Federal Register / Vol. 65, No. 24 / Friday, February 4, 2000 / Notices 5715

9 15 U.S.C. 78s(b)(3)(A)(i).

10 17 CFR 240.19b–4(f)(1).

11 17 CFR 200.30–3(a)(12).

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

2 17 CFR 240.19b–4.

3 15 U.S.C. 78s(b)(3)(A)(i).

4 17 CFR 240.19b–4(f)(1).

and the rules and regulations

thereunder applicable to DTC because it

clarifies DTC’s interpretation of its rule,

thereby eliminating confusion in the

industry relating to the implementation

of the Profile feature and providing for

more expeditious implementation of

Profile. The proposed rule change will

be implemented consistently with the

safeguarding of securities and funds in

DTC’s custody or control or for which

it is responsible.

(B) Self-Regulatory Organization’s

Statement on Burden on Competition

DTC perceives no impact on

competition by reason of the proposed

rule change.

(C) Self-Regulatory Organization’s

Statement on Comments on the

Proposed Rule Change Received From

Members, Participants or Others

The proposed rule change has been

developed through discussions with

several DTC participants and DRS

limited participants. Written comments

relating to the proposed rule change

have not yet been solicited or received

on the proposed rule change. DTC will

notify the Commission of any written

comments received by DTC.

III. Date of Effectiveness of the

Proposed Rule Change and Timing for

Commission Action

The foregoing rule change has become

effective pursuant to Section

19(b)(3)(A)(i) 9 of the Act and Rule 19b–

4(f)(1) 10 promulgated thereunder

because the proposal interprets the

meaning of an existing rule. At any time

within sixty days of the filing of such

proposed rule change, the Commission

may summarily abrogate such 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,

including whether the proposed rule

change 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

Section, 450 Fifth Street, N.W.,

Washington, D.C. 20549. Copies of such

filing also will be available for

inspection and copying at the principal

office of DTC. All submissions should

refer to File No. SR–DTC–00–01 and

should be submitted by February 25,

2000.

For the Commission by the Division of

Market Regulation, pursuant to delegated

authority.11

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 00–2487 Filed 2–23–00; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–42363; File No. SR–NASD–

00–01]

Self-Regulatory Organizations; Notice

of Filing and Immediate Effectiveness

of Proposed Rule Change by the

National Association of Securities

Dealers, Inc. Relating to a Notice to

Members on Extended Hours Trading

January 28, 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 January

11, 2000, the National Association of

Securities Dealers, Inc. (‘‘NASD’’ or

‘‘Association’’), through its wholly

owned subsidiary, 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 and

interpretation with respect to the

meaning of an existing rule under

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

Rule 19b–4(f)(1) 4 thereunder, 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 issuing a Notice

of Members reminding members of their

obligation under just and equitable

principles of trade and the advertising

rules to disclose to customers the

material risks of extended hours trading.

The text of the Notice to Members is

provided below.

* * * * *

NASD Notice to Members

Disclosure To Customers Engaging In

Extended Hours Trading

Suggested Routing

Legal & Compliance; Senior

Management

Executive Summary

NASD Regulation, Inc. (NASD

Regulation) reminds members of their

obligation under just and equitable

principles of trade and the advertising

rule to disclose to customers the

material risks of extended hours trading.

A model disclosure statement is

included with this Notice in Attachment

A.

Questions concerning this Notice may

be directed to Gary L. Goldsholle,

Assistant General Counsel, Office of

General Counsel, NASD Regulation, at

(202) 728–8104.

Background and Discussion

A number of member firms recently

have started offering their retail

customers various opportunities to trade

stocks after regular market hours in

what is known as ‘‘extended hours

trading.’’ An even greater number of

member firms have announced plans to

offer extended hours trading in coming

months.

The growth of extended hours trading

provides retail customers with greater

opportunities to trade securities and

manage their portfolios, and in so doing,

provides access to markets that were

previously limited to institutional

customers. Participation in extended

hours trading may offer certain benefits

to retail customers, but entails several

material risks. Depending on the

particular extended hours trading

environment, these risks may include:

• lower liquidity

• high volatility

• changing prices

• unlinked markets

• an exaggerated effect from news

announcements; and

• wider spreads.

In light of these risks, members have

an obligation to their retail customers to

5716 Federal Register / Vol. 65, No. 24 / Friday, February 4, 2000 / Notices

disclose the material risks of extended

hours trading to customers before

permitting them to engage in extended

hours trading. NASD Regulation

commends the many members that have

already provided detailed disclosures

about the risks of extended hours

trading. This Notice is a reminder that

these disclosures are not only a laudable

business practice, but are a regulatory

requirement under just and equitable

principles of trade.

To assist members with their

disclosure obligation, NASD Regulation

has developed a series of model

disclosures dealing with the risks of

extended hours trading. Members are

free to develop their own disclosures or

modify these model disclosures to meet

their particular disclosure needs. In

some cases, members may need to

develop additional disclosures to

address such issues as options trading,

options exercises, the effect of stock

splits, dividend payments, as well as

any additional risks that may arise in

the future.

In addition, members are reminded

that Rule 2210 requires that all

communications with the public shall

be based on principles of fair dealing

and good faith, and that exaggerated,

unwarranted, or misleading statements

are prohibited. Members should use

caution in communications with the

public about their extended hours

trading systems to ensure that these

requirements are satisfied. Members

describing the benefits of extended

hours trading must also describe the

material risks.

Finally, members are also reminded

that in Notice of Members 99–11, NASD

Regulation described the types of

general disclosure that firms may use to

inform their customers about the risks

associated with stock volatility. In

preparing disclosures regarding

extended hours trading, members may

wish to review the types of disclosure

suggested in that Notice.

Attachment A

Model Extended Hours Trading Risk

Disclosure

•Risk of Lower Liquidity. Liquidity

refers to the ability of market

participants to buy and sell securities.

Generally, the more orders that are

available in a market, the greater the

liquidity. Liquidity is important because

with greater liquidity it is easier for

investors to buy or sell securities, and

as a result, investors are more likely to

pay or receive a competitive price for

securities purchased or sold. There may

be lower liquidity in extended hours

trading as compared to regular market

hours. As a result, your order may only

be partially executed, or not at all.

•Risk of Higher Volatility. Volatility

refers to the changes in price that

securities undergo when trading.

Generally, the higher the volatility of a

security, the greater its price swings.

There may be greater volatility in

extended hours trading than in regular

market hours. As a result, your order

may only be partially executed, or not

at all, or you may receive an inferior

price in extended hours trading than

you would during regular market hours.

•Risk of Changing Prices. The prices

of securities traded in extended hours

trading may not reflect the prices either

at the end of regular market hours, or

upon the opening the next morning. As

a result, you may receive an inferior

price in extended hours trading than

you would during regular market hours.

•Risk of Unlinked Markets.

Depending on the extended hours

trading system or the time of day, the

prices displayed on a particular

extended hours trading system may not

reflect the prices in other concurrently

operating extended hours trading

systems dealing in the same securities.

Accordingly, you may receive an

inferior price in one extended hours

trading system than you would in

another extended hours trading system.

•Risk of News Announcements.

Normally, issuers make news

announcements that may affect the price

of their securities after regular market

hours. Similarly, important financial

information is frequently announced

outside of regular market hours. In

extended hours trading, these

announcements may occur during

trading, and if combined with lower

liquidity and higher volatility, may

cause an exaggerated and unsustainable

effect on the price of a security.

•Risk of Wider Spreads. The spread

refers to the difference in price between

what you can buy a security for and

what you can sell it for. Lower liquidity

and higher volatility in extended hours

trading may result in wider than normal

spreads for a particular security.

* * * * *

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 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

1. Purpose

A number of member firms have

recently started offering their retail

customers opportunities to trade stocks

after traditional market hours in what is

known as ‘‘extended hours trading.’’ An

even greater number of member firms

have announced plans to offer extended

hours trading in the next several

months.

The growth of extended hours trading

provides retail customers with greater

opportunities to trade securities and

manage their portfolios, and in so doing,

provides access to markets that were

previously limited to institutional

customers. Participation in extended

hours trading may offer certain benefits

to retail customers, but entails several

material risks. Depending on the

particular extended hours trading

environment, these risks may include:

(1) lower liquidity; (2) higher volatility;

(3) changing prices; (4) unlinked

markets; (5) an exaggerated effect from

news announcements; and (6) wider

spreads. In light of these risks, NASD

Regulation believes that members have

an obligation to their retail customers to

disclose the material risks of extended

hours trading before permitting them to

engage in extended hours trading.

The Notice to Members states that just

and equitable principles of trade (NASD

Rule 2110) require members to disclose

to customers the material risks of

extended hours trading. The Notice to

Members also states that the advertising

rule (NASD Rule 2210) requires that all

communications with the public shall

be based upon principles of fair dealing

and good faith, and that members

describing the benefits of extended

hours trading must also describe the

material risks.

The Notice to Members does not

require any standardized disclosure.

However, to assist members with their

disclosure obligations, NASD

Regulation staff has developed model

extended hours trading risk disclosures

that address each of the six factors

identified above. The model disclosures

are provided as guidance only. Members

will be free to modify the model

disclosures or draft their own

disclosures, so long as all of the material

risk factors are addressed.

Federal Register / Vol. 65, No. 24 / Friday, February 4, 2000 / Notices 5717

5 15 U.S.C. 78o–3(b)(6).

6 In reviewing this proposal, the Commission has

considered its impact on efficiency, competition,

and capital formation. 15 U.S.C. 78c(f).

7 15 U.S.C. 78s(b)(3)(A).

8 17 CFR 240.196–4(f)(1). 9 17 CFR 200.30–3(a)(12).

2. Statutory Basis

NASD Regulation believes that the

Notice to Members is consistent with

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

the Act,5 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 protect

investors and the public interest. NASD

Regulation believes that member firms

that permit customers to engage in

extended hours trading have an

obligation under just and equitable

principles of trade to disclose to such

customers the material risks of extended

hours trading. Similarly, members that

advertise the opportunities and benefits

of extended hours trading must also

disclose the materials risks. NASD

Regulation believes that this Notice to

Members is an important element to

protect investors and the public interest

with respect to extended hours trading.6

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.

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 pursuant to Section

19(b)(3)(A)(i) of the Act 7 and Rule 19b–

4(f)(1) 8 in that it constitutes a stated

policy and 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,

including whether the purposed rule

change 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 number

SR–NASD–00–01 and should be

submitted by February 25, 2000.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.9

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 00–2486 Filed 2–3–00; 8:45 am]

BILLING CODE 8010–01–M

DEPARTMENT OF STATE

Office of Visa Services

[Public Notice 3211]

30-Day Notice of Information

Collection; Petition to Classify Special

Immigrant Under INA 203(b)(4) as an

Employee Or Former Employee of the

U.S. Government Abroad, Form DS–

1884

SUMMARY: The Department of State has

submitted the following information to

the Office of Management and

Budget(OMB) in accordance with the

Paperwork Reduction Act of 1995.

Comments should be submitted to OMB

within 30 days of the publication of this

notice.

The following summarizes the

information collection proposal

submitted to OMB:

Type of Request: Reinstatement of

Form.

Originating Office: CA/VO/F/P.

Title of Information Collection:

Petition to ClassifySpecial Immigrants

Under INA 203(b)(4) as an Employee or

Former Employee of the U.S.

Government Abroad.

Frequency: 500.

Form Number: DS–1884.

Respondents: Foreign Applicants.

Estimated Number of Respondents:

500.

Average Hours Per Response: .5

hours.

Total Estimated Burden: 250 hours.

Public comments are being solicited

to permit the agency to:

• Evaluate whether the proposed

information collection is necessary for

the proper performance of the functions

of the agency, including whether the

information will have practical utility.

• Evaluate the accuracy of the

agency’s estimate of the burden of the

proposed collection, including the

validity of the methodology and

assumptions used.

• Enhance the quality, utility, and

clarity of the information to be

collected.

• Minimize the reporting burden on

those who are to respond, including

through the use of automated collection

techniques or other forms of technology.

FOR ADDITIONAL INFORMATION: Copies of

the proposed information collection and

supporting documents may be obtained

from Daria Darnell, U.S. Department of

State, 2401E ST NW, RM L–703,

Washington, DC 20520, Tel: 202–663–

1253.Public comments and questions

should be directed to the State

Department Desk Officer, Office of

Information and Regulatory Affairs,

Office of Management and Budget

(OMB),Washington, DC 20530, (202)

395–5871.

Dated: January 12, 2000.

Nancy H. Sambaiew,

Deputy Assistant Secretary of State for Visa

Services.

[FR Doc. 00–2549 Filed 2–3–00; 8:45 am]

BILLING CODE 4710–06–U

DEPARTMENT OF STATE

[Public Notice No. 3189]

Secretary of State’s Advisory

Committee on Private International

Law: Study Group Related to the

Protection of Children Conventions and

Agreements; Meeting notice

There will be a public meeting of a

Study Group of the Secretary of State’s

Advisory Committee on Private

International Law on Saturday, February

26, 2000, to discuss international

protection of children issues. The

meeting will be held from 9:30 to 4:30