75328 Federal Register / Vol. 65, No. 232 / Friday, December 1, 2000 / Notices

6 15 U.S.C. 78q–1.

7 17 CFR 200.30–3(a)(12).

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

2 17 CFR 240.19b–4.

IDBs with excess net capital or excess

financial resources of more than

$20,000,000 would be margined under

the current event factor of 1.25. In either

case, the event factor would be subject

to EMCC’s right to change the risk

factor, as provided in EMCC Rule 4,

Section 5(A)III.

EMCC believes that the two-tier

membership standard will permit it to

accept IDBs for membership while

appropriately collateralizing the risk

posed by those entities with lower

levels of capital. EMCC recognizes that

the clearing fund is a key mitigant to

market risk in the event of member

insolvency and feels that margining

those IDBs with less than $20,000,000

excess regulatory capital at an event

factor of 1.5 should mitigate any risk of

their lower capital levels.

The effective date for these proposed

changes will be thirty days following

the date the Commission approves the

filing for current members and will be

immediately for any applicant who

becomes a member after the rule change

is approved.

EMCC believes that the proposed rule

change is consistent with the

requirements of section 17A of the Act 6

and the rules and regulations

thereunder because it promotes the

prompt and accurate settlement of

emerging markets securities

transactions.

(B) Self-Regulatory Organization’s

Statement on Burden on Competition

EMCC does not believe that the

proposed rule change will have an

impact on or impose a burden on

competition.

(C) Self-Regulatory Organization’s

Statement on Comments on the

Proposed Rule Change Received From

Members, Participants or Others

No written comments relating to the

proposed rule change have been

solicited or received. EMCC will notify

the Commission of any written

comments received by EMCC.

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 reason 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 EMCC. All submissions should

refer to File No. SR–EMCC–00–05 and

should be submitted by December 22,

2000.

For the Commission by the Division of

Market Regulation, pursuant to delegated

authority.7

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 00–30669 Filed 11–30–00; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–43613; File No. SR–NASD–

00–59]

Self Regulatory Organizations; Notice

of Filing of a Proposed Rule Change by

the National Association of Securities

Dealers, Inc. To Permit the Inclusion of

Certain Unit Investment Trusts in

Nasdaq’s Mutual Fund Quotation

Service

November 22, 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 October

20, 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 (‘‘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 6800 to permit the inclusion of

certain Unit Investment Trusts (‘‘UITs’’)

in Nasdaq’s Mutual Fund Quotation

Service (‘‘MFQS’’). Proposed new

language is in italics; proposed

deletions are in brackets.

* * * * *

6800. MUTUAL FUND QUOTATION

SERVICE

(a) Description

The Mutual Fund Quotation Service

collects and disseminates through The

Nasdaq Stock Market prices for [both]

mutual funds, [and] money market

funds, and unit investment trusts.

(b) Eligibility Requirements

To be eligible for participation in the

Mutual Fund Quotation Service, a fund

shall:

(1) be registered with the Commission

as an open-end (‘‘open-end fund’’) or a

closed-end (‘‘closed-end fund’’)

investment company or a unit

investment trust pursuant to the

Investment Company Act of 1940,

(2) execute the agreement specified by

the Association relating to the fund’s

obligations under the Program,

(3) pay, and continue to pay, the fees

as set forth in Rule 7090, an d

(4) submit quotations through an

automatic quotation system operated by

the Association.

(c) News Media Lists

(1) (A) An eligible open-end fund

shall be authorized for inclusion in the

News Media List released by the

Association if it has at least 1,000

shareholders or $25 million in net

assets.

(B) An eligible closed-end fund or

unit investment trust shall be authorized

for inclusion in the News Media List

released by the Association if it has at

least $60 million in net assets.

(C) Compliance with subparagraphs

(1)(A) and (B) shall be certified by the

fund to the Association at the time of

initial application for inclusion in the

List.

Federal Register / Vol. 65, No. 232 / Friday, December 1, 2000 / Notices 75329

3Nasdaq corrected a typographical error that

appeared in the proposed rule language. Telephone

conversation between Jeffrey S. Davis, Assistant

General Counsel, Nasdaq and Susie Cho, Attorney,

Division of Market Regulation, Commission,

November 16, 2000.

4 Id.

5Section 4(2) of the Investment Company Act of

1940 defines a Unit Investment Trust as ‘‘an

investment company which (A) is organized under

a trust indenture, contract of custodianship or

agency, or similar instrument, (B) does not have a

board of directors, and (C) issues only redeemable

securities, each of which represents an undivided

interest in a unit of specified securities; but does

not include a voting trust.’’ 15 U.S.C. 80a–4(2).

6See NASD Rule 6800.

7See id.

8See NASD Rule 7090.

9 15 U.S.C. 78o–3(b)(6).

10 15 U.S.C. 78k–1.

11 15 U.S.C. 78o–3(b)(6).

(2) (A) An authorized open-end fund

shall remain included in the New Media

List if it has either 750 shareholders or

$15 million in net assets.

(B) An authorized closed-end fund or

unit investment trust shall remain

included in the News Media List if it

has $30 million in net assets.

(C) Compliance with subparagraphs

(2)(A) and (B) shall be certified to the

Association upon written request by the

Association.

(d) Supplemental List

An eligible open-end fund, [or]

closed-end fund or unit investment trust

shall be authorized for inclusion in the

Supplemental List released to vendors

of Nasdaq Level 1 Service if it meets one

of the criteria set out in subparagraph

(1), subparagraph (2), or subparagraph

(3) below:

(1) the fund or unit investment trust

has net assets of $10 million or more, or

(2) 3 the fund or unit investment trust

has had two full years of operation, or

(3) 4 the fund’s or unit investment

trust’s investment adviser:

(A) is the investment adviser of least

one other fund or unit investment trust

that is listed on the Mutual Fund

Quotation Service and that has net

assets of $10 million or more; and

(B) has at least $15 million in total

assets of open-end, [and] closed-end, or

unit investment trust funds under

management.

(e) 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 is proposing to amend NASD

Rule 6800 to add listing standards for

the inclusion of Unit Investment Trusts

(‘‘UITs’’) to Nasdaq’s Mutual Fund

Quotation Service (‘‘MFQS’’ or the

‘‘Service’’).5 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 permitting funds included in

the Service (or pricing agents designated

by such funds) to use 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.

Funds must meet minimum eligibility

criteria in order to be included in the

MFQS.6 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 initial

inclusion requirements.7 In addition,

there are maintenance/continued

inclusion requirements for the News

Media list only. If a fund qualifies for

the News Media List, pricing

information about the fund is eligible

for inclusion in the fund tables of

newspapers and is also eligible for

dissemination over Nasdaq’s Level 1

Service, 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. Therefore, the Supplemental

List 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.8

MFQS provides valuable pricing

information for a large portion of funds

for which there is significant investor

interest, but it currently covers no UITs.

According to data complied by the

Investment Company Institute, as of the

end of 1999 there were a total of 10,418

trusts with a market value of $94.60

billion, including 8,924 tax-free bond

trusts, with a market value of $25.56

billion, 409 taxable bond trusts, with a

market value of $4.28 billion; and 1,085

equity trusts, with a market value of

$64.76 billion. Nasdaq estimates that

nearly all of the equity-based UITs that

exist today would be eligible for

inclusion in the MFQS under the

proposed new standards. Although

many of the bond-based UITs will

qualify under these standards, industry

participants have indicated to Nasdaq

that few of these funds will elect to

participate in the MFQS.

Due to their similarly in pricing

characteristics, Nasdaq proposes to

apply to UITs the same MFQS listing

standards that will apply to closed-end

mutual funds. To qualify for initial

inclusion in the News Media Lists, a

closed-end fund must have at least $60

million in net assets, and to remain in

the News Media List, an closed-end

fund would have to maintain at least

$30 million in net assets. These listing

standards are designed to identify

securities in which there is significant

investor interest. Likewise, Nasdaq

would apply to UITs the same criteria

for inclusion in the Supplemental List

as it currently applies to open and

closed-end funds. Currently, an openend or closed-end fund qualifies for

inclusion in the Supplemental List if the

fund has at least $10 million in net

assets, or the fund has had two full

years of operation or if the investment

advisor to the fund has at least one other

fund listed on MFQS that has $10

million in assets. In addition, the

investment advisor must have under

management at least $15 million from

open-end, closed-end, or money-market

funds. Managed assets from other

sources—such as pension funds—would

not be included for purposes of

determining whether the investment

firm meets the requirement that it

manage at least $15 million in fundrelated assets. Nasdaq proposes to apply

the same three alternative criteria to

UITs, requiring that they have $10

million in assets, be in operation for two

full years, or have an investment advisor

with sufficient fund- or UIT-related

assets under management.

2. Statutory Basis

Nasdaq believes that the proposed

rule change is consistent with the

provisions of section 15A(b)(6) 9 and

section 11A 10 of the Act. Section

15A(b)(6) 11 of the Act requires the rules

of a registered national securities

association to foster cooperation and

coordination with persons engaged in

processing information with respect to

securities, to remove impediments to

and perfect the mechanism of a free and

open market and a national market

75330 Federal Register / Vol. 65, No. 232 / Friday, December 1, 2000 / Notices

12 15 U.S.C. 78k–1(a)(1)(C).

13 17 CFR 200.30–3(a)(12).

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

2Securities Exchange Act Release No. 43457

(October 17, 2000) 65 FR 63662 (October 24, 2000).

3Securities Exchange Act Release No. 31937

(March 1, 1993), 58 FR 12609 [SR–NSCC–92–14]

(order approving post settlement correction

initiated by Settling Members and TPA Members).

4Currently, a Settling Member or TPA Member

must reject the extended correction instruction

within three days. NSCC will issue an ‘‘Important

Notice’’ at least 30 days prior to implementing

changes in the time frames required for rejections

of extended corrections. Telephone conservation

between Richard J. Paley, Associate Counsel, NSCC,

and Susan M. Petersen, Special Counsel, Division

of Market Regulation, Commission (October 16,

2000).

5Pursuant to Section 21 of Rule 52A, a Fund

Member or Mutual Fund Processor (‘‘Receiving

Fund Member’’) may initiate a request for the

transfer of a customer’s mutual fund shares,

investment fund, or UIT units from another Fund

Member or Mutual Fund Processor (‘‘Delivering

Fund Member’’). The Delivering Fund Member

must acknowledge or reject the transfer request

system, and, in general, to protect

investors and the public interest. In

section 11A(a)(1)(C),12 the Congress

found that it is in the public interest and

appropriate for the protection of

investors and the maintenance of fair

and orderly markets to assure the

availability to brokers, dealers, and

investors of information with respect to

quotations and transactions in

securities.

Nasdaq believes that the proposed

rule change will protect investors and

the public interest by promoting better

processing of price information in UITs.

Accordingly, the new listing criteria

will provide greater transparency to the

markets by providing greater pricing

information for a broader base of

investments for which there is

significant investor interest. Nasdaq

believes the proposed listing standards

serve as a means for the marketplace to

screen issuers and to provide listed

status only to bona fide investment

companies with sufficient investor base

and trading interest to maintain fair and

orderly markets.

B. Self-Regulatory Organization’s

Statement on Burden on Competition

Nasdaq does not believe that the

proposed rule change will impose any

burden on competition that is not

necessary or appropriate in furtherance

of the purposes of the Act.

C. Self-Regulatory Organization’s

Statement on Comments on the

Proposed Rule Change Received From

Members, Participants, or Others

Nasdaq did not solicit or receive

written comments on the proposed rule

change.

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 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 at

the Commission’s Public Reference

Room. Copies of such filing will also be

available for inspection and copying at

the principal office at the NASD. All

submissions should refer to File No.

SR–NASD–00–59 and should be

submitted by December 22, 2000.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.13

Margaret H. McFarland,

Deputy Security.

[FR Doc. 00–30664 Filed 11–30–00; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–43598; File No. SR–NSCC–

00–12]

Self-Regulatory Organizations;

National Securities Clearing

Corporation; Order Granting

Accelerated Approval of a Proposed

Rule Change Relating to the

Submission of Extended Corrections

and Time Frames for Confirmation

November 20, 2000.

On August 28, 2000, the National

Securities Clearing Corporation

(‘‘NSCC’’) filed with the Securities and

Exchange Commission (‘‘Commission’’)

a proposed rule change (File No. SR–

NSCC–00–12) pursuant to section

19(b)(1) of the Securities Exchange Act

of 1934 (‘‘Act’’) 1 to permit NSCC to

allow Fund Members and Mutual Fund

Processors to submit extended (post

settlement) corrections in NSCC’s

Mutual Fund Service’s Fund/Serv.

Notice of the proposal was published in

the Federal Register on October 24,

2000.2 No comment letters were

received. For the reasons discussed

below, the Commission is granting

accelerated approval of the proposed

rule change.

I. Description

Pursuant to NSCC’s Rule 52A, section

12, only a Settling Member or TPA

Member may currently submit extended

(post settlement) correction instructions.

These types of instructions are

submitted when a Settling Member or

TPA Member determines that data with

respect to a settled order previously

transmitted to a Fund Member or

Mutual Fund Processor is in need of

correction.3

Under the proposed rule change,

section 12 will be amended to also

permit Fund Members and Mutual Fund

Processors to submit extended (post

settlement) corrections to Settling

Members or TPA Members. No action

will be required by a Settling Member

or TPA Member if it determines to

accept the extended correction of a

Fund Member or Mutual Fund

Processor. A Settling Member or TPA

Member will be able to reject the

extended correction instruction within

the time frame established by NSCC.4 In

addition, section 12 will be revised to

permit extended corrections for

exchange orders.

The rule change also proposes to

make two additional changes to Rule

52A. Sections 4 and 8 of Rule 52A are

being amended to allow NSCC to delete

certain orders, corrections, and

extended corrections that have not been

confirmed or rejected, respectively,

within the time frame established by

NSCC. Section 21 is being amended to

reduce the maximum time frame within

which a Delivering Fund Member must

confirm the value of Fund/Serv eligible

mutual fund shares, investment funds,

or UIT units being transferred to a

Receiving Fund Member from sixty days

to tens days.5