[Federal Register Volume 67, Number 164 (Friday, August 23, 2002)]
[Notices]
[Pages 54687-54688]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-21520]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-46381; File No. S7-24-89]
Joint Industry Plan; Order Granting Partial Temporary Approval of
Amendment No. 13 of the Reporting Plan for Nasdaq-Listed Securities
Traded on Exchanges on an Unlisted Trading Privilege Basis, Submitted
by the National Association of Securities Dealers, Inc., the Boston
Stock Exchange, Inc., the Chicago Stock Exchange, Inc., the Cincinnati
Stock Exchange, Inc., the Pacific Exchange, the American Stock Exchange
LLC, and the Philadelphia Stock Exchange, Inc.
August 19, 2002.
I. Introduction and Description
On May 31, 2002, the Cincinnati Stock Exchange, Inc. (``CSE'') on
behalf of itself and the National Association of Securities Dealers,
Inc. (``NASD''), the American Stock Exchange LLC (``Amex''), the Boston
Stock Exchange, Inc. (``BSE''), the Chicago Stock Exchange, Inc.
(``CHX''), the Pacific Exchange, Inc. (``PCX''), and the Philadelphia
Stock Exchange, Inc. (``PHLX'') (hereinafter referred to collectively
as ``Participants''),\1\ as members of the operating committee
(``Operating Committee'' or ``Committee'') \2\ of the Plan submitted to
the Securities and Exchange Commission (``SEC'' or ``Commission'') a
proposal to amend the Plan, pursuant to Rule 11Aa3-1 \3\ and Rule
11Aa3-2 \4\ under the Securities Exchange Act of 1934 (``Act'' or
``Exchange Act''). The proposal represents the 13th amendment (``13th
Amendment'') made to the Plan. Notice of the proposed 13th Amendment
was published in the Federal Register on July 5, 2002.\5\
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\1\ The CSE was elected chair of the Operating Committee for the
Joint Self-Regulatory Organization Plan Governing the Collection,
Consolidation and Dissemination of Quotation and Transaction
Information for Nasdaq-Listed Securities Traded on Exchanges on an
Unlisted Trading Privilege Basis (``Nasdaq UTP Plan'' or ``Plan'')
by the Participants.
\2\ Among other things, the 13th Amendment proposes to add the
Nasdaq Stock Market, Inc. (``Nasdaq'') as a Participant. The
Committee is made up of all the Participants.
\3\ 17 CFR 240.11Aa3-1.
\4\ 17 CFR 240.11Aa3-2.
\5\ Securities Exchange Act Release No. 46139 (June 28, 2001
[sic]), 67 FR 44888 (``13th Amendment Notice'').
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The Nasdaq UTP Plan governs the collection, processing, and
dissemination on a consolidated basis of quotation and last sale
information for each of its Participants. This consolidated information
informs investors of the current quotation and recent trade prices of
Nasdaq securities. It enables investors to ascertain from one data
source the current prices in all the markets trading Nasdaq securities.
The Plan serves as the required transaction reporting plan for its
Participants, which is a prerequisite for their trading Nasdaq
securities.
As discussed in the 13th Amendment Notice, proposed amendments to
the Plan have been segregated into four categories: (1) Category 1,
``Effective Upon Nasdaq's Exchange Registration;'' (2) Category 2,
``Effective Upon Launch of the Internal SIP;'' (3) Category 3,
``Effective Upon End of Parallel Period--Elimination of the Legacy
SIP;'' and (4) Category 4, ``Timing Not An Issue.'' Through the 13th
Amendment Notice, the Commission granted temporary summary
effectiveness to amendments detailed in Category 2 so as to allow the
target launch date for the new Internal Securities Information
Processor (``SIP'') data feeds to be met.\6\ The Commission received no
comments on the proposed 13th Amendment.
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\6\ In November of 2001, Nasdaq began implementing the
``Internal SIP'' project. The Internal SIP is a separate technology
infrastructure within Nasdaq that will perform the functions of the
SIP for Nasdaq-listed securities. When the Internal SIP is in place,
Nasdaq will be able to separate its functions as a stock market from
its functions as a SIP for the Plan.
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This partial temporary approval order approves the 13th Amendment's
extension of the Plan through August 19, 2003. This order does not
approve the amendments detailed in Categories 1, 2, 3, and 4 in the
13th Amendment Notice,\7\ which will be addressed in a separate action.
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\7\ Pursuant to Rule 11Aa3-2(c)(4), 17 CFR 240.11Aa3-2(c)(4),
the temporary summary effectiveness granted to the Category 2
amendments by the 13th Amendment Notice may not exceed 120 days in
length. This partial temporary approval order has no impact upon
such temporary summary effectiveness of the Category 2 amendments.
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II. Discussion
The Commission finds that extending the Plan for one year is
consistent with the requirements of the Act and the rules and
regulations thereunder, and, in particular, section 12(f) \8\ and
section 11A(a)(1) \9\ of the Act and Rules 11Aa3-1 and 11Aa3-2
thereunder.\10\ Section 11A of the Act directs the Commission to
facilitate the development of a national market system for securities,
``having due regard for the public interest, the protection of
investors, and the maintenance of fair and orderly markets,'' and cites
as an objective of that system the ``fair competition * * * between
exchange markets and markets other than exchange markets.'' \11\ When
the Commission first approved of the Plan on a pilot basis, it found
that the Plan ``should enhance market efficiency and fair competition,
avoid investor confusion, and facilitate surveillance of concurrent
exchange and OTC trading.'' \12\ The Plan has been in existence since
1990 and Participants have been trading Nasdaq securities under the
Plan since 1993.
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\8\ 15 U.S.C. 78l(f). The Commission finds that extending the
Plan is consistent with fair and orderly markets, the protection of
investors and the public interest, and otherwise in furtherance of
the purposes of the Act. The Commission has taken into account the
public trading activity in securities traded pursuant to the Plan,
the character of the trading, the impact of the trading of such
securities on existing markets, and the desirability of removing
impediments to, and the progress that has been made toward the
development of a national market system.
\9\ 15 U.S.C. 78k-1(a)(1).
\10\ 17 CFR 240.11Aa3-1 and 17 CFR 240.11Aa3-2.
\11\ 15 U.S.C. 78k-1(a).
\12\ Securities Exchange Act Release No. 28146 (June 26, 1990),
55 FR 27917 (July 6, 1990).
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[[Page 54688]]
The Commission finds that extending the pilot period of the Plan
furthers the goals described above by preventing the lapsing of the
sole effective transaction reporting plan for Nasdaq securities traded
by other exchanges pursuant to unlisted trading privileges. The
Commission believes that the Plan is currently a critical component of
the national market system and that the Plan's expiration would have a
serious, detrimental impact on the further development of the national
market system.
III. Conclusion
It is therefore ordered, pursuant to sections 12(f) and 11A of the
Act \13\ and paragraph (c)(2) of Rule 11Aa3-2 \14\ thereunder, that the
pilot expiration date for the Plan be, and hereby is, extended through
August 19, 2003.
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\13\ 15 U.S.C. 78l(f) and 15 U.S.C. 78k-1.
\14\ 17 CFR 240.11Aa3-2(c)(2).
By the Commission.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 02-21520 Filed 8-22-02; 8:45 am]
BILLING CODE 8010-01-P