NASD Notice to Members 99-66 - August 1999

SEC Approves Prior Reference Price Trade Modifier, Changes to Bunching Rules, and Riskless Principal Trade-Reporting Rules for the Third Market

Executive Summary

On July 8, 1999, the Securities and Exchange Commission (SEC or Commission) approved a rule change to:

  1. implement a new trade report modifier to identify trades effected at a prior reference price (.PRP modifier);
  2. eliminate the 10,000-share limitation on individual trades that may be "bunched" for trade-reporting purposes for trades that are effected on the first day of secondary market trading; and
  3. require Market Makers in the Third Market to report trades under the current riskless principal rules that apply to non-Market Makers in the Third Market. Additionally, on July 23, 1999, the SEC approved a rule change to eliminate an unnecessary provision in National Association of Securities Dealers, Inc. (NASD®) Rule 6420 relating to the reporting of transactions in exchange-listed securities traded in the Third Market.

This Notice includes questions and answers regarding the rule changes (Attachment A); and the text of the rule changes (Attachment B). The rule changes go into effect on September 30, 1999.

 

Questions concerning this Notice may be directed to the Office of General Counsel, The Nasdaq Stock Market, Inc., at (202) 728-8294 or the Legal Section, Market Regulation, NASD Regulation, Inc., (NASD Regulation®) at (301) 590- 6410.