Regulation of Alternative Trading Systems; Suspension (Extension of Effective date to December 1, 2000)
Overview
SECURITIES AND EXCHANGE COMMISSION
17 CFR Part 242
Release No. 34-42603A; File No. S7-12-98]
RIN 3235-AH41
Regulation of Alternative Trading Systems; Temporary Stay of Effectiveness
AGENCY: Securities and Exchange Commission
ACTION: Temporary Stay of Effectiveness
SUMMARY: The Securities and Exchange Commission stays the effectiveness of Rules 301(b)(5)(i)(D) and (E) and 301(b)(6)(i)(D) and (E) until December 1, 2000. This would provide sufficient time for a reporting system to be developed that would compile and publish data for investment grade and non-investment grade corporate market segments. These provisions relate to alternative trading systems that trade certain categories of debt securities. The other alternative trading system rules, which were published in 63 FR 70844 on December 22, 1998, remain effective as previously stated.
DATES: 17 CFR 242.301(b)(5)(i)(D) and (E) and 242.301(b)(6)(i)(D) and (E) are stayed until December 1, 2000.
FOR FURTHER INFORMATION CONTACT: Constance Kiggins, Senior Special Counsel, at (202) 942-0059, and Kevin Ehrlich, Attorney, at (202) 942-0778, Division of Market Regulation, Securities and Exchange Commission, 450 Fifth Street, N.W., Washington, D.C. 20549-1001.
SUPPLEMENTARY INFORMATION:
I. Background
On December 8, 1998, the Securities and Exchange Commission ("Commission") adopted new rules and rule amendments to allow alternative trading systems to choose whether to register as national securities exchanges, or to register as broker-dealers and comply with additional requirements under Regulation ATS, depending on their activities and trading volume.1 The effective date for most of these new rules and rule amendments was April 21, 1999. The Commission stated in the adopting release that Rules 301(b)(5)(i)(D) and (E) and 301(b)(6)(i)(D) and (E) would become effective on April 1, 2000. These rules relate to certain requirements for alternative trading systems that trade investment grade and non-investment grade corporate debt securities. For alternative trading systems trading 20 percent or more of the average daily trading volume over at least four of the preceding six months in either investment grade or non-investment grade corporate debt securities, the fair access and systems capacity, security, and integrity requirements were to take effect on April 1, 2000.
II. Temporary Stay of Effectiveness of Rules 301(b)(5)(i)(D) and (E) and 301(b)(6)(i)(D) and (E)
In the Adopting Release, we noted that volume data for investment grade and non-investment grade corporate debt was not being compiled or published. Accordingly, market participants and regulators had no mechanism to determine what the aggregate daily trading volume is for either investment grade corporate bonds or non-investment grade corporate bonds. The Commission had anticipated that a comprehensive reporting system for corporate debt would be in place by April 1, 2000 that would have allowed market participants to access aggregate data with which to determine their own compliance with the rules. While efforts are ongoing to complete such a system, no such comprehensive reporting system is currently in place. The Commission currently believes that staying the effectiveness of Rules 301(b)(5)(i)(D) and (E) and 301(b)(6)(i)(D) and (E) until December 1, 2000 would provide sufficient time for a system to be developed and implemented that would compile and publish data for both market segments.2
By the Commission.
Jonathan G. Katz
Secretary
Dated: March 31, 2000
Footnotes
1 Securities Exchange Act Release No. 40760 (Dec. 8, 1998), 63 FR 70844 (Dec. 22, 1998) ("Adopting Release").
2 The Commission, however, believes that good business practice dictates that alternative trading systems adopt the standards of systems capacity, security, and integrity regardless of their trading volume.
Last Reviewed or Updated: March 31, 2000