27608 Federal Register / Vol. 63, No. 96 /Tuesday, May 19, 1998 / Notices

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

2NYSE Rule 344 states that ‘‘Supervisory

Analysts * * * shall be acceptable to, and

approved by, the Exchange.’’ NYSE Rule 344,

Supplementary Material .10 sets forth qualifications

to be considered by the Exchange.

3See NYSE Rule 344, Supplementary Material

.10.

structures, systems or components or to

design or operation of an addressee’s

facility. It also does not impose an

interpretation of the Commission’s rules

that is either new or different from a

previous staff position. The staff,

therefore, has not performed a backfit

analysis.

Dated at Rockville, Maryland, this 11th day

of May 1998.

For The Nuclear Regulatory Commission.

David B. Matthews,

Acting Director, Division of Reactor Program

Management, Office of Nuclear Reactor

Regulation.

[FR Doc. 98–13190 Filed 5–18–98; 8:45 am]

BILLING CODE 7590–01–P

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–39985; File No. SR–NASD–

98–28]

Self-Regulatory Organizations; Notice

of Filing of Proposed Rule Change by

the National Association of Securities

Dealers, Inc. Relating to Approval of

Research Reports

May 12, 1998.

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

Securities Exchange Act of 1934

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

April 27, 1998, the NASD Regulation,

Inc. (‘‘NASD Regulation’’) 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 NASD Regulation. 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 is proposing to

amend Rule 2210, ‘‘Communications

with the Public,’’ of the Conduct Rules

of the National Association of Securities

Dealers, Inc. (‘‘NASD’’ or

‘‘Association’’), to permit the approval

of research reports by a supervisory

analyst acceptable to the New York

Stock Exchange (‘‘NYSE;’’) under NYSE

Rule 344, ‘‘Supervisory Analysts,’’ 2 to

satisfy NASD requirements that research

reports be approved by a registered

principal. Below is the text of the

proposed rule change. Proposed new

language is in italics.

2200. Communications with Customers

and the Public

2210. Communications with the Public

* * * * *

(b) Approval and Recordkeeping.

(1) Each item of advertising and sales

literature shall be approved by signature

or initial, prior to use or filing with the

Association, by a registered principal of

the member. This requirement may be

met, only with respect to corporate debt

and equity securities that are the subject

of research reports as that term is

defined in Rule 472 of the New York

Stock Exchange, by the signature or

initial of a supervisory analyst approved

pursuant to Rule 344 of the New York

Stock Exchange.

* * * * *

II. Self-Regulatory Organizations’

Statement of the Purpose of, and

Statutory Basis for, the Proposed Rule

Change

In its filing with the Commission,

NASD Regulation 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.

NASD Regulation 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

a. Background. Subparagraph (b)(1) to

NASD Rule 2210 regarding

Communications with the Public

requires each item of advertising and

sales literature to be approved by

signature or initial of a registered

principal of an NASD member prior to

use or filing with NASD Regulation. The

definition of ‘‘sales literature’’ in

subparagraph (a)(2) to NASD Rule 2210

includes research reports.

Paragraph (b) to NYSE Rule 472,

‘‘Communications with the Public,’’

requires that research reports be

prepared or approved by a supervisory

analyst acceptable to the NYSE under

NYSE Rule 334. NYSE Rule 472,

Supplementary Material .10 defines

‘‘research reports’’ as ‘‘* * * an analysis

of individual companies, industries,

market conditions, securities or other

investment vehicles which provide

information reasonably sufficient upon

which to base an investment decision.’’

In order to become a supervisory analyst

under NYSE Rule 344, an applicant may

present evidence of appropriate

experience and either (i) pass an NYSE

Supervisory Analysts Examination, or

(ii) successfully complete a specified

level of the Chartered Financial

Analysts Examination prescribed by the

NYSE and pass only that portion of the

NYSE Supervisory Analysts

Examination dealing with Exchange

rules on research standards and related

matters.3

A joint NASD/NYSE member raised

the issue of whether the approval of

research reports by a supervisory

analyst approved by the NYSE under

NYSE Rule 344 could satisfy the NASD

requirement that each item of

advertising and sales literature be

approved by signature or initial of a

registered principal prior to use or filing

with NASD Regulation.

b. Discussion. The NYSE designation

of ‘‘supervisory analyst’’ does not

constitute a registration category for

NASD principals. The NASD Regulation

staff reviewed the content outline for

the supervisory analyst examination.

The particular categories of securities

addressed in the ‘‘securities analysis’’

section of the outline are fixed income

securities and equity securities. The

NASD Regulation staff concluded that

the coverage in the supervisory analysts

examination of the NYSE

communication rules is comparable to

the communication materials covered in

the NASD principal examination. Thus,

NASD Regulation believes that with

respect to the level of training and

experience necessary for the review of

research reports on debt and equity, the

level of supervisory analyst registration

is comparable to the level of NASD

principal registration.

Given that the scope of approval

authority is limited to research reports

and that the material in the NYSE

supervisory analyst examination and the

NASD principal examination is

comparable in this area, the NASD

Regulation staff concluded that the

investor protection goals intended by

the NASD’s current principal review

requirement rule could be satisfied by

NYSE requirements in this area.

The proposed rule change amends

subparagraph (b)(1) to NASD Rule 2210

to state that the requirement that

advertising and sales literature be

approved by a registered principal of an

NASD member firm may be met, with

respect to corporate debt and equity

securities that are the subject of research
Federal Register / Vol. 63, No. 96 /Tuesday, May 19, 1998 / Notices 27609

4 15 U.S.C. 78o–3.

5 17 CFR 200.30–3(a)(12).

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

reports as that term is defined in NYSE

Rule 472, by the signature or initial of

a supervisory analyst approved

pursuant to NYSE Rule 344. Any other

material requiring supervisory approval

would continue to require approval by

an NASD registered principal.

2. Statutory Basis

NASD believes that the proposed rule

change is consistent with the provisions

of Section 15A(b)(6) 4 of the Act, which

require that the rules of the Association

be designed to promote just and

equitable principles of trade, and, in

general, to protect investors and the

public interest, in that the proposed rule

change, by permitting approval of

research reports by a supervisory

analyst to satisfy NASD principal

approval requirements of such reports

according to standards comparable to

the NASD requirements, preserves the

investor protection goals of the NASD

rules and eliminates duplicative

regulatory requirements.

B. Self-Regulatory Organization’s

Statement on Burden on Competition

NASD Regulation 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

NASD Regulation has neither

solicited nor received comments on the

proposed rule change.

III. Date of Effectiveness of the

Proposed Rule Change and Timing for

Commission Action

Within 35 days of the date of

publication of this notice in the Federal

Register or within such longer period (i)

as the Commission may designate, up to

90 days of such date if it finds such

longer period to be appropriate and

publishes its reasons for so finding, or

(ii) as to which the self-regulatory

organization consents, the Commission

will:

A. By order approve such proposed

rule change, or

B. Institute proceedings to determine

whether the proposed rule change

should be disapproved.

IV. Solicitation of Comments

Interested persons are invited to

submit written data, views, and

arguments concerning the foregoing,

including whether the proposed rule

change is consistent with the Act.

Persons making written submissions

should file a 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 persons, 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 File No.

SR–NASD–98–28 and should be

submitted by June 9, 1998.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.5

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 98–13183 Filed 5–18–98; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–39981; File No. SR–NYSE–

98–11]

Self-Regulatory Organizations; Notice

of Filing of Proposed Rule Change by

the New York Stock Exchange, Inc. To

Amend Rule 97, ‘‘Limitation on

Members’ Trading Because of Block

Positioning,’’ To Except Transactions

That Facilitate Certain Customer Stock

Transactions, and To Except Certain

Transactions Made To Rebalance an

Index Portfolio

May 11, 1998.

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

Securities Exchange Act of 1934

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

March 30, 1998, the New York Stock

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

filed with the Securities and Exchange

Commission (‘‘Commission’’) the

proposed rule changes as described in

Item I, II, and III below, which Items

have been prepared by the Exchange.

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 would

amend Exchange Rule 97, ‘‘Limitation

on Members’ Trading Because of Block

Positioning,’’ to except transactions that

facilitate certain customer transactions

in: (i) basket of stock; (ii) blocks of

stock; (iii) specific stocks within a

basket of stocks; and (iv) index

component stocks. The proposal would

also would except certain transactions

made to rebalance an index portfolio.

The following is the text of Exchange

Rule 97 marked to reflect the proposed

rule change. Additions to the current

text appear in italics while deletions

appear in brackets.

Limitation on Members’ Trading

Because of Block Positioning

Rule 97 (a) When a member

organization holds any part of a long

position in a stock in its trading account

resulting from a block transaction it

effected with a customer, such member

organization may not effect the

following transactions for any account

in which it has a direct or indirect

interest for the remainder of the trading

day on which it acquired such position:

(i) a purchase on a ‘‘plus’’ tick if such

purchase would result in a new daily

high;

(ii) a purchase on a ‘‘plus’’ tick within

one-half hour of the close;

(iii) a purchase on a ‘‘plus’’ tick at a

price higher than the lowest price at

which any block was acquired in a

previous transaction on that day; or

(iv) a purchase on a ‘‘zero plus’’ tick

of more than 50% of the stock offered

at a price higher than the lowest price

at which any block was acquired in a

previous transaction on that day.

For purposes of the restrictions in

subparagraph (iii) and (iv) above, in the

case where more than one block was

acquired during the day, the lowest

price of any such block will be the

governing price.

(b) The provisions of paragraph (a)

shall not apply to transactions made:

(1) For bona fide arbitrage or to engage

in the purchase and sale, or sale and

purchase of securities of companies

involved in publicly announced merger,

acquisition, consolidation, tender, etc.;

(2) To offset a transaction made in

error;

(3) To facilitate the conversion of

options;

(4) By specialists in the stocks in

which they are registered; [or]

(5) To facilitate the sale of a block of

stock or a basket of stocks by a

customer[.];