[Federal Register Volume 59, Number 125 (Thursday, June 30, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-15933]
[[Page Unknown]]
[Federal Register: June 30, 1994]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-34254]
Self-Regulatory Organizations; Notice and Immediate Effectiveness
of Proposed Rule Change by the National Association of Securities
Dealers, Inc. Relating to Initial Quotations of Initial Public
Offerings
June 24, 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 June 15,
1994 the National Association of Securities Dealers, Inc. (``NASD'' or
``Association'') filed with the Securities and Exchange Commission
(``SEC'' or ``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
The NASD is proposing to implement a change to its existing
practice and procedures regarding quotations and the commencement of
trading in Nasdaq securities newly listed after an initial public
offering (``IPO'') that permit a five minute quotation-only time period
prior to the commencement of trading in the IPO.
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
The NASD is proposing to change the current policies and practices
by which initial quoting and trading of new issues are conducted in The
Nasdaq Stock Market. Under the proposed change, when an IPO is first
authorized for inclusion in the Nasdaq Stock Market, the system will
display the time of day when quoting in the issue may begin and a time
of day when trading in that issue may begin. Specifically, when a new
security is released for trading, the window for quotations has been
set to allow market makers a period of five minutes to enter and adjust
their quotations prior to the commencement of trading. This quotation
period should assist the market makers in determining the appropriate
opening price. Currently, when an IPO is authorized for trading on
Nasdaq, market makers are permitted to immediately and simultaneously
enter quotations and trade on the subject security.
The proposed quotation-only period for IPOs is similar to the
display of quotations that occurs prior to the opening of the Nasdaq
Stock market. As with the pre-opening quotation period that occurs
daily in the Nasdaq Stock Market, the proposed quotation-only period
should provide market makers with the opportunity to adjust their
quotations and to present a better quotation when the market opens for
trading. Because it may be difficult at times to accurately gauge
interest in an IPO, quotes and trades in the IPO may be subject to
excessive volatility. This ``IPO Quote Window'' should permit a more
orderly market to develop prior to its release for actual trading.
The NASD believes that the proposed rule change is consistent with
the provisions of Section 15A(b)(6) of the Act, which requires, among
other things, that the rules of the Association remove impediments to
and perfect the mechanism of a free and open market and a national
market system, and Section 15A(b)(11), which provides that the rules of
the Association relating to quotations should 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.
(B) Self-Regulatory Organization's Statement on Burden on Competition
The NASD does not believe that the proposed rule change will result
in any burden on competition that is not necessary or appropriate in
furtherance of the purposes of the Act, as amended.
(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. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become effective pursuant to Section
19(b)(3)(A) of the Act and subparagraph (e) of Rule 19B-4 thereunder
because the proposal constitutes a change to its stated practices
regarding the administration and operation of existing quotation rules.
At any time within 60 days of the filing 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, 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 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 July 21, 1994.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\1\
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\1\17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 94-15933 Filed 6-29-94; 8:45 am]
BILLING CODE 8010-01-M