41456 Federal Register / Vol. 62, No. 148 / Friday, August 1, 1997 / Notices

5 15 U.S.C. 78f(b)(5).

6 15 U.S.C. 78s(b)(2).

7 17 CFR 200.30–3(a)(12).

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

2 17 CFR 240.19b–4.

3Securities Exchange Act Release No. 38267 (Feb.

11, 1997), 62 FR 7488 (Feb. 19, 1997).

4See NYSE Rule 124.60 (detailing the

circumstances when the ITS best bid or offer will

not be utilized).

5The Exchange considers a bid or offer as firm

when the members of the market center

disseminating the bid or offer are not relieved of

their obligations with respect to such bid or offer

under paragraph (c)(2) of Rule 11Ac1–1 pursuant to

the ‘‘unusual market’’ exception of paragraph (b)(3)

of Rule 11Ac1–1. See 17 CFR 240.11Ac1–1(b)(3); 17

CFR 240.11Ac1–1(c)(2).

C. Self-Regulatory Organization’s

Statement on Comments on the

Proposed Rule Change Received From

Members, Participants or Others

No written comments were either

solicited or received.

III. Date of Effectiveness of the

Proposed Rule Change and Timing for

Commission Action

The NASD requests the Commission

to find good cause, pursuant to section

19(b)(2) of the Act, for temporarily

approving an extension of Rule 10334

prior to the thirtieth day after

publication in the Federal Register. The

Commission finds that extending Rule

10334 pending final action by the

Commission on the proposed rule

change is consistent with the

requirements of the Act and the rules

and regulations thereunder applicable to

a national securities association and, in

particular, the requirements of section

15A(b)(6) of the Act.5 The Commission

finds good cause for approving the

temporary extension of Rule 10334 prior

the thirtieth day after the date of

publication of notice of filing thereof in

the Federal Register in that temporary

accelerated approval will benefit users

of the arbitration process in that

providing a temporary extension of the

Procedures will permit arbitration

participants to continue to use the

Procedures. In addition, except with

respect to the administrative conference

required under the Rule, the current

application of Rule 10334 to any case

submitted to arbitration is voluntary.

Thus, temporarily accelerating the

approval of Rule 10334 while

simultaneously requesting comment on

the five year extension of the program

and the amendment to make the entire

program voluntary in nature will permit

the NASD to maintain the continuity of

the process will not have any adverse

impact on the investing public.

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 self-regulatory

organization consents, the Commission

will:

A. By order approved 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.

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. 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 NASD. All

submissions should refer to File No.

SR–NASD–97–52 and should be

submitted by August 22, 1997.

It is therefore ordered, pursuant to

section 19(b)(2) 6 that NASD Rule 10334

is temporarily extended until the

Commission takes final action on the

present proposal.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.7

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 97–20372 Filed 7–31–97; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–38874; File No. SR–NYSE–

96–33]

Self-Regulatory Organizations; New

York Stock Exchange, Inc.; Order

Granting Approval To Proposed Rule

Change Relating to the Execution of

Odd-Lot Orders

July 25, 1997.

I. Introduction

On November 25, 1996, the New York

Stock Exchange, Inc. (‘‘NYSE’’or

‘‘Exchange’’) submitted to the Securities

and Exchange Commission (‘‘SEC’’ or

‘‘Commission’’), pursuant to Section

19(b)(1) of the Securities Exchange Act

of 1934 (‘‘Act’’) 1 and Rule 19b–4

thereunder,2 a proposed rule change to

price odd-lot transactions according to

the next round-lot execution to occur on

the Exchange under certain

circumstances.

The proposed rule change was

published for comment in the Federal

Register on February 19, 1997,3 and no

comments were received. This order

approves the proposal.

II. Description

Currently, odd-lot market orders are

executed in the odd-lot system against

the specialist in that stock at a price

based on the ‘‘best pricing quote’’

(‘‘BPQ’’). This is either the NYSE quote

or the best quote from another

Intermarket Trading System (‘‘ITS’’)

market center. (A buy odd-lot market

order is executed at the offer price, and

a sell odd-lot market order is executed

at the bid price.) However, in situations

where the quote for a stock does not

qualify as a valid quote, either because

it is designated as a non-firm quote or

it fails a system validation check

because it exceeds certain parameters,

the current procedure prices odd-lot

executions using the last sale price in

the round lot market.4 The Exchange

believes, however, that this may not

reflect the current market for the stock

because the quote condition (i.e. a nonfirm or a gapped quote) strongly

suggests that the market is likely to

move away from that last price. In these

situations, the Exchange believes the

current procedure may disadvantage

customers or the specialist.

In instances when quotation

information is not available or the

security has been determined to be in

‘‘non-firm mode,’’ 5 the NYSE proposes

to price odd-lot orders by utilizing the

price of the next Exchange round sale or

such other price deemed appropriate

under prevailing market conditions by

the member organization designated by

the Exchange to act as a market maker

for odd-lot orders. In instances where

the quote in a security does not meet the

Exchange’s odd-lot system guidelines,

the NYSE proposes to price odd-lot

orders by utilizing the price of the next

Exchange round sale or the next

Exchange quote that is within the oddlot system guidelines (whichever occurs
Federal Register / Vol. 62, No. 148 / Friday, August 1, 1997 / Notices 41457

6These uncodified guidelines currently provide

for the following maximum valid spread ranges:

Common stock for prices less than or equal to

$50, the valid spread is 1 point

for prices between $50 1/64 and $100, the valid

spread is 13⁄4 points

for prices greater than $100, the valid spread is

21⁄2 points

Preferred stock:

for prices less than or equal to $50, the valid

spread is 2 points

for prices between 501⁄64 and 100, the valid

spread is 21⁄4 points

for prices greater than $100, the valid spread is

21⁄2 points

Spread between quote and last sale must not

exceed:

prices less than or equal to $10, the valid spread

is 3⁄8 point

prices between 101⁄8 and $25, the valid spread is 1⁄2 point

prices between 251⁄8 and $40, the valid spread is 5⁄8 point

prices greater than $40, the valid spread is 21⁄2

points

7 15 U.S.C. 78f(b).

8 15 U.S.C. 78f(b)(5).

9 In approving this rule, the Commission notes

that it has considered the proposal’s impact on

efficiency, competition, and capital formation,

consistent with section 3 of the Act. 15 U.S.C.

§ 78c(f).

10NYSE Rule 124 generally provides that odd-lot

market orders will be executed at the price of the

‘‘adjusted ITS bid (offer)’’ at the time the order is

received by the Exchange. NYSE Rule 124.60 states

that a quotation in a stock from another ITS market

center will be considered if: (1) The stock is

included in ITS in that market center, (2) the size

of the quotation is greater than 100 shares, (3) the

bid or offer is not more than one-quarter dollar

away from the bid (offer) disseminated by the

Exchange, (4) the quotation conforms to the

Exchange’s requirements concerning minimum

fractional changes, (5) the quotation does not result

in a ‘‘locket market,’’ (6) the market center is not

experiencing operational or system problems with

respect to the dissemination of quotation

information, and (7) the bid or offer is ‘‘firm’’

pursuant to the Commission’s and the market’s

rules.

11Securities Exchange Act Release No. 27971

(May 2, 1990), 55 FR 19409 (May 9, 1990)

(approving File No. SR–NYSE–90–60).

12 15 U.S.C. 78s(b).

13 15 U.S.C. 78s(b)(2).

14 17 CFR 200.30–3(a)(12).

first) or such other price deemed

appropriate under prevailing market

conditions by the member organization

designated by the Exchange to act as a

market maker for odd-lot orders.6 The

Exchange believes this would provide

more appropriate pricing of odd-lot

orders as it would reflect actual roundlot market prices at the time the odd-lot

orders are executed.

III. Discussion

The Commission finds that the

proposed rule change is consistent with

the requirements of the Act and the

rules and regulations thereunder

applicable to a national securities

exchange and, in particular, with the

requirements of section 6(b).7

Specifically, the Commission believes

the proposal is consistent with the

section 6(b)(5) 8 requirements that the

rules of an exchange be designed to

remove impediments to and perfect the

mechanism of a free and open market,

to facilitate transactions in securities

and, in general, to protect investors and

the public interest.9

The Commission believes it is

adequate for the NYSE to price standard

odd-lot market orders at the price of the

next Exchange round-lot sale when the

BPQ is unavailable. Although the

current pricing algorithm provides

investors with more advantageous

prices in a steadily declining market

than the proposed algorithm, utilizing

the next Exchange round-lot sale price

when the BPQ is unavailable is a

reasonable choice by the Exchange that

is not inconsistent with the Act. The

proposal continues to provide

procedures that facilitate the execution

of odd-lot orders when use of the ITS

quote may not be appropriate.

The Commission also believes it is

appropriate for the Exchange to price

odd-lot orders by utilizing the price of

the next Exchange round-lot sale or the

next Exchange quote that is within the

odd-lot system guidelines (whichever

occurs first) in instances where the

quote in a security does not meet the

Exchange’s odd-lot system guidelines.

The Commission has previously found

that it is appropriate for the Exchange to

impose certain, limited prerequisites on

quotes from other market centers before

incorporating such quotes into the

Exchange’s odd-lot pricing system.10

The Commission stated that such

limitations help protect the automatic

execution features of the Exchange’s

odd-lot pricing system against the

inclusion of aberrant quotations.11

Similarly, the maximum valid spread

parameters, as drafted, should help to

exclude stale quotations from the oddlot system. If the Exchange chooses to

narrow these parameters, it must file the

proposed change with the Commission

pursuant to Section 19(b) of the Act.12

IV. Conclusion

It is therefore ordered, pursuant to

Section 19(b)(2) of the Act,13 that the

proposed rule change (SR–NYSE–96–

33) is approved.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.14

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 97–20373 Filed 7–31–97; 8:45 am]

BILLING CODE 8010–1–M

SOCIAL SECURITY ADMINISTRATION

Testing Modifications to the Disability

Determination Procedures; Federal

Processing Center Testing

AGENCY: Social Security Administration.

ACTION: Notice of an additional test site

and the duration of testing involving

modifications to the disability

determination procedures.

SUMMARY: The Social Security

Administration (SSA) is announcing the

location of additional testing that it will

conduct under the current rules at 20

CFR 404.906, 404.943, 416.1406, and

416.1443. Those rules authorize the

testing of several modifications to the

disability determination procedures that

we normally follow in adjudicating

claims for disability insurance benefits

under title II of the Social Security Act

(the Act) and claims for supplemental

security income based on disability

under title XVI of the Act. This notice

announces the test site and duration of

testing involving a combination of

features of the proposed redesigned

disability process. The notice also

describes additional features that will

allow us to test the effectiveness of

processing cases under a combination of

the models in a Federal processing

center.

FOR FURTHER INFORMATION CONTACT:

Harry Pippin, Disability Models Team

Leader, Office of Disability, Disability

Process Redesign Staff, Social Security

Administration, 6401 Security

Boulevard, Baltimore, Maryland 21235,

410–965–9203.

SUPPLEMENTARY INFORMATION: Current

regulations at 20 CFR §§ 404.906,

404.943, 416.1406, and 416.1443

authorize us to test different

modifications to the disability

determination procedures. We describe

the use of four features of the testing

modifications to the disability

determination procedures as the full

process model. Those modifications are:

the use of a single decisionmaker who

may make the disability determination

without requiring the signature of a

medical consultant; the conducting of a

predecisional interview in which a

claimant, for whom SSA does not have

sufficient information to make a fully

favorable determination or for whom the

evidence would require an initial

determination denying the claim, can

present additional information to the

decisionmaker before an initial

determination is made; the elimination