37808 Federal Register / Vol. 65, No. 117 / Friday, June 16, 2000 / Notices

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

2 17 CFR 240.19b–4.

Document Room, the Gelman Building,

2120 L Street, NW., Washington, DC.

The filing of requests for hearing and

petitions for leave to intervene is

discussed below.

By July 17, 2000, the licensee may file

a request for a hearing with respect to

issuance of the amendment to the

subject facility operating license and

any person whose interest may be

affected by this proceeding and who

wishes to participate as a party in the

proceeding must file a written request

for a hearing and a petition for leave to

intervene. Requests for a hearing and a

petition for leave to intervene shall be

filed in accordance with the

Commission’s ‘‘Rules of Practice for

Domestic Licensing Proceedings’’ in 10

CFR Part 2. Interested persons should

consult a current copy of 10 CFR 2.714

which is available at the Commission’s

Public Document Room, the Gelman

Building, 2120 L Street, NW.,

Washington, DC, and accessible

electronically through the ADAMS

Public Electronic Reading Room link at

the NRC Web site (http://www.nrc.gov).

If a request for a hearing or petition for

leave to intervene is filed by the above

date, the Commission or an Atomic

Safety and Licensing Board, designated

by the Commission or by the Chairman

of the Atomic Safety and Licensing

Board Panel, will rule on the request

and/or petition; and the Secretary or the

designated Atomic Safety and Licensing

Board will issue a notice of hearing or

an appropriate order.

As required by 10 CFR 2.714, a

petition for leave to intervene shall set

forth with particularity the interest of

the petitioner in the proceeding, and

how that interest may be affected by the

results of the proceeding. The petition

should specifically explain the reasons

why intervention should be permitted

with particular reference to the

following factors: (1) The nature of the

petitioner’s right under the Act to be

made party to the proceeding; (2) the

nature and extent of the petitioner’s

property, financial, or other interest in

the proceeding; and (3) the possible

effect of any order which may be

entered in the proceeding on the

petitioner’s interest. The petition should

also identify the specific aspect(s) of the

subject matter of the proceeding as to

which petitioner wishes to intervene.

Any person who has filed a petition for

leave to intervene or who has been

admitted as a party may amend the

petition without requesting leave of the

Board up to 15 days prior to the first

prehearing conference scheduled in the

proceeding, but such an amended

petition must satisfy the specificity

requirements described above.

Not later than 15 days prior to the first

prehearing conference scheduled in the

proceeding, a petitioner shall file a

supplement to the petition to intervene

which must include a list of the

contentions which are sought to be

litigated in the matter. Each contention

must consist of a specific statement of

the issue of law or fact to be raised or

controverted. In addition, the petitioner

shall provide a brief explanation of the

bases of the contention and a concise

statement of the alleged facts or expert

opinion which support the contention

and on which the petitioner intends to

rely in proving the contention at the

hearing. The petitioner must also

provide references to those specific

sources and documents of which the

petitioner is aware and on which the

petitioner intends to rely to establish

those facts or expert opinion. Petitioner

must provide sufficient information to

show that a genuine dispute exists with

the applicant on a material issue of law

or fact. Contentions shall be limited to

matters within the scope of the

amendment under consideration. The

contention must be one which, if

proven, would entitle the petitioner to

relief. A petitioner who fails to file such

a supplement which satisfies these

requirements with respect to at least one

contention will not be permitted to

participate as a party.

Those permitted to intervene become

parties to the proceeding, subject to any

limitations in the order granting leave to

intervene, and have the opportunity to

participate fully in the conduct of the

hearing, including the opportunity to

present evidence and cross-examine

witnesses.

If a hearing is requested, the

Commission will make a final

determination on the issue of no

significant hazards consideration. The

final determination will serve to decide

when the hearing is held.

If the final determination is that the

amendment request involves no

significant hazards consideration, the

Commission may issue the amendment

and make it immediately effective,

notwithstanding the request for a

hearing. Any hearing held would take

place after issuance of the amendment.

If the final determination is that the

amendment request involves a

significant hazards consideration, any

hearing held would take place before

the issuance of any amendment.

A request for a hearing or a petition

for leave to intervene must be filed with

the Secretary of the Commission, U.S.

Nuclear Regulatory Commission,

Washington, DC 20555–0001, Attention:

Rulemakings and Adjudications Staff, or

may be delivered to the Commission’s

Public Document Room, the Gelman

Building, 2120 L Street, NW.,

Washington, DC, by the above date. A

copy of the petition should also be sent

to the Office of the General Counsel,

U.S. Nuclear Regulatory Commission,

Washington, DC 20555–0001, and to

Mark J. Wetterhahn, Esquire, Winston &

Strawn, 1400 L Street, NW.,

Washington, DC 20005–3502, attorney

for the licensee.

Nontimely filings of petitions for

leave to intervene, amended petitions,

supplemental petitions and/or requests

for hearing will not be entertained

absent a determination by the

Commission, the presiding officer or the

presiding Atomic Safety and Licensing

Board that the petition and/or request

should be granted based upon a

balancing of the factors specified in 10

CFR 2.714(a)(1)(i)–(v) and 2.714(d).

For further details with respect to this

action, see the application for

amendment dated June 7, 2000, which

is available for public inspection at the

Commission’s Public Document Room,

the Gelman Building, 2120 L Street,

NW., Washington, DC, and accessible

electronically through the ADAMS

Public Electronic Reading Room link at

the NRC Web site (http://www.nrc.gov).

Dated at Rockville, Maryland, this 13th day

of June 2000.

For the Nuclear Regulatory Commission.

Peter S. Tam,

Senior Project Manager, Section 1, Project

Directorate I, Division of Licensing Project

Management, Office of Nuclear Reactor

Regulation.

[FR Doc. 00–15269 Filed 6–15–00; 8:45 am]

BILLING CODE 7590–01–P

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–42908; File No. SR–NASD–

00–22]

Self-Regulatory Organizations; Notice

of Filing of Proposed Rule Change by

the National Association of Securities

Dealers, Inc. Relating to Limit Order

Protection for OTC Bulletin Board

Securities

June 7, 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 19,

2000, the National Association of

Securities Dealers, Inc. (‘‘NASD’’ or

‘‘Association’’), through its wholly

owned subsidiary, the Nasdaq Stock

Federal Register / Vol. 65, No. 117 / Friday, June 16, 2000 / Notices 37809

3See Exchange Act Release No. 34279 (June 29,

1994), 59 FR 34883 (July 7, 1994).

4See Exchange Act Release No. 35751 (May 22,

1995), 60 FR 27997 (May 26, 1995).

5See In re E.F. Hutton & Co., Exchange Act

Release No. 25887 (July 6, 1998).

6The OTCBB, unlike Nasdaq, is a quotation

medium for subscribing NASD members, not an

issuer listing service. OTCBB securities are traded

by market makers that enter quotes and trade

reports through a sophisticated, closed computer

network, which is accessed through the Nasdaq

Workstation II. The OTCBB differs from Nasdaq in

several ways; for example, the OTCBB does not

maintain relationships with quoted issuers or

impose quantitative listing standards. Also, the

OTCBB also has different quotation obligations and

does not currently provide a method for automated

trade executions.

7All priced market maker quotations entered into

the service are required to be firm up to a minimum

size. However, market makers may still enter

unpriced indications of interest in the OTCBB. See

NASD Rules 6540 and 6750.

8By comparison, during the same month, Nasdaq

averaged over 1.8 billion shares per day, while the

New York Stock Exchange averaged 1.06 billion

share per day.

9This requirement was effective immediately for

all issuers initiating quotation on the OTCBB after

January 4, 1999. All issuers quoted on the OTCBB

as of that date were required to comply with the

rule on a phased-in basis, beginning in July 1999

and ending in June 2000. See Exchange Act Release

No. 40878 (Jan. 4, 1999), 64 FR 1255 (Jan. 8, 1999).

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.

1. Self-Regulatory Organization’s

Statement of the Terms of Substance of

the Proposed Rule Change

Nasdaq is proposing a new Rule 6541

to implement a pilot program

specifically prohibiting member firms

from trading ahead of customer limit

orders in designated OTC Bulletin

Board (‘‘OTCBB’’) securities. Below is

the text of the proposed rule change.

Proposed new language is in italics.

6541. Limit Order Protection

(a) Members shall be prohibited from

‘‘trading ahead’’ of customer limit

orders that a member accepts in

securities quoted on the OTCBB.

Members handling customer limit

orders, whether received from their own

customers or from another member, are

prohibited from trading at prices equal

or superior to that of the customer limit

order without executing the limit order.

Members are under no obligation to

accept limit orders from any customer.

(b) Notwithstanding subparagraph (a)

of this rule, a member may negotiate

specific terms and conditions applicable

to the acceptance of limit orders only

with respect to such orders that are:

(1) for customer accounts that meet

the definition of an ‘‘institutional

account’’ as that term is defined in Rule

3110(c)(4); or

(2) for 10,000 shares or more, and

greater than $20,000 in value.

(c) Contemporaneous trades

A member that trades through a held

limit order must execute such limit

order contemporaneously, or as soon as

practicable, but in no case later than

five minutes after the member has

traded at a price more favorable than

the customer’s price.

(d) Application

(1) This rule shall apply only to

OTCBB securities specifically identified

as such through the Nasdaq

Workstation service.

(2) This rule shall apply, regardless of

whether the subject security is

additionally quoted in a separate

quotation medium.

(3) This rule shall apply from 9:30

a.m. to 4:00 p.m. Eastern Time.

(4) This rule shall be in effect until [12

months from date of Commission

approval].

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

Background. NASD IM–2110–2

(commonly known as the ‘‘Manning

Rule’’) was adopted in 1994 3 and

further amended in 1995 4 to prohibit

NASD member firms from trading ahead

of customer limit orders in Nasdaq

securities. The impetus for this rule was

a case brought several years earlier by a

customer of a member firm, William

Manning, who alleged that the firm had

accepted his limit order, failed to

execute it, and violated its fiduciary

duties to him by trading ahead of the

order. In the Manning decision, the

NASD found and the SEC affirmed that

a member firm, upon acceptance of a

customer’s limit order, undertakes a

fiduciary duty and cannot trade for its

own account at prices more favorable

than the customer’s order.5 In the wake

of this decision, however, members

continued to trade ahead of customer

limit order provided the practice was

fully disclosed to the customer.

Through adoption of IM–2110–2, the

NASD effectively eliminated the

disclosure ‘‘safe-harbor’’ that developed

after the Manning decision for all

securities listed on Nasdaq. In

proposing the interpretation, the Nasdaq

recognized the growing importance of

Nasdaq as a major equity market and

noted that such a rule would enhance

the image of the market by creating a

more equitable, fair, and accessible

market for all investors. Indeed,

although the Manning Rule does not

explicitly apply to OTCBB issues, it has

always been the position of NASD and

Nasdaq that a member owes a duty of

best execution to all accepted customer

orders.

Nasdaq now believes that it is

appropriate to employ this same

rationale in applying limit order

protection to the OTCBB.6 Over the past

six years, the OTCBB has evolved into

a marketplace for numerous securities,

with market makers providing real-time

quotations available for reviewing by

other market participants.7 In 1994, the

average daily volume in all OTCBB

securities was approximately 28.5

million shares, a number that grew to

more than 300 million shares per day in

1999. OTCBB trading volume in

February 2000 averaged more than 1.2

billion shares per day.8

As a result of this increase in trading

volume, the OTCBB has become a more

open and transparent market in which

investors can obtain considerable

information regarding the quoted

issuers. For instance, by July 2000, all

issuers quoted on the OTCBB will be

required to provide updated financial

information to the Commission, or to

banking or insurance regulators, on a

periodic basis.9 The accessibility of this

disclosure information, along with lastsale information available through the

Internet, has provided the retail investor

with additional tools to make educated

investment decisions regarding many

formerly obscure OTCBB issuers.

In short, the OCTBB is far different

today than it was at its inception ten

years ago. In light of these notable

changes, the increased retail

participation, and the continuous efforts

by Nasdaq and the NASD to provide fair

37810 Federal Register / Vol. 65, No. 117 / Friday, June 16, 2000 / Notices

10Although the proposed rule will specifically

apply only to selected securities during the pilot

program, general duties of best execution will

continue to apply to all customer orders in all

securities.

11This number represents roughly 10 percent of

the total number of securities expected to remain

on the OTCBB upon the completed implementation

of Rule 6530. See supra note 10. For OTCBB

securities that are not included in the pilot,

members may trade ahead of customer limit orders

if full and clear disclosure regarding this practice

is provided to the customer.

12Nasdaq currently intends to display the

identifier ‘‘##’’ following the security name

denoting it as among the securities to which the

proposed rule would be applicable. This same

method of identification was utilized successfully

by Nasdaq in designating securities subject to the

SEC Order Handling Rules during their initial

phase-in period.

13Order entry firms that forward customer orders

to dealers for execution would continue to be

subject to their duties of best execution and would

owe a fiduciary duty to those orders. Accordingly,

firms should routinely monitor the handling of their

customer limit orders to ensure that the executing

broker is complying with the provisions of this rule.

14Member firms may impose terms and

conditions in the case of limit orders involving at

least 10,000 shares and having a value greater than

$20,000. The corresponding thresholds for IM–

2110–2 are 10,00 shares and $100,000. The

distinction in price is due to the relatively lower

share prices of OTCBB securities. Nasdaq will study

this limit as part of the pilot period analysis and

adjust it as appropriate if deemed necessary.

15This term is defined in NASD Rule 3110(c)(4).

16See NASD Notice to Members 95–67.

17See NASD Notice to Members 98–78.

18 15 U.S.C. 78o–3(b)(6).

and efficient markets for all investors,

Nasdaq now proposes to extend limit

order protection to investors of OTCBB

securities.

Proposed Pilot Program. Nasdaq

proposes to institute a 12-month pilot

program that will apply limit order

protection to a select subset of OTCBB

securities.10 Nasdaq will monitor the

progress of this rule and its effect on the

market throughout the entire period.

Prior to the completion of this pilot,

Nasdaq will evaluate the impact of the

proposed rule and report its findings to

the Commission and, thereafter,

determine the appropriate course of

action.

Nasdaq intends to examine the effects

of the proposed rule by applying it to

approximately 325 OTCBB securities.11

Securities subject to the proposed rule

will be positively designated as such

through the Nasdaq Workstation II.12

Nasdaq will select as one sample set the

200 most actively traded OTCBB

securities, which will be selected on the

basis of specific price and volume

parameters. An additional 100 securities

will be selected as a representative

cross-section of all remaining OTCBB

securities, therein providing an

opportunity to test the effects of this

rule upon the wide variety of securities

quoted on the OTCBB. The

implementation of the proposed rule

upon these 300 securities would be

phased in over a period of several

weeks, beginning with the top 200

actively traded securities, then

proceeding to the 100 representative

cross-section securities. This phase-in

process is intended to protect against

any unanticipated or deleterious effect

that could occur through an immediate

application to all securities.

The remaining 25 securities would

consist of selected securities added to

the OTCBB after the initial phase-in

period had been completed. This

additional allowance is intended to

provide Nasdaq with the flexibility to

impose the proposed rule upon

securities that necessitate its

protections. It is expected that these

securities, which would be selected by

Nasdaq on a case-by-case basis, would

be those that are highly liquid and

widely held by retail investors. The

securities expected to be included in

this category are those that have been

delisted from Nasdaq or an exchange

and start trading on the OTCBB.

Application of the proposed rule is

intended to substantially mirror IM–

2110–2, although some minor

modifications, discussed below, have

been afforded due to the distinction

between Nasdaq and the OTCBB. While

members will be under no obligation to

accept limit orders, those willing to do

so would be prohibited from trading at

prices equal or superior to any held

customer limit orders, regardless of

whether those orders are from their own

customers or from customers of firms

who have routed those orders to the

member for execution.13 This rule

would apply even to those members

who, in the past, have fully disclosed to

their customers that they may trade

ahead of customer limit orders.

As with IM–2110–2, Nasdaq

recognizes that filling institutional-sized

orders involves differing trading

strategies and risks, and that an

application of limit order protection to

all orders could prove unduly

burdensome to those members willing

to accept institutional orders. For that

reason, Nasdaq has determined that the

member may apply terms and

conditions concerning limit order

protection when accepting an

institutional-sized order 14 or an order

from an institutional account.15

An additional distinction in the

application of limit order protection to

OTCBB securities will be the time

interval allocated for

‘‘contemporaneous’’ executions. In

Nasdaq securities, a member is not

deemed to have traded ahead of a

customer limit order if the member

provides a contemporaneous execution

of the customer’s order.

‘‘Contemporaneous’’ has been

interpreted by Nasdaq to require an

execution as quickly as possible, but

absent reasonable and documental

justification, within one minute.16 This

interpretation recognizes that additional

time beyond the one minute provision

may be necessary during unusual

market conditions (e.g., at the opening

or upon the commencement of trading

following a trading halt or an initial

public offering), provided that the

member has taken all reasonable steps

to execute the trade as soon as

possible.17

Unlike Nasdaq, in which trades may

be executed or delivered through

automated means, the OTCBB service

provides no means of automated

communication. Participants in OTCBB

securities are generally required to

contact each other via telephone, a time

consuming process that can prove

especially burdensome during periods

of high trade volume. Recognizing this

distinction, Nasdaq proposes to require

a ‘‘contemporaneous’’ trade to be

executed as quickly as possible, but no

later than five minutes after becoming

marketable. If market conditions or

other circumstances cause the member

to exceed this five-minute requirement,

the member should continue to attempt

to execute the order as quickly as

possible, while sufficiently

documenting the particular conditions

or circumstances causing this delay.

Nasdaq will study this provision and

modify it as appropriate at the

conclusion of this pilot.

This rule will apply only during

normal market hours of 9:30 a.m. to 4:00

p.m. Although the OTCBB service is

available from 7:30 a.m. to 6:30 p.m.,

prices on the OTCBB are required to be

firm only during the normal market

hours. The hours of application of this

rule would adjust accordingly on days

in which normal market hours are

shortened due to holidays or other

events.

2. Statutory Basis

Nasdaq believes that the proposed

rule change is consistent with the

provisions of Section 15A(b)(6) of the

Act 18 which requires, among other

things, that the Association’s rules be

designed to prevent fraudulent and

manipulative acts and practices, to

promote just and equitable principles of

trade, and, in general, to protest

investors and the public interest. The

new rule would ensure the protection of

investor’s limit orders, enhance the

Federal Register / Vol. 65, No. 117 / Friday, June 16, 2000 / Notices 37811

19 17 CFR 200.30–3(a)(12).

quality of trading on the OTCBB, and

significantly reduce the potential for

unfair discrimination, real or perceived,

of customer orders.

(B) Self-Regulatory Organization’s

Statement on Burden on Competition 

Nasdaq does not believe that the

proposed rule change would 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

Within 35 days of the date of

publication of this notice in the Federal

Register or within such longer period (i)

As the Commission may designate up to

90 days of such date if it finds such

longer period to be appropriate and

publishes its reasons for so finding, or

(ii) as to which the NASD consents, the

Commission will:

(A) By order approve such proposed

rule change, or

(B) Institute proceedings to determine

whether the proposed rule change

should be disapproved.

IV. Solicitation of Comments

Interested persons are invited to

submit written data, views, and

arguments concerning the foregoing,

including whether the proposed rule is

consistent with the Act. Persons making

written submissions should file six

copies thereof with the Secretary,

Securities and Exchange Commission,

450 Fifth Street, N.W., Washington, D.C.

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 No.

SR–NASD–00–22 and should be

submitted by July 7, 2000.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority. 19

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 00–15242 Filed 6–15–00; 8:45 am]

BILLING CODE 8010–01–M

SMALL BUSINESS ADMINISTRATION

[Declaration of Disaster #3260]

Commonwealth of Kentucky

Grayson County and the contiguous

counties of Breckinridge, Butler,

Edmonson, Hardin, Hart, and Ohio in

the Commonwealth of Kentucky

constitute a disaster area due to

damages caused by severe storms and

tornadoes that occurred on May 23,

2000. Applications for loans for

physical damage as a result of this

disaster may be filed until the close of

business on August 3, 2000 and for

economic injury until the close of

business on March 5, 2001 at the

address listed below or other locally

announced locations: U.S. Small

Business Administration, Disaster Area

2 Office, One Baltimore Place, Suite

300, Atlanta, GA 30308.

The interest rates are:

Percent

For Physical Damage:

HOMEOWNERS WITH CREDIT AVAILABLE ELSEWHERE ......................................................................................................... 7.375

HOMEOWNERS WITHOUT CREDIT AVAILABLE ELSEWHERE .................................................................................................. 3.687

BUSINESSES WITH CREDIT AVAILABLE ELSEWHERE ............................................................................................................. 8.000

BUSINESSES AND NON-PROFIT ORGANIZATIONS WITHOUT CREDIT AVAILABLE ELSEWHERE ...................................... 4.000

OTHERS (INCLUDING NON-PROFIT ORGANIZATIONS) WITH CREDIT AVAILABLE ELSEWHERE ....................................... 6.750

For Economic Injury:

BUSINESSES AND SMALL AGRICULTURAL COOPERATIVES WITHOUT CREDIT AVAILABLE ELSEWHERE ..................... 4.000

The numbers assigned to this disaster

are 326012 for physical damage and

9H4700 for economic injury.

(Catalog of Federal Domestic Assistance

Program Nos. 59002 and 59008)

Dated: June 7, 2000.

Kris Swedin,

Acting Administrator.

[FR Doc. 00–15284 Filed 6–15–00; 8:45 am]

BILLING CODE 8025–01–P

SMALL BUSINESS ADMINISTRATION

[Declaration of Disaster #3262]

State of North Carolina

Alamance County and the contiguous

counties of Caswell, Chatham, Guilford,

Orange, Randolph, and Rockingham in

the State of North Carolina constitute a