Joint Industry Plan; Solicitation of Comments and Order Granting Summary Effectiveness To Request To Extend the Operation of the Reporting Plan for Nasdaq-Listed Securities Traded on Exchanges on an Unlisted Trading Privilege Basis, Submitted by The Pacific Exchange, Inc., The National Association of Securities Dealers, Inc., The American Stock Exchange LLC, The Boston Stock Exchange, Inc., The Chicago Stock Exchange, Inc., The National Stock Exchange, Inc., and The Philadelphia Stock Exchange, Inc. and To Extend Certain Exemptive Relief, 74059-74061 [E5-7329]
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Federal Register / Vol. 70, No. 239 / Wednesday, December 14, 2005 / Notices
of Funds Affiliate and Underwriting
Affiliate. The Fund of Funds will notify
the Rydex Fund of any changes to the
list of the names as soon as reasonably
practicable after a change occurs. The
Rydex Fund and the Fund of Funds will
maintain and preserve a copy of the
order, the agreement, and the list with
any updated information for the
duration of the investment and for a
period of not less than six years
thereafter, the first two years in an
easily accessible place.
9. Prior to approving any advisory
contract under section 15 of the Act, the
board of directors of each Fund of
Funds, including a majority of the
disinterested directors, will find that the
advisory fees charged under such
advisory contract are based on services
provided that will be in addition to,
rather than duplicative of, the services
provided under the advisory contract(s)
of any Rydex Fund in which the Fund
of Funds may invest. These findings and
their basis will be recorded fully in the
minute books of the appropriate Fund of
Funds.
10. A Fund of Funds Adviser will
waive fees otherwise payable to it by the
Fund of Funds in an amount at least
equal to any compensation (including
fees received pursuant to any plan
adopted by a Rydex Fund under rule
12b-1 under the Act) received from a
Rydex Fund by the Fund of Funds
Adviser, or an affiliated person of the
Fund of Funds Adviser, other than any
advisory fees paid to the Fund of Funds
Adviser or its affiliated person by the
Rydex Fund, in connection with the
investment by the Fund of Funds in the
Rydex Fund. Any Subadviser will waive
fees otherwise payable to the
Subadviser, directly or indirectly, by the
Fund of Funds in an amount at least
equal to any compensation received
from a Rydex Fund by the Subadviser,
or an affiliated person of the Subadviser,
other than any advisory fees paid to the
Subadviser or its affiliated person by the
Rydex Fund, in connection with the
investment by the Fund of Funds in the
Rydex Fund made at the direction of the
Subadviser. In the event that the
Subadviser waives fees, the benefit of
the waiver will be passed through to the
Fund of Funds.
11. Any sales charges and/or service
fees charged with respect to shares of
the Funds of Funds will not exceed the
limits applicable to a fund of funds as
set forth in rule 2830 of the NASD
Conduct Rules.
12. No Rydex Fund will acquire
securities of any investment company or
company relying on section 3(c)(1) or
3(c)(7) of the Act in excess of the limits
contained in section 12(d)(1)(A) of the
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15:29 Dec 13, 2005
Jkt 208001
Act, except to the extent permitted by
section 12(d)(1)(E) of the Act or an
exemptive order that allows the Rydex
Fund to purchase shares of an affiliated
money market fund for short-term cash
management purposes.
13. The board of directors of any Fund
of Funds and the Board of Trustees of
any Rydex Fund will satisfy the fund
governance standards as defined in rule
0–1(a)(7) under the Act by the later of
(i) the compliance date for the rule or
(ii) the date on which the Fund of Funds
and the Rydex Fund execute a
Participation Agreement.
B. ETF Order
Applicants agree to replace condition
2 of the ETF Order with the following
condition:
14. Each Fund’s Prospectus and
Product Description will clearly
disclose that, for purposes of the Act,
Shares are issued by a Fund and the
acquisition of Shares by investment
companies is subject to the restrictions
of section 12(d)(1) of the Act, except as
permitted by an exemptive order that
permits registered investment
companies to invest in a Fund beyond
the limits of section 12(d)(1), subject to
certain terms and conditions, including
that the registered investment company
enter into an agreement with the Fund
regarding the terms of the investment.
For the Commission, by the Division of
Investment Management, pursuant to
delegated authority.
J. Lynn Taylor,
Assistant Secretary.
[FR Doc. E5–7339 Filed 12–13–05; 8:45 am]
BILLING CODE 8010–01–P
PO 00000
74059
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–52886; File No. S7–24–89]
Joint Industry Plan; Solicitation of
Comments and Order Granting
Summary Effectiveness To Request To
Extend the Operation of the Reporting
Plan for Nasdaq-Listed Securities
Traded on Exchanges on an Unlisted
Trading Privilege Basis, Submitted by
The Pacific Exchange, Inc., The
National Association of Securities
Dealers, Inc., The American Stock
Exchange LLC, The Boston Stock
Exchange, Inc., The Chicago Stock
Exchange, Inc., The National Stock
Exchange, Inc., and The Philadelphia
Stock Exchange, Inc. and To Extend
Certain Exemptive Relief
December 5, 2005.
I. Introduction and Description
On December 2, 2005, the Pacific
Exchange, Inc. (‘‘PCX’’) on behalf of
itself and the National Association of
Securities Dealers, Inc. (‘‘NASD’’), the
American Stock Exchange LLC
(‘‘Amex’’), the Boston Stock Exchange,
Inc. (‘‘BSE’’), the Chicago Stock
Exchange, Inc. (‘‘CHX’’), the National
Stock Exchange, Inc. (‘‘NSX’’), and the
Philadelphia Stock Exchange, Inc.
(‘‘Phlx’’) (hereinafter referred to
collectively as ‘‘Participants’’),1 as
members of the operating committee
(‘‘Operating Committee’’ or
‘‘Committee’’) of the Plan submitted to
the Securities and Exchange
Commission (‘‘Commission’’) a request
to extend the operation of the Plan and
also to extend certain exemptive relief
as described below.2 The Nasdaq UTP
Plan governs the collection, processing,
and dissemination on a consolidated
basis of quotation and last sale
information for each of its Participants.
This consolidated information informs
investors of the current quotation and
recent trade prices of The Nasdaq Stock
Market, Inc. (‘‘Nasdaq’’) securities. It
enables investors to ascertain from one
data source the current prices in all the
markets trading Nasdaq securities. The
Plan serves as the required transaction
reporting plan for its Participants,
which is a prerequisite for their trading
1 PCX is the chair of the operating committee
(‘‘Operating Committee’’ or ‘‘Committee’’) for the
Joint Self-Regulatory Organization Plan Governing
the Collection, Consolidation and Dissemination of
Quotation and Transaction Information for NasdaqListed Securities Traded on Exchanges on an
Unlisted Trading Privilege Basis (‘‘Nasdaq UTP
Plan’’ or ‘‘Plan’’) by the Participants.
2 See letter from Bridget M. Farrell, Chairman,
OTC/UTP Operating Committee, to Jonathan G.
Katz, Secretary, Commission, dated December 2,
2005.
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74060
Federal Register / Vol. 70, No. 239 / Wednesday, December 14, 2005 / Notices
Nasdaq securities. Currently, the Plan is
scheduled to expire on December 21,
2005.
This order grants summary
effectiveness, pursuant to Rule 608(b)(4)
under the Securities Exchange Act of
1934 (‘‘Act’’),3 to the request to extend
operation of the Plan, as modified by all
changes previously approved, and to the
request to extend certain exemptive
relief (‘‘Date Extension’’). Pursuant to
Rule 608(b)(4) under the Act,4 the Date
Extension will be effective upon
publication in the Federal Register on
temporary basis not to exceed 120 days.
II. Exemptive Relief
While both Nasdaq and the NASD
operate under the umbrella of a single
Plan Participant, the submission of two
distinct best bids and offers (‘‘BBOs’’)
could be deemed inconsistent with
Section VI.C.1 of the Plan.5 Pursuant to
the 13th Amendment of the Plan and
Rule 608(a)(3),6 Nasdaq cannot be
granted Plan Participant status until it is
registered as a national securities
exchange. While Nasdaq submits a
distinct BBO from the NASD and until
Nasdaq is registered as a national
securities exchange, the NASD will
submit quotes to the Plan’s Securities
Information Processor (‘‘SIP’’) in a
manner different than specified in
Section VI.C.1. of the Plan and, thus, in
conflict with Commission Rule 608(c).7
As discussed at length in the notice of
the 13th Amendment,8 the Commission
had determined to relieve the potential
conflict among the SuperMontage
approval order,9 Rule 608,10 and the
Plan, by granting the NASD an
exemption under Rule 608(e) 11 from
compliance with Section VI.C.1. of the
Plan as required by Rule 608(c) 12 until
such time as Nasdaq is registered as a
national securities exchange.13 The Plan
CFR 242.608(b)(4).
CFR 242.608(b)(4).
5 Section VI.C.1. of the Plan, as approved by the
Operating Committee in the 13th Amendment,
states that ‘‘[t]he Processor shall disseminate on the
UTP Quote Data Feed the best bid and offer
information supplied by each Participant, including
the NASD....’’
6 17 CFR 242.608(a)(3).
7 17 CFR 242.608(c). Commission Rule 608(c)
requires a self-regulatory organization participant of
national market system plan to comply with the
terms of that plan.
8 See Securities Exchange Act Release No. 46139
(June 28, 2001), 67 FR 44888 (July 5, 2002) (‘‘13th
Amendment Notice’’).
9 See Securities Exchange Act Release No. 43863
(January 19, 2001), 66 FR 8020 (January 26, 2001).
10 17 CFR 242.608.
11 17 CFR 242.608(e).
12 17 CFR 242.608(c).
13 On March 15, 2001, the Nasdaq Stock Market,
Inc. (‘‘Nasdaq’’) submitted to the Commission a
Form 1 application pursuant to Section 6 of the Act,
Participants have requested an
extension of the exemptive relief.
III. Discussion
The Commission finds that extending
the operation of the Plan is consistent
with the requirements of the Act and the
rules and regulations thereunder, and,
in particular, Section 12(f) 14 and
Section 11A(a)(1) 15 of the Act and Rules
601 and 608 thereunder.16 Section 11A
of the Act directs the Commission to
facilitate the development of a national
market system for securities, ‘‘having
due regard for the public interest, the
protection of investors, and the
maintenance of fair and orderly
markets,’’ and cites as an objective of
that system the ‘‘fair competition * * *
between exchange markets and markets
other than exchange markets.’’ 17 When
the Commission first approved the Plan
on a pilot basis, it found that the Plan
‘‘should enhance market efficiency and
fair competition, avoid investor
confusion, and facilitate surveillance of
concurrent exchange and OTC
trading.’’ 18 The Plan has been in
existence since 1990 and Participants
have been trading Nasdaq securities
under the Plan since 1993. The
Commission finds that extending the
operation of the Plan through summary
effectiveness furthers the goals
described above by preventing the lapse
of the sole effective transaction
reporting plan for Nasdaq securities
traded by exchanges pursuant to
unlisted trading privileges. The
Commission believes that the Plan is
currently a critical component of the
national market system and that the
Plan’s expiration would have a serious,
detrimental impact on the further
development of the national market
system. The Commission also finds that
it is appropriate to grant summary
effectiveness to the request to extend the
3 17
4 17
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15:29 Dec 13, 2005
Jkt 208001
seeking registration as a national securities
exchange. The most recent Form 1 and
accompanying amendments were published for
comment. See Securities Exchange Act Release No.
52559 (October 4, 2005), 70 FR 59097 (October 11,
2005).
14 15 U.S.C. 78l(f). The Commission finds that
extending the Plan is consistent with fair and
orderly markets, the protection of investors and the
public interest, and otherwise in furtherance of the
purposes of the Act. The Commission has taken into
account the public trading activity in securities
traded pursuant to the Plan, the character of the
trading, the impact of the trading of such securities
on existing markets, and the desirability of
removing impediments to, and the progress that has
been made toward the development of a national
market system.
15 15 U.S.C. 78k–1(a)(1).
16 17 CFR 242.601 and 17 CFR 242.608.
17 15 U.S.C. 78k–1(a).
18 See Securities Exchange Act Release No. 28146
(June 26, 1990), 55 FR 27917 (July 6, 1990).
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Frm 00073
Fmt 4703
Sfmt 4703
exemption under Rule 608(e) 19 from
compliance with Section VI.C.1. of the
Plan as required by Rule 608(c).20 The
Commission believes that the Plan is a
critical component of the national
market system and that the requested
exemptive relief is necessary to assure
the effective operation of the Plan. The
Commission believes that the requested
exemptive relief extension is consistent
with the Act, the Rules thereunder, and,
specifically, with the objectives set forth
in Sections 12(f) and 11A of the Act 21
and Rules 601 and 608 thereunder.22
IV. Solicitation of Comments
The Commission seeks general
comments on the extension of the
operation of the Plan and the extension
of exemptive relief. Interested persons
are invited to submit written data,
views, and arguments concerning the
foregoing, including whether the
proposal 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 S7–24–89 on the subject line.
Paper Comments
• Send paper comments in triplicate
to Jonathan G. Katz, Secretary,
Securities and Exchange Commission,
Station Place, 100 F Street, NE,
Washington, DC 20549–9303.
All submissions should refer to File
Number S7–24–89. 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
19 17
CFR 242.608(e).
CFR 242.608(c).
21 15 U.S.C. 781(f) and 15 U.S.C. 78k–1.
22 17 CFR 242.601 and 17 CFR 242.608.
20 17
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Federal Register / Vol. 70, No. 239 / Wednesday, December 14, 2005 / Notices
Room. Copies of the filing also will be
available for inspection and copying at
the Office of the Secretary of the
Committee, currently located at the
Pacific Exchange, Inc. and Archipelago
Exchange L.L.C., 100 South Wacker
Drive, Suite 2000, Chicago, IL 60606.
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 S7–24–89 and should be
submitted on or before January 4, 2006.
V. Conclusion
It is therefore ordered, pursuant to
Sections 12(f) and 11A of the Act 23 and
paragraph (b)(4) of Rule 608
thereunder,24 that the operation of the
Plan, as modified by all changes
previously approved, be, and hereby is,
extended, and that certain exemptive
relief also be extended, both for a period
not to exceed 120 days from the date of
publication of this Date Extension in the
Federal Register.
For the Commission, by the Division of
Market Regulation, pursuant to delegated
authority.25
Jonathan G. Katz,
Secretary.
[FR Doc. E5–7329 Filed 12–13–05; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–52901; File No. SR–OPRA–
2005–03]
Options Price Reporting Authority;
Order Approving an Amendment to the
Plan for Reporting of Consolidated
Options Last Sale Reports and
Quotation Information To Provide That
Classes of Foreign Currency Options
Newly Introduced for Trading on the
Philadelphia Stock Exchange Be
Treated as Equity/Index Options
During a Temporary Period Ending on
December 31, 2007
December 6, 2005.
On October 21, 2005, the Options
Price Reporting Authority (‘‘OPRA’’)
submitted to the Securities and
Exchange Commission (‘‘Commission’’),
pursuant to Section 11A of the
Securities Exchange Act of 1934
(‘‘Act’’) 1 and Rule 608 thereunder,2 an
23 15
U.S.C. 78(f) and 15 U.S.C. 78k–1.
CFR 242.608(b)(4).
25 17 CFR 200.30–3(a)(27).
1 15 U.S.C. 78k–1.
2 17 CFR 242.608.
24 17
VerDate Aug<31>2005
15:29 Dec 13, 2005
Jkt 208001
amendment to the Plan for Reporting of
Consolidated Options Last Sale Reports
and Quotation Information (‘‘OPRA
Plan’’).3 The proposed OPRA Plan
amendment would provide that classes
of Foreign Currency Options (‘‘FCO
Securities’’ or ‘‘FCO’’), newly
introduced for trading on the Phlx
during a temporary period ending no
later than December 31, 2007, will be
treated by OPRA as Equity/Index
Options (‘‘EIO Securities’’ or ‘‘EIO’’) to
the extent described in the proposed
amendment. Notice of the proposal was
published in the Federal Register on
November 7, 2005.4 The Commission
received no comment letters on the
proposed OPRA Plan amendment. This
order approves the proposal.
FCO Securities under the OPRA Plan
are currently traded only on the Phlx,
which processes these options on a
separate computer platform from its EIO
Securities. The FCO platform is a legacy
system, which is in the process of being
converted to a newer technology. The
Phlx has advised OPRA that it expects
to have this effort completed no later
than December 31, 2007, and that, in the
meanwhile, the Phlx does not intend to
devote resources to expanding the soon
to be replaced legacy platform. Because
the legacy FCO platform does not have
the capacity to handle additional classes
of FCO Securities that may be
introduced for trading by the Phlx while
the new platform is being developed,
the Phlx has proposed to temporarily
process any such new classes of FCO
Securities on its EIO platform, which
does have the capacity to handle them,
until the new FCO platform is available.
According to OPRA, this would mean
that, while these new FCO Securities are
on the EIO platform, their quotes and
trade reports would be disseminated to
OPRA over EIO data lines and not over
the FCO data line. In turn, this would
require OPRA to treat these quotes and
trade reports as if they were EIO
Securities. Thus, quotes and trade
reports covering these new FCO
3 The OPRA Plan is a national market system plan
approved by the Commission pursuant to Section
11A of the Act and Rule 608 thereunder (formerly
Rule 11Aa3–2). See Securities Exchange Act
Release No. 17638 (March 18, 1981), 22 S.E.C.
Docket 484 (March 31, 1981). The full text of the
OPRA Plan is available at https://
www.opradata.com.
The OPRA Plan provides for the collection and
dissemination of last sale and quotation information
on options that are traded on the participant
exchanges. The six participants to the OPRA Plan
are the American Stock Exchange LLC, the Boston
Stock Exchange, Inc., the Chicago Board Options
Exchange, Incorporated, the International Securities
Exchange, Inc., the Pacific Exchange, Inc., and the
Philadelphia Stock Exchange, Inc (‘‘Phlx’’).
4 See Securities Exchange Act Release No. 52710
(November 1, 2005), 70 FR 67503.
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Frm 00074
Fmt 4703
Sfmt 4703
74061
Securities would be included in OPRA’s
basic service and not in its FCO service,
and revenues and expenses pertaining
to market data regarding these new FCO
Securities would be allocated to OPRA’s
basic accounting center and further
allocated among the parties to the OPRA
Plan as if these products were EIO
Securities and not FCO Securities.
OPRA represents that all currently
traded FCO products would continue to
be disseminated on the current FCO
data line, and would continue to be
treated by OPRA as FCO Securities.
Only newly traded FCO Securities
would be treated as EIO Securities and
only for a temporary period while the
Phlx’s upgraded FCO platform is being
developed. The purpose of the proposed
OPRA Plan amendment is to codify in
the language of the OPRA Plan the
above-described temporary treatment of
the Phlx’s newly traded FCO Securities.
After careful review, the Commission
finds that the proposed OPRA Plan
amendment is consistent with the
requirements of the Act and the rules
and regulations thereunder.5 The
Commission finds that the proposed
OPRA Plan amendment is consistent
with Section 11A of the Act 6 and Rule
608 thereunder 7 in that it is appropriate
in the public interest, for the protection
of investors and the maintenance of fair
and orderly markets, to remove
impediments to, and perfect the
mechanisms of, a national market
system. Specifically, the Commission
finds that it is appropriate to clarify in
the language of the OPRA Plan the
temporary treatment of the Phlx’s newly
traded FCO Securities as EIO Securities
and believes that the proposed language
is a reasonable accommodation by
OPRA during the time the Phlx is
upgrading its FCO platform.
It is therefore ordered, pursuant to
Section 11A of the Act,8 and Rule 608
thereunder,9 that the proposed OPRA
Plan amendment (SR–OPRA–2005–03)
be, and it hereby is, approved on a
temporary basis, until December 31,
2007.
5 In approving this proposed OPRA Plan
Amendment, the Commission has considered its
impact on efficiency, competition, and capital
formation. 15 U.S.C. 78c(f).
6 15 U.S.C. 78k–1.
7 17 CFR 242.608.
8 15 U.S.C. 78k–1.
9 17 CFR 242.608.
E:\FR\FM\14DEN1.SGM
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]]>Agencies
[Federal Register Volume 70, Number 239 (Wednesday, December 14, 2005)]
[Notices]
[Pages 74059-74061]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E5-7329]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-52886; File No. S7-24-89]
Joint Industry Plan; Solicitation of Comments and Order Granting
Summary Effectiveness To Request To Extend the Operation of the
Reporting Plan for Nasdaq-Listed Securities Traded on Exchanges on an
Unlisted Trading Privilege Basis, Submitted by The Pacific Exchange,
Inc., The National Association of Securities Dealers, Inc., The
American Stock Exchange LLC, The Boston Stock Exchange, Inc., The
Chicago Stock Exchange, Inc., The National Stock Exchange, Inc., and
The Philadelphia Stock Exchange, Inc. and To Extend Certain Exemptive
Relief
December 5, 2005.
I. Introduction and Description
On December 2, 2005, the Pacific Exchange, Inc. (``PCX'') on behalf
of itself and the National Association of Securities Dealers, Inc.
(``NASD''), the American Stock Exchange LLC (``Amex''), the Boston
Stock Exchange, Inc. (``BSE''), the Chicago Stock Exchange, Inc.
(``CHX''), the National Stock Exchange, Inc. (``NSX''), and the
Philadelphia Stock Exchange, Inc. (``Phlx'') (hereinafter referred to
collectively as ``Participants''),\1\ as members of the operating
committee (``Operating Committee'' or ``Committee'') of the Plan
submitted to the Securities and Exchange Commission (``Commission'') a
request to extend the operation of the Plan and also to extend certain
exemptive relief as described below.\2\ The Nasdaq UTP Plan governs the
collection, processing, and dissemination on a consolidated basis of
quotation and last sale information for each of its Participants. This
consolidated information informs investors of the current quotation and
recent trade prices of The Nasdaq Stock Market, Inc. (``Nasdaq'')
securities. It enables investors to ascertain from one data source the
current prices in all the markets trading Nasdaq securities. The Plan
serves as the required transaction reporting plan for its Participants,
which is a prerequisite for their trading
[[Page 74060]]
Nasdaq securities. Currently, the Plan is scheduled to expire on
December 21, 2005.
---------------------------------------------------------------------------
\1\ PCX is the chair of the operating committee (``Operating
Committee'' or ``Committee'') for the Joint Self-Regulatory
Organization Plan Governing the Collection, Consolidation and
Dissemination of Quotation and Transaction Information for Nasdaq-
Listed Securities Traded on Exchanges on an Unlisted Trading
Privilege Basis (``Nasdaq UTP Plan'' or ``Plan'') by the
Participants.
\2\ See letter from Bridget M. Farrell, Chairman, OTC/UTP
Operating Committee, to Jonathan G. Katz, Secretary, Commission,
dated December 2, 2005.
---------------------------------------------------------------------------
This order grants summary effectiveness, pursuant to Rule 608(b)(4)
under the Securities Exchange Act of 1934 (``Act''),\3\ to the request
to extend operation of the Plan, as modified by all changes previously
approved, and to the request to extend certain exemptive relief (``Date
Extension''). Pursuant to Rule 608(b)(4) under the Act,\4\ the Date
Extension will be effective upon publication in the Federal Register on
temporary basis not to exceed 120 days.
---------------------------------------------------------------------------
\3\ 17 CFR 242.608(b)(4).
\4\ 17 CFR 242.608(b)(4).
---------------------------------------------------------------------------
II. Exemptive Relief
While both Nasdaq and the NASD operate under the umbrella of a
single Plan Participant, the submission of two distinct best bids and
offers (``BBOs'') could be deemed inconsistent with Section VI.C.1 of
the Plan.\5\ Pursuant to the 13th Amendment of the Plan and Rule
608(a)(3),\6\ Nasdaq cannot be granted Plan Participant status until it
is registered as a national securities exchange. While Nasdaq submits a
distinct BBO from the NASD and until Nasdaq is registered as a national
securities exchange, the NASD will submit quotes to the Plan's
Securities Information Processor (``SIP'') in a manner different than
specified in Section VI.C.1. of the Plan and, thus, in conflict with
Commission Rule 608(c).\7\ As discussed at length in the notice of the
13th Amendment,\8\ the Commission had determined to relieve the
potential conflict among the SuperMontage approval order,\9\ Rule
608,\10\ and the Plan, by granting the NASD an exemption under Rule
608(e) \11\ from compliance with Section VI.C.1. of the Plan as
required by Rule 608(c) \12\ until such time as Nasdaq is registered as
a national securities exchange.\13\ The Plan Participants have
requested an extension of the exemptive relief.
---------------------------------------------------------------------------
\5\ Section VI.C.1. of the Plan, as approved by the Operating
Committee in the 13th Amendment, states that ``[t]he Processor shall
disseminate on the UTP Quote Data Feed the best bid and offer
information supplied by each Participant, including the NASD....''
\6\ 17 CFR 242.608(a)(3).
\7\ 17 CFR 242.608(c). Commission Rule 608(c) requires a self-
regulatory organization participant of national market system plan
to comply with the terms of that plan.
\8\ See Securities Exchange Act Release No. 46139 (June 28,
2001), 67 FR 44888 (July 5, 2002) (``13th Amendment Notice'').
\9\ See Securities Exchange Act Release No. 43863 (January 19,
2001), 66 FR 8020 (January 26, 2001).
\10\ 17 CFR 242.608.
\11\ 17 CFR 242.608(e).
\12\ 17 CFR 242.608(c).
\13\ On March 15, 2001, the Nasdaq Stock Market, Inc.
(``Nasdaq'') submitted to the Commission a Form 1 application
pursuant to Section 6 of the Act, seeking registration as a national
securities exchange. The most recent Form 1 and accompanying
amendments were published for comment. See Securities Exchange Act
Release No. 52559 (October 4, 2005), 70 FR 59097 (October 11, 2005).
---------------------------------------------------------------------------
III. Discussion
The Commission finds that extending the operation of the Plan is
consistent with the requirements of the Act and the rules and
regulations thereunder, and, in particular, Section 12(f) \14\ and
Section 11A(a)(1) \15\ of the Act and Rules 601 and 608 thereunder.\16\
Section 11A of the Act directs the Commission to facilitate the
development of a national market system for securities, ``having due
regard for the public interest, the protection of investors, and the
maintenance of fair and orderly markets,'' and cites as an objective of
that system the ``fair competition * * * between exchange markets and
markets other than exchange markets.'' \17\ When the Commission first
approved the Plan on a pilot basis, it found that the Plan ``should
enhance market efficiency and fair competition, avoid investor
confusion, and facilitate surveillance of concurrent exchange and OTC
trading.'' \18\ The Plan has been in existence since 1990 and
Participants have been trading Nasdaq securities under the Plan since
1993. The Commission finds that extending the operation of the Plan
through summary effectiveness furthers the goals described above by
preventing the lapse of the sole effective transaction reporting plan
for Nasdaq securities traded by exchanges pursuant to unlisted trading
privileges. The Commission believes that the Plan is currently a
critical component of the national market system and that the Plan's
expiration would have a serious, detrimental impact on the further
development of the national market system. The Commission also finds
that it is appropriate to grant summary effectiveness to the request to
extend the exemption under Rule 608(e) \19\ from compliance with
Section VI.C.1. of the Plan as required by Rule 608(c).\20\ The
Commission believes that the Plan is a critical component of the
national market system and that the requested exemptive relief is
necessary to assure the effective operation of the Plan. The Commission
believes that the requested exemptive relief extension is consistent
with the Act, the Rules thereunder, and, specifically, with the
objectives set forth in Sections 12(f) and 11A of the Act \21\ and
Rules 601 and 608 thereunder.\22\
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\14\ 15 U.S.C. 78l(f). The Commission finds that extending the
Plan is consistent with fair and orderly markets, the protection of
investors and the public interest, and otherwise in furtherance of
the purposes of the Act. The Commission has taken into account the
public trading activity in securities traded pursuant to the Plan,
the character of the trading, the impact of the trading of such
securities on existing markets, and the desirability of removing
impediments to, and the progress that has been made toward the
development of a national market system.
\15\ 15 U.S.C. 78k-1(a)(1).
\16\ 17 CFR 242.601 and 17 CFR 242.608.
\17\ 15 U.S.C. 78k-1(a).
\18\ See Securities Exchange Act Release No. 28146 (June 26,
1990), 55 FR 27917 (July 6, 1990).
\19\ 17 CFR 242.608(e).
\20\ 17 CFR 242.608(c).
\21\ 15 U.S.C. 781(f) and 15 U.S.C. 78k-1.
\22\ 17 CFR 242.601 and 17 CFR 242.608.
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IV. Solicitation of Comments
The Commission seeks general comments on the extension of the
operation of the Plan and the extension of exemptive relief. Interested
persons are invited to submit written data, views, and arguments
concerning the foregoing, including whether the proposal 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 S7-24-89 on the subject line.
Paper Comments
Send paper comments in triplicate to Jonathan G. Katz,
Secretary, Securities and Exchange Commission, Station Place, 100 F
Street, NE, Washington, DC 20549-9303.
All submissions should refer to File Number S7-24-89. 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
[[Page 74061]]
Room. Copies of the filing also will be available for inspection and
copying at the Office of the Secretary of the Committee, currently
located at the Pacific Exchange, Inc. and Archipelago Exchange L.L.C.,
100 South Wacker Drive, Suite 2000, Chicago, IL 60606. 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 S7-24-89 and should be
submitted on or before January 4, 2006.
V. Conclusion
It is therefore ordered, pursuant to Sections 12(f) and 11A of the
Act \23\ and paragraph (b)(4) of Rule 608 thereunder,\24\ that the
operation of the Plan, as modified by all changes previously approved,
be, and hereby is, extended, and that certain exemptive relief also be
extended, both for a period not to exceed 120 days from the date of
publication of this Date Extension in the Federal Register.
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\23\ 15 U.S.C. 78(f) and 15 U.S.C. 78k-1.
\24\ 17 CFR 242.608(b)(4).
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\25\
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\25\ 17 CFR 200.30-3(a)(27).
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Jonathan G. Katz,
Secretary.
[FR Doc. E5-7329 Filed 12-13-05; 8:45 am]
BILLING CODE 8010-01-P
