Federal Register / Vol. 62, No. 68 / Wednesday, April 9, 1997 / Notices 17273

19 17 CFR 200.30–3(a)(12).

1See Report of the Arbitration Policy Task Force

on Securities Arbitration Reform, at 73.

2Under the simplified arbitration procedures for

matters between a public customer and an

associated person or member, cases are resolved

without a hearing (so-called ‘‘paper cases’’) by a

single public arbitrator. A public customer may,

however, demand a hearing, or the arbitrator may

call a hearing, in which case the arbitrator will hold

a hearing and the parties will have the benefit of

all of the available forms of discovery. See Rule

10302. Under the standard arbitration procedures

for all matters involving public customers, cases in

which the claims are more than $10,000 but less

than $30,000 may be heard by a single public

arbitrator. These cases are not decided on the

papers; rather, the arbitrator holds a hearing.

However, any party may demand a three person

panel. See Rule 10308.

3NASDR will shortly be filing a proposed rule

change to amend Rule 10308 to implement the list

selection process for the selection of arbitrators

recommended by the Task Force. The list selection

rule filing will further substantially amend Rule

10308, but will not be implemented until NASD has

developed the technology and procedures to

administer the process and developed a pool of

arbitrators sufficient to provide lists of arbitrators in

accordance with the requirements of the rule.

Accordingly, NASD is amending Rule 10308 in the

interim until the list selection rule is filed,

approved and implemented.

available for inspection and copying at

the principal office of the NASD. All

submissions should refer to File No.

SR–NASD–97–16 and should be

submitted by April 30, 1997.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.19

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 97–9004 Filed 4–8–97; 8:45 am]

BILLING CODE 8010–01–P

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–38466; File No. SR–NASD–

97–22]

Self-Regulatory Organizations; Notice

of Filing of Proposed Rule Change by

the National Association of Securities

Dealers, Inc. To Amend the Damage

Ceilings for Claims Under the Standard

Arbitration and Simplified Arbitration

Procedures

April 2, 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 27, 1997,

the National Association of Securities

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

filed with the Securities and Exchange

Commission (‘‘Commission’’) the

proposed rule change as described in

Items I, II, and III below, which Items

has been prepared by the self-regulatory

organization. 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

NASD Regulation, Inc. (‘‘NASDR’’) is

proposing to amend the Code of

Arbitration Procedure (‘‘Code’’) of the

NASD to: (1) Raise the ceiling for

disputes to be eligible for resolution by

a single arbitrator under simplified

arbitration procedures from $10,000 to

$25,000; and (2) raise the ceiling for

disputes eligible for resolution by a

single arbitrator under standard

arbitration procedures from $30,000 to

$50,000.

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

self-regulatory organization 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 self-regulatory organization 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

In its January 1996 Report on

Securities Arbitration Reform, the

NASD’s Arbitration Policy Task Force

(‘‘Task Force’’) recommended that the

ceiling for cases eligible for resolution

by a single arbitrator under simplified

arbitration procedures should be raised

from $10,000 to $30,000. The Task

Force also recommended that the ceiling

for cases eligible for resolution by a

single arbitrator under standard

arbitration procedures should be raised

from $30,000 to $50,000. The Task

Force recommended that these changes

apply to all NASD arbitrations—public

customer and intra-industry. The Task

Force stated, and NASDR concurs, that

raising the threshold, which will cause

a larger percentage of cases to be

resolved under the simplified

arbitration procedures, will ‘‘strike an

appropriate balance between the desire

for faster and less expensive arbitration

on the one hand and more expansive

procedures on the other.’’ 1

NASDR has consulted with the

Securities Industry Conference on

Arbitration (‘‘SICA’’) and the New York

Stock Exchange (‘‘NYSE’’) on the

appropriate threshold for simplified and

single-arbitrator proceedings. While

SICA and the NYSE agree with the Task

Force’s rationale, they are concerned

that setting the threshold for simplified

arbitrations too high could disadvantage

customer claimants by limiting their

procedural rights 2 under the Code in

cases that have significant economic

value to the customer. In view of these

concerns, NASD is instead proposing to

set the threshold for simplified

arbitration at $25,000, instead of

$30,000. SICA approved of the adjusted

thresholds at its October 17, 1996

meeting.

Accordingly, NASD is proposing to

amend Rules 10202, Composition of

Panels (former Section 9) and 10308,

Designation of Number of Arbitrators

(formerly Section 19) 3 of the Code to

establish the threshold for single

arbitrator cases at $50,000. NASDR is

also proposing to amend Rules 10203,

Simplified Industry Arbitration

(formerly Section 10) and 10302,

Simplified Arbitration (formerly Section

13) of the Code to establish the

threshold for simplified arbitrations at

$25,000. In addition, NASD is proposing

to amend each of those rules to state

that the threshold amount is ‘‘exclusive

of attendant costs and interest.’’

Under the proposed rule change to

Rules 10302(d) and 10308(b), claims

involving public customers and

exceeding $25,000, exclusive of

attendant costs and interest, will be

heard by a three member arbitration

panel, rather than a panel of no less

than three and no more than five

arbitrators. Under the proposed rule

change to Rule 10302 (f) and (h)(3), the

Director of Arbitration will ‘‘appoint,’’

rather than ‘‘select,’’ the public

arbitrator for simplified arbitration. The

proposed rule change amends Rule

10308(a) to state that a majority of the

arbitrators on a three member arbitration

panel (for claims that are less than or

equal to $50,000 but where a party or

arbitrator requested a panel of three

arbitrators) shall be public arbitrators,

rather than stating that a majority of the

three arbitrator panel ‘‘shall not be from

the securities industry.’’ The proposed

rule change also includes several

technical changes designed to correct

inconsistencies in the rule language and

which were also adopted by SICA.

2. Statutory Basis

The NASD believes that the proposed

rule change is consistent with the

provisions of Section 15A(b)(6) of the
17274 Federal Register / Vol. 62, No. 68 / Wednesday, April 9, 1997 / Notices

4 15 U.S.C. § 78o–3.

1The Commission has modified the text of the

summaries submitted by NSCC.

Act 4 in that raising the thresholds for

simplified arbitration and for standard

arbitrations using a single arbitrator will

permit such cases to be resolved more

quickly and at lower cost to the parties

and is consistent with the NASD’s

longstanding goal of providing the

investing public with a fair, efficient

and cost-effective forum for the

resolution of disputes.

B. Self-Regulatory Organization’s

Statement on Burden on Competition

The NASD does not believe that the

proposed rule change will impose any

inappropriate 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 were either

solicited or received.

III. Date of Effectiveness of the

Proposed Rule Change and Timing for

Commission Action

Within 35 days of the 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 self-regulatory organization

consents, the Commission will:

(A) by order approve the proposed

rule change, or

(B) institute proceedings to determine

whether the proposed rule change

should be disapproved.

IV. Solicitation of Comments

Interested persons are invited to

submit written data, views, and

arguments concerning the foregoing.

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 at

the Commission’s Public Reference

Room. Copies of such filing will also be

available for inspection and copying at

the principal office of the NASD. All

submissions should refer to File No.

SR–NASD–97–22 and should be

submitted by April 30, 1997.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 97–9065 Filed 4–8–97; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–38453; File No. SR–NSCC–

97–3]

Self-Regulatory Organizations;

National Securities Clearing

Corporation; Notice of Filing of

Proposed Rule Change Regarding

Exemption Processing

March 28, 1997.

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

Securities Exchange Act of 1934 (the

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

March 7, 1997, the National Securities

Clearing Corporation (‘‘NSCC’’) 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 primarily by NSCC.

The Commission is publishing this

notice to solicit comments on the

proposed rule change from interested

persons.

I. Self-Regulatory Organization’s

Statement of the Terms of Substance of

the Proposed Rule Change

The proposed rule change consists of

modifications to NSCC’s procedures

regarding exemption processing in

NSCC’s Continuous Net Settlement

(‘‘CNS’’) system.

II. Self-Regulatory Organization’s

Statement of the Purpose of, and

Statutory Basis for, the Proposed Rule

Change

In its filing with the Commission,

NSCC 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. NSCC has prepared

summaries, set forth in sections (A), (B),

and (C) below, of the most significant

aspects of such statements.1

(A) Self-Regulatory Organization’s

Statement of the Purpose of, and

Statutory Basis for, the Proposed Rule

Change

(1) The purpose of the proposed rule

change is to modify the methods of

submitting exemptions under NSCC’s

procedures. As a part of the NSCC’s

CNS Accounting Operation, members

may control the delivery of their

securities to NSCC through the use of

exemptions. CNS is an on-going

accounting system that nets a member’s

securities obligations on a daily basis to

produce a new short or long position in

each issue.

A short position in CNS represents

the quantity owed to NSCC by the

member. To satisfy short positions for

purposes of settlement, securities are

delivered from the member’s account at

The Depository Trust Company (‘‘DTC’’)

to NSCC’s account at DTC. These

deliveries are subject to exemption

limitations imposed by the member,

which may elect to deliver to NSCC all,

part, or none of any short position.

Exemptions assist members in

complying with the segregation

provisions of Rule 15c3–3 of the Act

and in meeting other delivery needs.

NSCC presently requires members to

input exemption instructions on a daily

basis. Currently, NSCC also permits but

does not require members to input

standing instructions.

In addition to submitting exemption

instructions to NSCC, members may

also manage their segregation and

delivery needs through the use of DTC’s

‘‘Memo Segregation’’ facility. Since a

member may either use NSCC’s or

DTC’s systems to control delivery

requirements, the proposed rule change

will no longer mandate that exemption

instructions be submitted to NSCC every

day.

If a daily instruction is not submitted,

not received, or is received but cannot

be processed by NSCC, the member’s

standing exemption instructions will be

used. As a result, members will now be

required to submit standing exemption

instructions to NSCC since they will

serve as the member’s default

instructions under the proposed

procedures.

(2) The proposed rule change is

consistent with Section 17A of the Act

and the rules and regulations

thereunder since it will facilitate the

prompt and accurate clearance and

settlement of securities transactions and

in general protect investors and the

public interest.