[Federal Register Volume 61, Number 186 (Tuesday, September 24, 1996)]
[Notices]
[Pages 50058-50059]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-24425]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-37689; File No. S7-24-89]


Joint Industry Plan; Solicitation of Comments and Order Approving 
Request To Extend Temporary Effectiveness of Plan for Nasdaq/National 
Market Securities Traded on an Exchange on an Unlisted or Listed Basis, 
Submitted by the National Association of Securities Dealers, Inc., and 
the Boston, Chicago and Philadelphia Stock Exchanges

September 16, 1996.
    The National Association of Securities Dealers, Inc., on behalf of 
itself and the Boston, Chicago, and Philadelphia Stock Exchanges 
(collectively, ``Participants'') \1\ has submitted to the Commission a 
request \2\ to extend through September 30, 1996, operation of a joint 
transaction reporting plan (``Plan'') and certain related exemptive 
relief for trading of Nasdaq/National Market securities traded on an 
exchange on an unlisted or listed basis.\3\ This notice and order 
solicits comment on certain related substantive matters identified 
below, and extends the effectiveness of the Plan through September 30, 
1996.
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    \1\ The signatories to the Plan, i.e., the National Association 
of Securities Dealers, Inc. (``NASD''), and the Chicago Stock 
Exchange, Inc. (``Chx'') (previously, the Midwest Stock Exchange, 
Inc.), Philadelphia Stock Exchange, Inc. (``Phlx''), and the Boston 
Stock Exchange, Inc. (``BSE''), are the ``Participants.'' The BSE, 
however, joined the Plan as a ``Limited Participant,'' and reports 
quotation information and transaction reports only in Nasdaq/
National Market (previously referred to as ``Nasdaq/NMS'') 
securities listed on the BSE. Originally, the American Stock 
Exchange, Inc., was a Participant to the Plan, but did not trade 
securities pursuant to the Plan, and withdrew from participation in 
the Plan in August 1994.
    \2\ See letter from Robert E. Aber, Vice President, General 
Counsel and Secretary, Nasdaq, to Mr. Jonathan G. Katz, Secretary, 
Commission, dated September 16, 1996.
    \3\ Section 12 of the Act generally requires an exchange to 
trade only those securities that the exchange lists, except that 
Section 12(f) of the Act permits unlisted trading privileges 
(``UTP'') under certain circumstances. For example, Section 12(f), 
among other things, permits exchanges to trade certain securities 
that are traded over-the-counter (``OTC/UTP''), but only pursuant to 
a Commission order or rule. The present order fulfills this Section 
12(f) requirement. For a more complete discussion of this Section 
12(f) requirement, see November 1995 Extension Order, infra note 4, 
at n. 2.
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I. Background

    The Commission originally approved the Plan on June 26, 1990.\4\ 
The Plan governs the collection, consolidation and dissemination of 
quotation and transaction information for Nasdaq/National Market 
securities listed on an exchange or traded on an exchange pursuant UTP. 
Commission approval of operation of the Plan was scheduled to expire 
September 15, 1996. Recently, the Commission received a revised version 
of the proposed revenue sharing agreement,\5\ the original version of 
which was discussed and published for comment in the March 18, 1996 
Extension Order. In order to provide the Commission with an opportunity 
to review the revised version of the revenue sharing agreement, the 
Participants have requested that pilot approval of the Plan be extended 
through September 30, 1996.
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    \4\ See Securities Exchange Act Release No. 28146 (June 26, 
1990), 55 FR 27917 (``1990 Approval Order''). For a detailed 
discussion of the history of UTP in OTC securities, and the events 
that led to the present plan and pilot program, See also Securities 
Exchange Act Release No. 34371 (July 13, 1994), 59 FR 37103 (``1994 
Extension Order''). See also Securities Exchange Act Release No. 
35221, (January 11, 1995), 60 FR 3886 (``January 1995 Extension 
Order''), Securities Exchange Act Release No. 36102 (August 14, 
1995), 60 FR 43626 (``August 1995 Extension Order''), Securities 
Exchange Act Release No. 36226 (September 13, 1995), 60 FR 49029 
(``September 1995 Extension Order''), Securities Exchange Act 
Release No. 36368 (October 13, 1995), 60 FR 54091 (``October 1995 
Extension Order''), Securities Exchange Act Release No. 36481 
(November 13, 1995), 60 FR 58119 (``November 1995 Extension 
Order''), Securities Exchange Act Release No. 36589 (December 13, 
1995), 60 FR 65696 (``December 13, 1995 Extension Order''), 
Securities Exchange Act Release No. 36650 (December 28, 1995), 60 FR 
358 (``December 28, 1995 Extension Order''), Securities Exchange Act 
Release No. 36934 (March 6, 1996), 61 FR 10408 (``March 6, 1996 
Extension Order''), and Securities Exchange Act Release No. 36985 
(March 18, 1996), 61 FR 12122 (``March 18, 1996 Extension Order'').
    \5\ See letter from Robert E. Aber, Vice President, General 
Counsel, and Secretary, Nasdaq, to Jonathan G. Katz, Secretary, 
Commission, dated September 13, 1996.
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II. Exemptive Relief

    In conjunction with the Plan, on a temporary basis scheduled to 
expire on September 15, 1996, the Commission granted an exemption from 
Rule 11Ac1-2 under the Act regarding the calculated best bid and offer 
(``BBO''), and granted the BSE an exemption from the provision of Rule 
11Aa3-1 under the Act that requires transaction reporting plans to 
include market identifiers for transaction reports and last sale data.

III. Comments on the Operation of the Plan

    In the January 1995, August 1995, September 1995, October 1995, 
November 1995, December 13, 1995, December 28, 1995, March 6, 1996, and 
March 18, 1996 Extension Orders, the Commission solicited, among other 
things, comment on: (1)Whether the BBO calculation for the relevant 
securities should be based on price and time only (as currently is the 
case) or if the calculation should include size of the quoted bid or 
offer; and (2) whether there is a need for an intermarket linkage for 
order routing and execution and an accompanying trade-through rule. The 
Commission continues to solicit comment on these matters.

IV. Solicitation of Comment

    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 at the 
Commission's Public Reference Room. All submission should refer to File 
No. S7-24-89 and should be submitted by October 15, 1996.

V. Conclusion

    The Commission finds that an extension of temporary approval of the 
operation of the Plan through September 30, 1996, is appropriate and in 
furtherance of Section 11A of the Act. In order to provide the 
Commission with an opportunity to review the revised revenue sharing 
agreement, while ensuring continued operation of the Plan, the 
Commission believes that it is appropriate to extend pilot approval of 
the Plan through September 30, 1996. The Commission finds further that 
extension of the exemptive relief through September 30, 1996, as 
described above, also is consistent with the Act, the Rules thereunder, 
and specifically with the objectives set forth in Sections 12(f) and 
11A of the Act and in Rules 11Aa3-1 and 11Aa3-2 thereunder.

[[Page 50059]]

    It is therefore ordered, pursuant to Sections 12(f) and 11A of the 
Act and (c)(2) of Rule aaAa3-2 thereunder, that the Participants' 
request to extend the effectiveness of the Joint Transaction Reporting 
Plan for Nasdaq/National Market securities traded on an exchange on an 
unlisted or listed basis and certain exemptive relief through September 
30, 1996, is approved.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority, 17 CFR 200.30-3(a)(29).
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 96-24425 Filed 9-23-96; 8:45 am]
BILLING CODE 8010-01-M