Federal Register / Vol. 62, No. 205 / Thursday, October 23, 1997 / Notices 55295

3 17 CFR 200.30–3(a)(12).

1 15 U.S.C. 78s(b)(1). 2 15 U.S.C. 78s(b)(3)(A)(i). 3 15 U.S.C. 78o–3.

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

submissions, 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 persons, 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 the filing will also be

available for inspection and copying at

the Board’s principal offices. All

submissions should refer to File No.

SR–MSRB–97–6 and should be

submitted by November 13, 1997.

For the Commission by the Division of

Market Regulation, pursuant to delegated

authority.3

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 97–28123 Filed 10–22–97; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–39250; File No. SR–NASD–

97–75]

October 16, 1997.

Self-Regulatory Organizations; Notice

of Filing and Immediate Effectiveness

of Proposed Rule Change by National

Association of Securities Dealers, Inc.

Relating to the Distribution of

Information Concerning the Availability

of the NASD Regulation, Inc. Public

Disclosure Program

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

Securities Exchange Act of 1934

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

October 14, 1997, NASD Regulation,

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

Regulation has designated this proposal

as one constituting a stated policy,

practice, or interpretation with respect

to the meaning of an existing rule under

Section 19(b)(3)(A)(i) of the Act,2 which

renders the rule effective upon the

Commission’s receipt of this filing. 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

NASD Regulation is proposing a rule

change to amend Conduct Rule 2280 of

the National Association of Securities

Dealers, Inc. (‘‘NASD’’ or

‘‘Association’’), to postpone the effective

date from September 10, 1997, to

January 1, 1998. The text of Rule 2280

is not changed.

II. Self-Regulatory Organization’s

Statement of the Purpose of and

Statutory Basis for, the Proposed Rule

Change

In its filing with the Commission,

NASD Regulation 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 the Item IV below.

NASD Regulation 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

On February 11, 1997, NASD

Regulation proposed Rule 2280,

‘‘Investor Education and Protection,’’

which requires certain NASD members

to provide customers with specified

disclosures regarding NASD

Regulation’s Public Disclosure Program

in writing not less than once every

calendar year. NASD Regulation filed

Amendment No. 1 on July 31, 1997. The

SEC approved Rule 2280 on September

10, 1997, therefore, the rule was

effective on that date. Rule 2280

contemplates that the specified

disclosures concerning the Public

Disclosure Program will be made

through customer account statements or

in another type of publication at least

once each calendar year. The proposed

rule change is necessary to provide

members with sufficient time to comply

with the Rule.

Members generally send account

statements to customers on a monthly

basis if there is account activity, or on

a quarterly basis if there is none. Rule

2280, with its current effective date of

September 10, 1997, is draconian in that

it would leave members with very little

time in which to modify their account

statement production processes to

include the disclosures required under

Rule 2280. Members would have only a

few weeks to comply with a Rule that

envisioned a compliance period of up to

one year. Many members have already

earmarked their account statements for

the remainder of the calendar year with

pertinent year-end information, such as

tax-related notices, and in many cases

there may not be sufficient space to

include these additional disclosures

without incurring substantial costs.

Additionally, for members with

customers with inactive accounts, a

separate mailing would be required

because year-end or fourth-quarter

account statements would not comply

with Rule 2280 since such notices

would not be sent until early 1998.

The Commission’s Order approving

Rule 2280 noted that the Rule was

amended to address concerns that

compliance with Rule 2280 would

impose ‘‘significant costs’’ on firms that

normally do not carry customer

accounts and hold customer funds or

securities. The case for postponing the

effective date of Rule 2280 is even more

compelling. In the absence of a

postponement of the effective date,

many members would be required to

create an entirely separate mailing to

customers to provide the disclosures

required under Rule 2280. The cost of

such a mailing would be very significant

and would be inconsistent with the

objective of Rule 2280, which is to allow

members to provide the specified

disclosures in a cost-effective manner.

NASD Regulation believes that the

proposed rule change is consistent with

the provisions of Section 15A(b) of the

Act 3 in that postponing the effective

date of Rule 2280 does not diminish the

rule’s effectiveness in protecting

investors and the public interest.

B. Self-Regulatory Organization’s

Statement on Burden on Competition

NASD Regulation 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 purposes of the Act, as amended.
55296 Federal Register / Vol. 62, No. 205 / Thursday, October 23, 1997 / Notices

4 17 CFR 240.19b–4(e).

5 17 CFR 200.30–3(a)(12). 1 15 U.S.C. § 78s(b)(1).

2See Securities Exchange Act Release No.

37619A (September 6, 1996), 61 FR 48290

(September 12, 1996).

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

The foregoing rule change has become

effective upon filing pursuant to Section

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

subparagraph (e) of Rule 19b–4 4

thereunder in that it constitutes a stated

policy, practice, or interpretation with

respect to the meaning of an existing

rule.

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 Commissions’ 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–97–75 and should

be submitted by November 13, 1997.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.5

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 97–28122 Filed 10–22–97; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–39248; File No. SR–NASD–

97–74]

Self-Regulatory Organizations; Notice

of Filing and Immediate Effectiveness

of Proposed Rule Change by National

Association of Securities Dealers, Inc.

Relating to SelectNet Fees

October 16, 1997.

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

Securities Exchange Act of 1934

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

October 14, 1997, the National

Association of Securities Dealers, Inc.

(‘‘NASD’’ or ‘‘Association’’) filed with

the Securities and Exchange

Commission (‘‘Commission’’ or ‘‘SEC’’)

the proposed rule change as described

in Items I, II, and III below, which Items

have been prepared by the NASD. 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

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

Act, the NASD, through its whollyowned subsidiary, The Nasdaq Stock

Market, Inc. (‘‘Nasdaq’’) is herewith

filing a proposed rule change to

temporarily abate 50% of the fee

currently charged under NASD Rule

7010(l) for the execution of a transaction

in SelectNet from $2.50 per side to

$1.25 per side effective October 1, 1997

through December 31, 1997. If no

further action is taken, Nasdaq will

revert to assessing SelectNet fees at the

present level of $2.50 per side on

January 1, 1998.

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

NASD 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 NASD has

prepared summaries, set forth in

Sections A, B, and C below, of the most

significant aspects of the statements.

A. Self-Regulatory Organization’s

Statement of the Purpose of, and

Statutory Basis for, the Proposed Rule

Change

Nasdaq is proposing to temporarily

abate 50% of the fee currently charged

under NASD Rule 7010(l) for the

execution of a transaction in SelectNet

from $2.50 per side to $1.25 per side

effective October 1, 1997 through

December 31, 1997. The proposed rule

change constitutes only a temporary

abatement in the fee Nasdaq collects.

Nasdaq believes that the recent

volume increases in the market

generally and SelectNet usage in

particular justify a temporary abatement

of fees to SelectNet users. Specifically,

SelectNet transaction volume is at an

historic high. In August 1997, more than

75,000 daily executions took place in

SelectNet. This represents an almost

fourfold increase in volume from

average daily activity recorded in 1996.

The growth in SelectNet usage can be

attributed to a number of factors, most

notably the introduction of the SEC

Order Execution Rules (‘‘Order

Execution Rules’’) in January of this

year.2 Nasdaq used the SelectNet system

to create the linkage with each

electronic communication network

(‘‘ECN’’) anticipated by the Order

Execution Rules. Accordingly, SelectNet

has become the chosen means of

accessing orders displayed in the

Nasdaq quote montage by eligible ECNs

such as Instinet. Growth in SelectNet

utilization closely tracks expansion in

the number of Nasdaq stocks covered by

the Order Execution Rules. The speed

and volatility of today’s markets,

software enhancements and a

heightened awareness of trading

obligations by market participants also

has contributed to growth in SelectNet

activity as well as an increase in

SelectNet revenues. Accordingly,

Nasdaq believes that a temporary

abatement of these fees for SelectNet

users is appropriate.

Nasdaq believes that a temporary fee

abatement is preferable to a permanent

fee reduction due to both the uncertain

future of SelectNet as a service offered

by Nasdaq and the significant amount of

network capacity consumed by

SelectNet Message traffic. If no further

action is taken, Nasdaq will revert to

assessing SelectNet fees at the present

rate of $2.50 per side on January 1,

1998.

Nasdaq believes that the proposed

rule change is consistent with Section