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

Federal Register / Vol. 65, No. 27 / Wednesday, February 9, 2000 / Notices 6431

3See NASD Rule 6800.

4 Id.

5Nasdaq Level 1 Service is a subscription-based

data service that ‘‘includes the following data: (1)

Inside bid/ask quotations calculated for securities

listed in the Nasdaq Stock Market and securities

quoted in the OTC Bulletin Board (OTCBB) service;

(2) the individual quotations or indications of

interest of broker/dealers utilizing the OTCBB

service; and (3) last sale information on securities

classified as designated securities in the Rule 4630,

4640, and 4650 Series and securities classified as

over-the-counter equity securities in the Rule 6600

Series.’’ NASD Rule 7010(a).

6See NASD Rule 7090.

7See Securities Exchange Act Release No. 37014

(March 22, 1996), 61 FR 14182 (File No. SR–NASD–

96–05).

8 15 U.S.C. 78o–3(b)(5).

9 15 U.S.C. 78o–3(b)(5).

Lists and [$200] $275 per fund

authorized for the Supplemental List.

Funds authorized during the course of

an annual billing period shall receive a

proportion of these fees but no credit or

refund shall accrue to funds terminated

during an annual billing period. In

addition, there shall be a one-time

application processing fee of $250 for

each new fund authorized.

(b) 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,

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

Nasdaq proposes to change the annual

listing fees for the MFQS. The MFQS

was created to collect and to

disseminate data pertaining to the value

of open-end and closed-end funds.

Currently, the MFQS disseminates the

valuation data for over 11,000 funds.

The Service facilitates this process by

providing for the automated entry,

through a browser-based application, of

pricing data by a fund and a fund’s

pricing agent.

Funds must meet minimum eligibility

criteria in order to be included in the

MFQS.3 The MFQS has two ‘‘lists’’ in

which a fund may be included—the

News Media List and the Supplemental

List—and each list has its own

eligibility requirements.4 If a fund

qualifies for the News Media List,

pricing information about the fund is

eligible for inclusion in newspaper fund

tables and is also eligible for

dissemination over Nasdaq’s Level 1

Service 5, which is distributed by market

data vendors. If a fund qualifies for the

Supplemental List, the pricing

information about that fund generally is

not included in newspaper fund tables,

but is disseminated over Nasdaq’s Level

1 Service. The Supplemental List,

therefore, provides significant visibility

for funds that do not otherwise qualify

for inclusion in the News Media List.

Each fund incurs an annual fee for

inclusion in the Service.6 Currently,

funds included in the News Media List

pay an annual fee of $275, and funds

included in the Supplemental List pay

an annual fee of $200.

The original MFQS was built as a

DOS-based application. In recent years,

technology has progressed and user

needs for the MFQS have increased.

Responding to requests made by users of

the MFQS, the mutual fund industry,

and the Investment Company Institute

(‘‘ICI’’), Nasdaq performed market

research to determine which

enhancements MFQS users would

prefer in a redesigned Service. Since the

last fee increase in 1996,7 the MFQS

software application has been rewritten,

and notable technology enhancements

have been implemented to support the

Service’s functionality.

Specifically, in 1998, Nasdaq took the

list of enhancements requested by

MFQS users and developed and

implemented an entirely new MFQS

application, using browser-based

technology. The MFQS now permits

funds included in the Service (or

pricing agents designated by such

funds) to use the browser-based

technology to transmit directly to

Nasdaq a multitude of pricing

information, including information

about a fund’s net asset value, offer

price, and closing market price. Out of

the approximately 27 enhancements

suggested by the industry, Nasdaq has

incorporated 20 into the new MFQS

application, and two more are

scheduled for implementation in early

2000.

The new browser-based MFQS

upgrade became fully-operational in

May 1999. Due to the significant costs

for development, maintenance, and

support of the new MFQS product,

however, additional revenue is needed

to (1) sustain the quality of the MFQS;

and (2) make future product

enhancements to the MFQS, to improve

efficiency and accuracy of price

reporting. In addition, the MFQS is

operating at a yearly loss in light of the

recent technology enhancements to the

Service. Accordingly, Nasdaq proposes

to increase its current fees for the

Supplemental List from $200 to $275,

and for the News Media List from $275

to $400.

2. Statutory Basis

Nasdaq believes that the proposed

rule change is consistent with the

provisions of Section 15A(b)(5) 8 of the

Act which requires that the rules of a

national securities association provide

for the equitable allocation of reasonable

dues, fees and other charges among

members and issuers and other persons

using any facility or system which the

Association operates or controls. Nasdaq

believes that the increased user fee is a

fair means of recovering the cost related

to the development and maintenance of

the enhanced MFQS system requested

by users of the Service and the ICI. The

proposal is consistent with Section

15A(b)(5) 9 because the fees will be

imposed directly and only on those who

benefit from the recently enhanced

MFQS. The proposed fee is designed to

cover the costs related to the

development and maintenance of the

enhanced MFQS system and

development costs associated with

future enhancements that will improve

efficiency and accuracy in the collection

of pricing information.

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 Organizations’

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

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

6432 Federal Register / Vol. 65, No. 27 / Wednesday, February 9, 2000 / Notices

10 17 CFR 200.30–3(a)(12).

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

2 17 CFR 240.19b–4.

3 In Amendment No. 1, the NYSE made several

clarifications to the proposed rule change,

incorporated appropriate provisions for Non-US

issuers, and revised the procedures for the annual

report requirement. See Letter to Richard Strasser,

Assistant Director, Division of Market Regulation

(‘‘Division’’), SEC, from James E. Buck, Senior Vice

President and Secretary, NYSE, dated October 22,

1999 (‘‘Amendment No. 1’’).

4 In Amendment No. 2, the NYSE made several

technical changes to the text of the proposed rule

change and clarified that the supplemental listing

application (‘‘SLAP’’) provision applies to Non-U.S.

issuers. See Letter to Richard Strasser, Assistant

Director, Division, SEC, from James E. Buck, Senior

Vice President and Secretary, NYSE, dated

December 14, 1999 (‘‘Amendment No. 2’’). In

Amendment No. 2, the Exchange also requested

accelerated approval of the proposed rule change.

The Exchange withdrew this request as per

telephone conversation between Amy Bilbija,

Counsel, NYSE, and Terri Evans, Special Counsel,

and Heather Traeger, Attorney, Division, SEC, on

January 4, 2000.

*As such term is defined by the Securities and

Exchange Commission in Rule 16a–1(f) under the

Securities Exchange Act of 1934, or any successor

rule.

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 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–99–77 and should be

submitted by March 1, 2000.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.10

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 00–2967 Filed 2–8–00; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–42364; File No. SR–NYSE–

99–14]

Self-Regulatory Organizations; Notice

of Filing of Proposed Rule Change and

Amendment Nos. 1 and 2 Thereto by

the New York Stock Exchange, Inc.

Relating to Amendments to the Listed

Company Manual

January 28, 2000.

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

Securities Exchange Act of 1934

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

notice is hereby given that on April 12,

1999, the New York Stock Exchange,

Inc. (‘‘NYSE’’ or ‘‘Exchange’’) 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.

On October 25, 1999, the Exchange

submitted Amendment No. 1 to the

proposed rule change.3 On December

16, 1999, the Exchange submitted

Amendment No. 2.4 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 proposed rule change consists of

amendments to the Listed Company

Manual (‘‘Manual’’) to: (1) Implement

regulatory reviews of key personnel

associated with listing applicants; (2)

codify the Exchange’s procedures

regarding supplemental listing

applications for companies identified as

being below continued listing standards;

and (3) amend its disclosure

requirements for listed companies late

in filing their form 10–K or annual

report. The text of the proposed rule

change follows. New text is italicized.

Deleted text is bracketed.

NYSE Listed Company Manual

* * * * *

Section 3

Corporate Responsibility

* * * * *

315.00 Regulatory Review of Listing

Candidates and their Significant

Related Individuals and Entities

Each listing applicant must provide

the Exchange with a letter from counsel

representing that, to the company’s

knowledge, no officer,* board member,

no non-institutional shareholder with

greater than 10% ownership of the

company has been convicted of a felony

or misdemeanor relating to financial

issues (e.g., embezzlement, fraud, theft)

in the past ten years. In addition, the

Exchange will review background

materials available to its regarding the

aforementioned individuals as part of

the eligibility review process.

* * * * *

Section 7

Listing Applications

* * * * *

703.11 Supplemental Listing Process

* * * * *

(C) No supplemental listing

applications will be approved for

companies that have been identified as

being below the Exchange’s continued

listing standards (see Para. 802.01) for

issuances to new shareholders unless

such issuance is determined to be

consistent with an Exchange-approved

plan (or its goals) pursuant to Para.

802.02 or Para. 802.03 as applicable.

* * * * *

Section 2

Disclosure and Reporting Material

Information

* * * * *

203.00 Annual and Interim Reporting

Requirements

203.01 Annual Report Requirement

The Exchange requires that

companies publish at least once a year

and [submit] distribute to shareholders

an annual report containing financial

statements of the company and its

consolidated subsidiaries prepared in

conformity with generally accepted

accounting principles. The company

must distribute its annual report to its

shareholders not later than [three

months] 120 days (225 days for non-US

issuers) after the close of each fiscal

year. [, but] Notwithstanding the

foregoing, domestic issuers must make

this distribution at least fifteen days in

advance of the annual meeting. )Non-US

issuers are encouraged to do so when

possible.) When the annual report is

mailed to shareholders, two copies

should be sent to the Exchange together

with advice as to the date of mailing to

shareholders.

Companies may satisfy the annual

distribution requirement either by

distributing an annual report to share

holders, or by distributing to

shareholders to Form 10–K (or Form 20–

F for Non-US issuers) filed with the SEC,

with an indication that it is distributed

in lieu of a separate annual report.

When the annual report (or Form 10–K

or Form 20–F) is mailed to shareholders,

two copies should be sent to the