44158 Federal Register / Vol. 62, No. 160 / Tuesday, August 19, 1997 / Notices

4 17 CFR 200.30–3(a)(12).

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

2 17 CFR 240.19b–4.

III. Date of Effectiveness of the

Proposed Rule Change and Timing for

Commission Action

The foregoing rule change has become

effective immediately pursuant to

Section 19(b)(3)(A)(ii) of the Act and

subparagraph (e) of Rule 19b–4

thereunder in that it establishes or

changes a due, fee or other charge.

At any time within 60 days of the

filing of a rule change pursuant to

Section 19(b)(3)(A) of the Act, the

Commission may summarily abrogate

the rule change if it appears to the

Commission that such action is

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.

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 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 number

SR–NASD–97–55 and should be

submitted by September 9, 1997.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.4

[FR Doc. 97–21906 Filed 8–18–97; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–38925; File No. SR–NASD–

97–54]

Self-Regulatory Organizations; Notice

of Filing of Proposed Rule Change by

National Association of Securities

Dealers, Inc. Relating to Computer-toComputer Interface Circuit Fees for

Non-NASD Members

August 12, 1997.

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 July 28,

1997, the Nasdaq Stock Market, Inc.

(‘‘Nasdaq’’) 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 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 is proposing to amend Rule

7010 of the National Association of

Securities Dealers, Inc. (‘‘NASD’’ or

‘‘Association’’), to charge Computer-toComputer Interface (‘‘CTCI’’) subscribers

that are not NASD members a circuit fee

of $200 per month for each circuit.

Proposed new language is in italics.

7010. System Services

(a)–(g) No Change

(h) Nasdaq Workstation tm Service

(1) No Change

(2) No Change

(3) The following charges shall apply

for each CTCI subscriber:

Service Charge $200/month per

CTCI circuit

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

The purpose of the proposed rule

change is to charge CTCI subscribers

that are not NASD members a circuit fee

of $200 per month for each circuit.

Firms employ CTCI between their inhouse computer systems and Nasdaq for

a variety of functions, the most

prevalent being order entry into the

Small Order Execution System

(‘‘SOES’’) and the reporting of

transactions into the Automated

Confirmation Transaction Service

(‘‘ACT’’). Nasdaq currently supports a

total of 449 circuits.

Although most users of CTCI are

NASD members, a small number are

not. Specifically, these are mutual funds

or their pricing agents that may use

CTCI for transmitting net asset values

(‘‘NAVs’’) each day to Nasdaq’s Mutual

Fund Quotation Service. To ensure that

the costs are uniformly allocated among

all CTCI subscribers, Nasdaq is

proposing to apply the circuit charge to

these subscribers as well.

The CTCI network is presently

managed by MCI Communications

Corp., which is responsible for customer

services including installation,

relocation and trouble shooting.

Subscribers pay a monthly fee to MCI

for each recruit in use. Nasdaq does not

currently charge CTCI subscribers

beyond the fees associated with the

transaction services supported by the

CTCI network.

The new fee structure is necessary

due to adjustments and enhancements

that Nasdaq has already made to

support capacity for trading days of 1

billion shares currently, 1.5 billion

shares by the end of 1997, and 2 billion

shares in 1998. As the number of CTCI

circuits grows, the potential to exceed

capacity limits in the CTCI supported

services, notably ACT and SOES,

likewise increases. As a consequence,

additional infrastructure enhancements

will be required to maintain the level of

support required to run these services at

an acceptable level of performance. In

addition to future systems

enhancements, Nasdaq continues to

incur costs for the support of CTCI

circuits and subscribers. These costs

include hardware and software

enhancements and upgrades for the

communications interfaces with Nasdaq

systems, support of the subscriber

database, customer telephone support

and Nasdaq staff planning and

provisioning for CTCI. A recent activitybased costing analysis indicated that

these costs total approximately $1.1
Federal Register / Vol. 62, No. 160 / Tuesday, August 19, 1997 / Notices 44159

3 15 U.S.C. § 78o–3.

4 17 CFR 200.30–3(a)(12).

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

2 17 CFR 240.19b–4.

3This notice includes Amendment No. 1 to the

proposed rule change, supplementing the Statement

of Purpose in Section II, which was filed with the

Commission on August 8, 1997. See letter from

Michael D. Pierson, Office of Regulatory Policy,

Pacific Exchange, to Mandy S. Cohen, Office of

Market Supervision, Division of Market Regulation,

Commission (dated August 7, 1997).

4 ‘‘POETS’’ is an acronym for the Pacific Options

Exchange Trading System.

5See also PCX Options Floor Procedure Advice

G–9 (‘‘Fast Market Procedures’’).

million annually, which Nasdaq seeks

to recover through this fee.

Nasdaq believes that the proposed

rule change is consistent with the

provisions of Section 15A(b)(5) of the

Act,3 which requires that the rules of the

NASD provide for the equitable

allocation of reasonable dues, fees and

other charges among members and

issuers and other persons using any

facility or system which the NASD

operates or controls.

B. Self-Regulatory Organization’s

Statement on Burden on Competition

Nasdaq does not believe that the

proposed rule change will result in any

burden on competition that is not

necessary or appropriate in furtherance

of the persons of the Act, as amended.

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 self-regulatory

organization 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.

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 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 number

SR–NASD–97–54 and should be

submitted by September 9, 1997.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.4

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 97–21907 Filed 8–18–97; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–38927; File No. SR–PCX–

97–21]

Self-Regulatory Organizations; Notice

of Filing of Proposed Rule Change by

the Pacific Exchange, Inc. Relating to

the Suspension of its Automatic

Execution System (‘‘Auto-Ex’’) During

Unusual Market Conditions

August 12, 1997.

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 June 4,

1997, the Pacific Exchange, Inc.

(‘‘Exchange’’) 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 the self-regulatory organization.3 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 Exchange is proposing to adopt

new rules on the suspension of its

Automatic Execution System (‘‘AutoEx’’) for options trading during unusual

market conditions, and the maximum

bid-ask spread differentials that are

permitted during unusual market

conditions. The text of the proposed

rule change is available at the Exchange.

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

self-regulatory organization 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 self-regulatory organization 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

Statement of Purpose

The Exchange is proposing to modify

its Rule 6.28 (‘‘Unusual Market

Conditions’’) to address situations

involving system failures, ranging from

‘‘frozen screens’’ in an issue (where

quote changes are entered into the

system, but such changes are not

reflected in the market being

disseminated) to a floor-wide system

malfunction of the POETS system

(where all screen displays on the floor

fail).4 Rule 6.28 currently provides that

whenever an Options Floor Official

determines that ‘‘an unusual condition

or circumstance’’ exists, because of an

influx of orders or other unusual

conditions or circumstances, and the

interests of maintaining a fair and

orderly market so require, such official

may declare a ‘‘fast market’’ in one or

more classes of option contracts.5 The

proposed amendments are designed to

provide additional safeguards and

procedures to deal with such situations.

First, the Exchange is proposing to

modify subsection (a) of Rule 6.28 to

require the agreement of two Options

Floor Officials before a ‘‘fast market’’

can be declared. Second, the Exchange

is proposing to add a new subsection

(b)(7), to allow the Options Floor

Officials who have declared a fast

market to suspend the Auto-Ex if,

because of an influx of orders or other

unusual market conditions or

circumstances, they determine that such

action is appropriate in maintaining a

fair and orderly market. The initial

suspension of Auto-Ex is limited to five

minutes and a Floor Governor must be

notified immediately. Suspension of