[Federal Register Volume 59, Number 55 (Tuesday, March 22, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-6600]


[[Page Unknown]]

[Federal Register: March 22, 1994]


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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-33760; File No. SR-NASD-93-74]

 

Self-Regulatory Organizations; National Association of Securities 
Dealers; Order Approving Proposed Rule Change Relating to the Use of 
Geographic Indicators Appended to Market Maker Identifiers Disseminated 
Over the NASD's OTC Bulletin Board Service

March 14, 1994.

I. Introduction

    On December 10, 1993, the National Association of Securities 
Dealers, Inc. (``NASD'' or ``Association''), submitted to the 
Securities and Exchange Commission (``SEC'' or ``Commission''), 
pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'')\1\ and Rule 19b-4 thereunder,\2\ a proposed rule change 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.\3\
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    \1\15 U.S.C. 78s(b)(1) (1988).
    \2\17 CFR 240.19b-4 (1991).
    \3\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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    The proposed rule change was published for comment in Securities 
Exchange Act Release No. 33541 (January 28, 1994), 59 FR 5454 (February 
4, 1995). No comments were received on the proposal.

II. Description of the Proposal

    The NASD proposes 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 proposed rule change also requires the NASD to 
publish the fifth-character branch indicators from time to time in the 
Nasdaq/CQS symbol directory.
    The NASD is proposing to use these indicators in order to avoid 
confusion and delay by market participants in contacting market makers 
in securities quoted on the OTCBB. According to the present filing, the 
NASD believes the proposal will ensure that traders direct their calls 
to the location where the market maker for the stock is located, 
thereby avoiding instances where multiple phone calls are needed to 
access a market maker's quote.
    The NASD is seeking approval to add the geographic indicator to the 
OTCBB screen currently used by market professionals. The OTCBB screen 
displays, among other things, market maker telephone numbers beside 
each quotation. In the present proposal, the NASD states that the 
mandatory use of the indicator is necessary due to Nasdaq Workstation 
IIsm service developments which will include moving market maker 
telephone numbers from the OTCBB screen to a separate screen. The NASD 
believes that, once Nasdaq Workstation II is operational, there may be 
confusion among market participants unless the geographic indicator is 
added to the OTCBB screen.\4\
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    \4\The Commission notes that the NASD has not filed a proposed 
rule change with the Commission regarding Nasdaq Workstation II 
service developments.
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III. Discussion

    The Commission believes the proposed rule change is consistent with 
the Act and with the rules and regulations thereunder. Specifically, 
the Commission believes the present proposal is consistent with section 
15A(b)(11) of the Act.\5\ Section 15A(b)(11) requires, among other 
things, that the rules of the Association include provisions governing 
the form and content of quotations relating to securities sold 
otherwise than on a national securities exchange, and that those rules 
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.
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    \5\15 U.S.C. 78o-3(b)(11) (1988).
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    The Commission believes that the use of fifth-character, geographic 
indicators, combined with the dissemination of the relevant telephone 
numbers, should assist market professionals in obtaining timely access 
to member branches that publish OTCBB quotations. The Commission also 
believes that the addition of the proposed geographic indicator to the 
current OTCBB screen should allow for the continued prevention of 
misleading OTCBB quotations, and the promotion of orderly procedures 
for collecting, distributing, and publishing quotations on the 
OTCBB.\6\ Thus, the Commission finds that the proposed rule change is 
consistent with section 15A(b)(11) of the Act, and the rules and 
regulations thereunder.
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    \6\The Commission notes that this approval order is limited to 
the addition of the geographic indicators to the OTCBB screen 
currently used by market professionals. Until the NASD files a 
proposed rule change with the Commission that describes the Nasdaq 
Workstation II service mentioned in this filing, the Commission will 
not have sufficient information to determine whether the geographic 
indicators are adequate to fulfill the purposes of section 
15A(b)(11) of the Act given those developments.
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    It is therefore ordered, pursuant to section 19(b)(2) of the 
Act,\7\ that the proposed rule change (SR-NASD-93-74) is approved.

    \7\15 U.S.C. 78s(b)(2) (1988).
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    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\8\
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    \8\17 CFR 200.30-3(a)(12) (1991).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 94-6600 Filed 3-21-94; 8:45 am]
BILLING CODE 8010-01-M