Self-Regulatory Organizations; National Association of Securities Dealers, Inc.; Order Granting Approval To Proposed Rule Change and Amendment No. 1 Thereto To Require Limit Order Protection and To Expand the Application of Manning Obligations to Exchange-Listed Securities, 46897-46898 [E5-4349]

Download as PDF Federal Register / Vol. 70, No. 154 / Thursday, August 11, 2005 / Notices 2. Statutory Basis The Amex believes that the proposed rule change is consistent with section 6(b) of the Act 7 in general and furthers the objectives of section 6(b)(5) 8 in particular, in that it is designed to prevent fraudulent and manipulative acts and practices and to promote just and equitable principles of trade. B. Self-Regulatory Organization’s Statement on Burden on Competition The Amex believes that the proposed rule change would impose no 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 The Exchange did not solicit or receive any written comments with respect to the proposal. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Within 35 days of the date of publication of this notice in the Federal Register or within such longer period (i) as the Commission may designate up to 90 days of such date if it finds such longer period to be appropriate and publishes its reasons for so finding or (ii) as to which the Exchange consents, the Commission will: A. By order approve such proposed rule change, or B. Institute proceedings to determine whether the proposed rule change should be disapproved. 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 100 F Street, NE., Washington, DC 20549–9303. All submissions should refer to File Number SR–Amex–2005–024. 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 Exchange. 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–Amex–2005–024 and should be submitted on or before September 1, 2005. For the Commission, by the Division of Market Regulation, pursuant to delegated authority.9 J. Lynn Taylor, Assistant Secretary. [FR Doc. E5–4350 Filed 8–10–05; 8:45 am] BILLING CODE 8010–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–52210; File No. SR–NASD– 2004–089] • 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–Amex–2005–024 on the subject line. Self-Regulatory Organizations; National Association of Securities Dealers, Inc.; Order Granting Approval To Proposed Rule Change and Amendment No. 1 Thereto To Require Limit Order Protection and To Expand the Application of Manning Obligations to Exchange-Listed Securities Paper Comments August 4, 2005. • Send paper comments in triplicate to Jonathan G. Katz, Secretary, Securities and Exchange Commission, On June 9, 2004, the National Association of Securities Dealers, Inc. (‘‘NASD’’) filed with the Securities and Exchange Commission (‘‘Commission’’), 7 15 8 15 U.S.C. 78f(b). U.S.C. 78f(b)(5). VerDate jul<14>2003 16:14 Aug 10, 2005 9 17 Jkt 205001 PO 00000 pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’) 1 and Rule 19b–4 thereunder,2 a proposed rule change to require members to provide price improvement to customer limit orders under certain circumstances, and to expand the application of NASD IM–2110–2 (‘‘Manning’’ obligations) to exchangelisted securities. The proposed rule change prohibits a member from trading for its own account in a Nasdaq or exchange-listed security at a price that is better than an unexecuted customer limit order in that security, unless the member immediately thereafter executes the customer limit order at the price at which it traded for its own account or at a better price. On November 2, 2004, NASD filed Amendment No. 1 to the proposed rule change.3 The proposed rule change, as modified by Amendment No. 1, was published for notice and comment in the Federal Register on February 25, 2005.4 The Commission received no comments on the proposed rule change. This order approves the proposed rule change, as modified by Amendment No. 1. The Commission finds that the proposed rule change, as amended, is consistent with the requirements of the Act and the rules and regulations thereunder applicable to a national securities association and, in particular, the requirements of section 15A of the Act 5 and the rules and regulations thereunder. The Commission finds specifically that the proposed rule change is consistent with section 15A(b)(6),6 which requires, among other things, that NASD’s rules 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. The Commission believes that requiring price improvement for customer limit orders as detailed in the proposed rule change, and the expansion of the application of Manning obligations under NASD IM– 2110–2 to include exchange-listed securities, will provide the opportunity for investors to receive better limit order executions, and thus enhance the overall integrity of the market.7 1 15 U.S.C. 78s(b)(1). CFR 240.19b–4. 3 Amendment No. 1 replaced NASD’s original proposed rule change in its entirety. 4 Securities Exchange Act Release No. 51231 (February 18, 2005), 70 FR 9402. 5 15 U.S.C. 78o–3 6 15 U.S.C. 78o–3(b)(6). 7 In approving this proposed rule change, the Commission has considered the proposal’s impact 2 17 CFR 200.30–3(a)(12). Frm 00089 Fmt 4703 Sfmt 4703 46897 Continued E:\FR\FM\11AUN1.SGM 11AUN1 46898 Federal Register / Vol. 70, No. 154 / Thursday, August 11, 2005 / Notices It is therefore ordered, pursuant to section 19(b)(2) of the Act 8 that the proposed rule change (SR–NASD–2004– 089) be, and it hereby is, approved, as amended. For the Commission, by the Division of Market Regulation, pursuant to delegated authority.9 J. Lynn Taylor, Assistant Secretary. [FR Doc. E5–4349 Filed 8–10–05; 8:45 am] BILLING CODE 8010–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–52206; File No. SR–PCX– 2005–59] Self-Regulatory Organizations; Pacific Exchange, Inc.; Notice of Filing of Proposed Rule Change and Amendment Nos. 1 and 3 Thereto Relating to Amendments to the Exchange’s Trade-Through and Locked Markets Rules August 4, 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 27, 2005, the Pacific Exchange, Inc. (‘‘PCX’’) filed with the Securities and Exchange Commission (‘‘Commission’’) the proposed rule change as described in items I, II, and III below, which items have been prepared by the PCX. The PCX filed Amendment No. 1 to the proposed rule change on July 8, 2005.3 The PCX filed Amendment No. 2 to the proposed rule change on July 29, 2005 and withdrew Amendment No. 2 on August 1, 2005. The PCX filed Amendment No. 3 to the proposed rule change on August 1, 2005.4 The Commission is publishing this notice to solicit comments on the proposed rule change, as amended, from interested persons. on efficiency, competition, and capital formation. See, 15 U.S.C. 78c(f). 8 15 U.S.C. 78s(b)(2). 9 17 CFR 200.30–3(a)(12). 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 3 See Form 19b–4 dated July 8, 2005 (‘‘Amendment No. 1’’). In Amendment No. 1, the PCX revised the rule text to use terms consistent with PCX’s current rules and made clarifying changes in the purpose and statutory basis sections. 4 See Partial Amendment dated August 1, 2005 (‘‘Amendment No. 3’’). In Amendment No. 3, the PCX made clarifying changes to the rule text and the purpose section. VerDate jul<14>2003 16:14 Aug 10, 2005 Jkt 205001 I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The PCX is proposing to codify the ‘‘trade and ship’’ and ‘‘book and ship’’ concepts pursuant to the Intermarket Option Linkage Plan (‘‘Plan’’). The text of the proposed rule change is available on the PCX’s Web site (https:// www.pacificex.com), at the PCX’s Office of the Secretary, and at the Commission’s Public Reference Room. II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the PCX 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. The PCX 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 The purpose of the proposed rule change is to provide that: (i) A Participant Exchange may trade an order at a price that is one minimum quoting increment inferior to the National Best Bid or Offer (‘‘NBBO’’) if a Linkage Order 5 is transmitted to the NBBO market(s) to satisfy all interest at the NBBO price (this is the ‘‘trade and ship’’ concept); and (ii) a Participant Exchange may book an order that would lock another Participant Exchange if a Linkage Order is sent to such other Participant Exchange to satisfy all interest at the lock price (this is the ‘‘book and ship’’ concept). Under the trade and ship proposal, any execution received from the NBBO market must (pursuant to agency obligations) be reassigned to the customer order that is underlying the Linkage Order that was transmitted to ‘‘take out’’ the NBBO market. Below are examples illustrating the applications of these concepts: Trade and Ship Example. Participant Exchange A is disseminating an offer of $2.00 for 100 contracts. Participant Exchange B is disseminating the national best offer of $1.95 for 10 contracts. No other market is at $1.95. Participant Exchange A receives a 100contract customer buy order to pay PO 00000 $2.00. Under this proposal, Participant Exchange A could execute 90 contracts (or 100 contracts) of the customer order at $2.00 provided Participant Exchange A simultaneously transmits a 10contract Principal Acting as Agent (‘‘P/A’’) 6 Order to Participant Exchange B to pay $1.95. Assuming an execution is obtained from Participant Exchange B, the customer would receive the 10contract fill at $1.95 and 90 contracts at $2.00 (if the customer order was originally filled in its entirety at $2.00, an adjustment would be required to provide the customer with the $1.95 price for 10 contracts reflecting the P/A Order execution). As proposed, this would not be deemed a Trade-Through. Book and Ship Example. Participant Exchange A is disseminating a $1.85– $2.00 market. Participant Exchange B is disseminating a $1.80–$1.95 market. The $1.95 offer is for 10 contracts. No other market is at $1.95. Participant Exchange A receives a customer order to buy 100 contracts at $1.95. Under this proposal, Participant Exchange A could book 90 contracts of the customer buy order at $1.95 provided Participant Exchange A simultaneously transmitted a 10-contract P/A Order to Participant Exchange B to pay $1.95. Assuming an execution is obtained from Participant Exchange B, the customer would receive the 10-contract fill and the rest of the customer’s order will be displayed as a $1.95 bid on Participant Exchange A. The national best offer would likely be $2.00. As proposed, this would not be deemed a ‘‘locked’’ market for purposes of the Plan. 2. Statutory Basis The PCX believes that the proposed rule change is consistent with section 6(b) of the Act 7 in general, and furthers the objectives of section 6(b)(5) of the Act 8 in particular, because the proposed rule change is designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to foster cooperation and coordination with persons engaged in facilitating transactions in securities, and to remove impediments to and perfect the mechanism of a free and open market and a national market system. B. Self-Regulatory Organization’s Statement on Burden on Competition The PCX does not believe that the proposed rule change will impose any burden on competition that is not 6 See PCX Rule 6.92(a)(12)(i). U.S.C. 78f(b). 8 15 U.S.C. 78f(b)(5). 7 15 5 See PCX Rule 6.92(a)(12). Frm 00090 Fmt 4703 Sfmt 4703 E:\FR\FM\11AUN1.SGM 11AUN1

Agencies

SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 70, Number 154 (Thursday, August 11, 2005)]
[Notices]
[Pages 46897-46898]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E5-4349]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-52210; File No. SR-NASD-2004-089]


Self-Regulatory Organizations; National Association of Securities 
Dealers, Inc.; Order Granting Approval To Proposed Rule Change and 
Amendment No. 1 Thereto To Require Limit Order Protection and To Expand 
the Application of Manning Obligations to Exchange-Listed Securities

August 4, 2005.
    On June 9, 2004, the National Association of Securities Dealers, 
Inc. (``NASD'') filed with the Securities and Exchange Commission 
(``Commission''), pursuant to section 19(b)(1) of the Securities 
Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ a 
proposed rule change to require members to provide price improvement to 
customer limit orders under certain circumstances, and to expand the 
application of NASD IM-2110-2 (``Manning'' obligations) to exchange-
listed securities. The proposed rule change prohibits a member from 
trading for its own account in a Nasdaq or exchange-listed security at 
a price that is better than an unexecuted customer limit order in that 
security, unless the member immediately thereafter executes the 
customer limit order at the price at which it traded for its own 
account or at a better price.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

    On November 2, 2004, NASD filed Amendment No. 1 to the proposed 
rule change.\3\ The proposed rule change, as modified by Amendment No. 
1, was published for notice and comment in the Federal Register on 
February 25, 2005.\4\ The Commission received no comments on the 
proposed rule change. This order approves the proposed rule change, as 
modified by Amendment No. 1.
---------------------------------------------------------------------------

    \3\ Amendment No. 1 replaced NASD's original proposed rule 
change in its entirety.
    \4\ Securities Exchange Act Release No. 51231 (February 18, 
2005), 70 FR 9402.
---------------------------------------------------------------------------

    The Commission finds that the proposed rule change, as amended, is 
consistent with the requirements of the Act and the rules and 
regulations thereunder applicable to a national securities association 
and, in particular, the requirements of section 15A of the Act \5\ and 
the rules and regulations thereunder. The Commission finds specifically 
that the proposed rule change is consistent with section 15A(b)(6),\6\ 
which requires, among other things, that NASD's rules 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. The Commission believes that 
requiring price improvement for customer limit orders as detailed in 
the proposed rule change, and the expansion of the application of 
Manning obligations under NASD IM-2110-2 to include exchange-listed 
securities, will provide the opportunity for investors to receive 
better limit order executions, and thus enhance the overall integrity 
of the market.\7\

[[Page 46898]]

    It is therefore ordered, pursuant to section 19(b)(2) of the Act 
\8\ that the proposed rule change (SR-NASD-2004-089) be, and it hereby 
is, approved, as amended.
---------------------------------------------------------------------------

    \5\ 15 U.S.C. 78o-3
    \6\ 15 U.S.C. 78o-3(b)(6).
    \7\ In approving this proposed rule change, the Commission has 
considered the proposal's impact on efficiency, competition, and 
capital formation. See, 15 U.S.C. 78c(f).
    \8\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\9\
---------------------------------------------------------------------------

    \9\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

J. Lynn Taylor,
Assistant Secretary.
[FR Doc. E5-4349 Filed 8-10-05; 8:45 am]
BILLING CODE 8010-01-P

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