59038 Federal Register / Vol. 65, No. 192 / Tuesday, October 3, 2000 / Notices

8 17 CFR 2000.30–3(a)(12).

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

2 17 CFR 240.19b–4.

3See letter from Alden S. Adkins, Senior Vice

President and General Counsel, NASD Regulation,

to Katherine A. England, Assistant Director,

Division of Market Regulation, Commission, dated

September 5, 2000 (‘‘Amendment No. 1’’).

Amendment No. 1 proposed substantive changes to

the proposed rule language, including the definition

of the time of receipt for manual block orders of

10,000 shares or greater, and the provisions for

exemptive relief.

For the Commission by the Division of

Market Regulation, pursuant to delegated

authority. 8

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 00–25295 Filed 10–2–00; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–43344; File No. SR–NASD–

00–23]

Self-Regulatory Organizations; Notice

of Filing of Proposed Rule Change and

Amendment No. 1 by the National

Association of Securities Dealers, Inc.

Relating to Amendments to Order

Audit Trail System Rules

September 26, 2000.

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

Securities Exchange Act of 1934

(‘‘Exchange Act’’),1 and Rule 19b–4

thereunder,2 notice is hereby given that

on April 19, 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. On September 5, 2000,

NASD Regulation amended its

proposal.3 The Commission is

publishing this notice to solicit

comments on the proposed rule change,

as amended, from interested persons.

I. Self-Regulatory Organization’s

Statement of the Terms of Substance of

the Proposed Rule Change

NASD Regulation is proposing to

amend NASD Rules 6951, 6954, 6955

and 9610. The proposed rule change

would: (1) provide that the time of order

origination and receipt for an electronic

order is the time the order is captured

by a member’s electronic order-routing

or execution system; for a manual order

that is fewer than 10,000 shares, the

time of order origination and receipt is

the time the order is received by the

member’s trading desk or trading

department for execution or routing

purposes; and for a manual order that is

10,000 shares or greater, the time of

order origination and receipt is the time

the order is received by the member

from the customer; (2) exclude certain

members from the definition of

‘‘Reporting Member’’ for those orders

that meet specified conditions and are

recorded and reported to the Order

Audit Trail System (‘‘OATS’’) by

another member; (3) require any

receiving reporting member, including

electronic communications networks

(‘‘ECNs’’), that receive routed orders,

electronically or manually, to capture

and report a routed order identifier; and

(4) permit NASD Regulation to grant

exemptive relief from the OATS

reporting requirements to members that

meet specified criteria.

The text of the proposed rule change

follows. Proposed new rule language is

in italics; proposed deletions are in

brackets.

NASD Systems and Programs

6950. Order Audit Trail System

6951. Definitions

For purposes of Rules 6950 through 6957:

(a) through (m) No Change.

(n) ‘‘Reporting Member’’ shall mean a

member that receives or originates an order

and has an obligation to record and report

information under Rules 6954 and 6955. A

member shall not be considered a Reporting

Member in connection with an order, if the

following conditions are met:

(1) the member engages in nondiscretionary order routing process, pursuant

to which it immediately routes, by electronic

or other means, all of its orders to receiving

Reporting Member;

* * * * *

(2) the members does not direct and does

not maintain control over subsequent routing

or execution by the receiving Reporting

Member;

(3) the receiving Reporting Member records

and reports all information required under

Rules 6954 and 6955 with respect to the

orders; and

(4) the member has a written agreement

with the receiving Reporting Members

specifying the respective functions and

responsibilities of each part to affect full

compliance with the requirements of Rules

6954 and 6955.

* * * * *

6954. Recording of Order Information

(a) No Change.

(b) Order Origination and Receipt.

Unless otherwise indicated, the following

order information must be recorded under

this Rule when an order is received or

originated. For purpose of this Rule, the order

origination and receipt time for an electronic

order is the time the order is captured by a

member’s electronic order-routing or

execution system; for a manual order that is

fewer than 10,000 shares, the order

origination and receipt time is the time the

order is received by the member’s trading

desk or trading department for execution or

further routing purposes; and for a manual

order that is 10,000 shares or greater, the

order origination and receipt time is the time

the order is received by the member from the

customer.

(1) through (18) No Change.

(c) Order Transmittal.

Order information required to be recorded

under this Rule when an order is transmitted

includes the following.

(1) and (2) No Change.

(3) When a member electronically

transmits an order for execution on an

Electronic Communications Network:

(A) the transmitting Reporting Member and

shall record:

(i) the fact that the order was transmitted

to an Electronic Communications Network.

(ii) the order identifier assigned to the

order by the Reporting Member.

(iii) the maker participant symbol assigned

by the Association to the Reporting Member.

(iv) the market participant symbol assigned

by the Association to the member to which

the order is transmitted,

(v) the date the order was first originated

or received by the Reporting Member,

(vi) the date and time the order is

transmitted, and

(vii) the number of shares to which the

transmission applies; and

(B) the receiving Reporting Member

operating the Electronic Communications

Network shall record:

(i) the fact that the order was received by

an Electronic Communications Network,

(ii) the order identifier assigned to the

order by the member that transmits the order,

(iii) [(ii)] the market participant symbol

assigned by the Association to the

transmitting Reporting Member, and

(iv) [(iii)] other information items in Rule

6954(b) that apply with respect to such order,

which must include information items (1),

(2), (3), (6), (7), (8), (10), (11), (12), (13), (15),

and (16).

(4) When a member manually transmits an

order to another member, other than to an

Electronic Communications Network:

(A) the transmitting Reporting Member

shall record:

(i) the fact that the order was transmitted

manually,

(ii) the order identifier assigned to the

order by the Reporting Member,

(iii) the market participant symbol assigned

by the Association to the Reporting Member,

(iv) the market participant symbol assigned

by the Association to the member to which

the order is transmitted,

(v) the date the order was first originated

or received by the Reporting Member,

(vi) the date and time the order is

transmitted,

(vii) the number of shares to which the

transmission applies, and

(viii) for each order to be included in a

bunched order, the bunched order route

indicator assigned to the bunched order by

the Reporting Member; and

(B) the receiving Reporting Member shall

record, in addition to all other information

Federal Register / Vol. 65, No. 192 / Tuesday, October 3, 2000 / Notices 59039

4See Securities Exchange Act Release No. 39729

(March 6, 1998), 63 FR 12559 (March 13, 1998)

(‘‘OATS Approval Order’’).

5See In the Matter of National Association of

Securities Dealers, Inc., Exchange Act Release No.

37538 (August 8, 1996); Administrative Proceeding

File No. 3–9056 (‘‘SEC Order’’).

6 Id.

7ACT is an automated system owned and

operated by Nasdaq that captures transaction

information in real-time.

items in Rule 6954(b) that apply with respect

to such order:

(i) the fact that the order was received

manually, [and]

(ii) the order identifier assigned to the

order by the member that transmits the order,

and

(iii) [(ii)] the market participant symbol

assigned by the Association to the member

that transmits the order.

(5) When a member manually transmits an

order to an Electronic Communications

Network:

(A) the transmitting Reporting Member

shall record:

(i) the fact that the order was transmitted

manually,

(ii) the order identifier assigned to the

order by the Reporting Member,

(iii) the market participant symbol assigned

by the Association to the Reporting Member,

(iv) the market participant symbol assigned

by the Association to the member to which

the order is transmitted,

(v) the date the order was first originated

or received by the Reporting Member,

(vi) the date and time the order is

transmitted,

(vii) the number of shares to which the

transmission applies, and

(viii) for each order to be included in a

bunched order, the bunched order route

indicator assigned to the bunched order by

the Reporting Member; and

(B) the receiving Reporting Member shall

record:

(i) the fact that the order was received

manually,

(ii) the order identifier assigned to the

order by the member that transmits the order,

(iii) [ii] the market participant symbol

assigned by the Association to the

transmitting Reporting Member, and

(iv) [(iii)] other information items in Rule

6954(b) that apply with respect to such order,

which must include information items (1),

(2), (3), (6), (7), (8), (10), (11), (12), (13), (15),

and 16).

(6) No Change.

(d) No Change.

6955. Order Data Transmission

Requirements

(a) through (c) No Change

(d) Exemptions

(1) Pursuant to the Rule 9600 Series, the

staff, for good cause shown after taking into

consideration all relevant factors, may

exempt, subject to specified terms and

conditions, a member from the order data

transmission requirements of this Rule for

manual orders, if such exemption is

consistent with the protection of investors

and the public interest, and the member

meets the following criteria:

(A) the member and current control

affiliates and associated persons of the

member have not been subject within the last

five years to any disciplinary action, and

within the last ten years to any disciplinary

action involving fraud;

(B) the member has annual revenues of less

than $2 million;

(C) the member does not conduct any

market making activities in Nasdaq Stock

Market equity securities;

(D) the member does not execute principal

transactions with its customers (with limited

exception for principal transactions executed

pursuant to error corrections); and

(E) the member does not conduct clearing

or carrying activities for other firms.

(2) An exemption provided pursuant to this

paragraph (d) shall not exceed a period of

two years. At or prior to the expiration of a

grant of exemptive relief under this

paragraph (d), a member meeting the criteria

set forth in paragraph (d)(1) may request,

pursuant to the Rule 9600 Series, a

subsequent exemption, which will be

considered at the time of the request,

consistent with the protection of investors

and the public interest.

(3) This paragraph shall be in effect until

[five years from the effective date of the

proposed rule change].

* * * * *

9600. Procedures for Exemptions

9610. Application

(a) Where to File

A member seeking an exemption from Rule

1021, 1022, 1070, 2210, 2320, 2340, 2520,

2710, 2720, 2810, 2850, 2851, 2860,

Interpretive Material 2860–1, 3010(b)(2),

3020, 3210, 3230, 3350, 6955, 8211, 8212,

8213, 11870, or 11900, Interpretive Material

2110–1, or Municipal Securities Rulemaking

Board Rule G–37 shall file a written

application with the appropriate department

or staff of the Association and provide a copy

of the application to the Office of General

Counsel of NASD Regulation.

(b) and (c) No Change.

* * * * *

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) Background

On March 6, 1998, the SEC approved

NASD Order Audit Trail System

(‘‘OATS’’) Rules 6950 through 6957.4

OATS provides a substantially

enhanced body of information regarding

orders and transactions that improves

NASD Regulation’s ability to conduct

surveillance and investigations of

member firms for violations of federal

securities laws and Association rules. In

addition, OATS is intended to fulfill

one of the undertakings contained in the

order issued by the SEC relating to the

settlement of an enforcement action

against the NASD for failure to

adequately enforce its rules.5 Pursuant

to the SEC Order, OATS is required, at

a minimum, to: (1) Provide an accurate,

time-sequenced record of orders and

transactions, beginning with the receipt

of an order at the first point of contact

between the broker/dealer and the

customer or counterparty and further

documenting the life of the order

through the process of execution; and

(2) provide for market-wide

synchronization of clocks used in

connection with the recording of market

events.6

In general, OATS imposes obligations

on member firms to record in electronic

form and to report to NASD Regulation

on a daily basis certain information with

respect to orders originated, received,

transmitted, modified, canceled, or

executed (‘‘reportable events’’) by NASD

members relating to Nasdaq Stock

Market, Inc. (‘‘Nasdaq’’) equity

securities. OATS also requires member

firms to synchronize their business

clocks and to keep them continually

synchronized with a specific time

designated by the Association. OATS

captures this order information reported

by NASD members and integrates it

with quote information and transaction

information reported to the Automated

Confirmation Transaction Service

(‘‘ACT’’) 7 to provide the Association

with an accurate, time-sequenced record

of orders, quotes, and transactions.

In addition to NASD Rules 6950

through 6957, NASD Rule 3110 imposes

recordkeeping requirements on NASD

members that are obligated to record

and report information to the NASD

under the OATS rules. With respect to

an order that is received or executed at

the member’s trading department, the

member is required to record the

identification of the registered person

who received the order directly from a

customer and the identification of the

person who executed the order at a

market maker’s trading desk. In

59040 Federal Register / Vol. 65, No. 192 / Tuesday, October 3, 2000 / Notices

8See Securities Exchange Act Release No. 43263

(September 8, 2000), 65 FR 55661 (September 14,

2000). On March 9, 2000, NASD Regulation filed a

proposed amendment with the SEC for immediate

effectiveness to extend the implementation date of

Phase Three from July 31, 2000 to October 31, 2000.

See Exchange Act Release No. 42515 (March 10,

2000), 65 FR 14638 (March 17, 2000). The purpose

of these extensions is to provide NASD Regulation

adequate time to analyze and consider the proposed

changes described in the current proposal, and, in

particular, those affecting Phase Three recording

and reporting requirements.

9See OATS Approval Order, pp. 22–23, supra

note 4. Specifically, with respect to manual orders,

information item (18) (type of account for which the

order is submitted) of NASD Rule 6954(b) would be

required to be reported only to the extent that such

information item is available. Information items (4)

(identification of any department or the

identification number of any terminal where an

order is received) and (5) (identification of the

department of the member originating an order) or

Rule 6954(b) and information items under (1)

(recordkeeping requirements for orders transmitted

to another department within the member)

specified in Rule 6954(c) would not be required to

be recorded and reported with respect to manual

orders. In addition, information items (4)

(identification of any department or identification

number of any terminal where an order is received),

(5) (the identification of the department of the

member that originates the order), (9) (the

designation of the order as a short sale), (14) (any

request by a customer that an order not be

displayed or that a block size order be displayed,

pursuant to Rule 11Ac1–4(c) under the Exchange

Act), (17) (the identification of the order as related

to a Program Trade or an Index Arbitrage Trade),

and (18) (the type of account for which the order

is submitted) specified in Rule 6954(b) would not

be required to be recorded and reported by ECNs

receiving orders either electronically or manually.

10 If an order is received and then immediately

entered into an electronic system, the time the order

is captured by such system has been interpreted to

be the time of receipt. See OATS Reporting

Technical Specifications, Section 4.1.3.

11Because certain order handling rules may apply

different to block orders of 10,000 shares or greater,

the proposed rule change defines the time of receipt

differently depending on the size of the order. For

example, members may attach terms and conditions

to certain block orders of 10,000 shares or greater

for purposes of the limit order protection rule, such

orders excepted from the limit order display rule

unless a customer expressly requests otherwise.

addition, NASD Rule 3110 requires a

member to record the identification of

the department of the member that

originated an order that is transmitted

manually to another department within

a member.

The effective date for OATS

requirements are set forth in NASD Rule

6957, which provides for different

phases of implementation. All members

were required to synchronize their

computer system clocks and all

mechanical clocks that record times for

regulatory purposes by August 7, 1998,

and July 1, 1999, respectively. In

addition, the implementation schedule

required that electronic orders received

at the trading department of a member

that is a market maker in the subject

securities and those received by

electronic communications networks

(‘‘ECNs’’) be entered into OATS as of

March 1, 1999 (‘‘Phase One’’). Not all

information relating to electronic orders

received by market makers was required

to be reported to OATS during Phase

One. Information items relating to all

electronic orders, however, was

required to be reported to OATS by

August 1, 1999 (‘‘Phase Two’’).

As of December 15, 2000, the OATS

rules will apply to all manual orders

(‘‘Phase Three’’).8 With respect to

manual orders and all orders received

by ECNs, however, the data required to

be electronically recorded and

transmitted to the OATS is limited to

information that is expected to be

readily available at the trading desk.9

The books and records requirements,

set forth in NASD Rule 3110(h)(1)(A)

and (B), pertaining to the identification

of the registered representative who

receives an order directly from a

customer and the identification of each

registered person who executes the

order, became effective on March 1,

1999. The recordkeeping requirements,

set forth in NASD Rule 3110(h)(1)(C),

applicable to orders originated by a

member and manually transmitted to

another department within the member

firm, will become effective on December

15, 2000.

Since the implementation of the

OSTS requirements, NASD Regulation

staff has been closely reviewing OATS

activities with the goal of identifying

ways in which to enhance the

effectiveness of OATS as a regulatory

tool. In this regard, NASD Regulation

has identified certain changes to OATS

that its believes will enhance NASD

Regulation’s automated surveillance for

compliance with trading and market

making rules such as the NASD’s Limit

Order Protection Interpretation, the

SEC’s Order Handling Rules, and a

member firm’s best execution

obligations. These rule changes will, at

the same time, eliminate the reporting of

duplicative information and reduce the

regulatory burdens on member firms,

particularly certain smaller member

firms.

(b) Current Proposal

(1) Change to Time of Receipt of Order

NASD Rule 6954 requires certain

identifying information to be recorded

at various critical points during the life

of an order. In addition to uniquely

identifying the order, this information

assists NASD Regulation in carrying out

its regulatory responsibilities with

respect to that order. In general, the

required information items relate to: (1)

the origin of an order (i.e., in-house,

customer, or another member); (2)

whether the member relies upon a

Reporting Agent to fulfill its reporting

obligations; (3) how the order was

received (i.e. manually or

electronically); (4) the items of the

order; (5) whether the order was

transmitted for execution to another

department within the member (other

than to the trading department), to

another member, or to an ECN, and how

it was transmitted (i.e., manually or

electronically); and (6) whether the

order was modified, canceled, or

executed.

NASD Rule 6954(b) requires certain

information to be recorded when an

order is received or originated. For

electronic orders, the proposed rule

change would codify the staff’s current

position that the order origination and

receipt time is the time the order is

captured by a member’s electronic

order-routing or execution system.

NASD Regulation believes that this

definition of time of receipt is a close

substitute for the time an order is

received by the trading desk because

routing through the electronic system to

the trading desk is nearly instantaneous.

Once the OATS rules are fully phased

in on December 15, 2000, manual

orders, whether recorded at a market

maker trading desk or at another

location, will be subject to all the

recording and reporting requirements.

Currently, the time of receipt recorded

and reported to OATS is the time the

firm receives the order from a

customer.10 Although the actual time a

manual order is received by a firm is

useful for certain regulatory purposes, it

is of little value to NASD Regulation’s

Market Regulation Department’s

automated surveillance for identifying

potential violations of NASD IM 2110–

2 (the limit order protection rule), Rule

11Ac1–4 under the Exchange Act (limit

order display rule), and NASD Rule

2320 (best execution obligations). In

many instances, the more useful time

for these purposes is the time the order

is received by the trading desk or

trading department. Accordingly, NASD

Regulation is proposing to amend Rule

6954(b) to require the time of receipt to

be recorded and reported by a member

firm to OATS for a manual order that is

fewer than 10,000 shares to be the time

the order is received by the member’s

trading desk or trading department for

execution or routing purposes. For a

manual order that is 10,000 shares or

greater, the time of receipt required to

be recorded and reported would

continue to be the time the order is

received by the member from the

customer. 11

Federal Register / Vol. 65, No. 192 / Tuesday, October 3, 2000 / Notices 59041

12 17 CFR 240.17a–3(a)(6).

13 If any delay results in the routing of an order

due to systems problems or other reasons, the

member with whom the order originated would be

required to report OATS data.

14This exclusion would not change a member’s

requirement to capture and retain the time an order

was received from a customer under Rule 17a–

3(a)(6) or the Exchange Act. 17 CFR 240.17a–3(a)(6).

NASD Regulation believes that, for

electronic orders and manual orders for

fewer than 10,000 shares, the time the

order is received at the trading desk or

trading department is the most relevant

time and will provide the best indicator

for NASD Regulation’s automated

surveillance systems to review for

compliance with applicable rules. In

addition, NASD Regulations believes

the proposed rule change will reduce

the burden of reprogramming reporting

systems for Phase Three requirements,

as well as the cost of manually inputting

these times for orders not directly

inputted into an electronic order

handling system, while still

substantially fulfilling the undertakings

contained in the SEC Order.

Notwithstanding this proposed rule

change to the OATS rules, NASD

Regulation recognizes the importance of

capturing the time the order was

actually received from the customer to

determine if there are any inordinate

delays in transmitting the order to the

trading desk. In this regard, all firms

must continue to capture and retain the

time an order was received from a

customer (if different than the time the

order was entered into an electronic

system) under Rule 17a–3(a)(6) of the

Exchange Act.12 This information is

available to NASD Regulation staff as

part of its investigatory process and is

used during field examinations of

member firms to determine, among

other things, how promptly the firm

transmits its orders for execution.

(2) Exclusion from OATS Reporting for

Certain Members

Certain members engage in a nondiscretionary order routing process

whereby, immediately after receipt of a

customer order, the member routes the

order, by electronic or other means, to

another member (‘‘receiving member’’)

for further routing or execution at the

receiving member’s discretion.

Currently, the OATS rules require both

the member with whom the order

originated and the receiving member to

create and report new order reports and

possibly route reports. This results in

the receipt of duplicative information by

OATS. In such instances, therefore,

NASD Regulation is proposing that the

OATS rules be amended to require, in

such instances, that only the receiving

member report OATS data. Under the

proposed rule change to NASD Rule

6951(n), a member would not be

required to report OATS data regarding

an order, if the following conditions are

met:

(1) the member engages in a nondiscretionary order routing process,

pursuant to which it immediately

rouges, by electronic or other means, all

of its orders to a receiving Reporting

Member; 13

(2) the member does not direct or

maintain control over subsequent

routing or execution by the receiving

Reporting Member;

(3) the receiving Reporting Member

records and reports all information

required under NASD Rules 6954 and

6955 with respect to the order; and

(4) the member has a written

agreement with the receiving Reporting

Member specifying the respective

functions and responsibilities of each

party to effect full compliance with the

requirements of NASD Rules 6954 and

6955.

In addition to eliminating the

reporting of duplicative information to

OATS, NASD Regulation believes the

proposed rule change will reduce the

regulatory burdens on members,

particularly smaller members, that route

all their orders to another Reporting

Member by means of a nondiscretionary order routing process, for

execution or further routing purposes.14

(3) Capturing Routed Order Information

OATS has the capability of tracking

the history of an order by linking it

across firms through the use of a routed

order identifier. If the order does not

contain a routed order identifier, the

order cannot be linked to subsequent

actions, such as further routing or

execution by other firms or Nasdaq

systems. In this regard, the complete

history of a significant percentage of

orders are not tracked because the

OATS rules do not require any receiving

Reporting Member to capture and report

a routed order identifier if the order is

routed to it manually. OATS rules also

do not currently require ECNs to capture

and report a routed order identifier for

orders routed to the ECN manually or

electronically. Given the current level of

participation of ECNs, the linking of

these orders is essential if OATs is to

capture the life cycle of orders for

Nasdaq securities. Therefore, NASD

Regulation is proposing new provisions

to Rule 6954(c) that will require firms

and ECNs to capture and report the

transmitting Reporting Member’s unique

identifier for all routed orders. NASD

Regulation anticipates a ‘‘phase-in’’

period for implementation of this

proposed rule change to provide

adequate time for necessary systems and

procedures changes.

(4) Exemptive Relief

Finally, NASD Regulation is

proposing new paragraph (d) of Rule

6955 and an amendment to Rule 9610(a)

to permit NASD Regulation to grant

exemptive relief to certain members

from the reporting requirements of the

OATS rules under the procedures set

forth in the Rule 9600 series.

Specifically, members that meet the

following criteria would be eligible to

request an exemption from the OATS

reporting requirements for manual

orders:

(1) the member and current control

affiliates and associated persons of the

member have not been subject within

the last five years to any disciplinary

action, and within the last ten years to

any disciplinary action involving fraud;

(2) the member has annual revenues

of less than $2 million;

(3) the member does not conduct any

market making activities in Nasdaq

Stock Market equity securities;

(4) the member does not execute

principal transactions with its

customers (with limited exceptions for

error corrections); and

(5) the member does not conduct

clearing or carrying activities for other

firms.

Under the proposed rule change, any

exemptive relief granted would expire

no later than two years from the date the

member receives the exemptive relief.

At or prior to the expiration of a grant

of exemptive relief, members meeting

the specified criteria may request a

subsequent exemption, In addition,

under the proposed rule change, NASD

Regulation’s exemptive authority shall

be in effect for five years from the

effective date of the proposed rule

change.

The proposed exemptive authority

will provide NASD Regulation the

ability to grant relief to members

meeting the specified criteria in

situations where, for example, reporting

of this information would be unduly

burdensome for the member or where

temporary relief from the rules (in the

form of additional time to achieve

compliance would permit the member

to avoid unnecessary expense or

hardship.

2. Statutory Basis

The Association believes that the

proposed rule change is consistent with

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

59042 Federal Register / Vol. 65, No. 192 / Tuesday, October 3, 2000 / Notices

15 15 U.S.C. 78o–3(b)(6). 16 17 CFR 200.30–3(a)(12).

the Exchange Act,15 which require that

the rules of an association 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, under the proposed rule

change, OATS will continue to provide

a substantially enhanced body of

information regarding orders and

transactions and will improve NASD

Regulation’s ability to conduct

surveillance and investigations of

member firms for violations of the

Association’s and other applicable rules.

B. Self-Regulatory Organization’s

Statement on Burden on Competition

NASD Regulation does not believe

that the proposed rule change will

impose 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

NASD Regulation neither solicited

nor received written comments.

III. Date of Effectiveness of the

Proposed Rule Change and Timing for

Commission Action

Within 35 days of the 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 NASD consents, the

Commission will:

(A) by order approve the 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,

including whether the proposal is

consistent with the Exchange Act. In

particular, the Commission solicits

comments on the propriety of the

proposed time of receipt to be recorded

and reported to OATS for manual

orders. Currently, the time of receipt

recorded and reported to OATS is the

time the firm receives the order from a

customer. Under the proposed rule

change, this would continue to be the

time of receipt for manual orders that

are 10,000 shares or greater. For manual

orders of fewer than 10,000 shares,

however, the NASD has proposed that

the time of receipt to be recorded and

reported pursuant to the OATS rules be

the time the order is received by the

member’s trading desk or trading

department for execution or routing

purposes. The distinction is due to the

types of problems the NASD and the

Commission have encountered with

manual orders of various sizes. Manual

orders of greater than 10,000 shares are

more likely to be subject to potential

manipulation through delays in

transferring the orders to a firm’s trading

desk or trading department. Manual

orders of fewer than 10,000 shares,

however, may need to be more closely

examined for violations of the

Commission’s order handling rules. The

Commission seeks comment on whether

the proposed distinction between

manual orders of different sizes for

purposes of the proposed time of receipt

is reasonable.

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 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–00–23 and should be

submitted by October 24, 2000.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.16

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 00–25333 Filed 10–2–00; 8:45 am]

BILLING CODE 8010–01–M

SMALL BUSINESS ADMINISTRATION

(SBA)

Federal Assistance to Provide

Financial, Counseling, Technical

Assistance and Long-Term Training to

Small Business Owners and Those

Interested in Starting a Small Business

AGENCY: Small Business Administration.

ACTION: SBDC 2000 Program

Announcement for FY 2001 and CY

2001.

SUMMARY: The Small Business

Administration plans to issue an SBDC

program announcement. SBA plans to

issue an SBDC 2000 Program

Announcement for FY 2001 and CY

2001 to invite applicants from

Institutions of Higher Education and

Women’s Business Centers to establish,

manage, and oversee a Small Business

Development Center (SBDC) Network in

the State of Michigan.

The authorizing legislation is section

21 of the Small Business Act, (15 U.S.C.

648), as amended by section 6 of Pub.

L.101–515.

SBA’s Detroit District Office will hold

a bidders conference on November 6,

2000.

SBA’s Detroit District Office must

receive applications/proposals by

November 20, 2000.

SBA will select the applicants

competitively. The successful applicant

will receive an award to provide long

term training, counseling and technical

assistance to businesses/persons who

want to start or expand a small business.

The applicant must submit a one year

plan that describes the network,

proposed fund raising, training and

technical assistance activities. Award

recipients must provide non-Federal

matching funds, i.e., one-non Federal

dollar for each Federal dollar for the

project-year. At least half of the

matching requirement must be in cash.

The remainder may be in in-kind or in

waived indirect cost.

DATES: SBA will mail program

announcements to interested parties,

immediately, upon request. The

Opening date will be October 3, 2000

and the closing date will be November

3, 2000.

FOR FURTHER INFORMATION CONTACT:

Eugene Cornelius, (313) 226–7240.

Johnnie L. Albertson,

Associate Administrator for Small Business

Development Centers.

[FR Doc. 00–25368 Filed 10–2–00; 8:45 am]

BILLING CODE 8025–01–P