Federal Register / Vol. 65, No. 110 / Wednesday, June 7, 2000 / Notices 36189

3For a complete discussion of the admission

criteria, refer to Securities Exchange Act Release

No. 38600 (May 9, 1997), 62 FR 27086 [File No. SR–

DTC–96–13].

4See Securities Exchange Act Release Nos. 40064

(June 3, 1998), 63 FR 31818 [File No. SR–DTC–98–

11] and 41466 (May 28, 1999), 64 FR 30077 [File

No. SR–DTC–99–12]. 5 15 U.S.C. 78q–1(b)(3)(F).

6 17 CFR 200.30–3(a)(12).

1 15 U.S.C. 78s(b)(1).

2 17 CFR 240.19b-4.

(A) Self-Regulatory Organization’s

Statement of the Purpose of, and

Statutory Basis for, the Proposed Rule

Change

The purpose of the proposed rule

change is to extend the Commission’s

temporary approval of DTC’s admission

criteria for non-U.S. entities as direct

DTC participants. On May 9, 1997, the

Commission originally granted

temporary approval through May 31,

1998.3 The admission criteria are

designed to permit well-qualified, nonU.S. entities to obtain direct access to

DTC’s services without requiring the

non-U.S. entities to obtain financial

guarantees from another DTC

participant. According to DTC, DTC

established the program for admission

of non-U.S. entities in response to

requests it received from certain

participants. These participants

requested that DTC consider changes in

its admissions policy that would allow

non-U.S. affiliates of U.S. participants to

become direct participants without

having to obtain financial guarantees

from their U.S. affiliates that are DTC

participants. The Commission has

subsequently extended its original

temporary approval through May 31,

2000.4

In November 1999, DTC admitted one

non-U.S. entity as a direct participant

under the standards for admission of

non-U.S. entities. DTC has received

several inquiries from other non-U.S.

entities and expects to admit several

non-U.S. entities under its standards for

the admission of non-U.S. entities. DTC

is seeking an extension of the temporary

approval so it can complete the

admission of these non-U.S. entities and

gain further experience with the

admission standards for non-U.S.

entities and with the unique risks posed

by the activities of non-U.S. entities as

direct DTC participants.

DTC believes that the proposed rule

change is consistent with the

requirements of section 17A(b)(3)(F) of

the Act and the rules and regulations

promulgated because the admission

criteria takes into account the unique

risks to DTC raised by the admission of

non-U.S. entities while not unfairly

discriminating against non-U.S. entities

seeking admission as participants.

(B) Self-Regulatory Organization’s

Statement on Burden on Competition

While DTC acknowledges that the

proposed additional admissions criteria

applicable to non-U.S. entities may

impose some additional burden, for the

reasons stated above, DTC believes that

any such burden necessary and

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

DTC has not sought or received

comments on the proposed rule change.

III. Date of Effectiveness of the

Proposed Rule Change and Timing for

Commission Action

Section 17A(b)(3)(F) of the Act

requires that the rules of a clearing

agency be designed to assure the

safeguarding of securities and funds

which are in the custody or control of

the clearing agency or for which it is

responsible.5 The Commission finds

that the rule change is consistent with

this obligation because DTC’s admission

criteria for non-U.S. entities has been

designed in a manner that takes into

account jurisdiction differences in

regulatory structure and in business

operations of non-U.S. entities with

respect to DTC’s risk control and

management. Furthermore, DTC

admission criteria should bind non-U.S.

entities to DTC’s rules and procedures

in a manner similar to domestic

participants and should lesson or

eliminate the negative effects that

jurisdictional issues could have on

DTC’s exercise of its rights against nonU.S. entities. Therefore, the Commission

finds that the admissions criteria will

assist DTC in assuring the safeguarding

of securities and funds which are in its

custody, control, or for which it is

responsible.

DTC has requested that the

Commission find good cause for

approving the proposed rule change

prior to the thirtieth day after

publication of the notice of the filing.

The Commission finds good cause for

approving the proposed rule change

prior to the thirtieth day after

publication of the notice of the filing

because accelerated approval will

permit DTC to continue to use and

study the effectiveness of its admission

criteria for non-U.S. entities without

interruption when the current

temporary approval of these criteria

expires on May 31, 2000.

IV. Solicitation of Comments

Interested persons are invited to

submit written data, views, and

arguments concerning the foregoing,

including whether the proposed rule

change 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, 450 Fifth Street, NW.,

Washington, DC 20549. Copies of such

filing will also be available for

inspection and copying at the principal

office of the DTC. All submissions

should refer to file number SR–DTC–

00–07 and should be submitted by June

28, 2000.

It is therefore ordered, pursuant to

section 19(b)(2) of the Act, that the

proposed rule change (File No. SR–

DTC–00–07) be, and hereby is,

temporarily approved on an accelerated

basis through May 31, 2001.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.6

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 00–14254 Filed 6–6–00; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–42830; File No. SR–MSRB–

00–7]

Self-Regulatory Organizations; Notice

of Filing and Immediate Effectiveness

of Proposed Rule Change by the

Municipal Securities Rulemaking

Board Consisting of Technical

Amendments to Rules A–3, G–15, G–

17, and G–18

May 25, 2000.

Pursuant to section 19(b)(1) of the

Securities Exchange Act of 1934

(‘‘Act’’),1 and Rule 19b-4 thereunder,2

36190 Federal Register / Vol. 65, No. 110 / Wednesday, June 7, 2000 / Notices

3 17 CFT 240.19b-4(f)(6).

4Pursuant to Rule 19b-4(f)(6), the Board provided

the required five-day advance notice to the

Commission of its intent to file the proposed rule

change. In the notice, the Board represented that the

proposed rule change: (1) Will not significantly

affect the protection of investors; (2) will not

impose any significant burden on competition; and

(3) will not become operative for thirty days after

the date of this filing. See letter from Ernesto A.

Lanza, Associate General Counsel, MSRB, to

Katherine A. England, Assistant Director, Division

of Market Regulation, Commission, dated April 25,

2000.

5See Securities Exchange Act Release No. 41528

(June 15, 1999), 64 FR 33334 (June 22, 1999).

6 15 U.S.C. 78o–4(b)(1).

7The proposed changes to Rule G–17 are

consistent with similar amendments made to Rules

A–14, A–15, G–3 and G–27 in the 1999 Technical

Amendments.

8 17 CFR 240.15c3–1(a)(8)(ii).

9Rule D–1 provides that, unless the context

otherwise specifically requires, the terms used in

Board rules shall have the respective meanings set

forth in the Act and the rules and regulations of the

Commission thereunder. Thus, the deletion of the

definition of brokers’ broker from Rule G–18 would

automatically result in this term having the same

meaning as set forth under Rule 15c3–1(a)(8)(ii) of

the Act.

10Section 15B(b)(2)(C) of the Act states in

pertinent part that the rules of the Board ‘‘shall be

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, processing information with

respect to, and facilitating transactions in municipal

securities, to remove impediments to and perfect

the mechanism of a free and open market in

municipal securities, and, in general, to protect

investors and the public interest.’’ 15 U.S.C. 78o–

4(b)(2)(C).

11 15 U.S.C. 78s(b)(3)(A).

12 17 CFR 240.19b–4(f)(6).

notice is hereby given that on May 2,

2000, the Municipal Securities

Rulemaking Board (‘‘Board’’ or

‘‘MSRB’’) filed with the Securities and

Exchange Commission (‘‘SEC’’ or

‘‘Commission’’) the proposed rule

change as described in Items I, II, and

III below, which Items have been

prepared by the MSRB. The Board has

designated the proposed rule change as

constituting a ‘‘non-controversial’’ rule

change under paragraph (f)(6) of rule

19b-4 under the Act,3 which renders the

proposal effective upon receipt of this

filing by the Commission.4 The

Commission is publishing this notice to

solicit comments on the proposed rule

change from interested persons.

I. Self-Regulatory Organization’s

Statement of the Terms of Substance of

the Proposed Rule Change

The Board has filed with the

Commission a proposed rule change

consisting of technical amendments to

Rule A–3, on Board membership; Rule

G–15, on confirmation, clearance and

settlement of customer transactions with

customers; rule G–17, on conduct of

municipal securities business; and Rule

G–18, on execution of transactions. The

proposed rule change would become

operative on June 1, 2000.

II. Self-Regulatory Organization’s

Statement of the Purpose of, and

Statutory Basis for, the Proposed Rule

Change

In its filing with the Commission, the

MSRB included statements concerning

the purpose of and basis for the

proposed rule change and discussed any

comments it received on the proposed

rule change. The text of these statements

may be examined at the places specified

in Item IV below. The Board 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

The Board proposes to adopt

technical amendments to Rules A–3, G–

15, G–17, and G–18 for the purpose of

making certain non-substantive changes.

The proposed amendments to

subsections (a)(i), (c)(ii) and (c)(iv) of

Rule A–3 correct an unintended

omission from the technical

amendments (the ‘‘1999 Technical

Amendments’’),5 filed with and

approved by the Commission last year,

with respect to the definition of public

representatives on the Board and its

Nominating Committee. The proposed

rule change is intended to make the rule

language consistent with Section

15B(b)(1) of the Act.6

The proposed changes to Rule G–

15(d)(ii) make subsection and paragraph

references consistent with the Board’s

general usage of such references

throughout the rules.

The proposed amendments to Rule G–

17 change certain terminology used in

the rule from ‘‘municipal securities

business’’ to ‘‘municipal securities

activities’’ to avoid any ambiguity with

the term ‘‘municipal securities

business’’ as used in Rules G–37 and G–

38. The Board represents that the term

‘‘municipal securities business’’ as used

in Rules G–37 and G–38 has a specific

limited definition, whereas Rule G–17

uses that term in a manner intended to

include all of the municipal securities

activities of the dealer or its associated

persons.7

The proposed amendment to Rule G–

18 would delete a definition of ‘‘broker’s

broker’’ that pre-dated the Commission’s

definition of that term under Rule 15c3–

1(a)(8)(ii) of the Act.8 Because the

language used to define brokers’ broker

differs in the two definitions, the Board

believes that it is possible that some

ambiguity may exist as to whether the

term is intended to cover the same

universe of dealers under the general

federal securities laws and Board rules.

The Board represents that the deletion

of this definition from Rule G–18 would

eliminate this potential ambiguity.9

2. Statutory Basis

The Board believes that the proposed

rule is consistent with Section

15B(b)(2)(C) of the Act.10 The Board

further believes that the proposed rule

change will ensure that existing rule

provisions are accurate and

understandable.

B. Self-Regulatory Organization’s

Statement on Burden on Competition

The Board represents that the

proposed rule change will not impose

any burden on competition that is not

necessary or appropriate in furtherance

of the purposes of the Act, because it

would apply equally to all brokers,

dealers and municipal securities

dealers.

C. Self-Regulatory Organization’s

Statement on Comments on the

Proposed Rule Change Received From

Members, Participants or Others

No written comments were solicited

or received with respect to the proposed

rule change.

III. Date of Effectiveness of the

Proposed Rule Change and Timing for

Commission Action

Because the foregoing proposed rule

change: (i) Does not significantly affect

the protection of investors or the public

interest; (ii) does not impose any

significant burden on competition; (iii)

was provided to the Commission for its

review at least five business days prior

to the filing date; and (iv) does not

become operative for 30 days after the

date of its filing, the Board has

submitted this proposed rule change,

pursuant to Section 19(b)(3)(A) 11 of the

Act and Rule 19b–4(f)(6) 12 thereunder,

to become operative on June 1, 2000. At

any time within sixty 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

Federal Register / Vol. 65, No. 110 / Wednesday, June 7, 2000 / Notices 36191

13 17 CFR 200.30–3(a)(12).

1 15 U.S.C. 78s(b)(1).

2 17 CFR 240.19b–4.

3The Commission notes that, in SR–NASD–99–

32, the NASD added a provision to Rule 6750

allowing some Nasdaq officers to modify the

minimum quotation size for securities with a price

greater than $200 per share. See Exchange Act

Release No. 41907 (Sept. 23, 1999), 64 FR 52817

(Sept. 30, 1999).

4See Exchange Act Release No. 32570 (July 1,

1993), 58 FR 36725 (July 8, 1993).

5This requirement applies only to market makers

entering priced quotations. Market makers are

Continued

necessary or appropriate in the public

interest, for the protection of investors,

or otherwise in furtherance of the

purposes of the Act.

IV. Solicitation of Comments

Interested persons are invited to

submit written data, views, and

arguments concerning the foregoing,

including whether the proposed rule

change 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 at

the Commission’s Public Reference

Room. Copies of such filing will also be

available for inspection and copying at

the principal office of the MSRB. All

submissions should refer to File No.

SR–MSRB–00–7 and should be

submitted by June 28, 2000.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.13

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 00–14248 Filed 6–6–00; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–42852; File No. SR–NASD–

00–17]

Self-Regulatory Organizations; Notice

of Filing of Proposed Rule Change by

the National Association of Securities

Dealers, Inc. Relating to Minimum

Quotation Sizes in the OTC Bulletin

Board

May 30, 2000.

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 April 10,

2000, the National Association of

Securities Dealers, Inc. (‘‘NASD’’),

through its wholly owned subsidiary the

Nasdaq Stock Market, Inc. (‘‘Nasdaq’’)

filed with the Securities and Exchange

Commission (‘‘Commission’’) the

proposed rule change as described in

Items I, II, and III below, which Items

have been prepared by Nasdaq. The

Commission is publishing this notice to

solicit comments on the proposed rule

change from interested persons.

I. Self-Regulatory Organization’s

Statement of the Terms of Substance of

the Proposed Rule Change

Nasdaq proposes an amendment to

NASD Rule 6750 that would modify the

minimum quotation sizes for securities

quoted at a price exceeding $200 in the

OTC Bulletin Board (‘‘OTCBB’’). Below

is the text of the proposed rule change.

Proposed new language is in italic;

proposed deletions are in brackets.

6750. Minimum Quotation Size

Requirements For OTC Equity Securities

(a) Every member firm that functions

as a market maker in OTC Equity

Securities by entering firm quotations

into the OTC Bulletin Board Service

(OTCBB) (or any other inter-dealer

quotation system that permits quotation

updates on a real-time basis) must honor

those quotations for the minimum size

defined in the table below. In this

regard, it is the market maker’s

responsibility to determine the

minimum size requirement applicable

to its firm bid and/or offer in each of its

registered securities (excluding OTC

Equity Securities for which the OTCBB

will not accept firm quotations).

Depending on the price level of the bid

or offer, a different minimum size can

apply to each size of the market being

quoted by the member firm in a given

security.

Price

(bid or offer)

Minimum

quote size

0–.50 * ....................................... 5,000

.51–1.00 .................................... 2,500

1.01–10.00 ................................ 500

10.01–100.00 ............................ 200

100.01–200.00 .......................... 100

[200.01–+ .................................. 50]

200.01–500 ............................... 25

500.01–1000 ............................. 10

1000.01–2500 ........................... 5

2500.01+ ................................... 1

* The OTCBB can accept bids/offers expressed in fractions as small as 1/256 or in

decimals up to six places. In applying the

price test for minimum quotation size, any increment beyond an upper limit in the right

hand column will trigger application of the minimum quote size for the next tier. For example, a bid (or offer) of $.505 must be firm for a

size of 2,500 shares.

[A Nasdaq officer at the Executive

Vice President level or above, within its

discretion, may modify the minimum

quotation size for those securities with

a price exceeding $200.]

(b) 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 the

proposed rule change and discussed any

comments it received on the proposed

rule change. The text of these 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

Nasdaq is proposing to modify the

minimum quotation size for securities

quoted on the OTCBB that exceed a

price of $200 per share. Nasdaq believes

that this modification is necessary to

correct a previously unforeseen problem

with the schedule contained in Rule

6750, which presently mandates that

securities priced over $200 per share be

traded in blocks of 50 shares or more.3

For certain highly priced and/or thinly

traded securities, this rule has had an

undesired and detrimental effect on

transparency and liquidity.

Rule 6750 was originally approved by

the Commission in 1993 4 during the

early stages of the OTCBB service. Prior

to implementation of the rule, all priced

quotations on the OTCBB were required

to be firm for blocks of 100 shares or

more. This approach soon proved

unworkable for lower priced securities

for which a quote of 100 shares could

represent an insignificant aggregate

dollar value commitment to the market.

To remedy this situation, the NASD

implemented this minimum quotation

size rule for securities priced at $200

per share and below on a ‘‘graduated’’

or ‘‘tired’’ basis.5 For securities quoted