SOES Tier-Size Levels Set To Change April 1, 1998

Executive Summary

Effective April 1, 1998, tier sizes for 547 Nasdaq National Market^® securities will be revised in accordance with National Association of Securities Dealers, Inc. (NASD^®) Rule 4710(g).

For more information, please contact Nasdaq^® Market Operations at (203) 378-0284.

Description

Under Rule 4710, the maximum Small Order Execution System^SM (SOES^SM) order size for a Nasdaq National Market security is 1,000, 500, or 200 shares, depending on the trading characteristics of the security. The Nasdaq Workstation II^TM indicates the maximum SOES order size for each Nasdaq National Market security in its bid/offer quotation display. The indicator "NM10," "NM5," or "NM2" is displayed to the right of the security name, corresponding to a maximum SOES order size of 1,000, 500, or 200 shares, respectively.

The criteria for establishing SOES tier sizes are as follows:

• A 1,000-share tier size is applied to those Nasdaq National Market securities that have an average daily non-block volume of 3,000 shares or more a day, a bid price that is less than or equal to $100, and three or more market makers.
• 
  
  
• A 500-share tier size is applied to those Nasdaq National Market securities that have an average daily non-block volume of 1,000 shares or more a day, a bid price that is less than or equal to $150, and two or more market makers.
• 
  
  
• A 200-share tier size is applied to those Nasdaq National Market securities that have an average daily non-block volume of less than 1,000 shares a day, a bid price that is less than or equal to $250, and two or more market makers.

In accordance with Rule 4710, Nasdaq periodically reviews the SOES tier size applicable to each Nasdaq National Market security to determine if the trading characteristics of the issue have changed so as to warrant a tier-size adjustment. Such a review was conducted using data as of December 31, 1997, pursuant to the aforementioned standards. The SOES tier-size changes called for by this review are being implemented with three exceptions.

• First, issues were not permitted to move more than one tier-size level. For example, if an issue was previously categorized in the 1,000- share tier, it would not be permitted to move to the 200-share tier, even if the formula calculated that such a move was warranted. The issue could move only one level to the 500-share tier as a result of any single review. In adopting this policy, the NASD was attempting to maintain adequate public investor access to the market for issues in which the tier-size level decreased and to help ensure the ongoing participation of market makers in SOES for issues in which the tier-size level increased.
• 
  
  
• Second, for securities priced below $1 where the reranking called for a reduction in tier size, the tier size was not reduced.
• 
  
  
• Third, for the top 50 Nasdaq securities based on market capitalization, the SOES tier sizes were not reduced, regardless of whether the reranking called for a tier-size reduction.

In addition, with respect to initial public offerings (IPOs), the SOES tier-size reranking procedures provide that a security must first be traded on Nasdaq for at least 45 days before it is eligible to be reclassified.

Thus, IPOs listed on Nasdaq within the 45 days prior to December 31, 1997, were not subjected to the SOES tier-size review.

Following is a listing of the 547 Nasdaq National Market issues that will require an SOES tier-level change on April 1, 1998.