Federal Register / Vol. 62, No. 54 / Thursday, March 20, 1997 / Notices 13417

3The classification criteria is set forth in NASD

Rule 4613(a)(2) and the footnote to NASD Rule

4710(g).

4NASD To Members 97–17 (March 1997).

5 15 U.S.C. 78o(b)(6).

6 Id.

7 15 U.S.C. 78s(b)(3)(A)(i).

8 17 CFR 240.19b–4(e).

9 15 U.S.C. 78s(b)(3)(A).

10 17 CFR 200.30–3(a)(12).

A. Self-Regulatory Organization’s

Statement of the Purpose of, and

Statutory Basis for, the Proposed Rule

Change

The purpose of the rule change is to

effectuate Nasdaq’s periodic

reclassification of NNM securities into

appropriate tier sizes for purposes of

determining the maximum size order for

a particular security eligible for

execution through SOES. Nasdaq

periodically reviews the SOES tier size

applicable to each NNM security to

determine if the trading characteristics

of the issue have changed so as to

warrant a tier size adjustment. Such a

review was conducted using data as of

December 31, 1996, pursuant to the

following established criteria: 3

NNM securities with an average daily nonblock volume of 3,000 shares or more a day,

a bid price less than or equal to $100, and

three or more market makers are subject to

a minimum quotation size requirement of

1,000 shares and a maximum SOES order

size of 1,000 shares;

NNM securities with an average daily nonblock volume of 1,000 shares or more a day,

a bid price less than or equal to $150, and

two or more market makers are subject to a

minimum quotation size requirement of 500

shares and a maximum SOES order size of

500 shares; and

NNM securities with an average daily nonblock volume of less than 1,000 shares a day,

a bid price less than or equal to $250, and

less than two market makers are subject to a

minimum quotation size requirement of 200

shares and a maximum SOES order size of

200 shares.

Pursuant to the application of this

classification criteria, 692 NNM

securities will be reclassified effective

April 1, 1997. These 692 NNM

securities are set out in the NASD’s

Notice To Members 97–17.4

In ranking NNM securities pursuant

to the established classification criteria,

Nasdaq followed the changes dictated

by the criteria with three exceptions.

First, an issue was not moved more than

one tier size level. For example, if an

issue was previously categorized in the

1,000-share tier size, it would not be

permitted to move to the 200-share tier

even if the reclassification criteria

showed that such a move was

warranted. In adopting this policy,

Nasdaq was attempting to maintain

adequate public investor access to the

market for issues in which the tier size

level decreased and help ensure the

ongoing participation of market makers

in SOES for issues in which the tier size

level increased. Second, for securities

priced below $1 where the reranking

called for a reduction in tier size, the

tier size was not reduced. Third, for the

top 50 Nasdaq securities based on

market capitalization, the SOES tier

sizes were not reduced regardless of

whether the reranking called for a tiersize reduction.

The NASD believes that the proposed

rule change is consistent with Section

15A(b)(6) of the Act.5 Section

15A(b)(6) 6 requires, among other things,

that the rules of the NASD governing the

operation of Nasdaq be designed to

foster cooperation and coordination

with persons engaged in regulating,

clearing, settling, processing

information with respect to, and

facilitating transactions in securities,

and to remove impediments to and

perfect the mechanism of a free and

open market. The NASD believes that

the reassignment of NNM securities

within SOES tier size levels will further

these ends by providing an efficient

mechanism for small, retail investors to

execute their orders on Nasdaq and by

providing investors with the assurance

that they can effect trades up to a certain

size at the best prices quoted on Nasdaq.

B. Self-Regulatory Organization’s

Statement on Burden on Competition

The NASD believes that the proposed

rule change will not result in any

burden on competition that is not

necessary or appropriate in furtherance

of the purposes of the Act.

C. Self-Regulatory Organization’s

Statement on Comments on the

Proposed Rule Change Received From

Members, Participants, or Others

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 become

effective immediately on March 7, 1997,

pursuant to Section 19(b)(3)(A)(i) of the

Act 7 and subparagraph (e) of Rule 19b–

4 8 thereunder, because the reranking of

NNM securities into appropriate SOES

tier sizes was done pursuant to the

NASD’s stated policy and practice with

respect to the administrative and

enforcement of two existing NASD

rules. Further, in the SOES Tier Size

Order, the Commission requested that

the NASD provide this information as

an interpretation of an existing NASD

rule under Section 19(b)(3)(A) of the

Act.9

IV. Solicitation of Comments

Interested persons are invited to

submit written data, views, and

arguments concerning the foregoing.

Persons making written submissions

should file six copies thereof with the

Secretary, Securities and Exchange

Commission, 450 Fifth Street, N.W.,

Washington, D.C. 20549. 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–97–19 and should be

submitted by April 10, 1997.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.10

Jonathan G. Katz,

Secretary.

[FR Doc. 97–7048 Filed 3–19–97; 8:45 am]

BILLING CODE 8010–01–M

[Release No. 34–38399; File No. SR–NASD–

97–18]

Self-Regulatory Organizations; Notice

of Filing and Order Granting

Accelerated Approval of Proposed

Rule Change and Amendment No. 1 by

National Association of Securities

Dealers, Inc. Relating to Amendments

to the Corporate Financing Rule, The

Nasdaq Stock Market Rules, and Overthe-Counter Bulletin Board Rules to

Effect Compliance With SEC

Regulation M

March 14, 1997.

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

Securities Exchange Act of 1934

(‘‘Act’’), 15 U.S.C. 78s(b)(1), notice is

hereby given that on March 6, 1997, the

National Association of Securities

Dealers, Inc. (‘‘NASD’’ or ‘‘Association’’)

filed with the Securities and Exchange

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

the proposed rule and on March 10,

1997, the Association filed Amendment
13418 Federal Register / Vol. 62, No. 54 / Thursday, March 20, 1997 / Notices

No. 1. The proposed rule change and

Amendment No. 1 are described in

Items I, II, and III below, which Items

have been prepared by the NASD. The

Commission is publishing this notice to

solicit comments on the proposed rule

change from interested persons. For the

reasons discussed below, the

Commission is granting accelerated

approval of the proposed rule change.

I. Self-Regulatory Organization’s

Statement of the Terms of Substance of

the Proposed Rule Change

NASD Regulation is proposing to

amend the Corporate Financing Rule in

Rule 2710, the Nasdaq Rules, and the

Over-the-Counter Bulletin Board Rules

of the Association to effect compliance

with the Commission’s Regulation M.

Below is the text of the proposed rule

change. Proposed new language is in

italics; proposed deletions are in

brackets.

2700. SECURITIES DISTRIBUTIONS

2710. Corporate Financing Rule—

Underwriting Terms and Arrangements

(a) No change.

(b) Filing Requirements

(1) through (10) No change.

(11) Request for Underwriting Activity

Report

Nowithstanding the availability of an

exemption from filing under

subparagraph (b)(7) of this Rule, a

member acting as a manager (or in a

similar capacity) of a distribution of a

publicly traded subject security or

reference security that is subject to SEC

Rule 101 shall submit a request to the

Corporate Financing Department for an

Underwriting Activity Report with

respect to the subject and/or reference

security in order to facilitate compliance

with SEC Rules 101, 103, or 104, and

other distribution-related Rules of the

Association. The request shall be

submitted at the time a registration

statement or similar offering document

is filed with the Department, the SEC,

or other regulatory agency or, if not filed

with any regulatory agency, at least two

(2) business days prior to the

commencement of the restricted period

under SEC Rule 101. The request shall

include a copy of the registration

statement or similar offering document

(if not previously submitted pursuant to

subparagraph (b)(5) of this Rule). If no

member is acting as managing

underwriter of such distribution, each

member that is a distribution participant

or an affiliated purchaser shall submit a

request for an Underwriting Activity

Report, unless another member has

assumed responsibility for compliance

with this subparagraph. For purposes of

[this] subparagraphs (b) (11) and (12),

SEC Rules 100, 101, 103, and 104 are

rules of the Commission adopted under

Regulation M and the following terms

shall have the meanings as defined in

SEC Rule 100: ‘‘distribution,’’

‘‘distribution participant,’’ ‘‘reference

security,’’ ‘‘restricted period,’’ and

‘‘subject security.’’

(12) Submission of Pricing Information

A member acting as a manager (or in

a similar capacity) of a distribution

subject to subparagraph (b)(11) of

securities that are listed on a national

securities exchange or are considered

‘‘activity-traded’’ under SEC Rule 101

shall provide written notice to the

Market Regulation Department of NASD

Regulation, Inc., no later than the close

of business the day the offering

terminates, that includes the date and

time of the pricing of the offering, the

offering price, and the time the offering

terminated, which notice may be

submitted on the Underwriting Activity

Report.

(c) No change.

4600. NASDAQ MARKET MAKER

REQUIREMENTS

4614. Stabilizing Bids

(a) No change.

(b) Eligibility

Only one market maker in a[n issue]

security may enter a stabilizing bid.

(c) Limitations on Stabilizing Bids—

No change.

(d) Submission of Request to

Association

(1) A market maker that wishes to

enter a stabilizing bid shall submit a

request to Nasdaq Market Operations for

the entry [in the] on Nasdaq [quotation

display] of a one-sided bid identified as

a stabilizing bid. The market maker

shall confirm its request in writing no

later than the [end of] close of business

the day [on which] the stabilizing bid is

entered by submitting an Underwriting

Activity Report to Nasdaq Market

Operations that includes the

information required by subparagraph

(d)(2).

(2) In lieu of submitting the

Underwriting Activity Report as set

forth in subparagraph (d)(1), the market

maker may provide written

confirmation to Nasdaq Market

Operations that shall include:

(A) and (B)—No change.

(C) the date and time that an identifier

should be included on [the] Nasdaq

[quotation display]; and

(D) No change.

4619. Withdrawal of Quotations and

Passive Market Making

(a)–(c) No change.

(d) Excused withdrawal status or

passive market maker status may be

granted to a market maker that is a

distribution participant (or, in the case

of excused withdrawal status, an

affiliated purchaser) in order to comply

with SEC Rules 101, 103, or 104 under

the Act on the following conditions:

(1) A member acting as a manager (or

in a similar capacity) of a distribution of

a Nasdaq security that is a subject

security or reference security under SEC

Rule 101 and any member that is a

distribution participant or [that is] an

affiliated purchaser in such a

distribution that does not have a

manager shall provide written notice to

Nasdaq Market Operations and the

Market Regulation Department of NASD

Regulation, Inc. no later than the

business day prior to the first entire

trading session of the one-day or fiveday restricted period under SEC Rule

101, unless later notification is

necessary under the specific

circumstances.

(A) The notice required by

subparagraph (d)(1) of this Rule shall be

provided by submitting a completed

Underwriting Activity Report that

includes a request on behalf of each

market maker that is a distribution

participant or an affiliated purchaser to

withdraw the market maker’s

quotations, or that includes a request on

behalf of each market maker that is a

distribution participant (or an affiliated

purchaser of a distribution participant)

that its quotations be identified as those

of a passive market maker, and includes

the contemplated date and time of the

commencement of the restricted period.

(B) The managing underwriter shall

advise each market maker that it has

been identified as a distribution

participant or an affiliated purchaser to

Nasdaq Market Operations and that its

quotations will be automatically

withdrawn or identified as passive

market maker quotations, unless a

market maker that is a distribution

participant (or affiliated purchaser of a

distribution participant) notifies Nasdaq

Market Operations as required by

subparagraph (d)(2), below.

(2) A market maker that has been

identified to Nasdaq Market Operations

as a distribution participant (or an

affiliated purchaser of a distribution

participant) shall promptly notify

Nasdaq Market Operations and the

manager of its intention not to

participate in the prospective

distribution or not to act as a passive

market maker in order to avoid having
Federal Register / Vol. 62, No. 54 / Thursday, March 20, 1997 / Notices 13419

1Securities Exchange Act Release No. 38360

(March 4, 1997).

its quotations withdrawn or identified

as the quotations of a passive market

maker [, or in order to have its excused

withdrawal status rescinded].

(3) No change.

(4) No change.

(5) A member acting as a manager (or

in a similar capacity) of a distribution

subject to subparagraph (d)(1) of this

rule shall submit a request to Nasdaq

Market Operations and the Market

Regulation Department of NASD

Regulation, Inc. to rescind the excused

withdrawal status or passive market

making status of distribution

participants and affiliated purchasers,

which request shall include the date

and time of the pricing of the offering,

the offering price, and the time the

offering terminated, and, if not in

writing, shall be confirmed in writing no

later than the close of business the day

the offering terminates. The request

required by this subparagraph may be

submitted on the Underwriting Activity

Report.

4623. Penalty Bids and Syndicate

Covering Transactions

(a) No change.

(b) No change.

(c) Notwithstanding paragraph (a), a

market maker may request that its

quotation be identified as a penalty bid

on Nasdaq display by providing notice

to Nasdaq Market Operations, which

notice shall include the date and time

that the penalty bid identifier should be

entered on Nasdaq and, if not in writing,

shall be confirmed in writing no later

than the [end of the day on which] close

of business the day the penalty bid

identifier is entered on Nasdaq.

(d) No change.

6500. OTC BULLETIN BOARD SERVICE

6540. Requirements Applicable to

Market Makers

(a) No change.

(b) No change.

(1) Permissible Quotation Entries

(A)–(C) No change.

(D) Any member that intends to be a

distribution participant in a distribution

of securities subject to SEC Rule 101, or

is an affiliated purchaser in such

distribution, and is entering quotations

in an OTCBB-eligible security that is the

subject security or reference security of

such distribution shall, unless another

member has assumed responsibility for

compliance with this paragraph:

(i) No change.

(ii) withdraw all quotations in the

OTCBB-eligible security to comply with

the applicable restricted period under

SEC Rule 101 and not enter a stabilizing

bid pursuant to SEC Rule 104 in the

OTCBB; [and]

(iii) provide written notice to the

Corporate Financing Department of

NASD Regulation, Inc. of its intention to

impose a penalty bid or to conduct

syndicate covering transactions

pursuant to SEC Rule 104 prior to

imposing the penalty bid or engaging in

the first syndicate covering transaction.

Such notice shall include information as

to the date the penalty bid or first

syndicate covering transaction will

occur and the amount of the syndicate

short position[.] ; and

(iv) provide written notice to the

Market Regulation Department of NASD

Regulation, Inc. by the close of business

on the day the offering terminates that

includes the date and time of the pricing

of the offering, the offering price, and

the time the offering terminated.

(E) The written notice required by

subparagraphs (b)(1)(D)(i), [and] (iii) ,

and (iv) of this rule may be submitted

on the Underwriting Activity Report

provided by the Corporate Financing

Department of NASD Regulation, Inc. by

including the information required by

those subparagraphs.

(F) For purposes of subparagraph

(b)(1)(D), SEC Rules 100, 101, 103, and

104 are rules of the Commission

adopted under Regulation M and the

following terms shall have the meanings

as defined in SEC Rule 100: ‘‘affiliated

purchaser,’’ ‘‘distribution,’’

‘‘distribution participant,’’ ‘‘penalty

bid,’’ ‘‘reference security,’’ ‘‘restricted

period,’’ ‘‘stabilizing,’’ ‘‘subject

security,’’ and ‘‘syndicate covering

transaction.’’

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

NASD 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. The NASD has

prepared summaries, set forth in

Sections (A), (B), and (C) below, of the

most significant aspects of such

statements.

(A) Self-Regulatory Organization’s

Statement of the Purpose of, and

Statutory Basis for, the Proposed Rule

Change

1. Purpose

The SEC has approved, effective

March 4, 1997, amendments to the

NASD rules regarding Corporate

Financing, The Nasdaq Stock Market,

Inc. (‘‘Nasdaq’’), and the OTC Bulletin

Board (‘‘OTCBB’’) that are designed to

assist members in complying with SEC

Regulation M that became effective on

that date.1 In general, the amendments

to NASD rules establish a new

requirement for members to obtain an

Underwriting Activity Report from the

Corporate Financing Department of

NASD Regulation, Inc. (‘‘NASD

Regulation’’) with respect to a proposed

distribution subject to SEC Rule 101;

modify current Nasdaq requirements

with respect to the entry of a stabilizing

or penalty bid and requests for excused

withdrawal of quotations or designation

of quotations as those of a passive

market maker; and establish new

requirements for notification with

respect to penalty bids and syndicate

covering transactions for Nasdaq and

OTCBB securities.

The NASD is proposing to amend the

rules approved by the SEC on March 4,

1997 to require that members provide

notification to the Association of the

date and time of the pricing of an

offering, the offering price, and the time

the offering terminated with respect to

offerings of Nasdaq and OTCBB

securities, exchange-listed securities,

and securities considered ‘‘activelytraded’’ under SEC Rule 101 of

Regulation M. In addition, the NASD is

proposing to amend Rule 4619 of the

Nasdaq rules to clarify the applicability

of the provision to affiliated purchasers

of a distribution participant. Other

amendments are proposed to Rules

4614, 4623, 4619 and 6540 to make

nonsubstantive corrections to the

language of the rules.

The Nasdaq Rules. The NASD is

proposing to amend subparagraph (d)(1)

of Rule 4619 to require that the notice

to be submitted by a member to request

excused withdrawal or passive market

making status on the part of distribution

participants and affiliated purchasers

should be directed to both Nasdaq

Market Operations and the Market

Regulation Department of NASD

Regulation. Where the required notice is

submitted electronically to the

Association, it will automatically be

received at both these locations. Hard

copy submissions of the notice will be

required to be faxed to both

Departments.

Subparagraphs (d)(1) (A) and (B) of

Rule 4619 are proposed to be amended

to clarify that an affiliated purchaser of

a distribution participant, as compared

to an affiliated purchaser of the issuer,

is permitted to engage in passive market
13420 Federal Register / Vol. 62, No. 54 / Thursday, March 20, 1997 / Notices

2 15 U.S.C. 78o–3.

making. Where a market maker is an

affiliated purchaser of the issuer only,

the market maker will not be permitted

to engage in passive market making

under SEC Rule 103, as SEC Rule 102

does not include an exception for

passive market making activity.

However, a market maker that is

affiliated with a distribution participant,

i.e., a member that is a distribution

participant is affiliated with another

non-participating market maker, can

rely on the exception from SEC Rule 101

for passive market making.

The NASD is also proposing to adopt

new subparagraph (d)(5) of Rule 4619 to

require that the managing underwriter

submit a request to Nasdaq Market

Operations and the Market Regulation

Department of NASD Regulation to

terminate the excused withdrawal status

or passive market making status of

distribution participants and affiliated

purchasers. It is anticipated that the

request will be by telephone to the staff

of the Market Regulation Department

and the provision requires that it be

confirmed in writing by close of

business on the day the offering is

terminated. The request must include

the date and time of the pricing of the

offering, the offering price, and the time

the offering terminated. The member

may use an Underwriting Activity

Report to submit its request.

Paragraph (c) of Rule 4623, relating to

penalty bids and syndicate covering

transactions, is proposed to be amended

to make its language consistent with

other provisions in requiring that the

member’s request for an identifier for a

penalty bid be received no later than the

close of business the day the penalty bid

identifier is entered on Nasdaq.

OTCBB Rules. Moreover, the NASD is

proposing similar requirements with

respect to OTCBB securities. Proposed

amended Rule 6540 will require that a

member provide written notice to the

Market Regulation Department of NASD

Regulation by close of business on the

day the offering terminates that includes

the date and time of the pricing of the

offering, the offering price, and the time

the offering terminated.

Corporate Financing Rule. Similar to

requirements proposed with respect to

Nasdaq and OTCBB securities, the

NASD is also proposing to amend Rule

2710(b) to add new subparagraph (12) to

require that a member acting as a

manager (or in a similar capacity) of a

distribution subject to subparagraph

(b)(11) of Rule 2710 of securities that are

listed on a national securities exchange

or are considered ‘‘actively-traded’’

under SEC Rule 101 adopted under SEC

Regulation M, shall provide written

notice to the Market Regulation

Department of NASD Regulation by

close of business on the day the offering

terminates that includes the date and

time of the pricing of the offering, the

offering price, and the time the

distribution terminated. Actively-traded

securities, i.e., securities with an

Average Daily Trading Volume

(‘‘ADTV’’) of at least $1 million and a

public float value of at least $150

million, are no longer subject to any

restricted period under SEC Rule 101.

Thus, in the normal course, the NASD

is unlikely to receive any further

information with respect to when the

offering is priced and is terminated as

the market makers participating in the

offering need not submit a request for

excused withdrawal or identification of

quotations as those of a passive market

maker under NASD Rule 4619.

Information on the pricing of offerings

of actively-traded securities is

necessary, however, for the NASD to

carry out its regulatory obligations to

ensure compliance with the SEC’s

antifraud and antimanipulation rules

and regulations and with the NASD’s

Free-Riding and Withholding

Interpretation in IM–2110–1 and the

directed commissions provision of Rule

2740. Similarly, such pricing

information is necessary with respect to

a distribution of securities listed on a

national securities exchange in order to

permit the NASD to carry out its

regulatory obligations with respect to

such offerings.

The provision applies to distributions

of securities that are subject to new

subparagraph (b)(11) that requires that a

member acting as a manager (or in a

similar capacity) of a distribution of

securities subject to SEC Rule 101

submit a request to the Corporate

Financing Department for an

Underwriting Activity Report. If no

member is acting as managing

underwriter, each member that is a

distribution participant or an affiliated

purchaser is required to submit the

request unless another member has

assumed responsibility for compliance

with the requirement. Proposed

subparagraph (b)(12) provides that a

member may use the Underwriting

Activity Report to submit the required

information on pricing to Market

Regulation Department of NASD

Regulation. In referencing the

Underwriting Activity Report, the

NASD includes under that umbrella

different notification forms that may be

used by members to submit information

required by its rules to comply with SEC

Regulation M. The Regulation M

Trading Notification Form can be used

by a member to submit the pricing

information required by subparagraph

(b)(12) to Rule 2710, subparagraph (d)(5)

of Rule 4619 of the Nasdaq rules, and

subparagraph (b)(1)(D)(iv) of Rule 6540

of the OTCBB rules to Nasdaq Market

Operations.

2. Statutory Basis

The NASD believes that the proposed

rule change is consistent with the

provisions of Section 15A(b)(2) of the

Act 2 in that the proposed rule change

will enforce and facilitate compliance

by NASD members with the Securities

Exchange Act Rules, in addition to

compliance with the rules of the

Association. In addition, the proposed

rule change is consistent with the

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

Act in that the proposed rule change to

require that members submit pricing

information with respect to

distributions of securities not subject to

a restricted period under SEC Rule 101,

exchange-listed securities, and OTCBB

securities will prevent fraudulent and

manipulative acts and practices,

promote just and equitable principals of

trade, and protect investors and the

public interest.

(B) Self-Regulatory Organization’s

Statement on Burden on Competition

NASD Regulations 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. Solicitation of Comments

Interested persons are invited to

submit written data, views, and

arguments concerning the foregoing.

Persons making written submissions

should file six copies thereof with the

Secretary, Securities and Exchange

Commission, 450 Fifth Street, NW.,

Washington, DC 20549. 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
Federal Register / Vol. 62, No. 54 / Thursday, March 20, 1997 / Notices 13421

3 17 U.S.C. 78s(b)(2) (1988).

4 17 CFR 200.30–3(a)(12) (1996).

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

2On March 3, 1997, the NYSE filed Amendment

No. 1 to its proposal. See letter from James E. Buck,

Senior vice President and Secretary, NYSE, to Ivette

Lo ́pez Assistant director, Division of Market

Regulation, SEC, dated February 28, 1997. In

Amendment No. 1, the NYSE withdrew certain

proposed amendments to the following sections of

the NYSE’s Allocation Policy and Procedures: I.

Purpose; III. Allocation Panel, composition; IV.

Allocation Criteria; and V. Policy Notes. Id. The

Exchange has filed a separate proposal under

Section 19(b)(2) of the Act to amend the abovereferenced items. See File No. SR–NYSE–97–06.

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 the file

number in the caption above and should

be submitted by April 10, 1997.

IV. Commission’s Findings and Order

Granting Accelerated Approval of the

Proposed Rule Change

The Commission finds that the NASD’

proposal is consistent with the Act and

the rules and regulations thereunder

applicable to a registered national

securities association. Specifically, the

provisions of Section 15A(b)(2) of the

Act which requires that an association

enforce compliance with Securities

Exchange Act Rules in addition to the

rules of the association. The

Commission believes that the proposal

will enforce and facilitate compliance

by NASD members with the

requirements of Regulation M, SEC

Rules 100 through 105.

In addition, the Commission finds

that the NASD’s proposal is consistent

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

of the Act which requires, in part, that

an association have rules that are

designed to prevent fraudulent and

manipulative acts and practices,

promote just and equitable principals of

trade, and in general, to protect

investors. The Commission believes that

the NASD’s proposal is consistent with

Section 15A(b)(6) of the Act in that the

amendments to Nasdaq and OTCBB

Rules, in addition to the establishment

of a requirement to provide pricing

information with respect to offerings of

exchange-listed and ‘‘actively-traded’’

securities under SEC Rule 101, provide

a regulatory framework that will assist

members in complying with the

obligations under Regulation M. The

Commission, therefore, finds good cause

for approving the proposed rule change

prior to the thirtieth day after the date

of publication of filing thereof in the

Federal Register.

It is therefore ordered, pursuant to

Section 19(b)(2) of the Act,3 that the

proposed rule change be and hereby is

approved. The proposed rule change is

effective March 14, 1997, with the

exception of the provisions of Rule 4623

and Rule 5460 that implement the

notification requirements adopted under

Regulation M Rule 104 with respect to

penalty bids and syndicate covering

transactions that will become effective

on the date that the notification

requirements under SEC Rule 104

become effective.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.4

Jonathan G. Katz,

Secretary.

[FR Doc. 97–7054 Filed 3–19–97; 8:45 am]

BILLING CODE 8010–01–M

[Release No. 34–38372; File No. SR–NYSE–

97–04]

Self-Regulatory Organizations; Notice

of Filing and Immediate Effectiveness

of Proposed Rule Change by the New

York Stock Exchange, Inc. Relating to

Amendments to the Exchange’s

Allocation Policy and Procedures

March 7, 1997.

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

Securities Exchange Act of 1934

(‘‘Act’’), 1 notice is hereby given that on

February 21, 1997, as amended on

March 3, 1997, the New York Stock

Exchange, Inc. (‘‘NYSE’’ or ‘‘Exchange’’)

filed with the Securities and Exchange

Commission (‘‘Commission’’) the

proposed rule change as described in

Items I, II, and III below, which Items

have been prepared by the selfregulatory organization. 2 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 Exchange, pursuant to Rule 19b–

4 of the Act, submits a proposed rule

change amending the NYSE’s Allocation

Policy and Procedures. The text of the

proposed rule change is as follows [new

text is italicized; deleted text is

bracketed].

Allocation Policy and Procedures

* * * * *

Listing company input

[Listing on the New York Stock

Exchange is a significant development

for a company, and the assignment of a

specialist to make a market in the

company’s shares via the allocation

process is an important step. The listing

company may wish to communicate its

views for consideration by the

Allocation Committee in selecting the

best possible specialist for the

company’s stock.

The Allocation Committee will

consider a letter from the listing

company requesting specific units and/

or specifying particular expertise in one

or more aspects of the specialist’s role.

While specialist performance continues

to be the most significant criterion, the

committee will use its professional

judgment in giving appropriate weight

to all relevant factors, including

company letters, to determine the

selection of a specialist unit.

From time to time a listing company

may choose to interview specialist

units. The Exchange takes a neutral

position on this practice and as such

will neither arrange interviews nor

recommend units to be interviewed.]

Listing on the New York Stock

Exchange is a significant development

for a company, and the assignment of a

specialist through the allocation process

is an important step. The Exchange’s

Allocation Policy is intended to provide

listing companies with a choice of

alternatives as to how their specialist

unit may be selected. The listing

company may choose to have its

specialist unit selected by the Allocation

Committee, in accordance with the

criteria specified in the Allocation

Policy, and the exercise of the

Committee’s expert professional

judgment. Alternatively, the listing

company may choose to become more

directly involved in the selection

process. In that case, the company may

request that the Allocation Committee

select specialist units that would be

appropriate to trade the company’s

stock, with the company then making

the final selection from among the

group of units as chosen by the

Allocation Committee. Such a group

shall consist of three, four, or five units,

selected by the Committee as

demonstrably deemed to be the most

qualified to receive such allocation from

among the units that apply, based upon

the criteria set forth in this policy. These

procedures shall apply to the allocation

of a newly-listing company, as well as

the reallocation of an already listed

company.

Specialist Unit Selected by Allocation

Committee. If the listing company so

chooses, the Allocation Committee shall

select the specialist unit to be allocated

the company’s stock based on the

Committee’s expert assessment of the

type of specialist unit that would be

most appropriate for the company, and

the Committee’s professional evaluation

of performance data and other relevant