[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: 94-30946]
[[Page Unknown]]
[Federal Register: December 16, 1994]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-35083; File No. SR-NASD-94-65]
Self-Regulatory Organizations; Notice of Filing and Immediate
Effectiveness of Proposed Rule Change by National Association of
Securities Dealers, Inc. Relating to Security Application Fee for the
PORTAL Market
December 12, 1994.
Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''), 15 U.S.C. 78s(b)(1), notice is hereby given that on November
30, 1994, the National Association of Securities Dealers, Inc.
(``NASD'' or ``Association'') filed with the Securities and Exchange
Commission (``SEC'' or ``Commission'') 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.
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
Pursuant to the provisions of Section 19(b)(1) of the Act, the NASD
is herewith filing a proposed rule change to the PORTAL Market Rules,
Schedule I to the NASD By-Laws (``PORTAL Rules'') to amend the security
application fee in Article I, Section 1 with respect to securities
submitted for designation in The PORTAL Market. The NASD is proposing
to delay the implementation of the adoption of the security application
fee in Article IX, Section 1, approved by the SEC in Securities
Exchange Release No. 34562 (August 19, 1994), 59 FR 44210, and the
implementation of proposed rule change filed herein to January 3, 1995.
Below is the text of the proposed rule change. Proposed new language is
italicized; proposed deletions are in brackets.
The PORTAL Market
Schedule I to the NASD By-Laws
* * * * *
PART IX
PORTAL FEES
Sec. 1 Entry Fee
When a PORTAL participant submits an application for designation of
any class of securities as a PORTAL security, it shall pay to the
Corporation a filing fee of $2,000 [per class of security covered by
the security] for an application covering a security or group of
identifiable securities issuable as part of a single private placement
covered by the same offering documents, [submitted] plus $200 per
assigned security symbol that is in addition to the first symbol
assigned.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed 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
(a) On August 19, 1994, the Commission approved an NASD amendment
to its PORTAL Rules that added a security application fee for PORTAL
participants\1\ applying for designation of any class of securities as
a PORTAL security.\2\ The Nasdaq Stock Market, Inc. operates the PORTAL
Market for the quotation of securities that are restricted securities,
as defined in Rule 144(a)(3) under the Securities Act of 1933
(``Securities Act''), or securities that are treated as if
restricted.\3\ In order to qualify for inclusion in the PORTAL Market,
a security that is restricted or treated as if restricted must be
eligible to be sold pursuant to Rule 144A under the Securities Act,\4\
be in negotiable form, and be assigned a CUSIP or other security
identification number that is different from any identification number
assigned to any unrestricted securities of the same class. Designation
of a security as a PORTAL security permits the security to be assigned
a CUSIP number by Standard & Poor's Corporation and be cleared and
settled through the Depository Trust Company.
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\1\Section 2 of the PORTAL Rules permits any PORTAL participant
to submit an application for security designation, rather than the
issuer of the security. ``PORTAL participants'' include PORTAL
dealers, PORTAL brokers, and PORTAL investors. The first two
categories of PORTAL participants are required to be brokers and
dealers registered with the Commission under Section 15 of the Act
and members of the NASD. The third category of PORTAL participants
are institutional investors that are not members of the NASD that
meet the definition of ``qualified institutional buyer'' under Rule
144A.
\2\Securities Exchange Act Release No. 34562 (August 19, 1994),
59 FR 44210.
\3\The PORTAL Rules provide that to qualify for initial
designation and continued designation in the PORTAL Market, a
security shall be either a restricted security, as defined in Rule
144(a)(3) under the Securities Act, or a security that upon issuance
and continually thereafter only can be sold pursuant to Regulation S
under the Securities Act, Rule 144A, or Rule 144 under the
Securities Act, or in a transaction exempt from the registration
requirements of the Securities Act pursuant to Section 4 of the
Securities Act and not involving any public offering.
\4\This provision requires that the security meet the
requirements of Rule 144A(d) (3) and (4) under the Securities Act,
which are, respectively, the ``fungibility'' and ``information
delivery requirement'' conditions of Rule 144A.
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The security application fee required a fee of $2,000 per class of
security covered by the security application and, as well, a fee of
$200 for each assigned security symbol that is in addition to the first
symbol assigned. The application fee rule language required that the
NASD assess the $2,000 fee with respect to each separate class of
security when one or more classes of securities are covered by a single
security application. This is not the manner in which the NASD intended
to implement the new fee. In the NASD's rule filing related to the new
fee, SR-NASD-94-39, the NASD stated that the ``NASD is proposing to
adopt a filing fee of $2,000 per security application submitted plus
$200 for each security identification symbol assigned after the first
symbol.'' The foregoing description more accurately described that the
NASD intends to assess the new fee with respect to each security
application submitted, rather than with respect to each class of
security covered by the application.
In order to clarify the rule language of the security application
fee provision in Part IX, Section 1 of the PORTAL Rules, the NASD is
proposing to amend Section 1 to provide that the PORTAL participants
shall pay a filing fee of $2,000 for an application covering a security
or group of identifiable securities issuable as part of a single
private placement covered by the same offering documents, plus $200 per
assigned security symbol that is in addition to the first symbol
assigned. The NASD believes that the foregoing rule language makes
clear that the $2,000 fee applies with respect to each private
placement offering, notwithstanding that the offering may involve
multiple issuers and contain multiple securities.
The security application fee was effective August 19, 1994. In
light of concerns that arose regarding the clarity of the rule language
of the new provision in Article IX, Section 1, the NASD delayed
implementation of the new fee in order to develop revised rule language
that would more clearly indicate the intended application of the fee.
The NASD is proposing to delay the implementation of the security
application fee approved by the SEC in Securities Exchange Act Release
No. 34562 (August 19, 1994), 59 FR 44210 and the implementation of
proposed rule change filed herein to January 3, 1995.
(b) The NASD believes that the proposed rule change is consistent
with the provisions of Section 15A(b)(5) of the Act, which requires
that the rules of the Association provide for the equitable allocation
of reasonable dues, fees and other charges among members and issuers
and other persons using any facility or system which the Association
operates or controls in that the proposed rule change equitably applies
a filing fee to all applications submitted by PORTAL dealers, PORTAL
brokers, and PORTAL qualified investors for the designation of
securities to the PORTAL Market.
(B) Self-Regulatory Organization's Statement on Burden on Competition
The NASD does not believe that the proposed rule change will result
in any burden on competition that is not necessary or appropriate in
furtherance of the purposes of the Act, as amended.
(C) Self-Regulatory Organization's Statement on Comments on the
Proposed Rule Change Received From Members, Participants, or Others
Written comments were neither solicited nor received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become effective pursuant to Section
19(b)(3)(A) of the Act and subparagraph (e) of Act Rule 19b-4 because
the rule change constitutes an interpretation with respect to the
meaning, administration, or enforcement of an existing rule of the
NASD. At any time within 60 days of the filing of a rule change, the
Commission may summarily abrogate the rule change if it appears to the
Commission that such action is necessary or appropriate in the public
interest, for the protection of investors, or otherwise in furtherance
of the purposes of the Act.
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 in the caption
above and should be submitted by January 6, 1995.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority, 17 CFR 200.30-3(a)(12).
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 94-30946 Filed 12-15-94; 8:45 am]
BILLING CODE 8010-01-M
