[Federal Register Volume 65, Number 69 (Monday, April 10, 2000)]
[Rules and Regulations]
[Page 18888]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-8873]


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SECURITIES AND EXCHANGE COMMISSION

17 CFR Part 242

[Release No. 34-42603A; File No. S7-12-98]
RIN 3235-AH41


Regulation of Alternative Trading Systems; Temporary Stay of 
Effectiveness

AGENCY: Securities and Exchange Commission.

ACTION: Temporary stay of effectiveness.

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SUMMARY: The Securities and Exchange Commission stays the effectiveness 
of Rules 301(b)(5)(i)(D) and (E) and 301(b)(6)(i)(D) and (E) until 
December 1, 2000. This would provide sufficient time for a reporting 
system to be developed that would compile and publish data for 
investment grade and non-investment grade corporate market segments. 
These provisions relate to alternative trading systems that trade 
certain categories of debt securities. The other alternative trading 
system rules, which were published in 63 FR 70844 on December 22, 1998, 
remain effective as previously stated.

DATES: 17 CFR 242.301(b)(5)(i)(D) and (E) and 242.301(b)(6)(i)(D) and 
(E) are stayed until December 1, 2000.

FOR FURTHER INFORMATION CONTACT: Constance Kiggins, Senior Special 
Counsel, at (202) 942-0059, and Kevin Ehrlich, Attorney, at (202) 942-
0778, Division of Market Regulation, Securities and Exchange 
Commission, 450 Fifth Street, N.W., Washington, D.C. 20549-1001.

SUPPLEMENTARY INFORMATION:

I. Background

    On December 8, 1998, the Securities and Exchange Commission 
(``Commission'') adopted new rules and rule amendments to allow 
alternative trading systems to choose whether to register as national 
securities exchanges, or to register as broker-dealers and comply with 
additional requirements under Regulation ATS, depending on their 
activities and trading volume.\1\ The effective date for most of these 
new rules and rule amendments was April 21, 1999. The Commission stated 
in the adopting release that Rules 301(b)(5)(i)(D) and (E) and 
301(b)(6)(i)(D) and (E) would become effective on April 1, 2000. These 
rules relate to certain requirements for alternative trading systems 
that trade investment grade and non-investment grade corporate debt 
securities. For alternative trading systems trading 20 percent or more 
of the average daily trading volume over at least four of the preceding 
six months in either investment grade or non-investment grade corporate 
debt securities, the fair access and systems capacity, security, and 
integrity requirements were to take effect on April 1, 2000.
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    \1\ Securities Exchange Act Release 40760 (Dec. 8, 1998), 63 FR 
70844 (Dec. 22, 1998) (``Adopting Release'').
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II. Temporary Stay of Effectiveness of Rules 301(b)(5)(i)(D) and 
(E) and 301(b)(6)(i)(D) and (E)

    In the Adopting Release, we noted that volume data for investment 
grade and non-investment grade corporate debt was not being compiled or 
published. Accordingly, market participants and regulators had no 
mechanism to determine what the aggregate daily trading volume is for 
either investment grade corporate bonds or non-investment grade 
corporate bonds. The Commission had anticipated that a comprehensive 
reporting system for corporate debt would be in place by April 1, 2000 
that would have allowed market participants to access aggregate data 
with which to determine their own compliance with the rules. While 
efforts are ongoing to complete such a system, no such comprehensive 
reporting system is currently in place. The Commission currently 
believes that staying the effectiveness of Rules 301(b)(5)(i)(D) and 
(E) and 301(b)(6)(i)(D) and (E) until December 1, 2000 would provide 
sufficient time for a system to be developed and implemented that would 
compile and publish data for both market segments.\2\
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    \2\ The Commission, however, believes that good business 
practice dictates that alternative trading systems adopt the 
standards of systems capacity, security, and integrity regardless of 
their trading volume.

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    By the Commission.

    Dated: March 31, 2000.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 00-8873 Filed 4-7-00; 8:45 am]
BILLING CODE 8010-01-U