[Federal Register Volume 65, Number 236 (Thursday, December 7, 2000)]
[Rules and Regulations]
[Pages 76562-76563]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-31136]


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SECURITIES AND EXCHANGE COMMISSION

17 CFR Part 242

[Release No. 34-43651; File No. S7-12-98]
RIN 3235-AH41


Regulation of Alternative Trading Systems; Extension of Temporary 
Stay of Effectiveness

AGENCY: Securities and Exchange Commission.

ACTION: Extension of temporary stay of effectiveness.

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SUMMARY: The Securities and Exchange Commission extends the stay of 
effectiveness of Rules 301(b)(5)(i)(D) and (E) and 301(b)(6)(i)(D) and 
(E) until December 1, 2001. These provisions relate to alternative 
trading systems that trade certain categories of debt securities. This 
stay is necessary to provide sufficient time for a reporting system to 
be developed that would compile and publish data for investment grade 
and non-investment grade corporate debt instruments. 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, 2001.

FOR FURTHER INFORMATION CONTACT: John Polise, Senior Special Counsel, 
at (202) 942-0068, Gordon Fuller, Special Counsel, at (202) 942-0792, 
or Steven Johnston, Special Counsel at (202) 942-0795, Division of 
Market Regulation, Securities and Exchange Commission, 450 Fifth 
Street, NW., Washington, DC 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. 
Specifically, for alternative trading systems trading 20 percent or 
more of the average daily trading volume in either investment grade or 
non-investment grade corporate debt securities over at least four of 
the preceding six months, the fair access and systems capacity, 
security, and integrity requirements were to take effect on April 1, 
2000. On March 31, 2000, the Commission issued a temporary stay of 
effectiveness for Rules 301(b)(5)(i)(D) and (E) until December 1, 
2000.\2\
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    \1\ Securities Exchange Act Release No. 40760 (Dec. 8, 1998), 63 
FR 70844 (December 22, 1998) (``Adopting Release'').
    \2\ Securities Exchange Act Release No. 42603A (March 31, 2000), 
65 FR 18888 (April 10, 2000) (``Stay of Effectiveness Release'').
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II. Extension of 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 and the Stay of Effectiveness Release, we 
noted that volume data for investment grade and non-investment grade 
corporate debt was not yet being compiled or published. Accordingly, 
market

[[Page 76563]]

participants and regulators had no mechanism to determine the aggregate 
daily trading volume for either investment grade corporate bonds or 
non-investment grade corporate bonds for purposes of complying with or 
enforcing the rules. While efforts are ongoing to complete such a 
system, no comprehensive reporting system is currently in place. The 
Commission believes that extending the stay of effectiveness of Rules 
301(b)(5)(i)(D) and (E) and 301(b)(6)(i)(D) and (E) until December 1, 
2001 should provide sufficient time for a system to be developed and 
implemented that would compile and publish data for both market 
segments.\3\
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    \3\ 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: December 1, 2000.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 00-31136 Filed 12-06-00; 8:45 am]
BILLING CODE 8010-01-P