[Federal Register Volume 65, Number 4 (Thursday, January 6, 2000)]
[Notices]
[Pages 799-800]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-279]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-42269; File No. S7-24-89]
Joint Industry Plan; Solicitation of Comments and Order Approving
Amendment No. 10 to Reporting Plan for Nasdaq/National Market
Securities Traded on an Exchange on an Unlisted or Listed Basis,
Submitted by the National Association of Securities Dealers, Inc., and
the Boston, Chicago, Philadelphia and Cincinnati Stock Exchanges
December 23, 1999.
I. Introduction
On December 6, 1999, the National Association of Securities
Dealers, Inc. (``NASD''), on behalf of itself and the Boston Stock
Exchange, Inc. (``BSE''), the Chicago Stock Exchange, Inc. (``CHX''),
the Philadelphia Stock Exchange, Inc. (``PHLX''), and the Cincinnati
Stock Exchange (``Cincinnati'') submitted to the Securities and
Exchange Commission (``Commission'' or ``SEC'') Amendment No. 10 to a
joint transaction reporting plan (``Plan'')\1\ for Nasdaq/National
Market (``Nasdaq/NM'') (previously referred to as Nasdaq/NMS)
securities traded on an exchange on an unlisted or listed basis.\2\
This notice and order approves the amendment, which would add
Cincinnati as a Participant to the Plan and make technical changes to
the Plan to reflect that the Midwest Stock Exchange now is called the
Chicago Stock Exchange.
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\1\ Section 12(f) of the Securities Exchange Act of 1934
(``Act'') describes the circumstances under which an exchange may
trade a security that is not listed on the exchange, i.e., by
extending unlisted trading privileges (``UTP'') to the security. See
15 U.S.C. 781(f). Section 12(f) required exchanges to apply to the
Commission before extending UTP to any security. In order to approve
an exchange UTP application for a registered security not listed on
any exchange (``OTC/UTP''), Section 12(f) required the Commission to
determine that various criteria had been met concerning fair and
orderly markets, the protection of investors, and certain national
market initiatives. Section 12(f) was amended on October 22, 1994;
the amendment removed the application requirement. OTC/UTP is now
allowed only pursuant to a Commission order or rule, which is to be
issued or promulgated under essentially the same standards that
previously applied to Commission review of UTP applications. The
present order fulfills these Section 12(f) requirements.
\2\ The signatories to the Plan, i.e., the NASD, the CHX
(previously, the Midwest Stock Exchange, Inc.), the PHLX, and the
BSE, are the ``Participants.'' The BSE, however, joined the Plan as
a ``Limited Participant,'' and reports quotation information and
transaction reports only in Nasdaq/NM securities listed on the BSE.
Originally, the American Stock Exchange, Inc., was a Participant to
the Plan, but did not trade securities pursuant to the Plan, and
withdrew from participation in the Plan in August 1994.
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II. Background
The Commission originally approved the Plan on June 26, 1990.\3\
The Plan governs the collection, consolidation and dissemination of
quotation and transaction information for Nasdaq/NM securities listed
on an exchange or traded on an exchange pursuant to a grant of UTP.\4\
The Commission originally approved trading pursuant to the Plan on a
one-year pilot basis, with the pilot period to commence when
transaction reporting pursuant to the Plan commenced. Accordingly, the
pilot period commenced on July 12, 1993.\5\ The Plan has since been in
operation on an extended pilot basis.\6\
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\3\ See Securities Exchange Act Release No. 28146 (June 26,
1990), 55 FR 27917 (July 6, 1990) (``1990 Approval Order'').
\4\ See Section 12(f)(2) of the Act. See also December 1998
Extension Order, infra note 6, for a more in depth description of
the Plan.
\5\ See letter from David T. Rusoff, Foley & Lardner, to Betsy
Prout, Division of Market Regulation, SEC, dated May 9, 1994.
\6\ See Securities Exchange Act Release No. 34371 (July 13,
1994), 59 FR 37103 (July 20, 1994); Securities Exchange Act Release
No. 35221 (January 11, 1995), 60 FR 3886 (January 19, 1995);
Securities Exchange Act Release No. 36102 (August 14, 1995), 60 FR
43626 (August 22, 1995); Securities Exchange Act Release No. 36226
(September 13, 1995), 60 FR 49029 (September 21, 1995); Securities
Exchange Act Release No. 36368 (October 13, 1995), 60 FR 54091
(October 19, 1995); Securities Exchange Act Release No. 36481
(November 13, 1995), 60 FR 58119 (November 24, 1995); Securities
Exchange Act Release No. 36589 (December 13, 1995), 60 FR 65696
(December 20, 1995); Securities Exchange Act Release No. 36650
(December 28, 1995), 61 FR 358 (January 4, 1996); Securities
Exchange Act Release No. 36934 (March 6, 1996), 61 FR 10408 (March
13, 1996); Securities Exchange Act Release No. 36985 (March 18,
1996), 61 FR 12122 (March 25, 1996); Securities Exchange Act Release
No. 37689 (September 16, 1996), 61 FR 50058 (September 24, 1996);
Securities Exchange Act Release No. 37772 (October 1, 1996), 61 FR
52980 (October 9, 1996); Securities Exchange Act Release No. 38457
(March 31, 1997), 62 FR 16880 (April 8, 1997); Securities Exchange
Act Release No. 38794 (June 30, 1997) 62 FR 36586 (July 8, 1997);
Securities Exchange Act Release No. 39505 (December 31, 1997) 63 FR
1515 (January 9, 1998); Securities Exchange Act Release No. 40151
(July 1, 1998) 63 FR 36979 (July 8, 1998); Securities Exchange Act
Release No. 40869 (December 31, 1998), 64 FR 1834 (January 12, 1999)
(``December 1998 Extension Order''); and Securities Exchange Act
Release No. 41392 (May 12, 1999), 64 FR 27839 (May 21, 1999) (``May
1999 Approval Order''); Securities Exchange Act Release No. 42268
(December 23, 1999).
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III. Description of the Plan
The Plan provides for the collection from Plan Participants and the
consolidation and dissemination to vendors, subscribers and others of
quotation and transaction information in ``eligible securities.'' \7\
The Plan contains various provisions concerning its operation,
including: Implementation of the Plan; Manner of Collecting,
Processing, Sequencing, Making Available and Disseminating Last Sale
Information; Reporting Requirements (including hours of operation);
Standards and Methods of Ensuring Promptness, Accuracy and Completeness
of Transaction Reports; Terms and Conditions of Access; Description of
Operation of Facility Contemplated by the Plan; Method and Frequency of
Processor Evaluation; Written Understandings of Agreements Relating to
Interpretation of, or Participation in, the Plan; Calculation of the
Best Bid and Offer; Dispute Resolution; and Method of Determination and
Imposition, and Amount of Fees and Charges.\8\
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\7\ The Plan defines ``eligible security'' as any Nasdaq/NM
security as to which unlisted trading privileges have been granted
to a national securities exchange pursuant to Section 12(f) of the
Act or that is listed on a national securities exchange. On May 12,
1999, the Commission expanded the number of eligible Nasdaq/NM
securities that may be traded by the CHX pursuant to the Plan from
500 to 1000. (See May 1999 Approval Order, supra) note 6.
\8\ The full text of the Plan, as well as a ``Concept Paper''
describing the requirements of the Plan, are contained in the
original filing which is available for inspection and copying in the
Commission's public reference room.
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IV. Discussion
The Commission finds that it is consistent with Section 11A \9\ of
the Act to add Cincinnati as a Participant to the Plan and to make
technical changes to the Plan to reflect that the Midwest Stock
Exchange is now called the Chicago Stock Exchange. Section 11A directs
the Commission to facilitate the development of a national market
system for securities, ``having due regard for the public interest, the
protection of investors, and the
[[Page 800]]
maintenance of fair and orderly markets,'' and cites as an objective of
that system the ``fair competition * * * between exchange markets and
markets other than exchange markets.'' \10\ When the Commission first
approved the Plan on a pilot basis, it found that the Plan ``should
enhance market efficiency and fair competition, avoid investor
confusion, and facilitate regulatory surveillance of concurrent
exchange and OTC trading.'' \11\ The Commission now finds that adding a
Participant to the Plan furthers these same goals.
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\9\ 15 U.S.C. 78k-1. In approving this amendment, the Commission
has considered the amendment's impact on efficiency, competition,
and capital formations. 15 U.S.C. 78(c)(f).
\10\ 15 U.S.C. 78k-1(a)(1)(C)(ii).
\11\See supra note 3.
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Section 1C of the Plan provides that a national securities exchange
in whose market eligible securities become traded, may become a
Participant, provided that the exchange executes a copy of the Plan and
pays its share of development costs as specified in Section XIV of the
Plan. Cincinnati has filed an executed copy of the Plan with the
Commission, and the Participants have represented to the Commission
that Cincinnati has paid its share of the development costs specified
in Section XIV of the Plan. Accordingly, the Commission finds that
Cincinnati has satisfied the requirements listed in the Plan to become
a participant.
The Commission also finds that the technical amendments to the Plan
are consistent with the Act. The Commission believes that the Plan
should accurately reflect the Participants. Thus, it is appropriate
that all references to the Midwest Stock Exchange are changed to the
Chicago Stock Exchange, and that the Plan itself be modified to provide
for a symbol for CHX.
V. Solicitation of Comment
Interested persons are invited to submit written data, views and
arguments concerning the foregoing, including whether the proposed
amendment is consistent with the Act. Persons making written
submissions should file six copies thereof with the Secretary,
Securities and Exchange Commission, 450 Fifth Street NW, Washington, DC
20549-0609. Copies of the submission, all subsequent amendments, all
written statements with respect to the proposed amendment that are
filed with the Commission, and all written communications relating to
the proposed amendment between the Commission and any person, other
than those that may be withheld from the public in accordance with the
provisions of 5 U.S.C. 552, will be available for inspection and
copying at the Commission's Public Reference Room. All submissions
should refer to File No. S7-24-89 and should be submitted by February
10, 2000.
VI. Conclusion
It is therefore ordered, pursuant to Sections 12(f) and 11A of the
Act and paragraph (c)(2) of Rule 11Aa3-2 thereunder, that Amendment No.
10 to the Plan, is approved.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\12\
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\12\ 17 CFR 200.30-3(a)(29).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 00-279 Filed 1-5-00; 8:45 am]
BILLING CODE 8010-01-M
