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To: SSP who wrote (67020)	10/12/2000 10:36:55 AM
From: CIMA	Respond to of 150070

NASD Board Approves OTCBB Order Delivery System On October 5, 2000, the NASD Board of Governors approved the creation of an automated order delivery system for the OTC Bulletin Board (OTCBB) in a continuing effort to promote a fair and efficient marketplace.This initiative will be submitted to the Securities and Exchange Commission (SEC) for public comment and approval. We will continue to update you on progress regarding SEC approval and plans for implementation via the OTCBB website. The OTCBB has experienced significant growth in volume, positions, securities, and market participation in the past ten years despite the quotation service's lack of trading automation. The OTCBB has made significant strides in making measurable market improvements in the past three years, including: 1) the implementation of the Eligibility Rule, which requires each OTCBB issuer to be fully registered with the SEC (or appropriate banking or insurance regulator) and be current in its filings; and, 2) the upcoming launch of a Limit Order Protection pilot program (pending SEC approval), which prohibits member firms from trading ahead of customer limit orders. The need for an automated order delivery system for the OTCBB has arisen due to increased trading activity in this market, and the accompanying regulatory concerns and operational difficulties. The primary objectives of providing an order delivery and execution system for the OTCBB are: to increase execution speed of customer orders, which, in turn, should provide a better opportunity for best execution: to enable market participants to contact each other electronically to send orders, execute orders, and force a market participant to move its quote in order to unlock the market; to enable the NASDR to extend the locked/crossed market rule to the OTCBB since an order-delivery and execution system with a liability component is an essential tool for implementation of that rule; to complement the changing volume and trading behavior in the OTCBB, and to provide the infrastructure necessary to enact new rules aimed at investor protection. The system will be built to accept directed liability orders only. Specifically, via Nasdaq Workstation II, an NASD member firm would be able to enter a priced order targeted to a market maker at the market maker's quoted price or better. The system would then send a pop-up message to the market maker's Nasdaq Workstation II terminal(s) alerting the market maker to the presence of a liability order. The market maker would then be obligated to execute the liability order up to the size of its quoted price, unless the market maker is in the process of executing another limit order at the same price. The market maker would generally have three minutes to take action on the order before it times out, and the order entry party would be able to cancel the order after 10 seconds. The NASD believes that providing automated access to the market will further efforts to make the OTCBB a more efficient and orderly marketplace for investors and market participants alike.