Federal Register / Vol. 61, No. 132 / Tuesday, July 9, 1996 / Notices 36099

6 17 CFR 200.30–3(a)(12).

1See Securities Exchange Act Release No. 33721

(March 7, 1994), 59 FR 11636 (March 11, 1994). On

July 5, 1994, the Commission approved a 120-day

extension to the Exchange’s Municipal Bond

Trading Pilot Program. See Securities Exchange Act

Release No. 34317 (July 5, 1994), 59 FR 35546 (July

Continued

securities that are neither Nasdaq nor

exchange-listed.

The NASD believes the extension of

the Service through December 31, 1996

is fully consistent with the foregoing

provisions of the Act.

B. Self-Regulatory Organization’s

Statement on Burden on Competition

The NASD believes that the 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

Written comments were neither

solicited nor received.

III. Date of Effectiveness of the

Proposed Rule Change and Timing for

Commission Action

The NASD requests that the

Commission find good cause, pursuant

to Section 19(b)(2) of the Act, for

approving the proposed rule change

prior to the 30th day after its

publication in the Federal Register to

avoid any interruption of the Service.

The current authorization for the

Service extends through June 30, 1996.

Hence, it is imperative that the

Commission approve the instant filing

on or before that date. Otherwise, the

NASD will be required to suspend

operation of the Service pending

Commission action on the proposed

extension.

The NASD believes that accelerated

approval is appropriate to ensure

continuity in the Service’s operation

pending a determination on permanent

status for the Service, as requested in

File No. SR–NASD–92–7. Continued

operation of the Service will ensure the

availability of an electronic quotation

medium to support member firms’

market making in approximately 5,514

OTC Equities and the widespread

dissemination of quotation information

on these securities. The Service’s

operation also expedites price discovery

and facilitates the execution of customer

orders at the best available price. From

a regulatory standpoint, the NASD’s

capture of quotation data from

participing market makers supplements

the transctional data now reported by

member firms pursuant to NASD Rule

6600.

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 the file

number in the caption above and should

be submitted by: July 30, 1996.

V. Commission’s Findings and Order

Granting Accelerated Approval

The Commission finds that approval

of the proposed rule change is

consistent with the Act and the rules

and regulations thereunder, and in

particular with the requirements of

Section 15A(b)(11) of the Act, which

provides that the rules of the NASD

relating to quotations must be designed

to produce fair and informative

quotations, prevent ficititious or

misleading quotations and promote

orderly procedures for collecting,

distributing, and publishing quotations.

The Commission finds good cause for

approving the proposed rule change

prior to the 30th day after the date of

publishing notice of the filing thereof.

The Commission finds that approval of

this proposed rule change to continue

operation of the pilot program is

customers’ orders at the best available

price. Additionally, continued operation

of the Service will materially assist the

NASD’s surveillance of trading in OTC

Equities that are quoted in the Service,

including certain non-Tape B securities

that are listed on regional exchanges

and quoted in the Service.

It is therefore ordered, pursuant to

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

proposed rule change be, and hereby is,

approved for an interim period through

December 31, 1996.

For the Commission, by the Division of

Market Regulation, pusuant to delegated

authority.6

Jonathan G. Katz,

Secretary.

[FR Doc. 96–17351 Filed 7–8–96; 8:45 am]

BILLING CODE 8010–01–M

[Release No. 34–37385; File No. SR–PSE–

96–16]

Self-Regulatory Organizations; Notice

of Filing of Proposed Rule Change by

the Pacific Stock Exchange, Inc.

Relating to Listing and Trading

Guidelines for Municipal Bonds

June 28, 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 June 5, 1996, the

Pacific Stock Exchange, Inc. (‘‘PSE’’ or

‘‘Exchange’’) 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 self-regulatory 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

The PSE proposes to adopt on a

permanent basis rules for the listing and

trading of municipal bonds.

The text of the proposed rule change

is available at the Office of the

Secretary, PSE and at the Commission.

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

PSE 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 PSE 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

On March 7, 1994, the Commission

approved an Exchange pilot program

providing for the listing and trading of

‘‘municipal securities,’’ as defined in

Section 3(a)(29) of the Act (‘‘pilot

program’’) 1 The Exchange now
36100 Federal Register / Vol. 61, No. 132 / Tuesday, July 9, 1996 / Notices

12, 1994). The pilot program expired in November

1994.

2MSRB Rule G–3 provides specific qualification

requirements for municipal securities principals

and representatives. In light of the PSE’s

qualification requirements for specialists, the

Exchange believes it is appropriate for the PSE to

rely on these requirements for its specialists in lieu

of the Rule G–3 standards. It is important, however,

that any specialist selected by the PSE for a listed

municipal security be familiar with the

characteristics of municipal securities.

3See Rule 5.46.

4The National Association of Securities Dealers

(‘‘NASD’’) has the authority to enforce the MSRB

rules. The Exchange notes that it will also be

responsible for enforcing MSRB rules for the listed

municipal securities. The PSE’s enforcement in this

regard will not preempt or limit in any manner the

NASD’s authority to act in this area.

5To date, the Exchange has not listed or traded

any municipal securities under the pilot program.

6 17 CFR 200.30–3(a)(12) (1994).

1 15 U.S.C. § 78s(b)(1) (1988).

2 17 CFR 240.19b–4

proposes to adopt this municipal

securities pilot program on a permanent

basis.

Under the pilot program, a municipal

security may be eligible for Exchange

listing provided it is rated as investment

grade by at least one nationally

recognized rating service, and satisfies

the Exchange’s distribution criteria for

bonds of issuers whose corporate

securities are not listed on the

Exchange, i.e., the size of issue must be

at least $20 million principal amount/

aggregate market value, with at least 100

holders. In addition, the Exchange may

consider such other information as it

deems necessary to evaluate the

appropriateness of the issue for

exchange trading, including the

financing structure and/or arrangement

of the issuer.

Any municipal securities listed by the

Exchange must be assigned to a

specialist and traded in accordance with

all PSE regulations otherwise applicable

to the trading of securities listed on the

Exchange. As with corporate bonds,

trade reports and quotation information

for municipal securities will be

disseminated over Network B. However,

to ensure uniformity of practice within

the securities industry, proposed Rule

5.13(i) provides that all aspects of the

trade reconciliation process, including

comparison, settlement and clearing

will be governed by the applicable

requirements of the Municipal

Securities Rulemaking Board

(‘‘MSRB’’).2

Under the pilot program, any

purchase or sale of a municipal security

shall be exempt from the provisions of

the Exchange’s off-board trading rules.3

In addition pilot program is not

intended to otherwise alter the existing

regulatory framework and oversight

applicable to municipal securities

trading.4 Finally, a municipal security

would be subject to delisting in the

event it were no longer rated as

investment grade by a nationally

recognized rating service.

To accommodate the listing of

municipal securities, the PSE proposes

to apply the same rules and conditions

of the pilot program, as noted above, on

a permanent basis. In addition, the

Exchange proposes to adopt the

following rules on a permanent basis:

Rule 3.2(e)(3) (basic listing

requirements); Rule 3.5(d)(5)

(maintenance requirements); Rule

5.13(i) (comparance, settlement, and

clearance); and Rule 5.46(xv)

(exemption to offboard trading

requirements). The Exchange proposes

that any municipal security that it lists

be assigned to a specialist and traded in

accordance with all PSE regulations

otherwise applicable to the trading of

securities on the Equity Floors of the

Exchange.5 Finally, the Exchange

represents that it will require that its

members who trade municipal bonds

listed on the Exchange will have an

adequate understanding of the tax

implication of the trading of such

bonds.

2. Statutory Basis

The Exchange believes the proposed

rule change is consistent with Section

6(b) of the Act in general and furthers

the objectives of Section 6(b)(5) in

particular in that it is designed to

prevent fraudulent and manipulative

acts and practices and to promote just

and equitable principles of trade, and is

not designed to permit unfair

discrimination between customers,

issuers, brokers and dealers.

B. Self-Regulatory Organization’s

Statement on Burden on Competition

The Exchange believes the proposed

rule change will impose no burden on

competition.

C. Self-Regulatory Organization’s

Statement on Comments on the

Proposed Rule Change Received from

Members, Participants or Others

The Exchange has neither solicited

nor received written comments on the

proposed rule change.

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 other 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 at

the Commission’s Public Reference

Section, 450 Fifth Street, N.W.,

Washington, D.C. 20549. Copies of such

filing will also be available for

inspection and copying at the principal

office of the PSE. All submissions

should refer to File No. SR–PSE–96–16

and should be submitted by: July 30,

1996.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.6

Jonathan G. Katz,

Secretary.

[FR Doc. 96–17353 Filed 7–8–96; 8:45 am]

BILLING CODE 8010–01–M

[Release No. 34–37391; File No. SR–PSE–

96–21]

Self-Regulatory Organizations; Notice

of Filing of Proposed Rule Change by

the Pacific Stock Exchange, Inc.,

Relating to the Liability of the

Exchange and its Governors, Officers,

and Agents

July 1, 1996.

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 June 17,

1996, the Pacific Stock Exchange, Inc.

(‘‘PSE’’ or ‘‘Exchange’’) filed with the

Securities and Exchange Commission

(‘‘Commission’’) the proposed rule