Self-Regulatory Organizations; National Association of Securities Dealers, Inc.; Notice of Filing of a Proposed Rule Change To Require Members To Report All Transactions that Must Be Reported to NASD and Are Subject to a Regulatory Transaction Fee to the Nasdaq Market Center and/or the Trade Reporting and Comparison Service, 26795-26797 [06-4280]
Download as PDF
26795
Federal Register / Vol. 71, No. 88 / Monday, May 8, 2006 / Notices
The Commission is of the opinion that
the public interest and the protection of
investors require a suspension of trading
in the securities of the above-listed
company.
Therefore, it is ordered, pursuant to
Section 12(k) of the Securities Exchange
Act of 1934, that trading in the
securities of the above-listed company is
suspended for the period from 9:30 a.m.
EDT on May 4, 2006, through 11:59 p.m.
EDT on May 17, 2006.
By the Commission.
Nancy M. Morris,
Secretary.
[FR Doc. 06–4304 Filed 5–4–06; 11:25 am]
Rules 6130 and 6130A that would
expressly require members to report
odd-lot transactions, away from the
market sales, and OTC options with
special indicators denoting that such
transactions are reported in accordance
with Section 3.
The text of the proposed rule change
is available on NASD’s Web site
(https://www.nasd.com). from NASD’s
principal office, and at the
Commission’s Public Reference Room.
The text of the proposed rule change
also appears below. Proposed new
language is italicized; proposed
deletions are in brackets.3
SCHEDULE A TO NASD BY-LAWS
BILLING CODE 8010–01–P
*
SECURITIES AND EXCHANGE
COMMISSION
Release No. 34–53748; File No. SR–NASD–
2006–055
Self-Regulatory Organizations;
National Association of Securities
Dealers, Inc.; Notice of Filing of a
Proposed Rule Change To Require
Members To Report All Transactions
that Must Be Reported to NASD and
Are Subject to a Regulatory
Transaction Fee to the Nasdaq Market
Center and/or the Trade Reporting and
Comparison Service
*
*
*
*
Section 3—Regulatory Transaction Fee
Each member shall be assessed a
regulatory transaction fee. The amount
shall be determined periodically in
accordance with Section 31 of the Act.
Transactions assessable under this
Section 3 that must be reported to
NASD shall be reported in an
automated manner.
*
*
*
*
*
4000. THE NASDAQ STOCK MARKET
*
*
*
*
*
4600. NASDAQ MARKET MAKER
REQUIREMENTS
*
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 21,
2006, the National Association of
Securities Dealers, Inc. (‘‘NASD’’) filed
with the Securities and Exchange
Commission (’’Commission’’) the
proposed rule change as described in
Items I, 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.
4630. Reporting Transactions in Nasdaq
National Market Securities
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
wwhite on PROD1PC61 with NOTICES
May 2, 2006.
4640. Reporting Transactions in Nasdaq
Capital Market Securities
NASD is proposing to amend Section
3 of Schedule A to the NASD By-Laws
(‘‘Section 3’’), to require members to
report all transactions that must be
reported to NASD and that are subject
to a regulatory transaction fee pursuant
to Section 3 to the Nasdaq Market
Center (‘‘NMC’’) and/or the Trade
Reporting and Comparison Service
(‘‘TRACS’’). In addition, NASD is
proposing new provisions in NASD
1 15
2 17
U.S.C. 78s(b)(1).
CFR 240.19b–4.
VerDate Aug<31>2005
16:05 May 05, 2006
Jkt 208001
*
*
*
*
*
*
*
*
*
4632. Transaction Reporting
(a) through (d) No Change.
(e) Transactions Not [Required] To Be
Reported For Publication Purposes
The following types of transactions
shall not be reported for publication
purposes:
(1) through (6) No Change.
(f) through (g) No Change.
*
*
*
*
*
The following types of transactions
shall not be reported for publication
purposes:
(1) through (5) No Change.
(f) through (g) No Change.
*
*
*
*
*
4000A. NASD ALTERNATIVE DISPLAY
FACILITY
*
*
*
*
*
4600A. TRADING IN NASDAQ
SECURITIES
*
*
*
*
*
4632A. Transactions Reported by
Members
(a) through (j) No Change.
(k) Transactions Not To Be Reported
To NASD For Publication Purposes
The following types of transactions
effected by NASD members shall not be
reported to TRACS for publication
purposes:
(1) through (5) No Change.
(I) No Change.
*
*
*
*
*
6000. NASD SYSTEMS AND
PROGRAMS
6100. TRADE REPORTING SERVICE
*
*
*
*
*
6130. Trade Report Input
(a) through (f) No Change.
(g) Reporting Certain Transactions for
Purposes of Regulatory Transaction Fee
Assessment
The following types of transactions
that are assessed a regulatory
transaction fee in accordance with
Section 3 of Schedule A to the NASD
By-Laws must be reported to the Nasdaq
Market Center as prescribed below.
Transactions must be submitted to the
Nasdaq Market Center by 6:30 p.m.
Eastern Time (or the end of the Nasdaq
Market Center reporting session that is
in effect at that time).
4642. Transaction Reporting
(a) through (d) No Change.
(e) Transactions Not [Required] To Be
Reported For Publication Purposes
(1) Odd-Lot Transactions
Transactions for less than a normal
unit of trading shall be reported to the
Nasdaq Market Center with a modifier
of .RO to designate the transaction as
submitted for purposes of the regulatory
transaction fee under Section 3 of
Schedule A to the NASD By-Laws.
Transactions may be entered as clearing
or non-clearing.
3 NASD has filed another proposed rule change,
SR–NASD–2005–087, which, among other things,
proposed a new Trade Reporting Facility. If this
filing is approved prior to that filing, the Trade
Reporting Facility rules would be amended to make
conforming changes with this proposal. However, if
SR–NASD–2005–087 is approved prior to the
approval of this filing, this filing will be amended
to make conforming changes with the Trade
Reporting Facility rules.
(2) Away From the Market Sales
Transactions where the buyer and
seller have agreed to trade at a price
substantially unrelated to the current
market for the security, and
consideration is given, shall be reported
to the Nasdaq Market Center with a
modifier of .RA to designate the
*
PO 00000
*
*
Frm 00063
*
Fmt 4703
*
Sfmt 4703
E:\FR\FM\08MYN1.SGM
08MYN1
26796
Federal Register / Vol. 71, No. 88 / Monday, May 8, 2006 / Notices
transaction as submitted for purposes of
the regulatory transaction fee under
Section 3 of Schedule A to the NASD
By-Laws. Transactions may be entered
as clearing or non-clearing.
(3) Exercises of OTC Options
Transactions effected pursuant to the
exercise of an OTC option shall be
reported to the Nasdaq Market Center
with a modifier of .RX to designate the
transaction as submitted for purposes of
the regulatory transaction fee under
Section 3 of Schedule A to the NASD
By-Laws. Transactions may be entered
as clearing or non-clearing.
*
*
*
*
*
6400. REPORTING TRANSACTIONS IN
LISTED SECURITIES
*
*
*
*
*
6420. Transaction Reporting
(a) through (d) No Change.
(e) Transactions Not [Required] To Be
Reported For Publication Purposes
The following types of transactions
shall not be reported for inclusion on
the Consolidated Tape:
(1) through (8) No Change.
(f) No Change.
*
*
*
*
*
6620. Transaction Reporting
(a) through (d) No Change.
(e) Transactions Not [Required] To Be
Reported For Publication Purposes
The following types of transactions
shall not be reported for publication
purposes:
(1) through (4) No Change.
(f) No Change.
*
*
*
*
*
6000A. NASD ADF SYSTEMS AND
PROGRAMS
6100A. TRACS TRADE COMPARISON
SERVICE
wwhite on PROD1PC61 with NOTICES
*
*
*
*
*
6130A. Trade Report Input
(a) through (b) No Change.
(c) Reporting Certain Transactions for
Purposes of Regulatory Transaction Fee
Assessment
The following types of transactions
that are assessed a regulatory
transaction fee in accordance with
Section 3 of Schedule A to the NASD
By-Laws must be reported to TRACS as
prescribed below. Transactions must be
submitted to TRACS by 6:30 p.m.
Eastern Time (or the end of the TRACS
reporting session that is in effect at that
time).
(1) Odd-Lot Transactions
Transactions for less than a normal
unit of trading shall be reported to
VerDate Aug<31>2005
16:05 May 05, 2006
Jkt 208001
TRACS with a modifier of .RO to
designate the transaction as submitted
for purposes of the regulatory
transaction fee under Section 3 of
Schedule A to the NASD By-Laws.
Transactions may be entered as clearing
or non-clearing.
(2) Away From the Market Sales
Transactions where the buyer and
seller have agreed to trade at a price
substantially unrelated to the current
market for the security, and
consideration is given, shall be reported
to TRACS with a modifier of .RA to
designate the transaction as submitted
for purposes of the regulatory
transaction fee under Section 3 of
Schedule A to the NASD By-Laws.
Transactions may be entered as clearing
or non-clearing.
(3) Exercises of OTC Options
Transactions effected pursuant to the
exercise of an OTC option shall be
reported to TRACS with a modifier of
.RX to designate the transaction as
submitted for purposes of the regulatory
transaction fee under Section 3 of
Schedule A to the NASD By-Laws.
Transactions may be entered as clearing
or non-clearing.
*
*
*
*
*
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
Pursuant to Section 31 of the Act,4
NASD and the national securities
exchanges are required to pay
transaction fees and assessments to the
Commission that are designed to recover
the costs related to the government’s
supervision and regulation of the
securities markets and securities
professionals. NASD obtains funds to
pay its Section 31 fees and assessments
from its membership, in accordance
4 15
PO 00000
U.S.c. 78ee.
Frm 00064
Fmt 4703
Sfmt 4703
with Section 3. Currently, most of the
transactions that are assessable under
Section 3 are reported to NASD through
automated facilities, because most
transactions must be reported to NMC or
TRACS pursuant to NASD trade
reporting rules. NASD is able to use the
transaction data reported to NMC and
TRACS for Section 3 billing purposes.
Member firms, however, are currently
required to manually self-report covered
sales of odd-lots, away from the market
sales, and exercises of OTC options
because these transactions are not
otherwise required to be reported to
NMC or TRACS.
To improve NASD’s programs related
to compliance with Section 31 of the
Act and Rule 31 thereunder,5 NASD is
proposing to require NASD member
firms to report all covered sales that
must be reported to NASD and that are
assessed under Section 3 in an
automated manner. While the current
manual self-reporting process has
allowed NASD to meet its obligations
under Section 31 of the Act, there have
been instances when some members
filed their self-reporting form late or
amended previous forms in later months
to include additional covered sales
volume. NASD believes that requiring
automated reporting of such covered
sales would facilitate efficient, accurate,
and timely reporting. Automated
reporting would also reduce the burden
on members that results from manually
reporting certain transactions to NASD.
In addition, the mandatory reporting of
odd-lots and other transactions would
enhance the regulatory audit trail while
not providing distortive information to
the publicly disseminated tape.
To fully automate NASD’s procedures
for assessing the regulatory transaction
fee, NASD is proposing to amend: (1)
Section 3 to create an affirmative
obligation to report, in an automated
manner, all covered sales that must be
reported to NASD for purposes of
Section 3; (2) NASD Rules 6130 and
6130A to require that members report
all transactions reportable to NASD and
subject to the regulatory transaction fee
pursuant to Section 3 to NMC or TRACS
and to identify certain transactions
submitted specifically for a regulatory
transaction fee assessment with a
special indicator denoting their
purpose; 6 and (3) NASD Rules 4632,
5 17
CFR 240.31.
proposes to use the following modifiers
for purposes of reporting to the NMC or TRACS
certain transaction that are subject to the regulatory
transaction fee under Section 3: (1) .RO to designate
odd-lot transactions; (2) .RA to designate
transactions where the buyer and seller have agreed
to trade at a price substantially unrelated to the
current market for the security; and (3) .RX to
6 NASD
E:\FR\FM\08MYN1.SGM
08MYN1
Federal Register / Vol. 71, No. 88 / Monday, May 8, 2006 / Notices
4642, 4632A, 6420, and 6620 governing
trade reporting that currently prohibit
member firms from reporting odd-lot
transactions, away from the market
sales, and OTC options, as well as other
identified transactions, to clarify that
the prohibition found in the transaction
reporting rules is limited to the
submission of a transaction for
publication purposes.7
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, if the
Commission approves this proposal.
The effective date would be at least 90
days following publication of the Notice
to Members announcing Commission
approval to allow firms sufficient time
to make any necessary systems changes.
2. Statutory Basis
NASD believes that the proposed rule
change is consistent with the provisions
of Section 15A(b)(6) of the Act,8 which
requires, among other things, that NASD
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. NASD
believes that requiring members to
report, in an automated manner, all
transactions that must be reported to
NASD and are subject to the regulatory
transaction fee would ensure more
accurate and timely reporting of such
transactions and would reduce the
burden on members that results from
manually reporting certain transactions.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
NASD does not believe that the
proposed rule change would 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
wwhite on PROD1PC61 with NOTICES
Written comments were neither
solicited nor received.
designate transactions effected pursuant to the
exercise of an OTC option.
7 The proposed amendments to NASD Rules
4632A and 6420 solely amend the headings of
NASD Rules 4632A(k) and 6420(e), respectively.
The text of these rules does not need to be amended
because it already stated that the prohibition on
reporting the identified transactions is limited to
the submission of a transaction for publication
purposes (or in the case of listed securities, for
inclusion on the Consolidated Tape).
8 15 U.S.C. 78o–3(b)(6).
VerDate Aug<31>2005
16:05 May 05, 2006
Jkt 208001
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
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–2006–055 on the
subject line.
26797
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–2006–055 and
should be submitted on or before May
30, 2006.
For the Commission, by the Division of
Market Regulation, pursuant to delegated
authority.9
Nancy M. Morris,
Secretary.
[FR Doc. 06–4280 Filed 5–5–06; 8:45 am]
BILLING CODE 8010–01–M
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–53743; File No. SR–NASD–
2006–045]
Self-Regulatory Organizations;
National Association of Securities
Dealers, Inc.; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change Relating to Amendments
to Rule 2520 (Margin Requirements)
April 28, 2006.
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 3,
Paper Comments
2006, the National Association of
Securities Dealers, Inc. (‘‘NASD’’) filed
• Send paper comments in triplicate
with the Securities and Exchange
to Nancy M. Morris, Secretary,
Commission (‘‘SEC’’ or ‘‘Commission’’)
Securities and Exchange Commission,
the proposed rule change as described
Station Place, 100 F Street, NE.,
in Items I, II, and III below, which Items
Washington, DC 20549–1090.
have been prepared by NASD. NASD
All submissions should refer to File
has designated the proposed rule change
Number SR–NASD–2006–055. This file
as constituting a ‘‘non-controversial’’
number should be included on the
subject line if e-mail is used. To help the rule change pursuant to section
19(b)(3)(A) 3 of the Act and Rule 19b–
Commission process and review your
4(f)(6) thereunder,4 which renders the
comments more efficiently, please use
only one method. The Commission will proposal effective upon filing with the
post all comments on the Commission’s Commission. The Commission is
publishing this notice to solicit
Internet Web site (https://www.sec.gov/
comments on the proposed rule change
rules/sro.shtml). Copies of the
from interested persons.
submission, all subsequent
amendments, all written statements
I. Self-Regulatory Organization’s
with respect to the proposed rule
Statement of the Terms of Substance of
change that are filed with the
the Proposed Rule Change
Commission, and all written
NASD is proposing to amend NASD
communications relating to the
Rules 2520 and 2522 that will revise the
proposed rule change between the
Commission and any person, other than margin requirements to (1) recognize
specific additional complex option
those that may be withheld from the
public in accordance with the
9 17 CFR 200.30–3(a)(12).
provisions of 5 U.S.C. 552, will be
1 15 U.S.C. 78s(b)(1).
available for inspection and copying in
2 17 CFR 240.19b–4.
the Commission’s Public Reference
3 15 U.S.C. 78s(b)(3)(A).
Room. Copies of such filing also will be
4 17 CFR 240.19b–4(f)(6). NASD gave the
available for inspection and copying at
Commission written notice of its intent to file this
proposed rule change on March 24, 2006.
the principal office of NASD. All
PO 00000
Frm 00065
Fmt 4703
Sfmt 4703
E:\FR\FM\08MYN1.SGM
08MYN1
Agencies
[Federal Register Volume 71, Number 88 (Monday, May 8, 2006)]
[Notices]
[Pages 26795-26797]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 06-4280]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Release No. 34-53748; File No. SR-NASD-2006-055
Self-Regulatory Organizations; National Association of Securities
Dealers, Inc.; Notice of Filing of a Proposed Rule Change To Require
Members To Report All Transactions that Must Be Reported to NASD and
Are Subject to a Regulatory Transaction Fee to the Nasdaq Market Center
and/or the Trade Reporting and Comparison Service
May 2, 2006.
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 21, 2006, the National Association of Securities Dealers,
Inc. (``NASD'') filed with the Securities and Exchange Commission
(''Commission'') the proposed rule change as described in Items I, 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 Section 3 of Schedule A to the NASD By-
Laws (``Section 3''), to require members to report all transactions
that must be reported to NASD and that are subject to a regulatory
transaction fee pursuant to Section 3 to the Nasdaq Market Center
(``NMC'') and/or the Trade Reporting and Comparison Service
(``TRACS''). In addition, NASD is proposing new provisions in NASD
Rules 6130 and 6130A that would expressly require members to report
odd-lot transactions, away from the market sales, and OTC options with
special indicators denoting that such transactions are reported in
accordance with Section 3.
The text of the proposed rule change is available on NASD's Web
site (https://www.nasd.com). from NASD's principal office, and at the
Commission's Public Reference Room. The text of the proposed rule
change also appears below. Proposed new language is italicized;
proposed deletions are in brackets.\3\
---------------------------------------------------------------------------
\3\ NASD has filed another proposed rule change, SR-NASD-2005-
087, which, among other things, proposed a new Trade Reporting
Facility. If this filing is approved prior to that filing, the Trade
Reporting Facility rules would be amended to make conforming changes
with this proposal. However, if SR-NASD-2005-087 is approved prior
to the approval of this filing, this filing will be amended to make
conforming changes with the Trade Reporting Facility rules.
---------------------------------------------------------------------------
SCHEDULE A TO NASD BY-LAWS
* * * * *
Section 3--Regulatory Transaction Fee
Each member shall be assessed a regulatory transaction fee. The
amount shall be determined periodically in accordance with Section 31
of the Act. Transactions assessable under this Section 3 that must be
reported to NASD shall be reported in an automated manner.
* * * * *
4000. THE NASDAQ STOCK MARKET
* * * * *
4600. NASDAQ MARKET MAKER REQUIREMENTS
* * * * *
4630. Reporting Transactions in Nasdaq National Market Securities
* * * * *
4632. Transaction Reporting
(a) through (d) No Change.
(e) Transactions Not [Required] To Be Reported For Publication
Purposes
The following types of transactions shall not be reported for
publication purposes:
(1) through (6) No Change.
(f) through (g) No Change.
* * * * *
4640. Reporting Transactions in Nasdaq Capital Market Securities
* * * * *
4642. Transaction Reporting
(a) through (d) No Change.
(e) Transactions Not [Required] To Be Reported For Publication
Purposes
The following types of transactions shall not be reported for
publication purposes:
(1) through (5) No Change.
(f) through (g) No Change.
* * * * *
4000A. NASD ALTERNATIVE DISPLAY FACILITY
* * * * *
4600A. TRADING IN NASDAQ SECURITIES
* * * * *
4632A. Transactions Reported by Members
(a) through (j) No Change.
(k) Transactions Not To Be Reported To NASD For Publication
Purposes
The following types of transactions effected by NASD members shall
not be reported to TRACS for publication purposes:
(1) through (5) No Change.
(I) No Change.
* * * * *
6000. NASD SYSTEMS AND PROGRAMS
6100. TRADE REPORTING SERVICE
* * * * *
6130. Trade Report Input
(a) through (f) No Change.
(g) Reporting Certain Transactions for Purposes of Regulatory
Transaction Fee Assessment
The following types of transactions that are assessed a regulatory
transaction fee in accordance with Section 3 of Schedule A to the NASD
By-Laws must be reported to the Nasdaq Market Center as prescribed
below. Transactions must be submitted to the Nasdaq Market Center by
6:30 p.m. Eastern Time (or the end of the Nasdaq Market Center
reporting session that is in effect at that time).
(1) Odd-Lot Transactions
Transactions for less than a normal unit of trading shall be
reported to the Nasdaq Market Center with a modifier of .RO to
designate the transaction as submitted for purposes of the regulatory
transaction fee under Section 3 of Schedule A to the NASD By-Laws.
Transactions may be entered as clearing or non-clearing.
(2) Away From the Market Sales
Transactions where the buyer and seller have agreed to trade at a
price substantially unrelated to the current market for the security,
and consideration is given, shall be reported to the Nasdaq Market
Center with a modifier of .RA to designate the
[[Page 26796]]
transaction as submitted for purposes of the regulatory transaction fee
under Section 3 of Schedule A to the NASD By-Laws. Transactions may be
entered as clearing or non-clearing.
(3) Exercises of OTC Options
Transactions effected pursuant to the exercise of an OTC option
shall be reported to the Nasdaq Market Center with a modifier of .RX to
designate the transaction as submitted for purposes of the regulatory
transaction fee under Section 3 of Schedule A to the NASD By-Laws.
Transactions may be entered as clearing or non-clearing.
* * * * *
6400. REPORTING TRANSACTIONS IN LISTED SECURITIES
* * * * *
6420. Transaction Reporting
(a) through (d) No Change.
(e) Transactions Not [Required] To Be Reported For Publication
Purposes
The following types of transactions shall not be reported for
inclusion on the Consolidated Tape:
(1) through (8) No Change.
(f) No Change.
* * * * *
6620. Transaction Reporting
(a) through (d) No Change.
(e) Transactions Not [Required] To Be Reported For Publication
Purposes
The following types of transactions shall not be reported for
publication purposes:
(1) through (4) No Change.
(f) No Change.
* * * * *
6000A. NASD ADF SYSTEMS AND PROGRAMS
6100A. TRACS TRADE COMPARISON SERVICE
* * * * *
6130A. Trade Report Input
(a) through (b) No Change.
(c) Reporting Certain Transactions for Purposes of Regulatory
Transaction Fee Assessment
The following types of transactions that are assessed a regulatory
transaction fee in accordance with Section 3 of Schedule A to the NASD
By-Laws must be reported to TRACS as prescribed below. Transactions
must be submitted to TRACS by 6:30 p.m. Eastern Time (or the end of the
TRACS reporting session that is in effect at that time).
(1) Odd-Lot Transactions
Transactions for less than a normal unit of trading shall be
reported to TRACS with a modifier of .RO to designate the transaction
as submitted for purposes of the regulatory transaction fee under
Section 3 of Schedule A to the NASD By-Laws. Transactions may be
entered as clearing or non-clearing.
(2) Away From the Market Sales
Transactions where the buyer and seller have agreed to trade at a
price substantially unrelated to the current market for the security,
and consideration is given, shall be reported to TRACS with a modifier
of .RA to designate the transaction as submitted for purposes of the
regulatory transaction fee under Section 3 of Schedule A to the NASD
By-Laws. Transactions may be entered as clearing or non-clearing.
(3) Exercises of OTC Options
Transactions effected pursuant to the exercise of an OTC option
shall be reported to TRACS with a modifier of .RX to designate the
transaction as submitted for purposes of the regulatory transaction fee
under Section 3 of Schedule A to the NASD By-Laws. Transactions may be
entered as clearing or non-clearing.
* * * * *
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
Pursuant to Section 31 of the Act,\4\ NASD and the national
securities exchanges are required to pay transaction fees and
assessments to the Commission that are designed to recover the costs
related to the government's supervision and regulation of the
securities markets and securities professionals. NASD obtains funds to
pay its Section 31 fees and assessments from its membership, in
accordance with Section 3. Currently, most of the transactions that are
assessable under Section 3 are reported to NASD through automated
facilities, because most transactions must be reported to NMC or TRACS
pursuant to NASD trade reporting rules. NASD is able to use the
transaction data reported to NMC and TRACS for Section 3 billing
purposes. Member firms, however, are currently required to manually
self-report covered sales of odd-lots, away from the market sales, and
exercises of OTC options because these transactions are not otherwise
required to be reported to NMC or TRACS.
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\4\ 15 U.S.c. 78ee.
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To improve NASD's programs related to compliance with Section 31 of
the Act and Rule 31 thereunder,\5\ NASD is proposing to require NASD
member firms to report all covered sales that must be reported to NASD
and that are assessed under Section 3 in an automated manner. While the
current manual self-reporting process has allowed NASD to meet its
obligations under Section 31 of the Act, there have been instances when
some members filed their self-reporting form late or amended previous
forms in later months to include additional covered sales volume. NASD
believes that requiring automated reporting of such covered sales would
facilitate efficient, accurate, and timely reporting. Automated
reporting would also reduce the burden on members that results from
manually reporting certain transactions to NASD. In addition, the
mandatory reporting of odd-lots and other transactions would enhance
the regulatory audit trail while not providing distortive information
to the publicly disseminated tape.
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\5\ 17 CFR 240.31.
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To fully automate NASD's procedures for assessing the regulatory
transaction fee, NASD is proposing to amend: (1) Section 3 to create an
affirmative obligation to report, in an automated manner, all covered
sales that must be reported to NASD for purposes of Section 3; (2) NASD
Rules 6130 and 6130A to require that members report all transactions
reportable to NASD and subject to the regulatory transaction fee
pursuant to Section 3 to NMC or TRACS and to identify certain
transactions submitted specifically for a regulatory transaction fee
assessment with a special indicator denoting their purpose; \6\ and (3)
NASD Rules 4632,
[[Page 26797]]
4642, 4632A, 6420, and 6620 governing trade reporting that currently
prohibit member firms from reporting odd-lot transactions, away from
the market sales, and OTC options, as well as other identified
transactions, to clarify that the prohibition found in the transaction
reporting rules is limited to the submission of a transaction for
publication purposes.\7\
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\6\ NASD proposes to use the following modifiers for purposes of
reporting to the NMC or TRACS certain transaction that are subject
to the regulatory transaction fee under Section 3: (1) .RO to
designate odd-lot transactions; (2) .RA to designate transactions
where the buyer and seller have agreed to trade at a price
substantially unrelated to the current market for the security; and
(3) .RX to designate transactions effected pursuant to the exercise
of an OTC option.
\7\ The proposed amendments to NASD Rules 4632A and 6420 solely
amend the headings of NASD Rules 4632A(k) and 6420(e), respectively.
The text of these rules does not need to be amended because it
already stated that the prohibition on reporting the identified
transactions is limited to the submission of a transaction for
publication purposes (or in the case of listed securities, for
inclusion on the Consolidated Tape).
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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, if the Commission approves this proposal. The
effective date would be at least 90 days following publication of the
Notice to Members announcing Commission approval to allow firms
sufficient time to make any necessary systems changes.
2. Statutory Basis
NASD believes that the proposed rule change is consistent with the
provisions of Section 15A(b)(6) of the Act,\8\ which requires, among
other things, that NASD 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. NASD believes that requiring members to report, in an
automated manner, all transactions that must be reported to NASD and
are subject to the regulatory transaction fee would ensure more
accurate and timely reporting of such transactions and would reduce the
burden on members that results from manually reporting certain
transactions.
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\8\ 15 U.S.C. 78o-3(b)(6).
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B. Self-Regulatory Organization's Statement on Burden on Competition
NASD does not believe that the proposed rule change would 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
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-2006-055 on the subject line.
Paper Comments
Send paper comments in triplicate to Nancy M. Morris,
Secretary, Securities and Exchange Commission, Station Place, 100 F
Street, NE., Washington, DC 20549-1090.
All submissions should refer to File Number SR-NASD-2006-055. 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 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-2006-055 and should be submitted on or before May 30, 2006.
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\9\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\9\
Nancy M. Morris,
Secretary.
[FR Doc. 06-4280 Filed 5-5-06; 8:45 am]
BILLING CODE 8010-01-M