[Federal Register Volume 62, Number 56 (Monday, March 24, 1997)]
[Notices]
[Pages 13921-13922]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-7281]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-38398; File No. SR-NASD-97-05]
Self-Regulatory Organizations; Notice of Filing of Proposed Rule
Change by the National Association of Securities Dealers, Inc.,
Relating to the Transfer of Limited Partnership Securities
March 13, 1997.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ notice is hereby given that on January 29, 1997 the NASD
Regulation, Inc. (``NASD Regulation'') 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 the self-regulatory organization. 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
NASD Regulation is proposing to amend Rules 11580 and 11870 of the
National Association of Securities Dealers, Inc. (``NASD'' or
``Association'') to expand the current exceptions to the requirement
that members use the Limited Partnership Transfer Forms for the
transfer of limited partnership securities and require that the Forms
be used by members in account transfers of limited partnerships.
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 self-regulatory organization
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 self-regulatory organization
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
On January 29, 1996, the Commission approved new NASD Rule 11580
(formerly, Section 73) to the NASD's Uniform Practice Code requiring
members to use Standardized Transfer Forms when transferring limited
partnership securities.\2\ Use of the forms became mandatory for NASD
members on May 15, 1996. NASD Regulation is proposing two amendments
related to the use of the Standardized Transfer Forms. The first is an
amendment to NASD Rule 11580 to expand the current exceptions to
include limited partnerships that trade in the non-Nasdaq over-the-
counter market that are in a depository. The second amendment is to
NASD Rule 11870 (formerly, Section 65) to require that the Standardized
Transfer Forms be used by members in account transfers of limited
partnerships.
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\2\ Securities Exchange Act Release No. 36783 (Jan. 29, 1996),
61 FR 3955 (Feb. 2, 1996).
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i. Amendment to Rule 11580. This rule includes an exception for
limited partnership securities that are listed on an exchange or the
Nasdaq Stock Market. The exception does not cover those limited
partnership securities that are quoted on the OTC Bulletin Board that
trade with such frequency that use of the Standardized Transfer Forms
would not be appropriate. In order to broaden the exception, NASD
Regulation is proposing to amend subparagraph (a) of NASD Rule 11580 to
except from the requirements of the rule those limited partnership
securities that are in a depository and that settle regular way.\3\ It
is believed that the proposed criteria of depository eligibility and
regular way settlement identify that group of non-Nasdaq over-the-
counter limited partnership securities that do not need the
Standardized Transfer Forms to facilitate settlement. The Forms were
specifically adopted to address problems associated with the settlement
of limited partnership interests that are generally illiquid and where
the transfer requirements contained in the General Partnership
Agreement vary widely as to the type of information and documents
necessary for a valid transfer of a interest.
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\3\ The Commission notes that the proposal requires that the
securities be physically present in a depository to qualify for this
exception. Simply being ``eligible for deposit'' in a depository is
not enough.
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[[Page 13922]]
ii. Amendment to Rule 11870. Since the adoption of NASD Rue 11580,
members have inquired as to whether the Standardized Transfer Forms can
be used to accomplish account transfers under NASD Rule 11870. In order
to clarify this issue, NASD Regulation is proposing to amend Rule 11870
to provide that in the case of limited partnership securities, members
must use the Standardized Transfer Forms unless exempted by that
rule.\4\
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\4\ The Commission notes that use of the Forms will supplement,
rather than replace, the current forms utilized by members, when
effecting an account transfer. NASD Regulation represents that the
use of the Forms is necessary because these securities are held in
the member's name for the benefit of the investor. Thus, it is
necessary to notify the general partner of the ``change in
ownership'' when an investor transfers its account to a different
member so the general partner may adjust its records accordingly.
Telephone conversation between Suzanne E. Rothwell, Dorothy Kennedy,
NASD Regulation, and Anthony P. Pecora, Division of Market
Regulation, SEC (Mar. 7, 1997).
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2. Statutory Basis
NASD Regulation believes the proposed rule change is consistent
with the provisions of Section 15A(b)(6) of the Act \5\ in that the
proposed rule change is designed to foster cooperation and coordination
with persons engaged in regulating, clearing, settling, processing
information with respect to, and facilitating transactions in
securities and, in general, to protect the public interest.
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\5\ 15 U.S.C. 78o-3.
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B. Self-Regulatory Organization's Statement on Burden on Competition
NASD Regulation believes the proposed rule change will not impose
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
NASD Regulation has neither solicited nor received written
comments.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Within 35 days of the publication of this notice in the Federal
Register or within such longer period (i) as the Commission may
designate up to 90 days of such date if it finds such longer period to
be appropriate and publishes its reasons for so finding or (ii) as to
which the self-regulatory organization consents, the Commission will:
(A) By order approve the proposed rule change, or
(B) institute proceedings to determine whether the proposed rule
change should be disapproved.
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 at the
Commission's Public Reference Section, 450 Fifth Street, N.W.,
Washington, D.C. 20549. Also, copies of such filing will be available
for inspection and copying at the principal office of NASD. All
submissions should refer to File No. SR-NASD-97-05 and should be
submitted by April 14, 1997.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\6\
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\6\ 17 C.F.R. 200.30-3(a)(12).
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Jonathan G. Katz,
Secretary.
[FR Doc. 97-7281 Filed 3-21-97; 8:45 am]
BILLING CODE 8010-01-M
