[Federal Register Volume 59, Number 81 (Thursday, April 28, 1994)]
[Unknown Section]
[Page ]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-10125]
[Federal Register: April 28, 1994]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-33946; International Series Release No. 659; File No.
SR-NASD-94-23]
Self-Regulatory Organizations; National Association of Securities
Dealers, Inc. Notice of Filing and Order Granting Accelerated Temporary
Approval of Proposed Rule Change Relating to the Quotation Linkage With
the London Stock Exchange
April 21, 1994.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ notice is hereby given that on April 12, 1994, the
National Association of Securities Dealers, Inc. (``NASD'' or
``Association'') filed with the Securities and Exchange Commission
(``Commission'' or ``SEC'') the proposed rule change as described in
Items I and II 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.
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\1\15 U.S.C. 78s(b)(1) (1988).
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
On October 2, 1987, the Commission issued an order approving
operation of a market information linkage between the NASD and the
London Stock Exchange (``LSE'') (formerly, the International Stock
Exchange of the United Kingdom and the Republic of Ireland) for a pilot
term of two years.\2\ This experimental linkage supports an interchange
of quotation information (``linkage information'') on about 740
securities (``linkage securities''); of that total, each marketplace
has designated approximately half as its ``pilot group'' of linkage
securities. NASD and LSE members that function as market makers in one
or more of a subset of linkage securities that are quoted in both the
Nasdaq and LSE dealer systems (``common issues'') are entitled to
access linkage information without paying a separate charge to receive
it. Operation of the linkage in this fashion comports with the terms of
the Commission's October 1987 Order. Most recently, the Commission
authorized an extension of this pilot linkage through May 5, 1994, by
approving File No. SR-NASD-93-55.\3\
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\2\Securities Exchange Act Release No. 24979 (Oct. 2, 1987), 52
FR 37684 (Oct. 8, 1987) (the ``October 1987 Order'').
\3\Securities Exchange Act Release No. 33060 (Oct. 15, 1993), 58
FR 54616 (Oct. 22, 1993).
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Pursuant to Section 19(b)(1) of the Act and Rule 19b-4 thereunder,
the NASD hereby files this proposed rule change to obtain Commission
approval for continuation of the NASD/LSE pilot linkage through October
31, 1994.
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
The purpose of this rule filing is to obtain an extension of the
Commission's interim approval of the NASD/LSE linkage through October
31, 1994. Absent an extension, authorization for the linkage will
expire as of May 5, 1994.
For some time now, the sponsors of this linkage have considered
various possibilities for its future development in meeting the needs
of the international investment community. Both markets have also
launched major initiatives to migrate their core processing and
communications facilities to state-of-the-art technologies that will
yield operational efficiencies and enhanced capacity. In this
connection, the LSE has notified the NASD that the progression of the
LSE's technology migration will foreclose continued operation of the
NASD/LSE linkage after October 31, 1994. Accordingly, the NASD is
requesting that the Commission extend its interim approval of the NASD/
LSE linkage through October 31, 1994. The NASD does not anticipate
further extension beyond that date.
The NASD submits that the statutory basis for the NASD/LSE pilot
linkage and the requested extension thereof, are contained in Sections
11A(a)(1) (B) and (C) and 15A(b)(6) of the Act. Subsections (B) and (C)
of Section 11A(a)(1) set forth the Congressional goals of achieving
more efficient and effective market operations, the availability of
information with respect to quotations for securities and the execution
of investor orders in the best market through the application of new
data processing and communications techniques. Section 15A(b)(6)
requires, among other things, that the rules of the NASD be designed to
foster cooperation and coordination with persons engaged in regulating,
clearing, settling, processing information with respect to, and
facilitating transactions in securities, and to remove impediments to
and perfect the mechanism of a free and open market. The NASD believes
that the requested extension of the linkage's temporary authorization
is fully consistent with the policy goals reflected in these statutory
provisions.
B. Self-Regulatory Organization's Statement on Burden on Competition
In its original release announcing interim approval of the NASD/LSE
pilot linkage, the Commission referenced certain competitive concerns
raised by Instinet Corporation (``Instinet'') through counsel.\4\ In
response, the NASD, after consultation with the LSE, made a good faith
effort to address those concerns by narrowing the universe of firms and
terminals permitted access to linkage information at no cost. Those
changes were reflected in File No. SR-NASD-87-20, which the Commission
approved by issuing the October 1987 Order. With respect to File No.
SR-NASD-89-44 (which resulted in extension of the linkage's
authorization until December 1, 1990), the NASD also submitted
statistical and cost information relative to its participation in the
pilot project. Given that the NASD/LSE linkage will be terminated on or
shortly before October 31, 1994, the NASD believes that the instant
rule change will not result in any burden on competition that is not
necessary or appropriate in furtherance of the purposes of the Act.
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\4\See Securities Exchange Act Release No. 23158 (Apr. 21,
1986), 51 FR 15989 (Apr. 29, 1986). See also letter from Daniel T.
Brooks, Counsel for Instinet, to John Wheeler, Secretary, SEC (Apr.
16, 1986).
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C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
Written comments were neither solicited nor received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The NASD requested that the Commission find good cause for
approving this proposed rule change prior to the 30th day following
publication of notice of the filing in the Federal Register, and, in
any event, by May 5, 1994, the expiration of the linkage's present
authorization. The NASD believes that the requested extension of the
pilot period is fully consistent with the statutory provisions and
policy goals referenced in Section II of this Rule 19b-4 filing.
Moreover, the NASD argued the additional time will enable the
sponsoring markets to effect an orderly termination of this
experimental project. Under the circumstances, the Commission finds
that allowing the NASD/LSE linkage to cease abruptly would be
counterproductive.
The Commission finds that the proposed rule change is consistent
with the requirements of the Act and the rules and regulations
thereunder applicable to the NASD and, in particular, the requirements
of Sections 11A(a)(1) (B) and (C) and 15A(b)(6), and the rules and
regulations thereunder.
The Commission finds good cause for approving the proposed rule
change prior to the 30th day after the date of publication of notice of
filing thereof. Accelerated approval will avoid an unnecessary
interruption of the pilot linkage while allowing the NASD and LSE to
provide for an orderly termination of this experimental program in the
final quarter of 1994.\5\ Accordingly, under these circumstances, the
Commission believes the NASD/LSE linkage should be permitted to
continue operating, without a hiatus, for a brief period sufficient to
bridge the migration to new technologies being developed by the
sponsoring markets.
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\5\The NASD has represented that it will provide notice to its
subscribers of the termination of the NASD/LSE linkage in its
Subscriber Bulletin no later than August 30, 1994. Telephone
conversation between Michael Kulczak, Associate General Counsel,
NASD, with Michael Ryan, Attorney, SEC (Apr. 19, 1994).
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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 19, 1994.
It is therefore ordered, pursuant to Section 19(b)(2) of the Act,
that the proposed rule change be, and hereby is, approved for an
additional period, inclusive of October 31, 1994.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\6\
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\6\17 CFR 200.30-3(a)(12) (1993).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 94-10125 Filed 4-26-94; 8:45 am]
BILLING CODE 8010-01-M