[Federal Register Volume 59, Number 24 (Friday, February 4, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-2578]
[[Page Unknown]]
[Federal Register: February 4, 1994]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-33541; File No. SR-NASD-93-74]
Self-Regulatory Organizations; Notice of Proposed Rule Change by
the National Association of Securities Dealers, Inc., Relating to the
Use of Geographic Indicators Appended to Market Maker Identifiers
Disseminated Over the NASD's OTC Bulletin Board Service
January 28, 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 December
10, 1993, the National Association of Securities Dealers, Inc.
(``NASD'') filed with the Securities and Exchange Commission
(``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 require market makers participating in the
NASD's OTC Bulletin Board Service (``OTCBB'') to append a
fifth-character, geographic indicator to their market maker identifier
(``MMID'') on the OTCBB screen when the firm's trading desk for a
particular security quoted on the OTCBB is located away from the firm's
primary trading office.\1\ The following is new language to be added to
the recently codified OTCBB rules. Language to be added is italicized.
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\1\On January 5, 1994, the Commission approved an NASD proposal
to codify the existing requirements respecting access to and the use
of the OTCBB. See Securities Exchange Act Release No. 33433 (January
5, 1994), 59 FR 1772 (January 12, 1994) (File No. SR-NASD-93-56).
Accordingly, the proposed OTCBB rule language contained in this
filing would amend that recent codification.
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OTC Bulletin Board Service Rules
Section 4
(c) In cases where a market maker has more than one trading
location, a fifth-character, geographic indicator shall be appended to
the market maker's identifier for that security to identify the branch
location where the security is traded. The fifth-character branch
indicators are established by the Association and published from time
to time in the Nasdaq/COS symbol directory.
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
1. Purpose
The NASD is proposing to amend section 4 of its OTCBB rules to
require market makers participating in the OTCBB to append a fifth-
character, geographic indicator to their MMIDs when the firm's trading
desk for a security quoted on the OTCBB is located away from the firm's
primary trading office. The NASD believes that the use of fifth-
character, geographic indicators is necessary to avoid confusion and
delay by market participants in contacting market makers in securities
quoted on the OTCBB. Specifically, the NASD believes that the use of
geographic indicators will ensure that traders will direct their calls
to the appropriate location where the market maker for the stock is
located and avoid instances where multiple phone calls are needed to
access a market maker's quote.
In addition, the NASD believes mandatory use of the fifth-
character, geographic indicator is necessary in light of developments
associated with the NASD's Nasdaq Workstation IISM service.
Specifically, with Nasdaq Workstation II, market makers' telephone
numbers will not be displayed on the OTCBB screen, but may be recalled
separately. Accordingly, once Nasdaq Workstation II is in operation,
unless fifth-character, geographic indicators are used, there may be
confusion among market participants concerning the trading location of
securities quoted on the OTCBB. The NASD also notes that the use of
fifth-character, geographic indicators already has been mandated for
market makers in securities traded on The Nasdaq Stock
Market.\2\
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\2\See Securities Exchange Act Release No. 31933 (February 26,
1993), 58 FR 12608 (March 5, 1993) (File No. SR-NASD-92-55).
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2. Statutory Basis
The NASD believes the proposed rule change is consistent with
section 15A(b)(6) of the Act. Section 15A(b)(6) requires that the rules
of a national securities association be designed to prevent fraudulent
and manipulative acts and practices, to promote just and equitable
principles of trade, to foster cooperation and coordination with
persons engaged in regulating, clearing, settling, processing
information with respect to, and facilitating transactions in
securities, to remove impediments to and perfect the mechanism of a
free and open market and a national market system and, in general, to
protect investors and the public interest. Specifically, the NASD
believes the use of fifth-character, geographic indicators is
consistent with the maintenance of fair and orderly markets and the
facilitation of transactions in securities because it will eliminate
unnecessary confusion and delay in trading of securities and foster
cooperation between members and market makers effecting trades in
securities quoted on the OTCBB.
B. Self-Regulatory Organization's Statement on Burden on Competition
The NASD believes that the proposed rule change will not result in
any burden on competition that is not necessary or appropriate in
furtherance of the purposes of the Act.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
Comments were neither solicited nor received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Within 35 days of the date of publication of this notice in the
Federal Register or within such longer period (i) as the Commission may
designate up to 90 days of such date if it finds such longer period to
be appropriate and publishes its reasons for so finding or (ii) as to
which the NASD consents, the Commission will:
A. By order approve such proposed rule change, or
B. Institute proceedings to determine whether the proposed rule change
should be disapproved.
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. 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 [insert date 21 days from the date of
publication].
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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Jonathan G. Katz,
Secretary.
[FR Doc. 94-2578 Filed 2-3-94; 8:45 am]
BILLING CODE 8010-01-M