[Federal Register Volume 65, Number 223 (Friday, November 17, 2000)]
[Notices]
[Pages 69581-69582]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-29446]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-43545; File No. S7-24-89]


Joint Industry Plan; Solicitation of Comments on the Pacific 
Exchange, Inc.'s Request To Expand the Number of Securities Eligible 
for Trading Pursuant to the Reporting Plan for Nasdaq/National Market 
Securities Traded on an Exchange on an Unlisted or Listed Basis

November 9, 2000.

I. Introduction

    On October 16, 2000, the Pacific Exchange, Inc. (``PCX'') submitted 
\1\ to the Securities and Exchange Commission (``Commission'' or 
``SEC'') a request to expand the maximum number of Nasdaq National 
Market (``Nasdaq/NM'') securities eligible for trading \2\ pursuant to 
the Joint Transaction Reporting Plan for the Nasdaq/National Market 
Securities Traded on an Exchange on an Unlisted or Listed Basis 
(``Plan'').\3\ The current maximum number of eligible Nasdaq/NM 
securities that may be traded pursuant to UTP is 1000 securities.\4\ 
The Commission is soliciting comment on whether to expand the number of 
eligible Nasdaq/NM securities that may be traded by a national 
securities exchange pursuant to the Plan to include all Nasdaq/NM 
securities.
---------------------------------------------------------------------------

    \1\ See Letter from Thomas E. Connaghan, Senior Vice President 
Equities, PCX, to Mr. Robert L.D. Colby, Deputy Director, Division 
of Market Regulation, SEC, and Mr. Robert Aber, Senior Vice 
President and General Counsel, The Nasdaq Stock Market, Inc. 
(``Nasdaq'') (Oct. 16, 2000).
    \2\ 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. 781(f). Section 12(f) required exchanges to apply to The 
Commission before extending UTP to any security. 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 pursuant 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.
    \3\ The signatories to the Plan, i.e., the National Association 
of Securities Dealers, Inc. (``NASD''), the Boston Stock Exchange, 
Inc. (``BSE''), the Chicago Stock Exchange, Inc. (``CHX'') 
(previously, the Midwest Stock Exchange, Inc.), the Philadelphia 
Stock Exchange, Inc. (``PHLX''), the PCX, and the Cincinnati Stock 
Exchange (``CSE'') 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.
    \4\ Exchange trading in Nasdaq/NM securities began in April 1987 
when the CHX began trading 25 Nasdaq/NM securities. See Securities 
Exchange Act Release No. 24406 (April 29, 1987), 52 FR 17495 (May 8, 
1987). The Commission increased the maximum number of eligible 
securities from 25 to 100 in 1991, from 100 to 500 in 1995, in 
response to a request from the CHX, and from 500 to the current 1000 
limit in 1999, again in response to a request from the CHX. See 
Securities Exchange Act Release No. 28146 (June 26, 1990), 55 FR 
27917 (July 6, 1990); Securities Exchange Act Release No. 36102 
(Aug. 14, 1995), 60 FR 43626 (Aug. 22, 1995); and Securities 
Exchange Act Release No. 41392 (May 12, 1999), 64 FR 27839 (May 21, 
1999).
---------------------------------------------------------------------------

II. Background

    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.\5\ 
The Commission approved trading pursuant to the Plan on a one-year 
pilot basis, with the pilot period to commence when trasnaction 
reporting pursuant to

[[Page 69582]]

the Plan commenced. The Commission originally approved the Plan on June 
26, 1990.\6\ Accordingly, the pilot period commenced on July 12, 1993 
and was scheduled to expire on July 12, 1994.\7\ The Plan has since 
been in operation on an extended pilot basis.\8\
---------------------------------------------------------------------------

    \5\ See Section 12(f)(2) of the Act. 15 U.S.C. 781(f)(2).
    \6\ See Securities Exchange Act Release No. 28146 (June 26, 
1990), 55 FR 27917 (July 6, 1990).
    \7\ See Letter from David R. Rusoff, Foley & Lardner, to Betsy 
Prout, Division of Market Regulation. (May 9, 1994).
    \8\ See Securities Exchange Act Release No. 34371 (July 13, 
1994), 59 FR 37103 (July 20, 1994); Securities Exchange Act Release 
No. 35221 (Jan. 11, 1995), 60 FR 3886 (Jan 19, 1995); Securities 
Exchange Act Release No. 36102 (Aug. 14, 1995), 60 FR 43626 (Aug. 
22, 1995); Securities Exchange Act Release No. 36226 (Sept. 13, 
1995), 60 FR 49029 (Sept. 21, 1995); Securities Exchange Act Release 
No. 36368 (Oct. 13, 1995); 60 FR 54091 (Oct. 19, 1995); Securities 
Exchange Act Release No. 36481 (Nov. 13, 1995), 60 FR 58119 (Nov. 
24, 1995); Securities Exchange Act Release No. 36589 (Dec. 13, 
1995), 60 FR 65696 (Dec. 20, 1995); Securities Exchange Act Release 
No. 36650 (Dec. 28, 1995), 61 FR 358 (Jan. 4, 1996); Securities 
Exchange Act Release No. 36934 (Mar. 6, 1996), 61 FR 10408 (Mar. 13, 
1996); Securities Exchange Act Release No. 36985 (Mar. 18, 1996), 61 
FR 12122 (Mar. 25, 1996); Securities Exchange Act Release No. 37689 
(Sept. 16, 1996), 61 FR 50058 (Sept. 24, 1996); Securities Exchange 
Act Release No. 37772 (Oct. 1, 1996), 61 FR 52980 (Oct. 9, 1996); 
Securities Exchange Act Release No. 38457 (Mar. 31, 1997), 62 FR 
16880 (Apr. 8, 1997); Securities Exchange Act Release No. 38794 
(June 30, 1997), 62 FR 36586 (July 8, 1997); Securities Exchange Act 
Release No. 39505 (Dec. 31, 1997) 63 FR 1515 (Jan. 9, 1998); 
Securities Exchange Act Release No. 40151 (July 1, 1998), 63 FR 
36979 (July 8, 1998); Securities Exchange Act Release No. 40896 
(Dec. 31, 1998), 64 FR 1834 (Jan. 12, 1999); Securities Exchange Act 
Release No. 41392 (May 12, 1999), 64 FR 27839 (May 21, 1999); and 
Securities Exchange Act Release No. 42268 (Dec. 23, 1999), 65 FR 
1202 (Jan. 6, 2000).
---------------------------------------------------------------------------

III. Description of the Plan

    The Plan provides for the collection from Plan Participants and the 
consolidation and dissemination to vendors, subscribers and others of 
quotation and transaction information in ``eligible securities.'' 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 Contemplated 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.\9\
---------------------------------------------------------------------------

    \9\ The full text of the Plan, as well as ``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.
---------------------------------------------------------------------------

IV. Description of the Proposal

    The Commission is proposing pursuant to Section 12(f) of the Act 
\10\ to expand the number of eligible Nasdaq/NM securities that may be 
traded by a national securities exchange pursuant to the Plan to 
include all Nasdaq/NM securities. The current maximum number of 
eligible Nasdaq/NM securities that may be traded pursuant to the Plan 
is 1000 securities.\11\
---------------------------------------------------------------------------

    \10\ 15 U.S.C. 781(f).
    \11\ See supra note 4.
---------------------------------------------------------------------------

V. Solicitation of Comments

    Interested persons are invited to submit written data, views and 
arguments concerning the foregoing, including whether it it 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 20549-0609. Copies of 
the submission, all subsequent amendments, all written statements with 
respect to the proposed change that are filed with the Commission, and 
all written communications relating to the proposal 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 December 8, 2000.
---------------------------------------------------------------------------

    \12\ 17 CFR 200.30-3(a)(29).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\12\
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 00-29446 Filed 11-16-8:45am]
BILLING CODE 8010-01-M