[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]
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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]]
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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.
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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.
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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