Self-Regulatory Organizations; National Association of Securities Dealers, Inc.; Notice of Filing of Proposed Rule Change Relating to Amendments To Rule 3360 To Expand Short-Interest Reporting To OTC Equity Securities, 66875-66876 [E5-6086]

Download as PDF Federal Register / Vol. 70, No. 212 / Thursday, November 3, 2005 / Notices that placed the sell order. Then, with respect to each ITS participant exchange, the exchange will determine whether it is a net sender or net receiver of ITS trades and send fees to or accept fees from each other exchange accordingly. The Commission believes this is an equitable manner for the exchanges to obtain funds to pay their Section 31 fees on covered sales resulting from ITS trades. Under Section 19(b)(2) of the Act,18 the Commission may not approve any proposed rule change prior to the thirtieth day after the date of publication of the notice of filing thereof, unless the Commission finds good cause for so doing. The Commission hereby finds good cause for approving the proposed rule change prior to the thirtieth day after publishing notice of filing thereof in the Federal Register. In this case, the Commission does not believe a comment period is necessary because all of the parties affected by the proposed fee—the other ITS participant exchanges—have already consented to and will adopt the same fee arrangement.19 For the reasons set forth above, the Commission finds good cause to accelerate approval of the proposed rule change pursuant to Section 19(b)(2) of the Act.20 V. Conclusion It is therefore ordered, pursuant to Section 19(b)(2) of the Act,21 that the proposed rule change (SR–CHX–2005– 33) is hereby approved on an accelerated basis. For the Commission, by the Division of Market Regulation, pursuant to delegated authority.22 Jonathan G. Katz, Secretary. [FR Doc. E5–6085 Filed 11–2–05; 8:45 am] BILLING CODE 8010–01–P 18 15 U.S.C. 78s(b)(2). supra note 17. 19 See SECURITIES AND EXCHANGE COMMISSION [Release No. 34–52679; File No. SR–NASD– 2005–112] Self-Regulatory Organizations; National Association of Securities Dealers, Inc.; Notice of Filing of Proposed Rule Change Relating to Amendments To Rule 3360 To Expand Short-Interest Reporting To OTC Equity Securities October 26, 2005. Id. CFR 200.30–3(a)(12). 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 IV below. NASD has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change NASD is proposing to amend Rule 3360 to expand the short interest reporting requirements to over-thecounter (‘‘OTC’’) equity securities. Below is the text of the proposed rule change. Proposed new language is in italics; proposed deletions are in brackets. * * * * * A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 3360 Short-Interest Reporting (a) Each member shall maintain a record of total ‘‘short’’ positions in all customer and proprietary firm accounts in OTC Equity Securities, securities included in The Nasdaq Stock Market, and in each other security listed on a registered national securities exchange and not otherwise reported to another self-regulatory organization and shall regularly report such information to NASD in such a manner as may be prescribed by NASD. [For the purposes of this rule, the term ‘‘customer’’ includes a broker/dealer.] Reports shall be made as of the close of the settlement date designated by NASD. Reports shall be received by NASD no later than the second business day after the reporting settlement date designated by NASD. (b) For purposes of this Rule[,]: (1) ‘‘short’’ positions to be reported are those resulting from ‘‘short sales’’ as 1 15 22 17 VerDate Aug<31>2005 18:27 Nov 02, 2005 2 17 Jkt 208001 that term is defined in SEC Rule 200 of Regulation SHO, with the exception of positions that meet the requirements of Subsections (e)(1), (6), (7), (8), and (10) of SEC Rule 10a–1 adopted under the Act[.]; (2) the term ‘‘customer’’ includes a broker-dealer; and (3) the term ‘‘OTC Equity Securities’’ shall mean any equity security that is not listed on The Nasdaq Stock Market or a national securities exchange. * * * * * 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 September 20, 2005, the National Association of Securities Dealers, Inc. (‘‘NASD’’) filed with the Securities and Exchange Commission (‘‘SEC’’ or ‘‘Commission’’) the proposed rule change as described in Items I, II and III below, which Items have been prepared by NASD. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. 20 Id. 21 66875 PO 00000 U.S.C. 78s(b)(1). CFR 240.19b–4. Frm 00060 Fmt 4703 Sfmt 4703 1. Purpose NASD is proposing to amend Rule 3360, Short-Interest Reporting, to require that members maintain and report on a monthly basis total short positions in OTC equity securities in all customer and proprietary firm accounts.3 Currently, Rule 3360(a) requires members to maintain a record of total short positions 4 in all customer5 and proprietary firm accounts in Nasdaq securities (and listed securities if not reported to another self-regulatory organization (‘‘SRO’’)) and requires members to report such information to 3 Non-self-clearing broker-dealers generally are considered to have satisfied their reporting requirement by making appropriate arrangements with their respective clearing organizations. See Notice to Members 03–08 (January 2003). 4 Rule 3360(b) provides that short positions required to be reported under the rule are those resulting from short sales as the term is defined in SEC Rule 200 of Regulation SHO, with limited exceptions. SEC Rule 200 of Regulation SHO provides, in part, the following: ‘‘The term ‘short sale’ shall mean any sale of a security which the seller does not own or any sale which is consummated by the delivery of a security borrowed by, or for the account of, the seller.’’ 17 CFR 242.200(a). 5 Short sale positions held for other brokerdealers that fall within the definition of short position provided in Rule 3360(b) must be reported under Rule 3360(a), unless these positions already are reported to an SRO. See Notice to Members 03– 08 (January 2003). E:\FR\FM\03NON1.SGM 03NON1 66876 Federal Register / Vol. 70, No. 212 / Thursday, November 3, 2005 / Notices NASD on a monthly basis. NASD believes that expanding the monthly short interest reporting requirements to OTC equity securities will increase the information available to public investors and other interested parties related to trading in OTC equity securities. Accordingly, NASD proposes to amend Rule 3360(a) to require that members maintain and report to NASD short sale positions for OTC equity securities. For purposes of the proposed rule change, OTC equity securities would be defined as any equity security that is not listed on The Nasdaq Stock Market or a national securities exchange. NASD will announce the effective date of the proposed rule change in a Notice to Members to be published no later than 60 days following Commission approval. In recognition of the technological and systems changes the proposed rule change may require, the effective date will be 90 days following publication of the Notice to Members announcing Commission approval. 2. Statutory Basis NASD believes that the proposed rule change is consistent with the provisions of Section 15A(b)(6) of the Act,6 which requires, 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 increase the information available to public investors and other interested parties related to trading in OTC equity securities. 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 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 6 15 U.S.C. 78o–3(b)(6). VerDate Aug<31>2005 18:27 Nov 02, 2005 Jkt 208001 longer period to be appropriate and publishes its reasons for so finding or (ii) as to which the self-regulatory organization 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 The Commission notes that the NASD is proposing an implementation period for proposed NASD Rule 3360. Specifically, the Commission notes that the NASD is proposing that it will announce the effective date of the proposed rule change in a Notice to Members to be published no later than 60 days following Commission approval and that the effective date of the proposed rule change will be 90 days following publication of the Notice to Members announcing Commission approval. The Commission specifically requests comment regarding whether this implementation period could be shorter. 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–2005–112 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–2005–112. 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 PO 00000 Frm 00061 Fmt 4703 Sfmt 4703 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, 100 F Street, NE., Washington, DC 20549. Copies of such filing also will be available for inspection and copying at the principal office of 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 the File Number SR–NASD–2005–112 and should be submitted on or before November 25,2005. For the Commission, by the Division of Market Regulation, pursuant to delegated authority.7 Jonathan G. Katz, Secretary. [FR Doc. E5–6086 Filed 11–2–05; 8:45 am] BILLING CODE 8010–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–52692; File No. SR–NASD– 2005–064] Self-Regulatory Organizations; National Association of Securities Dealers, Inc.; Order Granting Approval of Proposed Rule Change as Amended by Amendment No. 1 Relating to the Publication of Decisions Issued by the National Adjudicatory Council Pursuant to NASD Rule 1015 October 28, 2005. I. Introduction On May 12, 2005, the National Association of Securities Dealers, Inc. (‘‘NASD’’) filed with the Securities and Exchange Commission (‘‘SEC’’ or ‘‘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 amend NASD Interpretive Material 8310–2, ‘‘Release of Disciplinary and Other Information Through the Public Disclosure Program’’ (‘‘IM–8310–2’’) to authorize the NASD to release to the public information with respect to any decision issued by the National Adjudicatory Council (‘‘NAC’’) pursuant to NASD Rule 1015, ‘‘Review of 7 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 1 15 E:\FR\FM\03NON1.SGM 03NON1

Agencies

[Federal Register Volume 70, Number 212 (Thursday, November 3, 2005)]
[Notices]
[Pages 66875-66876]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E5-6086]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-52679; File No. SR-NASD-2005-112]


Self-Regulatory Organizations; National Association of Securities 
Dealers, Inc.; Notice of Filing of Proposed Rule Change Relating to 
Amendments To Rule 3360 To Expand Short-Interest Reporting To OTC 
Equity Securities

October 26, 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 September 20, 2005, the National Association of Securities Dealers, 
Inc. (``NASD'') filed with the Securities and Exchange Commission 
(``SEC'' or ``Commission'') the proposed rule change as described in 
Items I, II and III below, which Items have been prepared by NASD. The 
Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons.
---------------------------------------------------------------------------

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

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    NASD is proposing to amend Rule 3360 to expand the short interest 
reporting requirements to over-the-counter (``OTC'') equity securities. 
Below is the text of the proposed rule change. Proposed new language is 
in italics; proposed deletions are in brackets.
* * * * *


3360  Short-Interest Reporting

    (a) Each member shall maintain a record of total ``short'' 
positions in all customer and proprietary firm accounts in OTC Equity 
Securities, securities included in The Nasdaq Stock Market, and in each 
other security listed on a registered national securities exchange and 
not otherwise reported to another self-regulatory organization and 
shall regularly report such information to NASD in such a manner as may 
be prescribed by NASD. [For the purposes of this rule, the term 
``customer'' includes a broker/dealer.] Reports shall be made as of the 
close of the settlement date designated by NASD. Reports shall be 
received by NASD no later than the second business day after the 
reporting settlement date designated by NASD.
    (b) For purposes of this Rule[,]:
    (1) ``short'' positions to be reported are those resulting from 
``short sales'' as that term is defined in SEC Rule 200 of Regulation 
SHO, with the exception of positions that meet the requirements of 
Subsections (e)(1), (6), (7), (8), and (10) of SEC Rule 10a-1 adopted 
under the Act[.];
    (2) the term ``customer'' includes a broker-dealer; and
    (3) the term ``OTC Equity Securities'' shall mean any equity 
security that is not listed on The Nasdaq Stock Market or a national 
securities exchange.
* * * * *

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 IV 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 is proposing to amend Rule 3360, Short-Interest Reporting, to 
require that members maintain and report on a monthly basis total short 
positions in OTC equity securities in all customer and proprietary firm 
accounts.\3\ Currently, Rule 3360(a) requires members to maintain a 
record of total short positions \4\ in all customer\5\ and proprietary 
firm accounts in Nasdaq securities (and listed securities if not 
reported to another self-regulatory organization (``SRO'')) and 
requires members to report such information to

[[Page 66876]]

NASD on a monthly basis. NASD believes that expanding the monthly short 
interest reporting requirements to OTC equity securities will increase 
the information available to public investors and other interested 
parties related to trading in OTC equity securities. Accordingly, NASD 
proposes to amend Rule 3360(a) to require that members maintain and 
report to NASD short sale positions for OTC equity securities. For 
purposes of the proposed rule change, OTC equity securities would be 
defined as any equity security that is not listed on The Nasdaq Stock 
Market or a national securities exchange.
---------------------------------------------------------------------------

    \3\ Non-self-clearing broker-dealers generally are considered to 
have satisfied their reporting requirement by making appropriate 
arrangements with their respective clearing organizations. See 
Notice to Members 03-08 (January 2003).
    \4\ Rule 3360(b) provides that short positions required to be 
reported under the rule are those resulting from short sales as the 
term is defined in SEC Rule 200 of Regulation SHO, with limited 
exceptions. SEC Rule 200 of Regulation SHO provides, in part, the 
following: ``The term `short sale' shall mean any sale of a security 
which the seller does not own or any sale which is consummated by 
the delivery of a security borrowed by, or for the account of, the 
seller.'' 17 CFR 242.200(a).
    \5\ Short sale positions held for other broker-dealers that fall 
within the definition of short position provided in Rule 3360(b) 
must be reported under Rule 3360(a), unless these positions already 
are reported to an SRO. See Notice to Members 03-08 (January 2003).
---------------------------------------------------------------------------

    NASD will announce the effective date of the proposed rule change 
in a Notice to Members to be published no later than 60 days following 
Commission approval. In recognition of the technological and systems 
changes the proposed rule change may require, the effective date will 
be 90 days following publication of the Notice to Members announcing 
Commission approval.
2. Statutory Basis
    NASD believes that the proposed rule change is consistent with the 
provisions of Section 15A(b)(6) of the Act,\6\ which requires, 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 
increase the information available to public investors and other 
interested parties related to trading in OTC equity securities.
---------------------------------------------------------------------------

    \6\ 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

    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 self-regulatory organization 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

    The Commission notes that the NASD is proposing an implementation 
period for proposed NASD Rule 3360. Specifically, the Commission notes 
that the NASD is proposing that it will announce the effective date of 
the proposed rule change in a Notice to Members to be published no 
later than 60 days following Commission approval and that the effective 
date of the proposed rule change will be 90 days following publication 
of the Notice to Members announcing Commission approval. The Commission 
specifically requests comment regarding whether this implementation 
period could be shorter.
    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-2005-112 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-2005-112. 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, 100 F Street, 
NE., Washington, DC 20549. Copies of such filing also will be available 
for inspection and copying at the principal office of 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 the File Number SR-NASD-2005-112 
and should be submitted on or before November 25, 2005.
---------------------------------------------------------------------------

    \7\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\7\
Jonathan G. Katz,
Secretary.
 [FR Doc. E5-6086 Filed 11-2-05; 8:45 am]
BILLING CODE 8010-01-P
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