[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