Notice to Members 97-74

SEC Approves Amendments To Legal Definition Of Short Sale

On September 26, 1997, the Securities and Exchange Commission (SEC) approved an amendment to the National Association of Securities Dealers, Inc. (NASD®) short sale rule to provide that a “legal” short sale can be effected at a price equal to or greater than the offer price when the inside spread is less than 1/16th.  The rule change has been approved on a temporary basis effective immediately through January 15, 1998, at which time the SEC will consider permanent approval of the rule change as well as permanent approval of the NASD’s short sale rule.

Questions regarding this rule change should be directed to Andrew S. Margolin, Senior Attorney, The Nasdaq Stock Market, Inc., at (202) 728-8869.