Federal Register / Vol. 61, No. 88 / Monday, May 6, 1996 / Notices 20299

2The Commission has modified parts of these

statements.

3For a complete description of the DCC’s options

clearance system, refer to Securities Exchange Act

Release No. 26450 (January 18, 1989), 54 FR 2010

(Order granting DCC temporary registration as a

clearing agency).

4 15 U.S.C. 78q–1 (1988).

5 15 U.S.C. 78s(b)(3)(A)(iii) (1988).

6 17 CFR 240.19b–4(e)(4) (1995).

7 178 CFR 200.30–3a(a)(12) (1995).

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

2On April 19, 1996, the NASD filed Amendment

No. 1 to the proposed rule change. Letter from

Suzanne E. Rothwell, Associate General Counsel,

NASD, to Mark P. Barracca, Special Counsel,

Division of Market Regulation, SEC, dated April 19,

1996.

3Pursuant to a new rule numbering system for the

NASD Manual anticipated to be effective no later

than May 1, 1996, Sec. 5 of Art. IV and the

Resolution of the Board of Governors thereto of the

Rules of Fair Practice that are the subject of this

proposed rule change will become Rules 8210 and

8220, respectively. Securities Exchange Act Release

No. 36698 (Jan. 11, 1996), 61 FR 1419 (Jan. 19,

1996) (order approving File No. SR–NASD–95–51).

comments it received on the proposed

rule change. The text of these statements

may be examined at the places specified

in Item IV below. DCC has prepared

summaries, set forth in sections (A), (B),

and (C) below, of the most significant

aspects of such statements.2

(A) Self-Regulatory Organization’s

Statement of the Purpose of, and

Statutory Basis for, the Proposed Rule

Change

Through its options clearing system,

DCC clears trades in over-the-counter

options that have been agreed to

through the facilities of RMJ Options

Trading Corp. (‘‘RMJ’’).3 RMJ has

informed DCC that it intends to

eliminate its options trading business.

The purpose of the proposed rule

change is to allow DCC to replace RMJ

with Euro Broker Maxcor Inc. The

proposed rule change amends the

definition of RMJ contained in Article I

of the DCC’s procedures to state that all

references to RMJ in the procedures

shall be deemed references to the broker

then performing the duties and

responsibilities of RMJ under the

procedures.

The proposed rule change will

facilitate the prompt and accurate

clearance and settlement of securities

transactions. Therefore, the proposed

rule change is consistent with the

requirements of the Act, specifically

Section 17A of the Act, and the rules

and regulations thereunder.4

(B) Self-Regulatory Organization’s

Statement on Burden on Competition

DCC does not believe that the

proposed rule change will impose 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

The foregoing rule change has become

effective pursuant to Section

19(b)(3)(A)(iii) of the Act 5 and Rule

19b–4(e)(4) thereunder 6 in that the

proposal effects a change in an existing

service of a registered clearing agency

that does not adversely affect the

safeguarding of securities or funds in

the custody or control of the clearing

agency or for which it is responsible and

does not significantly affect the

respective rights or obligations of the

clearing agency or persons using the

service. 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, 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

communication 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 Section,

450 Fifth Street, NW., Washington, DC

20549. Copies of such filing also will be

available for inspection and copying at

DCC. All submissions should refer to

File No. SR–DCC–96–05 and should be

submitted by May 28, 1996.

For the Commission by the Division of

Market Regulation, pursuant to delegated

authority.7

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 96–11141 Filed 5–3–96; 8:45 am]

BILLING CODE 8010–01–M

[Release No. 34–37150; File No. SR–NASD–

96–14]

Self-Regulatory Organizations; Notice

of Filing of Proposed Rule Change by

the National Association of Securities

Dealers, Inc. Relating to the

Requirement That Members Provide

Information to Other Regulators for

Regulatory Purposes

April 29, 1996.

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

Securities Exchange Act of 1934

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

April 4, 1996, the National Association

of Securities Dealers, Inc. (‘‘NASD’’ or

‘‘Association’’) filed with the Securities

and Exchange Commission

(‘‘Commission’’) the proposed rule

change,2 as described in Items I, II, and

III below, which Items have been

prepared by 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 filing a proposed rule

change to amend NASD Rules 8210 and

8220.3 The NASD is proposing to amend

Rule 8210 to require members to

provide information to domestic and

foreign self-regulatory organizations,

associations, securities or contract

markets or regulators with which the

Association has entered into

information sharing agreements for

regulatory purposes and to the NASD’s

Market Surveillance Committee.

Pursuant to Amendment No. 1, the

NASD is amending Rule 8220 to

authorize any Market Surveillance

Committee to require any member to

submit a report in writing with regard

to any matter connected with such

member’s business or business

practices, and to inspect the books,

records and accounts of any member.

Below is the text of the proposed rule

change. Proposed new language is

italicized.
20300 Federal Register / Vol. 61, No. 88 / Monday, May 6, 1996 / Notices

4The ISG is an organization of securities industry

self-regulatory organizations (‘‘ISG/SROs’’) formed

in 1983 to coordinate and develop intermarket

surveillance programs designed to identify and

combat fraudulent and manipulative acts and

practices. In order to promote its purposes,

members agree to exchange such information as is

necessary for ISG members to perform their selfregulatory and market surveillance functions. The

NASD has been a member of the ISG since its

formation.

The ISG’s self-regulatory organization members

(ISG/SROs) include all of the registered securities

exchanges and associations: American Stock

Exchange (AMEX), Boston Stock Exchange (BSE),

Chicago Board Options Exchange (CBOE), Chicago

Stock Exchange (CHX), Cincinnati Stock Exchange

(CSE), National Association of Securities Dealers,

Inc. (NASD), New York Stock Exchange (NYSE),

Pacific Stock Exchange (PSE), and Philadelphia

Stock Exchange (PHLX). In addition, other domestic

contract markets and foreign SROs have been

granted ‘‘affiliate’’ membership in the ISG: Alberta

Stock Exchange (ASE), Amsterdam Stock Exchange

(AMSE), Australian Stock Exchange (ASX), Chicago

Board of Trade (CBOT), Chicago Mercantile

Exchange (CME), London International Financial

Futures and Options Exchange (LIFFE), London

Stock Exchange (LSE), Montreal Exchange (ME),

New York Futures Exchange (NYFE), Securities and

Futures Authority (SFA), Toronto Stock Exchange

(TSE), and the Vancouver Stock Exchange (VSE).

ISG/SROs and ISG affiliates are referred to herein

as ‘‘participants.’’

5The CBOE recently amended Rule 15.9(b) to

require its members and associated persons, at the

request of the CBOE, to furnish testimony,

documentary evidence or other information in

connection with any inquiry by a domestic or

foreign self-regulatory organization, association,

contract market, or regulator of such market with

whom the CBOE has entered into an agreement

providing for the exchange of information and other

forms of mutual assistance for market surveillance,

investigative, enforcement and regulatory purposes.

Securities Exchange Act Release No. 35403 (Feb. 22,

1995), 60 FR 10884 (Feb. 28, 1995) (order approving

File No. SR–CBOE–94–39). The PSE recently

amended Rule 10.2(d) to require PSE members,

member organizations, persons associated with a

member or member organization, and other persons

or entities over whom the PSE has jurisdiction

pursuant to Rule 10.1(b) to testify before another

SRO and to furnish information in connection with

a regulatory inquiry, investigation, examination, or

disciplinary proceeding resulting from an

agreement entered into by the PSE pursuant to Rule

14.1. Securities Exchange Act Release No. 35646

(Apr. 25, 1995), 60 FR 21227 (May 1, 1995) (order

approving File No. SR–PSE–95–02). Currently,

PROCEDURAL RULES

8000. COMPLAINTS,

INVESTIGATIONS AND SANCTIONS

* * * * *

8200. INVESTIGATIONS

8210. Reports and Inspection of Books

for Purpose of Investigating

Complaints

(a) For the purpose of any

investigation, or determination as to

filing of a complaint or any hearing of

any complaint against any member of

the Association or any person associated

with a member made or held in

accordance with the Rule 9000 Series,

or made or held by another domestic or

foreign self-regulatory organization,

association, securities or contract

market or regulator of such markets,

with whom the Association has entered

into an agreement providing for the

exchange of information and other

forms of material assistance solely for

market surveillance, investigative,

enforcement or other regulatory

purposes, any District Business Conduct

Committee, the Market Surveillance

Committee, or the Board of Governors,

or any duly authorized member or

members of any such Committees or

Board or any duly authorized agent or

agents of any such Committee or Board

shall have the right:

(1) to require any member of the

Association, person associated with a

member, or person no longer associated

with a member when such person is

subject to the Association’s jurisdiction

to report, either informally or on the

record, orally or in writing with regard

to any matter involved in any such

investigation or hearing, and

(2) to investigate the books, records

and accounts of any such member or

person with relation to any matter

involved in any such investigation or

hearing.

(b) No such member or person shall

fail to make any report as required in

this Rule, or fail to permit any

inspection of books, records and

accounts as may be validly called for

under this Rule. Any notice requiring an

oral or written report or calling for an

inspection of books, records and

accounts pursuant to this Rule shall be

deemed to have been received by the

member or person to whom it is

directed by the mailing thereof to the

last known address of such member or

person as reflected on the Association’s

records.

8220. Suspension of members for

Failure to Furnish Information Duly

Requested

* * * * *

(e) It is essential for the promotion of

the Association’s welfare, object and

purposes and more particularly for the

administration and enforcement of its

Rules:

(1) that any District Business Conduct

Committee, any Market Surveillance

Committee, or any duly authorized

member or members of any such

Committees, or any duly authorized

agent or agents of any such Committees,

or any Association examiner duly

authorized by the President shall have

the right, in order to and solely for the

purpose of determining whether any

member is complying with the Rules of

the Association:

(A) to require any such member to

submit a report in writing with regard

to any matter connected with such

member’s business or business

practices, and

(B) to inspect the books, records and

accounts of any such member; and

(2) that any such Committee or any

such member or members thereof, or

any such agent or agents thereof, or any

such examiner, be and hereby is granted

such rights.

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

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

1. Purpose

Currently, Rule 8210 of the NASD’s

Procedural Rules provides that the

NASD may require members and

associated persons to provide

information, and may investigate a

member’s books and records, in

connection with investigations or

proceedings conducted by the NASD.

The NASD periodically receives

requests from other regulatory

organizations with whom the NASD has

entered into agreements to share

regulatory information, including selfregulatory organizations (‘‘SROs’’) who

participate in the Intermarket

Surveillance Group (‘‘ISG’’), 4 for

information from NASD members in

connection with investigations being

conducted by these regulators. Rule

8210, however, does not expressly

permit the NASD to require members to

provide information in connection with

investigations being conducted by other

regulatory organizations, or to bring

disciplinary action against a member

that refuses to cooperate.

While the NASD believes that Rule

8210 provides adequate authority to

require members and associated persons

to provide information to other

regulatory organizations, it is believed

that clarifying this provision to

expressly provide for such information

sharing would be desirable. Most of the

other ISG participants have amended or

are amending their rules to clarify their

investigatory and information sharing

authority. 5 The proposed rule change
Federal Register / Vol. 61, No. 88 / Monday, May 6, 1996 / Notices 20301

NYSE Rule 476(a)(11) permits the NYSE to bring

disciplinary action against a member, member

organization, allied member, approved person,

registered or non-registered employee for failing to

comply with an NYSE request to submit books and

records to the NYSE or any other SRO and for

failure to furnish information to or to appear or

testify before the NYSE or other SRO. The NYSE

has proposed an amendment to Rules 27,

476(a)(11), and 477 to require persons under

Exchange jurisdiction to comply with information

requests from commodities markets and

associations and foreign self-regulatory

organizations and associations. Securities Exchange

Act Release No. 36831 (Feb. 12, 1996), 61 FR 6279

(Feb. 16, 1996) (notice of File No. SR–NYSE–95–

43). Currently, Art. V, Sec. 4(a) of the AMEX Rules

facilitates examinations being conducted by another

exchange.

6 15 U.S.C. 78o–3.

1The NASD originally submitted the proposed

rule change on April 24, 1996. Amendment No. 1,

submitted on April 29, 1996, states that the Board

of Directors of NASD Regulation, Inc. authorized

the filing of the proposed rule change with the

Commission on April 26, 1996. Amendment No. 2,

submitted on April 30, 1996, amends Rule 10334(h)

to extend the effective date of that Rule to August

1, 1996.

2Formerly Section 46 of the Code of Arbitration

Procedure, NASD Manual, Code of Arbitration

Procedure, Art. III, § 46 (CCH) ¶ 3746.

would permit the NASD to require

members and associated persons to

provide information to any other

domestic or foreign SROs, associations,

securities or contract markets or

regulators of such markets with whom

the Association has entered into

agreements providing for the exchange

of regulatory information. By amending

Rule 8210, the NASD also will have

explicit authority to discipline members

and associated persons who fail to

provide information to other domestic

or foreign SROs, associations, securities

or contract markets or regulators of such

markets with whom the NASD has

information sharing agreements.

Finally, the NASD is proposing to

insert the phrase ‘‘the Market

Surveillance Committee’’ in that part of

Subparagraph (a) of Rule 8210 that

references the District Business Conduct

Committee and the Board of Governors,

and the phrase ‘‘any Market

Surveillance Committee,’’ after the

phrase ‘‘any District Business Conduct

Committee’’ in Subparagraph (e)(1) of

Rule 8220. The change conforms Rules

8210 and 8220 with references to the

Market Surveillance Committee in the

definitions and relevant titles of the

Code of Procedure.

2. Statutory Basis

The NASD believes that the proposed

rule change is consistent with the

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

Act,6 which require, among other

things, that the rules of the Association

be designed to foster cooperation and

coordination with persons engaged in

regulating securities transactions. The

proposed rule change is consistent with

these objectives in that it clarifies that

the Association has the authority to

require members to provide information

to other domestic or foreign selfregulatory organizations, associations,

securities or contract markets or

regulators of such markets for regulatory

purposes and to discipline those

members who fail or refuse to provide

such information.

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

No written comments were either

solicited or received.

III. Date of Effectiveness of the

Proposed Rule Change and Timing for

Commission Action

Within 35 days of the 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 the 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 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–96–14 and should be

submitted by May 27, 1996.

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. 96–11228 Filed 5–3–96; 8:45 am]

BILLING CODE 8010–01–M

[Release No. 34–37154; File No. SR–NASD–

96–18]

Self-Regulatory Organizations; Notice

of Filing and Order Granting

Accelerated Approval of Proposed

Rule Change by National Association

of Securities Dealers, Inc. Relating to

the Temporary Extension of

Effectiveness of Arbitration

Procedures for Large and Complex

Cases

April 30, 1996.

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 April 30, 1996,1 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 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

temporarily extend the effectiveness of

the arbitration Procedures for Large and

Complex Cases, Rule 10334 of the Code

of Arbitration Procedure (‘‘Code’’),2 to

August 1, 1996. Below is the text of the

proposed rule change. Proposed new

language is in italics; proposed

deletions are in brackets.

Code of Arbitration Procedure

* * * * *

Procedures for Large and Complex Cases

Rule 10334

* * * * *