69592 Federal Register / Vol. 65, No. 223 / Friday, November 17, 2000 / Notices

13 15 U.S.C. 78q–1.

14The GJV Class B Interests, which will have the

right to vote on matters that do not relate to U.S.

regulated aspects as well as to share in the GJV’s

profits attributable to its domestic business, will be

owned 50% by DTCC, 45% by TISI, and 5% by

IAG. The GJV Class C Interests, which will have the

right to vote on matters that do not relate to U.S.

regulated aspects as well as to share in the GJV

profits attributable to its foreign business, will be

owned 50% by DTCC and 50% by IAG.

15 17 CFR 200.30–3(a)(12).

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

2 17 CFR 240.19b–4.

Earlier affirmation would allow brokerdealers and their institutional customers

to identify and resolve the exceptions

and potential fails much earlier in the

settlement cycle.

In the longer term, the combination of

TradeSuite’s and ESG’s systems

development expertise and other

resources would enable the proposed

joint venture to develop and market

globally a single integrated ‘‘workflow’’

approach to trade management for both

domestic and cross-border transactions.

This development would facilitate the

industry’s goal of achieving straightthrough processing, which would help

manage the tremendous growth in

trading volumes and prepare for the

transition to shorter settlement cycles.

In addition, the DTC resources to be

transferred to the GJV or provided to the

GJV pursuant to a services contract are

for the most part resources that are

already fully dedicated to the

TradeSuite Business. Therefore,

implementation of the subject proposal

will not deprive DTC of resources

needed for it to provide its other

services in a safe and sound manner.

Furthermore, all existing services of the

TradeSuite and ESG Businesses will

continue uninterrupted during and after

the transfer to the GJV.

DTC believes that the proposed rule

change is consistent with the

requirements of Section 17A of the

Act 13 and the rules and regulations

thereunder applicable to DTC because

the implementation of the subject

proposal will facilitate the prompt and

accurate clearance and settlement of

institutional transactions.

(B) Self-Regulatory Organization’s

Statement on Burden on Competition

The proposed rule change will not

impose any burden on competition. The

proposed joint venture will serve

members of the securities industry and

will be governed by its users. DTCC

(which itself is owned by, and whose

board represents, users) will own 50.1%

of the GJV Class A Interests and only

Class A Interests will have the right to

vote on matters relating to the U.S.

regulated aspects of the GJV’s activities

that are submitted to Interestholders.14

The GJV board of directors will be

composed of eight Managers, seven of

whom shall be voting Managers and one

of whom, the President of the GJV, shall

be a non-voting Manager. Of the seven

voting Managers, two will be appointees

of DTCC and may be DTCC directors or

officers (‘‘DTCC Board

Representatives’’). Two voting Managers

will be appointed by TISI and IAG,

acting jointly. The remaining three

voting Managers will be representatives

of the global securities industry, two of

whom will be nominees of DTCC. Board

decisions involving U.S. regulated

aspects of the GJV’s business will

require the affirmative vote of at least

one of the two DTCC Board

Representatives. In addition, the

approval of both Interestholders will be

required for many significant matters.

The purpose of the joint venture will

be to introduce significant efficiencies

into trade processing by combining two

existing businesses with complementary

positions and strengths. The joint

venture will combine these two

businesses to offer the securities

industry an integrated system for trade

processing which will assist firms in

dealing with unprecedented levels of

securities trading. The joint venture will

also be a positive response to the

expected industry and regulatory

mandate to reduce settlement cycles

worldwide and thereby to reduce risk

affecting the national clearance and

settlement system.

The joint venture will cooperate with

other post-trade presettlement

processing systems in order to achieve

interoperability.

(C) Self-Regulatory Organization’s

Statement on Comments on the

Proposed Rule Change Received From

Members, Participants or Others

Written comments on the proposal

from DTC participants or others have

not yet been solicited or received.

III. Date of Effectiveness of the

Proposed Rule Change and Timing for

Commission Action

Within thirty-five 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

ninety 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 self-regulatory

organization 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

Section, 450 Fifth Street, NW.,

Washington, DC 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–00–10 and should be

submitted by December 8, 2000.

For the Commission by the Division of

Market Regulation, pursuant to delegated

authority.15

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 00–29448 Filed 11–16–00; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–43535; File No. SR–NASD–

00–65]

Self-Regulatory Organizations; Notice

of Filing and Immediate Effectiveness

of Proposed Rule Change by National

Association of Securities Dealers, Inc.

Relating to Rule 10334 of the NASD

Code of Arbitration Procedure

November 8, 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 November

3, 2000, the National Association of

Securities Dealers, Inc. (‘‘NASD’’),

through its wholly owned subsidiary,

NASD Dispute Resolution, Inc. (‘‘NASD

Dispute Resolution’’) filed with the

Securities and Exchange Commission

Federal Register / Vol. 65, No. 223 / Friday, November 17, 2000 / Notices 69593

3 17 CFR 240.19b–4(f)(6).

(‘‘Commission’’) the proposed rule

change as described in Items I, II, and

III below, which Items have been

prepared by NASD Dispute Resolution.

NASD Dispute Resolution has

designated the proposed rule change as

constituting a ‘‘non-controversial’’ rule

change under paragraph (f)(6) of Rule

19b–4 under the Act,3 which renders

the proposal effective upon filing with

the Commission. 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 Dispute Resolution is

proposing to: (1) Amend Rule 10334 of

the Association’s Code of Arbitration

Procedure (‘‘Code’’) to accelerate the

expiration date of the Rule from August

1, 2002 to December 31, 2000; (2) to

delete paragraph (i) of Rule 10205,

Schedule of Fees for Industry and

Clearing Controversies and paragraph

(h) of Rule 10332, Schedule of Fees in

Customer Disputes, which relate solely

to Rule 10334; and (3) renumber Rules

10205 and 10332 accordingly. Below is

the text of the proposed rule change.

Proposed new language is in italics;

proposed deletions are in [brackets].

* * * * *

10334. Procedures for Large and

Complex Cases

(a) through (g) Unchanged.

(h) Temporary Effectiveness.

This Rule shall remain in effect until

[August 1, 2002] December 31, 2000,

unless modified or extended prior

thereto by the Board of Governors.

* * * * *

10205. Schedule of Fees for Industry

and Clearing Controversies

(a) through (h) Unchanged.

[(i) If an eligible matter is submitted

for arbitration as a large and complex

case, under the procedures set forth in

Rule 10334, or under procedures agreed

upon by the parties, following the

Administrative Conference specified in

Rule 10334, the fees and deposits for

such matter shall be those set forth in

the schedule of fees for claims over

$10,000,000.]

[(j)] (i) Schedule of Fees.

(Remainder unchanged).

* * * * *

10332. Schedule of Fees for Customer

Disputes

[(h) If an eligible matter is submitted

for arbitration as a large and complex

case under the procedures set forth in

Rule 10334, or under procedures agreed

upon by the parties, following the

Administrative Conference specified in

Rule 10334, the fees and deposits for

such matter shall be those set forth in

the schedule of fees for claims over

$10,000,000.]

[(i)] h Schedule of Fees.

(Remainder unchanged).

* * * * *

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 Dispute Resolution 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 Dispute Resolution 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 10334 of the Code establishes

certain optional procedures for handling

and managing large and complex

(‘‘LAC’’) cases, defined as those

involving claims of $1 million or more.

Specifically, the Rule provides for an

administrative conference at the outset

of the case, a preliminary hearing before

an arbitrator to resolve discovery and

other disputes, and the opportunity for

parties to select arbitrators through

preferential rankings. Use of the Rule

results in higher filing fees and deposits

for claimants than proceeding under the

general provisions of the Code.

The Rule was adopted for a one-year

pilot period in 1995. At that time, the

procedures established by the Rule were

not available in other arbitration cases.

In 1997, the NASD amended the Rule to

make certain of its provisions voluntary,

which had been mandatory. At the same

time, the NASD extended the Rule for

five years to provide enough time to

determine whether parties would use

the Rule more frequently as amended. In

its rule filing, the NASD noted that few

parties were electing to proceed under

the Rule. Parties elected to proceed

under the Rule in only 43 of the 880

cases from May 2, 1995 until January 28,

1997 that were eligible for treatment

under the Rule. The few parties who did

elect to proceed under the Rule

apparently did so to take advantage of

the availability of a list selection

procedure for the appointment of

arbitrators. The NASD found that parties

were deterred from using the Rule by

the higher fees it required.

Since then, changes to the Code and

to NASD Dispute Resolution practices

have extended the most important of the

procedures established by Rule 10334 to

all cases, including the selection of

arbitrators through preferential

rankings. The benefits of the

administrative conference and the

preliminary hearing are available

through the Initial Pre-hearing

Conference that is now held in almost

all cases. Moreover, the discovery

process has been significantly enhanced

with the recent adoption of the

Discovery Guide.

As a result of these changes, use of the

Rule has decreased significantly from its

already low 1997 level. Through July

31st of this year, parties have elected to

proceed to the administrative

conference phase of the LAC process in

only 4 out of 366 eligible cases; in 1999,

parties did so in only 6 out of 679 cases.

More significantly, in none of these

cases did the parties elect to proceed

under Rule 10334 past the

administrative conference stage to

discovery, arbitrator selection, and the

hearing on the merits. While some of

these cases may have settled, it is also

probable that once the parties

understood that the benefits of the Rule

are available under the Code without

the higher fees required under the Rule,

they elected not to continue to proceed

under the Rule. Whatever the reason, no

case has gone past the administrative

conference stage of Rule 10334

procedures since 1997.

Even though it is rarely used, the Rule

requires staff training and resource

allocation. It can also be a source of

confusion for parties, who may not

realize that they can now obtain the

principal benefits of the LAC case

program without paying the higher fees

required under the Rule.

Therefore, given the lack of use of

Rule 10334, and the fact that the

primary benefits of the Rule are

available under general Code

procedures at less cost to parties, NASD

Dispute Resolution believes that

additional time is not needed to

determine that the Rule should be

sunset. Therefore, the proposed rule

change would amend the Rule to

accelerate its expiration date to

December 31, 2000.

The proposed rule change would also

delete paragraph (i) of Rule 10205,

Schedule of Fees for Industry and

Clearing Controversies and paragraph

69594 Federal Register / Vol. 65, No. 223 / Friday, November 17, 2000 / Notices

4 15 U.S.C. 78o(b)(6).

5 17 CFR 240.19b–4(f)(6). 6 17 CFR 200.30–3(a)(12).

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

2 17 CFR 240.19b–4.

3See Securities Exchange Act Release No. 43383

(September 28, 2000), 65 FR 59480.

(h) of Rule 10332, Schedule of Fees in

Customer Disputes, which relate solely

to Rule 10334, and renumber Rules

10205 and 10332 accordingly.

2. Statutory Basis

NASD Dispute Resolution believes

that the proposed rule change is

consistent with the provisions of

Section 15A(b)(6) of the Act,4 which

requires, among other things, that the

Association’s rules must 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 Dispute

Resolution believes that accelerating the

expiration date of Rule 10334 will serve

the public interest by eliminating an

unnecessary, redundant Code provision

that confuses parties and results in

needless expenditure of NASD Dispute

Resolution resources.

B. Self-Regulatory Organization’s

Statement on Burden on Competition

NASD Dispute Resolution 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 proposed rule change has been

filed by the Association as a ‘‘noncontroversial’’ rule change under Rule

19b–4(f)(6) under the Act.5

Consequently, because the foregoing

proposed rule change: (1) Does not

significantly affect the protection of

investors or the public interest; (2) does

not impose any significant burden on

competition; and (3) does not become

operative until December 31, 2000, more

than 30 days from November 3, 2000,

the date on which it was filed, and the

NASD provided the Commission with

written notice of its intent to file the

proposed rule change at least five days

prior to the filing date, it has become

effective pursuant to Section 19(b)(3)(A)

of the Act and Rule 19b–4(f)(6)

thereunder. At any time within 60 days

of this filing, the Commission may

summarily abrogate this proposal 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, 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–00–65 and should be

submitted December 8, 2000.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.6

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 00–29444 Filed 11–16–00; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–43536; File No. SR–NASD–

00–48]

Self-Regulatory Organizations; Order

Granting Approval of Proposed Rule

Change by the National Association of

Securities Dealers, Inc. Requiring

Public Disclosure of Receipt of a

Delisting Notice

November 9, 2000.

I. Introduction

On August 10, 2000, the National

Association of Securities Dealers Inc.

(‘‘NASD’’ or ‘‘Association’’), through its

wholly owned subsidiary, the Nasdaq

Stock Market, Inc. (‘‘Nasdaq’’), filed

with the Securities and Exchange

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

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

Securities Exchange Act of 1934

(‘‘Act’’) 1 and Rule 19b–4 thereunder,2 a

proposed rule change that would

require an issuer to publicly disclose the

receipt of a delisting notice for failure to

comply with Nasdaq’s continued listing

requirements. Notice of the proposed

rule change appeared in the Federal

Register on October 5, 2000.3 The

Commission received no comments on

the proposed rule change. This order

approves the proposed rule change.

II. Description of the Proposal

Nasdaq proposes to amend Rule

4815(b) and IM 4120–2, ‘‘Disclosure of

Written Notice of Staff Determination,’’

to require an issuer to make a public

announcement through the news media

disclosing the receipt of a written staff

determination to prohibit continued

listing requirements (‘‘Staff

Determination’’) and the rule(s) upon

which the Staff Determination was

based. The proposal also requires the

public announcement to be make as

promptly as possible, but not more than

seven calendar days following the

receipt of the Staff Determination.

Additionally, the proposal provides that

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 made the public

announcement by the time that the

Listings Qualification Panel issues its

decision, that decision will also

determine whether to delist the issuer’s

securities for failure to make the public

announcement.

According to Nasdaq, the proposed

rule change is designed to require a

Nasdaq issuer to publicly disclose the

receipt of a written delisting notice for

failure to comply with the continued

listing requirements. 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. In this regard, Nasdaq

proposes that the public announcement

shall not only disclose the receipt of a

Staff Determination, but shall also

indicate the Marketplace Rule(s) upon

which it was based.

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