9708 Federal Register / Vol. 60, No. 34 / Tuesday, February 21, 1995 / Notices

26 17 CFR 200.30–3(a)(12) (1994)

1NASD Manual, Code of Arbitration Procedure,

Part III, Sec. 32(c) (CCH) ¶ 3732.

When volatility in the SOES

environment causes market makers to

widen spreads or to change quotes in

anticipation of waves of SOES orders,

quotes in the Nasdaq market become

more volatile and may be misleading to

the investing public. Accordingly,

absent continuation of the SOES

Minimum Exposure Limit rule and the

SOES Automated Quotation Update

Feature, the quotations published by

Nasdaq may not reflect the true market

in a security and, as a result, there may

be short-term volatility and loss of

liquidity in Nasdaq securities, to the

detriment of the investing public.

Further, the continuation of the

automated refresh feature will ensure

that a market maker’s quotation is

updated after an exposure limit is

exhausted. Uninterrupted use of this

function will maintain continuous

quotations in Nasdaq as market makers

exhausting their exposure limits in

SOES will not be subject to a ‘’closed

quote’’ condition or an unexcused

withdrawal from the market.

Finally, the NASD believes that the

proposed rule change is consistent with

significant national market system

objectives contained in Section

11A(a)(1)(C) of the Act. This provision

states it is in the public interest and

appropriate for the protection of

investors and the maintenance of fair

and orderly markets to assure, among

other things, (i) economically efficient

execution of securities transactions; (ii)

fair competition among brokers and

dealers; and (iii) the practically of

brokers executing investor orders in the

best market. Specifically, the SOES

Minimum Exposure Limit rule and the

SOES Automated Quotation Update

Feature advance each of these objectives

by preserving the operational

efficiencies of SOES for the processing

of small investors’ orders, by

maintaining current levels of market

maker participation through reduced

financial exposure from unpreferenced

orders, and by reducing price volatility

and the widening of market makers’

spreads in response to the practices of

order entry firms active in SOES.

In addition, for the same reasons

provided by the SEC when it approved

the Interim SOES Rules that are cited

above in the text accompanying

footnotes 7 through 14, the NASD

believes that the proposed rule change

is consistent with Sections 15A(b)(6),

15A(b)(9), 15A(b)(11) and 11A(a)(1)(C)

of the Act.

B. Self-Regulatory Organization’s

Statement on Burden on Competition

The NASD believes that the proposed

rule change will not 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

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.

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 for 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

Number SR–NASD–95–8 and should be

submitted by March 14, 1995.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.

Margaret H. MacFarland,

Deputy Secretary.

[FR Doc. 95–4085 Filed 2–17–95; 8:45 am]

BILLING CODE 8010–01–M

[Release No. 34–35370; File No. SR–NASD–

94–05]

Self-Regulatory Organizations; Notice

of Filing of Proposed Rule Change by

National Association of Securities

Dealers, Inc. Relating to Time Period

for the Exchange of Documents Before

an Arbitration Hearing

February 14, 1995.

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 February 1, 1995,

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, II, and

III below, which Items have been

prepared by the NASD. 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 NASD is proposing to amend

Section 32(c) of the NASD Code of

Arbitration Procedure (‘‘Code’’).1 Below

is the text of the proposed rule change.

Proposed new language is in italics;

proposed deletions are in brackets.

Code of Arbitration Procedure

* * * * *

General Provisions Governing Per-Hearing

Proceedings

Sec. 32.

* * * * *

(c) Pre-Hearing Exchange. At least [ten

(10)] Twenty (20) calendar days prior to

the first scheduled hearing date, all

parties shall serve on each other copies

of documents in their possession they

intend to present at the hearing and

shall identify witnesses they intend to

present at the hearing. The arbitrators

may exclude from the arbitration any

documents not exchanged or witnesses

not identified. This paragraph does not

require service of copies of documents

or identification of witnesses which

parties may use for cross-examination or

rebuttal.

* * * * *

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

NASD included statements concerning
Federal Register / Vol. 60, No. 34 / Tuesday, February 21, 1995 / Notices 9709

2The Securities Industry Conference on

Arbitration approved the proposed rule change as

an amendment to the Uniform Code of Arbitration

at its meeting on October 21, 1994.

3 15 U.S.C. 78o–3.

1 15 U.S.C. 78s(b)(1) (1988).

2CFR 240.19b-4 (1993).

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. The NASD 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

Section 32(c) currently requires all

parties to serve on each other copies of

documents in their possession they

intend to present at the hearing and to

identify witnesses they intend to

present at the hearing not less than 10

calendar days prior to the first

scheduled hearing date. Parties often

request additional discovery as a result

of information obtained through the

exchange of documents. These requests

create a significant burden on the

NASD’s Arbitration Department, which

currently must respond in a short period

of time to numerous requests for

additional discovery that arise from the

exchange of documents intended to be

used by the parties at the hearing. These

requests also create a significant burden

on the arbitrators and the parties.

Accordingly, the NASD is proposing to

amend Section 32(c) of the Code to

increase the amount of time before a

hearing where the parties are required to

exchange documents from 10 to 20

days.2 The proposed rule change is

intended to reduce the burden to the

Arbitration Department, arbitrators and

the parties in responding to last minute

discovery requests by increasing the

time for exchanging pre-hearing

memoranda.

The NASD believes that the proposed

rule change is consistent with the

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

Act 3 in that increasing the time for

exchange of documents prior to

arbitration hearing will facilitate the

arbitration process by providing a more

reasonable time frame in which to

address last minute discovery requests

and by reducing the burdens on the

forum staff, arbitrators and the parties in

dealing with such requests.

(B) Self-Regulatory Organization’s

Statement on Burden on Competition

The NASD 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

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.

Persons making written submissions

should file six copies thereof with the

Secretary, Securities and Exchange

Commission, 450 Fifth Street NW.,

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 in the caption above and should

be submitted by [insert date 21 days

from the date of publication].

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. 95–4086 Filed 2–17–95; 8:45 am]

BILLING CODE 8010–01–M

[Release No. 34–35373; File No. SR–NYSE–

94–42]

Self-Regulatory Organizations; New

York Stock Exchange, Inc.; Order

Granting Approval to Proposed Rule

Change Relating to the Mailing of

Interim Financial Statements to

Shareholders

Februrary 14, 1995.

On December 1, 1994, the New York

Stock Exchange, Inc. (‘‘NYSE’’ or

‘‘Exchange’’) submitted to the Securities

and Exchange Commission (‘‘SEC’’ or

‘‘Commission’’), pursuant to Section

19(b)(1) of the Securities Exchange Act

of 1934 (‘‘Act’’) 1 and Rule 19b-4

thereunder,2 a proposed rule change to

require corporations that distribute

interim reports to shareholders to

distribute such reports to both registered

and beneficial shareholders.

The proposed rule change was

published for comment in Securities

Exchange Act Release No. 35092

(December 12, 1994), 59 FR 65554

(December 20, 1994). No comments

were received on the proposal.

Currently, the NYSE requires listed

companies to publish interim earnings

statements as press reports, but does not

require that such statements also be sent

to shareholders. The rule change to

paragraph 203.02 of the NYSE’s Listing

Company Manual will continue to make

the distribution of interim reports to

shareholders voluntary, but will require

that corporations choosing to distribute

interim reports to shareholders must

distribute the reports to both registered

and beneficial shareholders.

The NYSE proposal is the product of

a review by various industry groups,

including the American Society of

Corporate Secretaries and the Securities

Industry Association, of listed

companies’ dissemination of interim

earnings reports to shareholders. The

groups have been attempting to achieve

some uniformity among listed

companies in the handling of interim

earnings reports. Presently, while some

listed companies distribute interim

reports to both record and beneficial

shareholders, some listed companies

only send interim reports to record

shareholders, and some do not send

interim reports to any shareholders. The

cost of providing interim reports to

beneficial shareholders has been

identified as a factor that discourages

listed companies from making a full

distribution of interim listed companies

from making a full distribution of

interim reports. Because broker-dealers

that hold investors’ securities in the