[Federal Register Volume 59, Number 241 (Friday, December 16, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-30914]
[[Page Unknown]]
[Federal Register: December 16, 1994]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-35077; File No. SR-NASD-94-68]
Self-Regulatory Organizations; Notice of Proposed Rule Change by
the National Association of Securities Dealers, Inc. Relating to a
Three Month Extension of the Interim SOES Rules
December 9, 1994.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ notice is hereby given that on December 7, 1994,\2\ the
National Association of Securities Dealers, Inc. (``NASD'' or
``Association'') filed with the Securities and Exchange Commission
(``Commission'' or ``SEC'') the proposed rule change as described in
Items I, II, and III below, which Items have been prepared by the NASD.
The Commission is publishing this notice to solicit comments on the
proposed rule change from interested persons.
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\1\15 U.S.C. 78s(b)(1) (1988).
\2\The NASD initially filed the proposed rule change on December
1, 1994. On December 7, 1994, the NASD filed Amendment No. 1 to
remove the short sale prohibition from its proposal to extend the
Interim SOES Rules.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
On December 23, 1993, the Commission approved on a one-year pilot
basis changes to The Nasdaq Stock Market, Inc.'s (``Nasdaq'') Small
Order Executive System (``SOES'') that: (1) Reduced the maximum size
order eligible for execution through SOES from 1,000 shares to 500
shares; (2) reduced the minimum exposure limit for ``unpreferenced''
SOES orders from five times the maximum order size to two times the
maximum order size, and eliminated the exposure limits for
``preferenced orders''; (3) implemented an automated function for
updating market maker quotations when the market maker's exposure limit
has been exhausted; and (4) prohibited short sales through SOES
(collectively referred to hereinafter as the ``Interim SOES
Rules'').\3\ Except for the short sale prohibition, the NASD proposes
to extend, until May 1, 1995, the effectiveness of the Interim SOES
Rules.
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\3\See Securities Exchange Act Release No. 33377 (Dec. 23,
1993), 58 FR 69419 (Dec. 30, 1993) (``Interim SOES Rules Approval
Order'').
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II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Propoed Rule Change
In its filing with the Commission, the NASD 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. The NASD 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
On December 23, 1993, the SEC issued an order that approved the
Interim SOES Rules on a one-year pilot basis effective January 7, 1994.
In response to two applications requesting a stay of the Interim SOES
Rules Approval Order, however, the SEC granted a partial stay of the
effective date of the order until January 25, 1995.\4\ Thus, since the
Commission approved the Interim SOES Rules for a one-year period and
this one-year period did not commence until the Commission's order
approving the rules became effective on January 25, 1994, it is the
NASD's understanding that the Interim SOES Rules will expire on January
25, 1995, absent further Commission action.
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\4\See Securities Exchange Act Release No. 33424 (Jan. 5, 1994).
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As described in more detail below, because the NASD believes
implementation of these rule changes has been associated with positive
developments in the markets for Nasdaq securities and clearly has not
had any negative effect on market quality, the NASD believes it is
appropriate and consistent with the maintenance of fair and orderly
markets and the protection of investors to extend the effectiveness of
the interim SOES Rules (without the short sale prohibition) until the
rules governing the operation of The Nasdaq Primary Retail Order View
and Execution System (``NPROVE'') have been approved by the SEC
and implemented.\5\
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\5\See Securities Exchange Act Release No. 34145 (June 1, 1994),
59 FR 29649 (June 6, 1994) (notice of original filing and Amendment
No. 1), Securities Exchange Act Release No. 34453 (July 28, 1994),
59 FR 39808 (Aug. 4, 1994) (notice of Amendment No. 2), and
Securities Exchange Act Release No. 35024 (Nov. 29, 1994), 59 FR
62755 (Dec. 6, 1994 (notice of Amendment No. 3).
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NPROVE is a new Nasdaq system for the execution of small-
sized customer orders that will provide individual investors with
enhanced limit order protection and important price improvement
opportunities, while at the same time affording market makers an
enhanced means to manage the risks associated with market making. The
NASD anticipates that NPROVE will be ready for implementation
by May 1, 1995 and is hopeful that the SEC will consider approval of
NPROVE well prior to that date. Accordingly, assuming the SEC
approves NPROVE by May 1, 1995, the NASD believes it is
necessary for the protection of investors and the preservation of the
quality of the markets for Nasdaq securities to extend the
effectiveness of the Interim SOES Rules for approximately three months
until May 1, 1995, so that there will be no lapse between the effective
date of NPROVE and termination of the Interim SOES Rules. By
preventing a lapse in the effectiveness of the Interim SOES Rules, the
NASD believes investors and the marketplace as a whole will continue to
receive the substantial benefits derived from the Interim SOES Rules.
The Interim SOES Rules reflect a reasoned approach by the NASD to
address the adverse effects on market liquidity attributable to active
intra-day trading activity through SOES, while at the same time not
compromising the ability of small, retail investors to receive
immediate executions through SOES. Specifically, the Interim SOES Rules
are designed to address concerns that concentrated, aggressive use of
SOES by a growing number of order entry firms has resulted in increased
volatility in quotations and transaction prices, wider spreads, and the
loss of liquidity for individual and institutional investor orders. In
light of the SEC's approval of the NASD's proposed short sale rule in
June 1994,\6\ however, the NASD believes it is appropriate to permit
short sales to be entered in SOES. Accordingly, the NASD proposes to
allow the effectiveness of this particular SOES rule to lapse on
January 25, 1995.
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\6\Securities Exchange Act Release No. 34277 (June 29, 1994), 59
FR 34885 (July 7, 1994).
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The NASD believes that the same arguments and justifications made
by the NASD in support of approval of the Interim SOES Rules are just
as compelling today as they were when the SEC relied on them to approve
the rules. In sum, the NASD continues to believe that concentrated
bursts of SOES activity by active order-entry firms contribute to
increased short-term volatility, wider spreads, and less market
liquidity on Nasdaq and that the Interim SOES Rules are an effective
means to minimize these adverse market impacts.
The NASD also notes that the SEC made specific findings in the
Interim SOES Rules Approval Order that the interim rules were
consistent with the Act. In particular, the SEC stated in its approval
order that:
a. Because the benefits for market quality of restricting SOES
usage outweigh any potential decrease in pricing efficiency, the
Commission concludes that the net effect of the proposal is to
remove impediments to the mechanism of a free and open market and a
national market system, and to protect investors and the public
interest, and that the proposed rule changes are designed to produce
accurate quotations, consistent with Sections 15A(b)(6) and
15A(b)(11) of the Act. In addition, the Commission concludes that
the benefits of the proposal in terms of preserving market quality
and preserving the operational efficiencies of SOES for the
processing of small size retail orders outweigh any potential burden
on competition or costs to customers or broker-dealers affected
adversely by the proposal. Thus, the Commission concludes that the
proposal is consistent with Section 15A(b)(9) of the Act in that it
does not impose a burden on competition which is not necessary or
appropriate in furtherance of the purposes of the Act.\7\
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\7\Interim SOES Rules Approval Order, supra note 1, 58 FR at
69423 (footnotes omitted).
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b. The Commission also concludes that the proposal advances the
objectives of Section 11A of the Act. Section 11A provides that it
is in the public interest and appropriate for the protection of
investors and the maintenance of fair and orderly markets to assure
economically efficient execution of securities transactions, fair
competition among market participants, and the practicality of
brokers executing orders in the best market. The Commission
concludes that the proposal furthers these objectives by preserving
the operational efficiencies of SOES for the processing of small
orders from retail investors.\8\
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\8\Id. (footnotes omitted).
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c. The Commission believes that it is appropriate to restrict
trading practices through SOES that impose excessive risks and costs
on market makers and jeopardize market quality, and which do not
provide significant contributions to liquidity or pricing
efficiency. * * * The Commission believes that it is more important
to ensure that investors seeking to establish or liquidate an
inventory position have ready access to a liquid Nasdaq market and
SOES than to protect the ability of customers to use SOES for intra-
day trading strategies.\9\
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\9\Id. at 69424-25 (footnotes omitted).
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d. The Commission believes that there are increased costs
associated with active intra-day trading activity through SOES that
undermine Nasdaq market quality * * * . Active intra-day trading
activity through SOES can also contribute to instability in the
market.\10\
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\10\Id. (footnotes omitted).
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e. In addition, these waves of executions can make it difficult
to maintain orderly markets. Given the increased volatility
associated with these waves of intra-day trading activity, market
makers are subject to increased risks that concentrated waves of
orders will cause the market to move away. As a result, individual
market makers may be unwilling to narrow the current spread and
commit additional capital to the market by raising the bid or
lowering the offer. When market makers commit less capital and quote
less competitive markets, prices can be expected to deteriorate more
rapidly. Accordingly, the Commission believes that it is appropriate
for the NASD to take measured steps to redress the economic
incentives for frequent intra-day trading inherent in SOES to
prevent SOES activity from having a negative effect on market prices
and volatility.\11\
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\11\Id. at 69425-26 (footnotes omitted).
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f. The Commission does not believe that intra-day trading
strategies through SOES contribute significantly to market
efficiency in the sense of causing prices to reflect information
more accurately.\12\
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\12\Id.
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g. The Commission has evaluated each of the proposed
modifications to SOES, and concludes that each of the modifications
reduces the adverse effects of active trading through SOES and
better enables market makers to manage risk while maintaining
continuous participation in SOES. In addition, the Commission does
not believe that any of the modifications will have a significant
negative effect on market quality. To the extent that any of the
modifications may result in a potential loss of liquidity for small
investor orders, the Commission believes that these reductions are
marginal and are outweighed by the benefits of preserving market
maker participation in SOES and increasing the quality of executions
for public and institutional orders as a result of the
modifications.\13\
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\13\Id.
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h. The Commission * * * has determined that the instant
modifications to SOES further the objectives of investor protection
and fair and orderly markets, and that these goals, on balance,
outweigh any marginal effects on liquidity for small retail orders,
and any anticompetitive effects on order entry firms and their
customers. The Commission concludes that the ability of active
traders to place trades through a system designed for retail
investors can impair market efficiency and jeopardize the level of
market making capital devoted to Nasdaq issues. The Commission
believes that the rule change is an appropriate response to active
trading through SOES, and that the modifications will reduce the
effects of concentrated intra-day DOES activity on the market.\14\
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\14\Id. at 69429.
The NASD believes these significant statutory findings by the SEC
regarding the Interim SOES Rules and the SEC's assessment of the likely
benefits to the marketplace that would result from the rules have been
confirmed and substantiated by an econometric study conducted by the
NASD's Economic Research Department on the effectiveness of the Interim
SOES Rules.\15\ When the SEC approved the Interim SOES Rules, it stated
that ``[a]ny further action the NASD seeks with respect to SOES--
extension of these modifications upon expiration, or introduction of
other changes--will require independent consideration under Section 19
of the Act.''\16\ In addition, the SEC stated that, should the NASD
desire to extend these SOES changes or modify SOES, the Commission
would expect ``the NASD to monitor the quality of its markets and
assess the effects of these changes on market quality for Nasdaq
securities.'' Also, if feasible, the SEC instructed the NASD to provide
a quantitative and statistical assessment of the effects of the SOES
changes on market quality; or, if an assessment is not feasible, the
SEC stated that the NASD should provide a reasoned explanation
supporting that determination.
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\15\Securities Exchange Act Release No. 35080 (Dec. 9, 1994)
(Commission notice of a letter from Gene Finn, Vice President &
Chief Economist, NASD, to Katherine England, Assistant Director,
National Market System & OTC Regulation, SEC, dated October 24,
1994, submitted in connection with the NASD's NPROVE filing,
File No. SR-NASD-94-13).
\16\Interim SOES Rules Approval Order, supra note 1, 59 FR at
69429. Amendment No. 4 to the NASD's filing for the Interim SOES
Rules also states that the NASD ``understand[s] that because of
substantial negative comment on the modifications, the SEC may wish
to review the impact of the changes after they have been in effect
for a reasonable time frame. The NASD believes that a one-year pilot
will provide a reasonable period to observe the operation of the
modifications and confirm the absence of adverse impact on SOES
averred in the comments. The experience during the pilot period will
also permit the NASD to better evaluate the prudence of requesting
permanent approval of these interim changes. For these reasons, the
NASD hereby requests that the SEC approve the proposal for a one-
year pilot.'' See letter from Robert E. Aber, Vice President &
General Counsel, Nasdaq, to Selwyn Notelovitz, Branch Chief, SEC,
dated November 29, 1993.
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In sum, the NASD's study found that:
Since the SOES changes went into effect in January
1994, the statistical evidence indicated that when average daily
volume, stock price, and stock price volatility are held constant
through regression techniques, quoted percentage spreads in Nasdaq
securities experienced a decline in the immediate period following
implementation of the changes and have continued to decline since
then. The statistical evidence also showed that the narrowing of
quoted percentage spreads became more pronounced and robust the
longer the Interim SOES Rules were in effect. In particular, quoted
spreads in cents per share for the 500 largest Nasdaq National
Market securities experienced a sharp decline from April 28 to May
12 and from June 23 to July 18 (footnote omitted);
With the exception of a brief, market-wide period of
volatility experienced by stocks traded on Nasdaq, the New York
Stock Exchange, and the American Stock Exchange during the Spring,
the volatility of Nasdaq securities appears to be unchanged in the
period following implementation of the changes; and
A smaller percentage of Nasdaq stocks experienced
extreme relative price volatility after implementation of the rules
and that these modifications, in turn, suggest a reduction in
relative volatilities since the rules were put into effect.
The NASD also believes that its study of the effectiveness of the
Interim SOES Rules lends credence to another NASD study that was
submitted to the SEC in support of approval of the Interim SOES
Rules.\17\ In the May 1993 SOES Study, the NASD found that concentrated
waves of orders entered into SOES by active order-entry firms resulted
in discernible degradation to the quality of the Nasdaq market.
Specifically, the study found, among other things, that: (1) Bursts of
orders entered into SOES by active order entry firms frequently result
in a decline in the bid price and a widening of the bid-ask spread; (2)
that there is a significant positive relationship between increases in
spreads and volume attributable to active order-entry firms as it
related to total SOES volume per security; and (3) activity by active
order-entry firms resulted in higher price volatility and less
liquidity--higher price changes are associated with high active trading
firm volume, even after controlling for normal price fluctuations.
Given the positive market effects associated with the Interim SOES
Rules, the NASD believes the findings of the May 1993 SOES Study as
well as the economic assumptions, principles, and hypotheses underlying
the study should not be dismissed by the Commission as ``inconclusive''
and that more weight should be given to the study.
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\17\See NASD Department of Economic Research: Impact of SOES
Active Trading Firms on Nasdaq Market Quality (May 12, 1993) (``May
1993 SOES Study''). See also Securities Exchange Act Release No.
32313 (May 17, 1993), 58 FR 29647 (publication of the study for
comment).
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Therefore, in light of all the above-cited statutory findings made
by the SEC when it approved the Interim SOES Rules, coupled with the
NASD's findings that the interim rules have been associated with
positive market developments in terms of lower spreads on Nasdaq and
less stocks with extreme relative price volatility, the NASD believes
it would be consistent with the Act for the Commission to extend the
Interim SOES Rules for a brief three month period so that the interim
rules can continue on an uninterrupted basis until May 1, 1995, the
anticipated implementation date for NPROVE. In sum, the NASD
believes its study affirms the validity and correctness of the SEC's
prior statutory findings made in connection with the approval of the
interim rules. Moreover, even if the Commission is unwilling to find
positive significance in the NASD's statistical analyses, at the very
least, these studies indicate that the market has not been harmed by
implementation of the Interim SOES Rules. As a result, the Commission's
rationale for the approval of the Interim SOES Rules for one year is
equally compelling, if not more compelling given the apparent positive
effects of the rules, to justify approval of the NASD's proposal to
extend the rules for approximately three months. To do otherwise would
require the SEC to refute its prior findings that the Interim SOES
Rules are consistent with the Act. Given the absence of any evidence of
unanticipated harm associated with implementation of the interim rules,
the NASD believes the Commission would have no factual basis to justify
such a refutation.
Moreover, even if the Commission concludes that the Interim SOES
Rules have had no impact on market quality, the NASD believes the
Commission's approval of New York Stock Exchange (``NYSE'') Rule 80A on
a permanent basis illustrates that the Commission would still have a
sufficient basis to approve an extension of the Interim SOES Rules for
a brief three month period.\18\ When NYSE Rule 80A was proposed, the
Commission received considerable adverse comment to the effect that
there was no causal relationship between index arbitrage and market
volatility and that activation of the rule during turbulent market
conditions could have disastrous effects on related options and futures
markets and actually exacerbate market volatility. Despite these
comments, the Commission approved the proposal on a one-year pilot
basis noting that ``the NYSE proposal represents a modest step,
proposed on a pilot basis, to attempt to address the issue of market
volatility.''\19\ After the one-year pilot, the NYSE prepared a report
that, in the SEC's words, found that ``the standard measures of NYSE
market quality appear largely unaffected by Rule 80A.'' Specifically,
the NYSE Report indicated that: (1) Quotes on the NYSE did not widen
after the 50 DJIA point trigger was reached; and (2) the imposition of
Rule 80A did not have any negative effect on price continuity and depth
in the market.\20\ In addition, in approving Rule 80A on a permanent
basis, the SEC noted that the rule ``represents a modest but useful
step by the NYSE to attempt to address the issue of market
volatility,''\21\ that the rule ``has not been disruptive to the
marketplace,''\22\ and that there was a ``lack of evidence of any
harmful effects of Rule 80A.''\23\ In sum, the SEC discussion of the
statutory basis for approval of NYSE Rule 80A focused in large part on
the fact that Rule 80A did not have any adverse impacts on market
quality on the NYSE and that, as a result, the NYSE should be given the
latitude to take reasonable steps to address excessive volatility in
its marketplace. Accordingly, the NASD believes the SEC should afford
the NASD the same regulatory flexibility that it afforded the NYSE to
implement rules reasonably designed to enhance the quality of Nasdaq
and minimize the effects of potentially disruptive trading practices.
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\18\Rule 80A provides that when the Dow Jones Industrial Average
declines or advances by 50 points or more, all index arbitrage
orders to sell or buy must be executed in a market stabilizing
manner.
\19\See Securities Exchange Act Release No. 28282 (July 30,
1990), 55 FR 31468, 31472 (Order approving File Nos. SR-NYSE-90-5
and SR-NYSE-90-11).
\20\See Securities Exchange Act Release No. 29854 (October 24,
1994), 56 FR 55963 (October 30, 1994) (order approving file SR-NYSE-
91-21) (``Rule 80A Approval Order'').
\21\Id. 56 FR at 55967.
\22\Id.
\23\Id. 56 FR at 55967-68.
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The NASD believes that the proposed rule change is consistent with
Sections 15A(b)(6), 15A(b)(9), 15A(b)(11) and 11A(a)(1)(C) of the Act.
Among other things, Section 15A(b)(6) requires that the rules of a
national securities association be designed to prevent fraudulent and
manipulative acts and practices, to promote just and equitable
principles of trade, to foster cooperation and coordination with
persons engaged in regulating, clearing, settling, processing
information with respect to, and facilitating transactions in
securities, to remove impediments to and perfect the mechanism of a
free and open market and a national market system and in general to
protect investors and the public interest. Specifically, the NASD is
proposing to retain the Interim SOES Rules for three months because of
concerns that concentrated, aggressive use of SOES by a growing number
of order entry firms has resulted in increased volatility in quotations
and transaction prices, wider spreads, and the loss of liquidity for
individual and institutional investor orders, all to the detriment of
public investors and the public interest. The NASD believes the Interim
SOES Rules have operated to rectify this situation while continuing to
provide an effective opportunity for the prompt, reliable execution of
small orders received from the investing public. With respect to the
proposal to remove the short sale prohibition from SOES, by expanding
the spectrum of retail orders that will be eligible to receive
automatic executions through SOES, the NASD believes the proposal may
enhance investor protection. Nonetheless, the NASD is very concerned
that re-allowing the entry of short sales into SOES may contribute to
destabilizing short term trading through SOES that could have adverse
corollary effects throughout Nasdaq.\24\ Accordingly, in order to
protect investors and the public interest, the NASD believes the
Interim SOES Rules should be extended until May 1, 1995, so that small
investors' orders will continue to receive the fair and efficient
executions that SOES was designed to provide.
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\24\The NASD will, therefore, review the volume and impact of
short sales effected through SOES on an on-going basis to determine
whether it is appropriate in the interests of maintaining fair and
orderly markets to continue to allow short-sales through SOES.
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Section 15A(b)(9) provides that the rules of the Association may
not impose any burden on competition not necessary or appropriate in
furtherance of the purposes of the Act. The Interim SOES Rules apply
across the board and do not target any particular user or participant.
For instance, all SOES orders must be for 500 shares or less, according
to the tier size requirements, all dealers may set their exposure
limits at two times the tier size, and all dealers may elect to utilize
the automated quote update feature. Accordingly, the NASD believes that
these rule changes are not anti-competitive, as they are uniform in
application and they seek to preserve the ability of SOES to provide
fair and efficient automated executions for small investor orders,
while preserving market maker participation in SOES and market
liquidity.
Section 15A(b)(11) empowers the NASD to adopt rules governing the
form and content of quotations relating to securities in the Nasdaq
market. Such rules must be designed to produce fair and informative
quotations, prevent fictitious and misleading quotations, and promote
orderly procedures for collecting and distributing quotations. The NASD
is seeking to continue the effectiveness of the Interim SOES Rules so
that SOES activity may not result in misleading quotations in the
Nasdaq market. Market makers place quotes in the Nasdaq system and
these quotes comprise the inside market and define the execution
parameters of SOES. When volatility in the SOES environment causes
market makers to widen spreads or to change quotes in anticipation of
waves of SOES orders, quotes in the Nasdaq market become more volatile
and may be misleading to the investing public. Accordingly, absent
continuation of the Interm SOES Rules, the quotations published by
Nasdaq may not reflect the true market in a security and, as a result,
there may be short-term volatility and loss of liquidity in Nasdaq
securities, to the detriment of the investing public. Further, the
continuation of the automated refresh feature will ensure that a market
maker's quotation is updated after an exposure limit is exhausted.
Uninterrupted use of this function will maintain continuous quotations
in Nasdaq as market makers exhausting their exposure limits in SOES
will not be subject to a ``closed quote'' condition or an unexcused
withdrawal from the market. Finally, the NASD notes that despite the
reduction in the maximum order size for SOES, market makers are still
obligated to adhere to minimum display size requirements for quotations
in Nasdaq National Market securities and Nasdaq SmallCap securities.
Finally, the NASD believes that the proposed rule change is
consistent with significant national market system objectives contained
in Section 11A(a)(1)(C) of the Act. This provision states it is in the
public interest and appropriate for the protection of investors and the
maintenance of fair and orderly markets to assure, among other things,
(i) economically efficient execution of securities transactions; (ii)
fair competition among brokers and dealers; and (iii) the practicality
of brokers executing investor orders in the best market. Specifically,
the Interim SOES Rules advance each of these objectives by preserving
the operational efficiencies of SOES for the processing of small
investors' orders, by maintaining current levels of market maker
participation through reduced financial exposure from unpreferenced
orders exceeding 500 shares, and by reducing price volatility and the
widening of market makers' spreads in response to the practices of
order entry firms active in SOES. With respect to the proposal to
remove the short sale prohibition from SOES, by expanding the spectrum
of retail orders that will be eligible to receive automatic executions
through SOES, the NASD believes the proposal may enhance investor
protection. Nonetheless, the NASD is very concerned that re-allowing
the entry of short sales into SOES may contribute to destabilizing
short term trading through SOES that could have adverse corollary
effects throughout Nasdaq.\25\
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\25\As indicated above, the NASD will review the volume and
impact of short sales effected through SOES on an on-going basis.
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In addition, for the same reasons provided by the SEC when it
approved the Interim SOES Rules that are cited above in the text
accompanying footnotes four through eleven, the NASD believes that the
proposed rule change is consistent with Sections 15A(b)(6), 15A(b)(9),
15A(b)(11), and 11A(a)(1)(C) of the Act.
B. Self-Regulatory Organization's Statement on Burden on Competition
The NASD believes that the proposed rule change will not result in
any burden on competition that is not necessary or appropriate in
furtherance of the purposes of the Act.
C. Self-Regulatory Organization's Statement on Comments of the Proposed
Rule Change Received from Members, Participants, or Others
Comments were neither solicited nor received.
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 NASD consent, the Commission will:
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
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 proposed rule change that are filed with
the Commission, and all written communications relating to the proposed
rule change 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 in the
Commission's Public Reference Room. Copies of such filing will also be
available for inspection and copying at the principal office of the
NASD. All submissions should refer to the file number SR-NASD-94-68 and
should be submitted by January 6, 1995.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\26\
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\26\17 CFR 200. 30-3(a)(12)(1994).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 94-30914 Filed 12-15-94; 8:45 am]
BILLING CODE 8010-01-M
