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86-86 NASDAQ National Market System Grows to 2,709 Securities With 26 Voluntary Additions on December 16, 1986

TO: All NASD Members and Level 2 and Level 3 Subscribers

On Tuesday, December 16, 1986, 26 issues are scheduled to join the NASDAQ National Market System, bringing the total number of issues in NASDAQ/NMS to 2,709. These 26 issues, which will begin trading under real-time trade reporting, are entering NASDAQ/NMS pursuant to the Securities and Exchange Commission's criteria for voluntary designation.

The 26 issues scheduled to join NASDAQ/NMS on Tuesday, December 16, 1986, are:

Symbol*

Company

Location

FAMB

1st American Bank for Savings

Boston, MA

ADVO

ADVO System, Inc.

Hartford, CT

CIOTS

Consolidated Capital Income Opportunity Trust/2

Emeryville, CA

CIOTW

Consolidated Capital Income Opportunity Trust/2 (Wts)

Emeryville, CA

DMCB**

Data Measurement Corporation

Gaithersburg, MD

DCPY

Datacopy Corporation

Mountain View, CA

DIBK***

Dime Savings Bank of Wallingford (The)

Wallingford, CT

DXYN

Dixie Yarns, Inc.

Chattanooga, TN

FFPC

First Federal Savings & Loan of Panama City

Panama City, FL

HSBK

Hibernia Savings Bank (The)

Boston, MA

LBFC

Landmark Financial Corporation

Hartford, CT

MLXX

MLX Corp.

Troy, MI

METR

Metrobank, N.A.

Los Angeles, CA

MUNI

Municipal Development Corporation

New York, NY

NVIS

National Video, Inc.

Portland, OR

NFSL

Newnan Federal Savings & Loan Association

Newnan, GA

NUTM

Nutmeg Industries, Inc.

Tampa, FL

PEBW

Peoples Savings Bank

Worcester, MA

SIGN

Plasti-Line, Inc.

Knoxville, TN

SGOPP

Seagull Energy Corporation (Pfd)

Houston, TX

SFBM

Security Federal Savings Bank

Billings, MT

SOBK

Southern Bankshares, Inc.

Beckley, WV

SYRA

Syracuse Supply Company

Syracuse, NY

TCEL

T Cell Sciences, Inc.

Cambridge, MA

TLII

Trans Leasing International, Inc

Northbrook, IL

UCFC

UniCARE Financial Corp.

Irvine, CA

The following issues may be included in NASDAQ/NMS prior to the next regularly scheduled phase-in date:

Pending Additions

Symbol*

Company

Location

ALNT

Alliant Computer System Corporation

Littleton, MA

BTCI

Brown Transport Co., Inc.

Atlanta, GA

COCR

Community Credit Co.

Minneapolis, MN

COTG

Cottage Savings Association

Cincinnati, OH

DIAL

Dial REIT, Inc.

Omaha, NE

DCPI

dick dark productions, inc.

Burbank, CA

POWR

Environmental Power Corporation

Boston, MA

FFAL

First Federal of Alabama, F.S.B.

Joseph, AL

FCHT

First Federal Savings and Loan Association of Chattanooga

Chattanooga, TN

Once an ineligible person's registration with a member firm has been approved, the person will not be required to undergo eligibility proceedings in connection with any future applications for registration in the capacity in which his registration was approved, assuming that the individual is not otherwise ineligible. An additional eligibility proceeding would be required, for example, if an individual who was previously approved as a registered representative requested registration in a principal capacity.

The Board of Governors recognizes the significant constraints that the proposed amendments would create for persons subject to its provisions. It believes, however, that the NASD's careful review of such persons' participation in the events and circumstances that led to the liquidation of a broker-dealer as well as their proposed activities, prior to approving their association with another broker-dealer, will prove beneficial to public customers. The Board believes that the proposed amendments will help reduce the number of SIPA liquidations, aid in the preservation of the funds administered by SIPC to meet the obligations of insolvent broker-dealers, and reduce the inconvenience and risk that may be incurred by public customers as a result of SIPA liquidations.

The NASD encourages all members and other interested persons to comment on the proposed amendments. Comments should be directed to:

Mr. Lynn Nellius
Secretary
National Association of Securities Dealers, Inc.
1735 K Street, N.W.
Washington, D.C. 20006-1506

Comments must be received no later than January 5, 1987. Comments received by this date will be considered by the NASD Qualifications Committee and the NASD Board of Governors. If the proposed amendments are approved by the Board, the amendments must be filed with and approved by the Securities and Exchange Commission before becoming effective.

Questions concerning this notice may be directed to Mary S. Head, NASD Office of General Counsel, at (202) 728-8284.

Sincerely,

Frank J. Wilson
Executive Vice President
Legal and Compliance

Attachment

Proposed Amendments to Article II, Sections 3, 4 and 5 of the NASD By-Laws*

Sec. 3 (a) No registered broker, dealer or municipal securities broker or dealer shall be admitted to membership, and no member shall be continued in membership, if such broker, dealer, municipal securities broker or dealer or member fails or ceases to satisfy the qualification requirements under Section 2 of this Article, or if such broker, dealer, municipal securities broker or dealer or member is or becomes subject to a disqualification under Section £ [41 of this Article.

(b) No person shall become associated with a member, or continue to be associated with a member, or transfer association to another member, if such person fails or ceases to satisfy the qualification requirements under Section 2 of this Article, if such person is or becomes ineligible under Section 4 of this Article, or if such person is or becomes subject to a disqualification under Section j^ [4] of this Article; and no broker, dealer or municipal securities broker or dealer shall be admitted to membership, and no member shall be continued in membership, if any person associated with it is ineligible to be an associated person under this subsection.

(Remainder of Section 3 is unchanged.)

Sec. 4 If a person associated with a member or seeking to become associated with a member was an officer, director, general partner, limited principal — financial and operations, owner of ten (10) percent or more of the voting securities, or a controlling person (or a person performing similar functions) of a member that was the subject of proceedings under the Securities Investor Protection Act of 1970 ("SIPA") instituted during such person's association with the member or within six months after the termination of such person's association with the member, then such person shall be considered ineligible for registration in any capacity. Before such ineligible person may become or continue to be registered in any capacity, he shall make application for registration to the Board of Governors pursuant to Article VII of the NASD Code of Procedure; provided, however, that once such person's registration or continued registration with a member subsequent to the institution of SIPA proceedings has been approved in a particular capacity, no additional application or approval shall be required with respect to any future application for registration in the capacity approved.

(Renumber Section 4, Definition of Disqualification, as Section 5.)

NASDAQ NMS TRADE REPORTING RULE SUMMARY

When To Report

With the exception of transactions executed through the Computer Assisted Execution System (CAES) and odd lot transactions, all transactions in NASDAQ NMS securities should be reported within 90 seconds of execution. For a more detailed list of these exceptions, refer to Section XIV, Schedule D of the NASD By-Laws.

Who Reports

The following charts summarize who reports different types of transactions in NASDAQ NMS securities. In brief, the following rules apply:

  • In transactions between two market makers, only the sell side reports.
  • In transactions between a market maker and a non-market maker, only the market maker reports.
  • In transactions between two non-market makers, only the sell side reports.
  • In transactions between a member and a customer, the member reports.

Principal Transactions

Member

Transaction

Member Reports When Contra-Party Is

   

Market Maker

Non-Market Maker

Customer

Market Maker 1/

buys from:

No

Yes

Yes

 

sells to:

Yes

Yes

Yes

Non-Market Maker

buys from:

No

No

Yes

 

sells to:

No

Yes

Yes

Agency Transactions

Member

Transaction

Member Reports When Contra-Party Is

   

Market Maker

Non-Market Maker

Customer2/

Market Maker

buys, as agent for customer, from:

No

Yes

Yes

 

sells, as agent for customer, to:

Yes

Yes

Yes

Non-Market Maker

buys, as agent for customer, from:

No

Yes

Yes

 

sells, as agent for customer, to:

No

No

Yes

Reporting Requirements for "Riskless" Transactions by Non-Market Makers

Member

Transaction

Member Reports When Contra-Party Is

   

Market Maker

Non-Market Maker

Customer

Non-Market Maker

buys from customer and sells to:

No

Yes

Yes

 

sells to customer and buys from:

No

No

Yes

What Price To Report

• For agency transactions, the member should report the number of shares only once, and report the price excluding the commission charged.

Example: Buy as agent 100 shares at 40 plus a commission of $12.50. Report 100 shares at 40

• For dual agency transactions, the member should report the number of sharesonly once, and report the price excluding the commission charged.

Example: Buy as agent 100 shares at 40 plus a commission of $12.50. Sell as agent 100 shares at 40 less a commission of $12.50. Report 100 shares at 40

• For principal transactions, except as provided below, the members should report each purchase and sale transaction separately and report the number of shares and the price. For principal transactions executed at a price which includes a mark-up, mark-down or service charge, the price reported shall exclude the mark-up, mark-down or service charge. The reported price should be reasonably related to the prevailing market, taking into consideration all relevant circumstances including, but not limited to, market conditions with respect to the security, the number of shares involved in the transaction, the published bids and offers with size at the time of the execution (including the reporting firm's own quotation), the cost of execution and the expenses involved in clearing the transaction.

Examples: Buy as principal 100 shares from another member at 40 (no mark-down included). Report 100 shares at 40
Buy as principal 100 shares from a customer at 39 7/8, which includes a 1/8 mark-down from the prevailing market of 40. Report 100 shares at 40
Sell as principal 100 shares to a customer at 40 1/8, which includes a 1/8 mark-up from the prevailing market of 40. Report 100 shares at 40
Buy as principal 10,000 shares from a customer at 39 3/4, which includes a 1/4 mark-down or service charge from the prevailing market of 40. Report 10,000 shares at 40

• A "riskless" principal transaction in which a member that is not a market maker in the security after having received from a customer an order to buy, purchases the security as principal from another member or customer to satisfy the order to buy or, after having received from a customer an order to sell, sells the security as principal to another member or customer to satisfy the order to sell, shall be reported as one transaction in the same manner as an agency transaction,excluding the mark-up or mark-down.

Examples: Sell as principal 100 shares to another member at 40 to fill an existing order. Buy as principal 100 shares from a customer at 40 minus a mark-down of $12.50. Report one transaction of 100 shares at 40

Aggregating or "Bunching" Trade Reports

• For NASDAQ NMSsecurities only, aggregating or "bunching" transaction reports at the same price is permitted for certain simultaneous and non-simultaneous executions. Simultaneous executions are defined to include:

  • Pre-opening orders that are executed at market opening;
  • Orders received during quotation or trading halts and executed once trading begins again;
  • Limit orders that are executed when the limit price is reached; and,
  • A branch office relaying combined customer orders which are executed simultaneously by the trading department.

• For non-simultaneous executions, bunching is permitted if all of the following four conditions are met:

  • All orders to be bunched must be executed within 60 seconds of the initial execution and effected at the same price.
  • All executions must be reported within 90 seconds of the initial execution;
  • The transaction must not be initiated by the trader; and,

The individual transactions to be aggregated must involve orders of less than 5,000 shares each.

SCHEDULE D

ARTICLE XIV

Reporting Transactions in NASDAQ National Market System Designated Securities

This Part has been adopted pursuant to Article XVI of the Corporation's By-Laws and applies to the reporting by all members of transactions in NASDAQ National Market System securities ("designated securities") through the Transaction Reporting System. These securities have been designated pursuant to the "National Market System Securities Designation Plan With Respect to NASDAQ Securities" ("Plan") which has been approved by the Securities and Exchange Commission pursuant to Rule HAa2-l.

Section 1 — Definitions

(a) Terms used in this Part shall have the meaning as defined in the Association's By-Laws and Rules of Fair Practice, Rule HAa2-l and the Plan, unless other defined herein.
(b) "Transaction Reporting System" means the transaction reporting system for the reporting and dissemination of last sale reports in designated securities.
(c) "Registered Reporting Market Maker" means a member of the Association which is registered as a NASDAQ market maker in a particular designated security. A member is a Registered Reporting Market Maker in only those designated securities for which it is registered as a NASDAQ market maker. A member shall cease being a Registered Reporting Market Maker in a designated security when it has withdrawn or voluntarily terminated its quotations in that security or when its quotations have been suspended or terminated by action of the Corporation.
(d) "Non-Registered Reporting Member" means a member of the Association which is not a Registered Reporting Market Maker.

Section 2 — Transaction Reporting

(a) When and How Transaction Reported
(1) Registered Reporting Market Makers shall transmit through the Transaction Reporting System, within 90 seconds after execution, last sale reports of transactions in designated securities executed during the hours of the Transaction Reporting System. Transactions not reported within 90 seconds after execution shall be designated as late.
(2) Non-Registered Reporting Members shall transmit through theTransaction Reporting System, or if such system is unavailable, via Telex,TWX or telephone to the NASDAQ Department in New York City, within 90 seconds after execution, last sale reports of transactions in designated securities executed during the trading hours of the Transaction Reporting System unless all of the following criteria are met:
(A) The aggregate number of shares of designated securities which the member executed and is required to report during the trading day does not exceed 1,000 shares; and,
(B) The total dollar amount of shares of designated securities which the member executed and is required to report during the trading day does not exceed $25,000; and,
(C) The member's transactions in designated securities have not exceeded the limits of (A) or (B) above on five or more of the previous ten trading days.
Transactions not reported within 90 seconds after execution shall be designated as late. If the member has reason to believe its transactions in a given day will exceed the above limits, it shall report all transactions in designated securities within 90 seconds after execution; in addition, if the member exceeds the above limits at any time during the trading day, it shall immediately report and designate as late any unreported transactions in designated securities executed earlier that day.
(3) Non-Registered Reporting Members shall report weekly to the NASDAQ Department in New York City, on a form designated by the Board of Governors, last sale reports of transactions in designated securities which are not required by Paragraph (2) to be reported within 90 seconds after execution.
(4) All members shall report weekly to the NASDAQ Department in New York City, on a form designated by the Board of Governors, last sale reports of transactions in designated securities executed outside the trading hours of the Transaction Reporting System.
(5) All trade tickets for transactions in designated securities shall be time-stamped at the time of execution.
(b) Which Party Reports Transaction
(1) In transactions between two Registered Reorting Market Makers, only the member representing the sell side shall report.
(2) In transactions between a Registered Reporting Market Maker and a Non-Registered Reporting Member, only the Registered Reporting Market Maker shall report.
(3) In transactions between two Non-Registered Reporting Members, only the member representing the sell side shall report.
(4) In transactions between a member and a customer, the member shall report.
(c) Information To Be Reported
Each last sale report shall contain the following information:
(1) NASDAQ symbol of the designated security;
(2) Number of shares (odd lots shall not be reported);
(3) Price of the transaction as required by Paragraph (d) below.
(d) Procedures For Reporting Price and Volume
Members which are required to report pursuant to Paragraph (b) above shall transmit last sale reports for all purchases and sales in designated securities in the following manner.
(1) For agency transactions, report the number of shares and the price excluding the commission charged.
Example: SELL as agent 100 shares at 40 less a commission of $12.50; REPORT 100 shares at 40.
(2) For dual agency transactions, report the number of shares only once, and report the price excluding the commission charged.
Example: SELL as agent 100 shares at 40 less a commission of $12.50; BUY as agent 100 shares at 40 plus a commission of $12.50; REPORT 100 shares at 40.
(3) For principal transactions, except as provided below, report each purchase and sale transaction separately and report the number of shares and the price. For principal transactions which are executed at a price which includes a mark-up, mark-down or service charge, the price reported shall exclude the mark-up, mark-down or service charge. Such reported price shall be reasonably related to the prevailing market, taking into consideration all relevant circumstances including, but not limited to, market conditions with respect to the security, the number of shares involved in the transaction, the published bids and offers with size at the time of the execution (including the reporting firm's own quotation), the cost of execution and the expenses involved in clearing the transaction.
Example: BUY as principal 100 shares from another member at 40 (no mark-down included);
REPORT 100 shares at 40.
Example: BUY as principal 100 shares from a customer at 39-7/8, which includes a 1/8 mark-down from prevailing market of 40;
REPORT 100 shares at 40.
Example: SELL as principal 100 shares to a customer at 40-1/8, which includes a 1/8 mark-up from the prevailing market of 40;
REPORT 100 shares at 40.
Example: BUY as principal 10,000 shares from a customer at 39-3/4, which includes a 1/4 mark-down or service charge from the prevailing market of 40;
REPORT 10,000 shares at 40.
Exception:
A "riskless" principal transaction in which a member that is not a market maker in the security after having received from a customer an order to buy, purchases the security as principal from another member or customer to satisfy the order to buy or, after having received from a customer an order to sell, sells the security as principal to another member or customer to satisfy the order to sell, shall be reported as one transaction in the same manner as an agency transaction, excluding the mark-up or mark-down.
Example: SELL as principal 100 shares to another member at 40 to fill an existing order; BUY as principal 100 shares from a customer at 40 minus a mark-down of $12.50; REPORT 100 shares at 40.
(e) Transactions Not Required To Be Reported
The following types of transactions shall not be reported:
(1) transactions executed through the Computer Assisted Execution System ("CAES");
(2) odd-lot transactions;
(3) transactions which are part of a primary distribution by an issuer or of a registered secondary distribution (other than "shelf distributions") or of an unregistered secondary distribution;
(4) transactions made in reliance on Section 4(2) of the Securities Act of 1933;
(5) transactions where the buyer and seller have agreed to trade at a price substantially unrelated to the current market for the security, e.g., to enable the seller to make a gift;
(6) purchases or sales of securities effected upon the exercise of an option pursuant to the terms thereof or the exercise of any other right to acquire securities at a pre-established consideration unrelated to the current market.
(f) Aggregation of Transaction Reports
(1) Under the following conditions, individual executions of orders in a security at the same price may be aggregated, for transaction reporting purposes, into a single transaction report.
(A) Orders received prior to the opening of the reporting member's market in the security and simultaneously executed at the opening. Also, orders received during a trading or quotation halt in the security and executed simultaneously when trading or quotations resume. In no event shall a member delay its opening ore resumption of quotations for the purpose of aggregating transactions.
Example: A firm receives, prior to its market opening, several market orders to sell which total 10,000 shares. All such orders are simultaneously executed at the opening at a reported price of 40. REPORT 10,000 shares at 40.
(B) Simultaneous executions by the member of customer transactions at the same price, e.g., a number of limit orders being executed at the same time when a limit price has been reached.
Example; A firm has several customer limit orders to sell which total 10,000 shares at a limit price of 40. That price is reached and all such orders are executed simultaneously. REPORT 10,000 shares at 40.
(C) Orders relayed to the trading department of the reporting member for simultaneous execution at the same price.
Example: A firm purchases a block of 50,000 shares from an institution at a reported price of 40. REPORT 50,000 at 40.
Subsequently, one of the firm's branch offices transmits to the firm's trading department for execution customer buy orders in the security totaling 12,500 shares at a reported price of 40. REPORT 12,500 at 40.
Subsequently, another branch office transmits to the firm's trading department for execution customer buy orders totaling 15,000 shares in the security at a reported price of 40. REPORT 15,000 at 40.
Example: Due to a major change in market conditions, a firm's trading department receives from a branch office for execution customer market orders to sell totaling 10,000 shares. All are executed at a reported price of 40. REPORT 10,000 at 40.
(D) An influx of orders received by the trading department of the reporting member which are impractical to report individually and are executed at the same price within 60 seconds of execution of the initial transaction; provided, however, that no individual order of 5,000 shares or more may be aggregated in a transaction report and that the aggregated transaction report shall be made within 90 seconds of the initial execution reported therein. Furthermore, it is not permissible for a member to withhold reporting a trade in anticipation of aggregating the transaction with other transactions.
Examples: A reporting member receives and execute the following orders at the following times and desires to aggregate reports to the maximum extent permitted under this rule.
First Example

11:01:00

500 shares at 40

11:01:05

500 shares at 40

11:01:10

4,000 shares at 40

11:01:15

500 shares at 40


REPORT: 5,500 shares at 40 within 90 seconds of 11:01.
Second Example

11:01:00

100 shares at 40

11:01:10

6,000 shares at 40

11:01:30

300 shares at 40


REPORT: 400 shares within 90 seconds of 11:01 and 6,000 shares within 90 seconds of 11:01:10 (individual transactions of 5,000 shares or more must be reported separately).
Third Example

11:01:00

100 shares at 40

11:01:15

500 shares at 40

11:01:30

200 shares at 40

11:02:30

400 shares at 40


REPORT: 800 shares at 40 within 90 seconds of 11:01 and 400 shares at 40 within 90 seconds of 11:02:30 (the last trade is not within 60 seconds of the first and must, therefore, be reported separately).
(2) The reporting member shall identify aggregated transaction reports and order tickets of aggregated trades in a manner directed by the Corporation.

* NASDAQ symbols are proprietary to the National Association of Securities Dealers, Inc.

** This issue is scheduled to commence trading in the NASDAQ System concurrently with its designation as a NASDAQ/NMS security on December 16, 1986.

*** This company was originally scheduled to enter NASDAQ/NMS on December 2, 1986. It has been rescheduled to enter on December 16, 1986.

* New language is underscored; deleted language is bracketed.

1/ Defined as a NASDAQ registered market maker in the security.

2/ In the case of dual agency transactions where customers are on both sides, the member reports one transaction exclusive of commissions.



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