36282 Federal Register / Vol. 63, No. 127 /Thursday, July 2, 1998 / Notices

16As discussed above, LOC orders will be subject

to the same deadlines for order entry as MOC

orders.

17As discussed above and in Amendment No. 1,

the Commission notes that the Exchange will not

apply the order entry procedures used for the close

of trading to the opening of trading. See

Amendment No. 1, supra note 3.

18 15 U.S.C. 78f(b)(5) and 15 U.S.C. 78s(b).

19 15 U.S.C. 78s(b)(2).

20 17 CFR 200.30–3(a)(12).

1 15 U.S.C. 78s(b)(1) (1994).

2 17 CFR 240.19b–4 (1997).

imbalance. In conjunction with the

prohibition on canceling or modifying

any MOC/LOC order after 3:40 p.m. the

Commission believes that this

requirement should allow the specialist

to make a timely and reliable

assessment, for every Amex-listed stock,

of MOC/LOC order flow and its

potential impact on closing prices.

Further, the proposal would require

Amex specialists to publish order

imbalances of 25,000 shares or more as

close to 3:40 p.m. as practicable. In

addition, under certain circumstances,

order imbalances of less than 25,000

shares may be published as close to 3:40

p.m. as practicable with the approval of

a Floor Official. The Commission

believes that permitting order imbalance

publications even though the imbalance

is under 25,000 shares should give

specialists needed flexibility to balance

order flow where the specialist believes

that it may be necessary to attract

contra-side interest. With respect to

changing the deadline for entering MOC

orders on non-expiration days, the

Commission believes that, by giving

market participants more time to react

to published MOC order imbalances, the

proposal may contribute to reducing

volatility at the close.16

Finally, the Exchange proposes to

apply the order imbalance

dissemination requirements at the

opening of trading as well as at the

close. Specifically, as discussed above,

the Exchange will require order

imbalances of 25,000 shares or more to

be disseminated before 9:30 a.m.

Circumstances under which an

imbalance of less than 25,000 shares

would be published will apply to the

opening as well.17 The Commission

believes that requiring order imbalances

to be published prior to the opening

may help reduce volatility at the

opening as well as at the close of

improving the specialists’ ability to

accurately assess opening order flow,

and attract contra-side interest to help

alleviate order imbalances. Further, the

policy should help provide the

investing public with more timely and

reliable information regarding likely

opening and closing prices, and thus the

ability to make more informed trading

decision.

The Commission finds good cause for

approving Amendment No. 1 to the

proposed rule change prior to the

thirtieth day after the date of

publication of notice of filing of this

amendment in the Federal Register.

Amendment No. 1 clarifies the proposal

to indicate what the deadline is for

order imbalance publications at the

opening. In addition, Amendment No. 1

clarifies that MOC/LOC order entry

procedures will not apply to the

opening of trading. As a result, the

Commission does not believe that

Amendment No. 1 raises any new

regulatory issues. Further, the

Commission notes that the original

proposal was published for the full 21-

day comment period and no comments

were received by the Commission.

Accordingly, the Commission believes

there is good cause, consistent with

Sections 6(b)(5) and 19(b) 18 of the Act,

to approve Amendment No. 1 to the

Exchange’s proposal on an accelerated

basis.

IV. Solicitation of Comments

Interested persons are invited to

submit written data, views and

arguments concerning Amendment No.

1, including whether it is consistent

with the Act. 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 Amex. All

submissions should refer to File No.

SR–AMEX–98–10 and should be

submitted by July 23, 1998.

V. Conclusion

It is therefore ordered, pursuant to

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

proposed rule change (SR–AMEX–98–

10) is approved as amended.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.20

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 98–17561 Filed 7–1–98; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–40124; File No. SR–NASD–

98–42]

Self-Regulatory Organizations; Notice

of Filing and Order Granting

Accelerated Approval to Proposed

Rule Change by the National

Association of Securities Dealers, Inc.

Relating to Extension of Effectiveness

of the Pilot Injunctive Relief Rule

June 24, 1998.

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

Securities and Exchange Act of 1934

(‘‘Act’’),1 and Rule 19b–4 thereunder,2

notice is hereby given that on June 12,

1998, the National Association of

Securities Dealers, Inc. (‘‘NASD’’ or

‘‘Association’’) filed with the Securities

and Exchange Commission (‘‘SEC’’ or

‘‘Commission’’) the proposed rule

change as described in Items I and II

below, which Items have been prepared

by NASD Regulation, Inc. (‘‘NASD

Regulation’’). The Commission is

publishing this notice to solicit

comments on the proposed rule change

from interested persons. For the reasons

discussed below, the Commission is

granting accelerated approval of the

proposed rule change.

I. Self-Regulatory Organization’s

Statement of the Terms of Substance of

the Proposed Rule Change

NASD Regulation is proposing to

amend Rule 10335 of the Code of

Arbitration (‘‘Code’’) of the NASD to

extend the pilot injunctive relief rule for

six months. Below is the text of the

proposed rule change. Proposed new

language is italicized; proposed

deletions are in brackets.

10335. Injunctions

* * * * *

(i) Effective Date

This Rule shall apply to arbitration

claims filed on or after January 3, 1996.

Except as otherwise provided in this

Rule, the remaining provisions of the

Code shall apply to proceedings

instituted under this Rule. This Rule

shall expire on [July 3, 1998] January 3,

1999, unless extended by the

Association’s Board of Governors.
Federal Register / Vol. 63, No. 127 /Thursday, July 2, 1998 / Notices 36283

3Securities and Exchange Act Release No. 36145

(August 23, 1995), 60 FR 45200 (Aug. 30, 1995).

4Securities and Exchange Act Release No. 38069

(December 20, 1996), 61 FR 68806 (December 30,

1996), and Securities and Exchange Act Release No.

39458 (December 17, 1997), 62 FR 67423 (December

24, 1997).

5 15 U.S.C. 78o–3. 6 15 U.S.C. 78s(b)(2).

7 15 U.S.C. 78o–3(b)(6).

8 15 U.S.C. 78o(b)(2).

9 15 U.S.C. 78s(b)(2).

10 17 CFR 200.30–3(a)(12).

II. Self-Regulatory Organization’s

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 III 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

The NASD’s injunctive relief rule,

Rule 10335 of the Code, provides a

procedure for obtaining injunctive relief

in arbitration and for expediting

proceedings for injunctive relief in

intra-industry disputes. Rule 10335

became effective on January 3, 1996, for

a one-year pilot period.3 The initial

pilot period was subsequently extended

twice by the Commission to permit

NASD Regulation’s Office of Dispute

Resolution to gain additional experience

with the rule before determining

whether the rule should be made

permanent, the pilot period should be

extended or the rule should be

permitted to terminate by its terms.4

The rule is currently due to expire on

July 3, 1998.

NASD Regulation is currently

developing a proposed rule change to

amend Rule 10335 and make it a

permanent part of the Code. NASD

Regulation anticipates filing this

proposed rule change by July 17, 1998.

The purpose of the requested six-month

extension of the existing injunctive

relief rule is to maintain the rule’s

effectiveness pending filing of and

Commission action on that proposed

rule change.

(b) Statutory Basis

NASD Regulation believes that the

proposed rule change is consistent with

the provisions of Section 15A(b)(6) of

the Act,5 which requires, among other

things, that the Association’s rules be

designed to prevent fraudulent and

manipulative acts and practices, to

promote just and equitable principles of

trade, and, in general, to protect

investors and the public interest. The

NASD believes that the current pilot

injunctive relief rule serves the public

interest by enhancing the satisfaction

with the arbitration process afforded by

expeditious resolution of certain

disputes. The NASD also believes that it

is in the interest of members that the

effectiveness of the rule remains

uninterrupted pending Commission

action on the permanent proposed rule

change.

(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

Written comments were neither

solicited nor received.

III. Solicitation of Comments

Interested person 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 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 such filing will also be

available for inspection and copying at

the principal office of the NASD. All

submissions should refer to the file

number SR–NASD–98–42 and should

submitted by July 23, 1998.

IV. Commission Findings and Order

Granting Accelerated Approval of

Proposed Rule Change

NASD Regulation has requested that

the Commission find good cause

pursuant to Section 19(b)(2) of the Act 6

for approving the proposed rule change

prior to the 30th day after publication in

the Federal Register. To avoid

interruption of the pilot injunctive relief

rule, the Commission finds that the

proposed rule change is consistent with

the requirements of the Act and the

rules and regulations thereunder

applicable to a national securities

association and, in particular, the

requirements of Section 15A(b)(6) of the

Act.7 Rule 10335 is intended to provide

a pilot system within the NASD

arbitration forum to process requests for

temporary injunctive relief. Rule 10335

is intended principally to facilitate the

disposition of employment disputes,

and related disputes, concerning

members who file for injunctive relief to

prevent registered representatives from

transferring their client accounts to their

new firms. The commission finds it is

appropriate to extend the pilot for six

months to avoid interruption of the pilot

injunctive relief rule During that time

the NASD Regulation will be able to

evaluate the success of Rule 10335 and

adequately review comments received.

The Commission expects the NASD to

submit a proposed rule change to add

Rule 10355 to the Code on a permanent

basis in the near future.

The Commission finds good cause for

approving the proposed rule change

prior to the thirtieth day after the date

of publication of notice of filing thereof

in the Federal Register. The

Commission believes that accelerated

approval of the proposal is appropriate

because members will continue to have

the benefit of injunctive relief in

arbitration without interruption. The

Commission is extending the pilot for

six months. During that time NASD

Regulation will submit a proposed rule

change to amend Rule 10335 to make it

a permanent part of the Code. The

Commission believes, therefore, that

granting accelerated approval of the

proposed rule change is consistent with

Section 15A of the Act.8

It is therefore ordered, pursuant to

Section 19(b)(2) of the Act,9 that the

proposed rule change be, and hereby is,

approved on an accelerated basis for a

six month pilot basis through January 3,

1999.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.10

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 98–17559 Filed 7–1–98; 8:45 am]

BILLING CODE 8010–01–M