[Federal Register Volume 63, Number 185 (Thursday, September 24, 1998)]
[Notices]
[Pages 51108-51110]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-25492]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-40443; File No. SR-NASD-98-67]
Self-Regulatory Organizations; Notice of Filing of Proposed Rule
Change and Amendment No. 1 Thereto by the National Association of
Securities Dealers, Inc. Relating to Policies Regarding Authority Over
American Stock Exchange LLC and Composition of Board of Governors of
American Stock Exchange LLC
September 16, 1998.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Exchange Act'' or ``Act''),\1\ notice is hereby given that on
September 14, 1998, the National Association of Securities Dealers,
Inc. (``NASD'' or ``Association'') 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 the self-regulatory organization. The NASD filed an
amendment to the filing on September 16, 1998.\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\ See Letter to Katherine England, Commission, from T. Grant
Callery, NASD, dated September 16, 1998 (``Amendment No. 1'').
Amendment No. 1 replaces entirely the Exhibit No. 1 originally
submitted with the rule filing.
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I. Self-Regulatory Organization's Statement of the Terms of
Substance of the Proposed Rule Change
The NASD has filed a proposed rule change to state two policies
regarding NASD's oversight of American Stock Exchange LLC (``Amex
LLC'') and the composition of the Board of Governors of Amex LLC. Below
is the text of the proposed rule change:
Policy With Respect to Authority Over American Stock Exchange LLC
Under the Transaction Agreement dated as of May 8, 1998, by and
among the NASD, American Stock Exchange, Inc., and certain other
related parities (the ``Transaction Agreement'' and, together with the
agreements and other documents attached thereto, the ``Transactional
Documents''), Amex LLC will be and remain a self-regulatory
organization registered under Section 6 of the Act, and as such will
have statutory authority and responsibility over, among other things,
the disciplining of its members, the amendment, repeal or addition of
provisions to its Constitution and Rules (subject only to the power of
the NASD to withhold consent to any such action affecting the
Constitution of Amex LLC), the listing and delisting of securities, the
grant or denial of membership in Amex LLC and approval of status as an
approved person or allied member, and the grant or denial of access of
facilities of and services offered by Amex LLC, all subject to the
power of the Securities and Exchange Commission under the Securities
Exchange Act of 1934 (the ``Act'').
Subject to the terms and conditions of the Transactional Documents,
the NASD will enjoy a controlling interest in Amex LLC, including in
the selection of a majority of the Amex LLC Board of Governors and,
through its influence over the Board of Governors, in the allocation of
the resources of Amex LLC.
[[Page 51109]]
As the parent company of Amex LLC, the NASD will be responsible to
ensure that Amex meets it obligations as a self-regulatory
organization. It will be the policy of the NASD that in discharging
that responsibility the NASD will be governed by the following
principles:
1. The NASD will exercise its powers and its managerial influence
to ensure that the Amex LLC fulfills its self-regulatory obligations
by:
Directing Amex LLC to take action necessary to effectuate its
purposes and functions as a national securities exchange operating
pursuant to the Act; and Ensuring that Amex LLC has and appropriately
allocates such financial, technological, technical, and personnel
resources as may be necessary or appropriate to meet its obligations
under the Act.
2. The NASD will refrain form taking any action with respect to
Amex LLC that, to the best of its knowledge, would impede, delay,
obstruct, or conflict with efforts by Amex LLC to carry out its self-
regulatory obligations under the Act and the rules and regulations
thereunder.
Policy With Respect to Composition of Board of Governors of
American Stock Exchange LLC
Section 9.12(d) of the Transaction Agreement dated as of May 8,
1998, by and among the NASD, American Stock Exchange, Inc., and certain
other related parties (the ``Transaction Agreement'') and Article II,
Sec. 04(a)(4) of the Constitution of American Stock Exchange LLC
(``Amex LLC'') provide that the Board of Governors of Amex LLC will
include two representatives of NASD staff appointed by the NASD.
To assure substantial and meaningful input by the public in the
governance of Amex LLC the NASD will use its appointment power to fill
one of those two positions with a representative of the staff who is
not an employee of and has no material business relationship with a
broker or dealer or with the NASD, NASD Regulations, The Nasdaq Stock
Market, or Amex LLC, but who be an officer or employee of an issuer of
securities listed on Nasdaq or Amex LLC or traded in the over-the-
counter market.
* * * * *
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 self-regulatory organization
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 self-regulatory organization
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
1. Purpose
The proposed rule change has two purposes. First, with regard to
NASD's authority over Amex LLC (the successor operating organization to
the American Stock Exchange), the proposed rule change is intended to
clarify the NASD's intent that, upon closing of the Transaction
Agreement dated as of May 8, 1998, by and among the NASD, the American
Stock Exchange, Inc., and certain other related parties, the NASD will
be responsible to ensure that Amex LLC will fulfill its self-regulatory
obligations and will have the resources necessary for it to do so.
Second, with regard to the composition of the Board of Governors of
Amex LLC, the proposed rule change is intended to ensure sufficient
non-Industry representation on that Board.
Summary of Proposed Rule Change
Policy With Respect to Authority Over American Stock Exchange LLC
This part of the proposed rule change sets forth certain principles
that will guide the NASD in its fulfillment of its responsibilities as
parent company of Amex LLC with ultimate responsibility for Amex LLC's
compliance with its statutory responsibilities as a self-regulatory
organization.
Policy With Respect to Composition of Board of Governors of
American Stock Exchange LLC
This part of the proposed rule change states the NASD's policy
that, in order to assure substantial and meaningful input by persons
outside the securities industry in the governance of Amex LLC, the NASD
will appoint as one of the two representatives of NASD staff on the
Amex LLC Board of Governors, a person who is not an employee of and has
no material business relationship with a broker or dealer or with the
NASD, NASD Regulation, The Nasdaq Stock Market, or Amex LLC, but who
may be an officer or employee of an issuer of securities listed on
Nasdaq or Amex LLC or traded in the over-the-counter market.
2. Statutory Basis
NASD believes that the proposed rule change is consistent with the
provisions of Sections 15A(b)(2) and 15A(b)(4) of the Act, which
require, among other things, that the NASD's rules must be designed to
carry out the purposes of the Act, and to assure a fair representation
of its members in the administration of its affairs.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Association does not believe that the proposed rule change will
impose any inappropriate burden on competition.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were either solicited or received.
III. Date of Effectiveness of the Proposed Rule Change and Timing
for Commission Action
Within 35 days of the 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 publishes its reasons for so finding or (ii) as to
which the self-regulatory organization consents, the Commission will:
(A) By order approve the 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, including whether the proposed rule
change is consistent with the Act. Persons making written submissions
should file six copies thereof with the Secretary, Securities and
Exchange Commission, 450 Fifth Street, NW, Washington DC 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 located at the above address. Copies
of such filing will also be
[[Page 51110]]
available for inspection and copying at the principal office of the
NASD. All submissions should refer to File No. SR-NASD-98-67 and should
be submitted by October 15, 1998.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\3\
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\3\ 17 CFR 200.30-3(a)(12).
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Jonathan G. Katz,
Secretary.
[FR Doc. 98-25492 Filed 9-23-98; 8:45 am]
BILLING CODE 8010-01-M