Self-Regulatory Organizations; National Association of Securities Dealers, Inc.; Notice of Filing of Proposed Rule Change Regarding the Nasdaq Opening Process for Initial Public Offerings, 44960-44961 [E5-4134]
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44960
Federal Register / Vol. 70, No. 149 / Thursday, August 4, 2005 / Notices
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act,6 that the
proposed rule change (SR–MSRB–2005–
08) be, and hereby is, approved.
For the Commission, by the Division of
Market Regulation, pursuant to delegated
authority.7
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. E5–4151 Filed 8–3–05; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–52156; File No. SR–NASD–
2005–091]
Self-Regulatory Organizations;
National Association of Securities
Dealers, Inc.; Notice of Filing of
Proposed Rule Change Regarding the
Nasdaq Opening Process for Initial
Public Offerings
July 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 July 20,
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
proposal as described in Items I, II, and
III below, which Items have been
prepared by Nasdaq. Nasdaq filed the
proposed rule change 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.
I. Self-Regulatory Organization’s
Statement of the Terms of the Substance
of the Proposed Rule Change
Nasdaq is filing a proposed rule
change to modify Rule 4704(c)(1) to
improve the opening of stocks that are
the subject of an Initial Public Offering.
Nasdaq has designated this proposal as
non-controversial and has provided the
Commission with a written description
of the proposal in accordance with Rule
19b–4(f)(6)(iii) under the Act.5 This rule
proposal, which is effective upon filing
66
15 U.S.C. 78s(b)(2).
CFR 200.30–3(a)(12).
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).
5 17 CFR 240.19b–4(f)(6)(iii).
7 17
VerDate jul<14>2003
16:23 Aug 03, 2005
with the Commission, would become
operative on August 22, 2005.
The text of the proposed rule change
is below. Proposed new language is in
italics; proposed deletions are in
brackets.6
*
*
*
*
*
Rule 4704 Opening Process for
Nasdaq-listed Securities
(a)–(b) No Change.
(c) Nasdaq-listed securities [that are
not designated by Nasdaq to participate
in the] in which no Nasdaq Opening
Cross occurs shall begin trading at 9:30
a.m. or, in the case of Nasdaq-listed
securities in which trading is halted
pursuant to Rule 4120(a), at the time
specified by Nasdaq pursuant to Rule
4120 in the following manner:
(1) At 9:30 or at the time specified by
Nasdaq pursuant to Rule 4120 the
system shall suspend processing as set
forth in paragraph (b) in order to open
and integrate Regular Hours orders into
the book in time priority; provided,
however, that in the case of an Initial
Public Offering halted pursuant to Rule
4120(a)(7), the Issuer’s Initial Public
Offering Price shall be entered on the
bid side of the market as the oldest
quotation.
(2)–(4) No Change.
(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
Rule 4704(c)(1) currently provides
that at 9:30 a.m. the system shall stop
processing according to the pre-opening
instructions set forth in Rule 4704(b)
and begin to construct the Nasdaq book
for the opening of trading. In the case of
an Initial Public Offering (‘‘IPO’’), the
first step in that process is to add quotes
6 Changes are marked to the rule text that appears
in the electronic NASD Manual found at the NASD
Web site at (https://www.nasd.com).
Jkt 205001
PO 00000
Frm 00078
Fmt 4703
Sfmt 4703
and orders in that security to the Nasdaq
book in time priority.
Nasdaq has determined that the
process currently set forth in Rule
4704(c) as applied to IPOs can be
improved by programmatically entering
the Issuer’s Public Offering Price as the
first quotation on the bid side of the
market. The current process can create
unnecessary volatility in an IPO
because, unlike other securities, there
are no existing quotes and orders in the
Nasdaq book against which to integrate
new quotes and orders. Due to this lack
of a baseline against which new quotes
and orders are measured before entry,
the first quotes entered into the system
for an IPO can vary significantly even in
instances where the security ultimately
opens at or near the IPO price. As a
result, the initial executions in an IPO,
even successive executions, can vary
significantly from each other and can
create the appearance of volatility.
By entering the Issuer’s Public
Offering Price as the first quotation on
the bid side of the market, Nasdaq hopes
to provide a baseline against which
subsequent quotes would be measured
and thereby reduce the potential for
volatility at the open. This should
happen in two ways. First, displaying a
quotation at the Issuer’s Public Offering
Price should encourage market
participants to enter quotations and
orders that are marketable at that price.
Second, the execution sequence at the
opening of trading would start from the
Issuer’s Public Offering Price and
revolve around that price, rather than
potentially starting from an extreme
price and moving towards the Issuer’s
price.
This proposal represents a minor
technical enhancement to Nasdaq’s
systems because Nasdaq already enters
the Issuer’s Public Offering Price into its
systems. Nasdaq currently enters the
Issuer’s Public Offering Price as the
previous day’s closing price for an IPO,
and uses it as the baseline for
calculating the daily price percentage
change for the IPO. Because the Issuer’s
Public Offering Price already resides
within Nasdaq systems as the oldest
entered price, it is a minor technical
change to display that price as a
quotation and to execute it in the
approved opening process.
2. Statutory Basis
Nasdaq believes that the proposed
rule change is consistent with the
provisions of Section 15A of the Act,7 in
general, and with Section 15A(b)(6) of
the Act,8 in particular, in that it is
7 15
8 15
E:\FR\FM\04AUN1.SGM
U.S.C. 78o–3.
U.S.C. 78o–3(b)(6).
04AUN1
Federal Register / Vol. 70, No. 149 / Thursday, August 4, 2005 / Notices
designed, among other things, to protect
investors and the public interest.
Nasdaq believes that the current
proposal is consistent with the NASD’s
obligations under these provisions of
the Act because it would result in a
more orderly opening for stocks that are
the subject of an Initial Public Offering.
The proposed rule change would
decrease volatility during an important
period of trading while preserving 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 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, 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 9 and Rule 19b–4(f)(6) thereunder.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,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
9 15
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–2005–091 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.
For the Commission, by the Division of
Market Regulation, pursuant to delegated
authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. E5–4134 Filed 8–3–05; 8:45 am]
BILLING CODE 8010–01–P
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(6).
16:23 Aug 03, 2005
11 17
Jkt 205001
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–52170; File No. SR–NASD–
2005–090]
Self-Regulatory Organizations;
National Association of Securities
Dealers, Inc.; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change and Amendment No. 1
Thereto To Modify Brut’s Directed
Cross Order Routing Process
July 29, 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 July 19,
All submissions should refer to File
2005, the National Association of
Number SR-NASD–2005–091. This file
Securities Dealers, Inc. (‘‘NASD’’),
number should be included on the
subject line if e-mail is used. To help the through its subsidiary, The Nasdaq
Stock Market, Inc. (‘‘Nasdaq’’), filed
Commission process and review your
with the Securities and Exchange
comments more efficiently, please use
Commission (‘‘Commission’’) the
only one method. The Commission will proposed rule change as described in
post all comments on the Commission’s Items I and II below, which Items have
Internet Web site (https://www.sec.gov/
been prepared by Nasdaq. On July 28,
rules/sro.shtml). Copies of the
2005, Nasdaq filed Amendment No. 1 to
submission, all subsequent
the proposed rule change.3 Nasdaq has
amendments, all written statements
designated the proposed rule change as
with respect to the proposed rule
constituting a non-controversial rule
change that are filed with the
change under Rule 19b–4(f)(6) under the
Commission, and all written
Act,4 which renders the proposal
communications relating to the
effective upon filing with the
proposed rule change between the
Commission. The Commission is
Commission and any person, other than publishing this notice to solicit
comments on the proposed rule change,
those that may be withheld from the
as amended, from interested persons.
public in accordance with the
provisions of 5 U.S.C. 552, will be
I. Self-Regulatory Organization’s
available for inspection and copying in
Statement of the Terms of the Substance
the Commission’s Public Reference
of the Proposed Rule Change
Room. Copies of such filing also will be
Nasdaq proposes to modify how
available for inspection and copying at
Directed Cross Orders are processed on
the principal office of the NASD. All
its Brut Facility. Under the proposal,
comments received will be posted
Brut Directed Cross Orders in exchangewithout change; the Commission does
listed securities that are directed to the
not edit personal identifying
New York Stock Exchange (‘‘NYSE’’)
information from submissions. You
will first be routed to the Nasdaq Market
should submit only information that
Center for potential execution and
you wish to make available publicly. All thereafter to venues that provide
submissions should refer to File
automated electronic executions before
Number SR–NASD–2005–091 and
being sent to the NYSE. Nasdaq will
should be submitted on or before
implement the proposed rule change on
August 25, 2005.11
or about July 28, 2005, with the exact
10 17
VerDate jul<14>2003
44961
PO 00000
CFR 200.30–3(a)(12).
Frm 00079
Fmt 4703
Sfmt 4703
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 Amendment No. 1 replaces the original filing in
its entirety. See Amendment No. 1. The effective
date of the original proposed rule change is July 19,
2005, and the effective date of the amendment is
July 28, 2005. For purposes of calculating the 60day period within which the Commission may
summarily abrogate the proposed rule change, as
amended, under Section 19(b)(3)(C) of the Act, the
Commission considers the period to commence on
July 28, 2005, the date on which the Exchange
submitted Amendment No. 1. See 15 U.S.C.
78s(b)(3)(C).
4 17 CFR 240.19b–4(f)(6).
2 17
E:\FR\FM\04AUN1.SGM
04AUN1
]]>Agencies
[Federal Register Volume 70, Number 149 (Thursday, August 4, 2005)]
[Notices]
[Pages 44960-44961]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E5-4134]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-52156; File No. SR-NASD-2005-091]
Self-Regulatory Organizations; National Association of Securities
Dealers, Inc.; Notice of Filing of Proposed Rule Change Regarding the
Nasdaq Opening Process for Initial Public Offerings
July 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 July 20, 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 proposal as described in Items I, II, and III
below, which Items have been prepared by Nasdaq. Nasdaq filed the
proposed rule change 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).
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of the
Substance of the Proposed Rule Change
Nasdaq is filing a proposed rule change to modify Rule 4704(c)(1)
to improve the opening of stocks that are the subject of an Initial
Public Offering. Nasdaq has designated this proposal as non-
controversial and has provided the Commission with a written
description of the proposal in accordance with Rule 19b-4(f)(6)(iii)
under the Act.\5\ This rule proposal, which is effective upon filing
with the Commission, would become operative on August 22, 2005.
---------------------------------------------------------------------------
\5\ 17 CFR 240.19b-4(f)(6)(iii).
---------------------------------------------------------------------------
The text of the proposed rule change is below. Proposed new
language is in italics; proposed deletions are in brackets.\6\
---------------------------------------------------------------------------
\6\ Changes are marked to the rule text that appears in the
electronic NASD Manual found at the NASD Web site at (https://
www.nasd.com).
---------------------------------------------------------------------------
* * * * *
Rule 4704 Opening Process for Nasdaq-listed Securities
(a)-(b) No Change.
(c) Nasdaq-listed securities [that are not designated by Nasdaq to
participate in the] in which no Nasdaq Opening Cross occurs shall begin
trading at 9:30 a.m. or, in the case of Nasdaq-listed securities in
which trading is halted pursuant to Rule 4120(a), at the time specified
by Nasdaq pursuant to Rule 4120 in the following manner:
(1) At 9:30 or at the time specified by Nasdaq pursuant to Rule
4120 the system shall suspend processing as set forth in paragraph (b)
in order to open and integrate Regular Hours orders into the book in
time priority; provided, however, that in the case of an Initial Public
Offering halted pursuant to Rule 4120(a)(7), the Issuer's Initial
Public Offering Price shall be entered on the bid side of the market as
the oldest quotation.
(2)-(4) No Change.
(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
Rule 4704(c)(1) currently provides that at 9:30 a.m. the system
shall stop processing according to the pre-opening instructions set
forth in Rule 4704(b) and begin to construct the Nasdaq book for the
opening of trading. In the case of an Initial Public Offering
(``IPO''), the first step in that process is to add quotes and orders
in that security to the Nasdaq book in time priority.
Nasdaq has determined that the process currently set forth in Rule
4704(c) as applied to IPOs can be improved by programmatically entering
the Issuer's Public Offering Price as the first quotation on the bid
side of the market. The current process can create unnecessary
volatility in an IPO because, unlike other securities, there are no
existing quotes and orders in the Nasdaq book against which to
integrate new quotes and orders. Due to this lack of a baseline against
which new quotes and orders are measured before entry, the first quotes
entered into the system for an IPO can vary significantly even in
instances where the security ultimately opens at or near the IPO price.
As a result, the initial executions in an IPO, even successive
executions, can vary significantly from each other and can create the
appearance of volatility.
By entering the Issuer's Public Offering Price as the first
quotation on the bid side of the market, Nasdaq hopes to provide a
baseline against which subsequent quotes would be measured and thereby
reduce the potential for volatility at the open. This should happen in
two ways. First, displaying a quotation at the Issuer's Public Offering
Price should encourage market participants to enter quotations and
orders that are marketable at that price. Second, the execution
sequence at the opening of trading would start from the Issuer's Public
Offering Price and revolve around that price, rather than potentially
starting from an extreme price and moving towards the Issuer's price.
This proposal represents a minor technical enhancement to Nasdaq's
systems because Nasdaq already enters the Issuer's Public Offering
Price into its systems. Nasdaq currently enters the Issuer's Public
Offering Price as the previous day's closing price for an IPO, and uses
it as the baseline for calculating the daily price percentage change
for the IPO. Because the Issuer's Public Offering Price already resides
within Nasdaq systems as the oldest entered price, it is a minor
technical change to display that price as a quotation and to execute it
in the approved opening process.
2. Statutory Basis
Nasdaq believes that the proposed rule change is consistent with
the provisions of Section 15A of the Act,\7\ in general, and with
Section 15A(b)(6) of the Act,\8\ in particular, in that it is
[[Page 44961]]
designed, among other things, to protect investors and the public
interest. Nasdaq believes that the current proposal is consistent with
the NASD's obligations under these provisions of the Act because it
would result in a more orderly opening for stocks that are the subject
of an Initial Public Offering. The proposed rule change would decrease
volatility during an important period of trading while preserving price
discovery and transparency that is vital to an effective opening of
trading.
---------------------------------------------------------------------------
\7\ 15 U.S.C. 78o-3.
\8\ 15 U.S.C. 78o-3(b)(6).
---------------------------------------------------------------------------
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, 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 \9\ and
Rule 19b-4(f)(6) thereunder.\10\
---------------------------------------------------------------------------
\9\ 15 U.S.C. 78s(b)(3)(A).
\10\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------
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-2005-091 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-2005-091. 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-2005-091 and should be submitted on or before
August 25, 2005.\11\
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.
---------------------------------------------------------------------------
\11\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. E5-4134 Filed 8-3-05; 8:45 am]
BILLING CODE 8010-01-P
