Holiday Settlement Schedule

TO: All NASD Members and Municipal Securities Bank Dealers

ATTN: All Operations Personnel

Securities markets and the NASDAQ System will be closed on Good Friday, March 28, 1986. "Regular-way" transactions made on the business days immediately preceding that day will be subject to the following schedule.

Trade Date-Settlement Date Schedule For "Regular-Way" Transactions

The foregoing settlement dates should be used by broker-dealers and municipal securities dealers for purposes of clearing and settling transactions pursuant to the NASD's Uniform Practice Code and Municipal Securities Rulemaking Board G-12 on Uniform Practice.

Questions regarding the application of these settlement dates to a particular situation may be directed to the NASD's Uniform Practice Department at (212) 839-6256.

* * * * *

NASD Market Services, Inc.

1735 K Street, N.W.
Washington, D.C. 20006
(202) 728-8000

March 14, 1986

TO: All SOES Participants

RE: SOES Progress Report

The NASDAQ market's Small Order Execution System (SOES) was designed in 1984 by traders, operations personnel and senior management of NASD member firms to be a versatile and cost-effective system for the automated execution of small agency orders in NASDAQ securities.

Since the System's December 1984 start-up:

• The number of securities authorized for SOES trading has grown from the 25 most-active issues in the NASDAQ National Market System to the full complement of 4,745 securities now quoted in the NASDAQ System.
• The number of trades executed through SOES has grown from 12,500, representing 2.5 million shares, for the month of January 1985, to 133,000 trades accounting for 35 million shares in February 1986. As many as 8,000 trades representing 2.1 million shares have been executed through SOES in a single day.
• The number of NASD firms registered with SOES has grown from 131 to the current 262.
• The share limit for SOES executions in NASDAQ/NMS securities was increased from 500 to 1,000. (The share limit for orders in non-NMS NASDAQ securities remains at 500.)

Further, SOES has been technically enhanced so that:

• An order may be entered on behalf of another NASD member, i.e., the "give-up" capability. (See Subscriber Bulletin, Volume 4, Number 7, November 1985, page 1, and NASD Notice to Subscribers, November 19, 1985.)
• A market maker may enter exposure limits on both sides of his quotation for each security in which he is registered as a SOES market maker. The exposure limits, which are visible only to the responsible market maker, decline with each execution and are reported to the responsible market maker with execution reports. (See Subscriber Bulletin, Volume 4, Number 7, November 1985, page 1, and NASD Notice to Subscribers, December 18, 1985.)

The value of SOES to the NASDAQ market has been clearly demonstrated in the very active markets experienced during the past year. The SOES Users Committee believes that the System is merely on the threshold of what can be accomplished in meeting the needs of NASD firms for an automated system providing economical execution of small orders in NASDAQ securities.

It is recognized by everyone that continued growth of SOES, however, is dependent upon (1) preserving the confidence of SOES market makers that all participants are observing the established rules; (2) enhancing the technical capabilities of the System; and (3) refining the System's rules as experience is gained.

SOES participants are, therefore, reminded that procedures are in place to quickly resolve any questions as to whether SOES users have complied with the rules of the System. SOES market makers are urged to call the SOES Operations Center at (212) 839-6210 whenever they have a concern that an order may have been entered in violation of the SOES operating rules, e.g., entering firm was acting as principal rather than agent, order as originally received from customer was in excess of the 1,000/500 share limits, etc. The caller may disclose his identity in confidence or, if preferred, remain anonymous. Upon notification of a possible rule violation, the NASD will determine whether an infraction has, in fact, occurred and, if so, bring it to the attention of the appropriate disciplinary committee.

Also, SOES firms are urged to communicate to the SOES Users Committee their thoughts with respect to future system technical enhancements and needed rule amendments. Members of the Committee, their firms and phone numbers are included on the attached sheet.

If you have any questions concerning this notice, please contact me at (212)839-6326.

Sincerely,

John H. Hodges, Jr.
Senior Vice President
Market Services

Attachment

NASD

SOES USERS COMMITTEE

Bernard L. Madoff, Chairman
Bernard L. Madoff
110 Wall Street
New York, New York 10005
(212) 825-3910

Peter DaPuzzo
Shearson Lehman/American Express, Inc.
Two World Trade Center
New York, NY 10048
(212)321-6000

E. E. Geduld
Herzog, Heine, Geduld, Inc.
26 Broadway
New York, New York 10004
(212) 962-0300

Richard F. Lynch
Thomson McKinnon Securities, Inc.
One New York Plaza
New York, New York 10011
(212) 482-6300

Leonard Mayer
Mayer & Schweitzer, Inc.
30 Montgomery Street
Jersey City, New Jersey 07302
(201)433-7744

Jeremiah A. Mullins
Dean Witter Reynolds Inc.
Two World Trade Center 16th Floor
New York, New York 10048
(212) 524-3790

Glen R. Shipway
Interstate Securities Corporation
2700 NCNB Plaza
Charlotte, North Carolina 28280
(704) 379-9000

William H. Sulya
A.G. Edwards & Sons, Inc.
One N. Jefferson Avenue
St. Louis, Missouri 63103
(314) 289-3000

John N. Tognino
Merrill Lynch, Pierce, Fenner & Smith, Inc.
One Liberty Plaza, 165 Broadway
New York, New York 10080
(212) 637-7455

Kenneth J. Wessels
Piper, Jaffray & Hopwood, Inc.
222 South Main Street
Minneapolis, Minnesota 55402
(612) 342-6000

Paul R. Yednak
E. F. Hutton & Company, Inc.
One Battery Park Plaza
New York, New York 10004
(212) 742-5000

* Pursuant to Sections 220.8(b)(l) and (4) of Regulation T of the Federal Reserve Board, a broker-dealer must promptly cancel or otherwise liquidate a customer purchase transaction in a cash account if full payment is not received within seven (7) business days of the date of purchase or, pursuant to Section 220.8(d)(l), make application to extend the time period specified. The date by which members must take such action is shown in the column entitled "Regulation T Date."