[Federal Register Volume 64, Number 38 (Friday, February 26, 1999)]
[Notices]
[Pages 9552-9553]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-4776]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-41076; File No. SR-NASD-99-06]
Self-Regulatory Organizations; Notice of Filing and Immediate
Effectiveness of Proposed Rule Change by National Association of
Securities Dealers, Inc. Relating to the Practice of Using a Fifth
Character Identifier With the Symbol of Foreign Securities
February 19, 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 February 2, 1999, the National Association of Securities Dealers,
Inc. (``NASD'' or ``Association''), through its wholly-owned subsidiary
the Nasdaq Stock Market, Inc. (``Nasdaq''), filed with the Securities
and Exchange Commission (``Commission'') the proposed rule change as
described in Items I, II, and III below, which Items have been prepared
by Nasdaq.\3\ 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).
\2\ 17 CFR 240.19b-4.
\3\ Nasdaq originally submitted the proposal on January 25,
1999. On February 22, 1999, Nasdaq submitted a letter from Robert E.
Aber, Senior Vice President and General Counsel, Nasdaq, to Richard
Strasser, Assistant Director, Commission (``Amendment No.''). In
Amendment No. 1, Nasdaq made technical and conforming changes to the
proposal and clarified the investor protection concerns discussed in
the purpose section of the filing. Because this filing was filed
pursuant to Section 19(b)(3)(A) of the Act, it must be complete at
the time it is filed. Therefore, the date of the amendment is deemed
the date of the filing of the proposal.
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II Self-Regulatory Organization's Statement of the Terms of
Substance of the Proposed Rule Change
Nasdaq is filing with the Commission a proposed rule change to
explain a change in Nasdaq's current practice of using a fifth
character identifier with the symbol of foreign securities. Nasdaq
seeks to remove the ``F'' or ``Y'' letter, which designates a security
as foreign, from the end of the symbol for that security.
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
1. Purpose
Presently, it is Nasdaq's general practice to affix a ``F'' or a
``Y'' to the symbol of foreign securities and American Depositary
Receipts that trade on the Nasdaq Stock Market to reflect that the
issuer is a foreign issuer. Certain issuers have expressed a preference
that the fifth character be removed and have suggested that they would
switch to a marketplace without a symbol designation if the fifth
character is not removed. Therefore, the practice of affixing an
identifier has become a competitive issue because Nasdaq is the only
securities market that identifies foreign securities through such a
symbol designator. Given this, and the fact that foreign issuers
participating in the capital markets of the United States are required
to comply with the rules of the Commission, Nasdaq believes that such
designation serves no investor protection purpose and may cause
investor confusion. In the absence of any investor protection concerns,
changes to the practices related to symbols on the Nasdaq Stock Market
are properly made by the Association. Accordingly, Nasdaq believes that
its is appropriate to remove the fifth character identifier for foreign
securities when requested by the issuer.
2. Statutory Basis
Nasdaq believes that the proposed rule change is consistent with
the provisions of Section 15A(b)(6) of the Act.\4\ which requires,
among other things, that the Association's rules must be designed to
prevent fraudulent and manipulative acts and practices, to promote just
and equitable principles of trade, and, in general, to protect
investors and the public interest.
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\4\ 15 U.S.C. 78o-3(b)(6).
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B. Self-Regulatory Organization's Statement on Burden on Competition
Nasdaq 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 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
Because the foregoing proposed rule change: (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 the proposed rule
change has become effective pursuant to Section 19(b)(3)(A) of the Act
\5\ and
[[Page 9553]]
subparagraph (e)(6) of Rule 19b-4 thereunder.\6\ Although Rule 19b-
4(e)(6) requires that an Exchange submit written notice of its intent
of file at least five days prior to the filing date, the Commission
notes that in this case, this requirement was waived at Nasdaq's
request.
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\5\ 15 U.S.C. 78s(b)(3)(A).
\6\ 17 CFR 240.19b-4(e)(6).
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The Commission also notes that under Rule 19b-4(e)(6)(iii), the
proposed rule change does not become operative for 30 days after the
date of its filing, or such shorter time as the Commission may
designate if consistent with the protection of investors and the public
interest. Nasdaq requests a waiver of this 30-day period. Nasdaq
represents to the Commission that it is the only market that identifies
a security as foreign through the extra character. According to Nasdaq,
this extra character may lead to investor confusion. By removing the
extra character, Nasdaq hopes to reduce this potential investor
confusion. Moreover, Nasdaq believes that investor protection concerns
are reduced because other markets actively trade foreign securities,
yet these markets do not designate these securities as foreign by an
additional character on the securities' symbols. For the reasons
discussed above, the Commission finds the waiver of the 30 day period
is consistent with the protection of investors and the public interest.
At any time within 60 days of the filing of the proposed rule
change, the Commission may summarily abrogate such 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, 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. 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 No. SR-NASD-99-06 and should be
submitted by March 19, 1999.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\7\
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\7\ 17 CFR 200.30-3(a)(12).
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Jonathan G. Katz,
Secretary.
[FR Doc. 99-4776 Filed 2-25-99; 8:45 am]
BILLING CODE 8010-01-M
