[Federal Register Volume 59, Number 249 (Thursday, December 29, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-31995]
[[Page Unknown]]
[Federal Register: December 29, 1994]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-35133; File No. SR-NASD-94-63]
Self-Regulatory Organizations; National Association of Securities
Dealers, Inc.; Filing and Order Granting Accelerated Approval of a
Proposed Rule Change
December 21, 1994.
Prusuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ notice is hereby given that on November 23, 1994, the
National Association of Securities Dealers, Inc. (``NASD'') filed with
the Securities and Exchange Commission (``Commission'') the proposed
rule change as described in Items I and II 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).
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The NASD is proposing to amend its Policy Statement on Market
Closings (``Statement'' or ``Policy Statement''), adopted pursuant to
Article VII, Section 3 of the NASD By-Laws,\2\ to extend its expiration
date on year to December 31, 1995. No other terms of the Policy
Statement are proposed to be amended.
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\2\NASD Manual, By-Laws, Art. VII, Sec. 3, (CCH) 1182A.
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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, 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
The Policy Statement was adopted as a rule proposal of the NASD
under Article VII, Section 3 of the NASD By-Laws. The Statement
provides the NASD with authority, acting through a designated committee
of the Board of Governors, to take appropriate action in the event of
an emergency or extraordinary market conditions. Article VII, Section 3
was adopted by the NASD as a result of the events of October 1987. The
provision was drafted to enable the NASD to respond to future crises
with a maximum degree of flexibility, providing properly tailored
responses to varying situations.\3\
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\3\The Release approving the Policy Statement stated that ``the
Commission believes the proposal provides the NASD with the
flexibility to deal with extraordinary market conditions such as
existed in October, 1987.'' Securities Exchange Act Release No.
26072 (September 12, 1988), 53 FR 36143.
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The Commission requested the NASD to express its views on the
``circuit breaker'' proposal of the President's Working Group on
Financial Markets, and the Policy Statement was adopted in response to
that request. The Policy Statement was approved on October 19, 1988.\4\
As originally approved, the Policy Statement was to expire December 31,
1989, unless modified or extended before then by the NASD. The
expiration date of the Policy Statement has been extended a number of
times.\5\
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\4\See Securities Exchange Act Release No. 26198 (October 19,
1988), 53 FR 41673.
\5\Securities Exchange Act Release Nos. 27370, (October 23,
1989), 54 FR 43881 (approving File No. SR-NASD-89-46, extending
expiration date through December 31, 1990); 28694 (December 12,
1990), 55 FR 52119 (approving File No. SR-NASD-90-60, extending
expiration date through December 31, 1991); 30113 (December 20,
1991), 56 FR 67341 (File No. SR-NASD-91-70, extending expiration
date through January 31, 1992); 30304 (January 29, 1992), 57 FR 4658
(approving File No. SR-NASD-92-02, extending expiration date through
December 31, 1993); and 33292 (December 6, 1993), 58 FR 65214 (File
No. SR-NASD-93-70, extending expiration date through December 31,
1994).
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The Policy Statement expresses the views of the NASD Board of
Governors as of July 16, 1993 concerning progress made on the numerous
proposals emanating from the October 1987 crisis. From time to time,
the Board will review progress made on the recommendations set forth in
the Statement as well as other developments as they may occur. The
views of the Board may change and the NASD may modify or amplify the
Statement accordingly. It should also be noted that the Policy
Statement sets forth the NASD's proposed response to a specific set of
circumstances. The Statement does not in any way preclude the NASD from
taking any other action that may be appropriate under other
circumstances. The NASD is proposing to extend the expiration date of
the Policy Statement for one year to December 31, 1995 The NASD is
concerned regarding the diminishing percentage relationship between the
250 and 400 point thresholds and the increasing level of the Dow Jones
Industrial Average. It is the intention of the NASD to reevaluate the
thresholds in the Policy Statement.
The NASD believes the proposed rule change is consistent with the
provisions of Section 15A(b)(6) of the Act, as the Policy Statement is
designed to foster cooperation and coordination with the Commission and
the other self-regulatory organizations engaged in regulating the
United States securities markets.
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 NASD has requested that the Commission find good cause pursuant
to Section 19(b)(2) for approving the proposed rule change prior to the
thirtieth day after publication in the Federal Register. In support of
its request, the NASD stated that the Policy Statement will expire on
December 31, 1994 unless the proposed rule change is approved prior
thereto, and that the proposed rule change merely extends the Policy
Statement and makes no other change to the terms of the Policy
Statement. Moreover, no public comments have been received in response
to the prior publications for comment of the NASD's proposals extending
the Policy Statement.
The Commission finds that the proposed rule change is consistent
with the requirements of the Act and the rules and regulations
thereunder applicable to the NASD, and, in particular, the requirements
of Section 15A and the rules and regulations thereunder. Since the
Commission approved the NASD's proposal in 1988, the Dow Jones
Industrial Average has not experienced a one day market decline that
would trigger a market halt. Nevertheless, the Commission continues to
believe that circuit breaker procedures are desirable to deal with
potential strains that may develop during periods of extreme market
volatility, and, accordingly, the Commission believes that the pilot
program should be extended. The Commission also believes that circuit
breakers represent a reasonable means to retard a rapid one day market
decline that can have a destabilizing effect on the nation's financial
markets and participants in these markets.
The Commission finds good cause for approving the proposed rule
change prior to the thirtieth day after the date of publication of
notice of filing thereof in the Federal Register because there are no
changes being made to the current provisions, which originally were
subject to the full notice and comment procedures, and accelerated
approval would enable the Policy Statement to continue uninterrupted.
The Commission believes, therefore, that granting accelerated approval
of the proposed rule change is appropriate and consistent with Sections
15A and 19(b) of the Act.\6\
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\6\The Commission reaffirms its request that the NASD implement
its Policy Statement by implementing a trading halt as quickly as
practicable whenever the New York Stock Exchange and other equity
markets have suspended trading. See Securities Exchange Act Release
No. 27370, supra note 5.
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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 submissions, 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 19, 1995.
It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\7\ that the proposed rule change (SR-NASD-94-63) is hereby
approved until December 31, 1995.
\7\15 U.S.C. 78s(b)(2) (1988).
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For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\8\
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\8\17 CFR 200.30-3(a)(12) (1993).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 94-31995 Filed 12-28-94; 8:45 am]
BILLING CODE 8010-01-M
