[Federal Register Volume 64, Number 76 (Wednesday, April 21, 1999)]
[Notices]
[Pages 19573-19575]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-9943]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-41287; File No. SR-NASD-99-18]
Self-Regulatory Organizations; Notice of Filing and Order
Granting Accelerated Approval of Proposed Rule Change by the National
Association of Securities Dealers, Inc. Relating to the Size of the
Nasdaq Listing and Hearing Review Council
April 14, 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 April 1, 1999, the National Association of Securities Dealers, Inc.
(``NASD''), 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 and II below, which Items
[[Page 19574]]
have been prepared by Nasdaq.\3\ The Commission is publishing this
notice to solicit comments on the proposed rule change from interested
persons and simultaneously granting approval to the proposed rule
change.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ Amendment No. 1 was received by the Commission on April 8,
1999, the substance of which is incorporated into this notice.
Letter from Robert E. Aber, Senior Vice President and General
Counsel, Nasdaq, to Katherine A. England, Division of Market
Regulation, Commission, dated April 7, 1999 (``Amendment No. 1'').
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I. Self-Regulatory Organization's Statement of the Terms of
Substance of the Proposed Rule Change
Nasdaq is proposing to increase the maximum size of the Nasdaq
Listing and Hearing Review Council (``Review Council'') to 18 members
and increase the minimum number of non-industry members on the Review
Council to five. Below is the text of the proposed rule change.
Proposed new language is in italics; proposed deletions are in
[brackets].
* * * * *
Bylaws of The Nasdaq Stock Market, Inc.
Sec. 5.2 Number of Members and Qualifications
(a) The Nasdaq Listing and Hearing Review Council shall consist of
no fewer than eight and no more than [11] 18 members, of which not more
than 50 percent may be engaged in market-making activity or employed by
a member whose revenues from market-making activity exceed ten percent
of its total revenues. The Nasdaq Listing and Hearing Review Council
shall include at least [three] five Non-Industry members.
* * * * *
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 III 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
This proposal is designed to address the increase in the workload
of the Review Council. The number of listing and policy matters pending
before the Review Council has significantly increased over the last
year. This increased workload is challenging the ability of the Review
Council to effectively discharge its duties. Accordingly, Nasdaq is
proposing to increase the maximum size of the Review Council to 18
members. The Review Council will continue to be a balanced committee,
with not more than 50 percent of its members engaged in market-making
activity or employed by a member whose revenues from market-making
activity exceed ten percent of its total revenues. Furthermore, the
proposal provides for the minimum percentage of non-industry members on
the Review Council to remain virtually the same.
2. Statutory Basis
Nasdaq believes that the proposed rule change is consistent with
the provisions of Section 15A(b)(6) of the Act \4\ in that it is
designed to prevent fraudulent and manipulative acts and practices, to
promote just and equitable principals of trade, and in general, to
protect investors and the public interest. Increasing the size of the
Review Council, while maintaining it as a balanced committee, will
permit the Review Council to remain focused on issues that may raise
investor protection concerns and to act rapidly on such issues when
necessary.
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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 does not believe that the proposed rule change will impose
any inappropriate burden on competition.
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. 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 20549-0609. 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 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-99-18 and should be
submitted by May 12, 1999.
IV. Commission's Findings and Other Granting Accelerated Approval
of Proposed Rule Change
The Commission finds that the proposed rule change is consistent
with the requirements of the Act and the rules and regulations
thereunder applicable to a national securities association.\5\
Specifically, the Commission believes the proposal is consistent with
Section 15A(b)(6) and (6)(11).\6\ Section 15A(b)(6) requires, in part,
that the rules of a national securities association be designed to
prevent fraudulent and manipulative acts and practices, to promote just
and equitable principals of trade, and in general, to protect investors
and the public interest.\7\ Section 15A(b)(11) requires, among other
things, that the rules of a national securities association include
provisions governing the form and content of quotations, and that such
rules must be designed to promote orderly procedures for collecting,
distributing, and publishing quotations.\8\
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\5\ In approving this proposed rule change, the Commission
considered the proposal's impact on efficiency, competition, and
capital formation. 15 U.S.C. 78c(f).
\6\ 15 U.S.C. 78o-3(b)(6) and (b)(11).
\7\ 15 U.S.C. 78o-3(b)(6).
\8\ 15 U.S.C. 78o-3(b)(11).
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The Commission finds that increasing the number of members on the
Review Council should provide for the efficient and timely execution of
the Review Council's duties (e.g., establishing listing standards and
making listing determinations).\9\ The Commission believes that this
proposal should
[[Page 19575]]
reduce workloads, expedite the listing process and facilitate capital
formation by allowing issuers quicker access to capital. The Nasdaq
proposal should also protect investors and the public interest by
ensuring that delisting decisions and policy determinations involving
listing standards are addressed promptly. In addition, the Commission
notes that the proposed rule change maintains virtually the same
percentage of industry members versus non-industry members on the
Review Council, which should prevent any unfair discrimination in the
execution of the Review Council's duties. For the foregoing reasons,
the Commission finds good cause for approving the proposed rule change
prior to the thirtieth day after the date of publication of notice
thereof in the Federal Register.
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\9\ The Nasdaq submits that the proposed rule change is
immediately necessary given the increased workload facing the Review
Council. See, Amendment No. 1.
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V. Conclusion
It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\10\ that the proposed rule change (SR-NASD-99-18) is approved.
\10\ 15 U.S.C. 78s(b)(2).
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For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\11\
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\11\ 17 CFR 200.30-3(a)(12).
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Jonathan G. Katz,
Secretary.
[FR Doc. 99-9943 Filed 4-20-99; 8:45 am]
BILLING CODE 8010-01-M
