Federal Register / Vol. 63, No. 3 / Tuesday, January 6, 1998 / Notices 585

1 Italics indicate additions; [brackets] indicate

deletions.

2A complete description of the program is found

in the Board’s filing with the Commission on the

customer phase of the program and the

Commission’s Approval Order. See Securities

Exchange Act Release No. 37998 (November 29,

1996).

3See Rule G–14 Transaction Reporting

Procedures, section (b)(iv).

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–39495; File No. SR–MSRB–

97–18]

Self-Regulatory Organizations; Notice

of Filing and Immediate Effectiveness

of Proposed Rule Change by the

Municipal Securities Rulemaking

Board Relating to Transaction

Reporting Procedures

December 29, 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 December 23, 1997,

the Municipal Securities Rulemaking

Board (‘‘Board’’ or ‘‘MSRB’’) filed with

the Securities and Exchange

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

a proposed rule change (File No. SR–

MSRB–97–18). The proposed rule

change is described in Items I, II, and III

below, which Items have been prepared

by the Board. 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

Rule G–14—Reports of Sales or

Purchases 1

No change.

Rule G–14 Transaction Reporting

Procedures

(a) Inter-Dealer Transactions

No change.

(b) Customer Transactions

(i) Each broker, dealer and municipal

securities dealer shall report to the

Board all transactions with customer

effected after [January 1, 1998] March 1,

1998, except as described in paragraph

(iii) of this section (b). A broker, dealer

or municipal securities dealer shall

report a transaction by submitting or

causing to be submitted to the Board, by

midnight of trade date, the customer

transaction information specified in

paragraph (ii) of this section (b) in such

format and manner specified in the

current User’s Manual for Customer

Transaction Reporting. The broker,

dealer or municipal securities dealer

shall promptly report cancellation of the

trade or corrections to any required data

items.

(ii)–(iv) No change.

II. Self-Regulatory Organization’s

Statement of the Terms of Substance of

the Proposed Rule Change

In its filing with the Commission, the

Board 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 texts of these

statements may be examined at the

places specified in Item IV below. The

board has prepared summaries, set forth

in Section 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

The proposed rule change changes the

effective date for the beginning of the

customer transaction phase of the

Board’s Transaction Reporting Program.

The customer transaction phase of the

program was filed by the Board and

approved by the Commission in 1996,

with an effective date for system

operations of January 1, 1998. The

addition of customer transactions to the

existing transaction reporting system for

inter-dealer transactions will allow the

Board to include customer data in the

daily reports of price and volume

activity and in the surveillance database

that the Board makes available to

regulators.2 The Commission also

approved the Board’s plan to conduct a

mandatory testing program.3 The testing

program is designed to ensure that

modifications to dealer computer

systems necessary for customer

transaction reporting have occurred and

that links between dealer systems that

submit data and Board computer

systems for processing data are

coordinated and are operating correctly.

The start date for the testing program

was set for July 1, 1997.

The proposed rule change consists of

two parts: (i) An amendment to the

language of Rule G–14 Transaction

Reporting Procedures, changing the

effective date of dealers’ obligations to

report data correctly and accurately to

the Board’s Transaction Reporting

Program from January 1, 1998, to March

1, 1998 (the ‘‘operational start date’’);

and (ii) a notice to the industry that

explains, notwithstanding the delay in

the operational start date, dealers are

responsible under rule G–14 to continue

to test their transaction reporting

capabilities with the Board prior to the

new operational start date. The notice

states that, once initial testing protocols

have been successfully completed, the

testing program requires that dealers

continue to submit live test data to the

Board. This will allow the Board and

dealers to resolve possible problems in

reporting of certain types of transactions

prior to the operational start date for the

system. It also will provide the Board

with information about the market that

will help the Board to design the daily

price and volume reports that will

include customer transaction data.

The Board has determined that it is

necessary to delay full system

operations and to extend the testing

period from January 1, 1998 to March 1,

1998, because of technical difficulties

encountered in the development of

computer systems that will operate the

Program. The Board plans to complete

computer system design and

construction in time to place the

Program on an operational basis for

trades occurring on or after March 1,

1998. At its February 1998 meeting, the

Board plans to review the status of

system development and construction.

At that time, the Board intends to

review test data that has been submitted

thus far and to decide how best to

structure the daily price and volume

reports that will reflect the customer

transaction activity that is occurring in

the market.

The Board believes the proposed rule

change is consistent with Section

15B(b)(2)(C) of the Act, which provides

that the Board’s rules shall:

Be designed to prevent fraudulent and

manipulative acts and practices, to promote

just and equitable principles of trade, to

foster cooperation and coordination with

persons engaged in regulating, clearing,

settling processing information with respect

to, and facilitating transactions in municipal

securities, to remove impediments to and

perfect the mechanism of a free and open

market in municipal securities, and, in

general, to protect investors and the public

interest.

The Board believes that the proposed

rule change is necessary so that initial

operations of the customer transaction

reporting phase of the Transaction

Reporting Program can begin as soon as

possible and so that the Board’s

production of daily price/volume

reports can reflect customer transaction

data as soon as possible. The Board

believes that the operation of the

Transaction Reporting Program, in

general, will facilitate the statutory

purposes noted above because the

Program will provide an additional
586 Federal Register / Vol. 63, No. 3 / Tuesday, January 6, 1998 / Notices

1 15 U.S.C. 78s(b)(3)(a).

2Conversation between Arnold Golub, Office of

General Counsel, Nasdaq with Mandy Cohen,

Division of Market Regulation, Commission

(December 24, 1995).

3 17 CFR 240.19b–4(e)(6).

4The Association has represented that this

proposed rule change: (1) Will not significantly

affect the protection of investors or the public

interest; (ii) will not impose any significant burden

on competition, and (iii) will not become operative

for 30 days after the date of this filing, unless

otherwise accelerated by the Commission. The

Association also has provided at least five business

days notice to the Commission of its intent to file

this proposed rule change, as required by Rule 19b–

4(e)(6) under the Act. Id.

5See Securities Exchange Act Release No. 39326

(November 14, 1997), 62 FR 62385 (November 21,

1997) (File No. SR–NASD–97–71).

6See Id.

7Proposed new language is underline, proposed

deletions are in brackets.

degree of price transparency in the

municipal securities market and will

provide a surveillance audit trail that

may be used by market regulators in

furtherance of their regulatory purposes.

B. Self-Regulatory Organization’s

Statement on Burden on Competition

The Board does not believe that the

proposed rule change will impose any

burden on competition not necessary or

appropriate in furtherance of the

purposes of the Act since it would apply

equally to all brokers, dealers and

municipal securities dealers and merely

delays the start-up date for a program

that previously has been approved by

the Commission.

C. Self-Regulatory Organization’s

Statement of Comments on the

Proposed Rule Change Received From

Members, Participants, or Others

Written comments were neither

solicited nor received.

III. Date of Effectiveness of the

Proposed Rule Change and Timing for

Commission Action

Because the proposed rule change is

merely a technical correction of rule

language, the Board has designated this

proposed rule change as constituting a

stated policy, practice, or interpretation

with respect to the meaning,

administration, or enforcement or an

existing Board rule under Section

19(b)(3)(A) of the Act, which renders the

proposed rule change effective upon

receipt of this filing by the Commission.

At any time within sixty days of the

filing of the proposed rule change, the

Commission may summarily abrogate

such rule change if it appears to the

Commission that such action is

necessary or appropriate in the public

interest, for the protection of investors,

or otherwise in furtherance of the

purposes of the Act.

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 the filing will also be

available for inspection and copying at

the Board’s principal offices. All

submissions should refer to File No.

SR–MSRB–97–18 and should be

submitted by January 27, 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. 98–159 Filed 1–5–98; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–39494; File No. SR–NASD–

97–97]

Self-Regulatory Organizations; Notice

of Filing, Immediate Effectiveness and

Designation of Accelerated Operative

Date of Proposed Rule Change by

National Association of Securities

Dealers, Inc., Relating to Conforming,

Technical Amendments to Certain

Rules Relating to Procedures on

Grievances Concerning The

Automated Systems

December 29, 1997.

Pursuant to Section 19(b)(3)(A) of the

Securities Exchange Act of 1934

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

December 24, 1997, the National

Association of Securities Dealers, Inc.

(‘‘NASD’’ or ‘‘Association’’), through its

wholly owned subsidiary, The Nasdaq

Stock Market, Inc. (‘‘Nasdaq’’) filed with

the Securities and Exchange

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

the proposed rule change as described

in Items I, II, and III below, which Items

have been prepared by Nasdaq. Several

technical amendments were made to the

proposal on the same date.2 The

Association has designated the

proposed rule change as constituting a

‘‘non-controversial’’ rule change under

paragraph (e)(6) of Rule 19b–4 under the

Act 3 which renders the proposal

effective upon receipt of this filing by

the Commission.4 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 Association is filing the proposed

rule change to make conforming

technical changes to the Rule 9700

Series to substitute the ‘‘Nasdaq Hearing

Review Committee,’’ whose tenure will

terminate next month, with the ‘‘Nasdaq

Listing and Hearing Council,’’ which

will perform similar functions

thereafter. These changes are necessary

to conform the Rule 9700 Series to the

recently approved revisions to the

Nasdaq By-Laws that will take effect in

January 1998.5 In addition, the text of

new rule 4880 has been revised to

reflect recent changes in the review

process approved by the Commission at

the same time as the by-laws.6 Finally,

for ease of reference, the Rule 9700

Series has been renumbered as the Rule

4800 Series, since the rules contained

therein relate to other rules within the

Rule 4000 Series. The text of the

proposed rule change follows: 7

* * * * *

Rules of the Association

* * * * *

4000. The Nasdaq Stock Market

* * * * *

[9700] 4800. Procedures on Grievances

Concerning the Automated Systems

[9710] 4810. Purpose

The purpose of this Rule [9700] 4800

Series is to provide, where justified,

redress for persons aggrieved by the

operations of any automated quotation,

execution, or communication system

owned or operated by the Association,

or any subsidiary thereof, and approved

by the Commission, not otherwise

provided for by the [this] Code of

Procedure as set forth in the Rule 9000

Series or the Uniform Practice Code as

set forth in the Rule 11000 Series, and

to provide procedures for the handling

of qualification matters pursuant to The

Nasdaq Stock Market Rules, as set forth

in the Rule 4000 Series.