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[Federal Register Volume 62, Number 59 (Thursday, March 27, 1997)]
[Notices]
[Pages 14708-14710]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-7784]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-38427; File No. SR-CTA/CQ-97-1]

Consolidated Tape Association; Notice of Filing of First 
Substantive Amendment to the Second Restatement of the Consolidated 
Tape Association Plan

March 21, 1997.
    Pursuant to Rule 11Aa3-2 of the Securities Exchange Act of 1934, as 
amended (``Act''), notice is hereby given that on March 14, 1997, the 
Consolidated Tape Association (``CTA'') Plan Participants filed with 
the Securities and Exchange Commission (``Commission'' or ``SEC'') 
amendments to the Restated CTA Plan. The Commission is publishing this 
notice to solicit comments from interested persons on the amendments.

I. General Overview of the Amendment

First Substantive Amendment to the Second Restatement of the CTA Plan

    The Participants to the CTA Plan propose to amend the Second 
Restatement of the CTA Plan.\1\ The amendment would modify the CTA 
Plan's procedures for resuming the dissemination of last sale prices 
following a regulatory halt. More specifically, the amendment would 
reduce from 15 minutes to ten minutes the period that must elapse 
before the Processor can resume the dissemination of market data after 
the primary market for the halted security notifies the Processor that 
the information that triggered the halt has been adequately disclosed. 
The text of the proposed amendment is available from the CTA and at the 
Commission.
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    \1\ The Commission approved the Second Restatement of the CTA 
Plan on May 9, 1996. See Securities Exchange Act Release No. 37191, 
61 FR 24842.
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II. Description and Purpose of the Amendments

A. Rule 11Aa3-2

    Section XI(a) of the Second Restatement of the CTA Plan recognizes 
the right of the primary market for a security to halt or suspend 
trading in the security if it feels that the non-disclosure of 
information relating to the security or other regulatory problems 
warrants that action. After the primary market notifies the Processor 
that the information that triggered the halt has been adequately 
disclosed, the Processor is required to disseminate indications of 
interest for the security that any Participant may provide.
    If the primary market provides an indication of interest within 15 
minutes of the time that it notifies the Processor about the adequate 
information disclosure, the Processor may resume its dissemination of 
last sale information relating to the security at the end of that 15-
minute period.
    If the primary market does not provides an indication of interest 
within 15 minutes of its notice to the Processor of the adequate 
information disclosure, then within five minutes of the end of that 
period, the primary market must cause the Processor to include on the 
consolidated tape an administrative message. The message must signify 
the continuation of the halt or announce the existence of a market 
condition that relates to the trading of the security in the primary 
market. In the latter case (i.e., the announcement), the halt 
terminates five minutes after the announcement, at which time the 
Processor is to resume disseminating last sale information relating to 
the security.
    The proposed amendment will reduce the 15-minute period to ten 
minutes. This amendment will enable trading in the security to resume 
ten minutes after the security's primary market notifies the Processor 
that the requisite information has been adequately disclosed. In the 
context of a halt that involves the announcement of an existing market 
condition, the amendment will also expedite the time by which the 
primary market must make the announcement, thereby expediting the 
resumption of the Processor's dissemination of last sale information 
relating to the security.
    The post-disclosure waiting period is primarily intended to allow 
an adequate opportunity for an appropriate level of dispersion of the 
information that triggered the trading halt. The Participants believe 
that significant increases in the speed of communications allow for 
rapid dissemination of information and rapid response to that 
disseminated information.
    Moreover, the Participants believe the increases in the speed of 
communications have shifted the balance between timeliness and the 
price discovery. That is, ten minutes, rather than 15 minutes, has 
become an appropriate period to arrive at a price that reflects an 
appropriate equilibrium of buying and selling interest. The proposed 
amendment will allow a stock to open or re-open in a more expeditious 
manner, while still providing sufficient time for the appropriate 
pricing of orders. As a result, the Participants believe the

[[Page 14709]]

proposed amendment strikes an appropriate balance between the 
preservation of the price discovery process and the provision of timely 
opportunities for investors to participate in the market.
    In addition, the amendment would conform the CTA Plan to rule 
changes of the New York Stock Exchange (``NYSE'') and the American 
Stock Exchange (``AMEX'').\2\ In relevant part, those rule changes 
reduce from 15 minutes to ten minutes the duration of the time period 
that must elapse between the first publication of an indication of 
interest following a trading halt and the reopening of trading in the 
halted security.
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    \2\ The Commission approved the NYSE rule changed on January 31, 
1997. See Exchange Act Release No. 38225, 62 FR 5875 (February 7, 
1997). The AMEX has filed in its version (the ``Proposed AMEX 
Rule'') with the Commission and the Commission is by separate Notice 
publishing the proposed rule for comment today. See Exchange Act 
Released No. 38426 (March 21, 1997).
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    Without the instant amendment to the CTA Plan, the NYSE and AMEX 
rule changes would create the following anomaly: If an indication of 
interest for a security is published less than five minutes after NYSE 
or AMEX announces that the information that gave rise to a regulatory 
trading halt has been adequately dispersed, NYSE and AMEX rules would 
allow the specialist to reopen trading in the security before the CTA 
Plan would allow the Processor to report the security's last sale price 
information. This amendment would eliminate the anomaly.
Governing or Constituent Document
    The proposed amendment does not change any governing or constituent 
document relating to a person authorized to implement or administer the 
CTA Plan on behalf of the Participants.
Implementation of Amendment
    The Participants plan to implement the proposed changes upon (a) 
the completion of necessary systems modification (which the Commission 
is told are minor in nature) and (b) in respect of the applicability of 
the proposed amendment to Network B Eligible Securities, Commission 
approval of the Proposed AMEX Rule.
Development and Implementation Phases
    See Item II(A)(3).
Analysis of Impact on Competition
    The Participants believe the proposed amendment will impose no 
burden on competition.
Written Understanding or Agreement Relating to Interpretation of, or 
Participation in, Plan
    The Participants have no written understandings or agreements 
relating to interpretation of its CTA Plan or conditions for becoming a 
CTA Plan Participant.
Approval by Sponsors in Accordance with Plan
    Under Section IV(b) of the CTA Plan, each of the CTA Plan's 
Participants must execute a written amendment to the CTA Plan before 
the amendment can become effective. The amendment is so executed.
Description of Operation of Facility Contemplated by the Proposed 
Amendment
    The Participants believe the proposed amendment does not change the 
manner in which the CTA Plan's facilities will be operated.
Terms and Conditions of Access
    The Participants believe the amendment does not change the terms 
and conditions of access.
Method of Determination and Imposition, and Amount of, Fees and Charges
    The proposed amendment neither imposes any new fee or charge nor 
alters any existing fee or charge.
Method and Frequency of Processor Evaluation
    The proposed amendment does not change the method of frequency for 
evaluating the CTA Plan Processor.
Dispute Resolution
    The proposed amendment does not change the method by which disputes 
may be resolved under the CTA Plan.

B. Rule 11Aa3-1

Reporting Requirements
    The Participants believe the proposed amendment would not affect 
the CTA Plan's reporting requirements.
Manner of Collecting, Processing, Sequencing, Making Available and 
Disseminating Last Sale Information
    In the context of a regulatory halt, the proposed amendment would 
expedite by five minutes the time by which the Processor must make a 
security's last sale prices available after the primary market for the 
security notifies the processor that the information that triggered the 
halt has been adequately disseminated.
Manner of Consolidation
    The proposed amendment does not change the manner by which the 
Participants consolidate last sale prices.
Standards and Methods Ensuring Promptness, Accuracy and Completeness of 
Transaction Reports
    The proposed amendment does not change the standards and methods by 
which the CTA Plan ensures, promptness, accuracy and completeness.
Rules and Procedures Addressed to Fraudulent or Manipulative 
Dissemination
    The Participants believe the ten minute waiting period provides 
adequate opportunity for the dispersion of the information that 
triggered the halt.
Terms of Access to Transaction Reports
    The Participants believe the proposed amendment has no effect on 
the CTA Plan's specific terms of access to transaction reports made 
available under the CTA Plan.
Identification of Marketplace of Execution
    The proposed amendment has no effect on the provisions of the CTA 
Plan that require displays to identify the marketplace where each 
transaction was executed.

III. Solicitation of Comments

    The CTA in its filing requested immediate effectiveness (subject to 
the implementation period described above) of this amendment pursuant 
to Rule 11Aa3-2(c)(3)(ii) under the Act. That rule provides that 
amendments concerned solely with the administration of the plan may be 
put into effect upon filing if so designated by the Participants. The 
Commission does not believe that this filing is concerned solely with 
the administration of the Plan. Rather the proposed amendment would 
have an effect upon trading practices within the National Market 
System. Moreover, the Commission today has also published for comment a 
rule proposal by the AMEX that relates to the applicability of the 
proposed CTA amendment to Network B eligible securities.\3\ 
Consequently, the Commission has decided to publish this proposed 
amendment in accordance with Rule 11Aa3-2(c)(1).
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    \3\ Id.
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    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing.

[[Page 14710]]

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 the Commission's Public 
Reference Room. Copies of such filing will also be available for 
inspection and copying at the principal office of the CTA. All 
submissions should refer to the file number in the caption above and 
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should be submitted by April 17, 1997.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\4\
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    \4\ 17 CFR 200.30-3(a)(27) (1989).
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Jonathan G. Katz,
Secretary.
[FR Doc. 97-7784 Filed 3-26-97; 8:45 am]
BILLING CODE 8010-01-M
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