Federal Register / Vol. 62, No. 20 / Thursday, January 30, 1997 / Notices 4563

5See Securities Exchange Act Release No. 37772

(October 1, 1996).

6 17 CFR 200.30–3(a)(12) (1989).

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

2 17 CFR 240.19b–4.

3Securities Exchange Act Release No. 38042 (Dec.

11, 1996), 61 FR 6633 (Dec. 17, 1996).

Subsequently, NASD Regulation extended the time

period for Commission action until January 31,

1997. Letter from John Ramsay, Deputy General

Counsel, NASD Regulation, to Katherine A.

England, Assistant Director, Division of Market

Regulation, SEC, dated January 21, 1997.

4See Securities Exchange Act Release No. 36783

(Jan. 29, 1996), 61 FR 3955 (Feb. 2, 1996).

more efficient linkage with the CHX

because of the impact CHX quotes have

on their proprietary execution systems.

In particular, because many firms

operate systems that guarantee

executions based on the best bid or offer

on Nasdaq, which includes CHX quotes,

these firms want to be able to readily

access CHX quotes when the CHX is

alone at the inside price. In addition,

among other things, more efficient

access to CHX quotes will serve to avoid

locked and crossed markets. In sum, the

NASD believes its proposal will serve to

promote intermarket competition,

enhance the price discovery process for

Nasdaq securities, and dramatically

improve the access of Nasdaq market

makers to the CHX floor and vice versa.

Accordingly, Nasdaq and the NASD

believe that the proposed rule change is

consistent with Sections 15A(b)(6) and

11A(a)(1)(C) of the Act. Among other

things, Section 15A(b)(6) requires that

the rules of a 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,

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 11A(a)(1)(C) provides that it is

in the public interest to, among other

things, assure the economically efficient

execution of securities transactions and

the availability to brokers, dealers, and

investors of information with respect to

quotations for and transactions in

securities. Specifically, by improving

the access of Nasdaq market makers and

UTP specialists to each others’ quotes,

the proposed rule change will serve to

enhance intermarket competition, the

best execution of investors’ orders, and

the price discovery process for Nasdaq

securities. Moreover, Nasdaq and the

NASD believe the proposed rule change

will serve to benefit small investors

because it will help to minimize the

length of time that SOES will reject

orders when a UTP exchange is alone at

the best bid or offer on Nasdaq. Finally,

Nasdaq and the NASD believe that

providing UTP exchanges access to

SelectNet is responsive to the

Commission’s request that Nasdaq and

the exchanges create an electronic

linkage between Nasdaq market makers

and exchange specialists.5

B. Self-Regulatory Organization’s

Statement on Burden on Competition

The NASD believes that the proposed

rule change will not 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

Comments were neither solicited nor

received.

III. Date of Effectiveness of the

Proposed Rule Change and Timing for

Commission Action

The proposed rule change has become

effective immediately pursuant to

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

subparagraph (e) of Securities Exchange

Act Rule 19b–4 because, consistent with

the standards set forth in Rule 19b–

4(e)(5), the proposal does not: (1)

significantly affect the protection of

investors or the public interest; (2)

impose any significant burden on

competition; or (3) have the effect of

limiting the access to or availability of

SelectNet. In particular, because no

operational aspect to SelectNet is being

modified by this proposal in any way

other than an expansion of the scope of

market participants that will have

access to the SelectNet, Nasdaq and the

NASD believe it is appropriate that the

proposal has become effective upon

filing pursuant to Rule 19b–4(e)(5). In

fact, because of the intermarket access

that will be fostered by the proposal,

Nasdaq and the NASD believe the

proposal will promote the protection of

investors and enhance competition.

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 many 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 the file

number in the caption above and should

be submitted by February 20, 1997.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.6

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 97–2255 Filed 1–29–97; 8:45 am]

BILLING CODE 8010–01–M

[Release No. 34–38205; File No. SR–NASD–

96–42]

Self-Regulatory Organizations;

National Association of Securities

Dealers, Inc.; Order Granting Approval

to Proposed Rule Change Relating to

Transfer of Limited Partnership

Interests

January 24, 1997.

On November 15, 1996, NASD

Regulation, Inc., (‘‘NASD Regulation’’)

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

allow members under certain

circumstances to petition the staff of

NASD Regulation for permission to

modify the standardized limited

partnership transfer forms.

The proposed rule change was

published for comment in the Federal

Register on December 17, 1996.3 No

comments were received on the

proposal. This order approves the

proposal.

Currently, all members of the National

Association of Securities Dealers, Inc.

(‘‘NASD’’) are required to use

standardized transfer, registration

confirmation, and distribution

allocation forms (‘‘Forms’’) when

transferring any limited partnership

security.4 After use of the Forms became

mandatory, transfer agents, member

firms, and securities attorneys raised a

number of questions concerning the

applicability of the Forms to certain

types of transfers. For example, it was

suggested that the distribution
4564 Federal Register / Vol. 62, No. 20 / Thursday, January 30, 1997 / Notices

5 15 U.S.C. 78o–3.

6 15 U.S.C. 78o(b)(6). In finding that the proposed

rule change is in the public interest, the

Commission, consistent with Section 3(f) of the Act,

has taken into consideration the extent to which the

proposal promotes efficiency. 15 U.S.C. 78c(f).

7An overly liberal application of this exemptive

authority by NASD Regulation staff would

eliminate the benefits sought by the NASD when it

proposed the use of standardized forms.

8 15 U.S.C. 78s(b)(2).

9 17 CFR 200.30–3(a)(12).

1Rule 6.52(a) provides in part that ‘‘[o]nly nonbroker/dealer customer orders may be placed with

an Order Book Official pursuant to this Rule.’’ Cf.

SEC Rule 11Ac1–4(a)(6) (equity ‘‘customer limit

orders’’ that must be displayed pursuant to Rule

11Ac–1–4 include those that are ‘‘not for the

account of either a broker or dealer’’) (effective

January 20, 1997).

2Rule 6.87(a) provides: ‘‘Only non-broker/dealer

customer orders are eligible for execution on the

allocation form be modified to provide

additional options for specific treatment

of capital transactions, capital

distributions, sale or refinancing

proceeds, special distributions,

liquidating distributions, and

distributions with respect to terminating

transactions. In another case, an NASD

member stated that modifications to

both the transfer and distribution

allocation forms were necessary to

satisfy certain conditions of purchase

imposed by its limited partnership

secondary transaction department. In

addition, although the Forms were

intended to be used for all purchases,

sales, exchanges, and transfers of

limited partnership interests, many

member firms have developed standard

one page documents for transfers that

are ‘‘not for consideration,’’ such as

transfers related to a change of trustee

or custodian or transfers resulting from

death, divorce, or gift. These previously

developed documents fulfill the same

purpose as the new Standardized

Transfer Forms, i.e., permitting a fast

and efficient transfer of the security.

Finally, other miscellaneous issues

have been raised in connection with the

use of the Forms, including a request to

meet a requirement that each investor

demonstrate U.S. citizenship.

To address this recurring situation,

NASD Regulation has proposed a rule

change that would add a new paragraph

to NASD Rule 11580 that authorizes

NASD Regulation’s Corporate Financing

Department, in response to a member’s

written request, to issue a waiver from

the requirement to use the Forms for

good cause shown. This waiver would

allow the requesting member to modify

the Forms as requested to meet legal or

regulatory requirements or to otherwise

facilitate the transfer of the limited

partnership interests.

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

association, and, in particular, with the

requirements of Section 15A.5

Specifically, the Commission believes

the proposal is consistent with the

Section 15A(b)(6) requirements that the

rules of an association be designed 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 prevent fraudulent and

manipulative acts and practices, and, in

general, to protect investors and the

public interest.6

The Commission recognizes that there

may be instances where the current

standardized forms may need to be

modified to expedite the transfer of

limited partnership interests due to the

variety of partnership products

available. Therefore, the Commission

believes the proposed rule change will

allow NASD Regulation staff to provide

the flexibility sometimes necessary to

facilitate a more efficient transfer of

limited partnership interests in

particular cases where a rigid ‘‘form

over substance’’ requirement might

hinder the transfer process.

Nevertheless, to ensure the proposed

rule change will not unnecessarily

reduce or eliminate the benefits of

utilizing standardized forms, the

Commission emphasizes that waivers

allowing members to modify the Forms

should be issued only under limited

circumstances. They will be issued

when needed to allow members to meet

legal or regulatory requirements not

sufficiently addressed in the Forms or to

otherwise facilitate the transfer of

limited partnership interests. In

applying this standard, it is important

that waivers not be issued to allow

members to substitute their own forms

or to make wholesale changes to the

Forms, unless otherwise noted.7

It is therefore ordered, pursuant to

Section 19(b)(2) of the Act,8 that the

proposed rule change (SR–NASD–96–

42) is approved.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.9

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 97–2256 Filed 1–29–97; 8:45 am]

BILLING CODE 8010–01–M

[Release No. 34–38203; File No. SR–PSE–

96–46]

Self-Regulatory Organizations; Notice

of Filing of Proposed Rule Change by

the Pacific Stock Exchange, Inc.

Relating to Foreign Broker-Dealers

January 24, 1997.

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

Securities Exchange Act of 1934

(‘‘Act’’), 15 U.S.C. 78s(b)(1), notice is

hereby given that on December 16, 1996,

the Pacific Stock Exchange, Inc. (‘‘PSE’’

or ‘‘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 PSE. 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 amend

its rules to specify that the term

‘‘broker/dealer,’’ as used in PSE Rules

6.52(a), 6.86 and 6.87, includes foreign

broker/dealers. The Exchange is also

proposing to adopt a definition of the

term ‘‘foreign broker/dealer.’’

The text of the proposed rule change

is available at the Office of the

Secretary, the PSE, and at the

Commission.

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

Exchange 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

PSE 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

Purpose

PSE Rules 6.52(a), 6.86 and 6.87,

relating to option transactions, currently

distinguish between orders for broker/

dealers and orders for non-broker/

dealers. Under these rules, only nonbroker/dealer customer orders are

eligible to be placed on the public limit

order book,1 to be entered for automatic

execution,2 or to be eligible for a