[Federal Register Volume 62, Number 112 (Wednesday, June 11, 1997)]
[Notices]
[Pages 31856-31857]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-15331]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-38720; File No. SR-NASD-97-26]
Self-Regulatory Organizations; Notice of Extension of the Comment
Period for the Proposed Rule Change by the National Association of
Securities Dealers, Inc., Relating to an Expansion of the Pilot for the
NASD's Rule Permitting Market Makers To Display Their Actual Quotation
Size
June 5, 1997.
On April 11, 1997, the National Association of Securities Dealers,
Inc. (``NASD'' or ``Association'') filed with the Securities and
Exchange Commission (``Commission'' or ``SEC'') a proposed change to
NASD Rule 4613(a)(1)(C). The proposal would allow market makers to
quote their actual size by reducing the minimum quotation size
requirement for market makers in certain securities listed on The
Nasdaq Stock Market (``Nasdaq'') to one normal unit of trading
(``Actual Size Rule''). The Actual Size Rule presently applies to a
group of fifty Nasdaq securities on a pilot basis.\1\ The NASD has
proposed to extend this pilot program to December 1997 and to add an
additional 100 stocks to the pilot program. The Commission has already
received comments from many individual investors and other market
participants on the ongoing pilot.
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\1\ The approval of the pilot program was announced in
Securities Exchange Act Release No. 38156 (January 10, 1997), 62 FR
2415 (January 16, 1997). The approval of the extension was announced
in Securities Exchange Act Release No. 38156 (April 15, 1997), 62 FR
19373 (April 21, 1997).
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On June 3, 1997, the NASD filed with the Commission a revised
report containing its economic analysis of the operation of the Actual
Size Rule for the group of 50 stocks in the pilot, as requested by the
Commission.\2\ The study examines the effects of the removal of the
1,000-Share Quote Size Rule on market quality.
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\2\ A copy of the executive summary of the report is available
at Nasdaq's World Wide Web site at ``http://www.nasdaq.com''.
Members of the public may also download a file containing the entire
report at this site.
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The NASD's study compares the market quality of pilot stocks with
the market quality of peer stocks in the next tranche of stocks that
became subject to the Order Handling Rules, but remained subject to the
1,000-Share Quote Size Rule. The study: (1) Summarizes the relevant
academic literature; (2) empirically assesses market quality for both
groups pre- and post-rule change by examining spread, volatility,
depth,
[[Page 31857]]
and liquidity; and (3) examines the use of automatic execution systems
for the pilot stocks, Nasdaq's Small Order Execution System (``SOES''),
and some private systems to assess whether investors continue to have
reasonable access to market maker capital.
The NASD asserts that the evidence analyzed in the study reveals
that the pilot stocks and non-pilot stocks have experienced virtually
the same improvements in market quality since implementation of the
SEC's Order Handling Rules. Specifically, the NASD says that it found
no statistically significant basis to conclude that the market quality
of the pilot stocks has been affected as a result of removal of the
1,000-Share Quote Size Rule. In addition, the NASD found that investors
in the pilot stocks continue to have substantial and reasonable access
to market maker capital through both SOES and market makers'
proprietary automatic execution systems.
In order to give the public additional time to comment on this
analysis, the comment period for the NASD's current proposal has been
extended at the Commission's request to July 3, 1997. A copy of the
report is available in the Commission's Public Reference room in File
No. SR-NASD-97-26.
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 Jonathan G. Katz, 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
number SR-NASD-97-26 and should be submitted by July 3, 1997.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\3\
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\3\ 17 CFR 200.30-3(a)(12) (1989).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 97-15331 Filed 6-6-97; 4:08 pm]
BILLING CODE 8010-01-U
