[Federal Register Volume 61, Number 3 (Thursday, January 4, 1996)] [Notices] [Pages 358-359] From the Federal Register Online via the Government Publishing Office [www.gpo.gov] [FR Doc No: 96-128] ======================================================================= ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-36650; File No. S7-24-89] Joint Industry Plan; Solicitation of Comments and Order Approving Amendment No. 7 to Reporting Plan for Nasdaq/National Market Securities Traded on an Exchange on an Unlisted or Listed Basis, Submitted by the National Association of Securities Dealers, Inc., and the Boston, Chicago and Philadelphia Stock Exchanges December 28, 1995. On December 28, 1995, the National Association of Securities Dealers, Inc., and the Boston, Chicago, and Philadelphia Stock Exchanges (collectively, ``Participants'') \1\ submitted to the Commission proposed Amendment No. 7 to a joint transaction reporting plan (``Plan'') for Nasdaq/National Market securities traded on an exchange on an unlisted or listed basis.\2\ Amendment No. 7 would extend the effectiveness of the plan through March 5, 1996.\3\ This order approves Amendment No. 7 to the Plan, thereby approving its operation through March 5, 1996. \1\ The signatories to the Plan, i.e., the National Association of Securities Dealers, Inc. (``NASD''), and the Chicago Stock Exchange, Inc. (``Chx'') (previously, the Midwest Stock Exchange, Inc.), the Philadelphia Stock Exchange, Inc. (``Phlx''), and the Boston Stock Exchange, Inc. (``BSE''), are the ``Participants.'' The BSE, however, joined the Plan as a ``Limited Participant,'' and reports quotation information and transaction reports only in Nasdaq/National Market (previously referred to as ``Nasdaq/NMS'') securities listed on the BSE. Originally, the American Stock Exchange, Inc., was a Participant to the Plan, but did not trade securities pursuant to the Plan, and withdrew from participation in the Plan in August 1994. \2\ Section 12 of the Act generally requires an exchange to trade only those securities that the exchange lists, except that Section 12(f) of the Act permits unlisted trading privileges (``UTP'') under certain circumstances. For example, Section 12(f), among other things, permits exchanges to trade certain securities that are traded over-the-counter (``OTC/UTP''), but only pursuant to a Commission order or rule. The present order fulfills this Section 12(f) requirement. For a more complete discussion of this Section 12(f) requirement, see November 1995 Extension Order, infa note 3, at n. 2. \3\ On November 13, 1995, the Commission extended the effectiveness of the Plan through December 12, 1995, by partially approving Amendment No. 6. Amendment No. 6 requested an extension of the effectiveness of the Plan through December 29, 1995. See Securities Exchange Act Release No. 36481 (November 13,1 995), 60 FR 58119 (``November 1995 Extension Order''). Thereafter, the Commission approved the remainder of Amendment No. 6 by approving operation of the Plan through December 29, 1995. See Securities Exchange Act Release No. 36589 (December 13, 1995), 60 FR 65696 (``December 1995 Extension Order''). [[Page 359]] --------------------------------------------------------------------------- I. Background The Commission originally approved the Plan on June 26, 1990.\4\ The Plan governs the collection, consolidation and dissemination of quotation and transaction information for Nasdaq/National Market securities listed on an exchange or traded on an exchange pursuant to UTP. The Commission has extended the effectiveness of the Plan six times since then to allow the Participants to trade pursuant to the Plan while they finalize their negotiations for revenue sharing under the plan.\5\ \4\ See Securities Exchange Act Release No. 28146 (June 26, 1990), 55 FR 27917 (``1990 Approval Order''). For a detailed discussion of the history of UTP in OTC securities, and the events that led to the present plan and pilot program, see 1994 Extension Order, infra note 5. \5\ See Securities Exchange Act Release No. 34371 (July 13, 1994), 59 FR 37103 (``1994 Extension Order''). See also Securities Exchange Act Release No. 35221, (January 11, 1995), 60 FR 3886 Release No. 36102 (August 14, 1995), 60 FR 43626 (``August 1995 Extension order''), Securities Exchange Act Release No. 36226 (September 13, 1995), 60 FR 49029 (``September 1995 Extension Order''), Securities Exchange Act Release No. 36368 (October 13, 1995), 60 FR 54091 (``October 1995 Extension Order''), and the November and December 1995 Extension Orders, supra note 3. --------------------------------------------------------------------------- As originally approved by the Commission, the Plan required the Participants to complete their negotiations regarding revenue sharing during the one-year pilot period. The January 1995 Extension Order approved the effectiveness of the Plan through August 12, 1995. Since January 1995, the Commission has expected the Participants to conclude their financial negotiations promptly and to submit a filing to the Commission that reflected the results of the negotiations. Moreover, the Commission's August 1995 Extension Order required the Participants to submit a filing concerning revenue sharing on or before August 31, 1995. The Commission's December 1995 Extension Order noted that request, and further requested that the Participants submit to the Commission, on or before December 20, 1995, a proposed revenue sharing amendment, along with a proposed amendment to extend the effectiveness of the Plan through the pending period for the financial proposal. The Commission currently believes it is appropriate to extend the effectiveness of the Plan through March 5, 1996, so that operation of the Plan may continue while the Commission awaits these amendments and prepares them for publication in the Federal Register. II. Extension of Certain Exemptive Relief In conjunction with the Plan, on a temporary basis scheduled to expire on December 29, 1995, the Commission granted an exemption from Rule 11Ac1-2 under the Act regarding the calculated best bid and offer (``BBO''), and granted the BSE an exemption from the provision of Rule 11Aa3-1 under the Act that requires transaction reporting plans to include market identifiers for transaction reports and last sale data. This order extends these exemptions through march 5, 1996. Further, this extension will remain in effect only if the Plan continues in effect through that date pursuant to a Commission order.\6\ The Commission continues to believe that this exemptive relief is appropriate through March 5, 1996. \6\ In the December 1995 Extension Order, the Commission extended these exemptions through December 29, 1995. Pursuant to a request made by the NASD, this order further extends the effectiveness of the relevant exemptions through March 5, 1996. See letter from Richard Ketchum, Chief Operating Officer and Executive Vice President, NASD, to Jonathan G. Katz, Secretary, Commission, dated December 22, 1995. --------------------------------------------------------------------------- III. Comments on the Operation of the Plan In the January 1995 Extension Order, the August 1995 Extension Order, the September 1995 Extension Order, the October 1995 Extension Order, and the November 1995 Extension Order, the Commission solicited, among other things, comment on: (1) Whether the BBO calculation for the relevant securities should be based on price and time only (as currently is the case) or if the calculation should include size of the quoted bid or offer; and (2) whether there is a need for an intermarket linkage for order routing and execution and an accompanying trade- through rule. The Commission continues to solicit comment on these matters. 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. Sec. 552, will be available for inspection and copying at the Commission's Public Reference Room. All submissions should refer to File No. S7-24-89 and should be submitted by January 25, 1996. V. Conclusion The Commission finds that proposed Amendment No. 7 to the Plan to extend the operation of the Plan and the financial negotiation period through March 5, 1996, is appropriate and in furtherance of Section 11A of the Act. The Commission finds further that extension of the exemptive relief through March 5, 1996, as described above, also is consistent with the Act and the Rules thereunder. Specifically, the Commission believes that these extensions should serve to provide the Participants with more time to conclude their financial negotiations and to submit the necessary filings to the Commission. This, in turn, should further the objects of the Act in general, and specifically those set forth in Sections 12(f) and 11A of the Act and in Rules 11Aa3-1 and 11Aa3-2 thereunder. It is therefore ordered, pursuant to Sections 12(f) and 11A of the Act and (c)(2) of Rule 11Aa3-2 thereunder, that Amendment No. 7 to the Joint Transaction Reporting Plan for Nasdaq/National Market securities traded on an exchange on an unlisted or listed basis is hereby approved and trading pursuant to the Plan is hereby approved on a temporary basis through March 5, 1996. For the Commission, by the Division of Market Regulation, pursuant to delegated authority, 17 CFR 200.30-3(a)(29). Jonathan G. Katz, Secretary. [FR Doc. 96-128 Filed 1-3-96; 8:45 am] BILLING CODE 8010-01-M