The National Securities Clearing Corp. says it may shorten the amount of business history insurance carriers need to become NSCC members.
The NSCC has filed a rule change notice concerning the requirements with the U.S. Securities and Exchange Commission.
The change, which could take effect as soon as 35 days from today, would update an NSCC rule change notice released in 2006.
The NSCC, a unit of the Depository Trust & Clearing Corp., New York, helps run the infrastructure that supports broker-to-broker stock, bond and mutual fund trades in the United States.
The NSCC also provides information and money settlement services for mutual fund, variable life insurance and variable annuity transactions.
The 2006 notice replaced the NSCC’s old, multipart membership structure with a system of “full service members” and “limited members,” with the “limited member” category including “mutual fund/insurance services members” and “insurance carrier/retirement services” members.
The new notice, which appears today in the Federal Register, notes that NSCC insurance carrier/retirement services members have had to have at least 3 years of business history, or personnel with enough experience to compensate for the lack of business history.
Full service members and insurance services members have needed only 6 months of business history, or personnel with enough experience to compensate for the lack of business history.
The NSCC now has decided that the business history rules for insurance carriers and retirement services companies need not be any more stringent that those applied to full service members, NSCC officials write in the Federal Register notice.
The NSCC is responding by cutting the business history requirement for insurance carriers to 6 months, from 3 years, officials write.
The NSCC also notes that, under the current rules, an insurance company can apply to become a fund member. Up till now, however, the financial requirements for insurance companies have not been spelled out, officials write.
The NSCC now plans to describe specific financial standards for insurers that want to become fund members, officials report.