act as Settling Banks.

SEC. 9. The Corporation shall maintain a list of insurance plans which may be the subject of orders processed through the Insurance Processing Service (hereinafter referred to as "Eligible Insurance Plans") and may from time to time add insurance plans to such list or remove insurance plans therefrom. An Eligible Insurance Plan may only be an insurance plan has been assigned a CUSIP number.

SEC. 10. The Corporation shall maintain a list of government securities which may be the subject of contracts processed through the Corporation (hereinafter referred to as "Eligible Government Securities") and may from time to time add government securities to such list or remove government securities therefrom. An Eligible Government Security may only be: an unmatured, marketable debt security in book-entry form that is a direct obligation of the United States Government; such other security issued or guaranteed by the United States, a U.S. government agency or instrumentality, or a U.S. government-sponsored corporation; or, such other security as determined by the Corporation from time to time.

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PROCEDURE II

II. TRADE COMPARISON SERVICE

Introduction

Trade Comparison is the first step in the clearance and settlement of securities transactions. Trade Comparison consists of reporting, validating and matching the buy and sell sides of a securities transaction and results in a compared trade which, except as specified below, is either a CNS Contract, a Foreign Security Contract, or a Balance Order Contract within the meaning of Rule 5. Compared trades are routed to either the CNS Accounting Operation, the Balance Order Accounting Operation, the Foreign Security Accounting Operation, or a Qualified Clearing Agency.

Separate Trade Comparison is provided for regular way and when-issued and when distributed transactions in equity securities (a) executed on NYSE (round-lot transactions), (b) executed on Amex and (c) traded in OTC and on other national securities exchanges. Separate Trade Comparison is also provided for debt securities, including when issued and when-distributed transactions, on a consolidated basis for transactions in all marketplaces.

Regular Way NYSE/Amex Equity Securities

Trade Input and Comparison

Members and Self-Regulatory Organizations on behalf of Members may submit to the Corporation trade data relating to regular way transactions in equity securities executed on Amex and, if round-lots, NYSE. NYSE odd-lot trades shall be submitted pursuant to Section III.E. of these Procedures. Regular way trade data may be submitted throughout T until the time specified by the Corporation on the first day following trade date (T+1) (hereinafter referred to as "Original Trade Input"), and shall include quantity, security identification, identification of the marketplace of execution, contra-broker, trade value and other identifying details as the Corporation may require or permit. The Corporation may accept trade data after the Original Trade Input in order for such data to be routed to either the NYSE or Amex for processing.

Regular way trade data as submitted by Members or as submitted by Self-Regulatory Organizations on behalf of Members is converted, if necessary, validated and matched by the Corporation to insure that the details of each trade are in agreement between the purchaser and seller. Results of this process are reported by the Corporation to Members on Regular Way T+1 Contract Lists. With regard to regular way trade data reported on T by Self-Regulatory Organizations ("Locked-in Trade Data") which the Corporation may accept on behalf of a Member, the Corporation reports back such data to Members on T-Contract lists. Regular Way T+1 Contract Lists are available to Members on the morning of T+1. T-Contract lists are available to Members on the morning of T+1. Separate regular way T+1 and T-Contract lists are issued for transactions executed on the NYSE and Amex.

Regular Way T+1 Contract Lists categorize trade data as compared, uncompared and advisory, and may display such other data relevant to compared trades as the Corporation shall determine from time to time.

(a) Compared - Items identified as compared are those for which both a purchaser and a seller submitted identical trade data and for which a comparison has been effected.

(b) Uncompared - Items identified as uncompared reflect trades submitted by the Member for which the opposite side either did not submit data or did not submit data which agreed in all respects.

(c) Advisory - Advisory data represents trades submitted by another party against the Member, but which did not match any trade the Member submitted. Advisory Listings may be generated by the Corporation for items listed as advisory data. The use of Advisory Listings is explained in paragraph 2 of subsection C of this Section. In cases where a purchaser and seller have submitted identical data, except for the name of the contra party and the name of the contra party submitted by one of them is the other party which submitted identical data, the transaction is deemed compared under the suggested name procedure under which the Corporation "suggests" a match. With respect to trade input where at least one of the two parties names as the contra party an omnibus account, as specified from time to time by the Corporation, in cases where the purchaser and seller have submitted identical data except for the number of shares traded and the name of the contra party, the transaction will be deemed partially compared to the extent of the lesser number of shares as submitted by one of the parties. Trades which are matched by the suggested name procedure are specifically identified on the Regular Way T+1 Contract List. It is the responsibility of the two parties involved to verify that the suggested match is correct. If a suggested match is incorrect, the trade must be deleted through the facilities of the NYSE or Amex. The results of this process will be reflected on the Adjustment Contract.

Regular Way T+1 and T-Contract Lists identify each security as being eligible (a CNS Security) or non-eligible (a Balance Order Security) for processing through the CNS system. Separate totals are provided at the end of the Contract Lists for each of these categories.

The Corporation provides Members with the ability to clear and settle any compared trade on a trade-for-trade basis. Such transactions are referred to as Special Trades and may be classified as such, whether or not the security is a CNS Security. In order for a transaction to be classified as a Special Trade, each of the purchaser and seller must agree to settle on a trade-for-trade basis and must identify the transaction in its trade input as a Special Trade. If only one party identifies a transaction as a Special Trade, it will not be compared. In addition, the Corporation itself may determine that some or all transactions in a security shall settle on a trade-for-trade basis.

Adjustment Contracts are produced each evening showing all compared trade data resulting from T+1 and older adjustments processed by the NYSE and Amex, as well as step out transactions processed that day. Designations for CNS Securities and Balance Order securities are shown in the same manner as on the T+1 Regular Way Contract List. New data is added to or subtracted from the totals carried forward from the T+1 Regular Way Contract List to arrive at new totals. The new totals represent the combined input for T through T+2 that is now compared. Trades compared after such time as established on T+2 are not included in the normal settlement cycle. Such trades will be assigned a new settlement date which will be either the next business day or two business days following the date the trade is compared or received by the Corporation based upon whether the trade is processed by the Corporation before or after such time as established by the Corporation.

2. Comparison of Cash, Next Day and Sellers-Options Transactions

Members and Self-Regulatory Organizations on behalf of Members may submit to the Corporation, for comparison, data relating to cash, next day, and sellers-options transactions. Results of the comparison process for these items are reported by the Corporation on a separate section of the Adjustment Contract List. Such items may only be settled directly between the parties.

Regular Way Over-the-Counter and Other Exchange Equity Securities

Trade Input and Comparison

Trade input and comparison of Regular Way transactions executed OTC and on other securities exchanges (other than NYSE and Amex) is the same as for NYSE and Amex Regular Way transactions in equity securities, except as noted below:

(a) The Suggested Name procedure is not used.

Adjustment Contracts are not issued.

(c) Totals are not carried forward from one contract list to another.

(d) Trade data for cash, next day and sellers-options trades are not accepted for processing by the Corporation.

(e) Locked-In trade data may also be reported by Qualified Special Representatives and Service Bureaus, and may also be reported on T+1. Locked-In trade data reported on T+1 is reflected on T+1 Locked-In Contract Lists. These lists are available on the morning of T+2.

(f) Original Trade Input, As-Of and Withhold trade input, submitted by a Member, shall identify the major and minor side executing brokers and the major side Member. The minor side Member may also be submitted. If not submitted, the Corporation shall insert the proper information in accordance with the list maintained by the Corporation as provided for by Section 3 of Rule 3.

In order to maximize the number of compared trades, if the major and minor side executing broker information, when used as a criteria in the trade comparison process, results in an uncompared trade, the Corporation will recycle the trade data without the major and/or minor side executing broker information originally submitted. The Regular Way T+1 Contract Lists will indicate when a resulting compared or uncompared trade has been processed without the use of the major and/or minor side executing broker information.

Resolution of Uncompared

The Corporation provides the following procedures for resolution of uncompared regular way OTC and other securities exchange equity securities transactions:

(a) Advisory Listings are generated by the Corporation for each item listed as advisory data on the Regular Way T+1 Contract List. Advisory Listings may be submitted to the Corporation on T+1 at the time specified by the Corporation and may be accepted in whole or in part.

(b) Transactions may be added through the use of an As-Of submission on T+1 or thereafter. Both the purchaser and the seller must submit the As-Of. If data submitted by each Member matches in all respects, the trade is added for both Members.

(c) Previously compared OTC and other exchange transactions may be deleted through the submission of Withhold tickets on T+1 or thereafter. Each of the purchaser and the seller must submit a Withhold ticket. If data submitted by each Member matches in all respects, the trade will be deleted for both Members.

(d) Compared odd-lot trades for Balance Order Securities, to the extent that they cannot be aggregated into round-lots with the same contra broker or the balance or shares remaining after the round-lots are aggregated, will be netted and allotted independently from the round-lots.

The Corporation provides a joint service with Qualified Clearing Agencies for the comparison of OTC interregional transactions. Trade data submitted by Members which includes a contra party which is a participant in a Qualified Clearing Agency is compared on an interregional basis. The results of this comparison process are reported to the Member on its Contract Lists together with all other OTC transactions. All subsequent procedures (Advisories, Adds, Withholds, etc.) are the same as for interregional OTC trades.

(e) Supplemental Contract Lists are produced daily showing all compared trade data resulting from adjustments submitted on T+1. The Supplemental Contract List also shows previously compared trades which have been deleted. Each item is identified as to the type of activity involved.

Designations for CNS Securities and Balance Order Securities are shown in the same manner as on the Regular Way T+1 Contract List.

(f) Added trades are those which are compared on T+2 and thereafter. Added trades compared after such time as established by the Corporation on T+2 are not included in the normal settlement cycle. Such trades will be assigned a new settlement date, which will be either the next business day or two business days following the date the trade is compared or received by the Corporation based upon whether the trade is processed by the Corporation before or after such time as established by the Corporation.

Added Trade Contract Lists are produced on the night of T+2 and thereafter. Designations for CNS Securities, Balance Order Securities and Special Trades are shown in the same manner as the Regular Way T+1 Contract List.

Debt Securities

Trade Input and Comparison

Trade input and Comparison for transactions in debt securities in any par value (excluding fractions and decimals) includes transactions executed on NYSE (other than through the Automated Bond System), Amex (other than through the AMEX Order File System), OTC or other exchanges and functions in the same manner as OTC or other securities exchange Equity Security Trade Input and Comparison except for the following:

(a) Odd penny breakage due to rounding differences in Member's calculations of extended contract amounts is permitted. Trades in debt securities are compared if the contract amounts are within (i) a net $10.00 difference for trades of $100,000 or less and (ii) $.10 per $1,000 for trades greater than $100,000. In such case, the seller's contract amount is used.

(b) Trade input must indicate one of the following: NYSE, Amex or OTC, municipal security transactions or unit trust fund transactions.

(c) All compared trades in corporate bonds with par values of less than $1000 will be processed on a trade-for-trade basis.

(d) Members and Municipal Comparison Only Members who desire to extend the settlement date of a transaction submitted for comparison may do so by including, as part of trade input, the Settlement Date and the number of business days, up to a maximum of 15, beyond the regular way settlement date that they wish the trade to settle. In order for the trade to compare, both sides must submit the same number of adjusted settlement days.

(e) At the election of the affected Members or Municipal Comparison Only Members, debt securities transactions will be compared when net buy side and sell side aggregate principal amounts can be matched for a particular issue (even if the relevant principal amounts are specified in more than one buy side and/or more than one sell side submission) as long as the transactions would have been compared had such buy side and sell side principal amounts each been specified on a single submission.

(f) Members and Municipal Comparison Only Members may override clearing agent designations by submitting trade input for comparison as a Special Trade.

(g)(i) All compared trades between Members in municipal securities which are not eligible for deposit in a Qualified Securities Depository will be processed on a trade-for-trade basis.

(ii) All compared trades in municipal securities between Members and Municipal Comparison Only Members and between two Municipal Comparison Only Members, whether or not eligible for deposit in a Qualified Securities Depository, will be processed on a trade-for-trade basis.

(h)(i) All compared trades in municipal securities which have been processed on a trade-for-trade basis will be listed on the applicable Consolidated Trade Summaries at the original contract price. Each such individual listing (including any such listing pursuant to Section E.2(a) below) will constitute a security order for all purposes of the Corporation's Rules and Procedures, including the National Securities Clearing Corporation Fee Structure. The Corporation may make additional information regarding such trades (e.g., any clearing agent indicated by the applicable contra-party) available to Members and Municipal Comparison Only Members by such means as the Corporation determines from time to time.

(ii) Compared trades between Members in municipal securities which are eligible for deposit in a Qualified Securities Depository will be entered into the CNS Accounting System or processed on a trade-for-trade basis, depending upon the Member's standing instructions to the Corporation; provided, however, that if a Member has a CNS standing instruction and the contra side has a trade-for-trade standing instruction, the transaction will be processed on a trade-for-trade basis notwithstanding the CNS standing instruction, provided, further, that Members may override a CNS standing instruction by submitting trade input for comparison as a Special Trade.

(iii) When the Corporation processes municipal securities transactions on a trade-for-trade basis or as Special Trades, the resultant compared trades, as indicated on the applicable Consolidated Trade Summaries, are subject to the rules of the MSRB, including but not limited to the close-out provisions and delivery requirements and the transactions will not be included in the Balance Order Accounting Operation. Settlement of the resultant compared trades is the responsibility of the parties to the trades. Settlement of the resultant compared trades directly between Municipal Comparison Only Members or directly between Members and Municipal Comparison Only Members shall not be through the facilities of the Corporation.

2. Resolution of Uncompared Trades in Regular Way Debt Securities

The Corporation provides the following procedures for resolution of uncompared trades in Regular Way Debt Securities (other than municipal securities transactions, which, if resolved through the facilities of the Corporation, will, except as otherwise set forth in this Section II.D.2, follow the procedures set forth in Section II.C.2 above ("Resolution of Uncompared Transactions"), trades executed through the Automated Bond System, the AMEX Order File System or uncompared trades that the Corporation permits to be resolved through the facilities of the another "self-regulatory organization," as defined in the Securities Exchange Act of 1934):

(a) Advisory Listings are generated by the Corporation for each item listed as advisory data on the Regular Way T+1 Contract List. Advisory Listings for debt executions may be submitted on T+1 prior to the time specified by the Corporation.

(b) Debt security trades reported as executed on any market other than NYSE and Amex that are uncompared on T+1 or thereafter will generate two day advisory tickets that may be returned to the Corporation no later than two days after generation of the advisory ticket.

(c) All transactions in debt securities may be added, on any day following T, through the use of an As-Of form, in such form as the Corporation shall prescribe.

(d) No partial deletions for transactions in debt securities will be permitted.

(e) Members who, subsequent to their submission of Original Trade Input, find that such trade data is incorrect may delete uncompared corporate bond and unit trust fund trades by forwarding a Delete of Original Trade Input to the Corporation by the time specified by the Corporation. Members and Municipal Comparison Only Members who, subsequent to their submission of Original Trade Input, find that such trade data is incorrect may delete compared or uncompared municipal securities trades by forwarding a Delete of Original Trade Input to the Corporation by the time specified by the Corporation. Deletion of any such trade will not, however, extinguish either party's trade obligation.

(f) Previously compared municipal security trades, unit trust fund trades and OTC executions of corporate debt security trades may be deleted through the submission of Withhold tickets on any day following T+1. Each of the purchaser and the seller must submit a Withhold ticket. If data submitted by each Member matches in all respects, the transaction will be deleted for both Members.

(g) The Corporation also provides a comparison service for aged uncompared municipal security trades, unit trust fund trades and OTC executions of corporate debt security trades (hereinafter collectively referred to as "Uncompared debt transactions") through the use of the Demand As-Of service. Members may submit Uncompared debt transaction data on a Demand As-Of form within such time as set forth by the Corporation if an advisory from Original Trade Input or As-Of trade has gone unanswered. Uncompared debt transaction data shall include the same information as supplied for Original Trade Input and such other information as the Corporation may require.

A Demand As-Of which matches another Demand As-Of or a Regular As-Of as well as Accepted Demand As-of Advisories shall enter the Balance Order Accounting System or the CNS Accounting System.

If a Demand As-of does not match another Demand As-of or a Regular As-of, the Corporation shall generate a Demand As-Of Advisory. A Demand As-Of Advisory must be accepted, DK'ed or rejected prior to the cut-off time specified by the Corporation by marking the appropriate box and, in the case of a rejection, indicating the reason(s) for the rejection. The Demand As-Of Advisory may be rejected only if the terms shown are different from the terms of the previously submitted trade. An improperly rejected Demand As-Of Advisory will be treated as if the Demand As-Of Advisory had been DK'ed. A Demand As-Of Advisory which is DK'ed or improperly rejected will constitute a release of the originating Member from any further liability to complete the Uncompared debt transaction. A copy of the returned Demand As-Of Advisory will be sent by the Corporation to the originating Member. A Demand As-Of Advisory which is DK'ed or rejected will be dropped from the comparison system. Demand As-Of Advisories which are not returned to the Corporation prior to the time specified by the Corporation will result in the Corporation automatically entering a compared debt transaction into the comparison system.

The originating Member may delete an erroneously entered Demand As-Of by submitting a delete form to the Corporation in such form and by the time specified by the Corporation.

(h) Supplemental Contract Lists are produced showing all compared trade data resulting from submission of Advisory Listings. The Supplemental Contract List also shows previously compared trades which have been deleted.

Designations for CNS Securities and Balance Order Securities are shown in the same manner as on the Regular Way T+1 Contract List. New data is added to or subtracted from the totals carried forward from the T+1 Contract List to arrive at new totals. The new totals represent the combined input for T+1 and T+2 that is now compared. Compared trade totals for CNS Securities are carried forward to the Added Trade Contract List issued on T+2.

Compared trade totals for Balance Order Securities and Special Trades will not be carried forward to T+2. These totals represent the final compared trade total which will enter the netting operation within the Balance Order Accounting Operation (See Section V).

(I) Added trades are those which are compared on T+2 or thereafter. Those which are compared after such time as established by the Corporation on T+2 are not included in the normal settlement cycle. Such trades will be assigned a new settlement date, which will be either the next business day or two business days following the date the trade is compared or received by the Corporation based upon whether the trade is processed by the Corporation before or after such time as established by the Corporation. The assignment of a new settlement date applies to both CNS and Balance Order Securities. The original trade date appears on the Added Trade Contract List. Added Trade Contract Lists are produced daily. Designations for CNS Securities, Balance Order Securities, and Special Trades are shown in the same manner as the Regular Way T+1 Contract List. Added Trades in CNS Securities are added to the CNS total carried forward from the Supplemental Contract Lists. The final CNS totals represent the amount which will be included in the CNS Accounting Operation.

3. Automated Bond System

Trade Input and Correction for transactions submitted by the NYSE Automated Bond System functions as follows:

(a) Trade data for regular way transactions in debt securities included in NYSE's Automated Bond System shall be submitted to the Corporation by the NYSE.

(b) Corrections made on trade data shall be made pursuant to the procedures of the NYSE' Automated Bond System.

4. AMEX Order File System

The Corporation provides Members with the ability to compare transactions in equity and debt when-issued securities.

1. Equity

(a) Input and Comparison

Trade data for when-issued and when-distributed equity transactions executed on the NYSE or Amex must be submitted and will be compared in the same manner as specified in Section II, paragraph 1 of subsection B. Trade data for when-issued and when-distributed equity transactions executed OTC or on other securities exchanges, must be submitted in the same manner as specified in Section II, paragraph 1 of subsection C. When-issued and when-distributed trade data may be submitted separately or combined with regular way input.

(b) Resolution of Uncompared Trades

When-issued and when-distributed Contract Lists are produced for when-issued and when-distributed transactions. Adjustments to When-issued and when-distributed Contract Lists are made in the same manner as specified for regular way transactions. Time schedules for the submission of contract adjustments are the same as those for regular way trades.

Adjustments may be submitted as long as the security remains in a when-issued and when-distributed status. Any additions and deletions are reflected on Supplemental When-issued and When-distributed Contracts, or for NYSE or Amex equity transactions, on the Adjustment Contract. Such positions are accumulated and carried forward until the security is due for settlement.

(c) Settlement

The Settlement Date for issues traded on a when-issued and when-distributed basis is established by the appropriate regulatory authority. When-issued and when-distributed compared trades will be netted and allotted with regular way trades for the same Settlement Date as the when-issued and when-distributed trades.

When-issued and when-distributed trading activity may enter either the Balance Order Accounting Operation, the Foreign Security Accounting Operation, or the CNS Accounting Operation for settlement at the appropriate time. Determination of eligibility for CNS is at the discretion of the Corporation.

2. Debt

Municipal securities transactions that are submitted at least two days prior to the initial settlement date for the issue and corporate debt transactions that are submitted at least three days prior to the initial settlement date for the issue, and that specify either (i) a final settlement price and a Settlement Date that is either the initial settlement date or a specified number of days after the initial settlement date, (ii) a dollar price or (iii) for municipal securities, a price-to-yield and concession (if any) will be processed in accordance with this subsection 2. These transactions will sometimes be referred to herein as "new issue" transactions (but without negating their status as when-issued and when-distributed transactions for purposes of the Corporation's Rules and Procedures). Municipal securities transactions that are submitted from two to five days prior to the initial settlement date for the issue but do not meet the above criteria will be treated as regular way transactions. Corporate debt transactions that are submitted from three to five days prior to the initial settlement date for the issue but do not meet the above criteria will be treated as regular way transactions. All other transactions that are submitted more than five days prior to the initial settlement date for the issue will be treated as new issue transactions, and will be rejected if they do not meet the above criteria.

Trade comparison and settlement for new issue transactions function in the same manner as regular way trade comparison and settlement, except for the following:

(a) When the initial settlement date of an issue is known by the Corporation (and, if deemed necessary by the Corporation, confirmed in a manner satisfactory to the Corporation), the Corporation will calculate the final settlement price for all new issue debt securities submissions in that issue that do not have a final settlement price, and this final settlement price will be set forth on the applicable contract lists. New issue debt securities transactions may be compared on the basis of these final settlement prices. In addition, when the initial settlement date for a new issue has been postponed and the Corporation is notified of a new initial settlement date at least 2 days prior to such date (independently confirmed, to the extent deemed necessary), the Corporation will recalculate the final settlement prices for all affected transactions (whether or not the original final settlement price was calculated by the Corporation), and the new final settlement prices will be set forth on the applicable contract lists.

If a new issue submission contains a Settlement Date and a final settlement price, but the Corporation does not have confirmation satisfactory to it of the initial settlement date for the issue, then the Corporation will report the transaction as a memo item on the contract lists of the submitter and the party against whom the submission was made. If the Corporation obtains, within 2 days of the submission, confirmation satisfactory to it of the initial settlement date for the issue which matches the initial settlement date for the submission, the memo items will be changed to compared or uncompared/advisory as appropriate. If no such confirmation is obtained within 2 days of submission, the items will be dropped.

(b) Any new issue compared trade which is to be entered into the CNS Accounting Operation will enter the CNS Accounting Operation prior to the opening of business on the day prior to its Settlement Date (whether the initial Settlement Date for the issue or an extension of the initial Settlement Date as provided in paragraph (d) below) and will be netted with any regular-way compared trades for the same Settlement Date.

(c) Adjustments to when-issued and when-distributed contract lists are reflected on a separate When-issued and when-distributed Contract List.

(d) (i)The Settlement Date for new municipal issues is established by the issuer or underwriter, but except as provided below for syndicate takedown trades, may be extended by agreement of the submitting parties similar to regular way municipal trades.

(ii) The Settlement Date for corporate debt new issues is established by the appropriate authority.

(e) If the Corporation is notified that the initial Settlement Date for a new issue is postponed after the applicable Consolidated Trade Summary has been made available, the fact that trades in such issue are indicated in such Consolidated Trade Summary will be of no force and effect for purposes of the Corporation's Rules and Procedures, and provided that the Corporation receives timely notice of the new initial settlement date (independently confirmed to the Corporation's satisfaction, if deemed necessary), the Corporation may relist the trades in subsequent Consolidated Trade Summaries. If the Corporation is notified that the initial Settlement Date for a new issue is postponed after final CNS Contract Sheets are issued, to the extent that such trades continue to be carried in Members' CNS accounts, until settlement occurs, settlement of such trades may not be guaranteed by the Corporation. The provisions of this paragraph also apply to regular way transactions in a new issue that are entered into prior to the initial Settlement Date for the issue.

(f) If the Corporation receives notice that an entire issue has been canceled prior to its initial Settlement Date, trades in such issue will be deleted by the Corporation from the comparison process and, if the applicable Consolidated Trade Summary has been made available, trades in such issue that are indicated in such Consolidated Trade Summary will be considered null and void by the Corporation. To the extent that any trades in such issue have been entered into the CNS Accounting Operation, such trades will be journalled out of CNS. The provisions of this paragraph also apply to regular way transactions in a new issue that are entered into prior to the initial Settlement Date for the issue.

(g) Notwithstanding any other provision of these Procedures, (1) if any uncompared new issue submission has not been resolved by the opening of business on the day prior to its Settlement Date, the transaction will be deleted by the Corporation from the Comparison process, and (2) any municipal new issue transaction which is first reported as compared on the day prior to its Settlement Date may, at the request of either party to the transaction (made in such manner and at such time on the day prior to Settlement Date as the Corporation may require), be treated as if it were not compared. In that event, the Corporation shall provide appropriate notice that the listings in the relevant Consolidated Trade Summary will be of no force and effect for purposes of the Corporation's Rules and Procedures and shall take appropriate action to journal the transactions out of CNS, if necessary.

(h) With respect to municipal securities, syndicate takedown trades may only be submitted for comparison by the syndicate manager and such trade input must be identified as a syndicate takedown trade. Submission of a syndicate takedown trade will result in a compared trade which will be reported to the syndicate manager and the syndicate member on a syndicate takedown when-issued and when-distributed contract sheet. If a syndicate manager or a syndicate member does not agree with the terms of a takedown trade as reported on the contract sheet, he may delete the trade by submitting a one-sided delete form to the Corporation by the time specified by the Corporation. Submissions that would be compared with syndicate takedown trades but for the provisions of this paragraph (h) (i.e., buy side submissions that are not submitted by the syndicate manager but which match the sell side of syndicate takedown submissions) and that are submitted within two days of the syndicate takedown submission will be rejected as possible duplications of syndicate takedown trades. In addition, syndicate takedown submissions against brokers' brokers will be rejected.

In the event of a syndicate buy-back, only the syndicate manager may submit a withhold and such trade input must be identified as a syndicate takedown trade. Submission of a withhold will result in a compared withhold trade which will be reported to the syndicate manager and syndicate member on a syndicate takedown contract sheet.

All syndicate takedown trades will settle on a trade-for-trade basis. Extended settlement date and clearing agent designation options will not be available for syndicate takedown trades.

(i) With respect to municipal securities, new issue submissions that would be compared but for differences in trade dates indicated in the submission will be compared if the trade dates are within two days of each other.

Trade Comparison by an Authorized Agent

The Corporation permits Trade Comparison to be conducted by a Member for another person. For example, a Member which is a Qualified Clearing Agency may participate in Trade Comparison on behalf of one of its participants whether or not its participant is a Member.

The Member (the agent) may submit trade data for comparison pursuant to subsections B through E above on behalf of, and as agent for, another Member or a Qualified Non-Participant (the principal).

A Non-Participant may become a Qualified Non-Participant by applying to the Corporation for an identifying number in which event the Corporation shall issue an identifying number to the Non-Participant.

If the agent submits trade data on behalf of a principal, it shall identify the principal by name and the number assigned to the principal by the Corporation in the trade data.

The agent shall have all the obligations of the principal under the Rules and these Procedures except that if the principal is a Member which has agreed with the Corporation that it shall have such obligations, it shall have such obligations in lieu of the agent.

In all cases, the agent shall be obligated to settle any CNS Contracts or Balance Order Contracts of its principal pursuant to these Procedures.

The Corporation may also permit trade comparison to be conducted by a Member for the municipal securities transactions of a non-Member. The Member may submit municipal security trade data for comparison pursuant to subsections D and E above on behalf of the non-Member. With respect to these transactions submitted by the Member on behalf of the non-Member, the non-Member shall be liable as principal on the underlying transaction.

Reconfirmation and Pricing Service

The Reconfirmation and Pricing Service ("RECAPS") is a fail clearance system run by the Corporation. The system will be run from time-to-time as established by the Corporation for such securities as the Corporation shall determine. The system provides an opportunity to reconfirm and reprice transactions that already have been compared.

Members shall submit to the Corporation, on a day specified by the Corporation, at the time and in the manner established by the Corporation, RECAPS fail information. The day such information is submitted to the Corporation is referred to as "R." RECAPS fail information submitted on R shall be hereinafter referred to as "RECAPS Input." On a day specified by the Corporation, at the time and in the manner established by the Corporation, the Corporation will produce RECAPS Contracts containing standard contract categories (i.e., compared, uncompared and advisory columns). On the next business day after R, at the time and in the manner established by the Corporation, Members: (1) may submit an As-of-trade if the Member failed to timely submit a transaction to RECAPS and (2) must respond to a transaction submitted by a contra side that has not been reconfirmed after processing of RECAPS Input (hereinafter referred to as an "Unreconfirmed RECAP") by submitting in such form as determined by the Corporation an advisory, a DK or a reject and, in the case of a reject, indicating the reason(s) for the rejection and such other information as the Corporation may require. Failure to respond to an Unreconfirmed RECAP shall result in the transaction being deemed DK’ed. A DK’ed transaction extinguishes the rights, if any, of the DK’ing Member in respect of the transaction. Transactions of a Member that have been DK’ed shall be subject to the rules of the appropriate marketplace. As-Of trades will be compared only if there is an exact match; no trade resolution process will be available.

On a day specified by the Corporation, at the time and in the manner established by the Corporation, the Corporation will issue a second set of RECAPS Contracts, reflecting the RECAPS supplemental input received. Settlement information will be distributed to Members depending on the system in which the reconfirmed transaction will settle and settlement will occur, as follows:

(a) CNS - Reconfirmed fails in Securities eligible for CNS at the time of the RECAPS cycle will be forwarded to CNS for settlement on a day specified by the Corporation. A CNS RECAPS Projection Report will be issued along with a RECAPS CNS Compared Trade Summary concurrent with the production of the first or second RECAPS Contracts, whichever is appropriate.

(b) Balance Orders - Reconfirmed fails in Balance Order Securities will be netted and allotted, and Balance Orders and a RECAPS Non-CNS Compared Trade Summary will be issued, concurrent with the production of the first or second

RECAPS Contracts, whichever is appropriate, for settlement on a day specified by the Corporation.

(c) Trade-for-Trade - For reconfirmed fails in securities not eligible for the CNS or Balance Order Systems, the Corporation will issue RECAPS Receive and Deliver instructions (except in the case of reconfirmed fails in municipal securities, where such instructions may, but need not, be issued) and a Non-CNS Compared Trade Summary concurrent with the production of the first or second RECAPS Contracts, whichever is appropriate, for settlement on a day specified by the Corporation.

In the event that the current market price for a security is not available, the trade will settle on a trade-for-trade basis as a "Special Trade," with the value on the RECAPS Receive and Deliver Instructions being the amount at which the trade previously was compared. For reconfirmed fails in debt securities, the current market price will include accrued interest from the previous interest payment date to the new Settlement Date. If a fail was open over an interest payment date, the two parties to the trade will be required to settle that interest payment outside RECAPS, although the parties could use the Corporation's Dividend Settlement Service.

The RECAPS CNS Compared Trade Summary and the RECAPS Non-CNS Compared Trade Summary also will include the aggregate value of the original fails, the aggregate value of the Repriced RECAPS positions (i.e., the current market price of the reconfirmed trades) and the difference between the two, or the net cash adjustment. The net cash adjustment will settle the day the underlying RECAPS contract settles and will be included as part of the Member's daily money settlement with the Corporation. RECAPS, however, will not be a guaranteed service of the Corporation, so that if the Corporation fails to receive payment from a Member, the Corporation, in its discretion, may reverse in whole or part any credit previously given to any Member who is the contra side to a trade reconfirmed and repriced through RECAPS.

For the purposes of the Corporation's Buy-In Rules and Procedures, the Original Settlement Date for transactions reconfirmed through RECAPS, except for transactions in Municipal Securities, shall be considered to be the RECAPS Settlement Date for the reconfirmed transaction. For Municipal Securities, the Settlement Date shall continue to be the original date of the fail unless provided otherwise by the rules of the Municipal Securities Rulemaking Board, and the buy-in rules of the MSRB shall apply.

At the end of the RECAPS cycle, the Corporation will make available to Members a RECAPS Activity Report, in such form and by such time as determined by the Corporation, containing such information as determined by the Corporation regarding the Member’s activity for the RECAPS cycle.

Index Receipts

Composition and Preliminary Financial Data

Each day, by such time as required by the Corporation from time to time, the Index Receipt Agent shall report to the Corporation, a) the composition of index receipts for creations and redemptions occurring on the next business day ("T"), i.e., the shares and their associated quantities, and, if applicable, (b) the estimated cash amount, representing accrued dividend and balancing amount data (hereinafter referred to as the "Cash Amount"), and c) such other financial data as the Corporation may require or permit from time to time.

Each evening, by such time as determined by the Corporation from time to time, the Corporation will make available to Members a Portfolio Report detailing, if applicable, the estimated Cash Amount, other financial data and the composition of the next business day's index receipts. The composition data may be used by the Corporation to process index receipt creations and redemptions on the next business day.

2. Creation/Redemption Input

On T, by such time as established by the Corporation from time to time, an Index Receipt Agent may submit to the Corporation on behalf of Members, index receipt creation and redemption instructions, the final Cash Amount relative to such instructions and a transaction amount representing the Index Receipt

Agent's fee for the processing of the index receipt. On T+1, the Corporation will report to Members on the Index Receipt Detail Report the details of the creations and redemptions submitted, the underlying security components of netted creation and redemption instructions and index receipt positions. The report will indicate the quantity of each component and index receipt to be delivered and received on Settlement Date. The report will also indicate the final Cash Amount that must be paid or received and the transaction amount that must be paid on Settlement Date.

3. Settlement

Index receipts and the component securities which are eligible for CNS will be reported on the Consolidated Trade Summary. The Consolidated Trade Summary will also separately indicate the other component securities due to settle. Component securities will be netted with all other CNS and Non-CNS securities and entered into the CNS and Balance Order Accounting operations for settlement.

END

Exhibit B

SECURITIES AND EXCHANGE COMMISSION

(Release No. 34- ; File No. SR-NSCC-00-03)

Self-Regulatory Organizations; National Securities Clearing Corporation ("NSCC"); Notice of Filing of a Proposed Rule Change Rules to permit Members to automate the clearance and settlement process for government securities traded on the American Stock Exchange.

Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the "Act"), 15 U.S.C. Section 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 will permit Members to automate the clearance and settlement process for government securities traded on the American Stock Exchange.

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. Set forth in sections (A), (B) and (C) below, are 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 this filing is to modify the Rules and Procedures of National Securities Clearing Corporation ("NSCC" or the "Corporation") so that NSCC may: receive trade data in respect of government security transactions on the American Stock Exchange ("AMEX"); record trade information about those transactions on NSCC Contract Lists; and, at the request of Members transmit such trade information to Government Securities Clearing Corporation ("GSCC") for processing. As further described below, the rule filing will permit Members to automate the clearance and settlement process of government securities traded on the AMEX through the AMEX Order File ("AOF") System.

NSCC currently accepts trade data from the AMEX and other self-regulatory organizations on behalf of its Members. (See Rule 7, Section 5). By this rule filing, AMEX trade input to NSCC and NSCC’s recording of such input will function as follows:

The AMEX may submit locked-in trade data for regular way (T + 3) treasury security transactions included in its AOF System to the Corporation. Such securities, referred to in the Rules of NSCC as "Eligible Government Securities", must be unmatured, marketable debt securities in book-entry form that are direct obligations of the United States Government or such other securities issued or guaranteed by the United States, a U.S. government agency or instrumentality, or a U.S. government-sponsored corporation. (See Rule 3, Section 10).

The AMEX may submit its trade data throughout T until a time specified by NSCC. Such data will include quantity, security identification, identification of the marketplace of execution, contra-broker, trade value and other identifying details that the Corporation may require or permit.

NSCC will report back to Members their AOF trade data items, including final contract amount as calculated by the Corporation, on the morning of T+1 on a separate section of NSCC’s Regular Way T+1 Contract List.

Unless otherwise processed through GSCC, as described below, the settlement of AOF trade data items will be the responsibility of parties to the trade. Such items will not be settled through the facilities of NSCC.

The rule permits the Corporation to transmit, at the request of Members, AOF trade data items to GSCC for processing as follows:

Each Member that would like to settle these trades through GSCC must complete and deliver to the Corporation an authorization agreement within the time set by NSCC.

In respect of the authorization agreements, NSCC will submit AOF trade data items to GSCC that will meet the requirements of GSCC.

NSCC understands that GSCC will process the trade data items in accordance with the rules of GSCC.

In coordination with GSCC and the AMEX, NSCC intends to implement these new linkages and service on June 2, 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. In particular, the proposed rule change is consistent with Section 17A(b)(3)(F) of the Act, which requires that the rules of a clearing agency be designed to promote the prompt and accurate clearance and settlement of securities transactions and, in general, to protect investors and the public interest.

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

NSCC does not believe that the proposed rule change will impact 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.

No written comments have been solicited or received. NSCC will notify the Commission of any written comments received by NSCC.

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

(A) by order approve such proposed rule change, or

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

IV. Solicitation of Comments.

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

Jonathan G. Katz
Secretary

Dated: