NASDAQ/MSE: Unlisted Trading Privileges

TO: All NASD Members
All Level 2 and Level 3 Subscribers
Other Interested Persons

EXECUTIVE SUMMARY

On May 15, 1987, the Midwest Stock Exchange (MSE) will begin trading 25 NASDAQ National Market System (NASDAQ/NMS) securities under the SEC-approved National Association of Securities Dealers/Midwest Stock Exchange joint unlisted trading privileges (UTP) program. This notice explains the operation of the program, including which members are eligible to participate, how to contact MSE specialists in these 25 UTP stocks, how information on UTP securities will be displayed on NASDAQ terminals, and what the trade reporting obligations will be under the program.

On April 29, the SEC approved the NASD/MSE joint plan that gives the Midwest Stock Exchange unlisted trading privileges in 25 NASDAQ/NMS stocks. Trading under the plan will begin on Friday, May 15, 1987.

Which NASDAQ Market Makers May Contact MSE Specialists

The NASD/MSE joint UTP plan requires that MSE specialists provide for direct telephone access; this access, however, is limited to NASDAQ market makers in the same stock. Therefore, only a firm that is a NASDAQ market maker in the UTP stock may directly contact the MSE specialist in that stock to negotiate a trade.

The 25 NASDAQ/NMS issues that the SEC has approved to trade under the NASD/MSE UTP plan are listed below with the names and telephone numbers of the designated MSE specialists.

MIDWEST SPECIALIST ASSIGNMENTS FOR UTP NASDAQ/NMS ISSUES

NASDAQ market makers trading in UTP stocks who have any difficulty contacting specialists on the floor of the Midwest Stock Exchange should call NASDAQ Operations, New York, at 212-938-8300 or Nancy Leverette, MSE Operations, at 312-663-2111.

How Information on UTP Stocks Will Be Displayed on NASDAQ Level 2/3 Terminals

MSE specialists in the UTP stocks will be identified by "#MWSE" (signifying the Midwest Stock Exchange) on the far left of the screen, where market makers' symbols are ordinarily listed. The subscriber symbol of the specialist firm will be displayed to the right of the #MWSE quotation, as illustrated below.

The subscriber symbol of Billings & Co. is BILL; of Dempsey & Co., DEMP; and of Mesirow Web-Marsh, MWMC.

NASDAQ Level 1 displays will remain unchanged.

Transaction Reporting Obligations Under the NASD/MSE UTP Plan

Under the NASD/MSE joint UTP plan, specialists are treated as market makers for transaction reporting rules. NASDAQ's NMS transaction reporting rules will apply to trades involving MSE specialists in UTP stocks. That is, in a transaction between a market maker and a specialist, the sell side is required to report.

All transactions must be reported within 90 seconds of execution. A trade that is executed and is not reported within 90 seconds of execution must be reported as late [.SLD].

MSE specialists will be governed by MSE rules concerning the entry of quotations that create locked and crossed markets. The exchange has stated that it will police locked and crossed markets and take appropriate action against any specialist who intentionally locks or crosses a market in a UTP security. Calls regarding locked or crossed markets should be directed to NASDAQ Operations in New York, at 212-938-8300.

John T. Wall
Executive Vice President
Member and Market Services