[Federal Register Volume 59, Number 69 (Monday, April 11, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-8512]
[[Page Unknown]]
[Federal Register: April 11, 1994]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-33848; File No. SR-NASD-94-08]
Self-Regulatory Organizations; Notice and Immediate Effectiveness
of Proposed Rule Change by the National Association of Securities
Dealers, Inc., Relating to the Definition of Eligible Securities
Contained in the Codified Rules of the OTC Bulletin Board Service
April 1, 1994.
Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''), 15 U.S.C. 78s(b)(1), notice is hereby given that on February
15, 1994, the National Association of Securities Dealers, Inc.
(``NASD'' or ``Association'') 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 NASD.
The Commission is publishing this notice to solicit comments on the
proposed rule change from interested persons.
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
Pursuant to section 19(b)(1) of the Act and Rule 19b-4 thereunder,
the NASD hereby files this proposed rule change to incorporate into the
codified rules of the OTC Bulletin Board Service (``OTCBB'' or
``Service'') language reflecting the eligibility of certain securities
listed on regional stock exchanges in the United States. Following is
the full text of the codified rules as hereby amended. New language is
in italic; deletions are in brackets.
OTC Bulletin Board Service Rules
Section. 3
The following categories of securities shall be eligible for
quotation in the Service:
(a) any domestic equity security that is not listed on The Nasdaq
Stock MarketSM (``Nasdaq'') or a registered national securities
exchange in the U.S., [;] except that equity securities that are (i)
listed on one or more regional stock exchanges and (ii) do not qualify
for dissemination of transaction reports via the facilities of the
Consolidated Tape shall be considered eligible; and
(b) any foreign equity security or American Depositary Receipt
(``ADR'') that is not listed on [The] Nasdaq [Stock Market] or a
registered national securities exchange in the U.S., except that
foreign equity securities or ADRs that are (i) listed on one or more
regional stock exchanges and (ii) do not qualify for dissemination of
transaction reports via the facilities of the Consolidated Tape shall
be considered eligible.
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
1. Purpose
The purpose of this rule change is to incorporate specific language
into the codified OTCBB rules, which reflects that non-Tape B eligible
securities may be quoted in the Service. The necessity for this rule
proposal traces to the fact that the codified rules were approved by
the SEC\1\ before the Commission approved a separate NASD rule proposal
dealing solely with the concept of OTCBB eligibility for regional
listings that are not ``reported securities,'' within the meaning of
Rule 11Aa3-1(a)(4) under the Act.\2\ The instant rule proposal simply
incorporates the appropriate language in a form that is compatible with
the definition of OTCBB-eligible securities in the existing rules
covering the Service.
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\1\See Release No. 33433 (January 5, 1994), 59 FR 1772 (order
approving File No. SR-NASD-93-56).
\2\See Release No. 33507 (January 24, 1994), 59 FR 4300 (order
approving File No. SR-NASD-93-24).
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2. Statutory Basis
The NASD believes that the proposed rule change is consistent with
sections 15A(b) (6) and (11) of the Act. Section 15A(b)(6) requires, in
pertinent part, that NASD rules be designed to prevent fraudulent and
manipulative acts and practices, to promote just and equitable
principles of trade, to foster cooperation with persons engaged in
regulating, clearing, settling, processing information with respect to,
and facilitating transactions in securities, and in general to protect
investors and the public interest. Section 15A(b)(11) authorizes the
NASD to adopt rules governing the form and content of quotation
information dissemination by member firms relating to securities traded
over-the-counter. The NASD believes that the proposed rule change is
fully consistent with these statutory provisions and is essential to
the meaning and administration of established rules defining the
universe of securities eligible for quotation in the Service.
B. Self-Regulatory Organization's Statement on Burden on Competition
The NASD believes that the 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
Comments were neither solicited nor received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become immediately effective pursuant
to section 19(b)(3)(A) of the Act and subparagraph (e) of Rule 19b-4
thereunder because the proposal constitutes a stated policy, practice,
or interpretation. Specifically, with its approval of File No. SR-NASD-
93-24 on January 24, 1994, the Commission approved the concept of
expanding the universe of securities eligible for quotation in the
OTCBB to include equities listed on regional exchanges that are not
reported securities covered by the Consolidated Tape Plan. However,
because the proposal that codified the OTCBB rules was submitted to the
Commission between the time that the NASD submitted the proposal to
expand the securities eligible for the OTCBB (File No. SR-NASD-93-24)
and the time that the Commission approved that expansion, the NASD did
not include in its general codification proposal the present amended
section that expands the securities eligible for the OTCBB. Hence, the
instant rule proposal is necessary to incorporate specific language
into Section 3 of the codified rules to reflect the definitional change
approved by the SEC when it acted on File No. SR-NASD-93-24. The
instant proposal therefore deals exclusively with the meaning and
administration of a previously approved rule change and warrants
immediate effectiveness pursuant to section 19(b)(3) of the Act.
At any time within 60 days of the filing of such 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. 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 the file number in the caption
above and should be submitted by May 2, 1994.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority, 17 CFR 200.30-3(a)(12).
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 94-8512 Filed 4-8-94; 8:45 am]
BILLING CODE 8010-01-M
