[Federal Register Volume 67, Number 164 (Friday, August 23, 2002)]
[Notices]
[Pages 54687-54688]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-21520]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-46381; File No. S7-24-89]


Joint Industry Plan; Order Granting Partial Temporary Approval of 
Amendment No. 13 of the Reporting Plan for Nasdaq-Listed Securities 
Traded on Exchanges on an Unlisted Trading Privilege Basis, Submitted 
by the National Association of Securities Dealers, Inc., the Boston 
Stock Exchange, Inc., the Chicago Stock Exchange, Inc., the Cincinnati 
Stock Exchange, Inc., the Pacific Exchange, the American Stock Exchange 
LLC, and the Philadelphia Stock Exchange, Inc.

August 19, 2002.

I. Introduction and Description

    On May 31, 2002, the Cincinnati Stock Exchange, Inc. (``CSE'') on 
behalf of itself and the National Association of Securities Dealers, 
Inc. (``NASD''), the American Stock Exchange LLC (``Amex''), the Boston 
Stock Exchange, Inc. (``BSE''), the Chicago Stock Exchange, Inc. 
(``CHX''), the Pacific Exchange, Inc. (``PCX''), and the Philadelphia 
Stock Exchange, Inc. (``PHLX'') (hereinafter referred to collectively 
as ``Participants''),\1\ as members of the operating committee 
(``Operating Committee'' or ``Committee'') \2\ of the Plan submitted to 
the Securities and Exchange Commission (``SEC'' or ``Commission'') a 
proposal to amend the Plan, pursuant to Rule 11Aa3-1 \3\ and Rule 
11Aa3-2 \4\ under the Securities Exchange Act of 1934 (``Act'' or 
``Exchange Act''). The proposal represents the 13th amendment (``13th 
Amendment'') made to the Plan. Notice of the proposed 13th Amendment 
was published in the Federal Register on July 5, 2002.\5\
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    \1\ The CSE was elected chair of the Operating Committee for the 
Joint Self-Regulatory Organization Plan Governing the Collection, 
Consolidation and Dissemination of Quotation and Transaction 
Information for Nasdaq-Listed Securities Traded on Exchanges on an 
Unlisted Trading Privilege Basis (``Nasdaq UTP Plan'' or ``Plan'') 
by the Participants.
    \2\ Among other things, the 13th Amendment proposes to add the 
Nasdaq Stock Market, Inc. (``Nasdaq'') as a Participant. The 
Committee is made up of all the Participants.
    \3\ 17 CFR 240.11Aa3-1.
    \4\ 17 CFR 240.11Aa3-2.
    \5\ Securities Exchange Act Release No. 46139 (June 28, 2001 
[sic]), 67 FR 44888 (``13th Amendment Notice'').
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    The Nasdaq UTP Plan governs the collection, processing, and 
dissemination on a consolidated basis of quotation and last sale 
information for each of its Participants. This consolidated information 
informs investors of the current quotation and recent trade prices of 
Nasdaq securities. It enables investors to ascertain from one data 
source the current prices in all the markets trading Nasdaq securities. 
The Plan serves as the required transaction reporting plan for its 
Participants, which is a prerequisite for their trading Nasdaq 
securities.
    As discussed in the 13th Amendment Notice, proposed amendments to 
the Plan have been segregated into four categories: (1) Category 1, 
``Effective Upon Nasdaq's Exchange Registration;'' (2) Category 2, 
``Effective Upon Launch of the Internal SIP;'' (3) Category 3, 
``Effective Upon End of Parallel Period--Elimination of the Legacy 
SIP;'' and (4) Category 4, ``Timing Not An Issue.'' Through the 13th 
Amendment Notice, the Commission granted temporary summary 
effectiveness to amendments detailed in Category 2 so as to allow the 
target launch date for the new Internal Securities Information 
Processor (``SIP'') data feeds to be met.\6\ The Commission received no 
comments on the proposed 13th Amendment.
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    \6\ In November of 2001, Nasdaq began implementing the 
``Internal SIP'' project. The Internal SIP is a separate technology 
infrastructure within Nasdaq that will perform the functions of the 
SIP for Nasdaq-listed securities. When the Internal SIP is in place, 
Nasdaq will be able to separate its functions as a stock market from 
its functions as a SIP for the Plan.
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    This partial temporary approval order approves the 13th Amendment's 
extension of the Plan through August 19, 2003. This order does not 
approve the amendments detailed in Categories 1, 2, 3, and 4 in the 
13th Amendment Notice,\7\ which will be addressed in a separate action.
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    \7\ Pursuant to Rule 11Aa3-2(c)(4), 17 CFR 240.11Aa3-2(c)(4), 
the temporary summary effectiveness granted to the Category 2 
amendments by the 13th Amendment Notice may not exceed 120 days in 
length. This partial temporary approval order has no impact upon 
such temporary summary effectiveness of the Category 2 amendments.
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II. Discussion

    The Commission finds that extending the Plan for one year is 
consistent with the requirements of the Act and the rules and 
regulations thereunder, and, in particular, section 12(f) \8\ and 
section 11A(a)(1) \9\ of the Act and Rules 11Aa3-1 and 11Aa3-2 
thereunder.\10\ Section 11A of the Act 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 cites 
as an objective of that system the ``fair competition * * * between 
exchange markets and markets other than exchange markets.'' \11\ When 
the Commission first approved of 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.'' \12\ The Plan has been in existence since 
1990 and Participants have been trading Nasdaq securities under the 
Plan since 1993.
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    \8\ 15 U.S.C. 78l(f). The Commission finds that extending the 
Plan is consistent with fair and orderly markets, the protection of 
investors and the public interest, and otherwise in furtherance of 
the purposes of the Act. The Commission has taken into account the 
public trading activity in securities traded pursuant to the Plan, 
the character of the trading, the impact of the trading of such 
securities on existing markets, and the desirability of removing 
impediments to, and the progress that has been made toward the 
development of a national market system.
    \9\ 15 U.S.C. 78k-1(a)(1).
    \10\ 17 CFR 240.11Aa3-1 and 17 CFR 240.11Aa3-2.
    \11\ 15 U.S.C. 78k-1(a).
    \12\ Securities Exchange Act Release No. 28146 (June 26, 1990), 
55 FR 27917 (July 6, 1990).

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[[Page 54688]]

    The Commission finds that extending the pilot period of the Plan 
furthers the goals described above by preventing the lapsing of the 
sole effective transaction reporting plan for Nasdaq securities traded 
by other exchanges pursuant to unlisted trading privileges. The 
Commission believes that the Plan is currently a critical component of 
the national market system and that the Plan's expiration would have a 
serious, detrimental impact on the further development of the national 
market system.

III. Conclusion

    It is therefore ordered, pursuant to sections 12(f) and 11A of the 
Act \13\ and paragraph (c)(2) of Rule 11Aa3-2 \14\ thereunder, that the 
pilot expiration date for the Plan be, and hereby is, extended through 
August 19, 2003.
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    \13\ 15 U.S.C. 78l(f) and 15 U.S.C. 78k-1.
    \14\ 17 CFR 240.11Aa3-2(c)(2).

    By the Commission.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 02-21520 Filed 8-22-02; 8:45 am]
BILLING CODE 8010-01-P