Self-Regulatory Organizations; National Association of Securities Dealers, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Extending the Pilot Relating to Manning Price-Improvement Standards for Decimals, 39839-39840 [E5-3624]

Download as PDF Federal Register / Vol. 70, No. 131 / Monday, July 11, 2005 / Notices 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 For the Commission, by the Division of Market Regulation, pursuant to delegated authority.12 Margaret H. McFarland, Deputy Secretary. [FR Doc. E5–3621 Filed 7–8–05; 8:45 am] Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change, as amended, is consistent with the Act. Comments may be submitted by any of the following methods: BILLING CODE 8010–01–P Electronic Comments Self-Regulatory Organizations; National Association of Securities Dealers, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Extending the Pilot Relating to Manning PriceImprovement Standards for Decimals • 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–2005–081 on the subject line. SECURITIES AND EXCHANGE COMMISSION [Release No. 34–51953; File No. SR–NASD– 2005–085] June 30, 2005. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’) 1 and Rule 19b–4 thereunder,2 • Send paper comments in triplicate notice is hereby given that on June 29, to Jonathan G. Katz, Secretary, 2005, the National Association of Securities and Exchange Commission, Securities Dealers, Inc. (‘‘NASD’’) filed Station Place, 100 F Street, NE., with the Securities and Exchange Washington, DC 20549–9303. Commission (‘‘Commission’’) the proposed rule change as described in All submissions should refer to File Items I and II below, which Items have Number SR–NASD–2005–081. This file been prepared by NASD. NASD has number should be included on the subject line if e-mail is used. To help the filed this proposal pursuant to Section 19(b)(3)(A) of the Act 3 and Rule 19b– Commission process and review your 4(f)(6) thereunder,4 which renders the comments more efficiently, please use only one method. The Commission will proposal effective upon filing with the post all comments on the Commission’s Commission. The Commission is publishing this notice to solicit Internet Web site (https://www.sec.gov/ comments on the proposed rule change rules/sro.shtml). Copies of the from interested persons. submission, all subsequent I. Self-Regulatory Organization’s amendments, all written statements Statement of the Terms of Substance of with respect to the proposed rule the Proposed Rule Change change that are filed with the Commission, and all written NASD is proposing to extend through communications relating to the December 31, 2005, the current pilot proposed rule change between the price-improvement standards for Commission and any person, other than decimalized securities contained in those that may be withheld from the NASD Interpretive Material 2110–2— public in accordance with the Trading Ahead of Customer Limit Order provisions of 5 U.S.C. 552, will be (‘‘Manning Interpretation’’ or available for inspection and copying in ‘‘Manning’’). There are no proposed the Commission’s Public Reference changes to the rule text of the Manning Room. Copies of such filing also will be Interpretation. available for inspection and copying at II. Self-Regulatory Organization’s the principal office of the NASD. All Statement of the Purpose of, and comments received will be posted Statutory Basis for, the Proposed Rule without change; the Commission does Change not edit personal identifying In its filing with the Commission, information from submissions. You NASD included statements concerning should submit only information that you wish to make available publicly. All 12 17 CFR 200.30–3(a)(12). submissions should refer to File 1 15 U.S.C. 78s(b)(1). Number SR–NASD–2005–081 and 2 17 CFR 240.19b–4. should be submitted on or before 3 15 U.S.C. 78s(b)(3)(A). August 1, 2005. 4 17 CFR 240.19b–4(f)(6). Paper Comments VerDate jul<14>2003 16:03 Jul 08, 2005 Jkt 205001 PO 00000 Frm 00125 Fmt 4703 Sfmt 4703 39839 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 III below. NASD 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 NASD’s Manning Interpretation requires an NASD member firm to provide a minimum level of price improvement to an incoming order in a Nasdaq National Market or SmallCap security if the firm chooses to trade as principal with an incoming order at a price superior to that of the customer limit order that it currently holds. If the firm fails to provide the minimum level of price improvement to the incoming order, the firm must execute the held customer limit order. Generally, if a firm fails to provide the requisite amount of price improvement and also fails to execute the held customer limit order, it is in violation of the Manning Interpretation. The Commission originally approved, on a pilot basis, price-improvement standards for decimalized securities contained in the Manning Interpretation on April 6, 2001.5 At that time, NASD added the following language to IM–2110–2: For Nasdaq securities authorized for trading in decimals pursuant to the Decimals Implementation Plan For the Equities and Options Markets, the minimum amount of price improvement necessary in order for a market maker to execute an incoming order on a proprietary basis in a security trading in decimals when holding an unexecuted limit order in that same security, and not be required to execute the held limit order, is as follows: (1) For customer limit orders priced at or inside the best inside market displayed in Nasdaq, the minimum amount of price improvement required is $0.01; and (2) For customer limit orders priced outside the best inside market displayed in Nasdaq, the market maker must price improve the incoming order by executing the incoming order at a price at least equal to the next superior minimum quotation increment in Nasdaq (currently $0.01).6 5 See Securities Exchange Act Release No. 44165 (April 6, 2001), 66 FR 19268 (April 13, 2001). 6 Pursuant to the terms of the Decimals Implementation Plan for the Equities and Options Markets, the minimum quotation increment for Nasdaq securities (both National Market and SmallCap) at the outset of decimal pricing is $0.01. As such, Nasdaq displays priced quotations to two places beyond the decimal point (to the penny). E:\FR\FM\11JYN1.SGM Continued 11JYN1 39840 Federal Register / Vol. 70, No. 131 / Monday, July 11, 2005 / Notices Since approval, these standards continue to operate on a pilot basis which terminates on June 30, 2005.7 NASD has determined to seek an extension of its current pilot until December 31, 2005. NASD believes that such an extension provides for an appropriate continuation of the current Manning price-improvement standard while the Commission continues to analyze the issues related to customer limit order protection in a decimalized environment. NASD is not proposing any other changes to the pilot at this time. 2. Statutory Basis NASD 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, which require, among other things, that NASD rules must be designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, and, in general, to protect investors and the public interest. NASD believes that the proposed rule change will improve treatment of customer limit orders and enhance the integrity of the market. B. Self-Regulatory Organization’s Statement on Burden on Competition NASD 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. 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 NASD asserts that the foregoing rule change has become effective pursuant to Section 19(b)(3)(A) of the Act 10 and Rule 19b–4(f)(6) thereunder 11 because the rule change does not: Quotations submitted to Nasdaq that do not meet this standard are rounded to the nearest minimum quotation increment (namely, $0.01), specifically, rounded down for buy orders and rounded up for sell orders. See Securities Exchange Act Release No. 43876 (January 23, 2001), 66 FR 8251 (January 30, 2001) (SR–NASD–01–07). 7 See Securities Act Release No. 50893 (December 20, 2004), 69 FR 78078 (December 29, 2004). 8 15 U.S.C. 78o–3. 9 15 U.S.C. 78o–3(b)(6). 10 15 U.S.C. 78s(b)(3)(A). 11 17 CFR 240.19b–4(f)(6). VerDate jul<14>2003 16:03 Jul 08, 2005 Jkt 205001 (i) Significantly affect the protection of investors or the public interest; (ii) impose any significant burden on competition; nor (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.12 NASD has requested that the Commission waive the 30-day operative delay and designate the proposed rule change effective immediately so that the pilot can continue uninterrupted. The Commission hereby grants the request.13 The Commission believes that such waiver is consistent with the protection of investors and the public interest because it will allow the protection of customer limit orders provided by the pilot to continue without interruption and designates the proposed rule change to be operative upon filing with the Commission. 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. All submissions should refer to File Number SR–NASD–2005–085. 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 at the principal office of NASD and at the Commission’s Public Reference Room. 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 the File Number SR–NASD–2005–085 and should be submitted on or before August 1, 2005. IV. Solicitation of Comments For the Commission, by the Division of Market Regulation, pursuant to delegated authority.14 Margaret H. McFarland, Deputy Secretary. [FR Doc. E5–3624 Filed 7–8–05; 8:45 am] 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 rulecomments@sec.gov. Please include File Number SR–NASD–2005–085 on the subject line. Paper Comments: • Send paper comments in triplicate to Jonathan G. Katz, Secretary, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549–9303. 12 In addition, Rule 19b–4(f)(6)(iii) states that NASD must provide the Commission with written notice of its intent to file the proposed rule change at least five days prior to the date of filing of the proposed rule change. NASD satisfied this requirement. 13 For purposes only of accelerating the operative date of the proposal, the Commission has considered the proposed rule’s impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). PO 00000 Frm 00126 Fmt 4703 Sfmt 4703 BILLING CODE 8010–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–51954; File No. SR–NSCC– 2005–07] Self-Regulatory Organizations; National Securities Clearing Corporation; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to Charges for Communications Fees To Continue Operating Legacy Communication Networks June 30, 2005. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’),1 notice is hereby given that on June 17, 2005, the National Securities Clearing Corporation (‘‘NSCC’’) filed with the Securities and Exchange Commission (‘‘Commission’’) the proposed rule change described in Items 14 17 1 15 E:\FR\FM\11JYN1.SGM CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 11JYN1

Agencies

SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 70, Number 131 (Monday, July 11, 2005)]
[Notices]
[Pages 39839-39840]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E5-3624]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-51953; File No. SR-NASD-2005-085]


Self-Regulatory Organizations; National Association of Securities 
Dealers, Inc.; Notice of Filing and Immediate Effectiveness of Proposed 
Rule Change Extending the Pilot Relating to Manning Price-Improvement 
Standards for Decimals

June 30, 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 June 29, 2005, the National Association of Securities Dealers, Inc. 
(``NASD'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change as described in Items I and 
II below, which Items have been prepared by NASD. NASD has filed this 
proposal pursuant to Section 19(b)(3)(A) of the Act \3\ and Rule 19b-
4(f)(6) thereunder,\4\ which renders the proposal effective upon filing 
with the Commission. 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.
    \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

    NASD is proposing to extend through December 31, 2005, the current 
pilot price-improvement standards for decimalized securities contained 
in NASD Interpretive Material 2110-2--Trading Ahead of Customer Limit 
Order (``Manning Interpretation'' or ``Manning''). There are no 
proposed changes to the rule text of the Manning Interpretation.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, NASD 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 III below. NASD 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
    NASD's Manning Interpretation requires an NASD member firm to 
provide a minimum level of price improvement to an incoming order in a 
Nasdaq National Market or SmallCap security if the firm chooses to 
trade as principal with an incoming order at a price superior to that 
of the customer limit order that it currently holds. If the firm fails 
to provide the minimum level of price improvement to the incoming 
order, the firm must execute the held customer limit order. Generally, 
if a firm fails to provide the requisite amount of price improvement 
and also fails to execute the held customer limit order, it is in 
violation of the Manning Interpretation. The Commission originally 
approved, on a pilot basis, price-improvement standards for decimalized 
securities contained in the Manning Interpretation on April 6, 2001.\5\ 
At that time, NASD added the following language to IM-2110-2:

    \5\ See Securities Exchange Act Release No. 44165 (April 6, 
2001), 66 FR 19268 (April 13, 2001).
---------------------------------------------------------------------------

    For Nasdaq securities authorized for trading in decimals 
pursuant to the Decimals Implementation Plan For the Equities and 
Options Markets, the minimum amount of price improvement necessary 
in order for a market maker to execute an incoming order on a 
proprietary basis in a security trading in decimals when holding an 
unexecuted limit order in that same security, and not be required to 
execute the held limit order, is as follows:
    (1) For customer limit orders priced at or inside the best 
inside market displayed in Nasdaq, the minimum amount of price 
improvement required is $0.01; and
    (2) For customer limit orders priced outside the best inside 
market displayed in Nasdaq, the market maker must price improve the 
incoming order by executing the incoming order at a price at least 
equal to the next superior minimum quotation increment in Nasdaq 
(currently $0.01).\6\

    \6\ Pursuant to the terms of the Decimals Implementation Plan 
for the Equities and Options Markets, the minimum quotation 
increment for Nasdaq securities (both National Market and SmallCap) 
at the outset of decimal pricing is $0.01. As such, Nasdaq displays 
priced quotations to two places beyond the decimal point (to the 
penny). Quotations submitted to Nasdaq that do not meet this 
standard are rounded to the nearest minimum quotation increment 
(namely, $0.01), specifically, rounded down for buy orders and 
rounded up for sell orders. See Securities Exchange Act Release No. 
43876 (January 23, 2001), 66 FR 8251 (January 30, 2001) (SR-NASD-01-
07).

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[[Page 39840]]

    Since approval, these standards continue to operate on a pilot 
basis which terminates on June 30, 2005.\7\ NASD has determined to seek 
an extension of its current pilot until December 31, 2005. NASD 
believes that such an extension provides for an appropriate 
continuation of the current Manning price-improvement standard while 
the Commission continues to analyze the issues related to customer 
limit order protection in a decimalized environment. NASD is not 
proposing any other changes to the pilot at this time.
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    \7\ See Securities Act Release No. 50893 (December 20, 2004), 69 
FR 78078 (December 29, 2004).
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2. Statutory Basis
    NASD 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, which require, among other 
things, that NASD rules must be designed to prevent fraudulent and 
manipulative acts and practices, to promote just and equitable 
principles of trade, and, in general, to protect investors and the 
public interest. NASD believes that the proposed rule change will 
improve treatment of customer limit orders and enhance the integrity of 
the market.
---------------------------------------------------------------------------

    \8\ 15 U.S.C. 78o-3.
    \9\ 15 U.S.C. 78o-3(b)(6).
---------------------------------------------------------------------------

B. Self-Regulatory Organization's Statement on Burden on Competition

    NASD 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.

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

    NASD asserts that the foregoing rule change has become effective 
pursuant to Section 19(b)(3)(A) of the Act \10\ and Rule 19b-4(f)(6) 
thereunder \11\ because the rule change does not:
---------------------------------------------------------------------------

    \10\ 15 U.S.C. 78s(b)(3)(A).
    \11\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------

    (i) Significantly affect the protection of investors or the public 
interest;
    (ii) impose any significant burden on competition; nor
    (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.\12\ NASD has requested that the Commission waive the 30-day 
operative delay and designate the proposed rule change effective 
immediately so that the pilot can continue uninterrupted.
---------------------------------------------------------------------------

    \12\ In addition, Rule 19b-4(f)(6)(iii) states that NASD must 
provide the Commission with written notice of its intent to file the 
proposed rule change at least five days prior to the date of filing 
of the proposed rule change. NASD satisfied this requirement.
---------------------------------------------------------------------------

    The Commission hereby grants the request.\13\ The Commission 
believes that such waiver is consistent with the protection of 
investors and the public interest because it will allow the protection 
of customer limit orders provided by the pilot to continue without 
interruption and designates the proposed rule change to be operative 
upon filing with the Commission.
---------------------------------------------------------------------------

    \13\ For purposes only of accelerating the operative date of the 
proposal, the Commission has considered the proposed rule's impact 
on efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
---------------------------------------------------------------------------

    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, 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-2005-085 on the subject line.

Paper Comments:

     Send paper comments in triplicate to Jonathan G. Katz, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-9303.
    All submissions should refer to File Number SR-NASD-2005-085. 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 at the principal office of NASD and at the Commission's 
Public Reference Room. 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 the File 
Number SR-NASD-2005-085 and should be submitted on or before August 1, 
2005.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\14\
---------------------------------------------------------------------------

    \14\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Margaret H. McFarland,
Deputy Secretary.
[FR Doc. E5-3624 Filed 7-8-05; 8:45 am]
BILLING CODE 8010-01-P

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