59480 Federal Register / Vol. 65, No. 194 / Thursday, October 5, 2000 / Notices

18See Securities Exchange Act Release No. 42037

(October 20, 1999), 64 FR 57996 (October 28, 1999).

19 15 U.S.C. 78o–3(b)(6).

20 15 U.S.C. 78s(b)(2).

21 In approving Amendment No. 9, the

Commission has considered its impact on

efficiency, competition, and capital formation. 15

U.S.C. 78c(f).

22 17 CFR 200.30–3(a)(12).

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

2 17 CFR 240.19b–4.

instating the PMM standards set forth in

NASD Rule 4612 would be extremely

disruptive to the market and harmful to

investors.

Nasdaq also notes that the

Commission has signaled to the

securities industry that it is considering

fundamental changes to Rule 10a–1 of

the Exchange Act that could impact the

manner in which Nasdaq and the other

markets regulate short sales. On October

20, 1999, the Commission issued a

Concept Release on Short Sales in

which it sought comment on, among

other things, revising the definition of

short sale, extending short sale

regulation to non-exchange listed

securities, and eliminating short sale

regulation altogether.18 Nasdaq believes

it would be inappropriate for Nasdaq to

dramatically alter its regulation of short

sales while the Commission is

considering fundamentally changing

Rule 10a–1 of the Exchange Act.

III. Solicitation of Comments

Interested persons are invited to

submit written data, views, and

arguments concerning Amendment No.

9, including whether the proposed

Amendment is consistent with the Act.

Persons making written submissions

should file six copies thereof with the

Secretary, Securities and Exchange

Commission, 450 Fifth Street, NW.,

Washington, DC 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 No.

SR–NASD–98–26 and should be

submitted by October 26, 2000.

IV. Commission’s Findings and Order

Granting Accelerated Approval of the

Amendment

After careful consideration, the

Commission finds, for the reasons set

forth below, that the extension of the

Short Sale Rule pilot and the

suspension of the existing PMM

standards until June 30, 2001 is

consistent with the requirements of the

Act and the rules and regulations

thereunder. In particular, the extension

is consistent with Section 15A(b)(6) 19 of

the Act, which requires that the NASD’s

rules be designed, among other things,

to remove impediments to and perfect

the mechanism of a free and open

market and a national market system

and to promote just and equitable

principles of trade.

The Commission finds that

continuation of the Short Sale Rule pilot

and the continued suspension of the

current PMM standards will maintain

the status quo while the Commission

considering amending Rule 10a–1 under

the Exchange Act.

The Commission finds good cause for

approving the extension of the Short

Sale Rule pilot and the suspension of

existing PMM standards prior to the

30th day after the date of publication of

notice of the filing in the Federal

Register. It could be disruptive to the

Nasdaq market and confusing to market

participants to reintroduce the previous

PMM standards while new PMM

standards are being developed, and

while the Commission is considering

amending Rule 10a–1 under the

Exchange Act.

It Is Therefore Ordered, pursuant to

Section 19(b)(2) of the Act,20 that

Amendment No. 9 to the proposed rule

change, SR–NASD–98–26, which

extends the NASD Short Sale Rule pilot

and the suspension of the current PMM

standards to June 30, 2001, is approved

on an accelerated basis.21

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.22

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 00–25591 Filed 10–4–00; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–43383; File No. SR–NASD–

00–48]

Self-Regulatory Organizations; Notice

of Filing of Proposed Rule Change by

the National Association of Securities

Dealers, Inc. To Require an Issuer To

Publicly Disclose the Receipt of a

Delisting Notice for Failure To Comply

With the Continued Listing Standards

of The Nasdaq Stock Market

September 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 August

10, 2000, the National Association of

Securities Dealers, Inc. (‘‘NASD’’),

through its wholly owned subsidiary,

The Nasdaq Stock Market, Inc.

(‘‘Nasdaq’’), 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 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 proposes to require issuers to

publicly disclose the receipt of a

delisting notice for failure to comply

with Nasdaq’s continued listing

requirements. Below is the text of the

proposed rule change. Proposed new

language is in italics. Proposed

deletions are in brackets.

Rule 4120. Trading Halts

(a) Authority to Initiate Trading Halts.

In circumstances in which Nasdaq

deems it necessary to protect investors

and the public interest, Nasdaq may,

pursuant to the procedures set forth in

paragraph (b):

(1)–(4) No change.

(5) Halt trading in a security listed on

Nasdaq when Nasdaq requests from the

issuer information relating to:

(i) No change;

(ii) The issuer’s ability to meet Nasdaq

listing qualification requirements, as set

forth in the Rule 4300 , [and] 4400, and

4800 Series; or

(iii) No change.

(b) No change.

Federal Register / Vol. 65, No. 194 / Thursday, October 5, 2000 / Notices 59481

3 15 U.S.C. 78o–3(b)(6).

IM–4120–2. Disclosure of Written Notice

of Staff Determination

Rule 4815(b) requires that an issuer

make a public announcement through

the news medial disclosing the receipt of

a Written Notice of Staff Determination

(‘‘Staff Determination’’) to prohibit

continued listing of the issuer’s

securities under Rule 4815(a) as a result

of the issuer’s failure to comply with the

continued listing requirements, and the

Rule(s) upon which the Staff

Determination was based. Such public

announcement shall be made as

promptly as possible, but not more than

seven calendar days following the

receipt of the Staff Determination. If the

public announcement is not made by

the issuer within the time allotted,

trading of its securities shall be halted,

even if the issuer appeals the Staff

Determination as set forth in Rule 4820.

If the issuer fails to make the public

announcement by the time that the

Listing Qualifications Panel issues its

decision, that decision will also

determine whether to delist the issuer’s

securities for failure to make the public

announcement.

Rule 4815(b) does not relieve an

issuer of its obligation to make a

materially assessment of the pending

delisting action as it may relate to the

disclosure requirements of the federal

securities laws, nor should it be

construed as providing a safe harbor

under the federal securities laws. It is

suggested that the issuer consult with

corporate/securities counsel in assessing

its disclosure obligations under the

federal securities laws.

(Existing IM–4120–2 and IM–4120–3

renumbered as IM–4120–3 and IM–

4120–4)

Rule 4815. Written Notice of Staff

Determination

(a) If the Listing Qualifications

Department or the Listing Investigations

Department reaches a determination

(the ‘‘Staff Determination’’) to limit or

prohibit the initial or continued listing

of an issuer’s securities, it will notify

the issuer, describe the specific grounds

for the determination, identify the

quantitative standard or qualitative

consideration set forth in the Rule 4000

Series that the issuer has failed to

satisfy, and provide notice that upon

request the issuer will be provided an

opportunity for a hearing under this

Rule 4800 Series.

(b) An issuer that receives a Staff

Determination to prohibit continued

listing of the issuer’s securities under

Rule 4815(a) shall make a public

announcement through the news media

disclosing the receipt of the Staff

Determination, including the Rule(s)

upon which the Staff Determination was

based. Prior to the release of the public

announcement, an issuer shall provide

such disclosure to Nasdaq’s Stock

Watch and Listing Qualifications

Departments.* The public

announcement shall be made as

promptly as possible, but not more than

seven calendar days following receipt of

the Staff Determination. * Notification may be provided to the

StockWatch section of Nasdaq’s

MarketWatch Department at 1–800–

537–3929 or (301) 590–6411 (telephone),

(301) 590–6482 (facsimile) and to the

Hearings Department of Nasdaq’s

Listing Qualifications Department at

(301) 978–8079 (telephone), (301) 978–

8080 (facsimile).

* * * * *

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

1. Purpose

The purpose of the proposed rule

change is to require a Nasdaq issuer to

publicly disclose the receipt of a written

delisting notice for failure to comply

with the continued listing requirements

(‘‘Staff Determination’’). Since Nasdaq

does not currently have such a

requirement, some Nasdaq issuers

publicly disclose the receipt of a Staff

Determination while other issuers do

not make the disclosure. Nasdaq

believes that requiring public disclosure

of the receipt of a Staff Determination

serves to protect present and potential

investors in an issuer’s securities.

In order to provide investors with the

greatest protection possible, Nasdaq

believes that the public announcement

should not only disclose the receipt of

a Staff Determination, but also indicate

the Marketplace Rule(s) upon which the

Staff Determination was based. By

furnishing investors with the specific

continued listing requirement(s) that an

issuer has failed to meet, Nasdaq

believes that investors will be able to

make a more informed decision

regarding their investment (or potential

investment) in an issuer’s securities.

Furthermore, Nasdaq proposes that an

issuer be required to make the public

announcement as promptly as possible,

but not more than seven calendar days

following the receipt of the Staff

Determination. Nasdaq believes that this

time frame will provide an issuer with

a sufficient opportunity to prepare a

public announcement while also

ensuring that investors receive the

information in a timely manner. If an

issuer fails to disclose the receipt of a

Staff Determination, trading of its

securities will be halted until the

disclosure is made, even if the issuer

appeals the determination to the Listing

Qualifications Panel, as provided for

under Marketplace Rule 4820. If an

issuer fails to make the public

announcement by the time that the

Listing Qualifications Panel issues its

decision, that decision will also

determine whether to delist an issuer’s

securities for failure to make the public

announcement.

2. Statutory Basis

Nasdaq believes that the proposed

rule change is consistent with the

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

Act,3 in that the proposal is designed to

protect investors and the public interest.

As noted above, the proposed rule

change is aimed at ensuring that

investors are notified that Nasdaq has

determined to delist an issuer’s

securities for non-compliance with the

continued listing requirements.

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 purposes of the Act.

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

59482 Federal Register / Vol. 65, No. 194 / Thursday, October 5, 2000 / Notices

4 17 CFR 200.30–3(a)(12).

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

2 17 CFR 240.19b–4.

publishes its reasons for so finding or

(ii) as to which the NASD 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,

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, NW.,

Washington, DC 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–00–48 and should be

submitted by October 26, 2000.

For the Commission by the Division of

Market Regulation, pursuant to delegated

authority.4

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 00–25595 Filed 10–4–00; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–43367; File No. SR–NASD–

00–42]

Self-Regulatory Organizations; Notice

of Filing of Proposed Rule Change by

the National Association of Securities

Dealers, Inc. Relating to Proposed

Recording and Recordkeeping

Requirements of Certain Quotation

Data

September 27, 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 June

3,2000, the National Association of

Securities Dealers, Inc. (‘‘NASD’’),

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. 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 to add

new NASD Rule 6630 to require

members to record and maintain their

quotations displayed in certain

automated, inter-dealer quotation

systems, such as the Electronic Pink

Sheets (‘‘EPS’’), and to report such data

to NASD Regulation upon request.

Below is the text of the proposed rule

change. Additions are italicized;

deletions are in brackets.

* * * * *

6600. [REPORTING TRANSACTIONS

IN] OVER-THE-COUNTER EQUITY

SECURITIES

This Rule 660 Series sets forth

recording and reporting requirements

for certain quotations and unpriced

indications of interest displayed on

inter-dealer quotation systems and the

trade reporting requirements applicable

to members’ transactions in equity

securities for which real-time trade

reporting is not otherwise required

(hereinafter referred to as ‘‘OTC Equity

Securities’’). Members shall utilize the

Automated Confirmation Transaction

Service (ACT) for trade reporting in

OTC Equity Securities. Rules 6610 and

6620 No Change.

Rule 6630. Recording of Quotation

Information

(a) Quotation Recording Requirements

(1) Subject to the terms and

conditions contained herein, each OTC

Market Maker that displays priced

quotations (bid and/or offer) or

unpriced indications of interest in OTC

Equity Securities in an inter-dealer

quotation system that permits quotation

updates on a real-time basis shall record

each item of information described in

paragraph (b) of this Rule. This quote

activity record must reflect all changes

in an OTC Market Maker’s priced

quotation or quotation size displayed or

unpriced indication of interest, and the

time any such change was effected.

(2) Members shall record each item of

information required to be recorded

under this Rule in such form as is

prescribed by the Association from time

to time.

(3) Maintaining and Preserving

Records

(A) Each member shall maintain and

preserve records of the information

required to be recorded under this Rule

for the period of time and accessibility

specified in SEC Rule 17a–4(a).

(B) The records required to be

maintained and preserved under this

Rule may be immediately produced or

reproduced on ‘‘micrographic media’’ as

defined in SEC Rule 17a–4(f)(1)(i) or by

means of ‘‘electronic storage media’’ as

defined in SEC Rule 17a–4(f)(1)(ii) that

meet the conditions set forth in SEC

Rule 17a–4(f) and may be maintained

and preserved for the required time in

that form.

(b) Information to be Recorded

The quotation activity record required

pursuant to paragraph (a) of this Rule

shall contain, at a minimum, the

following information for every priced

quotation (bid and/or offer) or unpriced

indication of interest displayed by the

member during the trading day:

(1) Submitting firm;

(2) Inter-dealer quotation system or

medium;

(3) Trade date;

(4) Time quotation displayed

(expressed in hours, minutes and

seconds);

(5) Security name and symbol;

(6) Bid and bid quotation size (if

applicable);

(7) Offer and offer quotation size (if

applicable);

(8) Prevailing Inside Bid; and

(9) Prevailing Inside Offer

If no updates were entered to an OTC

Market Maker’s quotation or quotation

size for any given trading day, the

member must record the information in

subparagraphs (b)(1) through (7).

(c) Quotations Not Required To Be

Recorded

The recording requirements contained

in paragraphs (a) and (b) of this Rule

shall not apply to quotations of OTC

Equity Securities that are displayed on

an inter-dealer quotation system that is:

(1) qualified pursuant to Section 17B

of the Act; or

(2) operated by a member of the

Association.

(d) Reporting Requirements

(1) General Requirement

Members shall report information

required to be recorded under this Rule

to the Association upon its request.