[Federal Register Volume 62, Number 198 (Tuesday, October 14, 1997)]
[Notices]
[Pages 53361-53365]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-27049]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-39196; File No. SR-NASD-97-60]


Self-Regulatory Organizations; Notice of Filing of Proposed Rule 
Change by the National Association of Securities Dealers, Inc., 
Relating to Trading Halts

October 3, 1997.
    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 August 
20, 1997, the National Association of Securities Dealers, Inc. 
(``NASD'') filed with the Securities and Exchange Commission (``SEC'' 
or ``Commission'') the proposed rule change as described in Items I, 
II, and III below, with Items have been prepared by the Nasdaq Stock 
Market, Inc. (``Nasdaq''). The Commission is publishing this notice to 
solicit comments on the proposed rule change from interested persons.

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

    Nasdaq is proposing to amend NASD Rule 4120 and IM-4120-1 to expand 
Nasdaq's trading halt authority and to clarify procedures for 
initiating certain trading halts. Below is the text of the proposed 
rule change. Proposed new language is underlined; proposed deletions 
are in brackets.
4120. Trading Halts
(a) Authority to Initiate Trading Halts
    In circumstances in which [the Association] Nasdaq deems it 
necessary to protect investors and the public

[[Page 53362]]

interest, [the Association] Nasdaq may, pursuant to the procedures set 
forth in paragraph (b):
    (1) halt trading in the over-the-counter market of a security 
listed on Nasdaq [authorized for inclusion in Nasdaq pending] to permit 
the dissemination of material news;
    (2) halt trading in the over-the-counter market of a security 
listed on a national securities exchange during a trading halt imposed 
by such exchange to permit the dissemination of material news; or
    (3) halt trading by [ITS/CASES]: (i) CQS market markers [of a] in a 
CQS security [listed on a national securities exchange and authorized 
for inclusion in the ITS/CAES linkage during] when a national 
securities exchange imposes a trading halt [imposed by such exchange] 
in that CQS security because of an order imbalance or influx 
(``operational trading halt''); or (ii) Nasdaq market makers in a 
security listed on Nasdaq, when the security is a derivative or 
component of a CQS security and a national securities exchange imposes 
an operational trading halt in that CQS security. [ITS/CAES] CQS and 
Nasdaq market makers may commence quotations and trading at any time 
following initiation of operational trading halts, without regard to 
procedures for resuming trading set forth in paragraph (b)[.]; or
    (4) halt trading in an American Depository Receipt (``ADR'') or 
other security listed on Nasdaq, when the Nasdaq-listed security or the 
securities underlying the ADR is listed on or registered with a 
national or foreign securities exchange or market, and the national or 
foreign securities exchange or market, or regulatory authority 
overseeing such exchange or market, halts trading in such security for 
regulatory reasons; or
    (5) halt trading in a security listed on Nasdaq when Nasdaq 
requests from the issuer information relating to:
    (i) material news;
    (ii) the issuer's ability to meet Nasdaq listing qualification 
requirements, as set forth in the Rule 4300 and 4400 Series; or
    (iii) any other information which is necessary to protect investors 
and the public interest.
(b) Procedure for Initiating a Trading Halt
    (1) [The Board of Governors requires that] Nasdaq issuers are 
required to notify [the Association]Nasdaq of the release of any 
material news prior to the release of such information to the press as 
required by Rule 4310(c)(16) and 4320(d)(15).
    (2) Notification shall be provided directly to [the Association's 
Market Regulation] Nasdaq's MarketWatch Department by telephone, 
facsimile, or other compatible means of electronic communication.* 
Information communicated orally by authorized representatives of a 
Nasdaq issuer should be confirmed promptly in writing.
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    * The current telephone number is 1-800-537-6411, or from 6 p.m. 
to 8 a.m. Eastern Time, (301) 590-6413. The StockWatch fax number is 
(301) 590-6482.
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    (3) Upon receipt of [the] information [the Association, after 
consultation with the issuer,] from the issuer or other source, Nasdaq 
will promptly evaluate the information, estimate its potential impact 
on the market and determine whether a trading halt in the security is 
appropriate.
    [(4) Should the Association determine that a trading halt pending 
the dissemination of material news is necessary and in the public 
interest, the trading halt will become effective simultaneously with 
appropriate notice in the Nasdaq ``NEWS'' frame.
    (5) Should a national securities exchange notify the Association 
that it has halted or will halt trading in a security listed on that 
exchange pending the dissemination of material news, the Association 
may halt trading in such security in the over-the-counter market. The 
commencement of the trading halt will be effective simultaneously with 
appropriate notice in the Nasdaq ``NEWS'' frame.]
    (4) Should Nasdaq determine that a basis exists under Rule 
4120(a)(1), (a)(2), (a)(3), (a)(4), or (a)(5) for initiating a trading 
halt, the commencement of the trading halt will be effective 
simultaneously with appropriate notice in the Nasdaq ``NEWS'' frame.
    [(6)] (5) Trading in a halted security shall resume upon notice via 
the Nasdaq ``NEWS'' frame that a trading halt is no longer in effect.
IM-4120-1. Disclosure of Material Information
    Rules 4310(c)(16) and 4320(d)(15) require that, except in unusual 
circumstances, Nasdaq issuers disclose promptly to the public through 
the news media any material information which would reasonably be 
expected to effect the value of their securities or influence 
investors' decisions and that Nasdaq issuers notify [the Association] 
Nasdaq of the release of any such information prior to its release to 
the public through the news media. [The Board of Governors] Nasdaq 
recommends that Nasdaq issuers provide such notification at least ten 
minutes before such release.* Under unusual circumstances issuers [are] 
may not be required to make public disclosure of material events; for 
example, where it is possible to maintain confidentiality of those 
events and immediate public disclosure would prejudice the ability of 
the company to pursue its legitimate corporate objectives. However, 
Nasdaq issuers remain obligated to disclose this information to [the 
Association] Nasdaq upon request pursuant to Rules 4310(c)(15) or 
4320(d)(14).
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    * Notification may be provided to the [Market Regulation] 
MarketWatch Department by telephone 1-800-537-3929, (301) 590-6411, 
or from 6 p.m. to 8 a.m. Eastern Time, (301) 590-6413. Information 
communication orally should be confirmed promptly in writing. The 
StockWatch fax number is (301) 590-6482.
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    Whenever unusual market activity takes place in a Nasdaq issuer's 
securities, the issuer normally should determine whether [conditions 
requiring corrective action exist and, if so, should take whatever 
action is appropriate] there is material information or news which 
should be disclosed. If rumors or unusual market activity indicate that 
information on impending developments has become known to the investing 
public, or if information from a source other than the issuer becomes 
known to the investing public, a clear public announcement may be 
required as to the state of negotiations or development of issuer 
plans. Such an announcement may be required, even though the issuer may 
not have previously been advised of such information or the matter has 
not yet been presented to the issuer's Board of Directors for 
consideration. It may also be appropriate, in certain circumstances, to 
publicly deny false or inaccurate rumors which are likely to have, or 
have had, an effect on the trading in its securities or would likely 
have an influence on investment decisions.
Trading Halts
    A trading halt benefits current and potential shareholders by 
halting all trading in any Nasdaq securities until there has been an 
opportunity for the information to be disseminated to the public. This 
decreases the possibility of some investors acting on information known 
to them but which is not known to others. [A trading halt normally 
lasts until one half hour after the appearance of the news on wire 
services but it may last longer if a determination is made that the 
news has not been adequately disseminated.] A trading halt provides the 
public with an opportunity to evaluate the information and consider it

[[Page 53363]]

in making investment decisions. It also alerts the marketplace to the 
fact that news has been released.
    [The Association's Market Regulation] Nasdaq's Market Watch 
Department monitors real time trading in all Nasdaq series during the 
trading day for price and volume activity. In the event of certain 
price and volume movements, the [Market Regulation] Market Watch 
Department may contact an issuer and its market makers in order to 
ascertain the cause of the unusual market activity. The [Market 
Regulation] Market Watch Department treats the information provided by 
the issuer and other sources in a highly confidential manner, and uses 
it to assess market activity and assist in maintaining fair and orderly 
markets. A Nasdaq listing includes an obligation to disclose to the 
[Market Regulation] Market Watch Department information that the issuer 
is not otherwise disclosing to the investing public or the financial 
community. On occasion, changes in market activity prior to the 
issuer's release of material information may indicate that the 
information has become known to the investing pubic. Changes in market 
activity also may occur when there is a release of material information 
by a source other than the issuer, such as when a Nasdaq issuer is 
subject to an unsolicited take-over bid by another company. Depending 
on the nature of the event and the issuer's views regarding the 
business advisability of disclosing the information, the [Market 
Regulation] Market Watch Department may work with the issuer to 
accomplish a timely release of the information. Furthermore, depending 
on the materiality of the information and the anticipated [a] effect of 
the information on the price of the issuer's securities, the [Market 
Regulation] Market Watch Department may advise the issuer that a 
temporary trading halt is appropriate to allow for full dissemination 
of the information and to maintain an orderly market. The institution 
of a temporary trading halt pending the release of information is not a 
reflection on the value of the securities halted. Such trading halts 
are instituted, among other reasons, to insure that material 
information is fairly and adequately disseminated to the investing 
public and the marketplace, and to provide investors with the 
opportunity to evaluate the information in making investment decisions. 
A trading halt normally lasts one half hour but may last longer if a 
determination is made that news has not been adequately disseminated or 
that the original or an additional basis under Rule 4120 exists for 
continuing the trading halt.
    The [Market Regulation] Market Watch Department is required to keep 
non-public information[, including denial of rumors,] confidential and 
to use such information only for regulatory purposes.
    Material information which would reasonably be expected to affect 
the value of the securities of an issuer or influence investors' 
decisions would include information regarding issuer events of an 
unusual and/or nonrecurrent nature. The following list of events, while 
not an exhaustive summary of all situations in which disclosure to [the 
Association] Nasdaq should be considered, may be helpful in determining 
whether information is material. It should also be noted that every 
development that might be reported to [the Association] Nasdaq in these 
areas would not necessarily be deemed to warrant a trading halt.
     A merger, acquisition or joint venture;
     A stock split or stock dividend;
     Earnings and dividends of an unusual nature;
     The acquisition or loss of a significant contract;
     A significant new product or discovery;
     A change in control or a significant change in management;
     A call of securities for redemption;
     The public or private sale of a significant amount of 
additional securities;
     The purchase or sale of a significant asset;
     A significant labor dispute.
     Establishment of a program to make purchases of the 
issuer's own shares;
     A tender offer for another issuer's securities; and
     An event requiring the filing of a current report under 
the Act.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, Nasdaq 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. Nasdaq 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

    Nasdaq is proposing amendments to Rule 4120 to expand its existing 
trading halt authority. Rule 4120 currently sets out the bases on which 
Nasdaq may initiate trading halts. In addition to the existing bases, 
the proposed amendments authorize Nasdaq to: halt trading in the third 
market of a CQS security when a national securities exchange halts 
trading in such security for operational reasons; halt trading in a 
Nasdaq-listed security that is a derivative or component of a CQS 
security, when a national securities exchange halts trading in the 
underlying CQS security for operational reasons; halt trading in an 
American Depository Receipt (``ADR'') or other Nasdaq-listed security 
when a national or foreign securities exchange or regulatory entity 
imposes a regulatory trading halt in the security underlying the ADR or 
the Nasdaq-listed security; and halt trading when Nasdaq requests from 
an issuer information relating to material news or the issuer's 
compliance with Nasdaq listing qualification requirements. 
Additionally, the proposed amendments clarify that the procedures in 
the rule permit Nasdaq to initiate trading halts when material 
information emanates from a source other than the issuer.
    First, the proposed amendments expand Nasdaq's existing authority 
to initiate a trading halt in the third market of an exchange-listed 
security when the primary market initiates an operational trading halt 
in such security.\1\ Rule 4120(a)(3) currently authorizes Nasdaq to 
impose an operational trading halt in a security listed on a national 
securities exchange and traded through the ITS/CAES linkage.\2\ Under 
the current rule, Nasdaq may initiate a trading halt when there is an 
order imbalance or influx in

[[Page 53364]]

the security and the primary market halts trading to resolve 
operational issues. The proposed amendments expand Nasdaq's authority 
and permit Nasdaq to halt trading in all securities traded in the third 
market (i.e., CQS securities) \3\--not just those securities traded 
through the ITS/CAES linkage--when a national securities exchange 
initiates an operational trading halt in the CQS security.\4\
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    \1\ The ``third market'' is the market for exchange-listed 
securities away from exchange markets.
    \2\ ITS/CAES is the NASD's link to the Intermarket Trading 
System (``ITS''), which is a system that enables ITS/CAES market 
makers to trade certain exchange-listed securities--known as SEC 
Rule 19c-3 securities--by allowing such market makers to direct 
agency and principal orders to, and receive orders from, other ITS 
members. SEC Rule 19c-3 prohibits off-board trading restrictions 
from applying to securities that: (1) were not traded on an exchange 
before April 26, 1979; or (2) were traded on an exchange on April 
26, 1979, but ceased to be traded on an exchange for any period of 
time thereafter. (The Computer Assisted Execution System (``CAES'') 
is the NASD's automated system that allows members to direct 
principal and agency orders in exchange-listed securities to CAES 
for automated execution in the third market). Thus, pursuant to the 
ITS Plan, trading in ITS/CAES is limited to SEC Rule 19c-3 
securities and excludes those securities not subject to SEC Rule 
19c-3.
    \3\ The Consolidated Quotation System (``CQS'') is a service 
that provides quotations of all participating exchange specialists 
and market makers on all securities listed on the New York Stock 
Exchange and the American Stock Exchange, and selected securities 
listed on the regional stock exchanges.
    \4\ Thus, the proposed amendments would give Nasdaq expanded 
authority to initiate operational trading halts in the third market 
of SEC Rule 19c-3 securities, as well as those securities not 
subject to SEC Rule 19c-3.
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    In addition, the amendments authorize Nasdaq to halt trading in a 
security which is listed on Nasdaq and which also is a derivative or 
component of a CQS security (such as convertible bond, warrant, or 
unit), when a national securities exchange imposes an operational 
trading halt in the CQS security, i.e., when a national securities 
exchange halts trading in a CQS security for an order imbalance. 
Currently, the Nasdaq-listed derivative security would not be halted in 
conjunction with the operational trading halt in the CQS security, thus 
making it difficult for market makers in the Nasdaq-listed security to 
price accurately the derivative security due to the lack of current 
pricing information in the underlying CQS security. That is, because 
the primary market is temporarily closed, price discovery is not 
occurring in that venue, and market makers must attempt to determine 
pricing independent of the primary market or may wait until the primary 
market reopens to price their issues. The proposed amendments, however, 
would allow Nasdaq to halt trading in the Nasdaq-listed security, such 
as a Nasdaq-traded convertible bond whose value is tied closely to an 
exchange-listed security, when a national exchange initiates an 
operational trading halt in a CQS security. Similar to the current 
provisions of Rule 4120(a)(3), the proposed amendments permit CQS and 
Nasdaq market makers to commence quotations and trading at any time 
following the initiation of the operational trading halt. Nasdaq 
believes that the proposed amendments foster orderly markets and 
investor protection because they allow Nasdaq to halt trading--based on 
a national securities exchange's operational trading halt--to allow 
market makers in related issues to assess the situation and determine 
the appropriate pricing of the security.
    Second, Rule 4120 is being amended to authorize Nasdaq to halt 
trading in an ADR or other security listed on Nasdaq, when a national 
or foreign securities exchange or regulatory authority, for regulatory 
reasons, imposes a trading halt in the security underlying the ADR or 
the dually-listed (Nasdaq) security. There are times when another 
exchange, market, or regulatory entity--such as a Canadian commission 
or European market center with which a Nasdaq company's securities are 
registered or listed--implements a regulatory trading halt. These 
trading halts sometimes occur because the issuer is delinquent in 
making a required filing with the national or foreign securities 
exchange or regulatory entity, or the market or regulatory entity halts 
trading in the company's stock for a violation of that entity's rules 
or regulations. For example, an issuer, which is registered as a 
reporting company with a Canadian regulatory commission and which also 
is a Nasdaq-listed company or has its ADRs listed on Nasdaq, becomes 
delinquent in its filings with the Canadian commission. The Canadian 
commission subsequently initiates a trading half in the issuer's 
securities. Currently, trading would continue on Nasdaq even though 
regulatory concerns prompted another regulatory entity to halt trading 
in the issuer's securities, because the issuer is in compliance with 
Nasdaq filing requirements. Under the proposed amendments, however, 
Nasdaq could halt trading.
    Specifically, the amendments authorize Nasdaq to halt trading in an 
ADR or other Nasdaq-listed security, when the Nasdaq-listed security 
underlying the ADR is listed on or registered with a national or 
foreign securities exchange or market and trading is halted in the 
security for regulatory reasons by such exchange or market, or 
regulatory authority overseeing such exchange or market. Thus, the 
amendments ensure investor protection because they allow Nasdaq to take 
coordinated action when another market or regulatory authority 
identifies a regulatory basis for halting trading in an issue.
    Third, Rule 4120(a)(1) currently permits Nasdaq to halt trading in 
a Nasdaq-listed security to permit the dissemination of material news, 
and Rules 4120(b)(1)-(3) set out the procedures for doing so.\5\ 
Specifically, Rule 4120(b)(1) requires Nasdaq issuers to inform Nasdaq 
of any material news prior to the release of such information, and Rule 
4120(b)(3) authorizes Nasdaq to evaluate information provided by the 
issuer to determine if trading should be halted prior to the release of 
such information. Rule 4120(b)(3) does not specifically set out 
procedures for initiating a trading halt when Nasdaq is advised of 
material news about a particular Nasdaq issuer and such news emanates 
from a source other than that issuer. For instance, a Nasdaq issuer may 
be subject to an unsolicited take-over bid by another company, of which 
the Nasdaq-listed company is unaware. In such instance, the acquiring 
issuer might disseminate news about the unsolicited take-over bid to 
the public; thus, Nasdaq may learn of information warranting a trading 
halt from a source other than the Nasdaq issuer, such as a news 
headline.\6\ The proposed amendments to Rule 4120(b)(3) and IM-4120-1 
clarify that Nasdaq may halt trading when Nasdaq learns of material 
news about an issuer, regardless of whether the news emanates from the 
particular issuer or from another source. Furthermore, proposed 
amendments to Rule 4120(b)(3) reflect that Nasdaq may halt trading 
without first consulting the issuer about material news because it may 
not be practicable or possible for Nasdaq to do so, such as when 
material news is released (without consultation with Nasdaq) by a 
source other than the issuer.
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    \5\ The proposed change to Rule 4120(a)(1) specifies that 
trading in a Nasdaq-listed security may be halted ``to permit'' the 
dissemination of material news. (Rule 4120(a)(1) currently provides 
that trading in a Nasdaq-listed security may be halted ``pending'' 
the dissemination of material news.) The rule is being amended to 
specifically authorize Nasdaq to halt trading when material news 
technically is not ``pending'' but a trading halt is necessary to 
protect investors and maintain an orderly market. For example, there 
are instances where Nasdaq is not advised of pending material news, 
material news is disseminated partially, and Nasdaq learns of such 
news, and Nasdaq quickly determines that a halt is necessary to 
permit complete dissemination of the material news. Additionally, 
the amendments to Rule 4120(a)(1) will bring it into parity with the 
language in Rule 4120(a)(2).
    \6\ If the company initiating the unsolicited take-over bid is a 
Nasdaq issuer, that company--in certain circumstances--may not be 
required to report the take-over bid to Nasdaq if such information 
is not material to the company. Thus, even if the company initiating 
the bid is listed on Nasdaq, Nasdaq may not be apprized of such 
information by either the Nasdaq company which is initiating the 
unsolicited take-over or the Nasdaq company which is the target of 
the unsolicited take-over.
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    Next, the proposed amendments permit Nasdaq to halt trading when 
Nasdaq requests information from an issuer relating material news or 
qualification matters. For example, Nasdaq may be advised of material 
news about an issuer which appears to be

[[Page 53365]]

factually inaccurate or incomplete. This incomplete or inaccurate 
disclosure may raise regulatory and listing qualification issues (i.e., 
whether the issuer is in compliance with all Nasdaq listing 
requirements, as set out in the Rule 4300 and 4400 Series), which 
Nasdaq staff would thoroughly investigate, i.e., when a Nasdaq-listed 
company issues a press release making highly questionable claims of 
significant discovery. The Nasdaq company is unable to immediately 
substantiate the basis for the claims, which raises serious concerns 
with Nasdaq as to the accuracy of the company's public statement. 
Accordingly, Nasdaq staff determines that additional information from 
the issuer is required to evaluate whether the company's public 
statement is accurate or requires further clarification. The proposed 
amendments permit Nasdaq, upon the request of certain information, to 
halt trading so that it may determine whether continued trading is 
advisable once the information is received and reviewed.
    Nasdaq is proposing to amend IM-4120-1 to clarify that all trading 
halts initiated under Rule 4120--not just those imposed to permit the 
dissemination of material news--generally last one half hour, but may 
last longer if necessary to permit the dissemination of material news 
or if the original or an additional basis under Rule 4120(a) exists for 
continuing the halt. Furthermore, the statement in IM-4120-1 that 
Nasdaq will keep denials of rumors confidential is deleted to reflect 
Nasdaq's policy of issuing press releases indicating that MarketWatch 
has reviewed unusual trading activity, has contacted the issuer, and is 
not initiating a halt because it has not been advised of a basis for 
doing so.\7\
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    \7\ Note that under the proposed amendments, Nasdaq still is 
required to keep confidential all non-public information and use 
such information only for regulatory purposes.
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    The proposed amendments also include minor conforming changes to 
both Rule 4120 and IM-4120-1. For example, the procedures for halting 
trading have been consolidated into a revised Rule 4120(b)(4) in light 
of the inclusion of the additional bases for initiating trading halts. 
References in Rule 4120 and IM-4120-1 to the ``Association'' and 
``Market Regulation Department'' have been replaced with references to 
``Nasdaq'' and ``MarketWatch Department'' respectively, to reflect that 
Nasdaq has authority for trading halts under the Plan of Allocation and 
Delegation of Functions by NASD to Subsidiaries. Changes to Rule 
4120(b)(2) reflect that issuers may notify MarketWatch of material news 
by facsimile, as well as by telephone--which is stated in the 
accompanying footnote to the rule but not in the rule text. Finally, 
references in Rules 6350(b) and 6430(b) to operational trading halts 
for ITS/CAES market makers have been changed to reflect that Rule 4120 
will authorize Nasdaq to initiate trading halts for CQS market makers, 
as well as ITS/CAES market makers.
    Nasdaq believes that the proposed rule change is consistent with 
the provisions of Section 15A(b)(6) of the Act, in that it is 
designated to prevent fraudulent and manipulative acts and practices, 
to promote just and equitable principles of trade, to remove impediment 
to and perfect the mechanism of a free and open market and a national 
market system, and, in general, to protect investors and the public 
interest. As noted above, the proposed rule change will expand Nasdaq's 
authority to initiate regulatory trading halts when it learns of 
regulatory concerns (either through a regulatory trading halt by 
another market or incomplete or inaccurate disclosure from the issuer), 
and thus will prevent fraudulent practices and protect investors. The 
proposed rule changes also will broaden Nasdaq's authority to impose 
operational trading halts in the over-the-counter markets when market 
conditions so warrant, and thus will remove impediments to and perfect 
the mechanism of a free and open market.

B. Self-Regulatory Organization's Statement on Burden on Competition

    Nasdaq does not believe that the proposed rule change will result 
in any burden on competition that is not necessary or appropriate 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

    Within 35 days of the date of publication of this notice in the 
Federal Register or within such longer period (i) as the Commission may 
designate up to 90 days of such date if it finds such longer period to 
be appropriate and published its reasons for so finding or (ii) as to 
which the self-regulatory organization consents, the Commission will:
    A. By order approve such proposed rule change, or
    B. Institute proceedings to determine whether the proposed rule 
change should be disapproved.

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 number SR-NASD-97-60 and 
should be submitted by November 3, 1997.

    For the Commission, by the Division of the Market Regulation, 
pursuant to delegated authority.\8\
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    \8\ 17 CFR 300.30(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 97-27049 Filed 10-10-97; 8:45 am]
BILLING CODE 8010-01-M