Federal Register / Vol. 62, No. 66 / Monday, April 7, 1997 / Notices 16635

3Specifically, the trade data will be buyer versus

seller, buyer account, seller account, class code or

CUSIP/pool number, price, trade type, trade date,

settlement date, and par value.

4 15 U.S.C. 78q–1(b)(3)(F). 5 17 CFR 200.30–3(a)(12).

1 15 U.S.C. § 78s(b)(1).

2Securities Exchange Act Release No. 30766

(June 1, 1992), 57 FR 24281.

3Securities Exchange Act Release No. 34956

(November 9, 1994), 59 FR 59808. The amendments

would have narrowed the universe of securities

eligible for quotation on the Service. Specifically,

the NASD proposed to narrow the subset of foreign

equity securities, including those represented by

American Depositary Receipts, that would have

been OTCBB-eligible to those securities registered

with the Commission pursuant to Section 12 of the

Act. This requirement would have become effective

on July 5, 1994. Any foreign equity security quoted

in the OTCBB as of the close of business on July

1, 1994 that was not registered pursuant to Section

12 of the Act could remain OTCBB-eligible

provided that the issuer maintained an exemption

from Section 12 registration pursuant to Rule 12g3–

2(b) under the Act.

4The NASD submitted a technical amendment on

March 27, 1997, stating that the change to

Paragraph 6540(b)(1)(c) would not be implemented

until April 1, 1998. See Note 7 infra.

equipment to be able to process

transactions through the facilities of

MBSCC and be able to receive reports,

notices, and other communications

relating to transactions prepared by

MBSCC. Any current MBSCC

participant trading a COS eligible

security in a principal capacity will be

able to participate in COS if the

counterparty is a limited purpose

participant or the security traded is not

eligible in CCS.

Under COS, a trade will be negotiated

by the parties. Trade terms will then be

submitted electronically by the parties

to MBSCC for comparison. The

submitted trade terms will then be

compared in MBSCC’s AM or PM

processing pass. For a trade to compare

in COS, certain trade data will have to

match exactly.3 If a trade compares,

MBSCC will issue a purchase and sale

report go each side of the trade. The

purchase and sale report will serve as

the sole binding confirmation of the

trade. The trade will then be settled

outside of the MBSCC system. Trade

terms that do not compare will be

reported as unmatched on a transaction

summary report sent to the parties.

Individually or jointly, the parties must

then resolve or delete the unmatched

trade by taking one or more of the

following on-line actions: deletes, DK’s

(don’t know), affirms, and new input.

Unmatched trades will remain on a

transaction summary report until

resolved. MBSCC’s current rule on CCS

unmatched items will similarly be

applied to COS unmatched items.

Specifically, until the unmatched item

is resolved or deleted, the participant(s)

will be subject to the imposition of late

fees by MBSCC. For purposes of

computing the late fees, each missed

processing pass after a two pass grace

period will result in a separate

assessment against the participant(s). If

the unmatched trade is resolved,

MBSCC will compare and confirm it

with a purchase and sale report as

described above.

MBSCC believes that the proposed

rule change is consistent with the

requirements of Section 17A(3)(F) of the

Act 4 and the rules and regulations

thereunder because it will facilitate the

prompt and accurate clearance and

settlement of securities transactions.

(B) Self-Regulatory Organization’s

Statement on Burden on Competition

MBSCC 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. MBSCC will notify

the Commission of any written

comments received by MBSCC.

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 MBSCC 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.

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, 450 Fifth Street, N.W.,

Washington, D.C. 20549. Copies of such

filing will also be available for

inspection and copying at the principal

office of MBSCC.

All submissions should refer to the

file number SR–MBSCC–97–03 and

should be submitted by April 28, 1997.

For the Commission by the Division of

Market Regulation, pursuant to delegated

authority.5

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 97–8791 Filed 4–4–97; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–38456; File No. SR–NASD–

92–7]

Self-Regulatory Organizations;

National Association of Securities

Dealers, Inc.; Order Approving and

Notice of Filing and Order Granting

Accelerated Approval of Amendment

Nos. 3 and 4 to Proposed Rule Change

Relating to the OTC Bulletin Board

Service

March 31, 1997.

I. Introduction

On March 12, 1992, the National

Association of Securities dealers, Inc.

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

Exchange Commission (‘‘Commission’’),

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

Securities Exchange Act of 1934

(‘‘Act’’), 1 a proposal to obtain

permanent approval of the OTC Bulletin

Board Service (‘‘OTCBB Service,’’

‘‘OTCBB’’ or ‘‘Service’’). The

Commission noticed and solicited

comments regarding the proposal in the

Federal Register.2 On October 6, 1994

and on November 8, 1994, the NASD

filed Amendment Nos. 1 and 2 to the

proposal. The Commission noticed and

solicited comment regarding

Amendments 1 and 2.3 On March 14,

1997, the NASD filed Amendment No.

3 to the proposed rule change.

Amendment No. 3 supersedes

Amendment Nos. 1 and 2. On March 21,

1997, the NASD filed Amendment No.

4 to the proposal.4 This Order approves

the proposed rule change as amended

by Amendment Nos. 3 and 4 on an

accelerated basis.

II. Background

On June 1, 1990, the NASD, through

Nasdaq, initiated operation of the OTC
16636 Federal Register / Vol. 62, No. 66 / Monday, April 7, 1997 / Notices

5Securities Exchange Act Release No. 27975 (May

1, 1990), 55 FR 19124. On March 12, 1992, the

NASD filed with the Commission a proposal to

obtain permanent approval of the Service. See

Securities Exchange Act Release No. 30766 (June 1,

1992), 57 FR 24281. Since that time, the

Commission has extended operation of the Pilot

Program on several occasions. The most recent

extension expires March 31, 1997.

6With the Commission’s January 1994 approval

of File No. SR–NASD–93–24, the universe of

securities eligible for quotation in the OTCBB now

includes certain equities listed on regional stock

exchanges that do not qualify for dissemination of

transaction reports via the facilities of the

Consolidated Tape Association. Securities

Exchange Act Release No. 33507 (January 24, 1994),

59 FR 4300 (order approving File No. SR–NASD–

93–24).

7Under the temporary approval, foreign securities

that are included on the OTCBB need not be

registered with the Commission as long as they are

in compliance with Rule 12g3–2(b) under the Act.

Amendment No. 3 will provide a one-year sunset

period for this part of the Pilot Program.

8See Letter from Robert E. Aber, Vice President

and General Counsel, Nasdaq, to Katherine

England, Assistant Director, Division of Market

Regulation, SEC (March 27, 1997).

9Letter from William F. Ross, Public Securities,

Inc., to Jonathan G. Katz, Secretary, SEC (September

30, 1993); Letter from Arthur J. Pacheco and John

L. Watson III, Security Traders Association, to

Jonathan G. Katz, Secretary, SEC (June 23, 1992).

10Letter from Thomas D. Sanford, Vice President,

The Bank of New York, to Jonathan G. Katz,

Secretary, SEC (May 6, 1996); Letter from Zhi-jiong

Xu, Vice Chairman and Chief Accountant, Shanghai

Erfanji Co., Ltd. to Jonathan G. Katz, Secretary, SEC

(October 10, 1995); Letter from P.F. Haesler and

C.R. Rosset, Holderbank, to Jonathan G. Katz,

Secretary, SEC (June 19, 1995); Letter from Todd M.

Roberts, Roberts, Sheridan & Kotel, to Jonathan G.

Katz, Secretary, SEC (April 18, 1995); Letter from

Dr. Serfas Karran, Dresdner Bank, to Jonathan G.

Katz, Secretary, SEC (March 8, 1995); Letter from

Bulletin Board Service, which the

Commission had approved on a

temporary basis: 5 The OTCBB Service

provides a real-time quotation medium

that NASD member firms can use to

enter, update, and retrieve quotation

information (including unpriced

indications of interest) for equity

securities traded over-the-counter that

are neither listed on The Nasdaq Stock

MarketSM nor on a primary national

securities exchange (collectively

referred to as ‘‘OTC Equities’’).6

Essentially, the Service supports NASD

members’ market making in OTC

Equities through displaying quotations

entered through authorized Nasdaq

Workstation units. Real-time access to

quotation information captured in the

Service is available to subscribers of

Level 2⁄3 Nasdaq service as well as

subscribers of vendor-sponsored

services that now carry OTCBB service

data.

The OTCBB disseminates quotations

in electronic form for securities that, for

many years, had quotations published

only through reports known as the

‘‘pink sheets.’’ Consistent with the goals

and objectives respecting the

development of a national market

system, the OTCBB was initiated to

allow the market makers in non-Nasdaq

securities to enter and update quotation

information on a real-time basis. This

capability has enhanced the availability

of market information for non-Nasdaq

securities of domestic companies.

Similarly, the OTCBB has provided

order entry firms with real-time access

to the trading interest in domestic

securities being displayed by market

makers in OTC equity securities. This

access has assisted them in negotiating

the execution of customer orders at the

best available price. In addition, the

inclusion on the OTCBB of the

telephone numbers of participating

market makers has expedited the retail

firms’ processing of market orders. The

OTCBB also has strengthened the

NASD’s ability to monitor quotations in

these OTC equity securities.

III. Description of Amendment Nos. 3

and 4

Amendment No. 3 proposes to require

that foreign securities and ADRs be

registered with the Commission

pursuant to Section 12 of the Act to

remain eligible for quotation on the

OTCBB. The proposed requirement

would be effective on April 1, 1998.7

Amendment No. 4 amends the text of

the proposed rule change and clarifies

that the NASD will remove any foreign

security from the OTCBB if it is brought

to its attention that the security is no

longer registered with the Commission

pursuant to Section 12 of the Act.

Proposed new language is in italics;

proposed deletions are in brackets.

6530. OTCBB-Eligible Securities

The following categories of securities

shall be eligible for quotation in the

Service:

(a) No change

[(b) any foreign equity security or

American Depositary Receipt (ADR) that

is not listed on Nasdaq or a registered

national securities exchange in the U.S.,

except that foreign equity securities or

ADRs that are (1) listed on one or more

regional stock exchanges and (2) do not

qualify for dissemination of transaction

reports via the facilities Consolidate

Tape shall be considered eligible.]

(b) any foreign equity security or

American Depositary Receipt (ADR)

that:

(1) prior to April 1, 1998, is not listed

on Nasdaq or a registered national

securities exchange in the U.S., except

that a foreign equity security or ADR

shall be considered eligible if it is:

(A) listed on one or more regional

stock exchanges and;

(B) does not qualify for dissemination

of transaction reports via the facilities of

the Consolidated Tape.

(2) after March 31, 1998, is registered

with the Securities and Exchange

Commission pursuant to Section 12 of

the Securities Exchange Act of 1934 and

is not listed on Nasdaq or a registered

national securities exchange in the U.S.,

except that a foreign equity security or

ADR shall be considered eligible if it is:

(A) listed on one or more regional

stock exchanges and;

(B) does not qualify for dissemination

of transaction reports via the facilities of

the Consolidated Tape.

* * * * *

6540. Requirements Applicable to

Market Makers

(a) No change

(b) No change

(1) Permissible Quotation Entries

(A) No change

(B) No change

(C) A priced bid and/or offer entered

into the Service for a [foreign equity

security, and ADR, or a]* Direct

Participation Program security shall be

non-firm.2 Moreover, a market maker is

only permitted to update quotation

entries in such securities twice daily,

i.e., once between 8:30 a.m. and 9:30

a.m. Eastern Time, and once between

noon and 12:30 p.m. Eastern Time.

2The non-firm or indicative nature of a

priced entry [in a foreign or ADR issue] is

specifically identified on the montage of

market maker quotations accessible through

the Nasdaq Workstation service for this

subset of OTCBB-eligible securities.

* * * * *

*The text in brackets in paragraph

6540(b)(1)(c) and the footnote will be

amended effective April 1, 1998.8

IV. Comments Received

The Commission received twenty-four

letters in response to its request for

comments on the proposal and

Amendment Nos. 1 and 2. Two

comment letters supported permanent

approval of the Service.9 Twenty-two

letters commented about Amendment

Nos. 1 and 2 to the proposal. Although

these amendments are superseded by

Amendment Nos. 3 and 4, most of the

commenters expressed views regarding

the eligibility of foreign equity securities

on the Service.

Nineteen commenters urged the

Commission not to narrow the group of

securities eligible for quotation on the

Service.10 These commenters argued
Federal Register / Vol. 62, No. 66 / Monday, April 7, 1997 / Notices 16637

Sergio Luiz Goncalves Pereira, Director of Economy

and Finance and Market Relations, Telebras, to

Jonathan G. Katz, SEC (March 8, 1995); Letter from

Peter B. Tisne, Emmet, Marvin & Martin, LLP, to

Jonathan G. Katz, Secretary, SEC (March 16, 1995);

Letter from Alan Mercer, Peregrine Investments

Holdings Limited, to Jonathan G. Katz, Secretary,

SEC (March 21, 1995); Letter from P. Barnes-Wallis,

Director of Public Affairs, Rolls-Royce plc, to

Jonathan G. Katz, Secretary, SEC (March 9, 1995);

Letter from Murilo Bueno Kammer, General

Director, Iochpe-Maxion, to Jonathan G. Katz,

Secretary, SEC (March 17, 1995); Letter from Yauaki

Hirata, Director of Finance, Kobe Steel, Ltd., to

Jonathan G. Katz, Secretary, SEC (March 14, 1995);

Letter from John T. Hung, Executive Director,

Wheelock and Company Limited, to Jonathan G.

Katz, Secretary, SEC (March 21, 1995); Letter from

EVN Energie vernunftig nutzen, to Jonathan G. Katz,

Secretary, SEC (March 17, 1995); Letter from Ralph

Marinello, Vice President, Citibank, to Jonathan G.

Katz, Secretary, SEC (April 27, 1995); Letter from

Song Zhuangfei, Chairman of the Board and General

Manager, Shanghai Tyre & Rubber Co., Ltd., to

Jonathan G. Katz, Secretary, SEC (February 1995);

Letter from Shanghai Aklai Chemical Co., Ltd., to

Jonathan G. Katz, Secretary, SEC (October 7, 1995);

Letter from Shenzhen Special Economic Zone Real

Estate & Properties (Group) Co. Ltd., to Jonathan G.

Katz, Secretary, SEC (February 1995); Letter from

Robert Courtney Mangone, Fox & Horan, to

Jonathan G. Katz, SEC (February 27, 1995); Letter

from Thomas D. Sanford, Vice President, The Bank

of New York, to Brandon Becker and Linda Quinn,

SEC (November 15, 1994); Letter from Scott A.

Ziegler, Ziegler, Ziegler & Altman, to Jonathan G.

Katz, Secretary, SEC (December 11, 1994).

11Letter from James F. Duffy, Executive Vice

President and General Counsel, Amex, to Jonathan

G. Katz, Secretary, SEC (December 9, 1994); Letter

from James E. Buck, Senior Vice President and

Secretary, NYSE, to Jonathan G. Katz, Secretary,

SEC (March 18, 1993).

12At its inception, the OTCBB rules did not

require firm quotations, two-sided quotations, or

trade reporting. The NASD has made improvements

to the OTCBB since then. Pursuant to NASD rules,

all quotations for domestic securities must be twosided and firm; trades are reported within 90

seconds.

13 Issuers whose securities are included in the

OTCBB generally are required to register and report

pursuant to Section 12 of the act when the issuer

has more than 500 record holders of its equity

securities and $10 million in total assets.

against limiting the Service to foreign

equity securities registered pursuant to

Section 12 of the Act. The commenters

stated that the proposed amendment

would adversely affect the market for

Level I ADRs, which permits many

foreign issurers to develop a U.S. equity

market. They argued that the proposed

amendment would hurt the liquidity of

the market for Level I ADRs and impair

the access of foreign issuers to the U.S.

equity trading markets.

The American Stock Exchange, Inc.

(‘‘Amex’’) and the New York Stock

Exchange, Inc. (‘‘NYSE’’) submitted

comment letters objecting to the

inclusion of unregistered foreign

securities on the Service.11 Both the

Amex and the NYSE urged the

Commission not to grant permanent

approval to the Service, and to

disapprove the NASD’s proposal to

grandfather and make eligible for

quotation those securities whose issuers

had perfected their Rule 12g3–2(b)

exemption by July 1, 1994. The NYSE

asserted its belief that the Commission

should act promptly to remove foreign

securities from the Service. The Amex

also objected to the grandfathering of

foreign unregistered securities, and

asserted that the Service provides a

significant disincentive to listing and

registration for foreign issuers. In

addition, the Amex argued against

allowing foreign unregistered securities

to be quoted on the Service because

foreign issuers would be able to obtain

much of the visibility of an exchange or

Nasdaq listing without the burdens of

registration.

V. Solicitation of Comments

Interested persons are invited to

submit written data, views, and

arguments concerning Amendment Nos.

3 and 4 to File No. SR–NASD–92–7.

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 the 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 28, 1997.

VI. Commission’s Findings and Order

Granting Accelerated Approval

The Commission finds that approval

of the proposed rule change is

consistent with the Act and the rules

and regulations thereunder, and, in

particular, with the requirements of

Section 15A(b)(6), which provides that

the rules of the NASD must be designed

to prevent fraudulent and manipulative

acts and practices and to promote just

and equitable principles of trade, and of

Section 15A(b)(11) of the Act, which

provides that the rules of the NASD

relating to quotations must be designed

to produce fair and informative

quotations, prevent fictitious or

misleading quotations, and promote

orderly procedures for collecting,

distributing, and publishing quotations.

The Commission believes that

permanent approval of the NASD’s

proposal is appropriate at this time. The

OTCBB has fulfilled the NASD’s

objectives of increasing the visibility,

liquidity, and surveillance of nonNasdaq OTC equity securities.12 As

currently configured, the OTCBB

provides firm quotations and 90 second

trade reporting for domestic securities,

which has brought much needed

transparency to the market for these

securities. The enhanced transparency

facilitates price discovery and the

execution of customers’ orders at the

best available price. Additionally,

continued operation of the Service will

materially assist the NASD’s

surveillance of its members’ trading in

OTC Equities that are eligible and

quoted in the Service, and in regional

exchange securities that are not reported

to the Consolidated Tape and that are

quoted in the OTCBB by NASD

members.

The domestic issues included on the

OTCBB do not meet Nasdaq inclusion

standards and are less widely held,

more illiquid, and do not have the

operating history of Nasdaq

companies.13 While the potential for

trading abuses is greater for these types

of securities, these abuses can be

reduced by according more

transparency to these securities.

Nevertheless, the operation of the

OTCBB places a concomitant

responsibility on the NASD to surveil

adequately the quotes and prices

disseminated over the Service. Indeed,

the additional transparency from the

OTCBB should assist the NASD in its

surveillance efforts.

With respect to foreign issuers on the

OTCBB, the Commission believes a

different analysis is warranted. Since

the OTCBB’s inception, the inclusion of

unregistered foreign securities and

ADRs on the Service has raised concern.

As part of the Pilot Program, the

Commission permitted the inclusion of

quotations on the OTCBB of foreign

securities that were not registered under

the Act although in compliance with

Rule 12g3–2(b), because the OTCBB was

viewed as merely providing

transparency to trading in foreign issues

already occurring in the over-thecounter market. In contrast, securities

listed on an exchange or quoted on

Nasdaq must be registered securities.

Registration requires, in part, that the

issuer provide financial information in

accordance with U.S. accounting

standards. The quotation of foreign

securities on the OTCBB has raised
16638 Federal Register / Vol. 62, No. 66 / Monday, April 7, 1997 / Notices

14The Commission expects that the NASD will

act with diligence in attempting to ensure that this

change as amended is enforced, and that the NASD

will remove those securities from the OTCBB upon

gaining knowledge that a foreign issuer included on

the OTCBB is not registered and reporting under

Section 12 of the Act, and the rules thereunder.

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

2 15 U.S.C. 78q–1.

3Letter from John J. Sceppa, President and Chief

Executive Officer, PTC (February 13, 1997).

4 15 U.S.C. 78q–1(b)(2) and 78s(a).

5Securities Exchange Act Release No. 26671

(March 28, 1989), 54 FR 13266.

6Securities Exchange Act Release Nos. 27858

(March 28, 1990), 55 FR 12614; 29024 (March 28,

1991), 56 FR 13848; 30537 (April 9, 1992), 57 FR

12351; 32040 (March 23, 1993), 58 FR 16902; 33734

(March 8, 1994), 59 FR 11815; 35482 (March 13,

1995), 60 FR 14806; and 37024 (March 26, 1996),

61 FR 14357.

7Supra note 5.

8Supra note 3.

9Securities Exchange Act Release No. 37813

(October 11, 1996), 61 FR 54483.

concerns that the OTCBB would provide

an active secondary trading market in

unregistered securities. To address these

concerns, the quotation of foreign

securities on the OTCBB was limited to

‘‘non-firm’’ quotations that could be

updated a maximum of two times per

day. Thus, each quotation in a foreign

security on the OTCBB is ‘‘stale’’ and

serves more as an indication of a market

maker’s interest in dealing in the

security than as an actual bid and offer

in the security. In addition, while

market makers must report trades in

foreign securities to the NASD, the

NASD uses this information for

surveillance purposes only and does not

make this information public.

The Commission believes that is

appropriate to require that foreign

securities be registered pursuant to

Section 12 of the Act to be eligible for

inclusion in the OTCBB. As a general

matter, transparency benefits the

markets. However, in the context of the

inclusion of unregistered foreign

securities on the OTCBB, the benefits

may be outweighed by the potential

from including unregistered securities

on a visible U.S. market operated by a

self-regulatory organization. Although

the OTCBB provides some increase in

transparency for foreign securities, this

transparency is limited by the

restriction to non-firm quotations

updated twice daily. At the same time,

the OTCBB may be inconsistent with

the full disclosure goals of the securities

laws in allowing a regulated public

marketplace for unregistered securities.

The Commission believes that the

NASD could increase transparency with

less customer confusion by requiring

transaction reporting for foreign

securities traded over-the-counter in the

U.S. Transaction reporting information

has the potential to greatly enhance the

amount of market information available

to investors and better enable investors

to monitor the executions they receive

in foreign securities. In the meantime,

the Commission believes that it is

preferable for the NASD to require

foreign issuers that trade on the OTCBB

to be registered. Under the NASD’s

amendment, this requirement will apply

one year from the date of this Order.

The one-year sunset provision for

unregistered foreign issuers on the

OTCBB will give issuers an opportunity

to consider whether to register so that

they can continue to have their

securities included on the OTCBB in the

U.S. or to make other arrangements. It

also will provide the public with oneyear’s notice of the fact that these

issuers will no longer be quoted on the

OTCBB. The requirement that foreign

securities be registered will be effective

on April 1, 1998.14

The Commission finds good cause for

approving Amendment Nos. 3 and 4 to

the proposed rule change prior to the

30th day after the date of publishing

notice of the filing thereof. The

Commission finds that approval of this

proposed rule change is appropriate

because the Commission has considered

the comments received from interested

parties and believes that the continued

operation of the Service, as amended by

this Order, is in the public interest. In

particular, the Commission notes that

the OTCBB has been operating

continuously since June 1, 1990 on a

pilot basis, and the Commission finds

that a one-year phase-out of the system

for unregistered foreign securities would

prove less disruptive to trading than an

immediate removal of unregistered

foreign issuers from the OTCBB.

It is therefore ordered, pursuant to

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

proposed rule change SR–NASD–92–7

be, and hereby is, approved as amended.

The change to Paragraph 6540(b)(1)(c)

and the footnote will be effective on

April 1, 1998.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority, 17 CFR 200.30–3(a)(12).

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 97–8792 Filed 4–4–97; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–38452; File No. 600–25]

Self-Regulatory Organizations;

Participants Trust Company; Notice of

Filing of Request and Order Approving

Application for Extension of

Temporary Registration as a Clearing

Agency

March 28, 1997.

On February 14, 1997, the

Participants Trust Company (‘‘PTC’’)

filed with the Securities and Exchange

Commission (‘‘Commission’’) a request

pursuant to Section 19(a) of the

Securities Exchange Act of 1934

(‘‘Act’’) 1 for extension of its registration

as a clearing agency under Section 17A

of the Act 2 for a period of one year.3

The Commission is publishing this

notice and order to solicit comments

from interested persons and to grant

PTC’s request for an extension of its

temporary registration as a clearing

agency through March 31, 1998.

On March 28, 1989, the Commission

granted PTC’s application for

registration as a clearing agency

pursuant to Sections 17A(b)(2) and 19(a)

of the Act 4 on a temporary basis for a

period of one year.5 Subsequently, the

Commission issued orders that extended

PTC’s temporary registration as a

clearing agency, the last of which

extended PTC’s registration through

March 31, 1997.6

As discussed in detail in the initial

order granting PTC’s temporary

registration,7 one of the primary reasons

for PTC’s registration was to allow it to

develop depository facilities for

mortgage-backed securities, particularly

securities guaranteed by the

Government National Mortgage

Association. PTC services include

certificate safekeeping, book-entry

deliveries, and other services related to

the immobilization of securities

certificates.

PTC continues to make significant

progress in the areas of financial

performance, regulatory commitments,

and operational capabilities. For

example, the original face value of

securities on deposit at PTC as of

December 31, 1996, totaled $1.2 trillion,

an increase of approximately $125

billion over the amount on deposit as of

December 31, 1995. Total pools on

deposit, which were held at PTC in a

total of 1.3 million participant positions,

rose from 302,000 as of December 31,

1995, to more than 350,000 as of

December 31, 1996.8

During its most recent temporary

approval period, PTC established a new

category of participant for Federal

Reserve Banks.9 The Federal Reserve

Bank of New York became a Federal

Reserve participant on December 31,

1996. On December 31, 1996, PTC’s