Order Execution Obligations

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. DATES: 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 December 2, 1996, the compliance date to require the display of customer limit orders in only 50 of the 1,000 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, NW., Mail Stop 5–1, Washington, DC 20549. SUPPLEMENTARY INFORMATION: On August 28, 1996, the Securities and Exchange Commission (‘‘Commission’’) adopted

63710 Federal Register / Vol. 61, No. 232 / Monday, December 2, 1996 / Rules and Regulations 1 17 CFR 240.11Ac1–4. 2Securities Exchange Act Release No. 37619A (September 6, 1996), 61 FR 48290 (September 12,
1996) (‘‘Adopting Release’’).
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 1,000 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 1,000 Nasdaq 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 1,500 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 2,000 Nasdaq securities with the highest average daily trading volume over the previous quarter. The final phase-in date will be on August 28, 1997. From that date forward, the Display Rule will apply to all remaining Nasdaq securities. Dated: November 22, 1996. By the Commission. Margaret H.
McFarland, Deputy Secretary. [FR Doc. 96–30527 Filed 11–29–96; 8:45 am] BILLING CODE 8010–01–P