[Federal Register Volume 63, Number 24 (Thursday, February 5, 1998)]
[Notices]
[Pages 5985-5986]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-2887]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-39594; File No. SR-NASD-97-91]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by the National Association of 
Securities Dealers, Inc. Relating to Issuer Filings of Periodic Reports 
Through the EDGAR System

January 28, 1998.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on January 26, 1998, the 
National Association of Securities Dealers, Inc. (``NASD'' or 
``Association''), through its wholly owned subsidiary, The Nasdaq Stock 
Market, Inc. (``Nasdaq''), 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 Nasdaq.\2\ The Commission is publishing this notice to solicit 
comments on the proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ On January 26, 1998, Nasdaq filed Amendment No. 1 to the 
proposal. See Letter from Robert E. Aber, Vice President and General 
Counsel, Nasdaq, to Katherine England, Assistant Director, Division 
of Market Regulation, Commission, dated January 23, 1998 
(``Amendment No. 1''). The NASD initially submitted the proposal on 
December 12, 1997. At the staff's request, however, the NASD filed 
Amendment No. 1 to the proposed rule change on January 26, 1998. 
Amendment No. 1 makes technical corrections to proposed rule 
language and clarifies issues relating to the purpose of, and 
statutory basis for, the proposed rule change.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    Nasdaq, pursuant to Rule 19b-4 under the Act, is herewith filing a 
proposed rule change to NASD Rule 4310 (``Rule 4310'') and NASD Rule 
4320 (``Rule 4320'') to permit issuers that file periodic reports 
through the SEC's Electronic Data Gathering, Analysis, and Retrieval 
(``EDGAR'') system to stop submitting separate paper filings with 
Nasdaq. The full text of the proposed rule change is provided below in 
Exhibit A.

 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

    Rule 4310(c)(14) and Rule 4320(e)(12) require issuers to file with 
the Association and Nasdaq, respectively, three copies of all reports 
filed or required to be filed with the Commission. Rule 4310(c)(14) 
also requires the filing of three copies of ``other documents'' filed 
or required to be filed with the Commission. Effective July 1, 1997, 
Nasdaq implemented its electronic interface with the EDGAR system, the 
SEC's on-line database and filing service. The link provides Nasdaq 
with direct access to an issuer's electronic filings with the 
Commission. Electronic filing enables companies to disseminate 
information to investors and market participants at a faster and more 
cost-effective rate than traditional paper-based filing methods.\3\ To 
relieve companies of the burden and cost of providing separate paper 
copies of filings to Nasdaq, the proposed rule change provides that a 
company that files its periodic reports through EDGAR fulfills its 
filing obligations under NASD Rule 4310 and NASD Rule 4320 and is not 
required to file hard copies with Nasdaq. The proposed rule change does 
not affect companies that do not use EDGAR and instead continue to file 
paper reports with the SEC. These companies are still required to 
provide three copies of all filings to Nasdaq pursuant to Rule 4310 or 
Rule 4320. Finally, the proposed rule also makes conforming changes to 
Rule 4320. Specifically, the proposed rule change conforms the text of 
Rule 4320(e)(12) to the text of Rule 4310(c)(14) by clarifying

[[Page 5986]]

that the rule requires the filing with Nasdaq of ``other documents'' 
and by clarifying that the rule applies to all reports and other 
documents filed with the Commission, even if they are not required to 
be filed.
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    \3\ See Rulemaking for EDGAR Systems, Securities Act Release No. 
6944 (July 23, 1992), 57 FR 35070 (Aug. 9, 1992); Rulemaking for 
EDGAR Systems, Securities Act Release No. 6977 (Feb. 23, 1993), 58 
FR 14628 (Mar. 18, 1993); and Use of Electronic Media for Delivery 
Purposes for discussions of the benefits of electronic filing, 
Securities Act Release No. 7233 (Oct. 6, 1995), 60 FR 53458 (Oct. 
12, 1995).
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    Nasdaq believes that the proposed rule change is consistent with 
Section 15A(b)(6) of the Act. Section 15A(b)(6) requires, among other 
things, that the rules of a national securities association be designed 
to prevent fraudulent and manipulative acts and practices, and to 
remove impediments to and perfect the mechanism of a free and open 
market and a national market system. The use of electronic filing will 
permit Nasdaq to have access to information quickly and efficiently, 
thus assisting Nasdaq in the application of its rules designed to 
prevent fraudulent and manipulative acts and practices. The acceptance 
of electronic filings by Nasdaq also removes an impediment to those 
companies that file electronically with the SEC because those companies 
no longer will be required to separately file paper copies with Nasdaq.

(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

    The proposed rule change has become effective immediately upon 
filing pursuant to Section 19(b)(3)(A)(i) and (iii) of the Act and 
paragraph (e) of Rule 19b-4 thereunder because the proposed rule change 
constitutes a stated policy, practice, or interpretation with respect 
to the meaning, administration, or enforcement of an existing rule of 
the NASD and is concerned solely with the administration of the NASD. 
The proposed rule change merely provides an alternative method for an 
issuer to satisfy an existing requirement in the NASD Rules to provide 
information to Nasdaq, thereby removing an unnecessary burden on 
companies that file electronically with the Commission through EDGAR, 
and will not affect the availability of information to Nasdaq or 
investors. At any time within 60 days of the filing of such proposed 
rule change, the Commission may summarily abrogate such rule change if 
it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes 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 File No. SR-NASD-97-91 and should 
be submitted by February 26, 1998.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\4\
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    \4\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.

Exhibit A--Proposed New Language Is in Italics

* * * * *

4310. Qualification Requirements for Domestic and Canadian Securities

    (a)-(b) No change.
    (c) In addition to the requirements contained in paragraph (a) or 
(b) above, and unless otherwise indicated, a security shall satisfy the 
following criteria for inclusion in Nasdaq:
    (1)-(13) No change.
    (14) The issuer shall file with the Association three (3) copies of 
all reports and other documents filed or required to be filed with the 
Commission. This requirement is considered fulfilled for purposes of 
this paragraph if the issuer files the report or document with the 
Commission through the Electronic Data Gathering, Analysis, and 
Retrieval (``EDGAR'') system. An issuer that is not required to file 
reports with the Commission shall file with the Association three (3) 
copies of reports required to be filed with the appropriate regulatory 
authority. All required reports shall be filed with the Association on 
or before the date they are required to be filed with the Commission or 
appropriate regulatory authority. Annual reports filed with the 
Association shall contain audited financial statements.
    (15)-(27) No change.
    (d) No change.

Rule 4320. Qualification Requirements for Non-Canadian Foreign 
Securities and American Depositary Receipts

    (a)-(d) No change.
    (e) In addition to the requirements contained in paragraphs (a), 
(b), or (c) and (d), the security shall satisfy the following criteria 
for inclusion in Nasdaq:
    (1)-(11) No change.
    (12) The issuer shall file with Nasdaq three (3) copies of all 
reports and other documents filed or required to be filed with the 
Commission. This requirement is considered fulfilled for purposes of 
this paragraph if the issuer files the report or document with the 
Commission through the Electronic Data Gathering, Analysis, and 
Retrieval (``EDGAR'') system. All required reports must be filed with 
Nasdaq on or before the date they are required to be filed with the 
Commission.
    (13)-(23) No change.
    (f) No change.

[FR Doc. 98-2887 Filed 2-4-98; 8:45 am]
BILLING CODE 8010-01-M