[Federal Register Volume 59, Number 55 (Tuesday, March 22, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-6600]
[[Page Unknown]]
[Federal Register: March 22, 1994]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-33760; File No. SR-NASD-93-74]
Self-Regulatory Organizations; National Association of Securities
Dealers; Order Approving Proposed Rule Change Relating to the Use of
Geographic Indicators Appended to Market Maker Identifiers Disseminated
Over the NASD's OTC Bulletin Board Service
March 14, 1994.
I. Introduction
On December 10, 1993, the National Association of Securities
Dealers, Inc. (``NASD'' or ``Association''), submitted to the
Securities and Exchange Commission (``SEC'' or ``Commission''),
pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'')\1\ and Rule 19b-4 thereunder,\2\ a proposed rule change to
require market makers participating in the NASD's OTC Bulletin Board
Service (``OTCBB'') to append a fifth-character, geographic
indicator to their market maker identifier (``MMID'') on the OTCBB
screen when the firm's trading desk for a particular security quoted on
the OTCBB is located away from the firm's primary trading office.\3\
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\1\15 U.S.C. 78s(b)(1) (1988).
\2\17 CFR 240.19b-4 (1991).
\3\On January 5, 1994, the Commission approved an NASD proposal
to codify the existing requirements respecting access to and the use
of the OTCBB. See Securities Exchange Act Release No. 33433 (January
5, 1994), 59 FR 1772 (January 12, 1994) (File No. SR-NASD-93-56).
Accordingly, the proposed OTCBB rule language contained in this
filing would amend that recent codification.
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The proposed rule change was published for comment in Securities
Exchange Act Release No. 33541 (January 28, 1994), 59 FR 5454 (February
4, 1995). No comments were received on the proposal.
II. Description of the Proposal
The NASD proposes to amend section 4 of its OTCBB rules to require
market makers participating in the OTCBB to append a fifth-character,
geographic indicator to their MMIDs when the firm's trading desk for a
security quoted on the OTCBB is located away from the firm's primary
trading office. The proposed rule change also requires the NASD to
publish the fifth-character branch indicators from time to time in the
Nasdaq/CQS symbol directory.
The NASD is proposing to use these indicators in order to avoid
confusion and delay by market participants in contacting market makers
in securities quoted on the OTCBB. According to the present filing, the
NASD believes the proposal will ensure that traders direct their calls
to the location where the market maker for the stock is located,
thereby avoiding instances where multiple phone calls are needed to
access a market maker's quote.
The NASD is seeking approval to add the geographic indicator to the
OTCBB screen currently used by market professionals. The OTCBB screen
displays, among other things, market maker telephone numbers beside
each quotation. In the present proposal, the NASD states that the
mandatory use of the indicator is necessary due to Nasdaq Workstation
IIsm service developments which will include moving market maker
telephone numbers from the OTCBB screen to a separate screen. The NASD
believes that, once Nasdaq Workstation II is operational, there may be
confusion among market participants unless the geographic indicator is
added to the OTCBB screen.\4\
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\4\The Commission notes that the NASD has not filed a proposed
rule change with the Commission regarding Nasdaq Workstation II
service developments.
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III. Discussion
The Commission believes the proposed rule change is consistent with
the Act and with the rules and regulations thereunder. Specifically,
the Commission believes the present proposal is consistent with section
15A(b)(11) of the Act.\5\ Section 15A(b)(11) requires, among other
things, that the rules of the Association include provisions governing
the form and content of quotations relating to securities sold
otherwise than on a national securities exchange, and that those rules
be designed to produce fair and informative quotations, to prevent
fictitious or misleading quotations, and to promote orderly procedures
for collecting, distributing, and publishing quotations.
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\5\15 U.S.C. 78o-3(b)(11) (1988).
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The Commission believes that the use of fifth-character, geographic
indicators, combined with the dissemination of the relevant telephone
numbers, should assist market professionals in obtaining timely access
to member branches that publish OTCBB quotations. The Commission also
believes that the addition of the proposed geographic indicator to the
current OTCBB screen should allow for the continued prevention of
misleading OTCBB quotations, and the promotion of orderly procedures
for collecting, distributing, and publishing quotations on the
OTCBB.\6\ Thus, the Commission finds that the proposed rule change is
consistent with section 15A(b)(11) of the Act, and the rules and
regulations thereunder.
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\6\The Commission notes that this approval order is limited to
the addition of the geographic indicators to the OTCBB screen
currently used by market professionals. Until the NASD files a
proposed rule change with the Commission that describes the Nasdaq
Workstation II service mentioned in this filing, the Commission will
not have sufficient information to determine whether the geographic
indicators are adequate to fulfill the purposes of section
15A(b)(11) of the Act given those developments.
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It is therefore ordered, pursuant to section 19(b)(2) of the
Act,\7\ that the proposed rule change (SR-NASD-93-74) is approved.
\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) (1991).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 94-6600 Filed 3-21-94; 8:45 am]
BILLING CODE 8010-01-M
