Kenneth W. Perlman, Mayer & Schweitzer, Inc.

May 29, 1998

Mr. Kenneth W. Perlman
General Counsel
Mayer & Schweitzer, Inc.
111 Pavonia Avenue East
Jersey City, New Jersey 07310

Re: Exemption Pursuant to NASD Rule 2320(g)(2)

Dear Mr. Perlman:

We are in receipt of your letter in which you request that the Office of General Counsel, NASD Regulation grant your specific request for exemptive relief from NASD Rule 2320(g)(1), the three quote rule, through the authority granted to the staff under NASD Rule 2320(g)(2). Specifically, you requested an exemption from NASD Rule 2320(g)(1) (the three quote rule) for customer transactions in Canadian securities executed on a Canadian exchange.

In connection with your request you represent that executions on a Canadian exchange at the exchange price ordinarily results in the customer obtaining best execution of his/her order. Mayer & Schweitzer (MASH) on behalf of certain correspondent firms "gives up" their orders in Canadian securities to dealers in Canada for execution on a Canadian exchange at the exchange price. In your letter, you further represent that, based on a recent analysis of dealer prices compared to exchange prices, in virtually all cases the exchange had the best price. Under these circumstances, the function of contacting and obtaining quotes from three dealers would result in significant delays and would be unproductive and not in the best interest of the customer and thus would pose a hindrance to achieving best execution for the customer.

After taking into consideration all of the relevant information, the staff has decided to grant your request for exemptive relief from the requirements of NASD Rule 2320(g)(1) for customer transactions in Canadian securities executed on a Canadian exchange1, under the following conditions:

  1. a member must periodically monitor and review customer executions to assure that the member is achieving best execution under NASD Rule 2320 for customer transactions; and

  1. customer transactions in Canadian securities should be handled either as an agency or riskless principal transaction and should be executed on a Canadian exchange.

Sincerely,

Alden Adkins
Senior Vice President and General Counsel
NASD Regulation, Inc.

1 Under the above circumstances, the customer transactions would also be exempt from the requirements of NASD Rule 3110(b)(2), which governs the marking of the customer order ticket with three quote information.