Federal Register / Vol. 65, No. 27 / Wednesday, February 9, 2000 / Notices 6427

21 15 U.S.C. 78k–1(a)(1)(C).

22 15 U.S.C. 78k–1(a)(1)(D).

23 23 See 1997 Order, supra note 7.

24 15 U.S.C. 78s(b)(2).

25 17 CFR 200.30–3(a)(12).

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

2 17 CFR 240.19b–4.

3Filing amended to clarify text of proposed rule

change by including (iii). Phone conversation

between Ernesto A. Lanza, Associate General

Counsel, MSRB, and Melinda R. Diller, Attorney,

Division of Market Regulation, Commission on

January 24, 2000.

impediments to and perfect the

mechanism of a free and open market

and a national market system, and, in

general, to protect investors and the

public interest. The Commission also

believes that the proposal is consistent

with section 11A(a)(1)(C) 21 and

11A(a)(1)(D) 22 of the Act. The proposal

is consistent with section 11A(a)(1)(C)

in that it seeks to ensure economically

efficient execution of securities

transactions. Moreover, the proposal is

consistent with Section 11A(a)(1)(D) in

that it attempts to foster the linking of

markets for qualified securities through

communication and data processing

facilities.

The Commission notes, however, that

while the Exchange has been working

toward establishing a linkage,

specialists and OTC market makers do

not yet have an effective method of

routing orders to each other. The

Commission expects the Exchange to

continue to work towards establishing a

linkage with the Nasdaq systems as

requested in the January 1997 Order.23

In connection with this effort, the

Commission has requested an update on

the information provided in the

December 21, 1999 report using the

Exchange’s surveillance system. The

Commission requests that the Exchange

supplement the available trading data so

that it can consider issues concerning

the pilot program, including the

circumstances involving orders that are

not automatically executed through

MAX, whether orders are given the

NBBO shown at the time the order is

received or the NBBO posted at the time

the order is executed, and what

explanations are available for price

disimprovement. The Commission is

extending the pilot program for 90 days

so that the Exchange may compile this

data for the Commission’s review.

At the conclusion of this pilot’s

extension, the Commission requests that

the Exchange rewrite Article XX, Rule

37 and Article XX, Rule 43 of the

Exchange’s rules so these rules clearly

explain the difference between how

listed (or dually traded) securities and

over-the-counter (or Nasdaq/NM)

securities are routed and executed by

the Exchange, and submit the new

proposed language to the Commission

for review and approval. Additionally,

the Commission requests that the

Exchange include in its rules an

explanation of how the provisions of the

Exchange’s Best Rule interact with the

Exchange’s Rules governing automatic

execution of orders. Thus, the

Commission’s approval of the pilot

extension has several ramifications.

Approval will: (1) Allow the Exchange

to operate without interruption; (2)

provide a period for compilation of

additional data; and (3) allow the

Exchange to revise the language of the

existing rules for clarity and ease of

understanding in the public interest and

for protection of investors.

The Commission does not want to

interrupt the current operations of the

Exchange while the above-described

issues are being addressed. The

Commission, therefore, finds good cause

for approving the proposed rule change

prior to the thirtieth day after the date

of publication of notice of filing thereof

in the Federal Register.

It Is Therefore Ordered, pursuant to

section 19(b)(2) 24 of the Act that the

proposed rule change (SR–CHX–99–27)

be, and hereby is, approved through

May 1, 2000.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.25

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 00–2882 Filed 2–8–00; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–42374; File No. SR–MSRB–

99–11]

Self-Regulatory Organizations; Notice

of Filing of Proposed Rule Change by

the Municipal Securities Rulemaking

Board to Amend Rule G–36

February 2, 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 December

10, 1999, the Municipal Securities

Rulemaking Board (‘‘MSRB’’ or the

‘‘Board’’) 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 the Exchange. The Commission is

publishing this notice to solicit

comments on the proposed rule change

from interested persons.

I. Self-Regulatory Organization’s

Statement of the Terms of Substance of

the Proposed Rule Change

The Board has filed with the

Commission a proposed rule change to

amend Rule G–36, on delivery of official

statements, advance refunding

documents and Forms G–36(OS) and G–

36(ARD) to the Board or its designee.

The text of the proposed rule change is

set forth below. Deletions are in

brackets; additions are in italics.

Rule G–36—Delivery of Official

Statements, Advance Refunding

Documents and Forms G–36(OS) and

G–36(ARD) to Board or its Designee

(a)–(b) No Change.

(c) Delivery Requirements for Issues

not Subject to Securities Exchange Act

Rule 15c2–12.

(i) Subject to paragraph (iii) below,

each broker, dealer, or municipal

securities dealer that acts as an

underwriter in a primary offering of

municipal securities not subject to

Securities Exchange Act Rule 15c2–12

for which an official statement in final

form is prepared by or on behalf of the

issuer shall send to the Board or its

designee, by certified or registered mail,

or some other equally prompt means

that provides a record of sending,

[within] by the later of one business day

[of] after delivery of the securities by the

issuer to the broker, dealer, or

municipal securities dealer or one

business day after receipt of the official

statement in final form from the issuer

or its designated agent, the following

documents and written information: two

copies of the official statement in final

form[, if prepared by or on behalf of the

issuer]; and[, if an official statement in

final form is prepared,] two copies of

completed Form G–36(OS) prescribed

by the Board, including the CUSIP

number or numbers for the issue.

(ii)–(iii) 3 No change.

(d)–(f) 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, the

MSRB 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

6428 Federal Register / Vol. 65, No. 27 / Wednesday, February 9, 2000 / Notices

4See Securities Exchange Act Release No. 28081

(June 1, 1990), 55 FR 23333 (June 7, 1990);

‘‘Delivery of Official Statement to the Board: Rules

G–36 and G–8,’’ MSRB Reports, Vol. 9, No. 3

(November 1989) at 3.

5Municipal Securities Information Library and

MSIL are registered trademarks of the Board.

6 In primary offerings subject to Rule 15c2–12, the

underwriter is required under paragraph (b)(3) of

the Rule to contract with the issuer to receive the

final official statement within seven business days

after any final agreement to purchase, offer or sell

the municipal securities (the ‘‘sale date’’) and in

sufficient time to accompany any confirmation that

requests payment from any customer. Rule 15c2–12

does not apply to primary offerings with an

aggregate principal amount of less than $1,000,000

(‘‘Small Issue Securities’’). In addition, paragraph

(d)(1) of the Rule exempts primary offerings in

authorized denominations of $100,000 or more if

the securities (i) are sold to no more than 35

persons with knowledge and experience in

financial and business matters, capable of

evaluating the merits and risks of the investment

and not purchasing for more than one account or

with a view to distribution (‘Limited Offering

Securities’’); (ii) have a maturity of nine months or

less (‘Short-Term Securities’’); or (iii) at the option

of the holder may be tendered to the issuer or its

agent for redemption or purchase at par value or

more at least as frequently as every nine months

until maturity, earlier redemption, or purchase by

the issuer or its agent (‘‘Puttable Securities’’). Thus,

as originally adopted, Rule G–36 applied to all

primary offerings subject to Rule 15c2-12 as well as

to Small Issue Securities for which an official

statement in final form was prepared, but did not

apply to Limited Offering Securities, Short-Term

Securities and Puttable Securities.

7See Securities Exchange Act Release No. 32086

(March 31, 1993), 58 FR 18290 (April 8, 1993);

‘‘Delivery of Official Statements to the Board: Rule

G–36,’’ MSRB Reports, Vol. 12, No. 3 (September

1992) at 11. Thus only primary offerings exempt

from Rule 15c2–12 for which no official statement

in final form is prepared and Limited Offering

Securities remain exempt from Rule G–36. Those

offerings that currently are subject to Section (c)(i)

of Rule G–36 consist of Small Issue Securities,

Short-Term Securities and Puttable Securities, if an

official statement in final form has been prepared

by or on behalf of the issuer.

8The Board reviewed all Forms G–36(OS) for

primary offerings having sale dates in 1998 received

in acceptable form by the MSIL system on or prior

to December 31, 1998. Excluded from this review

were any Forms G–36(OS) that omitted the sale

date, date of receipt by the underwriter of the

official statement from the issuer or date that the

underwriter sent the official statement to the MSIL

system. Information provided by underwriters on

Form G–36(OS) is not independently verified by the

Board but is provided to the appropriate

enforcement agency on a regular basis.

Underwriters are required to certify that all

information contained in each Form G–36(OS)

submitted to the MSIL system is true and correct.

Inaccuracies in the information reported by

underwriters on Form G–36(OS) could subject such

underwriter to appropriate enforcement action. The

results of the Board’s review could be affected by

any such inaccuracies. The full results of this

review, including results relating to other

provisions of Rule G–36 and to the provisions of

Rule G–32 and Rule 15c2–12, were published in

‘‘Official Statement Deliveries Under Rules G–32

and G–36 and Exchange Act Rule 15c2–12,’’ MSRB

Reports, Vol. 19, No. 3 (Sept. 1999) at 29 (the

‘‘Board Notice’’).

9The remaining failures consisted of situations

where the issuer was reported to have delivered the

official statement to the underwriter in sufficient

time for the underwriter to comply with Rule G–

36(c)(i) but the underwriter delayed sending the

official statement to the Board until later than the

business day after the bond closing.

may be examined at the places specified

in Item IV below. The MSRB 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

Rule G–36 requires, among other

things, that a broker, dealer or

municipal securities dealer (a ‘‘dealer’’)

acting as underwriter in a primary

offering of municipal securities (with

certain limited exceptions) send to the

Board copies of the official statement

and completed Form G–36(OS). The

rule was adopted by the Board for the

purpose of creating a repository for

official statements that would function

much like a public library that stores,

indexes and provides copies of official

statements.4 This library, known as the

Municipal Securities Information

Library (or MSL) system,5 is intended

to serve as a central source for

information regarding municipal

securities trading in the primary and

secondary markets. As originally

adopted by the Board and approved by

the Commission, Rule G–36 applied to

all primary offerings of municipal

securities regardless of principal

amount, other than primary offerings

that qualified for exemption under

paragraph (d)(1) of Rule 15c2–12 under

the Act.6 The Board subsequently

amended Rule G–36 to subject to its

requirements certain categories of

primary offerings that are exempt under

Rule 15c2–12(d)(1), thereby further

extending the reach of Rule G–36

beyond the scope of Rule 15c2–12.7 The

Board felt that expanding the scope of

the rule to include such offerings would

result in a more complete collection of

disclosure documents and the overall

integrity, efficiency, and liquidity of the

municipal securities market would be

increased.

For any primary offering subject to

Rule G–36(c)(i), the underwriter

currently is required to send two copies

of the official statement, if one is

prepared, in final form with two copies

of Form G–36(OS), to the board by the

business day after the issuer delivers the

municipal securities to the underwriter

(the ‘‘bond closing’’). The Board

reviewed certain information included

by underwriters on Forms G–36(OS)

submitted to the Board’s MSIL system

in 1998, including approximately 2,000

such forms submitted in connection

with primary offerings subject to Rule

G–36(c)(i).8 For these offerings, the

Board found that 96% of the official

statements in final form were reported

to have been delivered by issuers to

underwriters within one business day

after closing. The 4% of official

statement deliveries by issuers to

underwriters that were reported as being

made more than one business day after

closing and therefore too late to permit

underwriters to comply with Rule G–

36(c)(i) constituted more than half

(approximately 54%) of all underwriter

failures to meet the time frame of that

section.9

The Board believes that there is

significant room for improvement with

respect to underwriter compliance with

Rule G–36(c)(i) in those situations in

which the official statement is received

in sufficient time to send to the Board

on a timely basis. Underwriters

experiencing problems in this area

should review their internal procedures

for ensuring that official statements

delivered by issuers are handled in a

manner that permits the accurate

completion and the prompt sending of

Form G–36(OS) and the official

statement to the Board.

However, the Board is concerned that

more than half of the instances in which

underwriters have not met the time

frame of Rule G–36(c)(i) resulted from

official statements that were reported to

have been delivered by issuers more

than one business day after closing. Of

course, the Board has no authority to

require that an issuer prepare an official

statement or that any official statement

that is prepared be delivered to

underwriters within a specified time

frame. In addition, the Commission

excepted those primary offerings that

are subject to Rule G–36(c)(i) from Rule

15c2–12. Therefore, the MSRB believes

that no regulatory framework exists to

compel, directly or indirectly, the

preparation and delivery of an official

statement in such offerings.

The Board notes that in

approximately 36% of the offerings

subject to Rule G–36(c)(i) the number of

business days between the sale date and

the business day following closing is

less than ten. As a result, for these

offerings, the requirement in Rule G–

36(c)(i) that the underwriter send the

official statement to the Board within

one business day after the bond closing

provides the underwriter with less time

to comply with its official statement

submission requirement than the ten

business day outside time frame of Rule

G–36(c)(i), were such a time frame

Federal Register / Vol. 65, No. 27 / Wednesday, February 9, 2000 / Notices 6429

10Section (b)(i) of Rule G–36 requires the

underwriter of a primary offering subject to Rule

15c2–12 to send two copies of the final statement,

together with two copies of Form G–36(OS), to the

Board within one business day after receipt of the

final official statement from the issuer but no later

than 10 business days after the sale date.

11The change in language makes clearer the fact

that Section (c)(i) will continue to apply to a

primary offering only if an official statement in final

form is prepared.

12 In contrast, Rule G–36(c)(i) currently requires

that the underwriter send the official statement to

the Board by the business day after the bond

closing, regardless of whether the underwriter has

in fact received the official statement by such day.

13 15 U.S.C. 78o–4(b)(2)(C).

14TBMA’s letter addressed the draft amendment

as well as certain other issues relating to Board

Rules G–36 and G–32 and Rule 15c2–12. The

comment letter from Charles Schwab & Co. Inc.

(‘‘Schwab’’) addressed certain issues relating to

Rule G–32. The Board is considering the comments

received on these other matters but has not

determined to take any rulemaking action with

respect to Rule G–32 or any provisions of Rule G–

36, other than Section (c)(i), at this time.

15Commercial paper is wholly exempt from the

Rule G–32 customer delivery requirement and

preliminary official statements may be delivered by

settlement (with official statements in final form

sent when they become available) for Puttable

Securities.

16Of course, the Board believes that there is

significant value to the secondary market in having

official statements available throughout the life of

the issue. Nonetheless, the Board sees no way of

justifying the existence of an official statement

based on the needs of the secondary market while

ignoring the needs of the primary market.

applicable to these offerings.10 At the

same time, however, issuers in these

offerings generally have not contracted

with underwriters to deliver official

statements within seven business days

of the sale date, as provided in

paragraph (b)(3) of Rule 15c2–12, since

such offerings are exempt from that rule.

Thus, in more than one-third of all

offerings subject to Rule G–36(c)(i),

underwriters are required to act more

quickly than they would under Rule G–

36(b)(i) even though there is no

concomitant obligation on the part of

issuers to deliver an official statement

within any particular time frame.

As a result, the Board published the

Board Notice seeking comment on,

among other things, a draft amendment

to Rule G–36(c)(i) which the Board

believed would address this situation.

After reviewing the comments received

on the Board Notice, the Board

determined to adopt the draft

amendment, with a minor clarifying

change.11 As amended, the rule would

provide that an underwriter in a

primary offering subject to Rule G–

36(c)(i) for which an official statement

in final form is prepared by the issuer

must send two copies of the official

statement in final form, together with

two copies of Form G–36(OS), to the

Board by the later of (i) one business

day after the bond closing or (ii) one

business day after receipt of the official

statement from the issuer.12 The

proposed rule change is intended solely

to provide relief to underwriters that

face violation of Rule G–36(c)(i) as a

result of circumstances beyond their

control and is not intended to imply

that underwriters and other dealers may

ignore their continuing obligation to

deliver official statements for new issue

municipal securities to customers by

settlement, as required under rule G–32.

2. Statutory Purpose

The Board believes the proposed rule

change is consistent with Section

15B(b)(2)(C) 13 of the Act, which

provides, in part, that the Board’s rules

shall:

be designed to prevent fraudulent and

manipulative acts and practices, to promote

just an equitable principles of trade, to foster

cooperation and coordination with persons

engaged in regulating, clearing, settling,

processing information with respect to, and

facilitating transactions in municipal

securities, to remove impediments to and

perfect the mechanism of a free and open

market in municipal securities, and, in

general, to protect investors and the public

interest.

The Board believes that the proposed

rule change is consistent with the Act in

that it removes an impediment to a free

and open market in municipal securities

without adversely affecting the

protection of investors and of the public

interest.

B. Self-Regulatory Organization’s

Statement on Burden on Competition

The Board does not believe that the

proposed rule change will impose any

burden on competition not necessary or

appropriate in furtherance of the

purposes of the Act because it would

apply equally to all municipal

underwriters.

C. Self-Regulatory Organization’s

Statement on Comments on the

Proposed Rule Change Received from

Members, Participants, or Others

In the Board Notice, the Board sought

comment on a draft amendment to Rule

G–36(c)(i) that would require an

underwriter in a primary offering

subject to Rule G–36(c)(i) for which an

official statement in final form has been

prepared to send the official statement

to the Board by the later of (i) one

business day after the bond closing or

(ii) one business day after receipt of the

official statement from the issuer. The

Board received two comment letters in

response to the Board Notice, only one

of which addressed the draft

amendment.14

The Bond Market Association (TBMA)

states that it ‘‘strongly supports’’ the

draft amendment. TBMA further states

that the change in the timing

requirement ‘‘means that underwriters

and issuers could schedule closings on

the basis of the needs of the transaction,

rather than for the purpose of allowing

a sufficient number of days to increase

the odds that the official statement will

be ready in time for the closing.’’

The Board strongly believes that this

second statement of TBMA

demonstrates a misunderstanding of the

nature of the proposed rule change, the

purpose of official statements in the

municipal securities market and the

other obligations of dealers with respect

to delivery of official statements. In the

Board Notice, the Board observed that

for new issue municipal securities,

dealers typically seek, and customers

generally expect, to settle their trades on

the same day as the closing of the

underwriting. As a result, underwriters

need to receive the official statement

from the issuer in sufficient time to

ensure that the official statement can be

delivered to customers by settlement of

their transactions, as required under

Rule G–32. If an issuer prepares an

official statement in final form but does

not deliver it to the underwriter by the

bond closing, dealers would continue to

be prohibited from settling their

transactions with customers until they

have delivered the official statement to

the customers, with certain very limited

exceptions.15 Thus, other than offerings

falling within the narrow exceptions

provided under Rule G–32, the only

offerings in which ‘‘the needs of the

transaction’’ would not include delivery

of the official statement by closing

would be those in which underwriters

expect to hold the securities in

inventory until the official statement is

in fact delivered and therefore made

available for redelivery to customers.

The completion and delivery of an

official statement by the closing of the

underwriting is not a technical

requirement imposed by the Board. If an

official statement serves no purpose in

an offering that is exempt from Rule

15c2–12, then the issuer need not

prepare one. Unless an issuer is

preparing an official statement for

reasons entirely unrelated to the offering

that it describes, it is difficult to

understand how completion of an

official statement after the underwriters

and initial customers have received

delivery of their securities can be

rationalized.16

6430 Federal Register / Vol. 65, No. 27 / Wednesday, February 9, 2000 / Notices

17TBMA states ‘‘that it is diffuclt to ensure the

desirable level of coordination between the

underwriter personnel who are best-positioned to

authenticate the official statement as the final

official statement and the personnel who are

responsible for filing with the Board.’’

18Schwab notes that it has ‘found that if the

dealers [from which it purchases new issue

municipal securities] do not have copies of the final

official statement, such copies are also generally

unavailable from the managing underwriter

financial printer. Bloomberg or another Nationally

Recognized Municipal Securities Information

Repository.’’ Delays in receiving official statements

by the MSIL system would further reduce their

availability from these other sources.

19 17 CFR 200.30–3(a)(12).

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

2 17 CFR 240.19b–4.

Although the submission requirement

under current Rule G–36(c)(i) may

influence an issuer to give completion

of the official statement in final form a

higher priority, this requirement also

may serve as a disincentive to prepare

the official statement in final form, since

an underwriter currently can avoid a

Rule G–36(c)(i) violation by prevailing

upon the issuer not to prepare an

official statement in final form at all (e.g.,

an underwriter that has purchased an

issue based on a preliminary official

statement could advise an issuer that it

need not finalize the official statement).

Changing the time frame of the Rule G–

36(c)(i) submission requirement would

eliminate this disincentive while

providing relief for underwriters that

may face a potential rule violation for

reasons beyond their control. The

official statement delivery requirement

under Rule G–32 would continue to

provide a powerful incentive to

underwriters to urge issuers to complete

the official statement in final form in

sufficient time to permit the

underwriters and the other dealers to

which they sell such new issue

municipal securities to deliver the

official statement to customers by

settlement.

Although TBMA supports the draft

amendment to Rule G–36(c)(i), it

suggests that the Board further amend

Rule G–36(c)(i) to extend the onebusiness day time frame to two-business

days. TBMA argues that ‘‘it is often

logistically difficult to meet the one-day

requirement’’ and that the MSIL

systems serves ‘‘archival rather than

real-time disclosure purposes.’’ 17 In

adopting Rule G–36(c)(i) and creating

the MSIL system, the Board undertook

to make available to the industry a

comprehensive repository of official

statements for use in both the primary

and secondary markets. In addition to

serving the vital archival purpose of

ensuring that information regarding

municipal securities is available

throughout the life of the securities, the

MSIL system serves an important

function in the primary market as an

alternate source (through its subscribers)

of official statements for dealers seeking

to fulfill their Rule G–32 customer

delivery obligation. Delaying the

submission of official statements to the

Board could impair the MSIL system‘s

usefulness in the primary market.18

Without a more substantial showing of

hardship to the dealer community, the

Board believes that extension of the

time frame for underwriters to turn the

official statement around to the Board is

not justified at this time. The ability to

meet this requirement is entirely within

the control of dealers, and they should

review their procedures to ensure that

this task is assigned to the appropriate

personnel having a clear understanding

of the procedural and substantive

requirements of Rule G–36. To the

extent that dealers experience difficulty

in coordinating the actions of various

personnel involved in the handling of

official statements, they should consider

whether they have instituted procedures

that adequately provide for compliance

with the rule.

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 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 MSRB 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 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 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 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 MSRB. All

submissions should refer to File No.

SR–MSRB–99–11 and should be

submitted by March 1, 2000.

For the Commission, by the Division

of Market Regulation, pursuant to

delegated authority. 19

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 00–2880 Filed 2–8–00; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–42376; File No. SR–NASD–

99–77]

Self-Regulatory Organizations; Notice

of Filing of Proposed Rule Change by

the National Association of Securities

Dealers, Inc., Relating to the Mutual

Fund Quotation Service

February 2, 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 December

17, 1999, 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 (‘‘SEC’’ or

‘‘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 is proposing to amend NASD

Rule 7090 to change the annual listing

fees for the Mutual Fund Quotation

Service (‘‘MFQS’’ or ‘‘Service’’).

Proposed new language is in italics;

proposed deletions are in brackets.

* * * * *

7090. Mutual Fund Quotation Service

(a) Funds included in the Mutual

Fund Quotation Service (‘‘MFQS’’) shall

be assessed an annual fee of [$275] $400

per fund authorized for the News Media