[Federal Register Volume 59, Number 69 (Monday, April 11, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-8512]


[[Page Unknown]]

[Federal Register: April 11, 1994]


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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-33848; File No. SR-NASD-94-08]

 

Self-Regulatory Organizations; Notice and Immediate Effectiveness 
of Proposed Rule Change by the National Association of Securities 
Dealers, Inc., Relating to the Definition of Eligible Securities 
Contained in the Codified Rules of the OTC Bulletin Board Service

April 1, 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 February 
15, 1994, the National Association of Securities Dealers, Inc. 
(``NASD'' or ``Association'') 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

    Pursuant to section 19(b)(1) of the Act and Rule 19b-4 thereunder, 
the NASD hereby files this proposed rule change to incorporate into the 
codified rules of the OTC Bulletin Board Service (``OTCBB'' or 
``Service'') language reflecting the eligibility of certain securities 
listed on regional stock exchanges in the United States. Following is 
the full text of the codified rules as hereby amended. New language is 
in italic; deletions are in brackets.

OTC Bulletin Board Service Rules

Section. 3

    The following categories of securities shall be eligible for 
quotation in the Service:
    (a) any domestic equity security that is not listed on The Nasdaq 
Stock MarketSM (``Nasdaq'') or a registered national securities 
exchange in the U.S., [;] except that equity securities that are (i) 
listed on one or more regional stock exchanges and (ii) do not qualify 
for dissemination of transaction reports via the facilities of the 
Consolidated Tape shall be considered eligible; and
    (b) any foreign equity security or American Depositary Receipt 
(``ADR'') that is not listed on [The] Nasdaq [Stock Market] or a 
registered national securities exchange in the U.S., except that 
foreign equity securities or ADRs that are (i) listed on one or more 
regional stock exchanges and (ii) do not qualify for dissemination of 
transaction reports via the facilities of the Consolidated Tape shall 
be considered eligible.

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 purpose of this rule change is to incorporate specific language 
into the codified OTCBB rules, which reflects that non-Tape B eligible 
securities may be quoted in the Service. The necessity for this rule 
proposal traces to the fact that the codified rules were approved by 
the SEC\1\ before the Commission approved a separate NASD rule proposal 
dealing solely with the concept of OTCBB eligibility for regional 
listings that are not ``reported securities,'' within the meaning of 
Rule 11Aa3-1(a)(4) under the Act.\2\ The instant rule proposal simply 
incorporates the appropriate language in a form that is compatible with 
the definition of OTCBB-eligible securities in the existing rules 
covering the Service.
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    \1\See Release No. 33433 (January 5, 1994), 59 FR 1772 (order 
approving File No. SR-NASD-93-56).
    \2\See Release No. 33507 (January 24, 1994), 59 FR 4300 (order 
approving File No. SR-NASD-93-24).
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2. Statutory Basis
    The NASD believes that the proposed rule change is consistent with 
sections 15A(b) (6) and (11) of the Act. Section 15A(b)(6) requires, in 
pertinent part, that NASD rules be designed to prevent fraudulent and 
manipulative acts and practices, to promote just and equitable 
principles of trade, to foster cooperation with persons engaged in 
regulating, clearing, settling, processing information with respect to, 
and facilitating transactions in securities, and in general to protect 
investors and the public interest. Section 15A(b)(11) authorizes the 
NASD to adopt rules governing the form and content of quotation 
information dissemination by member firms relating to securities traded 
over-the-counter. The NASD believes that the proposed rule change is 
fully consistent with these statutory provisions and is essential to 
the meaning and administration of established rules defining the 
universe of securities eligible for quotation in the Service.

B. Self-Regulatory Organization's Statement on Burden on Competition

    The NASD believes that the 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

    The foregoing rule change has become immediately effective pursuant 
to section 19(b)(3)(A) of the Act and subparagraph (e) of Rule 19b-4 
thereunder because the proposal constitutes a stated policy, practice, 
or interpretation. Specifically, with its approval of File No. SR-NASD-
93-24 on January 24, 1994, the Commission approved the concept of 
expanding the universe of securities eligible for quotation in the 
OTCBB to include equities listed on regional exchanges that are not 
reported securities covered by the Consolidated Tape Plan. However, 
because the proposal that codified the OTCBB rules was submitted to the 
Commission between the time that the NASD submitted the proposal to 
expand the securities eligible for the OTCBB (File No. SR-NASD-93-24) 
and the time that the Commission approved that expansion, the NASD did 
not include in its general codification proposal the present amended 
section that expands the securities eligible for the OTCBB. Hence, the 
instant rule proposal is necessary to incorporate specific language 
into Section 3 of the codified rules to reflect the definitional change 
approved by the SEC when it acted on File No. SR-NASD-93-24. The 
instant proposal therefore deals exclusively with the meaning and 
administration of a previously approved rule change and warrants 
immediate effectiveness pursuant to section 19(b)(3) of the Act.
    At any time within 60 days of the filing of such proposed rule 
change, the Commission may summarily abrogate such rule change if it 
appears to the Commission that such action is necessary or appropriate 
in the public interest, for the protection of investors, or otherwise 
in furtherance of the purposes of the Act.

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 May 2, 1994.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority, 17 CFR 200.30-3(a)(12).
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 94-8512 Filed 4-8-94; 8:45 am]
BILLING CODE 8010-01-M