Federal Register / Vol. 66, No. 99 / Tuesday, May 22, 2001 / Notices 28209

15 17 CFR 200.30–3(a)(12).

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

2 17 CFR 240.19b–4.

III. Conclusion

On the basis of the foregoing, the

Commission finds that the proposal is

consistent with the requirements of the

Act and in particular with the

requirements of section 17A of the Act

and the rules and regulations

thereunder.

It is Therefore Ordered, pursuant to

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

proposed rule change (File No. SR–

GSCC–00–13) be and hereby is

approved.

For the Commission by the Division of

Market Regulation, pursuant to delegated

authority.15

Jonathan G. Katz,

Secretary.

[FR Doc. 01–12824 Filed 5–21–01; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–44307; File No. SR–NASD–

2001–37]

Self-Regulatory Organizations; Notice

of Filing of Proposed Rule Change by

the National Association of Securities

Dealers, Inc. Relating to Trading Halt

Authority

May 15, 2001.

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

Securities Exchange Act of 1934

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

notice is hereby given that on May 11,

2001, the National Association of

Securities Dealers, Inc. (‘‘NASD’’),

through its subsidiary, The Nasdaq

Stock Market, Inc. (‘‘Nasdaq’’ 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 have been

prepared by Nasdaq. 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

Nasdaq is proposing to amend NASD

Rule 4120, Trading Halts, to clarify the

extent of Nasdaq’s authority to halt

trading in a security in response to

extraordinary market activity that

Nasdaq believes may be caused by the

misuse or malfunction of an electronic

system that is operated by, or linked to,

Nasdaq. The text of the proposed rule

change is below. Proposed new

language is in italics; proposed

deletions are in brackets.

* * * * *

4120. Trading Halts

(a) No change.

(1)–(5) No change.

(6) Halt trading in a security listed on

Nasdaq when:

(i) extraordinary market activity in the

security is occurring, such as the execution

of a series of transactions for a significant

dollar value at prices substantially unrelated

to the current market for the security, as

measured by the national best bid and offer,

and

(ii) Nasdaq believes that such

extraordinary market activity may be caused

by the misuse or malfunction of an electronic

quotation, communication, reporting, or

execution system operated by, or linked to,

Nasdaq.

(b)(1)–(3) No change.

(4) Should Nasdaq determine that a basis

exists under Rule 4120(a)[(1), (a)(2), (a)(3),

(a)(4), or (a)(5)] for initiating a trading halt,

the commencement of the trading halt will be

effective simultaneously with appropriate

notice in the Nasdaq ‘‘NEWS’’ frame.

(5) No change.

(6) A trading halt initiated under Rule

4120(a)(6) shall be terminated as soon as

Nasdaq determines either that the system

misuse or malfunction that caused the

extraordinary market activity has been

corrected or that system misuse or

malfunction is not the cause of the

extraordinary market activity.

* * * * *

II. Self-Regulatory Organization’s

Statement of the Purpose of, and

Statutory Basis for, the Proposed Rule

Change

In its filing with the Commission,

Nasdaq 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. Nasdaq 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

The purpose of the proposed rule

change is clarify Nasdaq’s authority to

initiate and continue trading halts in

circumstances where Nasdaq believes

that extraordinary market activity in a

security listed on Nasdaq may be caused

by the misuse or malfunction of an

electronic quotation, communication,

reporting, or execution system operated

by, or linked to, Nasdaq. NASD Rule

4120 provides Nasdaq with authority to

halt trading in securities in a number of

circumstances in which Nasdaq deems

a trading halt necessary to protect

investors and the public interest. The

specific bases for initiating a trade halt

that are currently listed in Rule 4120

focus primarily on ensuring that

investors have access to material news

about an issuer. Thus, trading may be

halted to allow the issuer to disseminate

material news or to allow Nasdaq to

request from the issuer information

relating to material news or other

information that is necessary to protect

investors and the public interest.

Trading of a security may also be halted

in certain circumstances to ensure

coordination with a halt of the same or

a related security imposed by another

market. The decision to halt trading and

to resume trading in a particular

security are communicated to market

participants via the Nasdaq ‘‘NEWS’’

frame of the Nasdaq Workstation.

As a result of the decentralized and

electronic nature of the market operated

by Nasdaq, the price and volume of

transactions in a Nasdaq-listed security

may be affected by the misuse or

malfunction of electronic systems,

including systems that are linked to, but

not operated by, Nasdaq. In

circumstances where misuse or

malfunction results in extraordinary

market activity, Nasdaq believes that it

may be appropriate to halt trading until

the system problem can be rectified. As

is true for all trading halts initiated

under Rule 4120, a decision to halt

trading would require a determination

that the action is necessary to protect

investors and the public interest. Thus,

a misuse or malfunction that has a

limited effect on a particular security

may not warrant a trading halt. In

extraordinary circumstances, however,

the system misuse or malfunction may

generate significant misinformation

about the demand for a particular

security in a manner that distorts prices

to the detriment of investors.

Under the proposed rule change,

Nasdaq would be authorized to initiate

a halt if it believes that a particular

insurance of extraordinary market

activity may be caused by system

misuse of malfunction. However, the

trading halt would continue only until

Nasdaq determines either that the

system misuse or malfunction that

caused the extraordinary market activity

has been corrected or that system

misuse or malfunction is not the cause

of the extraordinary market activity.

Thus, the existence of extraordinary

market activity, unrelated to an instance

of system misuse or malfunction, would

28210 Federal Register / Vol. 66, No. 99 / Tuesday, May 22, 2001 / Notices

3 15 U.S.C. 78o–3(b)(6).

4 17 CFR 200.30–3(a)(12).

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

2 17 CFR 240.19b–4.

3Letter from Darla C. Stuckey, Assistant

Secretary, NYSE to Jerry Carpenter, Assistant

Director, Division of Market Regulation (February 8,

2001).

4The Commission has modified the text of the

summaries prepared by the NYSE.

5Within the context of NYSE Rule 412, the term

‘‘receiving firm’’ refers to a member organization to

which a customer is transferring his account.

not provide a basis for continuing a

trade halt.

2. Statutory Basis

Nasdaq 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.

Nasdaq believes the proposed rule

change is consistent with these

requirements because the amendment

will provide Nasdaq with clearer

authority to respond to and alleviate

market disruptions and thereby protect

investors and the public interest.

B. Self-Regulatory Organization’s

Statement on Burden on Competition

Nasdaq 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.

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

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 NASD 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 six copies thereof with the

Secretary, Securities and Exchange

Commission, 450 Fifth Street, NW.,

Washington, DC 20549–0609. 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 Nasdaq. All

submissions should refer to file number

SR–NASD–2001–37 and should be

submitted by June 12, 2001.

For the Commission by the Division of

Market Regulation, pursuant to delegated

authority.4

Jonathan G. Katz,

Secretary.

[FR Doc. 01–12825 Filed 5–21–01; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–44302; File No. SR–NYSE–

00–61]

Self-Regulatory Organizations; Notice

of Filing of Proposed Rule Change by

the New York Stock Exchange, Inc., To

Amend the Interpretation of NYSE Rule

412, ‘‘Customer Account Transfer

Contracts’’

May 14, 2001.

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

Securities Exchange Act of 1934

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

notice is hereby given that on December

22, 2000, the New York Stock Exchange,

Inc. (‘‘NYSE’’), filed with the Securities

and Exchange Commission

(‘‘Commission’’) the proposed rule

change and on February 12, 2001,

amended the proposed rule change 3 as

described in Items I, II, and III below,

which Items have been prepared

primarily by the NYSE. The

Commission is publishing this notice to

solicit comments on the amended

proposed rule change from interested

persons.

I. Self-Regulatory Organization’s

Statement of the Terms of Substance of

the Proposed Rule Change

The NYSE proposes to amend its

Interpretation of NYSE Rule 412,

‘‘Customer Account Transfer Contracts,’’

to expedite the transfer of customer

accounts containing proprietary and/or

third party products. The text of the

proposed rule change is available upon

request from the NYSE’s Office of the

Secretary or through the Commission’s

Public Reference Branch.

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

NYSE included statements concerning

the prupose 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 NYSE has

prepared summaries, set forth in

sections A, B, and C below, of the most

significant aspects of such statements.4

A. Self-Regulatory Organization’s

Statement of the Purpose of, and

Statutory Basis for, the Proposed Rule

Change

1. Purpose

a. Introduction. NYSE Rule 412

prescribes procedures for member

organizations transfering customer

accounts and requires the use of the

automated Customer Account Transfer

Service (‘‘ACATS’’) which is

administered by the National Securities

Clearing Corporation (‘‘NSCC’’). Since

ACATS’s inception in 1985, several

enhancements to the system and to

NYSE Rule 412 have allowed for faster

and more efficient transfers to customer

accounts. Recent ACATS modifications

offer the capability to facilitate the

transfer of accounts containing third

party and/or proprietary products. The

proposed amendments to the

Interpretation of NYSE Rule 412 relate

to these modifications and would

provide the number greater flexibility to

expedite the transfer of such accounts.

b. Background. The transfer process is

initiated when, upon a customer’s

written instructions, the receiving firm 5

submits a Transfer Instruction Form or

Transfer Initiation Form (‘‘TIF’’) to the