Federal Register / Vol. 63, No. 146 /Thursday, July 30, 1998 / Notices 40759

authorize or require self-regulatory organizations to

act jointly with respect to matters as to which they

share authority under the Act in planning,

developing, operating, or regulating a national

market system (or subsystem thereof) or one or

more of the facilities thereof.

94The text reflects the latest unofficial

compilation of the ITS Plan supplied by the ITSOC,

including all previously incorporated amendments

up to May 30, 1997.

1 17 CFR 200.30–3(a)(12).

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

2 17 CFR 240.19b–4.

amended ITS Plan.94 Deleted text is

[bracketed] and new language is

italicized.

* * * * *

Section 1. Definitions.

(1)–(16) No Change.

(17) ‘‘ITS/CAES Security (stock)’’

means a security (stock) (a) that is a

System security[, (b) that is a 19c–3

security and (c)] and (b) as to which one

or more ITS/CAES Market Makers are

registered as such with the NASD for

the purposes of Applications. When

used with reference to a particular ITS/

CAES Market Maker, ‘‘ITS/CAES

security’’ means any such security

(stock) as to which the particular ITS/

CAES Market Maker is so registered.

(18)–(25) No Change.

[(26) ‘‘19c–3’’ security’’ means an

Eligible Security that is not a ‘‘covered

security’’ as that term is defined in SEC

Rule 19c–3 as in effect on May 1, 1982.]

[(27)](26)

[(27A)](26A)

[(27B)](26B)

[(27C)](26C)

[(27D)](26D)

[(27E)](26E)

[(28)](27)

[(29)](28)

[(30)](29)

[(31)](30)

[(32)](31)

[(33)](32)

[(34)](33)

[(34A)](33A)

[(34B)](33B)

[(35)](34)

[(36)](35)

[(37)](36)

Section 2. No Change.

Section 3. No Change.

Section 4. Administration of ITS Plan.

(a)–(b) No Change.

(c) Amendments to the ITS Plan. Any

proposed change in, addition to, or

deletion from the ITS Plan may be

effected only by a means of a written

amendment to the ITS Plan which sets

forth the change, addition or deletion, is

executed on behalf of [each

Participant]two-thirds of the

Participants, and is approved by the

SEC or otherwise becomes effective

pursuant to section 11A of the Act and

Rule 11Aa3–2.

(d)–(f) No Change.

Section 5. The System.

(a) No Change.

(b) General Operation.

(i) No Change.

(ii) Selection of System Securities.

The System is designed to accommodate

trading in any Eligible Security in the

case of any ITS/CAES Market Maker,

trading in one or more ITS/CAES

securities in which he is registered as

such with the NASD for the purposes of

the Applications. The particular

securities that may be traded through

the System at any time (‘‘System

securities’’) shall be selected by the

Operating Committee. The Operating

Committee may add or delete System

securities as it deems appropriate and

may delay the commencement of

trading in any Eligible Security if

capacity or other operational

considerations shall require such delay.

[ITS/CAES securities may be traded by

Exchange Participants and ITS/CAES

Market Makers as provided in the ITS

Plan and other System securities may be

traded by Exchange Participants as

provided in the ITS Plan.]

(c)–(d) No Change.

Section 6. No Change.

Section 7. No Change.

Section 8. No Change.

Section 9. No Change.

Section 10. No Change.

Section 11. No Change.

* * * * *

The proposed amendments do not

address the manner which the costs of

implementing these changes would be

apportioned because the Commission

believes the ITS Participants should

decide this issue among themselves.

Dated: July 24, 1998.

By the Commission.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 98–20313 Filed 7–29–98; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–40197A; File No. SR–

MSRB–98–04]

Self-Regulatory Organizations;

Municipal Securities Rulemaking

Board; Order Granting Approval of

Proposed Rule Change Relating to

Rule G–32, on Disclosures in

Connection With New Issues

July 23, 1998.

Correction

In FR Document No. 98–19445,

beginning on page 39322 for

Wednesday, July 22, 1998, the first full

paragraph of the page is revised to read:

The amendment provides an alternate

method of compliance with Rule G–32

in the case of Exempt VRDOs where the

final official statement is either

unavailable or incomplete. The

amendment is intended to provide relief

to dealers in the event they do not

receive the final official statement from

the issuer with enough time to deliver

the document to their customers by

settlement. Therefore, in those limited

circumstances where dealers may in fact

receive the official statement in final

form in sufficient time to deliver it to

customers by settlement (e.g., if an

issuer approves completion of the

official statement in final form prior to

execution of the purchase contract),

dealers would have the option of

complying with the existing provision

of the rule by delivering the official

statement in final form to the customer

by settlement.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.1

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 98–20366 Filed 7–29–98; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–40252; File No. SR–NASD–

98–46]

Self-Regulatory Organizations; Notice

of Filing and Immediate Effectiveness

of Proposed Rule Change by the

National Association of Securities

Dealers, Inc. Relating to Technical

Corrections to Delegation Plan and IM–

1000–4

July 23, 1998.

On July 9, 1998, the National

Association of Securities Dealers, Inc.

(‘‘NASD’’) through its regulatory

subsidiary NASD Regulation, Inc.

(‘‘NASD Regulation’’) filed with the

Securities and Exchange Commission

(‘‘Commission’’) a proposed rule change

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

Securities Exchange Act of 1934

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

The proposed rule change is described

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

have been prepared by NASD

Regulations. NASD Regulation has

designated this proposal as one

constituting a stated policy, practice, or

interpretation with respect to the

meaning of an existing rule under

Section 19(b)(3)(A)(i) of the Act, which
40760 Federal Register / Vol. 63, No. 146 /Thursday, July 30, 1998 / Notices

3 15 U.S.C. 78o–3(b)(6).

4 Id.

5 15 U.S.C. 78s(b)(3)(A)(i).

6 17 CFR 240.19b–4(e)(1).

7 15 U.S.C. 78s(b)(3)(A).

renders the proposal effective upon the

Commission’s receipt of this filing. 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

make a technical correction to NASD

Interpretive Material IM–1000–4 and a

clarifying amendment to the Plan of

Allocation and Delegation of Functions

by NASD to Subsidiaries (‘‘Delegation

Plan’’) regarding NASD Regulation’s

authority to inspect the books and

records of The Nasdaq Stock Market,

Inc. (‘‘Nasdaq’’). Below is the text of the

proposed rule change. Proposed new

language is italicized; proposed

deletions are in brackets.

IM–1000–4. [Appointment of Executive

Representative] Branch Offices and

Offices of Supervisory Jurisdiction

[The term ‘‘executive representative’’

as found in Section 3 of Article III of the

By-Laws means that person designated

by the member to represent, vote and act

for the member in all the affairs of the

Association. Pursuant to the provisions

of Section 8 of Article III of the ByLaws, every member who maintains a

registered branch office in a district of

the Association other than the one in

which its main office is located, is

entitled to one vote on all matters

pertaining solely to the district in which

such registered branch office is located,

including the election of members of the

Board of Governors from such district.

Should a member maintain more than

one branch office in a district, it is

entitled to only one vote in that district.

Therefore, each member shall designate

one executive representative and shall

designate one ‘‘district executive

representative’’ for each district other

than the one in which the main office

is located in which the member

maintains a registered branch office.]

Each member is under a duty to

insure that its membership application

with the Association is kept current at

all times by supplementary amendments

to its original application and that any

offices other than the main office are

properly designated and registered, if

required, with the Association.

Each member must designate to the

Association those offices of supervisory

jurisdiction, including the main office,

and must register those offices which

are deemed to be branch offices in

accordance with the standards set forth

in Rule 3010.

Plan of Allocation and Delegation of

Functions by NASD to Subsidiaries

I. NASD, Inc.

* * * * *

D. Access to and Status of Offices,

Directors, Employees, Books, Records,

and Premises of Subsidiaries

Notwithstanding the delegation of

authority to the Subsidiaries, as set forth

in Sections II.A. and III.A. below, the

staff, books, records, and premises of the

Subsidiaries are the staff, books,

records, and premises of the NASD

subject to oversight pursuant to the Act,

and all officers, directors, employees,

and agents of the Subsidiaries are

officers, directors, employees, and

agents of the NASD for purposes of the

Act. The books and records of Nasdaq

shall be subject at all times to inspection

and copying by NASD Regulation.

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 IV below.

NASD Regulation 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

1. Purpose

The proposed rule change makes a

technical correction to Interpretive

Material 1000–4 by removing an

obsolete provision regarding election

procedures and district executive

representatives. All regional nomination

and district election procedures are now

set forth in Articles VI and VIII of the

NASD Regulation By-Laws, which

permit only the Executive

Representative of a member firm to cast

a vote for a nomination or election.

The proposed rule change also adds a

clarifying provision to the Delegation

Plan specifically authorizing NASD

Regulation to inspect and copy Nasdaq

records. Nasdaq has always provided

NASD Regulation with full access to its

records. The clarification to the

Delegation Plan was recommended by

the Independent Consultant retained by

the NASD in accordance with Securities

Exchange Act Release No. 37538

(August 8, 1996), SEC’s Order

Instituting Public Proceedings Pursuant

to Section 19(h)(1) of the Securities

Exchange Act of 1934, Making Findings

and Imposing Remedial Sanctions, In

the Matter of National Association of

Securities Dealers, Inc., Administrative

Proceeding File No. 3–9056 (‘‘Order’’).

Undertaking No. 2 of the Order requires

that NASD Regulation have full access

to the records of Nasdaq.

(2) Statutory Basis

NASD Regulation believes that the

proposed rule change is consistent with

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

the Act,3 which requires, among other

things, that the Association’s rules must

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. NASD

Regulation believes that the technical

and clarifying corrections set forth in

the proposed rule change are consistent

with the provisions of the Section

15A(b)(6).4

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. Date of Effectiveness of the

Proposed Rule Change and Timing for

Commission Action

The foregoing rule change has become

effective pursuant to Section

19(b)(3)(A)(i) of the Act 5 and

subparagraph (e)(1) of Rule 19b–4

thereunder 6 in that it constitutes a

stated policy, practice, or interpretation

with respect to the meaning of an

existing rule. At any time within 60

days of the filing of a rule change

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

Act, 7 the Commission may summarily

abrogate the rule change if it appears to

the Commission that such action is

necessary or appropriate in the public

interest, for the protection of investors,
Federal Register / Vol. 63, No. 146 /Thursday, July 30, 1998 / Notices 40761

8 In reviewing this rule, the Commission has

considered the proposed rule’s impact on

efficiency, competition, and capital formation. 15

U.S.C. 78c(f).

9 17 CFR 200.30–3(a)(12).

1The NASD filed Amendment Nos. 1 and 2 to the

proposed rule change on July 14, 1998 and July 23,

1998, respectively, the substance of which is

incorporated into this notice. See letters from Alden

S. Adkins, Senior Vice-President and General

Counsel, NASD Regulation, to Katherine A.

England, Assistant Director, Market Regulation,

Commission, dated July 14, 1998 (‘‘Amendment No.

1’’) and July 23, 1998 (‘‘Amendment No. 2’’).

2NASD Regulation also intends to file a proposed

rule change to use a similar list selection process

for intra-industry arbitrations.

or otherwise in furtherance of the

purposes of the Act. 8

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 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 NASD. All

submissions should refer to File No.

SR–NASD–98–46 and should be

submitted by August 20, 1998.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.9

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 98–20363 Filed 7–29–98; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–40261; File No. SR–NASD–

98–48]

Self-Regulatory Organizations; Notice

of Filing of Proposed Rule Change by

the National Association of Securities

Dealers, Inc. Relating to the Selection

of Arbitrators in Arbitrations Involving

Public Customers

July 24, 1998.

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 July 10, 1998,1 the

National Association of Securities

Dealers, Inc. (‘‘NASD’’ or

‘‘Association’’), through its whollyowned subsidiary NASDA 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 the selfregulatory 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 is proposing to

amend Rule 10308 to set forth new

procedures to be used to select

arbitrators for arbitrations involving

public customers.2 Under the new

procedures, NASD Regulation will

allow the parties to an arbitration to

rank arbitrators from lists generated

primarily using an automated process,

providing parties with a substantial role

in determining the composition of their

arbitration panels. NASD Regulation is

proposing conforming changes to Rules

10104, 10309, 10310, 10311, 10312, and

10313. In addition, NASD Regulation

proposes to amend Rule 10315

concerning the scheduling of the first

meeting of the parties and the

arbitration panel to reflect that such

meetings usually occur prior to the first

hearing of an arbitration proceeding.

Finally, NASD Regulation proposes to

correctly state in the Rule 10000 Series

and any other Rules the name of the

NASD Regulation committee that

addresses arbitration and related

matters, the National Arbitration and

Mediation Committee.

Below is the text of the proposed rule

change. Proposed new language is in

italics proposed deletions are in

brackets.

* * * * *

10104. Composition and Appointment

of Panels

Except as otherwise specifically

provided in Rule 10308, t[T]he Director

[of Arbitration] shall compose and

appoint panels of arbitrators from the

existing pool of arbitrators of the

Association to conduct the arbitration of

any matter which shall be eligible for

submission under this Code. [The

Director of Arbitration may request that

the Executive Committee of the National

Arbitration Committee undertake the

composition and appointment of a panel

or undertake consultation with the

Executive Committee regarding the

composition and appointment of a panel

in any circumstance where he

determines such action to be

appropriate.]

* * * * *

10308. [Designation of Number of

Arbitrators] Selection of Arbitrators in

Customer Disputes

[(a) Except as otherwise provided in

Rule 10302, in all arbitration matters

involving public customers and where

the amount in controversy does not

exceed $30,000, the Director of

Arbitration shall appoint a single public

arbitrator knowledgeable in but who is

not from the securities industry to

decide the dispute, claim or

controversy. Upon the request of a party

in its initial filing or the arbitrator, the

Director of Arbitration shall appoint a

panel of three (3) arbitrators which shall

decide the matter in controversy. At

least a majority of the arbitrators

appointed shall not be from the

securities industry, unless the public

customer requests a panel consisting of

at least a majority from the securities

industry.

(b) In arbitration matters involving

public customers and where the amount

in controversy exceeds $50,000,

exclusive of attendant costs and interest,

or where the matter in controversy does

not involve or disclose a money claim,

the Director of Arbitration shall appoint

a panel of three (3) arbitrators, at least

a majority of whom shall not be from

the securities industry, unless the

public customer requests a panel

consisting of at least a majority from the

securities industry.

(c) An arbitrator will be deemed as

being from the securities industry if he

or she:

(1) Is a person associated with a

member or other broker/dealer,

municipal securities dealer, government

securities broker, or government

securities dealer, or

(2) Has been associated with any of

the above within the past three (3) years,

or

(3) Is retired from any of the above, or

(4) Is an attorney, accountant, or other

professional who has devoted twenty

(20) percent or more of his or her

professional work effort to securities

industry clients within the last two

years, or

(5) Is an individual who is registered

under the Commodity Exchange Act or

is a member of a registered futures

association or any commodities