Self-Regulatory Organizations; Notice of Filing and Immediate Effectiveness of Proposed Rule Change by the National Association of Securities Dealers, Inc. Clarifying Members' Obligations To Report Cancelled Trades, 11036-11040 [05-4293]
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11036
Federal Register / Vol. 70, No. 43 / Monday, March 7, 2005 / Notices
SECURITIES AND EXCHANGE
COMMISSION
Sunshine Act Meeting
Notice is hereby given, pursuant to the
provisions of the Government in the
Sunshine Act, Pub. L. 94–409, that the
Securities and Exchange Commission
will hold the following meeting during
the week of March 7, 2005:
A closed meeting will be held on
Wednesday, March 9, 2005, at 4 p.m.
Commissioners, Counsel to the
Commissioners, the Secretary to the
Commission, and recording secretaries
will attend the closed meeting. Certain
staff members who have an interest in
the matters may also be present.
The General Counsel of the
Commission, or his designee, has
certified that, in his opinion, one or
more of the exemptions set forth in 5
U.S.C. 552b(c)(5), (7), (9)(B), and (10)
and 17 CFR 200.402(a)(5), (7), 9(ii) and
(10), permit consideration of the
scheduled matters at the closed meeting.
Commissioner Atkins, as duty officer,
voted to consider the items listed for the
closed meeting in closed session.
The subject matter of the closed
meeting scheduled for Wednesday,
March 9, 2005, will be:
Institution and settlement of
injunctive actions; and
Institution and settlement of
administrative proceedings of an
enforcement nature.
At times, changes in Commission
priorities require alterations in the
scheduling of meeting items.
For further information and to
ascertain what, if any, matters have been
added, deleted or postponed, please
contact:
The Office of the Secretary at (202)
942–7070.
Dated: March 2, 2005.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 05–4393 Filed 3–2–05; 4:21 pm]
[File No. 500–1]
In the Matter of CMKM Diamonds, Inc.,
a/k/a Casavant Mining Kimberlite
International, Inc.; Order of
Suspension of Trading
March 3, 2005.
It appears to the Securities and
Exchange Commission that there is a
lack of current and accurate information
concerning the securities of CMKM
Jkt 205001
BILLING CODE 8010–01–P
Self-Regulatory Organizations; Notice
of Filing and Immediate Effectiveness
of Proposed Rule Change by the
National Association of Securities
Dealers, Inc. Clarifying Members’
Obligations To Report Cancelled
Trades
February 28, 2005.
Pursuant to section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’),1 and Rule 19b–4 thereunder,2
PO 00000
1 15
2 17
U.S.C. 78s(b)(1).
CFR 240.19b–4.
Frm 00102
Fmt 4703
notice is hereby given that on February
14, 2005, the National Association of
Securities Dealers, Inc. (‘‘NASD’’),
through its subsidiary, The Nasdaq
Stock Market, Inc. (‘‘Nasdaq’’), filed
with the Securities and Exchange
Commission (‘‘Commission’’) the
proposed rule change as described in
Items I, II, and III below, which Items
have been prepared by Nasdaq. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of the Substance
of the Proposed Rule Change Regarding
Reporting of Cancelled Trades
Nasdaq proposes to clarify members’
obligations to report the cancellation of
trades previously submitted to the
Nasdaq Market Center. Pursuant to
Section 19(b)(3)(A)(i) of the Act 3 and
Rule 19b–4(f)(6) 4 thereunder, Nasdaq
has designated this proposal as effecting
a change that does not significantly
affect the protection of investors or the
public interest, and does not impose any
significant burden on competition.
Nasdaq is proposing to make the change
operative 60 days after the date of filing.
Nasdaq has provided the Commission
the pre-filing notification as required by
subparagraph (iii) of Rule 19b–4(f)(6).
The text of the proposed rule change
is below. Proposed new language is
italicized; proposed deletions are in
brackets.5
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4630. Reporting Transactions in
Nasdaq National Market Securities
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4632. Transaction Reporting
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(g) Reporting Cancelled Trades
[Release No. 34–51278; File No. SR–NASD–
2005–027]
SECURITIES AND EXCHANGE
COMMISSION
18:15 Mar 04, 2005
By the Commission.
Jonathan G. Katz,
Secretary.
[FR Doc. 05–4446 Filed 3–3–05; 11:54 am]
SECURITIES AND EXCHANGE
COMMISSION
BILLING CODE 8010–01–P
VerDate jul<14>2003
Diamonds, Inc. (‘‘CMKM Diamonds’’)
(Pink Sheets symbol ‘‘CMKX’’), a
Nevada corporation also known as
Casavant Mining Kimberlite
International, Inc. Questions have been
raised about the adequacy of publicly
available information concerning,
among other things, CMKM Diamonds’
assets and liabilities, mining and other
business activities, share structure and
stock issuances, and corporate
management. Since the fiscal year
ending December 31, 2002, CMKM
Diamonds has been delinquent in its
periodic filing obligations under Section
13(a) of the Securities Exchange Act of
1934. The Commission is concerned
that CMKM Diamonds may have
unjustifiably relied on a Form S–8 to
issue unrestricted securities. The
Commission is also concerned that
CMKM Diamonds and/or certain of its
shareholders may have unjustifiably
relied on Rule 144(k) of the Securities
Act of 1933 (‘‘Securities Act’’) in
conducting an unlawful distribution of
its securities that failed to comply with
the resale restrictions of Rules 144 and
145 of the Securities Act.
The Commission is of the opinion that
the public interest and the protection of
investors require a suspension of trading
in the securities of the above-listed
company.
Therefore, it is ordered, pursuant to
Section 12(k) of the Securities Exchange
Act of 1934, that trading in the above
listed company is suspended for the
period from 9:30 a.m. E.S.T., March 3,
2005, through 11:59 p.m. E.S.T., on
March 16, 2005.
Sfmt 4703
(1) Obligation and Party Responsible for
Reporting Cancelled Trades
With the exception of trades cancelled
by Nasdaq staff in accordance with Rule
11890, members shall report to the
Nasdaq Market Center the cancellation
of any trade previously submitted to the
Nasdaq Market Center. The member
responsible under Rule 5430(b) for
submitting the original trade report shall
submit the cancellation report in
accordance with the procedures set
forth in paragraph (g)(2). For trades
executed through a Nasdaq system that
automatically reports trades to the
3 15
U.S.C. 78s(b)(3)(A)(i).
CFR 240.19b–4(f)(6).
5 The proposed rule change is marked to show
changes from the rule as it appears in the electronic
NASD Manual available at https://www.nasd.com.
4 17
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07MRN1
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Federal Register / Vol. 70, No. 43 / Monday, March 7, 2005 / Notices
Nasdaq Market Center, the member that
would have been required by Rule
5430(b) to report the trade (but for the
trade being reported automatically by
the Nasdaq system) shall submit the
cancellation report in accordance with
the procedures set forth in paragraph
(g)(2).
(2) Deadlines for Reporting Cancelled
Trades
(A) For trades executed between 9:30
a.m. and 4 p.m. Eastern Time and
cancelled [for which the decision to
cancel occurs] before 5:13:30 p.m. on
the date of execution, the member
responsible under paragraph (g)(1) shall
report the cancellation within 90
seconds of the time the trade is
cancelled [decision to cancel the trade].
(B) For trades executed between 9:30
a.m. and 4 p.m. Eastern Time and
cancelled [for which the decision to
cancel occurs] after 5:13:30 p.m., but
before 5:15 p.m. on the date of
execution, the member responsible
under paragraph (g)(1) shall use its best
efforts to report the cancellation not
later than 5:15 p.m. on the date of
execution, and otherwise it shall report
the cancellation on the following
business day by 6:30 p.m.
(C) For trades executed between 9:30
a.m. and 4 p.m. Eastern Time and
cancelled [for which the decision to
cancel occurs] after 5:15 p.m. on the
date of execution, the member
responsible under paragraph (g)(1) shall
report the cancellation on the following
business day by 6:30 p.m.
(D) For trades executed outside the
hours of 9:30 a.m. to 4 p.m. Eastern
Time and cancelled [for which a
decision to cancel is made] prior to 6:30
p.m. on the date of execution, the
member responsible for reporting under
paragraph (g)(1) shall report the
cancellation by 6:30 p.m.
(E) For trades executed outside the
hours of 9:30 a.m. to 4 p.m. Eastern
Time and cancelled [for which the
decision to cancel occurs] after 6:30
p.m. on the date of execution, the
member responsible under paragraph
(g)(1) shall report the cancellation on
the following business day by 6:30 p.m.
(F) For any trade cancelled [for which
the decision to cancel occurs] on any
date after the date of execution, the
member responsible under paragraph
(g)(1) shall report the cancellation (i) [if
the decision to cancel occurs before 6:30
p.m., then] by 6:30 p.m. on the date of
cancellation if the trade is cancelled
before 6:30 p.m. [when the decision to
cancel occurs], or (ii) [if the decision to
cancel occurs at or after 6:30 p.m., then]
by 6:30 p.m. on the following business
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18:15 Mar 04, 2005
Jkt 205001
day if the trade is cancelled at or after
6:30 p.m.
(G) For purposes of determining the
deadline by which a trade cancellation
must be reported to Nasdaq pursuant to
subparagraph (g) of this rule the term
‘‘cancelled’’ shall mean the time at
which (i) the member with the reporting
responsibility informs its contra party,
or is informed by its contra party, that
a trade is being cancelled, (ii) the
member with the reporting
responsibility and its contra party agree
to cancel a trade if neither party can
unilaterally cancel the trade, or (iii) the
member with the reporting
responsibility takes an action to cancel
the trade on its books and records,
whichever event occurs first.
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4640. Reporting Transactions in
Nasdaq SmallCapSM Market Securities
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4642. Transaction Reporting
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(g) Reporting Cancelled Trades
(1) Obligation and Party Responsible for
Reporting Cancelled Trades
With the exception of trades cancelled
by Nasdaq staff in accordance with Rule
11890, members shall report to the
Nasdaq Market Center the cancellation
of any trade previously submitted to the
Nasdaq Market Center. The member
responsible under Rule 5430(b) for
submitting the original trade report shall
submit the cancellation report in
accordance with the procedures set
forth in paragraph (g)(2). For trades
executed through a Nasdaq system that
automatically reports trades to the
Nasdaq Market Center, the member that
would have been required by Rule
5430(b) to report the trade (but for the
trade being reported automatically by
the Nasdaq system) shall submit the
cancellation report in accordance with
the procedures set forth in paragraph
(g)(2).
(2) Deadlines for Reporting Cancelled
Trades
(A) For trades executed between 9:30
a.m. and 4 p.m. Eastern Time and
cancelled [for which the decision to
cancel occurs] before 5:13:30 p.m. on
the date of execution, the member
responsible under paragraph (g)(1) shall
report the cancellation within 90
seconds of the time the trade is
cancelled [decision to cancel the trade].
(B) For trades executed between 9:30
a.m. and 4 p.m. Eastern Time and
cancelled [for which the decision to
cancel occurs] after 5:13:30 p.m., but
PO 00000
Frm 00103
Fmt 4703
Sfmt 4703
before 5:15 p.m. on the date of
execution, the member responsible
under paragraph (g)(1) shall use its best
efforts to report the cancellation not
later than 5:15 p.m. on the date of
execution, and otherwise it shall report
the cancellation on the following
business day by 6:30 p.m.
(C) For trades executed between 9:30
a.m. and 4 p.m. Eastern Time and
cancelled [for which the decision to
cancel occurs] after 5:15 p.m. on the
date of execution, the member
responsible under paragraph (g)(1) shall
report the cancellation on the following
business day by 6:30 p.m.
(D) For trades executed outside the
hours of 9:30 a.m. to 4 p.m. Eastern
Time and cancelled [for which a
decision to cancel is made] prior to 6:30
p.m. on the date of execution, the
member responsible for reporting under
paragraph (g)(1) shall report the
cancellation by 6:30 p.m.
(E) For trades executed outside the
hours of 9:30 a.m. to 4 p.m. Eastern
Time and cancelled [for which the
decision to cancel occurs] after 6:30
p.m. on the date of execution, the
member responsible under paragraph
(g)(1) shall report the cancellation on
the following business day by 6:30 p.m.
(F) For any trade cancelled [for which
the decision to cancel occurs] on any
date after the date of execution, the
member responsible under paragraph
(g)(1) shall report the cancellation (i) [if
the decision to cancel occurs before 6:30
p.m., then] by 6:30 p.m. on the date of
cancellation if the trade is cancelled
before 6:30 p.m. [when the decision to
cancel occurs], or (ii) [if the decision to
cancel occurs at or after 6:30 p.m., then]
by 6:30 p.m. on the following business
day if the trade is cancelled at or after
6:30 p.m.
(G) For purposes of determining the
deadline by which a trade cancellation
must be reported to Nasdaq pursuant to
subparagraph (g) of this rule the term
‘‘cancelled’’ shall mean the time at
which (i) the member with the reporting
responsibility informs its contra party,
or is informed by its contra party, that
a trade is being cancelled, (ii) the
member with the reporting
responsibility and its contra party agree
to cancel a trade if neither party can
unilaterally cancel the trade, or (iii) the
member with the reporting
responsibility takes an action to cancel
the trade on its books and records,
whichever event occurs first.
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4650. Reporting Transactions in
Nasdaq Convertible Debt Securities
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E:\FR\FM\07MRN1.SGM
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07MRN1
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11038
Federal Register / Vol. 70, No. 43 / Monday, March 7, 2005 / Notices
4652. Transaction Reporting
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(g) Reporting Cancelled Trades
(1) Obligation and Party Responsible for
Reporting Cancelled Trades
With the exception of trades cancelled
by Nasdaq staff in accordance with Rule
11890, members shall report to the
Nasdaq Market Center the cancellation
of any trade previously submitted to the
Nasdaq Market Center. The member
responsible under Rule 5430(b) for
submitting the original trade report shall
submit the cancellation report in
accordance with the procedures set
forth in paragraph (g)(2). For trades
executed through a Nasdaq system that
automatically reports trades to the
Nasdaq Market Center, the member that
would have been required by Rule
5430(b) to report the trade (but for the
trade being reported automatically by
the Nasdaq system) shall submit the
cancellation report in accordance with
the procedures set forth in paragraph
(g)(2).
(2) Deadlines for Reporting Cancelled
Trades
(A) For trades executed between 9:30
a.m. and 4 p.m. Eastern Time and
cancelled [for which the decision to
cancel occurs] before 5:13:30 p.m. on
the date of execution, the member
responsible under paragraph (g)(1) shall
report the cancellation within 90
seconds of the time the trade is
cancelled [decision to cancel the trade].
(B) For trades executed between 9:30
a.m. and 4 p.m. Eastern Time and
cancelled [for which the decision to
cancel occurs] after 5:13:30 p.m., but
before 5:15 p.m. on the date of
execution, the member responsible
under paragraph (g)(1) shall use its best
efforts to report the cancellation not
later than 5:15 p.m. on the date of
execution, and otherwise it shall report
the cancellation on the following
business day by 6:30 p.m.
(C) For trades executed between 9:30
a.m. and 4 p.m. Eastern Time and
cancelled [for which the decision to
cancel occurs] after 5:15 p.m. on the
date of execution, the member
responsible under paragraph (g)(1) shall
report the cancellation on the following
business day by 6:30 p.m.
(D) For trades executed outside the
hours of 9:30 a.m. to 4 p.m. Eastern
Time and cancelled [for which a
decision to cancel is made] prior to 6:30
p.m. on the date of execution, the
member responsible for reporting under
paragraph (g)(1) shall report the
cancellation by 6:30 p.m.
VerDate jul<14>2003
18:15 Mar 04, 2005
Jkt 205001
(E) For trades executed outside the
hours of 9:30 a.m. to 4 p.m. Eastern
Time and cancelled [for which the
decision to cancel occurs] after 6:30
p.m. on the date of execution, the
member responsible under paragraph
(g)(1) shall report the cancellation on
the following business day by 6:30 p.m.
(F) For any trade cancelled [for which
the decision to cancel occurs] on any
date after the date of execution, the
member responsible under paragraph
(g)(1) shall report the cancellation (i) [if
the decision to cancel occurs before 6:30
p.m., then] by 6:30 p.m. on the date of
cancellation if the trade is cancelled
before 6:30 p.m. [when the decision to
cancel occurs], or (ii) [if the decision to
cancel occurs at or after 6:30 p.m., then]
by 6:30 p.m. on the following business
day if the trade is cancelled at or after
6:30 p.m.
(G) For purposes of determining the
deadline by which a trade cancellation
must be reported to Nasdaq pursuant to
subparagraph (g) of this rule the term
‘‘cancelled’’ shall mean the time at
which (i) the member with the reporting
responsibility informs its contra party,
or is informed by its contra party, that
a trade is being cancelled, (ii) the
member with the reporting
responsibility and its contra party agree
to cancel a trade if neither party can
unilaterally cancel the trade, or (iii) the
member with the reporting
responsibility takes an action to cancel
the trade on its books and records,
whichever event occurs first.
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6420. Transaction Reporting
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(f) Reporting Cancelled Trades
(1) Obligation and Party Responsible for
Reporting Cancelled Trades
With the exception of trades cancelled
by Nasdaq staff in accordance with Rule
11890, members shall report to the
Nasdaq Market Center the cancellation
of any trade previously submitted to the
Nasdaq Market Center. The member
responsible under Rule 6420 for
submitting the original trade report shall
submit the cancellation report in
accordance with the procedures set
forth in paragraph (f)(2). For trades
executed through a Nasdaq system that
automatically reports trades to the
Nasdaq Market Center, the member that
would have been required by Rule 6420
to report the trade (but for the trade
being reported automatically by the
Nasdaq system) shall submit the
cancellation report in accordance with
the procedures set forth in paragraph
(f)(2).
PO 00000
Frm 00104
Fmt 4703
Sfmt 4703
(2) Deadlines for Reporting Cancelled
Trades
(A) For trades executed between 9:30
a.m. and 4 p.m. Eastern Time and
cancelled [for which the decision to
cancel occurs] before 5:13:30 p.m. on
the date of execution, the member
responsible under paragraph (f)(1) shall
report the cancellation within 90
seconds of the time the trade is
cancelled [decision to cancel the trade].
(B) For trades executed between 9:30
a.m. and 4 p.m. Eastern Time and
cancelled [for which the decision to
cancel occurs] after 5:13:30 p.m., but
before 5:15 p.m. on the date of
execution, the member responsible
under paragraph (f)(1) shall use its best
efforts to report the cancellation not
later than 5:15 p.m. on the date of
execution, and otherwise it shall report
the cancellation on the following
business day by 6:30 p.m.
(C) For trades executed between 9:30
a.m. and 4 p.m. Eastern Time and
cancelled [for which the decision to
cancel occurs] after 5:15 p.m. on the
date of execution, the member
responsible under paragraph (f)(1) shall
report the cancellation on the following
business day by 6:30 p.m.
(D) For trades executed outside the
hours of 9:30 a.m. to 4 p.m. Eastern
Time and cancelled [for which a
decision to cancel is made] prior to 6:30
p.m. on the date of execution, the
member responsible for reporting under
paragraph (f)(1) shall report the
cancellation by 6:30 p.m.
(E) For trades executed outside the
hours of 9:30 a.m. to 4 p.m. Eastern
Time and cancelled [for which the
decision to cancel occurs] after 6:30
p.m. on the date of execution, the
member responsible under paragraph
(f)(1) shall report the cancellation on the
following business day by 6:30 p.m.
(F) For any trade cancelled [for which
the decision to cancel occurs] on any
date after the date of execution, the
member responsible under paragraph
(f)(1) shall report the cancellation (i) [if
the decision to cancel occurs before 6:30
p.m., then] by 6:30 p.m. on the date of
cancellation if the trade is cancelled
before 6:30 p.m. [when the decision to
cancel occurs], or (ii) [if the decision to
cancel occurs at or after 6:30 p.m., then]
by 6:30 p.m. on the following business
day if the trade is cancelled at or after
6:30 p.m.
(G) For purposes of determining the
deadline by which a trade cancellation
must be reported to Nasdaq pursuant to
subparagraph (f) of this rule the term
‘‘cancelled’’ shall mean the time at
which (i) the member with the reporting
responsibility informs its contra party,
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Federal Register / Vol. 70, No. 43 / Monday, March 7, 2005 / Notices
or is informed by its contra party, that
a trade is being cancelled, (ii) the
member with the reporting
responsibility and its contra party agree
to cancel a trade if neither party can
unilaterally cancel the trade, or (iii) the
member with the reporting
responsibility takes an action to cancel
the trade on its books and records,
whichever event occurs first.
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6600. REPORTING TRANSACTIONS
IN OVER-THE-COUNTER EQUITY
SECURITIES
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6620. Transaction Reporting
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(f) Reporting Cancelled Trades
(1) Obligation and Party Responsible for
Reporting Cancelled Trades
With the exception of trades cancelled
by Nasdaq staff in accordance with Rule
11890, members shall report to the
Nasdaq Market Center the cancellation
of any trade previously submitted to the
Nasdaq Market Center. The member
responsible under Rule 6620 for
submitting the original trade report shall
submit the cancellation report in
accordance with the procedures set
forth in paragraph (f)(2). For trades
executed through a Nasdaq system that
automatically reports trades to the
Nasdaq Market Center, the member that
would have been required by Rule 6620
to report the trade (but for the trade
being reported automatically by the
Nasdaq system) shall submit the
cancellation report in accordance with
the procedures set forth in paragraph
(f)(2).
(2) Deadlines for Reporting Cancelled
Trades
(A) For trades executed between 9:30
a.m. and 4 p.m. Eastern Time and
cancelled [for which the decision to
cancel occurs] before 5:13:30 p.m. on
the date of execution, the member
responsible under paragraph (f)(1) shall
report the cancellation within 90
seconds of the time the trade is
cancelled [decision to cancel the trade].
(B) For trades executed between 9:30
a.m. and 4 p.m. Eastern Time and
cancelled [for which the decision to
cancel occurs] after 5:13:30 p.m., but
before 5:15 p.m. on the date of
execution, the member responsible
under paragraph (f)(1) shall use its best
efforts to report the cancellation not
later than 5:15 p.m. on the date of
execution, and otherwise it shall report
the cancellation on the following
business day by 6:30 p.m.
VerDate jul<14>2003
18:15 Mar 04, 2005
Jkt 205001
(C) For trades executed between 9:30
a.m. and 4 p.m. Eastern Time and
cancelled [for which the decision to
cancel occurs] after 5:15 p.m. on the
date of execution, the member
responsible under paragraph (f)(1) shall
report the cancellation on the following
business day by 6:30 p.m.
(D) For trades executed outside the
hours of 9:30 a.m. to 4 p.m. Eastern
Time and cancelled [for which a
decision to cancel is made] prior to 6:30
p.m. on the date of execution, the
member responsible for reporting under
paragraph (f)(1) shall report the
cancellation by 6:30 p.m.
(E) For trades executed outside the
hours of 9:30 a.m. to 4 p.m. Eastern
Time and cancelled [for which the
decision to cancel occurs] after 6:30
p.m. on the date of execution, the
member responsible under paragraph
(f)(1) shall report the cancellation on the
following business day by 6:30 p.m.
(F) For any trade cancelled [for which
the decision to cancel occurs] on any
date after the date of execution, the
member responsible under paragraph
(f)(1) shall report the cancellation (i) [if
the decision to cancel occurs before 6:30
p.m., then] by 6:30 p.m. on the date of
cancellation if the trade is cancelled
before 6:30 p.m. [when the decision to
cancel occurs], or (ii) [if the decision to
cancel occurs at or after 6:30 p.m., then]
by 6:30 p.m. on the following business
day if the trade is cancelled at or after
6:30 p.m.
(G) For purposes of determining the
deadline by which a trade cancellation
must be reported to Nasdaq pursuant to
subparagraph (f) of this rule the term
‘‘cancelled’’ shall mean the time at
which (i) the member with the reporting
responsibility informs its contra party,
or is informed by its contra party, that
a trade is being cancelled, (ii) the
member with the reporting
responsibility and its contra party agree
to cancel a trade if neither party can
unilaterally cancel the trade, or (iii) the
member with the reporting
responsibility takes an action to cancel
the trade on its books and records,
whichever event occurs first.
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II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
On July 22, 2004, the Commission
approved a proposed rule change
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Fmt 4703
Sfmt 4703
11039
requiring members to report to Nasdaq
the cancellation of any trade previously
reported to Nasdaq, unless the trade is
cancelled by Nasdaq staff.6 Soon after
Commission approval, questions were
raised about the meaning of certain text
in the new rules. Specifically, the rule
requires trades executed and cancelled
during normal market hours to be
reported within 90 seconds of ‘‘the
decision to cancel the trade.’’ Trades
cancelled outside normal market hours
also must be reported by certain
specified times. Because the phrase ‘‘the
decision to cancel the trade’’ is
susceptible to multiple legitimate
interpretations, thus making it difficult
to impose a uniform standard against
which compliance with the rule can be
judged, Nasdaq is proposing new
language to clarify the events that trigger
the reporting obligation. The events are
as follows: (1) When the member with
the reporting obligation informs its
contra party, or is informed by its contra
party, that a trade is being cancelled, (2)
when the member and its contra party
agree to cancel a trade if neither party
has the ability to unilaterally cancel it,
or (3) the member takes an action to
cancel the trade on its books and
records. The new language also makes it
clear that the earliest occurrence of any
one of three specified events triggers the
reporting obligation. For example, if a
member and its contra party decide at
11 a.m. that a trade executed that same
day (after 9:30 a.m.) should be
cancelled, the member with the
reporting obligation must report the
cancellation to Nasdaq by 11:01:30 a.m.,
even if the member does not take action
to remove the trade from its books and
records until some time later that day.
Requiring the trigger to be the earliest of
the three events is designed to ensure
the reporting of the cancellation as soon
as possible.7
2. Statutory Basis
Nasdaq believes that the proposed
rule change is consistent with the
provisions of Section 15A of the Act,8 in
general, and with Section 15A(b)(6) of
the Act,9 in particular, in that it is
designed to prevent fraudulent and
manipulative acts and practices, to
foster cooperation and coordination
with persons engaged in regulating,
clearing, settling, processing
6 See Securities Exchange Act Release No. 50059
(July 22, 2004), 69 FR 45103 (July 28, 2004).
7 The original proposed rule change and this
current filing only establish an obligation to report
cancellations and do not establish rules governing
the circumstance in which it is permissible to
cancel trades.
8 15 U.S.C. 78o–3.
9 15 U.S.C. 78o–3(b)(6).
E:\FR\FM\07MRN1.SGM
07MRN1
11040
Federal Register / Vol. 70, No. 43 / Monday, March 7, 2005 / Notices
information with respect to, and
facilitating transactions in securities,
and to protect investors and the public
interest. The proposed rule change will
establish clear standards for
determining when the obligation to
report a cancelled trade is triggered, and
thus it assists members in complying
with the reporting obligation. The clear
standards also will make it easier for the
NASD to audit for compliance with the
rule.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
Nasdaq does not believe that the
proposed rule change will result in any
burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act, as amended.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
Written comments were neither
solicited nor received.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule
change does not:
(i) Significantly affect the protection
of investors or the public interest;
(ii) Impose any significant burden on
competition; and
(iii) Become operative for 30 days
from the date on which it was filed,10
or such shorter time as the Commission
may designate, it has become effective
pursuant to 19(b)(3)(A) of the Act 11 and
Rule 19b–4(f)(6) 12 thereunder.
At any time within 60 days of the
filing of such proposed rule change, the
Commission may summarily abrogate
such rule change if it appears to the
Commission that such action is
necessary or appropriate in the public
interest, for the protection of investors,
or otherwise in furtherance of the
purposes of the Act.13
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
10 Nasdaq has provided the Commission the prefiling notification as required by subparagraph (iii)
of Rule 19b–4(f)(6), and intends to make the change
operative 60 days after the date of filing.
11 15 U.S.C. 78s(b)(3)(A).
12 17 CFR 240.19b–4(f)(6).
13 15 U.S.C. 78s(b)(3)(C).
VerDate jul<14>2003
18:15 Mar 04, 2005
Jkt 205001
Electronic Comments
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an e-mail to rulecomments@sec.gov. Please include File
Number SR–NASD–2005–027 on the
subject line.
Paper Comments
• Send paper comments in triplicate
to Jonathan G. Katz, Secretary,
Securities and Exchange Commission,
450 Fifth Street, NW., Washington, DC
20549–0609.
All submissions should refer to File
Number SR–NASD–2005–027. This file
number should be included on the
subject line if e-mail is used. To help the
Commission process and review your
comments more efficiently, please use
only one method. The Commission will
post all comments on the Commission’s
Internet Web site (https://www.sec.gov/
rules/sro.shtml). Copies of the
submission, all subsequent
amendments, all written statements
with respect to the proposed rule
change that are filed with the
Commission, and all written
communications relating to the
proposed rule change between the
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for inspection and copying in
the Commission’s Public Reference
Section, 450 Fifth Street, NW.,
Washington, DC 20549. Copies of such
filing also will be available for
inspection and copying at the principal
office of the NASD. All comments
received will be posted without change;
the Commission does not edit personal
identifying information from
submissions. You should submit only
information that you wish to make
available publicly. All submissions
should refer to File Number SR–NASD–
2005–027 and should be submitted on
or before March 28, 2005.
For the Commission, by the Division of
Market Regulation, pursuant to delegated
authority.14
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 05–4293 Filed 3–4–05; 8:45 am]
BILLING CODE 8010–01–P
PO 00000
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–51276; File No. SR–NYSE–
2004–59]
Self-Regulatory Organizations; Notice
of Filing of Proposed Rule Change by
the New York Stock Exchange, Inc., To
Adopt New Rule 401A (‘‘Customer
Complaints’’), and an Amendment to
Rule 476A (‘‘Imposition of Fines for
Minor Violations of Rules’’), Adding
Rule 401A to the List of Exchange Rule
Violations and Fines Applicable
Thereto Pursuant to Rule 476A
February 28, 2005.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on October
21, 2004, the New York Stock Exchange,
Inc. (‘‘NYSE’’ or ‘‘Exchange’’), filed with
the Securities and Exchange
Commission (‘‘Commission’’ or ‘‘SEC’’)
the proposed rule change as described
in Items I, II and III below, which Items
have been prepared by NYSE. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
Proposed new Exchange Rule 401A
(‘‘Customer Complaints’’) would require
members and member organizations (the
‘‘Membership’’ or ‘‘Member Firms’’) to
send acknowledgement of any customer
complaint subject to the reporting
requirements of Rule 351(d) within 15
business days of receiving such
complaint, and to respond to the issues
raised in such complaint within a
reasonable period of time. The proposed
corresponding amendment to Rule 476A
(‘‘Imposition of Fines for Minor
Violations of Rules’’) would allow the
Exchange to sanction the Membership’s
less serious violations of the
acknowledgement provisions of
proposed new Rule 401A pursuant to
the minor fine provisions of Rule 476A.
Below is the text of the proposed rule
change. Proposed new language is
italicized.
*
*
*
*
*
Rule 401A
Customer Complaints
(a) For every customer complaint they
receive that is subject to the reporting
requirements of Rule 351(d), members
and member organizations must:
1 15
14 17
CFR 200.30–3(a)(12).
Frm 00106
Fmt 4703
Sfmt 4703
2 17
E:\FR\FM\07MRN1.SGM
U.S.C. 78s(b)(1).
CFR 240.19b–4.
07MRN1
]]>Agencies
[Federal Register Volume 70, Number 43 (Monday, March 7, 2005)]
[Notices]
[Pages 11036-11040]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 05-4293]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-51278; File No. SR-NASD-2005-027]
Self-Regulatory Organizations; Notice of Filing and Immediate
Effectiveness of Proposed Rule Change by the National Association of
Securities Dealers, Inc. Clarifying Members' Obligations To Report
Cancelled Trades
February 28, 2005.
Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on February 14, 2005, the National Association of Securities Dealers,
Inc. (``NASD''), through its subsidiary, The Nasdaq Stock Market, Inc.
(``Nasdaq''), filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I, II,
and III below, which Items have been prepared by Nasdaq. The Commission
is publishing this notice to solicit comments on the proposed rule
change from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of the
Substance of the Proposed Rule Change Regarding Reporting of Cancelled
Trades
Nasdaq proposes to clarify members' obligations to report the
cancellation of trades previously submitted to the Nasdaq Market
Center. Pursuant to Section 19(b)(3)(A)(i) of the Act \3\ and Rule 19b-
4(f)(6) \4\ thereunder, Nasdaq has designated this proposal as
effecting a change that does not significantly affect the protection of
investors or the public interest, and does not impose any significant
burden on competition. Nasdaq is proposing to make the change operative
60 days after the date of filing. Nasdaq has provided the Commission
the pre-filing notification as required by subparagraph (iii) of Rule
19b-4(f)(6).
---------------------------------------------------------------------------
\3\ 15 U.S.C. 78s(b)(3)(A)(i).
\4\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------
The text of the proposed rule change is below. Proposed new
language is italicized; proposed deletions are in brackets.\5\
---------------------------------------------------------------------------
\5\ The proposed rule change is marked to show changes from the
rule as it appears in the electronic NASD Manual available at http:/
/www.nasd.com.
---------------------------------------------------------------------------
* * * * *
4630. Reporting Transactions in Nasdaq National Market Securities
* * * * *
4632. Transaction Reporting
* * * * *
(g) Reporting Cancelled Trades
(1) Obligation and Party Responsible for Reporting Cancelled Trades
With the exception of trades cancelled by Nasdaq staff in
accordance with Rule 11890, members shall report to the Nasdaq Market
Center the cancellation of any trade previously submitted to the Nasdaq
Market Center. The member responsible under Rule 5430(b) for submitting
the original trade report shall submit the cancellation report in
accordance with the procedures set forth in paragraph (g)(2). For
trades executed through a Nasdaq system that automatically reports
trades to the
[[Page 11037]]
Nasdaq Market Center, the member that would have been required by Rule
5430(b) to report the trade (but for the trade being reported
automatically by the Nasdaq system) shall submit the cancellation
report in accordance with the procedures set forth in paragraph (g)(2).
(2) Deadlines for Reporting Cancelled Trades
(A) For trades executed between 9:30 a.m. and 4 p.m. Eastern Time
and cancelled [for which the decision to cancel occurs] before 5:13:30
p.m. on the date of execution, the member responsible under paragraph
(g)(1) shall report the cancellation within 90 seconds of the time the
trade is cancelled [decision to cancel the trade].
(B) For trades executed between 9:30 a.m. and 4 p.m. Eastern Time
and cancelled [for which the decision to cancel occurs] after 5:13:30
p.m., but before 5:15 p.m. on the date of execution, the member
responsible under paragraph (g)(1) shall use its best efforts to report
the cancellation not later than 5:15 p.m. on the date of execution, and
otherwise it shall report the cancellation on the following business
day by 6:30 p.m.
(C) For trades executed between 9:30 a.m. and 4 p.m. Eastern Time
and cancelled [for which the decision to cancel occurs] after 5:15 p.m.
on the date of execution, the member responsible under paragraph (g)(1)
shall report the cancellation on the following business day by 6:30
p.m.
(D) For trades executed outside the hours of 9:30 a.m. to 4 p.m.
Eastern Time and cancelled [for which a decision to cancel is made]
prior to 6:30 p.m. on the date of execution, the member responsible for
reporting under paragraph (g)(1) shall report the cancellation by 6:30
p.m.
(E) For trades executed outside the hours of 9:30 a.m. to 4 p.m.
Eastern Time and cancelled [for which the decision to cancel occurs]
after 6:30 p.m. on the date of execution, the member responsible under
paragraph (g)(1) shall report the cancellation on the following
business day by 6:30 p.m.
(F) For any trade cancelled [for which the decision to cancel
occurs] on any date after the date of execution, the member responsible
under paragraph (g)(1) shall report the cancellation (i) [if the
decision to cancel occurs before 6:30 p.m., then] by 6:30 p.m. on the
date of cancellation if the trade is cancelled before 6:30 p.m. [when
the decision to cancel occurs], or (ii) [if the decision to cancel
occurs at or after 6:30 p.m., then] by 6:30 p.m. on the following
business day if the trade is cancelled at or after 6:30 p.m.
(G) For purposes of determining the deadline by which a trade
cancellation must be reported to Nasdaq pursuant to subparagraph (g) of
this rule the term ``cancelled'' shall mean the time at which (i) the
member with the reporting responsibility informs its contra party, or
is informed by its contra party, that a trade is being cancelled, (ii)
the member with the reporting responsibility and its contra party agree
to cancel a trade if neither party can unilaterally cancel the trade,
or (iii) the member with the reporting responsibility takes an action
to cancel the trade on its books and records, whichever event occurs
first.
* * * * *
4640. Reporting Transactions in Nasdaq SmallCap\SM\ Market Securities
* * * * *
4642. Transaction Reporting
* * * * *
(g) Reporting Cancelled Trades
(1) Obligation and Party Responsible for Reporting Cancelled Trades
With the exception of trades cancelled by Nasdaq staff in
accordance with Rule 11890, members shall report to the Nasdaq Market
Center the cancellation of any trade previously submitted to the Nasdaq
Market Center. The member responsible under Rule 5430(b) for submitting
the original trade report shall submit the cancellation report in
accordance with the procedures set forth in paragraph (g)(2). For
trades executed through a Nasdaq system that automatically reports
trades to the Nasdaq Market Center, the member that would have been
required by Rule 5430(b) to report the trade (but for the trade being
reported automatically by the Nasdaq system) shall submit the
cancellation report in accordance with the procedures set forth in
paragraph (g)(2).
(2) Deadlines for Reporting Cancelled Trades
(A) For trades executed between 9:30 a.m. and 4 p.m. Eastern Time
and cancelled [for which the decision to cancel occurs] before 5:13:30
p.m. on the date of execution, the member responsible under paragraph
(g)(1) shall report the cancellation within 90 seconds of the time the
trade is cancelled [decision to cancel the trade].
(B) For trades executed between 9:30 a.m. and 4 p.m. Eastern Time
and cancelled [for which the decision to cancel occurs] after 5:13:30
p.m., but before 5:15 p.m. on the date of execution, the member
responsible under paragraph (g)(1) shall use its best efforts to report
the cancellation not later than 5:15 p.m. on the date of execution, and
otherwise it shall report the cancellation on the following business
day by 6:30 p.m.
(C) For trades executed between 9:30 a.m. and 4 p.m. Eastern Time
and cancelled [for which the decision to cancel occurs] after 5:15 p.m.
on the date of execution, the member responsible under paragraph (g)(1)
shall report the cancellation on the following business day by 6:30
p.m.
(D) For trades executed outside the hours of 9:30 a.m. to 4 p.m.
Eastern Time and cancelled [for which a decision to cancel is made]
prior to 6:30 p.m. on the date of execution, the member responsible for
reporting under paragraph (g)(1) shall report the cancellation by 6:30
p.m.
(E) For trades executed outside the hours of 9:30 a.m. to 4 p.m.
Eastern Time and cancelled [for which the decision to cancel occurs]
after 6:30 p.m. on the date of execution, the member responsible under
paragraph (g)(1) shall report the cancellation on the following
business day by 6:30 p.m.
(F) For any trade cancelled [for which the decision to cancel
occurs] on any date after the date of execution, the member responsible
under paragraph (g)(1) shall report the cancellation (i) [if the
decision to cancel occurs before 6:30 p.m., then] by 6:30 p.m. on the
date of cancellation if the trade is cancelled before 6:30 p.m. [when
the decision to cancel occurs], or (ii) [if the decision to cancel
occurs at or after 6:30 p.m., then] by 6:30 p.m. on the following
business day if the trade is cancelled at or after 6:30 p.m.
(G) For purposes of determining the deadline by which a trade
cancellation must be reported to Nasdaq pursuant to subparagraph (g) of
this rule the term ``cancelled'' shall mean the time at which (i) the
member with the reporting responsibility informs its contra party, or
is informed by its contra party, that a trade is being cancelled, (ii)
the member with the reporting responsibility and its contra party agree
to cancel a trade if neither party can unilaterally cancel the trade,
or (iii) the member with the reporting responsibility takes an action
to cancel the trade on its books and records, whichever event occurs
first.
* * * * *
4650. Reporting Transactions in Nasdaq Convertible Debt Securities
* * * * *
[[Page 11038]]
4652. Transaction Reporting
* * * * *
(g) Reporting Cancelled Trades
(1) Obligation and Party Responsible for Reporting Cancelled Trades
With the exception of trades cancelled by Nasdaq staff in
accordance with Rule 11890, members shall report to the Nasdaq Market
Center the cancellation of any trade previously submitted to the Nasdaq
Market Center. The member responsible under Rule 5430(b) for submitting
the original trade report shall submit the cancellation report in
accordance with the procedures set forth in paragraph (g)(2). For
trades executed through a Nasdaq system that automatically reports
trades to the Nasdaq Market Center, the member that would have been
required by Rule 5430(b) to report the trade (but for the trade being
reported automatically by the Nasdaq system) shall submit the
cancellation report in accordance with the procedures set forth in
paragraph (g)(2).
(2) Deadlines for Reporting Cancelled Trades
(A) For trades executed between 9:30 a.m. and 4 p.m. Eastern Time
and cancelled [for which the decision to cancel occurs] before 5:13:30
p.m. on the date of execution, the member responsible under paragraph
(g)(1) shall report the cancellation within 90 seconds of the time the
trade is cancelled [decision to cancel the trade].
(B) For trades executed between 9:30 a.m. and 4 p.m. Eastern Time
and cancelled [for which the decision to cancel occurs] after 5:13:30
p.m., but before 5:15 p.m. on the date of execution, the member
responsible under paragraph (g)(1) shall use its best efforts to report
the cancellation not later than 5:15 p.m. on the date of execution, and
otherwise it shall report the cancellation on the following business
day by 6:30 p.m.
(C) For trades executed between 9:30 a.m. and 4 p.m. Eastern Time
and cancelled [for which the decision to cancel occurs] after 5:15 p.m.
on the date of execution, the member responsible under paragraph (g)(1)
shall report the cancellation on the following business day by 6:30
p.m.
(D) For trades executed outside the hours of 9:30 a.m. to 4 p.m.
Eastern Time and cancelled [for which a decision to cancel is made]
prior to 6:30 p.m. on the date of execution, the member responsible for
reporting under paragraph (g)(1) shall report the cancellation by 6:30
p.m.
(E) For trades executed outside the hours of 9:30 a.m. to 4 p.m.
Eastern Time and cancelled [for which the decision to cancel occurs]
after 6:30 p.m. on the date of execution, the member responsible under
paragraph (g)(1) shall report the cancellation on the following
business day by 6:30 p.m.
(F) For any trade cancelled [for which the decision to cancel
occurs] on any date after the date of execution, the member responsible
under paragraph (g)(1) shall report the cancellation (i) [if the
decision to cancel occurs before 6:30 p.m., then] by 6:30 p.m. on the
date of cancellation if the trade is cancelled before 6:30 p.m. [when
the decision to cancel occurs], or (ii) [if the decision to cancel
occurs at or after 6:30 p.m., then] by 6:30 p.m. on the following
business day if the trade is cancelled at or after 6:30 p.m.
(G) For purposes of determining the deadline by which a trade
cancellation must be reported to Nasdaq pursuant to subparagraph (g) of
this rule the term ``cancelled'' shall mean the time at which (i) the
member with the reporting responsibility informs its contra party, or
is informed by its contra party, that a trade is being cancelled, (ii)
the member with the reporting responsibility and its contra party agree
to cancel a trade if neither party can unilaterally cancel the trade,
or (iii) the member with the reporting responsibility takes an action
to cancel the trade on its books and records, whichever event occurs
first.
* * * * *
6420. Transaction Reporting
* * * * *
(f) Reporting Cancelled Trades
(1) Obligation and Party Responsible for Reporting Cancelled Trades
With the exception of trades cancelled by Nasdaq staff in
accordance with Rule 11890, members shall report to the Nasdaq Market
Center the cancellation of any trade previously submitted to the Nasdaq
Market Center. The member responsible under Rule 6420 for submitting
the original trade report shall submit the cancellation report in
accordance with the procedures set forth in paragraph (f)(2). For
trades executed through a Nasdaq system that automatically reports
trades to the Nasdaq Market Center, the member that would have been
required by Rule 6420 to report the trade (but for the trade being
reported automatically by the Nasdaq system) shall submit the
cancellation report in accordance with the procedures set forth in
paragraph (f)(2).
(2) Deadlines for Reporting Cancelled Trades
(A) For trades executed between 9:30 a.m. and 4 p.m. Eastern Time
and cancelled [for which the decision to cancel occurs] before 5:13:30
p.m. on the date of execution, the member responsible under paragraph
(f)(1) shall report the cancellation within 90 seconds of the time the
trade is cancelled [decision to cancel the trade].
(B) For trades executed between 9:30 a.m. and 4 p.m. Eastern Time
and cancelled [for which the decision to cancel occurs] after 5:13:30
p.m., but before 5:15 p.m. on the date of execution, the member
responsible under paragraph (f)(1) shall use its best efforts to report
the cancellation not later than 5:15 p.m. on the date of execution, and
otherwise it shall report the cancellation on the following business
day by 6:30 p.m.
(C) For trades executed between 9:30 a.m. and 4 p.m. Eastern Time
and cancelled [for which the decision to cancel occurs] after 5:15 p.m.
on the date of execution, the member responsible under paragraph (f)(1)
shall report the cancellation on the following business day by 6:30
p.m.
(D) For trades executed outside the hours of 9:30 a.m. to 4 p.m.
Eastern Time and cancelled [for which a decision to cancel is made]
prior to 6:30 p.m. on the date of execution, the member responsible for
reporting under paragraph (f)(1) shall report the cancellation by 6:30
p.m.
(E) For trades executed outside the hours of 9:30 a.m. to 4 p.m.
Eastern Time and cancelled [for which the decision to cancel occurs]
after 6:30 p.m. on the date of execution, the member responsible under
paragraph (f)(1) shall report the cancellation on the following
business day by 6:30 p.m.
(F) For any trade cancelled [for which the decision to cancel
occurs] on any date after the date of execution, the member responsible
under paragraph (f)(1) shall report the cancellation (i) [if the
decision to cancel occurs before 6:30 p.m., then] by 6:30 p.m. on the
date of cancellation if the trade is cancelled before 6:30 p.m. [when
the decision to cancel occurs], or (ii) [if the decision to cancel
occurs at or after 6:30 p.m., then] by 6:30 p.m. on the following
business day if the trade is cancelled at or after 6:30 p.m.
(G) For purposes of determining the deadline by which a trade
cancellation must be reported to Nasdaq pursuant to subparagraph (f) of
this rule the term ``cancelled'' shall mean the time at which (i) the
member with the reporting responsibility informs its contra party,
[[Page 11039]]
or is informed by its contra party, that a trade is being cancelled,
(ii) the member with the reporting responsibility and its contra party
agree to cancel a trade if neither party can unilaterally cancel the
trade, or (iii) the member with the reporting responsibility takes an
action to cancel the trade on its books and records, whichever event
occurs first.
* * * * *
6600. REPORTING TRANSACTIONS IN OVER-THE-COUNTER EQUITY SECURITIES
* * * * *
6620. Transaction Reporting
* * * * *
(f) Reporting Cancelled Trades
(1) Obligation and Party Responsible for Reporting Cancelled Trades
With the exception of trades cancelled by Nasdaq staff in
accordance with Rule 11890, members shall report to the Nasdaq Market
Center the cancellation of any trade previously submitted to the Nasdaq
Market Center. The member responsible under Rule 6620 for submitting
the original trade report shall submit the cancellation report in
accordance with the procedures set forth in paragraph (f)(2). For
trades executed through a Nasdaq system that automatically reports
trades to the Nasdaq Market Center, the member that would have been
required by Rule 6620 to report the trade (but for the trade being
reported automatically by the Nasdaq system) shall submit the
cancellation report in accordance with the procedures set forth in
paragraph (f)(2).
(2) Deadlines for Reporting Cancelled Trades
(A) For trades executed between 9:30 a.m. and 4 p.m. Eastern Time
and cancelled [for which the decision to cancel occurs] before 5:13:30
p.m. on the date of execution, the member responsible under paragraph
(f)(1) shall report the cancellation within 90 seconds of the time the
trade is cancelled [decision to cancel the trade].
(B) For trades executed between 9:30 a.m. and 4 p.m. Eastern Time
and cancelled [for which the decision to cancel occurs] after 5:13:30
p.m., but before 5:15 p.m. on the date of execution, the member
responsible under paragraph (f)(1) shall use its best efforts to report
the cancellation not later than 5:15 p.m. on the date of execution, and
otherwise it shall report the cancellation on the following business
day by 6:30 p.m.
(C) For trades executed between 9:30 a.m. and 4 p.m. Eastern Time
and cancelled [for which the decision to cancel occurs] after 5:15 p.m.
on the date of execution, the member responsible under paragraph (f)(1)
shall report the cancellation on the following business day by 6:30
p.m.
(D) For trades executed outside the hours of 9:30 a.m. to 4 p.m.
Eastern Time and cancelled [for which a decision to cancel is made]
prior to 6:30 p.m. on the date of execution, the member responsible for
reporting under paragraph (f)(1) shall report the cancellation by 6:30
p.m.
(E) For trades executed outside the hours of 9:30 a.m. to 4 p.m.
Eastern Time and cancelled [for which the decision to cancel occurs]
after 6:30 p.m. on the date of execution, the member responsible under
paragraph (f)(1) shall report the cancellation on the following
business day by 6:30 p.m.
(F) For any trade cancelled [for which the decision to cancel
occurs] on any date after the date of execution, the member responsible
under paragraph (f)(1) shall report the cancellation (i) [if the
decision to cancel occurs before 6:30 p.m., then] by 6:30 p.m. on the
date of cancellation if the trade is cancelled before 6:30 p.m. [when
the decision to cancel occurs], or (ii) [if the decision to cancel
occurs at or after 6:30 p.m., then] by 6:30 p.m. on the following
business day if the trade is cancelled at or after 6:30 p.m.
(G) For purposes of determining the deadline by which a trade
cancellation must be reported to Nasdaq pursuant to subparagraph (f) of
this rule the term ``cancelled'' shall mean the time at which (i) the
member with the reporting responsibility informs its contra party, or
is informed by its contra party, that a trade is being cancelled, (ii)
the member with the reporting responsibility and its contra party agree
to cancel a trade if neither party can unilaterally cancel the trade,
or (iii) the member with the reporting responsibility takes an action
to cancel the trade on its books and records, whichever event occurs
first.
* * * * *
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
On July 22, 2004, the Commission approved a proposed rule change
requiring members to report to Nasdaq the cancellation of any trade
previously reported to Nasdaq, unless the trade is cancelled by Nasdaq
staff.\6\ Soon after Commission approval, questions were raised about
the meaning of certain text in the new rules. Specifically, the rule
requires trades executed and cancelled during normal market hours to be
reported within 90 seconds of ``the decision to cancel the trade.''
Trades cancelled outside normal market hours also must be reported by
certain specified times. Because the phrase ``the decision to cancel
the trade'' is susceptible to multiple legitimate interpretations, thus
making it difficult to impose a uniform standard against which
compliance with the rule can be judged, Nasdaq is proposing new
language to clarify the events that trigger the reporting obligation.
The events are as follows: (1) When the member with the reporting
obligation informs its contra party, or is informed by its contra
party, that a trade is being cancelled, (2) when the member and its
contra party agree to cancel a trade if neither party has the ability
to unilaterally cancel it, or (3) the member takes an action to cancel
the trade on its books and records. The new language also makes it
clear that the earliest occurrence of any one of three specified events
triggers the reporting obligation. For example, if a member and its
contra party decide at 11 a.m. that a trade executed that same day
(after 9:30 a.m.) should be cancelled, the member with the reporting
obligation must report the cancellation to Nasdaq by 11:01:30 a.m.,
even if the member does not take action to remove the trade from its
books and records until some time later that day. Requiring the trigger
to be the earliest of the three events is designed to ensure the
reporting of the cancellation as soon as possible.\7\
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\6\ See Securities Exchange Act Release No. 50059 (July 22,
2004), 69 FR 45103 (July 28, 2004).
\7\ The original proposed rule change and this current filing
only establish an obligation to report cancellations and do not
establish rules governing the circumstance in which it is
permissible to cancel trades.
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2. Statutory Basis
Nasdaq believes that the proposed rule change is consistent with
the provisions of Section 15A of the Act,\8\ in general, and with
Section 15A(b)(6) of the Act,\9\ in particular, in that it is designed
to prevent fraudulent and manipulative acts and practices, to foster
cooperation and coordination with persons engaged in regulating,
clearing, settling, processing
[[Page 11040]]
information with respect to, and facilitating transactions in
securities, and to protect investors and the public interest. The
proposed rule change will establish clear standards for determining
when the obligation to report a cancelled trade is triggered, and thus
it assists members in complying with the reporting obligation. The
clear standards also will make it easier for the NASD to audit for
compliance with the rule.
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\8\ 15 U.S.C. 78o-3.
\9\ 15 U.S.C. 78o-3(b)(6).
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B. Self-Regulatory Organization's Statement on Burden on Competition
Nasdaq does not believe that the proposed rule change will result
in any burden on competition that is not necessary or appropriate in
furtherance of the purposes of the Act, as amended.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
Written comments were neither solicited nor received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule change does not:
(i) Significantly affect the protection of investors or the public
interest;
(ii) Impose any significant burden on competition; and
(iii) Become operative for 30 days from the date on which it was
filed,\10\ or such shorter time as the Commission may designate, it has
become effective pursuant to 19(b)(3)(A) of the Act \11\ and Rule 19b-
4(f)(6) \12\ thereunder.
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\10\ Nasdaq has provided the Commission the pre-filing
notification as required by subparagraph (iii) of Rule 19b-4(f)(6),
and intends to make the change operative 60 days after the date of
filing.
\11\ 15 U.S.C. 78s(b)(3)(A).
\12\ 17 CFR 240.19b-4(f)(6).
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At any time within 60 days of the filing of such proposed rule
change, the Commission may summarily abrogate such rule change if it
appears to the Commission that such action is necessary or appropriate
in the public interest, for the protection of investors, or otherwise
in furtherance of the purposes of the Act.\13\
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\13\ 15 U.S.C. 78s(b)(3)(C).
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IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's Internet comment form (https://
www.sec.gov/rules/sro.shtml); or
Send an e-mail to rule-comments@sec.gov. Please include
File Number SR-NASD-2005-027 on the subject line.
Paper Comments
Send paper comments in triplicate to Jonathan G. Katz,
Secretary, Securities and Exchange Commission, 450 Fifth Street, NW.,
Washington, DC 20549-0609.
All submissions should refer to File Number SR-NASD-2005-027. This
file number should be included on the subject line if e-mail is used.
To help the Commission process and review your comments more
efficiently, please use only one method. The Commission will post all
comments on the Commission's Internet Web site (https://www.sec.gov/
rules/sro.shtml). Copies of the submission, all subsequent amendments,
all written statements with respect to the proposed rule change that
are filed with the Commission, and all written communications relating
to the proposed rule change between the Commission and any person,
other than those that may be withheld from the public in accordance
with the provisions of 5 U.S.C. 552, will be available for inspection
and copying in the Commission's Public Reference Section, 450 Fifth
Street, NW., Washington, DC 20549. Copies of such filing also will be
available for inspection and copying at the principal office of the
NASD. All comments received will be posted without change; the
Commission does not edit personal identifying information from
submissions. You should submit only information that you wish to make
available publicly. All submissions should refer to File Number SR-
NASD-2005-027 and should be submitted on or before March 28, 2005.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\14\
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\14\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 05-4293 Filed 3-4-05; 8:45 am]
BILLING CODE 8010-01-P
