[Federal Register Volume 65, Number 166 (Friday, August 25, 2000)]
[Notices]
[Pages 51878-51880]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-21744]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-43165; File No. S7-24-89]


Joint Industry Plan; Solicitation of Comments and Order Approving 
Amendment No. 11 to Reporting Plan for Nasdaq/National Market 
Securities Traded on an Exchange on an Unlisted or Listed Basis, 
Submitted by the National Association of Securities Dealers, Inc., and 
the Boston, Chicago, Philadelphia, and Cincinnati Stock Exchanges and 
the Pacific Exchange

August 16, 2000.

I. Introduction

    On July 5, 2000, the National Association of Securities Dealers, 
Inc. (``NASD''), on behalf of itself and the Boston Stock Exchange, 
Inc. (``BSE'') the Chicago Stock Exchange, Inc. (``CHX''), the 
Philadelphia Stock Exchange, Inc. (``PHLX''), the Pacific Exchange 
(``PCX'') and the Cincinnati Stock Exchange (``Cincinnati'') submitted 
to the Securities and Exchange Commission (``Commission'' or ``SEC'') 
Amendment No. 11 to a joint transaction reporting plan (``Plan'') \1\ 
for Nasdaq/National Market (``Nasdaq/NM'') (previously referred to as 
Nasdaq/NMS) securities traded on an exchange on an unlisted or listed 
basis.\2\ This notice and order approves the amendment, which would add 
PCX as a Participant to the Plan and make a change to the section of 
the Plan entitled ``Symbols for Market Identification for Quotation 
Information and Transaction Reports'' to indicate

[[Page 51879]]

that PCX should be referred to as ``Pacific Stock Exchange.''
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    \1\ Section 12(f) of the Securities Exchange Act of 1934 
(``Act'') describes the circumstances under which an exchange may 
trade a security that is not listed on the exchange, i.e., by 
extending unlisted trading privileges (``UTP'') to the security. See 
15 U.S.C. 78l(f). Section 12(f) required exchanges to apply to the 
Commission before extending UPT to any security. In order to approve 
an exchange UTP application for a registered security not listed on 
any exchange (``OTC/UTP''), Section 12(f) required the Commission to 
determine that various criteria had been met concerning fair and 
orderly markets, the protection of investors, and certain national 
market initiatives. Section 12(f) was amended on October 22, 1994, 
the amendment removed the application requirement. OTC/UTP is now 
allowed only purusant to a Commission order or rule, which is to be 
issued or promulgated under essentially the same standards that 
previously applied to Commission review of UTP applications. The 
present order fulfills these Section 12(f) requirements.
    \2\ The signatories to the Plan, i.e., the NASD, the CHX 
(previously, the Midwest Stock Exchange, Inc.), the PHLX, and the 
BSE, are the ``Participants.'' The BSE, however, joined the Plan as 
a ``Limited Participant,'' and reports quotation information and 
transaction reports only in Nasdaq/NM securities listed on the BSE. 
Originally, the American Stock Exchange, Inc., was a Participant to 
the Plan, but did not trade securities pursuant to the Plan, and 
withdrew from participation in the Plan in August 1994.
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II. Background

    The Commission originally approved the Plan on June 26, 1990.\3\ 
The Plan governs the collection, consolidation and dissemination of 
quotation and transaction information for Nasdaq/NM securities listed 
on an exchange or traded on an exchange pursuant to a grant of UTP.\4\ 
The Commission originally approved trading pursuant to the Plan on a 
one-year pilot basis, with the pilot period to commence when 
transaction reporting pursuant to the Plan commenced. Accordingly, the 
pilot period commenced on July 12, 1993.\5\ The Plan has since been in 
operation on an extended pilot basis.\6\
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    \3\ See Securities Exchange Act Release No. 28146 (June 26, 
1990), 55 FR 27917 (July 6, 1990) (``1990 Approval Order'').
    \4\ See Section 12(f)(2) of the Act. See also December 1998 
Extension Order, infra note 6, for a more in depth description of 
the Plan.
    \5\ See letter from David T. Rusoff, Foley & Lardner, to Betsy 
Prout, Division of Market Regulation SEC, dated May 9, 1994.
    \6\ See Securities Exchange Act Release No. 34371 (July 13, 
1994), 59 FR 37103 (July 20, 1994); Securities Exchange Act Release 
No. 35221 (January 11, 1995), 60 FR 3886 (January 19, 1995); 
Securities Exchange Act Release No. 36102 (August 14, 1995), 60 FR 
43626 (August 22, 1995); Securities Exchange Act Release No. 36226 
(September 13, 1995), 60 FR 40929 (September 21, 1995); Securities 
Exchange Act Release No. 36368 (October 13, 1995), 60 FR 54091 
(October 19, 1995); Securities Exchange Act Release No. 36481 
(November 13, 1995), 60 FR 58119 (November 24, 1995); Securities 
Exchange Act Release No. 36589 (December 13, 1995), 60 FR 65696 
(December 20 1995); Securities Exchange Act Release No. 36650 
(December 28, 1995), 61 FR 358 (January 4, 1996); Securities 
Exchange Act Release No. 36934 (March 6, 1996), 61 FR 10408 (March 
13, 1996); Securities Exchange Act Release No. 36985 (March 18, 
1996), 61 FR 12122 (March 25, 1996); Securities Exchange Act Release 
37689 (September 16, 1996), 61 FR 50058 (September 24, 1996); 
Securities Exchange Act Release No. 37772 (October 1, 1996), 61 FR 
52980 (October 9, 1996); Securities Exchange Act Release No. 38457 
(March 31, 1997) 62 FR 16880 (April 8, 1997; Securities Exchange Act 
Release No. 38794 (June 30, 1997) 62 FR 36586 (July 8, 1997); 
Securities Exchange Act Release No. 39505 (December 31, 1997) 63 FR 
1515 (January 9, 1998); Securities Exchange Act Release No. 40151 
(July 1, 1998) 63 FR 36979 (July 8, 1998); Securities Exchange Act 
Release No. 40869 (December 31, 1998), 64 FR 1834 (January 12, 1999) 
(``December 1998 Extension Order''); Securities Exchange Act Release 
No. 41392 (May 12, 1999), 64 FR 27839 (May 21, 1999) (``May 1999 
Approval Order''); Securities Exchange Act Release No. 42268 
(December 23, 1999) 65 FR 1202 (January 7, 2000); and Securities 
Exchange Act Release No. 43005 (June 30, 2000) 65 FR 42411 (July 10, 
2000).
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III. Description of the Plan

    The Plan provides for the collection from Plan Participants and the 
consolidation and dissemination of vendors, subscribers and others of 
quotation and transaction information in ``eligible securities.'' \7\ 
The Plan contains various provisions concerning its operation, 
including: Implementation of the Plan; Manner of Collecting, 
Processing, Sequencing, Making Available and Disseminating Last Sale 
Information; Reporting Requirements (including hours of operation); 
Standards and Methods of Ensuring Promptness, Accuracy and Completeness 
of Transaction Reports; Terms and Conditions of Access; Description of 
Operation of Facility Contemplating by the Plan; Method and Frequency 
of Processor Evaluation; Written Understandings of Agreements Relating 
to Interpretation of, or Participation in, the Plan; Calculation of the 
Best Bid and Offer; Dispute Resolution, and Method of Determination and 
Imposition, and Amount of Fees and Charges.\8\
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    \7\ The Plan defines ``eligible security'' as any Nasdaq/NM 
security as to which unlisted trading privileges have been granted 
to a national securities exchange pursuant to Section 12(f) of the 
Act or that is listed on a national securities exchange. On May 12, 
1999, the Commission expanded the number of eligible Nasdaq/NM 
securities that may be traded by the CHX pursuant to the Plan from 
500 to 1000. See May 1999 Approval Order, supra  note 6.
    \8\ The full text of the Plan, as well as a ``Concept Paper'' 
describing the requirements of the Plan, are contained in the 
original filing which is available for inspection and copying in the 
Commission's public reference room.
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IV. Discussion

    The Commission finds that it is consistent with Section 11A \9\ of 
the Act to add PCX as a Participant to the Plan and to change the 
section of the Plan entitled ``Symbols for Market Identification for 
Quotation Information and Transaction Reports'' to indicate that PCX 
should be referred to as ``Pacific Exchange'' instead of ``Pacific 
Stock Exchange.'' Section 11A directs the Commission to facilitate the 
development of a national market system for securities, ``having due 
regard for the public interest, the protection of investors, and the 
maintenance of fair and orderly markets,'' and cities as an objective 
of that system the ``fair competition * * * between exchange markets 
and markets other than exchange markets.'' \10\ When the Commission 
first approved the plan on a pilot basis, it found that the Plan 
``should enhance market efficiency and fair competition, avoid investor 
confusion, and facilitate surveillance of concurrent exchange and OTC 
trading.'' \11\ The Commission now finds that adding a Participant to 
the Plan furthers these same goals.
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    \9\ 15 U.S.C. 78k-1. In approving this amendment, the Commission 
has considered the amendment's impact on efficiency, competition, 
and capital formations. 15 U.S.C. 78(c)(f).
    \10\ 15 U.S.C. 78k-1(a)(1)(C)(ii).
    \11\ See supra note 3.
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    Section 1C of the Plan provides that a national securities exchange 
in whose market eligible securities become traded, may become a 
Participant, provided that the exchange executes a copy of the Plan and 
pays its share of development costs as specified in Section XIV of the 
Plan. PCX has filed an executed copy of the Plan with the Commission, 
and the Participants have represented to the Commission that PCX has 
paid its share of the development costs specified in Section XIV of the 
Plan. Accordingly, the Commission finds that the PCX has satisfied the 
requirements listed in the Plan to become a Participant.
    The Commission also finds that the technical amendment to the Plan 
is consistent with the Act. The Commission believes that the Plan 
should accurately reflect the Participants. Thus, it is appropriate 
that all references to the Pacific Stock Exchange are changed to the 
Pacific Exchange.

V. Solicitation of Comment

    Interested persons are invited to submit written data, views and 
arguments concerning the foregoing, including whether the proposed 
amendment 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. 20549-0609. Copies of the submission, all subsequent amendments, 
all written statements with respect to the proposed amendment that are 
filed with the Commission, and all written communications relating to 
the proposed amendment 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. All submissions 
should refer to File No. S7-24-89 and should be submitted by September 
15, 2000.

VI. Conclusion

    It Is Therefore Ordered, pursuant to Sections 12(f) and 11A of the 
Act and paragraph (c)(2) of Rule 11Aa3-2 thereunder, that Amendment No. 
11 to the Plan, is approved.


[[Page 51880]]


    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\12\
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    \12\ 17 CFR 200.30-3(a)(29).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 00-21744 Filed 8-24-00; 8:45 am]
BILLING CODE 8010-01-M