SEC APPROVES NASD RULE CHANGE RELATING TO THE ENTRY OF LOCKING/CROSSING QUOTATIONS PRIOR TO THE MARKET OPENING

1 See Memorandum to Equity Markets Advisory Committee No. 31-00, dated May 12, 2000. 2 Securities Exchange Act Release No. 42896 (June 2, 2000), 65 FR 36747 (June 9, 2000). [11941] June 12, 2000 TO: EQUITY MARKETS ADVISORY COMMITTEE No. 34-00 RE: SEC APPROVES NASD RULE CHANGE RELATING TO THE ENTRY OF LOCKING/CROSSING QUOTATIONS PRIOR TO THE MARKET OPENING ______________________________________________________________________________ As we previously informed you,1 the Securities and Exchange Commission published for comment a proposed rule change filed by the NASD, through its wholly-owned subsidiary, the Nasdaq Stock Market, relating to the entry of locking/crossing quotations prior to the opening of the market. The SEC has issued an order (a copy of which is attached) granting accelerated approval of the proposed rule change.2 In particular, the rule change will require a market participant to send a Trade-or-Move Message for agency orders that lock or cross the market between 9:20 and 9:29:59 a.m., for the actual size of the agency order, rather than 5,000 shares as previously required. An agency order will not include an order for the account of a market maker in the security, but will include orders for individuals, institutions, and broker-dealers who are not market makers in the security. The recipient of a Trade-or-Move Message must respond to that message within 30 seconds of receiving it by either (1) trading in full with the incoming Trade-or-Move Message; (2) declining to trade with the incoming Trade-or-Move Message and moving its quotation to a price level that unlocks or uncrosses the market; or (3) trading with a portion of the incoming Trade-or-Move Message and moving its quotation to a price level that unlocks or uncrosses the market. Ari Burstein Assistant Counsel Attachment