[13710]
July 10, 2001
TO: ACCOUNTING/TREASURERS COMMITTEE No. 19-01
END OF DAY PRICING FORUM No. 5-01
EQUITY MARKETS ADVISORY COMMITTEE No. 23-01
SEC RULES COMMITTEE No. 54-01
RE: ICI LETTER TO NASDAQ REGARDING JUNE 29TH MARKET DISRUPTION;
NASDAQ RESPONSE
On June 29th, following a lengthy interruption due to systems problems earlier in the
day, the Nasdaq Stock Market (“Nasdaq”) remained open until 5:00 p.m. Eastern time. This late
closing severely complicated the pricing process for mutual funds that invest in securities
traded on Nasdaq.
Following this incident, the Institute sent a letter to Nasdaq expressing its
disappointment at Nasdaq’s failure to promptly contact the Institute once they became aware of
the problem, both to inform the fund industry and to seek the Institute’s guidance and input on
a matter of extreme importance to funds and their shareholders. The letter urges Nasdaq, in the
event that significant market disruptions occur in the future, to promptly contact both the
Institute and the SEC’s Division of Investment Management.
In response to the Institute’s letter, Nasdaq President Richard Ketchum sent a letter of
apology in which he noted “the critical contribution that the investment management
community makes in ensuring an efficient and effective marketplace for Nasdaq stocks.” The
letter states that Nasdaq is taking all necessary steps to ensure that an event such as occurred on
June 29th will not recur. In addition, according to the letter, in the future, Nasdaq will make
every effort to ensure that the appropriate ICI officials are contemporaneously informed of
unusual Nasdaq market events, particularly if they occur near the close.
Copies of the Institute’s letter and Nasdaq’s response are attached.
Frances M. Stadler
Deputy Senior Counsel
Attachments
Attachment no. 1 (in .pdf format)