SECURITIES AND EXCHANGE COMMISSION
17 CFR Part 240
Release No. 34-37972; File No. S7-30-95
RIN 3235-AG66
Order Execution Obligations
AGENCY: Securities and Exchange Commission
ACTION: Final Rule; Revised Compliance Dates
SUMMARY: The Securities and Exchange Commission is revising, for
certain over-the-counter ("OTC") securities, the compliance dates
required by the recent adoption of Rule 11Ac1-4, the "Display
Rule," which generally requires OTC market makers and exchange
specialists to display customer limit orders.
EFFECTIVE DATE: The effective date for Rule 11Ac1-4 adopted by
the Securities and Exchange Commission, and published on
September 12, 1996 (61 FR 48290) remains January 10, 1997.
Effective [insert date of publication in the Federal Register],
the compliance date to require the display of customer limit
orders in only 50 of the 1000 most actively traded OTC securities
is January 10, 1997. The new compliance date for an additional
100 of these 1,000 securities is January 31, 1997, and the
compliance date for the remaining 850 most actively traded
securities is February 21, 1997. The remainder of the compliance
dates are unchanged.
FOR FURTHER INFORMATION CONTACT: David Oestreicher, Special
Counsel, (202) 942-0158, Division of Market Regulation,
Securities and Exchange Commission, 450 Fifth Street, N.W., Mail
Stop 5-1, Washington, D.C. 20549.
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SUPPLEMENTARY INFORMATION: On August 28, 1996, the Securities
and Exchange Commission ("Commission") adopted Rule 11Ac1-
4,-[1]- the "Display Rule," to require OTC market makers and
exchange specialists to display certain customer limit orders for
covered securities if no stated exception applies.-[2]-
As discussed in the Adopting Release, the Display Rule will
become effective on January 10, 1997. Implementation of the
Display Rule will be accomplished in phases, with the first phase
of implementation scheduled to begin on January 10, 1997. As
originally envisioned by the Commission, as of this date, the
Display Rule would apply to all exchange-traded securities and
the 1000 Nasdaq securities with the highest average daily trading
volume in the previous quarter. The Commission initially
provided a phase-in period for Nasdaq securities because the
display of limit orders in the OTC market represents a
significant change in OTC market practice. To ensure an orderly
market transition, the Commission believes that market
professionals should be provided a period of time in which to
become accustomed, in a small number of stocks, to the quote
volume and array of prices that will be reflected by the display
of customer limit orders. The Commission has determined,
therefore, to require as of January 10, 1997, compliance with the
Display Rule with respect to only 50 of the 1000 Nasdaq
---------FOOTNOTES----------
-[1]- 17 CFR 240.11Ac1-4.
-[2]- Securities Exchange Act Release No. 37619A
(September 6, 1996), 61 FR 48290 (September 12,
1996) ("Adopting Release").
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securities with the highest average daily trading volume in the
previous quarter. These 50 securities will be identified by
Nasdaq. On January 31, 1997, compliance with the Display Rule
will be required with respect to an additional 100 securities
identified by Nasdaq. Compliance with the Display Rule for the
remaining 850 of the 1000 Nasdaq securities with the highest
daily trading volume in the previous quarter, as determined by
Nasdaq, will be required on February 21, 1997. For exchange-
traded securities, the Commission believes that it continues to
be appropriate to require compliance with the Display Rule as of
January 10, 1997, except in cases where the security is a Nasdaq
security and is traded on an exchange pursuant to unlisted
trading privileges. In such cases, the security will be
considered to be a Nasdaq security, not an exchange-traded
security, for the purpose of determining the compliance date with
the Display Rule.
All subsequent phase-in dates for compliance with the
Display Rule will continue to apply as described in the Adopting
Release. Specifically, the second phase-in date will be on March
28, 1997. From this date forward, the Display Rule will apply to
the next 1500 Nasdaq securities with the highest average daily
trading volume over the previous quarter. The third phase-in
date will be on June 30, 1997. From that date forward, the
Display Rule will apply to the next 2000 Nasdaq securities with
the highest average daily trading volume over the previous
quarter. The final phase-in date will be on August 28, 1997.
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From that date forward, the Display Rule will apply to all
remaining Nasdaq securities.
By the Commission.
Jonathan G. Katz
Secretary
DATE: November 22, 1996