Self-Regulatory Organizations; National Association of Securities Dealers, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Regarding the Nasdaq Opening Process for Nasdaq-Listed Stocks, 20955-20958 [E5-1913]
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Federal Register / Vol. 70, No. 77 / Friday, April 22, 2005 / Notices
E. Petitioner’s Assertion That the
Commission Improperly Relied on the
Letter of CBOE’s Outside Counsel Is
Without Merit
Petitioner further contends that the
Commission’s ‘‘reliance’’ on the opinion
of CBOE’s outside counsel is manifestly
erroneous.32 Petitioner claims that the
opinion letter of CBOE’s outside counsel
failed to cite any relevant authority or
provide any rationale to support its
characterization of the CBOE’s action as
an ‘‘interpretation’’ of Article Fifth(b)
and accordingly should be given less
weight.33 Petitioner decried the opinion
letter’s elevation of ‘‘form over
substance,’’ its failure to ‘‘address the
circumstances when an ‘interpretation’
must also be deemed in substance an
amendment,’’ and its failure to discuss
‘‘the CBOE Board’s conflict of interest in
making and enforcing the interpretation
at issue here.’’ 34
Petitioner’s assertion that the opinion
letter of CBOE’s outside counsel failed
to cite any relevant authority or provide
any rationale is incorrect. Further, we
did not solely rely on the opinion of
CBOE’s outside counsel. We found the
opinion letter, along with the CBOE’s
Statement in Support of Approval, to be
‘‘persuasive,’’ and we found that those
materials provided a ‘‘sufficient basis’’
to support a finding that, ‘‘as a federal
matter under the Exchange Act, the
CBOE complied with its own Certificate
of Incorporation in determining that the
proposed rule change is an
interpretation of, not an amendment to,
Article Fifth(b).’’ 35 Further, and most
importantly, we specifically noted that
we did ‘‘not believe that Petitioner’s
argument refutes, to any degree, CBOE’s
analysis of why its proposed rule
change is an interpretation of Article
Fifth(b), not an amendment.’’ 36
Accordingly, we find Petitioner’s
allegation of error based on the letter of
CBOE’s outside counsel to be without
merit.
F. Petitioner’s Allegation That the
Commission Made a Finding Suggesting
That Not Approving CBOE’s
Interpretation Would Paralyze the
Exchange Is Factually Baseless
Petitioner concludes his brief by
arguing that ‘‘[t]he Commission’s Order
finding (incorporated from page 6 of the
32 Petitioner’s Brief in Support of Motion to
Reconsider, supra note 11, at 12. See also Statement
of Chicago Board of Options Exchange in Support
of Approval of Rule Under Delegated Authority,
October 26, 2004.
33 Petitioner’s Brief in Support of Motion to
Reconsider, supra note 11, at 12–13.
34 Id. at 12.
35 Order, supra note 2, at 10444.
36 Id.
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CBOE’s Statement in Support of
Approval) that failing to approve the
CBOE Board’s ‘interpretation’ would
‘paralyze’ the Exchange is without basis
in fact.’’ 37 As stated above, while we
cited to the CBOE’s Statement in
Support of Approval, we did not
incorporate by reference the substance
of that document into our Order. Nor
did we make any finding in our Order
that failing to approve the CBOE’s rule
change would paralyze the CBOE.
Accordingly, Petitioner’s argument is
unsupported and will not be considered
as grounds for reconsideration.
III
In the alternative, Petitioner suggests
that ‘‘the CBOT’s recent formal actions
to demutualize have the capacity to
render the proposed rule change moot’’
since the proposed rule change, the
Petitioner argues, is only relevant if the
CBOT is structured as a member
organization.38 Accordingly, the
Petitioner suggests that the Commission
should consider holding final
determination of the validity of the
proposed rule change in abeyance until
the CBOT members’ vote on whether to
demutualize is complete.39 We disagree.
Self-regulatory organizations are not
required to delay making changes to
their rules in order to account for future
contingencies that may or may not
impact such rule in the future. Rather,
to the extent that changed
circumstances warrant further revisions
to the CBOE’s rules, the CBOE would
need to submit a subsequent rule change
pursuant to Section 19(b)(1) of the Act 40
and Rule 19b–4 thereunder.41
Accordingly, we see no reason to hold
final determination of this motion to
reconsider in abeyance as suggested by
Petitioner.
Accordingly, we find that Petitioner’s
motion does not present the exceptional
circumstances required for us to
reconsider our earlier Order.
It is therefore ordered, that the motion
for reconsideration filed by Marshall
Spiegel be, and it hereby is, denied.
By the Commission.
Jill M. Peterson,
Assistant Secretary.
[FR Doc. E5–1912 Filed 4–21–05; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–51522; File No. SR—NASD–
2005–050]
Self-Regulatory Organizations;
National Association of Securities
Dealers, Inc.; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change Regarding the Nasdaq
Opening Process for Nasdaq-Listed
Stocks
April 11, 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 April 11,
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 are II below, which Items have
been prepared by Nasdaq. Nasdaq has
designated the proposed rule change as
‘‘non-controversial’’ under Section
19(b)(3)(A) of the Act 3 and Rule 19b–
4(f)(6) thereunder,4 which renders the
proposed rule change effective upon
filing with the Commission. 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
Nasdaq is filing a proposed rule
change to begin the pre-market trading
session on a voluntary basis at 8 a.m.
rather than 9:25 a.m. The text of the
proposed rule change is set forth below.
Proposed new language is in italics;
proposed deletions are in [brackets].5
*
*
*
*
*
4701. Definitions
(a)—(rr) No Change.
(ss) The term ‘‘Total Day’’ or ‘‘X
Order’’ shall mean, (a) For orders in ITS
Securities so designated, that if after
entry into the Nasdaq Market Center, the
order is not fully executed, the order (or
unexecuted portion thereof) shall
remain available for potential display
between 7:30 a.m. and 6:30 p.m. and for
potential execution between market
open (9:30 a.m.) and 6:30 p.m., after
1 15
Brief in Support of Motion to
Reconsider, supra note 11, at 13.
38 Id. at 3.
39 Id.
40 15 U.S.C. 78s(b)(1).
41 17 CFR 240.19b–4.
PO 00000
37 Petitioner’s
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20955
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 15 U.S.C. 78s(b)(3)(A).
4 17 CFR 240.19b–4(f)(6).
5 The proposed rule change is marked to show
changes from the rule tet appearing in the NASD
Manual available at https://www.nasd.com.
2 17
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which it shall be returned to the
entering party.
(b) For orders in Nasdaq-listed
securities so designated, that if after
entry into the Nasdaq Market Center, the
order is not fully executed, the order (or
unexecuted portion thereof) shall
remain available for potential display
between 7:30 a.m. and 4 p.m. and for
execution between [9:25] 8 a.m. and 4
p.m., after which it shall be returned to
the entering party. [X Orders entered
prior to 9:25 a.m. will be rejected back
to the entering party.]
(tt) No Change.
(uu) The term ‘‘Total Immediate or
Cancel’’ or ‘‘IOX Order’’ shall mean,
(a) For limit orders in ITS Securities
so designated, that if after entry into the
Nasdaq Market Center a marketable
limit order (or unexecuted portion
thereof) becomes non-marketable, the
order (or unexecuted portion thereof)
shall be canceled and returned to the
entering participant. Such orders are
available for potential execution
between 9:30 a.m. and 6:30 p.m.
(b) For limit orders in Nasdaq-listed
securities so designated, that if after
entry into the Nasdaq Market Center a
marketable limit order (or unexecuted
portion thereof) becomes nonmarketable, the order (or unexecuted
portion thereof) shall be canceled and
returned to the entering participant.
Such orders may be entered and are
available for potential execution
between [9:25] 8 a.m. and 4 p.m.
*
*
*
*
*
4704. Opening Process for NasdaqListed Securities
(a) No Change.
(b) Trading Prior To Normal Market
Hours. The system shall [open] process
all eligible Quotes/Orders in Nasdaqlisted securities at [9:25] 8 a.m. in the
following manner to prevent the
creation of locked/crossed markets.
(1) At [9:25] 8 a.m., the system shall
open in time priority all eligible Quotes
as stated in paragraph (5) below and all
eligible Orders in accordance with Rule
4701(ss) and (uu) [in time priority].
Quotes/Orders whose limit price [does]
would not lock or cross the book shall
be added to the book in strict time
priority. Quotes/Orders whose limit
price would lock or cross the book shall
be placed in an ‘‘In Queue’’ state except
as provided in paragraph (4).
(2) Next, the system shall begin
processing the In Queue Quotes/Orders
in strict time priority against the best
bid (ask) if the In Queue Quote/O[o]rder
is a sell (buy) order. If an In Queue
Quote/Order is not executable when it
is next in time for execution, the system
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shall automatically add that Quote/
Order to the book.
(3) Once the process set forth in
subparagraphs (1)–(2) is complete, the
system shall begin processing Quotes
and X and IOX Orders in accordance
with their entry parameters.
(4) Between 8 a.m. and 9:25 a.m., the
system shall open Quotes in accordance
with the entry parameters set by each
Nasdaq Quoting Market Participant
provided that Quotes that would lock/
cross the market will be rejected or
executed in accordance with the Nasdaq
Quoting Market Participant’s
instructions. At 9:25 a.m., the system
shall open all remaining unopened
Quotes in accordance with each firm’s
instructions.
(5) Nasdaq Quoting Market
Participants may instruct Nasdaq to
open their Quotes as follows:
(A) At the last price and size entered
by the participant during the previous
trading day, either including or
excluding reserve size;
(B) At a price and size entered by the
participant between 7:30 a.m. and
9:24:59 a.m.; or
(C) At the quotation limits for Nasdaq
systems, currently $.01 (bid) and $2,000
(ask).
([4]6) All trades executed prior to 9:30
shall be automatically appended with
the ‘‘.T’’ modifier.
([5]7) Notwithstanding subparagraphs
(1) through (5), if a Nasdaq Quoting
Market Participant has entered a
Locking/Crossing Quote/Order into the
system that would become subject to the
automated processing described above,
the system shall, before sending the
order to any other Quoting Market
Participant or Order Entry Firm, first
attempt to match off the order against
the locking/crossing Nasdaq Quoting
Market Participant’s own Quote/Order if
that participant’s Quote/Order is at the
highest bid or lowest offer, as
appropriate. A Nasdaq Quoting Market
Participant may avoid this automatic
matching through the use of antiinternalization qualifier as set forth in
Rule 4710(b)(1)(B)(ii)(a). Order Entry
Firms that enter locking/crossing
Quotes/Orders shall have those Quotes/
Orders processed as set forth in
subparagraphs (1) through ([4]3), unless
they voluntarily select a ‘‘Y’’ AIQ Value
as provided for in Rule
4710(b)(1)(B)(ii)(a).
(c)–(d) No Change.
*
*
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*
*
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II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission,
Nasdaq included statements concerning
the purpose of and basis for the
proposed rule change and discussed any
comments it received on the proposed
rule change. The text of these statements
may be examined at the places specified
in Item IV below. Nasdaq has prepared
summaries, set forth in Sections A, B,
and C below, of the most significant
aspects of such statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
Nasdaq proposes to make available on
a voluntary basis a pre-market trading
session of the execution service of the
Nasdaq Market Center at 8 a.m. rather
than at 9:25 a.m. As described below,
Nasdaq would open the trading session
at 8 a.m. using the unlocking/uncrossing
process that it currently uses at 9:25
a.m. All extended hours orders and all
quotations so designated by a Quoting
Market Participant would be eligible for
execution during the pre-market trading
session and quotations and orders
would participate precisely as they do
today. Trades that occur before 9:30 a.m.
would continue to receive a trade report
modifier denoting execution during
extended trading hours, as they do
today.
As it does today, Nasdaq would begin
the voluntary pre-market trading session
at 7:30 a.m. by making the system
available for displaying quotations and
orders but not for execution. As they do
today, firms would continue to have
three options for determining the price
at which their carryover quotes would
be opened at 9:25: (1) The last quotation
price entered during the previous day;
(2) the last quotation price the firm
enters after 7:30 a.m. and before 9:25
a.m.; or (3) the quote limits for Nasdaq,
currently $.01 (bid) and $2,000 (ask).
Beginning at 7:30 a.m. until 8 a.m.,
Nasdaq would display all quotations
and eligible orders remaining in the
system from the previous night. Market
participants would have the ability to
update their quotes beginning at 7:30
a.m. and to instruct Nasdaq regarding
the display of that updated quote. For
example, a market participant would be
able, at any time after 7:30 a.m., to enter
a quote update and to instruct Nasdaq
to open that quote immediately. If the
update were to be received before 8
a.m., the quotation would be opened
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and executable when the execution
functionality became available at 8 a.m.
If the quote open update were to be
received between 8 a.m. and 9:25 a.m.
the quote would be opened upon the
receipt of the quote update. At 9:25 a.m.
all quotations would be made available
for automatic executions.
Also at 7:30 a.m., market participants
would be able to begin voluntarily
submitting extended and regular hours
orders. To facilitate orderly trading
beginning at 8 a.m., Nasdaq would make
Total Day Orders (‘‘X Orders’’), as
described in Rule 4701(ss), and Total
Immediate or Cancel (‘‘IOX Orders’’), as
described in Rule 4701(uu), available for
execution at 8 a.m. rather than at 9:25
a.m. Extended hours orders would
receive a time stamp for purposes of
determining time priority and would be
displayed but not executed.
At 8 a.m., Nasdaq would open the
execution functionality of the Nasdaq
Market Center. In preparation for that
opening, Nasdaq would construct an
unlocked inside in each security by
applying the unlocking/uncrossing
process described in Rule 4704(b),
which it currently applies at 9:25 a.m.
In that process, Nasdaq would clear the
existing quotation display and ‘‘wake
up’’ the quotations of market
participants that have instructed Nasdaq
to open their quotations between 7:30
a.m. and 8 a.m. Quotations that have not
been opened between 7:30 a.m. and 8
a.m. would not be displayed and would
not participate in the 8 a.m. opening
process. Participating quotations would
be processed in order of time priority
and placed on the Nasdaq book,
provided, however, that quotations that
would lock or cross the market would
be rejected. Immediately upon
completion of the 8 a.m. unlocking/
uncrossing process, all quotations that
have been opened voluntarily and all
eligible orders that have been submitted
voluntarily would be subject to
automatic execution.
At 9:25 a.m., Nasdaq would ‘‘wake
up’’ all remaining un-opened quotations
and introduce them to the Nasdaq book
as it does today. A quotation might
remain unopened at 9:25 a.m. in two
circumstances: If a market participant
has entered a quotation update but has
not instructed Nasdaq to open the
quotation or if the participant has
entered no update at all. In the first
case, at 9:25 a.m., Nasdaq would open
the quotation at the price and size
specified by the participant. In the
second case, Nasdaq would open the
quotation based on the participant’s
instructions. Quotations that would lock
or cross the inside would automatically
be rejected.
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It is important to note that the
parameters governing the entry of
Market-on-Open and Opening
Imbalance Only Orders, as well as all
parameters governing the Nasdaq
Opening Cross would remain the same
as today, including dissemination of
Opening Cross information and the
processing of the Opening Cross itself.
Nasdaq believes that these changes
are consistent with the Act and would
improve the fairness and orderliness of
Nasdaq’s pre-open trading environment.
Having quotes opened voluntarily and
executable upon entry would improve
the accuracy of Nasdaq’s pre-market
trading data. Today, because quotations
are not executable, the market can
appear locked or crossed during the premarket session. In addition, Nasdaq
believes that making quotations and
orders available for execution would
improve both the transparency and
price discovery provided by those
quotations and orders. Nasdaq further
notes that several other market centers
are open for pre-market trading at this
time and therefore Nasdaq’s proposal
would enhance competition for
quotation and execution services.
2. Statutory Basis
Nasdaq believes that the proposed
rule change is consistent with the
provisions of Section 15A of the Act,6 in
general, and with Section 15A(b)(6) of
the Act,7 in particular, in that Section
15A(b)(6) requires that the NASD’s rules
be designed to protect investors and the
public interest. Nasdaq believes that its
current proposal is consistent with the
NASD’s obligations under these
provisions of the Act because it would
extend fair and orderly trading of
Nasdaq stocks on Nasdaq during an
increasingly active period of the trading
day, prevent the occurrence of locked
and crossed markets before the start of
normal market hours, and preserve price
discovery and transparency that is vital
to an effective opening of trading.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
Nasdaq does not believe that the
proposed rule change would result in
any burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act.
PO 00000
6 15
7 15
U.S.C. 78o–3.
U.S.C. 78o–3(b)(6).
Frm 00103
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20957
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants or Others
Nasdaq neither solicited nor received
written comments with respect to the
proposed rule change.
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, or
such shorter time as the Commission
may designate, if consistent with the
protection of investors and the public
interest, it has become effective
pursuant to Section 19(b)(3)(A) of the
Act 8 and Rule 19b–4(f)(6) thereunder.9
Nasdaq has requested that the
Commission waive the 30-day operative
delay for ‘‘non-controversial’’ proposals,
based upon a representation that the
proposal is of the utmost importance to
the fair and orderly operation of The
Nasdaq Stock Market during the preopening trading period. The
Commission believes that waiver of the
30-day operative delay is consistent
with the protection of investors and the
public interest because it would allow
Nasdaq immediately to implement the
proposed rule change which should
improve transparency in the preopening trading period. For this reason,
the Commission designates the proposal
to be effective and operative upon filing
with the Commission.10
At any time within 60 days of the
filing of the 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.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
8 15
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(6). The Commission notes
that Nasdaq provided written notice of its intent to
file the proposed rule change, along with a brief
description and text of the proposed rule change at
least five business days prior to the date of filing
of the proposed rule change.
10 For purposes only of waiving the 30-day
operative delay of the proposed rule change, the
Commission considered the proposed rule’s impact
on efficiency, competition, and capital formation.
15 U.S.C. 78c(f).
9 17
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Federal Register / Vol. 70, No. 77 / Friday, April 22, 2005 / Notices
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
DEPARTMENT OF STATE
[Public Notice 5048]
Fine Arts Committee Notice of Meeting
Electronic Comments
The Fine Arts Committee of the
Department of State will meet on May
21, 2005, at 10:30 a.m. in the Henry Clay
Room of the Harry S. Truman Building,
2201 C Street NW., Washington, DC.
The meeting will last until
approximately 12 noon and is open to
the public.
The agenda for the committee meeting
will include a summary of the work of
Paper Comments
the Fine Arts Office since its last
meeting on September 17, 2004 and the
• Send paper comments in triplicate
announcement of gifts and loans of
to Jonathan G. Katz, Secretary,
furnishings as well as financial
Securities and Exchange Commission,
contributions from January 1, 2004
450 Fifth Street, NW, Washington, DC
through December 31, 2004.
20549–0609.
Public access to the Department of
All submissions should refer to File
State is strictly controlled and space is
Number SR–NASD–2005–050. This file
limited. Members of the public wishing
number should be included on the
to take part in the meeting should
subject line if e-mail is used. To help the telephone the Fine Arts Office at (202)
Commission process and review your
647–1990 or send an e-mail to
comments more efficiently, please use
Craighillmf@state.gov by May 17 to
only one method. The Commission will make arrangements to enter the
post all comments on the Commission’s building. The public may take part in
Internet Web site (https://www.sec.gov/
the discussion as long as time permits
rules/sro.shtml). Copies of the
and at the discretion of the chairman.
submission, all subsequent
Dated: April 5, 2005.
amendments, all written statements
Gail F. Serfaty,
with respect to the proposed rule
Secretary, Fine Arts Committee, Department
change that are filed with the
of State.
Commission, and all written
[FR Doc. 05–8124 Filed 4–21–05; 8:45 am]
communications relating to the
BILLING CODE 4710–38–P
proposed rule change between the
Commission and any person, other than
those that may be withheld from the
DEPARTMENT OF TRANSPORTATION
public in accordance with the
provisions of 5 U.S.C. 552, will be
Office of the Secretary
available for inspection and copying in
the Commission’s Public Reference
Aviation Proceedings, Agreements
Room. Copies of such filing also will be Filed the Week Ending April 8, 2005
available for inspection and copying at
The following Agreements were filed
the principal office of the NASD. All
with the Department of Transportation
comments received will be posted
under the provisions of 49 U.S.C. 412
without change; the Commission does
and 414. Answers may be filed within
not edit personal identifying
21 days after the filing of the
information from submissions. You
application.
should submit only information that
Docket Number: OST–2005–20893.
you wish to make available publicly. All
Date Filed: April 4, 2005.
submissions should refer to File
Parties: Members of the International
Number SR–NASD–2005–050 and
Air Transport Association.
should be submitted on or before May
Subject:
13, 2005.
PTC2 AFR 0157 dated 8 March 2005,
For the Commission, by the Division of
TC2 Within Africa Resolutions r1–
Market Regulation, pursuant to delegated
r23.
authority.11
Minutes: PTC2 AFR 0158 dated 4 April
Jill M. Peterson,
2005.
Assistant Secretary.
Tables: PTC2 AFR Fares 0055 dated 18
[FR Doc. E5–1913 Filed 4–21–05; 8:45 am]
March 2005.
Intended effective date: 1 May 2005.
BILLING CODE 8010–01–P
Docket Number: OST–2005–20950.
11 17 CFR 200.30–3(a)(12).
Date Filed: April 8, 2005.
• 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–2005–050 on the
subject line.
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Parties: Members of the International
Air Transport Association.
Subject:
PTC12 NMS–AFR 0215 dated 11 March
2005, TC12 North Atlantic-Africa
(except USA–Reunion) Resolutions.
PTC12 NMS–AFR 0218 dated 18 March
2005, TC12 North Atlantic-Africa
(except USA–Reunion) Resolutions—
Technical Correction.
PTC12 NMS–AFR 0219 dated 26 March
2005, TC12 North Atlantic-Africa
(except USA–Reunion) Resolutions.
PTC12 NMS–AFR 0216 dated 11 March
2005, TC12 North Atlantic USA–
Reunion Resolutions.
PTC12 NMS–AFR 0217 dated 11 March
2005, TC12 Mid Atlantic-Africa
Resolutions r1–r33.
Minutes: PTC12 NMS–AFR 0220 dated
8 April 2005.
Tables: PTC12 NMS–AFR Fares 0105
dated 18 March 2005, TC12 North
Atlantic-Africa Specified Fares
Tables.
PTC12 NMS–AFR Fares 0104 dated 18
March 2005, TC12 Mid AtlanticAfrica Specified Fares Tables.
Intended effective date: 1 May 2005.
Renee V. Wright,
Acting Program Manager, Docket Operations,
Alternate Federal Register Liaison.
[FR Doc. 05–8086 Filed 4–21–05; 8:45 am]
BILLING CODE 4910–62–P
DEPARTMENT OF TRANSPORTATION
Office of the Secretary
Notice of Applications for Certificates
of Public Convenience and Necessity
and Foreign Air Carrier Permits Filed
Under Subpart B (Formerly Subpart Q)
During the Week Ending April 8, 2005
The following Applications for
Certificates of Public Convenience and
Necessity and Foreign Air Carrier
Permits were filed under Subpart B
(formerly Subpart Q) of the Department
of Transportation’s Procedural
Regulations (See 14 CFR 301.201 et.
seq.). The due date for Answers,
Conforming Applications, or Motions to
Modify Scope are set forth below for
each application. Following the Answer
period DOT may process the application
by expedited procedures. Such
procedures may consist of the adoption
of a show-cause order, a tentative order,
or in appropriate cases a final order
without further proceedings.
Docket Number: OST–2005–20889.
Date Filed: April 4, 2005.
Due Date for Answers, Conforming
Applications, or Motion to Modify
Scope: April 25, 2005.
Description: Application of
Continental Airlines, Inc., requesting a
E:\FR\FM\22APN1.SGM
22APN1
]]>Agencies
[Federal Register Volume 70, Number 77 (Friday, April 22, 2005)]
[Notices]
[Pages 20955-20958]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E5-1913]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-51522; File No. SR--NASD-2005-050]
Self-Regulatory Organizations; National Association of Securities
Dealers, Inc.; Notice of Filing and Immediate Effectiveness of Proposed
Rule Change Regarding the Nasdaq Opening Process for Nasdaq-Listed
Stocks
April 11, 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 April 11, 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 are
II below, which Items have been prepared by Nasdaq. Nasdaq has
designated the proposed rule change as ``non-controversial'' under
Section 19(b)(3)(A) of the Act \3\ and Rule 19b-4(f)(6) thereunder,\4\
which renders the proposed rule change effective upon filing with the
Commission. The Commission is publishing this notice to solicit
comments on the proposed rule change from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ 15 U.S.C. 78s(b)(3)(A).
\4\ 17 CFR 240.19b-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
Nasdaq is filing a proposed rule change to begin the pre-market
trading session on a voluntary basis at 8 a.m. rather than 9:25 a.m.
The text of the proposed rule change is set forth below. Proposed new
language is in italics; proposed deletions are in [brackets].\5\
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\5\ The proposed rule change is marked to show changes from the
rule tet appearing in the NASD Manual available at https://
www.nasd.com.
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* * * * *
4701. Definitions
(a)--(rr) No Change.
(ss) The term ``Total Day'' or ``X Order'' shall mean, (a) For
orders in ITS Securities so designated, that if after entry into the
Nasdaq Market Center, the order is not fully executed, the order (or
unexecuted portion thereof) shall remain available for potential
display between 7:30 a.m. and 6:30 p.m. and for potential execution
between market open (9:30 a.m.) and 6:30 p.m., after
[[Page 20956]]
which it shall be returned to the entering party.
(b) For orders in Nasdaq-listed securities so designated, that if
after entry into the Nasdaq Market Center, the order is not fully
executed, the order (or unexecuted portion thereof) shall remain
available for potential display between 7:30 a.m. and 4 p.m. and for
execution between [9:25] 8 a.m. and 4 p.m., after which it shall be
returned to the entering party. [X Orders entered prior to 9:25 a.m.
will be rejected back to the entering party.]
(tt) No Change.
(uu) The term ``Total Immediate or Cancel'' or ``IOX Order'' shall
mean,
(a) For limit orders in ITS Securities so designated, that if after
entry into the Nasdaq Market Center a marketable limit order (or
unexecuted portion thereof) becomes non-marketable, the order (or
unexecuted portion thereof) shall be canceled and returned to the
entering participant. Such orders are available for potential execution
between 9:30 a.m. and 6:30 p.m.
(b) For limit orders in Nasdaq-listed securities so designated,
that if after entry into the Nasdaq Market Center a marketable limit
order (or unexecuted portion thereof) becomes non-marketable, the order
(or unexecuted portion thereof) shall be canceled and returned to the
entering participant. Such orders may be entered and are available for
potential execution between [9:25] 8 a.m. and 4 p.m.
* * * * *
4704. Opening Process for Nasdaq-Listed Securities
(a) No Change.
(b) Trading Prior To Normal Market Hours. The system shall [open]
process all eligible Quotes/Orders in Nasdaq-listed securities at
[9:25] 8 a.m. in the following manner to prevent the creation of
locked/crossed markets.
(1) At [9:25] 8 a.m., the system shall open in time priority all
eligible Quotes as stated in paragraph (5) below and all eligible
Orders in accordance with Rule 4701(ss) and (uu) [in time priority].
Quotes/Orders whose limit price [does] would not lock or cross the book
shall be added to the book in strict time priority. Quotes/Orders whose
limit price would lock or cross the book shall be placed in an ``In
Queue'' state except as provided in paragraph (4).
(2) Next, the system shall begin processing the In Queue Quotes/
Orders in strict time priority against the best bid (ask) if the In
Queue Quote/O[o]rder is a sell (buy) order. If an In Queue Quote/Order
is not executable when it is next in time for execution, the system
shall automatically add that Quote/Order to the book.
(3) Once the process set forth in subparagraphs (1)-(2) is
complete, the system shall begin processing Quotes and X and IOX Orders
in accordance with their entry parameters.
(4) Between 8 a.m. and 9:25 a.m., the system shall open Quotes in
accordance with the entry parameters set by each Nasdaq Quoting Market
Participant provided that Quotes that would lock/cross the market will
be rejected or executed in accordance with the Nasdaq Quoting Market
Participant's instructions. At 9:25 a.m., the system shall open all
remaining unopened Quotes in accordance with each firm's instructions.
(5) Nasdaq Quoting Market Participants may instruct Nasdaq to open
their Quotes as follows:
(A) At the last price and size entered by the participant during
the previous trading day, either including or excluding reserve size;
(B) At a price and size entered by the participant between 7:30
a.m. and 9:24:59 a.m.; or
(C) At the quotation limits for Nasdaq systems, currently $.01
(bid) and $2,000 (ask).
([4]6) All trades executed prior to 9:30 shall be automatically
appended with the ``.T'' modifier.
([5]7) Notwithstanding subparagraphs (1) through (5), if a Nasdaq
Quoting Market Participant has entered a Locking/Crossing Quote/Order
into the system that would become subject to the automated processing
described above, the system shall, before sending the order to any
other Quoting Market Participant or Order Entry Firm, first attempt to
match off the order against the locking/crossing Nasdaq Quoting Market
Participant's own Quote/Order if that participant's Quote/Order is at
the highest bid or lowest offer, as appropriate. A Nasdaq Quoting
Market Participant may avoid this automatic matching through the use of
anti-internalization qualifier as set forth in Rule
4710(b)(1)(B)(ii)(a). Order Entry Firms that enter locking/crossing
Quotes/Orders shall have those Quotes/Orders processed as set forth in
subparagraphs (1) through ([4]3), unless they voluntarily select a
``Y'' AIQ Value as provided for in Rule 4710(b)(1)(B)(ii)(a).
(c)-(d) No Change.
* * * * *
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, Nasdaq included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. Nasdaq has prepared summaries, set forth in Sections A,
B, and C below, of the most significant aspects of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
Nasdaq proposes to make available on a voluntary basis a pre-market
trading session of the execution service of the Nasdaq Market Center at
8 a.m. rather than at 9:25 a.m. As described below, Nasdaq would open
the trading session at 8 a.m. using the unlocking/uncrossing process
that it currently uses at 9:25 a.m. All extended hours orders and all
quotations so designated by a Quoting Market Participant would be
eligible for execution during the pre-market trading session and
quotations and orders would participate precisely as they do today.
Trades that occur before 9:30 a.m. would continue to receive a trade
report modifier denoting execution during extended trading hours, as
they do today.
As it does today, Nasdaq would begin the voluntary pre-market
trading session at 7:30 a.m. by making the system available for
displaying quotations and orders but not for execution. As they do
today, firms would continue to have three options for determining the
price at which their carryover quotes would be opened at 9:25: (1) The
last quotation price entered during the previous day; (2) the last
quotation price the firm enters after 7:30 a.m. and before 9:25 a.m.;
or (3) the quote limits for Nasdaq, currently $.01 (bid) and $2,000
(ask).
Beginning at 7:30 a.m. until 8 a.m., Nasdaq would display all
quotations and eligible orders remaining in the system from the
previous night. Market participants would have the ability to update
their quotes beginning at 7:30 a.m. and to instruct Nasdaq regarding
the display of that updated quote. For example, a market participant
would be able, at any time after 7:30 a.m., to enter a quote update and
to instruct Nasdaq to open that quote immediately. If the update were
to be received before 8 a.m., the quotation would be opened
[[Page 20957]]
and executable when the execution functionality became available at 8
a.m. If the quote open update were to be received between 8 a.m. and
9:25 a.m. the quote would be opened upon the receipt of the quote
update. At 9:25 a.m. all quotations would be made available for
automatic executions.
Also at 7:30 a.m., market participants would be able to begin
voluntarily submitting extended and regular hours orders. To facilitate
orderly trading beginning at 8 a.m., Nasdaq would make Total Day Orders
(``X Orders''), as described in Rule 4701(ss), and Total Immediate or
Cancel (``IOX Orders''), as described in Rule 4701(uu), available for
execution at 8 a.m. rather than at 9:25 a.m. Extended hours orders
would receive a time stamp for purposes of determining time priority
and would be displayed but not executed.
At 8 a.m., Nasdaq would open the execution functionality of the
Nasdaq Market Center. In preparation for that opening, Nasdaq would
construct an unlocked inside in each security by applying the
unlocking/uncrossing process described in Rule 4704(b), which it
currently applies at 9:25 a.m. In that process, Nasdaq would clear the
existing quotation display and ``wake up'' the quotations of market
participants that have instructed Nasdaq to open their quotations
between 7:30 a.m. and 8 a.m. Quotations that have not been opened
between 7:30 a.m. and 8 a.m. would not be displayed and would not
participate in the 8 a.m. opening process. Participating quotations
would be processed in order of time priority and placed on the Nasdaq
book, provided, however, that quotations that would lock or cross the
market would be rejected. Immediately upon completion of the 8 a.m.
unlocking/uncrossing process, all quotations that have been opened
voluntarily and all eligible orders that have been submitted
voluntarily would be subject to automatic execution.
At 9:25 a.m., Nasdaq would ``wake up'' all remaining un-opened
quotations and introduce them to the Nasdaq book as it does today. A
quotation might remain unopened at 9:25 a.m. in two circumstances: If a
market participant has entered a quotation update but has not
instructed Nasdaq to open the quotation or if the participant has
entered no update at all. In the first case, at 9:25 a.m., Nasdaq would
open the quotation at the price and size specified by the participant.
In the second case, Nasdaq would open the quotation based on the
participant's instructions. Quotations that would lock or cross the
inside would automatically be rejected.
It is important to note that the parameters governing the entry of
Market-on-Open and Opening Imbalance Only Orders, as well as all
parameters governing the Nasdaq Opening Cross would remain the same as
today, including dissemination of Opening Cross information and the
processing of the Opening Cross itself.
Nasdaq believes that these changes are consistent with the Act and
would improve the fairness and orderliness of Nasdaq's pre-open trading
environment. Having quotes opened voluntarily and executable upon entry
would improve the accuracy of Nasdaq's pre-market trading data. Today,
because quotations are not executable, the market can appear locked or
crossed during the pre-market session. In addition, Nasdaq believes
that making quotations and orders available for execution would improve
both the transparency and price discovery provided by those quotations
and orders. Nasdaq further notes that several other market centers are
open for pre-market trading at this time and therefore Nasdaq's
proposal would enhance competition for quotation and execution
services.
2. Statutory Basis
Nasdaq believes that the proposed rule change is consistent with
the provisions of Section 15A of the Act,\6\ in general, and with
Section 15A(b)(6) of the Act,\7\ in particular, in that Section
15A(b)(6) requires that the NASD's rules be designed to protect
investors and the public interest. Nasdaq believes that its current
proposal is consistent with the NASD's obligations under these
provisions of the Act because it would extend fair and orderly trading
of Nasdaq stocks on Nasdaq during an increasingly active period of the
trading day, prevent the occurrence of locked and crossed markets
before the start of normal market hours, and preserve price discovery
and transparency that is vital to an effective opening of trading.
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\6\ 15 U.S.C. 78o-3.
\7\ 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 would result
in any burden on competition that is not necessary or appropriate in
furtherance of the purposes of the Act.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants or Others
Nasdaq neither solicited nor received written comments with respect
to the proposed rule change.
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, or such shorter time as the Commission may designate, if
consistent with the protection of investors and the public interest, it
has become effective pursuant to Section 19(b)(3)(A) of the Act \8\ and
Rule 19b-4(f)(6) thereunder.\9\ Nasdaq has requested that the
Commission waive the 30-day operative delay for ``non-controversial''
proposals, based upon a representation that the proposal is of the
utmost importance to the fair and orderly operation of The Nasdaq Stock
Market during the pre-opening trading period. The Commission believes
that waiver of the 30-day operative delay is consistent with the
protection of investors and the public interest because it would allow
Nasdaq immediately to implement the proposed rule change which should
improve transparency in the pre-opening trading period. For this
reason, the Commission designates the proposal to be effective and
operative upon filing with the Commission.\10\
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\8\ 15 U.S.C. 78s(b)(3)(A).
\9\ 17 CFR 240.19b-4(f)(6). The Commission notes that Nasdaq
provided written notice of its intent to file the proposed rule
change, along with a brief description and text of the proposed rule
change at least five business days prior to the date of filing of
the proposed rule change.
\10\ For purposes only of waiving the 30-day operative delay of
the proposed rule change, the Commission considered the proposed
rule's impact on efficiency, competition, and capital formation. 15
U.S.C. 78c(f).
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At any time within 60 days of the filing of the 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.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing,
[[Page 20958]]
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-2005-050 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-2005-050. 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 Room. 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-2005-050 and should be submitted on or before May
13, 2005.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\11\
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\11\ 17 CFR 200.30-3(a)(12).
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Jill M. Peterson,
Assistant Secretary.
[FR Doc. E5-1913 Filed 4-21-05; 8:45 am]
BILLING CODE 8010-01-P
