[Federal Register Volume 60, Number 200 (Tuesday, October 17, 1995)]
[Notices]
[Pages 53820-53821]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-25664]



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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-36359; International Series Release No. 865; File No. 
SR-NASD-95-46]


Self-Regulatory Organizations; Notice of Filing and Order 
Granting Accelerated Approval of Proposed Rule Change by the National 
Association of Securities Dealers, Inc., Relating to an Extension of 
the Nasdaq International Service Pilot Program

October 11, 1995.
    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 October 
4, 1995, 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. For the reasons discussed 
below, the Commission is granting accelerated approval of the proposed 
rule change.

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule

    The NASD proposes to extend for two years: (i) The pilot term of 
the Nasdaq International Service (``Service''); and (ii) the 
effectiveness of certain rules (``International Rules'') that are 
unique to the Service. This rule change does not entail any 
modification of the International Rules. The present authorization for 
the Service and the International Rules expires on October 11, 1995; 
therefore, with this filing, the pilot period for the Service and the 
International Rules would be extended until October 11, 1997.

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 NASD proposes to extend for two years, until October 11, 1997, 
the pilot operation of the Service and the effectiveness of the 
International Rules governing broker-dealers' access to and use of the 
Service. The existing pilot operation of the Service and the 
International Rules was authorized by the SEC in October 19911 and 
the Service was launched on January 20, 1992. In October 1993, the SEC 
approved a two-year extension of the pilot program for the Service 
through October 11, 1995.\2\

    \1\See Securities Exchange Act Release No. 29812 (October 11, 
1991), 56 FR 52082 (SR-NASD-90-33).
    \2\See Securities Exchange Act Release No. 33037 (October 8, 
1993), 58 FR 53752 (SR-NASD-93-50).
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    The Service supports an early trading session running from 3:30 
a.m. to 9:00 a.m. Eastern Time on each U.S. business day (``European 
Session'') that overlaps the business hours of the London financial 
markets. Participation in the Service is voluntary and is open to any 
authorized NASD member firm or its approved broker-dealer affiliate in 
the U.K. A member participates as a Service market maker either by 
staffing its trading facilities in the U.S. or the facilities of its 
approved affiliate during the European Session. The Service also has a 
variable opening feature that permits Service market makers to elect to 
participate starting from 3:30 a.m., 5:30 a.m. or 7:30 a.m., Eastern 
Time. The election is required to be made on a security-by-security 
basis at the time a firm registers with the NASD as a Service market 
maker.\3\ At present, there 

[[Page 53821]]
are no Service market makers participating in the Service.

    \3\Regardless of the opening time chosen by the Service market 
maker, the Service market maker is required to fulfill all the 
obligations of a Service market maker from that time (i.e., either 
3:30 a.m., 5:30 a.m. or 7:30 a.m.) until the European Session closes 
at 9:00 a.m., Eastern Time. See Securities Exchange Act Release No. 
32471 (June 16, 1993), 58 FR 33965 (SR-NASD-92-54).
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    As noted above, the NASD is seeking to extend the pilot term for 
two more years. During this period, the NASD plans to reevaluate the 
Service's operation and consider possible enhancements to the Service 
to broaden market maker participation. The NASD views the Service as a 
significant experiment in expanding potential opportunities for 
international trading via systems operated by The Nasdaq Stock Market, 
Inc. Accordingly, the NASD believes that this pilot operation warrants 
an extension to permit possible enhancements that will increase the 
Service's utility and attractivensess to the investment community.\4\

    \4\Assuming that the pilot term is extended, the NASD will 
continue to supply the Commission with the statistical reports 
prescribed in the initial approval order for the Service order at 
six month intervals.
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    The NASD believes that the proposed rule change is consistent with 
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, broader 
availability of information with respect to quotations for securities, 
and the execution of investor orders in the best market through the use 
of advanced data processing and communications techniques. Section 
15A(b)(6) requires, among other things, that the NASD rules be designed 
to prevent fraudulent and manipulative acts and practices, to promote 
just and equitable principles of trade, and to foster cooperation and 
coordination with persons engaged in regulating, clearing, settling, 
processing information with respect to, and facilitating transactions 
in securities. The NASD believes that the proposed extension of the 
Service and the International Rules is fully consistent with these 
statutory provisions.

(B) Self-Regulatory Organization's Statement on Burden on Competition

    The NASD believes that the proposed 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 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. The Commission believes that it is appropriate to 
approve on an accelerated basis the two year extension of the Nasdaq 
International Service, until October 11, 1997, to ensure the continuous 
operation of the Service, which is set to expire on October 11, 1995.
    The Commission believes that the proposed rule change is consistent 
with Sections 11A(a)(1)(B) and (C) and 15A(b)(6) of the Act. The 
Commission believes that, in connection with the globalization of 
securities markets, the service provides an opportunity to advance the 
statutory goals of: (1) Achieving more efficient and effective market 
operations; (2) broader availability of information with respect to 
quotations for securities; (3) the execution of investor orders in the 
best market through the use of advanced data processing and 
communications techniques; and (4) fostering cooperation and 
coordination with persons engaged in regulating, clearing, settling, 
processing information with respect to, and facilitating transactions 
in securities. The Commission continues to view the Service as a 
significant experiment in expanding potential opportunities for 
international trading via systems operated by The Nasdaq Stock Market, 
Inc. The Service is intended to promote additional commitments of 
merger firms' capital to market making and to attract commitments from 
firms based in Europe that currently do not function as Nasdaq market 
makers. Although there are no Service market makers participating in 
the Service, the NASD plans to reevaluate the Service's operation and 
consider possible enhancements to the Service to broaden market maker 
participation. Accordingly, the Commission believes that this pilot 
operation warrants an extension to permit possible enhancements that 
will increase the Service's utility and attractiveness to the 
investment community. Any changes to the operation of the Service will 
be filed pursuant to Section 19(b)(2) 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, N.W., Washington, D.C. 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 No. SR-NASD-95-46 and 
should be submitted by November 7, 1995.
    It is therefore ordered, pursuant to Section 19(b)(2) of the Act, 
that the proposed rule change SR-NASD-95-46 be, and hereby is, approved 
through October 11, 1997.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\5\

    \5\17 CFR 200.30-3(a)(12) (1989)
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 95-25664 Filed 10-16-95; 8:45 am]
BILLING CODE 8010-01-M