[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