[Federal Register Volume 66, Number 20 (Tuesday, January 30, 2001)]
[Notices]
[Pages 8251-8252]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-2506]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-43876; File No. SR-NASD-01-07]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by the National Association of 
Securities Dealers, Inc. to Establish Minimum Quotation Increment for 
Securities Quoting in Decimals

January 23, 2001
    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 January 22, 2001, 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 (``Commission'' or ``SEC'') the 
proposed rule change as described in Items I, II, and III below, which 
Items have been prepared by Nasdaq. Nasdaq filed the proposal pursuant 
to Section 19(b)(3)(A) of the Act,\3\ and Rule19b-4(f)(6) 
thereunder,\4\ which renders the proposal effective upon filing with 
the Commission.\5\ The Commission is publishing this notice to solicit 
comments on the proposed rule change from interest persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 15 U.S.C. 78s(b)(3)(A).
    \4\ 17 CFR 240.19b-4(f)(6).
    \5\ Nasdaq asked, and the Commission agreed, to waive the 5-day 
pre-filing notice requirement. See Rule 19b-4(f)(6)(iii). 17 CFR 
240.19b-4(f)(6)(iii).
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I. Self-Regulatory Organization's Statement of the Terms of 
Substance of the Proposed Rule Change

    Nasdaq proposes to amend NASD Rule 4613, ``Character of 
Quotations,'' to adopt a $0.01 minimum quotation increment for Nasdaq 
securities as previously agreed to as part of the Decimals 
Implementation Plan for the Equities and Options Markets 
(``Implementation Plan'' or ``Plan'') submitted to the Commission on 
July 24, 2000. Because this proposal simply implements the terms and 
conditions of the Implementation Plan, Nasdaq has designated this 
proposal as non-controversial, rendering it effective upon filing with 
the Commission. Nasdaq asks that the Commission waive the 30-day 
operative waiting period pursuant to SEC Rule 19b-4(f)(6)(iii).\6\ 
Nasdaq will implement this rule change on March 12, 2001. The text of 
the proposed rule change is below. Proposed new language is in italics. 
Proposed deletions are in brackets.
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    \6\ 17 CFR 240.19b-4(f)(6)(iii).
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4613. Character of Quotations

(a) Two-Sided Quotations
    (1) No Change.
    (A) No Change.
    (B) No Change.
    (C) No Change.
    (D) Minimum Price Variation for Decimal-based Quotations
    The minimum quotation increment for securities authorized for 
decimal pricing as part of the SEC-approved Decimals Implementation 
Plan for the Equities and Options Markets shall be $0.01. Quotations 
failing to meet this standard shall be rejected.
    (2) 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 its proposal and discussed any 
comments it received regarding the proposal. The text of these

[[Page 8252]]

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
    On July 25, 2000, the NASD, jointly with self-regulatory 
organizations, submitted to the Commission the Implementation Plan. As 
part of the Plan, the NASD committed to establish a minimum quotation 
increment of $0.01 for Nasdaq securities trading in decimals. That is, 
Nasdaq would display and disseminate quotations in securities trading 
in decimal-based increments to two places beyond the decimal point (to 
the penny). This proposed rule change establishes the $0.01 minimum 
quote increment for Nasdaq securities that transition from fractional 
to decimal pricing. The filing also informs market participants that 
decimal quotations submitted to Nasdaq that do not comport with the 
penny minimum quotation increment standard will be rejected by Nasdaq 
systems. Nasdaq intends to impose the $0.01 minimum decimal quotation 
increment, pursuant to the Plan's phase-in schedule, beginning March 
12, 2001, on every Nasdaq security that becomes authorized for decimal 
trading pursuant to the Plan.
2. Statutory Basis
    Nasdaq believes that the proposal is consistent with the provisions 
of Section 15A(b)(6) of the Act \7\ in that it is 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, and 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.
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    \7\ 15 U.S.C. 78o-3(b)(6).
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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.

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

    Because the foregoing proposed rule change does not:
    (i) significantly affect the protection of investors or the public 
interest;
    (ii) impose any significant burden on competition; and
    (iii) become operative for 30 days from the date on which it was 
filed, or such shorter time as the Commission may designate, it has 
become effective pursuant to Section 19(b)(3)(A) of the Act \8\ and 
Rule 19b-4(f)(6) thereunder.\9\ At any time within 60 days of the 
filing of the proposed rule change, the Commission may summarily 
abrogate such rule change if it appears to the Commission that such 
action is necessary or appropriate in the public interest, for the 
protection of investors, or otherwise in furtherance of the purposes of 
the Act.
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    \8\ 15 U.S.C. 78s(b)(3)(A).
    \9\ 17 CFR 240.19b-4(f)(6).
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    Nasdaq has requested that the Commission accelerate the operative 
date. The Commission finds good cause to waive the 30-day operative 
waiting period, because such designation is consistent with the 
protection of investors and the public interest. Acceleration of the 
operative date will allow Nasdaq to begin quoting securities in penny 
increments pursuant to the Implementation Plan, which is part of the 
industry-wide conversion to decimal pricing. For these reasons, the 
Commission finds good cause to waive both the 5-day pre-filing 
requirement and the 30-day operative waiting period.\10\
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    \10\ For purposes only of accelerating the operative date of 
this proposal, the Commission has considered the proposed rule's 
impact on efficiency, competition, and capital formation. 15 U.S.C 
78c(f).
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IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposal 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 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 number SR-NASD-01-07 and should be 
submitted by February 20, 2001.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\11\
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    \11\ 17 CFR 200.30-3(a)(12).

Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 01-2506 Filed 1-29-01; 8:45 am]
BILLING CODE 8010-01-M