[Federal Register Volume 59, Number 103 (Tuesday, May 31, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-13169]


[[Page Unknown]]

[Federal Register: May 31, 1994]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-34102; File No. SR-NASD-94-22]

 

Self-Regulatory Organizations; Filing and Immediate Effectiveness 
of Proposed Rule Change by National Association of Securities Dealers, 
Inc., Relating to the Effective Date of the New Rule Governing the 
Repricing of Open Orders

May 24, 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 May 20, 
1994, the National Association of Securities Dealers, Inc. (``NASD'' or 
``Association'') filed with the Securities and Exchange Commission 
(``SEC'' or ``Commission'') the proposed rule change as described in 
Items I, II, and III below, which Items have been prepared by the 
NASD.\1\ The NASD has designated this proposal as a policy relating to 
the administration or enforcement (i.e., the effective date) of a new 
rule of the Association under 19(b)(3)(A)(i) of the Act, which renders 
the rule effective upon the Commission's receipt of this filing. The 
Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons.
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    \1\The NASD amended the proposed rule change subsequent to its 
original filing on April 7, 1994. Amendment No. 1 revised the NASD's 
statement of the purpose of the proposed rule change. See Letter 
from Suzanne E. Rothwell, Associate General Counsel, NASD, to Mark 
P. Barracca, Branch Chief, Over-the-Counter Regulation, SEC (May 20, 
1994).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The NASD is proposing a rule change to change the effective date of 
new Section 46 of Article III of the Rules of Fair Practice to 
September 15, 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

    In SR-NASD-93-52, submitted to the SEC for approval on September 
22, 1993, the NASD proposed to amend Article III of the Rules of Fair 
Practice to add a new section 46 to require members to adjust open 
orders for securities when the security is quoted ex-dividend, ex-
rights, ex-distribution or ex-interest. SR-NASD-93-52 was approved by 
the SEC in Rel. No. 34-33440 on January 6, 1994. In Notice to Members 
94-09, published in February 1994, the NASD announced the new Section 
46 would be effective on May 15, 1994.
    The NASD has become aware that some members firms rely on the SOES 
limit order file for the execution of eligible open orders. The SOES 
limit order file does not currently have an automated repricing 
capability to assist members in complying with new section 46. 
Automated repricing is a capability planned for in connection with the 
implementation of the Nasdaq Stock Market's's N.PROVE improvement 
system; however, the date for N.PROVE's availability is currently not 
determined. Accordingly, because some member firms currently rely on 
the SOES limit order file for execution of open orders, and because 
they and another member firms which utilize the SOES limit order file 
from time to time will not be able to rely on SOES limit order file for 
automated repricing of limit orders in order to assist them with 
complying with new section 46, and because such member will need to 
develop alternative methods for repricing open orders when new section 
46 takes effect, delaying the effectiveness of new section 46 until 
September 15, 1994\2\ will permit such members to address their 
compliance issues prior to the effective date of the new rule.
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    \2\The NASD intends that all members will be expected to comply 
with new section 46 on the September 15, 1994 effective date.
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    The NASD believes that the proposed rule change is consistent with 
the provision of section 154(b)(6) of the Act,\3\ which require that 
the rules of the NASD, among other things, remove impediments to and 
perfect the mechanism of a free and open market and to protect 
investors and the public interest, in that delaying the effective date 
of section 46 until September 15, 1994, when the NASD anticipates it 
will implement an automated repricing mechanism for the SOES limit 
order file, will assist members in complying with the new rule.
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    \3\15 U.S.C. 78o-3.
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(B) Self-Regulatory Organization's Statement on Burden on Competition

    The NASD does not believe that the proposed rule change will result 
in any burden on competition that is not necessary or appreciate in 
furtherance of the purposes of the Act, as amended.

(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 foregoing rule change has become effective upon filing pursuant 
to section 19(b)(3)(A)(i) of the Act and subparagraph (e) of Rule 19b-4 
thereunder in that it changes the effective date of a new provision of 
the NASD's rules and is therefore a policy relating to the 
administration or enforcement (i.e. the effective date) of a new rule 
of the Association.
    At any time within 60 days of the filing of a rule change pursuant 
to section 19(b)(3)(A) of the Act, the Commission may summarily 
abrogate the rule change if it appears to the of investors, or 
otherwise in furtherance of the purposes of the Act.

IV. Solicitation of Comments

    Interested persons are invited to submit written date views, and 
arguments concerning the foregoing. Persons making written submission 
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 request 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 File Number SR-NASD-94-22 and 
should be submitted by June 21, 1994.

    .For the Commission, by the Division of Market Regulation, 
pursuant to delegate authority, 17 CFR 200.30-3(a)(12).
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 94-13169 Filed 5-27-94; 8:45 am]
BILLING CODE 8010-01-M