[Federal Register Volume 64, Number 47 (Thursday, March 11, 1999)]
[Notices]
[Pages 12198-12202]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-6044]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-41128; File No. SR-NASD-99-09]


Self-Regulatory Organizations; Notice of Filing of Proposed Rule 
Change by the National Association of Securities Dealers, Inc. Relating 
to the Establishment of an Agency Quotation in Nasdaq

March 2, 1999.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on February 3, 1999, 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. 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\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of 
Substance of the Proposed Rule Change

    Nasdaq is proposing to permit the separate display of customer 
orders by market makers in Nasdaq through a market maker agency 
identification symbol. Below is the text of the proposed rule change. 
Proposed new language is italicized; proposed deletions are in 
brackets.
    Rule 4613. Character of Quotations.

(a) Two-Sided Quotations

    (1) For each security in which a member is registered as a market 
maker, the member shall be willing to buy and sell such security for 
its own account on a continuous basis and shall enter and maintain two-
sided quotations in The Nasdaq Stock Market, subject to the procedures 
for excused withdrawal set forth in Rule 4619.
    (A) If a market maker updates the price of its bid or offer without 
any accompanying update to the size of such bid or offer, the size of 
the updated bid or offer shall be the size of the previous bid or 
offer.
    (B) Notwithstanding any other provision in this paragraph (a), in 
order to display a limit order in compliance with SEC Rule 11Ac1-4, a 
registered market maker's displayed quotation size may be for one 
normal unit of trading or a larger multiple thereof.
    (C) A registered market maker in a security listed on The Nasdaq 
Stock Market must display a quotation size for at least one normal unit 
of trading (or a larger multiple thereof) when it is not displaying a 
limit order in compliance with SEC Rule 11Ac1-4, provided, however, 
that a registered market maker may augment its displayed quotation size 
to display limit orders priced at the market maker's quotation.
    (D) A market maker registered as such in a Nasdaq National Market 
Security may also maintain a separate agency quotation for that 
security, pursuant to the requirements of subparagraph (b) of this rule 
(``Agency Quotation'').
    (2)-(5) No Change.

[[Page 12199]]

(b) Agency Quotations

    For each Nasdaq National Market Security in which a member is 
registered as a market maker, that member may display in The Nasdaq 
Stock Market an Agency Quote (separate from its proprietary quotation 
required by paragraph (a) of this rule), pursuant to the following 
requirements and conditions:
    (1) the Agency Quotation may be used to display customer orders, 
but shall not be used to display the market maker's own proprietary 
interest or the proprietary interest of another member who is 
registered as a market maker in the security at issue; provided, 
however, that a market maker may display in the Agency Quote a 
proprietary interest that represents a portion of a customer order that 
the market maker contemporaneously has filled from inventory;
    (2) the Agency Quote may be one sided, two sided, or in a closed-
quote state, and shall not be subject to the procedures for excused 
withdrawal set forth in Rule 4619;
    (3) Nasdaq shall assign a market maker identifier (``MMID'') to the 
Agency Quote that is distinct from the MMID for the market maker's 
proprietary quote.
    (b) and (c)--Redesigned as (c) and (d) respectively
    (d) Reasonably Competitive Quotations--Deleted.\3\
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    \3\ See Exchange Act Release No. 39120 (Sept. 23, 1997), 62 FR 
51170 (Sept. 30, 1997) (Order approving SR-NASD-97-70 eliminating 
the NASD's excess spread rule as of October 13, 1997).
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    (e) Locked and Crossed Markets--No Change

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

(1) Purpose
    Nasdaq is proposing to allow market makers in Nasdaq National 
Market Securities (``NNM'') to display in Nasdaq a second quotation 
separate from their proprietary quotation for the purpose of displaying 
customer interest. This second quotation--the Agency Quote--would 
facilitate the display and execution of agency orders in NNM 
securities. Nasdaq states that the purpose of the Agency Quote is to 
give market makers more flexibility in determining how they wish to 
handle customer orders and other agency business. Instead of having to 
display a customer limit order in their proprietary quote or in a 
qualifying electronic communications network (``ECN'''), market makers 
would also be able to display the order in their Agency Quote. Thus, 
Nasdaq believes that the proposal will allow market makers to regain 
control over their proprietary quotes that was lost with the 
introduction of the SEC's Order Handling Rules (``Order Handling 
Rules'' or ``OHR'').\4\
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    \4\ See Exchange Act Release No. 37619A (Sept. 6, 1996), 61 FR 
48290 (Sept. 12, 1996).
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    (a) Proprietary Quotes and SEC Order Handling Rules. Currently, a 
member registers as market maker in a particular stock by obtaining 
authorization from Nasdaq to display a proprietary quotation in the 
Nasdaq quote montage.\5\ Such quotation is identified with a four 
character identifier unique to that market maker (``market maker 
identifier'' or ``MMID''), and is sequenced in price/time/size priority 
along with the quotes of other Nasdaq market participants (i.e., market 
makers, ECNs, and UTP exchanges).
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    \5\ See NASD Rule 4611.
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    Nasdaq rules require that each registered market maker display 
during normal market hours (9:30 a.m. to 4:00 p.m.) a continuous and 
two-sided quotation with a designated price and size.\6\ Once 
registered, market makers are obligated to continue to display two-
sided quotes, unless the market maker withdraws (or is deemed to have 
withdrawn) from registration, subject to certain limited exceptions.\7\
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    \6\ See NASD Rule 4613(a).
    \7\ See NASD Rules 4619 and 4620. If a market maker does not 
qualify for an excused withdrawal under NASD Rule 4619, the 
withdrawal is deemed voluntary and the market maker is subject to a 
20-day penalty before the market maker can re-register in the stock.
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    According to Nasdaq, because of the nature of a dealer market, 
market makers historically have traded as principal rather than agent 
and market maker quotes historically have represented the market 
maker's willingness to buy or sell as principal a particular stock at a 
stated price and size. Nasdaq maintains that although market maker 
quotes are firm, and generally represented only the market maker's 
proprietary trading interest prior to 1997, market makers often were 
willing to trade well in excess of their quoted size.
    In Janaury of 1997, however, the Commission implemented the Order 
Handling Rules, which incorporated into Nasdaq some principles of 
auction markets. Specifically, the SEC adopted Rule 11Ac1-4 (``Display 
Rule''),\8\ which requires market makers to display customer limit 
orders that: (1) are priced better than a market maker's quote; or (2) 
add to the size of a market maker's quote when the market maker is at 
the best bid or best offer (``BBO'') in Nasdaq.\9\ The SEC also adopted 
amendments to its Firm Quote Rule--Rule 11Ac1-1 under the Act \10\--
which require a market maker to make publicly available any superior 
prices that it privately quotes through an ECN (``ECN Rule'') by 
either: (1) changing its quote to reflect the superior price in the 
ECN; or (2) delivering better-priced orders to an ECN that disseminates 
these priced orders to the public quotation system and provides broker-
dealers equivalent access to these orders (``ECN Display 
Alternative'').
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    \8\ 17 CFR 240.11Ac1-4.
    \9\ The requirements found in Rule 11Ac1-4 under the Act do not 
apply to any customer limit order that is: (1) executed upon 
receipt; (2) placed by a customer who expressly requests, either at 
the time that the order is placed or prior thereto pursuant to an 
individually negotiated agreement with respect to such customer's 
orders, that the order not be displayed; (3) an odd-lot order ; (4) 
a block size order, unless a customer placing such order requests 
that the order be displayed; (5) delivered immediately upon receipt 
to an exchange or association-sponsored system, or an ECN that 
complies with the requirements of Rule ``11Ac1-1(c)(5)(ii) under the 
Act with respect to that order; (6) delivered immediately upon 
receipt to another exchange member or OTC market maker that complies 
with the requirement of this section with respect to that order; or 
(7) an ``all or none'' order. See 17 CFR 240.11Ac1-4(c).
    \10\ See 17 CFR 240.11Ac1-1.
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    Nasdaq believes that the implementation of the OHR has effected the 
structure of the dealer market and the way in which many market makers 
transact business and process orders. Specifically, with the amendments 
to the Display Rule, customers have the ability to directly effect a 
market maker's quote and advertise their trading interest--along with 
the market maker's proprietary interest--in the market maker's quote. 
Market makers have expressed concern to Nasdaq that the implementation 
of the OHR have caused them (market makers) to ``lose control'' of 
their quotes because market makers must change their proprietary quote 
to reflect certain limit orders and must ``advertise competing 
interests in their quotes.'' Additionally, Nasdaq believes that the OHR 
frequently make

[[Page 12200]]

it difficult for market makers to ``work'' institutional or block-sized 
orders, which generally are accepted on a not-held basis and are for a 
negotiated net price. For example, a market maker may be piecing out 
part of an institutional/block-sized order in its quote (e.g., the 
market maker is displaying a bid for 2,000 shares of a 20,000 share buy 
order) when it receives a 200 share order priced 1/16th better than the 
order being worked. Unless the market maker executes the smaller order 
or sends it to an ECN or another broker-dealer to be displayed, the 
market maker must display the 200 share customer limit order, which may 
impede the market maker's ability to execute the institutional order 
efficiently.
    Nasdaq also believes that the inability of market makers to 
separate their retail and proprietary interest sometimes causes 
confusion to market participants. For example, if a market maker 
displays a 200 share limit order that improves its quote, an 
institutional customer may see the 200 share order in the quote and 
erroneously believe that the quote represents a price level at which 
the market maker wishes to trade proprietarily, for a greater size. 
Thus, institutions may erroneously conclude that the price of a 
displayed customer limit order represents the starting point for 
negotiating the net price the institution will receive or pay if it 
places a large order with the market maker.
    Alternatively, a market maker may send a customer limit order to a 
qualifying ECN or other broker/dealer for handling. Nasdaq contends 
that in these situations, the market maker is, in effect, giving away 
business. Furthermore, transaction costs may increase because the ECN 
may impose a fee on the shipped limit order. In addition, the NASD's 
Manning Interpretation \11\ requires the market maker to retrieve and 
execute the limit order that was sent to the ECN or other market maker 
it the market maker trades at the same or superior price to the limit 
order.\12\ Nasdaq believes that retrieving the customer limit order 
this may be logistically and technologically difficult for the market 
maker. Thus, Nasdaq believes that the OHR have created regulatory and 
administrative difficulties for market makers under certain 
circumstances. Nasdaq notes that it has proposed to establish a limit 
order facility or ``book'' in Nasdaq to address some of the issues 
outlined above, but that such proposals have been unsuccessful in 
obtaining SEC approval and industry support.\13\
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    \11\ Under the Manning Interpretation, a member violates NASD 
Rule 2110, which requires members to observe high standards of 
commercial honor and just and equitable principles of trade, if the 
member accepts and holds an unexecuted limit order from its customer 
(or a customer of another member) in a Nasdaq security and continues 
to trade the security for its own account at prices that would 
satisfy the customer's limit order, without executing that limit 
order. The interpretation further provides that a member firm may 
negotiate specific terms and conditions applicable to the acceptance 
of limit orders only with respect to limit orders that are: (a) for 
customer accounts that meet the definition of an ``institutional 
account'' as defined in Rule 3110(c)(4); or (b) 10,000 shares or 
more, unless such orders are less than $100,000.
    \12\ See NASD Rule 2110 and IM-2110-2; Interpretive Letter by 
Tom Gira, Associate General Counsel, dated July 3, 1997, regarding 
interaction between NASD Rule 2110/IM-2110-2 and Section 206(3) of 
the Investment Advisers Act of 1940 (available on www.nasdr.com).
    \13\ See e.g., SR-NASD-95-42, Exchange Act Release No. 37302 
(June 11, 1996), 61 FR 31574 (June 20, 1996) (Notice of SR-NASD-95-
42 proposing to adopt the NAqcess system).
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    (b) Agency Quote Proposal. Nasdaq believes that the Agency Quote 
proposal is a logical solution to the problem of trying to represent 
both proprietary and agency interest in the same quotation. Nasdaq also 
believes that the Agency Quote proposal should satisfy the interest of 
some market participants who desire to have a limit order display 
capability (or book) in Nasdaq, while addressing concerns that Nasdaq 
should not operate a limit order book that competes with members.
    Under this proposal, Nasdaq would provide market makers with the 
ability voluntarily display a separate and uniquely identified 
quotation in the Nasdaq quote montage for displaying customer orders in 
NNM securities. As proposed, market makers would be permitted to 
establish a second MMID for Agency Quotes in stocks in which the firm 
is a registered market maker in an NNM security.\14\ Nasdaq initially 
is proposing to limit the Agency Quote capability to NNM securities so 
that it can develop experience with this type of facility and study the 
effects of the proposal on the market, before proposing to expand the 
concept to the a Nasdaq SmallCap Market.
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    \14\ If a market maker withdraws from a security on an unexcused 
basis, the firm is deemed to have been withdrawn from registration 
as a market maker and therefore will not be permitted to maintain an 
Agency Quote. See NASD Rules 4619 and 4620. Similarly, if a firm 
withdraws on an excused basis, the firm would be permitted to 
maintain an Agency Quote during the excused withdrawal period. See 
id.
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    The proposal would permit market makers to publish a one-sided as 
well as a two-sided Agency Quote, and would permit market makers to 
leave their Agency Quote inactive. Market makers could display in the 
Agency Quote their own customers' orders and the orders of other 
broker/dealers. Market makers could choose to reflect the order, in 
whole or in part, in the Agency Quote. (Of course, a market maker could 
continue to represent a customer limit order in its proprietary quote.) 
A market maker would not be permitted, however, to display in the 
Agency Quote its own proprietary interest or the proprietary interest 
of another broker/dealer that also is a registered market maker in the 
security at issue. The rule provides, however, an exception to this 
general prohibition, which would allow a market maker to display in the 
Agency Quote a proprietary interest that represents a portion of a 
customer order that the market maker has contemporaneously filled from 
its inventory. This exception would assist market makers in working 
large customer orders. Thus, a market maker would be able to stop a 
portion of an institutional order, fill the stopped portion from 
inventory, and display the stopped portion in its Agency Quote.\15\ 
Accordingly, market makers could use the Agency Quote to work an 
institutional-sized order by displaying the entire order, or portions 
of the order, in the quote.
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    \15\ As noted infra, if a market maker executed its proprietary 
interest displayed in the Agency Quote, the market maker would still 
be obligated under the Manning Interpretation to protect any limit 
order covered by Manning that may have been transferred to another 
broker-dealer or ECN for execution.
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    For example, a market maker working a 20,000 share order could 
display 1,000 shares at a time in its Agency Quote. As noted above, the 
market maker also could use the Agency Quote to offset orders that were 
contemporaneously (and previously) executed with a customer that were 
part of an institutional order. Thus, if a market maker received an 
order to buy 100,000 shares from a customer and the market maker 
immediately sold the customer 60,000 shares out of the market maker's 
inventory, the market maker could thereafter reflect the 60,000 shares 
in its Agency Quote (in full or incrementally) or cold reflect the full 
100,000 shares in the Agency Quote (i.e., 60,00 shares proprietary and 
40,000 shares agency).
    Under the proposed rule change, the Manning Interpretation will 
continue to apply to both the market maker's proprietary and Agency 
Quotes. Therefore, a market maker will still be prohibited from trading 
ahead of customer orders, whether the order was reflected in the market 
maker's proprietary quote or Agency Quote.\16\ In

[[Page 12201]]

addition, Agency Quotes will be available for auto-execution through 
SOES or its successor system.\17\ Any execution effected through the 
automated facilities of Nasdaq against the Agency Quote would be 
reported by the Nasdaq system.\18\ Nasdaq also will permit Agency 
Quotes to use a supplemental size (i.e., reserve size) feature, so that 
a customer could have a portion of its order displayed in the quote, 
with the remainder of the order in reserve to be displayed in pieces 
after the displayed portion is executed.
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    \16\ As is the case today, a market maker could trade at a price 
equal or superior to a customer limit order if the market maker had 
negotiated ``terms and conditions'' consistent with the exception in 
the Manning Interpretation. See note 11, supra.
    \17\ Nasdaq has submitted a rule proposal to functionally 
integrate the SOES and SelectNet systems. See File No. SR-NASD-99-
11.
    \18\ Under the NASD's riskless principal rule proposal currently 
on file with the SEC, the market maker would not be required to 
report the offsetting buy/sell to the customer so long as the two 
transactions (e.g., the sale to the market maker and offsetting buy 
from the customer) were done contemporaneously at the same price. 
See Exchange Act Release No. 40382 (Aug. 28, 1998), 63 FR 47337 
(Sept. 4, 1998) (notice for SR-NASD-98-59 relating to trade 
reporting).
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    This proposal would provide a facility for the display and the 
automatic execution of customer limit orders, and would also allow 
market makers to retain their limit order business. Thus, the proposal 
should satisfy the interest of some market participants who desire to 
have a limit order display capability in Nasdaq, and allay some 
concerns that Nasdaq should not operate a limit order book that 
competes with members. Because quotes will be more easily identifiable 
as either proprietary or agency, the proposal should also allow market 
participants to better identify the prices and sizes at which market 
makers wish to trade proprietarily. Thus, the proposal should 
facilitate the negotiation of trades between market makers and 
institutions, as well as other market participants.
    (c) Fees for Accessing Agency Quotations. Currently, many ECNs 
charge fees to market participants (and ECN subscribers) that execute 
against a customer order that is displayed in the ECN. Although market 
makers currently may not charge a similar fee when their public quotes 
are accessed, market makers have expressed a desire to do so, in 
particular since they often are acting as agent by displaying a 
customer's interest in their quote. Some market makers argue that it is 
inequitable that ECNs are permitted to charge a fee when their quote is 
accessed, but market makers are prohibited from charging a fee in 
similar situations when they act as agent.\19\ Nasdaq notes, however, 
that in the past it was impossible to readily determine whether a 
market maker's quote represented its customers' interest or its 
proprietary interest, and thus whether it was acting as principal or 
agent. The Agency Quote proposal, if adopted, should change the 
structure of the market so it will be clear that when the market 
maker's Agency Quote is accessed, it is acting as agent.\20\ In light 
of the foregoing, Nasdaq plans to file a proposal shortly that would 
permit market makers to charge a fee when their Agency is accessed, 
similar to what ECNs currently may do.\21\ Nasdaq anticipates that the 
Agency Quote Fee proposal will require market makers and ECNs to round 
their quotes if the market maker's Agency Quote access fee exceeds a 
\1/2\ cent per share.\22\
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    \19\ The Commission has interpreted the Firm Quote Rule to 
prohibit market maker fees for access to their public quotes. The 
Commission also believes that ECNs are not subject to the same 
obligations as market makers under SEC Rule 11Ac1-1(c)(5)(ii). See 
Letters from Robert L.D. Colby, Deputy Director, Division of Market 
Regulation (``Division''), Commission, to Joseph G. Messina, Vice 
President, M.H. Meyerson & Co., Inc., dated June 12, 1998 and Louis 
B. Todd, Jr., Partner--Head of Equity Trading, J.C. Bradford & Co., 
dated August 6, 1998.
    \20\ The Commission notes that as proposed, a market maker could 
display its proprietary interest in the Agency Quote if the maker 
had previously and contemporaneously executed a customer order. As 
proposed, this proprietary interest would not be identified as such 
in the Agency Quote.
    \21\ At this time, the Commission offers no opinion regarding 
the forthcoming Agency Quote Fee proposal's consistency with the 
Firm Quote Rule.
    \22\ Nasdaq believes the pending Agency Quote fee proposal 
should, among other things, increase price transparency and help to 
identify potential best execution issues. Telephone conversation 
between John Malitzis, Assistant General Counsel, Office of the 
General Counsel, Nasdaq and Marc McKayle, Attorney, Division, 
Commission, on March 1, 1999.
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(2) Statutory Basis
    Nasdaq believes that the proposed rule change is consistent with 
the provisions of Sections 15A(b)(6),\23\ 15A(b)(11),\24\ and 11A of 
the Act.\25\ Section 15A(b)(6) \26\ requires that the rules of a 
registered national securities association are designed to prevent 
fraudulent and manipulative acts and practices, to promote just and 
equitable principles of trade, to foster cooperation and coordination 
with persons engaged in regulating, clearing, settling, processing 
information with respect to, and facilitating transactions in 
securities, to remove impediments 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; these rules must not be 
designed to permit unfair discrimination between customers, issuers, 
brokers, or dealers. Section 15A(b)(11) \27\ requires that the rules of 
a registered national securities association be designed to produce 
fair and informative quotations, prevent fictitious or misleading 
quotations and to promote orderly procedures for collecting, 
distributing, and publishing quotations. Section 11A(a)(1)(C) \28\ 
provides that it is in the public interest and appropriate for the 
protection of investors and the maintenance of fair and orderly markets 
to assure: (1) Economically efficient execution of securities 
transactions; (2) fair competition among brokers and dealers; (3) the 
availability to brokers, dealers and investors of information with 
respect to quotations and transactions in securities; (4) the 
practicability of brokers executing investors' orders in the best 
market; and (5) an opportunity for investors' orders to be executed 
without the participation of a dealer.
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    \23\ 15 U.S.C. 78o-3(b)(6).
    \24\ 15 U.S.C. 78o-3(b)(11.
    \25\ 15 U.S.C. 78k-1.
    \26\ 15 U.S.C. 78o-3(b)(6).
    \27\ 15 U.S.C. 78o-3(b)(11.
    \28\ 15 U.S.C. 78k-1(a)(1)(C).
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    Nasdaq believes that the proposal will provide another mechanism--
and therefore make it easier--for market makers to display limit orders 
and to comply with their obligations under the Order Handling Rules. 
Thus, Nasdaq believes that the proposed rule change is consistent with 
Section 11A \29\ and the SEC's Order Handling Rules,\30\ and, in 
particular, the Display Rule.\31\ Additionally, customer limit orders 
placed in the Agency Quote will be subject to auto-execution through 
SOES or Nasdaq's successor system. Thus, the proposal should assure the 
practicability of brokers executing investors' orders in the best 
market and assure an opportunity for investors' orders to be executed 
without the participation of a dealer. Additionally, by giving market 
makers the choice to display agency interest in a separate quote 
instead of sending the order to an ECN, transaction costs may be 
reduced.
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    \29\ U.S.C. 78k-1.
    \30\ See note 4, supra.
    \31\ See note 8, supra.
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    Nasdaq believes that the proposal also will provide greater 
information to the market and will decrease confusion because market 
participants will be better able to determine whether a quote 
represents a market maker's agency or proprietary interest. Thus, the 
proposal should produce fair and informative quotations and assure the 
availability to brokers, dealers and investors of information with 
respect to quotations and transactions in securities.
    The proposal also will make it easier for investors and market 
participants to determine the price at which a market maker wishes to 
trade proprietary. Thus, the proposal may better facilitate the 
negotiation of trade prices between

[[Page 12202]]

market makers, institutions, and other market participants. 
Accordingly, Nasdaq believes that the proposal will foster cooperation 
and coordination with persons engaged in facilitating securities 
transactions and will remove impediments to and perfect the mechanism 
of a free and open market and a national market system, and protect 
investors and the public interest.

(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 publishes 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, 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, 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-99-09 and should 
be submitted by April 1, 1999.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\32\
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    \32\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 99-6044 Filed 3-10-99; 8:45 am]
BILLING CODE 8010-01-M