[Federal Register Volume 62, Number 86 (Monday, May 5, 1997)]
[Notices]
[Pages 24517-24518]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-11614]



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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-38546; File No. SR-CTA/CQ-97-1]


Consolidated Tape Association; Order Granting Approval of First 
Substantive Amendment to the Second Restatement of the Consolidated 
Tape Association Plan

April 25, 1997.

I. Introduction

    On March 14, 1997, the Consolidated Tape Association (``CTA'') Plan 
Participants filed with the Securities and Exchange Commission 
(``Commission'' or ``SEC'') an amendment to the Restated CTA Plan 
pursuant to Rule 11Aa3-2 the Securities Exchange Act of 1934 (``Act''). 
Notice of the filing appeared in the Federal Register on March 27, 
1997.\1\ No comment letters were received in response to the Notice. 
For the reasons stated below, the Commission has determined to approve 
the filing.
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    \1\ Securities Exchange Act Release No. 38427 (March 21, 1997), 
62 FR 14708.
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II. Description of the Amendment

    Section XI(a) of the Second Restatement of the CTA Plan recognizes 
the right of the primary market for a security to halt or suspend 
trading in the security if it feels that the non-disclosure of 
information relating to the security or other regulatory problems 
warrants that action. After the primary market notifies the Processor 
that the information that triggered the halt has been adequately 
disclosed, the Processor is required to disseminate indications of 
interest for the security that any Participant may provide.
    If the primary market provides an indication of interest within 15 
minutes of the time that it notifies the Processor about the adequate 
information disclosure, the Processor may resume its dissemination of 
last sale information relating to the security at the end of that 15-
minute period.
    If the primary market does not provide an indication of interest 
within 15 minutes of its notice to the Processor of the adequate 
information disclosure, then within five minutes of the end of that 
period, the primary market must cause the Processor to include on the 
consolidated tape an administrative message. The message must signify 
the continuation of the halt or announce the existence of a market 
condition that relates to the trading of the security in the primary 
market. In the latter case (i.e., the announcement), the halt 
terminates five minutes after the announcement, at which time the 
Processor is to resume disseminating last sale information relating to 
the security.
    The instant amendment will reduce the 15-minutes period to ten 
minutes. This amendment will enable trading in the security to resume 
ten minutes after the security's primary market notifies the Processor 
that the requisite information has been adequately disclosed. In the 
context of a halt that involves the announcement of an existing market 
condition, the amendment will also expedite the time by which the 
primary market must make the announcement, thereby expediting the 
resumption of the Processor's dissemination of last sale information 
relating to the security.
    The post-disclosure waiting period is primarily intended to allow 
an adequate opportunity for an appropriate level of dispersion of the 
information that triggered the trading halt. The Commission believes 
that significant increases in the speed of communications allow for 
rapid dissemination of information and rapid response to that 
disseminated information.
    Moreover, the Commission believes the increases in the speed of 
communications have shifted the balance between timeliness and price 
discovery and believes that the CTA's choice of ten minutes, rather 
than 15 minutes, is a reasonable period to arrive at a price that 
reflects an appropriate equilibrium of buying and selling interest. The 
proposed amendment will allow a stock to open or re-open in a more 
expeditious manner, while still providing sufficient time for the 
appropriate pricing of orders. As a result, the proposed amendment 
strikes an appropriate balance between the preservation of the price 
discovery process and the provision of timely opportunities for 
investors to participate in the market.
    In addition, the amendment conforms the CTA Plan to rule changes of 
the New York Stock Exchange (``NYSE'') and the American Stock Exchange 
(``Amex'').\2\ In relevant part, those rule changes reduce from 15 
minutes to ten minutes the duration of the time period that must elapse 
between the first publication of an indication of interest following a 
trading halt and the reopening of trading in the halted security.
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    \2\ The Commission approved the NYSE rule change on January 31, 
1997. See Securities Exchange Act Release No. 38225, 62 FR 5875 
(February 7, 1997). The Amex had filed its version (the ``Proposed 
Amex Rule'') with the Commission and the Commission is by separate 
Order approving the proposed Amex rule. See Exchange Act Release No. 
38549 (April 28, 1997).
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    Without the instant amendment to the CTA Plan, the NYSE and Amex 
rule changes would create the following anomaly: If an indication of 
interest for a security is published less than five minutes after NYSE 
or Amex announces that the information that gave rise to a regulatory 
trading halt has been adequately dispersed, NYSE and Amex rules would 
allow the specialist to reopen trading in the security before the CTA 
Plan would allow the Processor to report the security's last sale price 
information. This amendment eliminates the anomaly.

III. Discussion

    The Commission has determined that this amendment is consistent 
with the Act. Rule 11Aa3-2(c)(2) under the Act provides, inter alia, 
that the Commission approve an amendment to an effective National 
Market System plan is it finds that the amendment is necessary or 
appropriate in the public interest, for the protection of investors and 
maintenance of fair and orderly markets, to remove impediments to and 
perfect the mechanisms of a National Market System, or otherwise in 
furtherance of the purposes of the Act. In making such a determination, 
the Commission must examine Section 11A of the Act and the rules 
promulgated thereunder. Rule 11Aa3-2(b) lists the requirements for 
filing or amending a national market system plan. The Commission has 
determined that the detailed description of the amendment, the 
rationale for the amendment, and plans for operation meet the 
requirements of Rule 11Aa3-2(b).
    Furthermore, the amendments will remove impediments to and perfect 
the mechanisms of a National Market System by reducing the period of 
time that must elapse before the Processor can resume the dissemination 
of market data after the primary market for the halted security 
notifies the Processor that the Information that triggered the halt has 
been adequately disclosed.

IV. Conclusion

    For the reasons discussed above, the Commission finds that the 
proposed amendment to the CTA Plan is consistent with the Act, and the 
Rules thereunder.
    It is therefore ordered, pursuant to Section 11A of the Act, that 
the amendment to the CTA Plan be, and hereby is, approved.


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    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\3\
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    \3\ 17 CFR 200.20-3(a)(27).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 97-11614 Filed 5-2-97; 8:45 am]
BILLING CODE 8010-01-M