[Federal Register Volume 64, Number 241 (Thursday, December 16, 1999)]
[Notices]
[Pages 70307-70309]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-32556]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-42213; File No. SR-NASD-99-71]
Self-Regulatory Organizations; Notice of Filing and Immediate
Effectiveness of Proposed Rule Change and Amendment No. 1 to the
Proposed Rule Change by the National Association of Securities Dealers,
Inc. To Delay Date of Commencement for Providing Nasdaq-Generated Best
Bid/Offer Inside Quotation From 4:00 p.m. to 6:30 p.m. Eastern Time
December 9, 1999.
Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and rule 19b-4 thereunder,\2\ notice is hereby given that
on December 3, 1999, the National Association of Securities Dealers,
Inc. (``NASD''), through its wholly owned subsidiary, The Nasdaq Stock
Market, Inc. (``Nasdaq'') 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 Nasdaq. On December 6, 1999, Nasdaq filed an amendment to the
proposed rule change.\3\ Nasdaq has designated this proposal as one
which does not significantly affect the protection of investors or the
public interest, and does not impose any significant burden on
competition under section 19(b)(3)(A) of the Act \4\ and rule 19b-
4(f)(6) thereunder,\5\ which renders the proposal effective upon filing
with the Commission. The Commission is publishing this notice to
solicit comments on the proposed rule change, as amended, from
interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ See December 6, 1999 letter from Thomas Moran, Esquire,
Nasdaq, to Katherine A. England, Assistant Director, Division of
Market Regulation, SEC (``Amendment No. 1''). In Amendment No. 1,
Nasdaq states that it received a letter from the Investment Company
Institute (``ICI'') in which the ICI indicated its support of a
delay in the implementation of a Nasdaq-generated best bid/offer
inside quotation (``Inside Quote'') until February 7, 2000.
\4\ 15 U.S.C. 78s(b)(3)(A).
\5\ 17 CFR 240.19b-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of
Substance of the Proposed Rule Change
Nasdaq proposes to defer, until February 7, 2000, the date by which
Nasdaq will commence providing an Inside Quote. Nasdaq had originally
proposed, and received Commission approval, to provide an Inside Quote
commencing on December 6, 1999.
[[Page 70308]]
Nasdaq's commitment to provide an Inside Quote after the regular close
of the Nasdaq market between the hours of 4:00 p.m. and 6:30 p.m.
Eastern Time is part of a currently-operating pilot program extending
the availability of several Nasdaq services and facilities until 6:30
p.m. Eastern Time. That pilot was approved by the Commission,\6\ and
commenced on October 25, 1999. Nasdaq has designated this proposal as
non-controversial, and thus eligible for immediate effectiveness
pursuant to section 19(b)(3)(A) of the Act \7\ and rule 19b-4(f)(6)
thereunder.\8\ Nasdaq requests that the Commission waive both the 30-
day pre-operative waiting period and the five-day pre-filing notice
requirement contained in rule 19b-4(f)(6)(iii).\9\
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\6\ See Securities Exchange Act Release No. 42003 (October 13,
1999), 64 FR 56554 (October 20, 1999) (NASD-SR-99-57).
\7\ 15 U.S.C. 78s(b)(3)(A).
\8\ 17 CFR 240.19b-4(f)(6).
\9\ 17 CFR 240.19b-4(f)(6)(iii).
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II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, Nasdaq 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. Nasdaq 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 October 13, 1999, the Commission approved a pilot program
expanding the operating hours of certain Nasdaq services and facilities
until 6:30 p.m. Eastern Time.\10\ The pilot commenced on October 25,
1999, and expanded, until 6:30 p.m. Eastern Time, the operation times
of the following services: (1) SelectNet Service (``SelectNet''); (2)
Automated Confirmation Transaction Service (``ACT''), (3) Nasdaq
Quotation Dissemination Service (``NQDS''); and (4) Nasdaq Trade
Dissemination Service (``NTDS'').
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\19\ See Securities Exchange Act Release No. 42003 (October 13,
1999), 64 FR 56554 (October 20, 1999) (NASD-SR-99-57).
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Nasdaq and the Commission received expressions of concern from the
mutual fund industry regarding its ability to modify its internal
automated computer systems to calculate in a timely fashion the value
of securities held in specific mutual funds if Nasdaq continued to
update an Inside Quote after 4:00 p.m. Eastern Time. In response to
these concerns, the NASD has decided to defer the implementation of an
Inside Quote from its currently-scheduled start date of December 6,
1999, to February 7, 2000.
Nasdaq believes that such deferral will allow mutual fund firms a
reasonable opportunity to enhance their internal systems prior to that
date. Nasdaq also believes that such deferral strikes a balance between
the investor's need for enhanced quote and trade collection and
dissemination after the regular close of the Nasdaq market, and
technological constraints faced by the mutual fund industry concerning
its ability to price accurately the securities held in those funds.
Nasdaq believes that the proposed rule change, as amended, is
consistent with the provisions of Section 15A(b)(6) of the Act,\11\ in
that it is 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.
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\11\ 15 U.S.C. 78o-3(b)(6).
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B. Self-Regulatory Organization's Statement on Burden on Competition
Nasdaq 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.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were solicited. Nasdaq received one written
comment on its proposal from the ICI, in which the ICI indicated its
support of a delay in the implementation of an Inside Quote until
February 7, 2000.
III. Date of Effectiveness of the Proposed Rule Change and Timing
for Commission Action
The proposed rule change, as amended, has become effective pursuant
to Section 19(b)(3)(A) of the Act \12\ and Rule 19b-4(f)(6) thereunder
\13\ because the proposal (1) does not significantly affect the
protection of investors or the public interest; (2) does not impose any
significant burden on competition; and (3) does not become operative
for 30 days after the date of filing or such shorter time as the
Commission may designate if consistent with the protection of investors
and the public interest, provided that Nasdaq has given the Commission
written notice of its intent to file the proposed rule change at least
five business days prior to the filing date of the proposed rule
change, or such shorter time as designated by the Commission.\14\
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\12\ 15 U.S.C. 78s(b)(3)(A).
\13\ 17 CFR 240.19b-4(f)(6).
\14\ In reviewing this proposal, the Commission has considered
its impact on efficiency, competition, and capital formation. 15
U.S.C. 78c(f).
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Nasdaq has requested that the Commission waive the five-day pre-
filing notice requirement contained in Rule 19b-4(f)(6)(iii),\15\ and
accelerate the operative date.
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\15\ 17 CFR 240.19b-4(f)(6)(iii).
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The Commission finds that it is appropriate to waive the five-day
pre-filing notice requirement, and to designate the proposal, as
amended, to become operative today, because such designation is
consistent with the protection of investors and the public interest.
Specifically, the Commission believe that the proposal furthers the
goals of the national market system as reflected in Sections
11A(a)(1)(C) (iii) and (iv) of the Act.\16\ Congress found in those
provisions that it is in the public interest and appropriate for the
protection of investors and the maintenance of fair and orderly markets
to assure the availability to brokers, dealers, and investors of
information with respect to quotations for and transactions in
securities, and to assure the practicability of brokers executing
investors' orders in the best market. The proposal will help to assure
the availability of information with respect to quotations and
transactions because it will allow the mutual fund industry a
reasonable amount of time to adjust its internal systems, thereby
helping to ensure that the systems operate accurately, efficiently, and
without disruption.
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\16\ 15 U.S.C. 78k-1(a)(1)(C) (iii) and (iv).
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The Commission also finds that the proposed rule change is
consistent with Section 15A of the Act \17\ in general, and Section
15A(b)(6) of the Act \18\ in particular, in that it is 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
[[Page 70309]]
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. The proposal accomplishes these objectives by allowing the
mutual fund industry an opportunity to reconfigure its internal
systems, thereby helping to ensure a seamless transition to a time when
Nasdaq provides an Inside Quote from 4:00 p.m. until 6:30 p.m. Eastern
Time.
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\17\ 15 U.S.C. 78o-3.
\18\ 15 U.S.C. 78o-3(b)(6).
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For these reasons, the Commission finds that designation of the
proposal to become operative today is consistent with the protection of
investors and the public interest.
At any time within 60 days of the filing of this proposed rule
change, the Commission may summarily abrogate this rule change if it
appears to the Commission that such action is necessary or appropriate
in the public interest or 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, including whether the proposal 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 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 file number SR-NASD-99-71, and should be
submitted by January 6, 2000.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\19\
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\19\ 17 CFR 200.30-3(a)(12).
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Jonathan G. Katz,
Secretary.
[FR Doc. 99-32556 Filed 12-15-99; 8:45 am]
BILLING CODE 8010-01-M
