Federal Register / Vol. 65, No. 112 / Friday, June 9, 2000 / Notices 36747

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

2 17 CFR 240.19b–4.

3See Securities Exchange Act Release No. 42754

(May 3, 2000), 65 FR 30167. 4See letter from Cameron Smith, General

Counsel, Island ECN, to Jonathan Katz, Secretary,

Commission, dated June 1, 2000. 5See Exchange Act Release No. 42400 (February

7, 2000), 65 FR 7407 (February 14, 2000) (order

approving File No. SR–NASD–99–23 to amend

NASD Rule 4613(e)).

6 Id.

7This requirement does not apply when the

market maker is holding agency interest where

there is no understanding with the customer to have

its order displayed and/or executed prior to the

market’s open, and the market maker otherwise is

engaging in bona fide market making activity

during the pre-opening period.

8 15 U.S.C. 78o–3(b)(6), 15 U.S.C. 78o–3(b)(11),

and 15 U.S.C. 78k–1(a)(1)(C).

the RRB that a student has ceased fulltime school attendance. Completion is

required to obtain or retain a benefit.

One response is requested of each

respondent.

The RRB proposes no changes to

Form G–315, G–315a, or G–315a.1. The

completion time for the G–315 is

estimated at seven minutes per

response. The completion time for the

G–315a and G–315a.1 is estimated at

two minutes. The RRB estimates that

approximately 960 Form G–315’s, 210

Form G–315a’s and 60 Form G–315a.1’s

are received annually.

Additional Information or Comments:

To request more information or to

obtain a copy of the information

collection justification, forms, and/or

supporting material, please call the RRB

Clearance Officer at (312) 751–3363.

Comments regarding the information

collection should be addressed to

Ronald J. Hodapp, Railroad Retirement

Board, 844 North Rush Street, Chicago,

Illinois 60611–2092. Written comments

should be received within 60 days of

this notice.

Chuck Mierzwa,

Clearance Officer.

[FR Doc. 00–14649 Filed 6–8–00; 8:45 am]

BILLING CODE 7905–01–M

RAILROAD RETIREMENT BOARD

Determination of Quarterly Rate of

Excise Tax for Railroad Retirement

Supplemental Annuity Program

In adcordance with directions in

Section 3221(c) of the Railroad

Retirement Tax Act (26 U.S.C., Section

3221(c)), the Railroad Retirement Board

has determined that the excise tax

imposed by such Section Section

3221(c) on every employer, with respect

to having individuals in his employ, for

each work-hour for which compensation

is paid by such employer for services

rendered to him during the quarter

beginning July 1, 2000, shall be at the

rate of 261⁄2 cents.

In accordance with directions in

Section 15(a) of the Railroad Retirement

Act of 1974, the Railroad Retirement

Board has determined that for the

quarter beginning July 1, 2000, 37.7

percent of the taxes collected under

Sections 3211(b) and 3221(c) of the

Railroad Retirement Tax Act shall be

credited to the Railroad Retirement

Account and 62.3 percent of the taxes

collected under such Sections 3211(b)

and 3221(c) plus 100 percent of the

taxes collected under Section 3221(d) of

the Railroad Retirement Tax Act shall be

credited to the Railroad Retirement

Supplemental Account.

Dated: June 1, 2000.

By Authority of the Board.

Beatrice Ezerski,

Secretary to the Board.

[FR Doc. 00–14648 Filed 6–8–00; 8:45 am]

BILLING CODE 7905–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–42896; File No. SR–NASD–

00–18]

Self-Regulatory Organizations; Order

Granting Accelerated Approval of

Proposed Rule Change by the National

Association of Securities Dealers, Inc.

Relating to the Entry of Locking/

Crossing Quotations Prior to the

Nasdaq Market Opening

June 2, 2000.

Introduction

On April 13, 2000, 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’’), pursuant

to Section 19(b)91) of the Securities

Exchange Act of 1934 (‘‘Act’’ or

‘‘Exchange Act’’),1 and Rule 19b–4

thereunder,2 a proposed rule change

relating to the entry of locking/crossing

quotations prior to the Nasdaq market

opening. On April 18, 2000, the NASD

submitted Amendment No. 1 to the

proposal. The proposed rule change and

Amendment No. 1 were published for

comment in the Federal Register on

May 10, 2000.3 The Commission

received one comment regarding this

proposal.4 This order approves the

proposed rule change, as amended.

II. Description of the Proposal

Currently, under NASD Rule 4613(e)

if a market participant locks/crosses the

market between 9:20 a.m. and 9:29:59

a.m. Eastern Time, the market

participant must send the market

maker(s) or ECN(s) being locked/

crossed, a SelectNet message that has

appended to it a ‘‘TRD OR MOV’’

administrative message (‘‘Trade-orMove Message’’).5 The aggregate size of

these Trade-or-Move Messages must be

at least 5,000 shares. Thus, in order to

lock/cross the market during this 10

minute period before the market opens,

a market participant must send a Tradeor-Move Message for 5,000 shares and

be willing to trade at least this amount.

The party being locked or crossed must

respond to the Trade-or-Move Message

within 30 seconds by trading with the

incoming message or moving its

quotation to a price level that resolves

the locked/crossed market.6

Nasdaq proposes to amend NASD

Rule 4613(e), to permit market

participants, when representing agency

interests, to lock/cross the market at the

actual size of the agency order, instead

of 5,000 shares as currently required by

rule. Under the proposal, if between

9:20 a.m. and 9:29:59 a.m. a market

participant receives an agency order that

would lock/cross the market, the market

participant may lock/cross the market

and send a Trade-or-Move Message for

the actual size of the agency order,

instead of 5,000 shares. 7 (For purposes

of the amended rule, an agency order

would not include an order for the

account of a market maker in the issue,

but would include orders for

individuals, institutions, and brokerdealers who are not market makers in

the security at issue.) Market

participants whose proprietary quotes

lock/cross the market between 9:20 and

9:29:59 a.m., would still be subject to

the 5,000 aggregate share size

requirement for Trade-or-Move

Messages. Thus, if a market participant

wishes to lock/cross the market while

acting as principal, the market

participant must send an aggregate of at

least 5,000 shares through a Trade-orMove Message to the parties being

locked/crossed.

III. Commission’s Findings and Order

Granting Accelerated Approval of

Proposed Rule Change

After careful review, the Commission

finds that the proposed rule change is

consistent with the requirements of the

Act and the rules and regulations

thereunder applicable to the NASD. In

particular, the Commission finds that

the proposal is consistent with the

requirements of Sections 15A(b)(6),

15A(b)(11), and 11A(a)(1)(C) of the Act.8

36748 Federal Register / Vol. 65, No. 112 / Friday, June 9, 2000 / Notices

9 15 U.S.C. 78o–3(b)(6).

10 15 U.S.C. 78o–3(b)(11).

11 15 U.S.C. 78k–1(a)(1)(C).

12 In approving the proposed rule change, the

Commission has considered the proposal’s impact

on efficiency, competition, and capital formation.

15 U.S.C. 78c(f).

13 15 U.S.C. 78o–3(b)(6), 15 U.S.C. 78o–(b)(11),

and 15 U.S.C. 78k–1(a)(1)(C).

14See Securities Exchange Act Release No. 40455

(September 22, 1998), 63 FR 51978 (September 29,

1998) (order approving File No. SR-NASD–98–01).

15 15 U.S.C. 78o–3(b)(11).

16 15 U.S.C. 78o–3(b)(6).

17As noted above, the Commission received one

comment letter regarding the proposal. The

commenter argued that market participants

receiving Trade-or-Move Messages would be able to

monitor the market so as to selectively execute

orders only when market conditions are favorable.

The commenter also noted that is not

technologically equipped, at present, to implement

the proposal. The commenter recommended that

Nasdaq address the problem of pre-opening locked

and crossed markets by requiring market

participants to open firm, pre-opening quotations.

See note 4, above.

In response to similar comments on NASD–99–

23, the NASD stated that an ECN with an order of

less than 5,000 shares that would lock or cross the

market could (1) attempt to match the order

internally with the order of another subscriber; (2)

attempt to fill the order by sending a Select Net

message to the market participant(s) it would lock

or cross; or (3) wait to accumulate the 5,000 shares

and then send a Trade-or-Move Message. in

addition, an ECN whose subscriber entered a

locking or crossing quotation between 9:20 a.m. and

9:29:59 a.m. could require its subscriber to comply

with the Trade-or-Move Message requirement.

Nasdaq also noted that an ECN with a pre-opening

order that locked or crossed the market could wait

until the opening of the market before sending a

SelectNet message to the market participants it

would lock or cross. See note 5, above.

18See note 4, above.

19 Id.

20 15 U.S.C. 78s(b)(2).

Section 15A(b)(6) 9 requires that the

rules of a registered national securities

association 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, 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.

Section 15A(b)(11) 10 requires that the

rules of a registered national securities

association be designed to produce fair

and informative quotations, prevent

fictitious or misleading quotations, and

to promote orderly procedures for

collection, distributing, and publishing

quotations. In Section 11A(a)(1)(C),11

Congress found that it is in the public

interest and appropriate for the

protection of investors and the

maintenance of fair and orderly markets

to assure: (1) economically efficient

execution of securities transactions; (2)

fair competition among brokers and

dealers; (3) the availability to brokers,

dealers and investors of information

with respect to quotations and

transactions in securities; (4) the

practicability of brokers executing

investors’ orders in the best market; and

(5) an opportunity for investors’ orders

to be executed without the participation

of a dealer.12

Specifically, the Commission finds

that the proposal is consistent with

Sections 15A(b)(6), 15A(b)(11), and

11A(1)(C) of the Act 13 because it is

designed to further reduce the frequency

of pre-opening locked and crossed

markets, which should help to provide

more informative quotation information,

facilitate price discovery, and contribute

to the maintenance of a fair and orderly

market. The proposal will require a

market participant to send a Trade-orMove Message for agency orders that

lock or cross the market between 9:20

and 9:29:59 a.m., for the actual size of

the agency order, rather than 5,000

shares. Under the proposal, an agency

order would not include an order for the

account of a market maker in the issue,

but would include orders for

individuals, institutions, and brokerdealers who are not market makers in

the security at issue. The recipient of a

Trade-or-Move Message must respond to

that message within 30 seconds of

receiving it.

The Commission believes that the

Trade-or-Move Message requirement for

agency orders may reduce instances of

pre-opening locked and crossed markets

by providing an effective mechanism for

promptly resolving any pre-opening

locked or crossed markets that occur. In

this regard, the Commission notes that

the recipient of a Trade-or-Move

Message must respond to the message

within 30 seconds by either (1) trading

in full with the incoming Trade-or-Move

Message; (2) declining to trade with the

incoming Trade-or-Move Message and

moving its quotation to a price level that

unlocks or uncrosses the market; or (3)

trading with a portion of the incoming

Trade-or-Move Message and moving its

quotation to a price level that unlocks

or uncrosses the market. By reducing

instances of pre-opening locked and

crossed markets, and facilitating the

prompt resolution of any pre-opening

locked or crossed markets that occur,

the proposal should help to provide a

more orderly opening in Nasdaq

securities, to the benefit of all market

participants.

The Commission believes, as it has

concluded previously,14 that continued

locking and crossing of the market can

negatively impact market quality. By

helping to reduce the frequency of preopening locked and crossed markets, the

Commission believes that the proposal

should improve market quality and

enhance the production of fair and

orderly quotations. Accordingly, the

Commission believes that the proposal

is designed to produce fair and

informative quotations, consistent with

Section 15A(b)(11),15 and to remove

impediments to and perfect the

mechanism of a free and open market

and a national markey system,

consistent with Section 15A(b)(6).16

In addition, the Commission finds

good cause for approving the proposed

rule change prior to the thirtieth day

after the date of publication of notice

thereof in the Federal Register. The

Commission believes that this proposal,

which effectively creates an agency

order exception to NASD Rule 4613,

could increase market liquidity and

transparency by allowing more

customers to participate in Nasdaq’s

pre-opening market.17 The Commission

notes that this proposal is responsive to

concerns raised by certain ECN

commenters SR–NASD–99–23 that

NASD Rule 4613(e) would

disproportionately impact ECNs and

limit the participation of ECNs, retail

investors, and small broker-dealers in

the pre-opening market.18 The

Commission believes that the

amendments to NASD Rule 4613(e),

which would permit agency orders for

quotes of less than 5,000 shares to be

appended to a Trade-or–Move Message,

should help allay the concerns of ECNs

with regard to the application of NASD

Rule 4613(e).

Finally, as the Commission noted in

approving NASD–99–23,19 under this

proposal ECNs can still handle orders

that lock or cross markets in the preopening in alternative ways. Specificaly,

an ECN could (1) reject a locking or

crossing order, just as ECNs reject

locking or crossing orders during

normal trading hours; or (2) trade with

the incoming Trade-or-Move Message

up to the size of its subscriber’s order

and decline the remainder of the Tradeor-Move Message.

IV. Conclusion

For the reasons discussed above, the

Commission finds that the proposal is

consistent with the Act and the rules

and regulations thereunder applicable to

a national securities association.

It is Therefore Ordered, pursuant to

Section 19(b)(2) of the Act,20 that the

Federal Register / Vol. 65, No. 112 / Friday, June 9, 2000 / Notices 36749

21 17 CFR 200.30–3(a)(12).

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

2The Commission has modified the text of the

summaries prepred by NSCC.

3NSCC Rule 3, Section 10.

4NSCC Procedure 11.D4(a)(ii).

5 Id. at (iii).

6 Id. at (iv).

7NSCC Procedure 11.D.4(b).

8 Id. at 4(b)(i).

9 Id. at 4(b)(ii).

10 15 U.S.C. 78q–1.

11 15 U.S.C. 78q–1(b)(3)(F).

proposed rule change (SR–NASD–00–

18) be and hereby is approved.

For the Commission by the Division of

Market Regulation, pursuant to delegated

authority.21

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 00–14596 Filed 6–8–00; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–42893; File No. SR–NSCC–

00–03]

Self-Regulatory Organizations;

National Securities Clearing

Corporation; Notice of Filing and Order

Granting Accelerated Approval of a

Proposed Rule Relating to Processing

Government Securities Trades

June 2, 2000.

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

Securities Exchange Act of 1934

(‘‘Act’’),1 notice is hereby given that on

April 5, 2000, National Securities

Clearing Corporation (‘‘NSCC’’) filed

with the Securities and Exchange

Commission (‘‘Commission’’) the

proposed rule change as described in

Items I and II below, which items have

been prepared primarily by NSCC. The

Commission is publishing this notice

and order to solicit comments from

interested parties and to grant

accelerated approval of the proposed

rule change.

I. Self-Regulatory Organization’s

Statement of the Terms of Substance of

the Proposed Rule Change

The proposed rule change will allow

NSCC to receive government securities

trade data from the American Stock

Exchange (‘‘AMEX’’), process the trade

data, and transmit the trade data to the

Government Securities Clearing

Corporation (‘‘GSCC’’).

II. Self-Regulatory Organization’s

Statement of the Purpose of, and

Statutory Basis for, the Proposed Rule

Change

In its filing with the Commission,

NSCC 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. NSCC has prepared

summaries, set forth in sections (A), (B)

and (C) below, of the most significant

aspects of these statements.2

(A) Self-Regulatory Organization’s

Statement of the Purpose of, and

Statutory Basis for, the Proposed Rule

Change

The purpose of the rule change is to

amend NSCC’s rules and procedurres to

permit NSCC to: (1) Receive trade data

concerning members’ government

security transactions conducted on the

AMEX; (2) record trade information

about those transactions on NSCC

members’ contract lists; and (3) transmit

at the request of members the trade

information to GSCC for processing.

Specifically, the rule change amends

NSCC’s rules and procedures as follows:

• The AMEX may submit locked-in

trade data for transactions in ‘‘eligible

government securities’’ included in the

AMEX Order File (‘‘AOF’’) System to

NSCC. NSCC will maintain a list of

‘‘eligible government securities’’ which

must be unmatured, marketable debt

securities in book-entry form that are

direct obligations of the United States

Government; securities issued or

guaranteed by the United States, a U.S.

government agency or instrumentality,

or a U.S. government-sponsored

corporation; or such other security as

determined by NSCC from time to time.3

• The AMEX may submit its trade

data throughout trade date (‘‘T’’) until a

time specified by NSCC. The trade data

must include quantity, security

identification, identification of the

marketplace of execution, contra-broker,

trade value, and other identifying

details that NSCC may require or

permit.4

• NSCC will report back to members

their AOF trade data items, including

final contract amount as calculated by

NSCC, on the morning of T+1 in a

separate section of NSCC’s regular way

T+1 contract list.5

• Unless otherwise processed through

GSCC, as described below, the

settlement of AFO trade data items will

be the responsibility of parties to the

trade. Such items will not be settled

through the facilities of NSCC.6

The rule change permits NSCC to

transmit, at the request of members,

AOF trade data items to GSCC for

processing as follows 7:

• Each member that would like to

settle its AFO trades through GSCC

must complete and deliver to NSCC an

authorization agreement.8

• NSCC will submit AOF trade data

items to GSCC within the timeframes

established by NSCC.9

NSCC believes that the proposed rule

change is consistent with the

requirements of the Act,10 and the rules

and regulations thereunder. In

particular, the proposed rule change is

consistent with section 17A(b)(3)(F) of

the Act, which requires that the rules of

a clearing agency be designed to

promote the prompt and accurate

clearance and settlement of securities

transactions and, in general, to protect

investors and the public interest.

(B) Self-Regulatory Organization’s

Statement on Burden on Competition

NSCC does not believe that the

proposed rule change will impact or

impose a burden on competition.

(C) Self-Regulatory Organization’s

Statement on Comments on the

Proposed Rule Change Received from

Members, Participants or Others

No written comments have been

solicited or received. NSCC will notify

the Commission of any written

comments received by NSCC.

III. Date of Effectiveness of the

Proposed Rule Change and Timing for

Commission Action

Section 17A(b)(3)(F) 11 of the Act

requires that the rules of a clearing

agency be designed to promote the

prompt and accurate clearance and

settlement of securities transactions. For

the reasons set forth below, the

Commission believes that NSCC’s rule

change is consistent with this

obligation.

The rule change permits NSCC to

build upon its existing facilities to

receive and process trade data

concerning government securities

traded through the AMEX’s AOF System

by NSCC members. After processing this

information, NSCC will report back to

members trade information relating to

their AOF trades. At the request of

members who wish to settle these trades

through GSCC, NSCC will then transmit

trade data to GSCC for processing. By

providing this service, NSCC will be

facilitating the prompt and accurate

clearance and settlement of Amextraded government securities. Therefore,

the Commission finds that the proposed

rule change is consistent with NSCC’s

obligations to promote the prompt and