Self-Regulatory Organizations; National Association of Securities Dealers, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to NASD Rule 5110 and Certain Other NASD Rules Amended Pursuant to SR-NASD-2005-087, 44747-44749 [E6-12738]
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Federal Register / Vol. 71, No. 151 / Monday, August 7, 2006 / Notices
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
III. Date of Effectiveness of the
change that are filed with the
Proposed Rule Change and Timing for
Commission, and all written
Commission Action
communications relating to the
The proposed rule change has become proposed rule change between the
Commission and any person, other than
effective pursuant to Section
19(b)(3)(A)(i) of the Act 24 and Rule 19b– those that may be withheld from the
public in accordance with the
4(f)(1) thereunder,25 in that the
provisions of 5 U.S.C. 552, will be
proposed rule change constitutes a
stated policy, practice, or interpretation available for inspection and copying in
the Commission’s Public Reference
with respect to the meaning,
Room. Copies of such filing also will be
administration, or enforcement of an
available for inspection and copying at
existing rule of the self-regulatory
the principal office of NASD. All
organization. NASD proposes to
comments received will be posted
implement the revised Series 55
without change; the Commission does
examination program on August 15,
not edit personal identifying
2006. NASD will announce the
information from submissions. You
implementation date in a Notice to
should submit only information that
Members to be published on the same
you wish to make available publicly. All
date as this filing.
submissions should refer to File
At any time within 60 days of the
filing of such proposed rule change, the Number SR–NASD–2006–086 and
should be submitted on or before
Commission may summarily abrogate
August 28, 2006.
such rule change if it appears to the
Commission that such action is
For the Commission, by the Division of
Market Regulation, pursuant to delegated
necessary or appropriate in the public
authority.26
interest, for the protection of investors,
Nancy M. Morris,
or otherwise in furtherance of the
purposes of the Act.
Secretary.
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.
[FR Doc. E6–12704 Filed 8–4–06; 8:45 am]
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
No. SR–NASD–2006–086 on the subject
line.
sroberts on PROD1PC70 with NOTICES
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:
Self-Regulatory Organizations;
National Association of Securities
Dealers, Inc.; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change Relating to NASD Rule
5110 and Certain Other NASD Rules
Amended Pursuant to SR–NASD–
2005–087
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–2006–086. 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
August 1, 2006.
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–54256; File No. SR–NASD–
2006–087]
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’) 1 and Rule 19b–4 thereunder,2
notice is hereby given that on July 20,
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 the NASD. The
26 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
24 15
U.S.C. 78s(b)(3)(A)(i).
25 17 CFR 240.19b–4(f)(1).
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17:19 Aug 04, 2006
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44747
NASD filed the proposed rules change
pursuant to Section 19(b)(3)(A) of the
Act 3 and Rule 19b–4(f)(6) thereunder,4
which renders the proposed rule change
effective upon filing with the
Commission. NASD proposes to make
the proposed rule change operative on
the date on which the Nasdaq Stock
Market LLC (‘‘Nasdaq Exchange’’)
commences operation as a national
securities exchange for Nasdaq-listed
securities.5 The Commission is
publishing this notice to solicit
comments on the proposed rule change
from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The NASD proposes to (1) amend
NASD Rule 5110 to clarify that the rule
is applicable to both Nasdaq and nonNasdaq exchange-listed securities; and
(2) make technical, non-substantive
changes to certain other NASD rules
that were amended by proposed rule
change SR–NASD–2005–087.6 Rule
5110 and the other amendments to
NASD rules proposed by SR–NASD–
2005–087 will become effective on the
date upon which the Nasdaq Exchange
operates as a national securities
exchange for Nasdaq-listed securities.
Currently, that date is projected to be
August 1, 2006. The text of the proposed
rule change is available on the NASD’s
Web site (https://www.nasd.com), at
NASD’s principal office, at the
Commission’s Public Reference Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
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. The NASD has
prepared summaries, set forth in
Sections A, B, and C below, of the most
significant aspects of such statements.
3 15
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(6).
5 These securities will not include approximately
40 securities that are dually-listed on the New York
Stock Exchange.
6 The NASD filed SR–NASD–2005–087 on July
11, 2005 and Amendment No. 1 on June 15, 2006.
The Commission approved SR–NASD–2005–087, as
amended, on June 30, 2006. See Securities
Exchange Act Release No. 54084 (June 30, 2006), 71
FR 38935 (July 10, 2006) (‘‘June 30 Approval
Order’’).
4 17
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Federal Register / Vol. 71, No. 151 / Monday, August 7, 2006 / Notices
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
On June 30, 2006, the Commission
approved SR–NASD–2005–087.7 Among
other things, in SR–NASD–2005–087,
the NASD proposed (1) amendments to
the NASD Delegation Plan, NASD ByLaws and NASD rules to reflect a
proposed phased implementation
strategy for the operation of the Nasdaq
Exchange as a national securities
exchange with respect to Nasdaq-listed
securities during a transitional period;
and (2) rules for reporting transactions
effected otherwise than on an exchange
to the new Trade Reporting Facility. The
NASD is filing this proposed rule
change in anticipation of SR–NASD–
2005–087 becoming effective to (1)
amend Rule 5110 to clarify that the rule
is applicable to both Nasdaq and nonNasdaq exchange-listed securities; and
(2) make technical, non-substantive
changes to certain other NASD rules
that were amended by SR–NASD–2005–
087.
sroberts on PROD1PC70 with NOTICES
Amendments to Rule 5110
Pursuant to SR–NASD–2005–087,
NASD proposed to renumber Rule
6440(i) as Rule 5110 and extend its
application to Nasdaq exchange-listed
securities. Currently, the rule prohibits
members from executing, otherwise
than on an exchange, a transaction in a
security subject to an initial public
offering until such security has first
opened for trading on the national
securities exchange listing the security,
as indicated by the dissemination of an
opening transaction in the security by
the listing exchange via the
Consolidated Tape.
As described in footnote 23 of the
June 30 Approval Order, the NASD is
proposing to amend Rule 5110 to delete
the reference to dissemination of the
opening transaction ‘‘via the
Consolidated Tape.’’ Pursuant to SR–
NASD–2005–087, Rule 5110 is intended
to apply to both Nasdaq and nonNasdaq exchange-listed securities. As
such, the reference in the rule to the
Consolidated Tape is too narrow given
that transactions in securities listed on
the Nasdaq Exchange are reported to the
Nasdaq Unlisted Trading Privileges
Plan.
Technical, Non-Substantive
Amendments
NASD is proposing a number of
grammatical and technical, non7 Id.
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17:19 Aug 04, 2006
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substantive changes to certain NASD
rules that were amended by SR–NASD–
2005–087.
Rules 4120A, 4633 and 6431 give
NASD authority to halt trading on the
ADF and trading reported to the Trade
Reporting Facility, with respect to
Nasdaq-listed securities, and trading
otherwise than on an exchange with
respect to non-Nasdaq exchange-listed
securities, respectively. These rules are
intended to be consistent in their
language and application. Accordingly,
NASD is proposing to amend Rule
4633(a)(2)(C)(i) and (ii) and Rule
6431(a)(2)(C)(i) and (ii) by replacing the
word ‘‘believes’’ with the word
‘‘determines.’’ The proposed change
would conform the language of these
rules to the language of Rule
4120A(a)(2)(C)(i) and (ii).8
NASD is also proposing to amend
Rule 4633 to change references to
trading halts ‘‘on’’ or ‘‘in’’ the Trade
Reporting Facility to ‘‘reported to’’ the
Trade Reporting Facility, to clarify that
trades are not executed on the Trade
Reporting Facility.
In addition, SR–NASD–2005–087
inadvertently renumbered
subparagraphs (MM) through (PP) of
Rule 2860(b)(2) as (KK) through (OO).
These subparagraphs should have been
renumbered (KK) through (NN). As a
result, there currently is no
subparagraph (OO). Therefore, the
proposed rule change would renumber
the rule’s subparagraphs (PP) through
(AAA) as (OO) through (ZZ).
Finally, several rule changes that were
approved by the Commission and
implemented subsequent to the filing of
Amendment No. 1 to SR–NASD–2005–
087 change the underlying or proposed
text provided in Exhibit 5 of SR–NASD–
2005–087. As a result, NASD is
proposing changes to the rule text
approved pursuant to SR–NASD–2005–
087 to make it consistent with the other
recently approved rule changes. These
include the following rule changes
along with the rules affected: SR–
NASD–2000–023 amended Rules 6951
and 6954; SR–NASD–2005–098
amended Rule 6740 (renumbered as
Rule 6640 pursuant to SR–NASD–2005–
087); SR–NASD–2006–040 amended
Rule 9610; and SR–NASD–2006–080
8 Specifically, each rule grants NASD authority to
halt trades in a particular security, including in the
event of extraordinary market activity in the
security. Rule 4120A(a)(2)(C)(i) and (ii) provides
that NASD may exercise this authority if it
‘‘determines’’ that such activity is caused by the
misuse or malfunction of a system operated by or
linked to NASD or a national securities exchange.
In otherwise identical provisions, Rule
4633(a)(2)(C)(i) and (ii) and Rule 6431(a)(2)(C)(i)
and (ii) use the word ‘‘believes’’ instead of
‘‘determines.’’
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Frm 00144
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Sfmt 4703
amended Rule 4901. In addition, the
‘‘Nasdaq National Market’’ was recently
renamed the ‘‘Nasdaq Global Market,’’
and pursuant to SR–NASD–2006–068, a
number of rules were amended to
change ‘‘Nasdaq National Market,’’
‘‘NNM’’ or ‘‘Nasdaq National Market
securities’’ to ‘‘Nasdaq Global Market,’’
‘‘NGM’’ or ‘‘Nasdaq Global Market
securities,’’ respectively.
2. Statutory Basis
NASD believes that the proposed rule
change is consistent with the provisions
of Section 15A(b)(6) of the Act,9 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 the proposed rule change
relating to Rule 5110 will result in
uniform regulation of securities that are
subject to an initial public offering. In
addition, NASD believes that the
proposed rule change will enhance the
integrity of the market by increasing the
consistency and clarity of its rules.
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, as amended.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
Written comments were neither
solicited nor received.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule
change does not:
(i) Significantly affect the protection
of investors or the public interest;
(ii) Impose any significant burden on
competition; and
(iii) Become operative for 30 days
from the date on which it was filed, or
such shorter time as the Commission
may designate if consistent with the
protection of investors and the public
interest, it has become effective
pursuant to Section 19(b)(3)(A) of the
Act,10 and Rule 19b–4(f)(6)
thereunder.11 At any time within 60
days of the filing of the proposed rule
change the Commission may summarily
9 15
U.S.C. 78o–3(b)(6).
U.S.C. 78s(b)(3)(A).
11 17 CFR 240.19b–4(f)(6).
10 15
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Federal Register / Vol. 71, No. 151 / Monday, August 7, 2006 / Notices
abrogate such rule change if it appears
to the Commission that such action is
necessary or appropriate in the public
interest, for the protection of investors,
or otherwise in furtherance of the
purposes of the Act.
A proposed rule change filed under
Rule 19b–4(f)(6) 12 normally does not
become operative prior to 30 days after
the date of filing. However, pursuant to
Rule 19b–4(f)(6)(iii),13 the Commission
may designate a shorter time if such
action is consistent with the protection
of investors and the public interest. The
NASD has asked the Commission to
waive the 30-day pre-operative delay.
The Commission believes that such
waiver is consistent with the protection
of investors and the public interest
because it would allow the NASD to
update and clarify its rules.14 For this
reason, the Commission designates the
proposed rule change to be operative on
the date that the Nasdaq Exchange
begins operations as a national
securities exchange for Nasdaq-listed
securities.15
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:
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 the filing also will be
available for inspection and copying at
the principal office of the NASD. All
comments received will be posted
without change; the Commission does
not edit personal identifying
information from submissions. You
should submit only information that
you wish to make available publicly. All
submissions should refer to File
Number SR–NASD–2006–087 and
should be submitted on or before
August 28, 2006.
For the Commission, by the Division of
Market Regulation, pursuant to delegated
authority.16
Nancy M. Morris,
Secretary.
[FR Doc. E6–12738 Filed 8–4–06; 8:45 am]
BILLING CODE 8010–01–P
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–2006–087 on the
subject line.
Paper Comments
• Send paper comments in triplicate
to Nancy M. Morris, Secretary,
Securities and Exchange Commission,
100 F Street, NE., Washington, DC
20549–1090.
All submissions should refer to File
Number SR–NASD–2006–087. 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
12 17
CFR 240.19b–4(f)(6).
CFR 240.19b–4(f)(6)(iii).
14 For purposes only of accelerating the operative
date of this proposal, the Commission has
considered the rule’s impact on efficiency,
competition and capital formation. 15 U.S.C. 78c(f).
15 As noted above, the Nasdaq Exchange is
currently scheduled to commence operating as a
national securities exchange with respect to
Nasdaq-listed securities on August 1, 2006.
sroberts on PROD1PC70 with NOTICES
13 17
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17:19 Aug 04, 2006
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SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–54258; File No. SR–NASD–
2006–080]
Self-Regulatory Organizations;
National Association of Securities
Dealers, Inc; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change and Amendment No. 1
Thereto To Extend the Time for NonMember Broker/Dealers To Access the
Brut and INET Facilities
August 1, 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 July 3,
2006, the National Association of
Securities Dealers, Inc. (‘‘NASD’’),
through its subsidiary, The Nasdaq
Stock Market, Inc. (‘‘Nasdaq’’), filed
with the Securities and Exchange
Commission (‘‘Commission’’) the
proposed rule change as described in
Items I and II below, which Items have
16 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
PO 00000
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Sfmt 4703
44749
been prepared by Nasdaq. On July 5,
2006, Nasdaq filed Amendment No. 1 to
the proposed rule change.3 Nasdaq filed
the proposed rule change as a ‘‘noncontroversial’’ rule change under Rule
19b–4(f)(6) under the Act,4 which
renders the proposal effective upon
filing with the Commission.5 The
Commission is publishing this notice to
solicit comments on the proposed rule
change, as amended, from interested
persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
Nasdaq proposes to continue the
participation of broker/dealers that are
non-NASD members in Nasdaq’s Brut
and INET systems through the earlier of
September 1, 2006, or the date Nasdaq
becomes operational as a national
securities exchange for the particular
types of securities traded by those nonmembers in Nasdaq’s INET and Brut
systems. The purpose of the proposed
rule change is to allow the non-NASD
member broker/dealers to have
continued access to the Brut and INET
systems while they take actions to
become members of The NASDAQ
Stock Market LLC (‘‘Nasdaq
Exchange’’).6 Nasdaq would implement
the proposed rule change immediately.
The text of the proposed rule change is
below. Proposed new language is in
italics. Proposed deletions are in
[brackets].
*
*
*
*
*
4901. Definitions
Unless stated otherwise, the terms
described below shall have the
following meaning:
(a) through (h) No change
(i) The term ‘‘Participant’’ shall mean
an NASD member that fulfills the
obligations contained in Rule 4902
regarding participation in the System.
The term ‘‘Participant’’ shall also
include non-NASD broker/dealers that
desire to use the System and otherwise
meet all other requirements for System
participation. Non-NASD member
broker/dealers shall have access to
3 In Amendment No. 1, Nasdaq revised the
proposed rule text to conform it with the existing
language of NASD Rule 4901.
4 17 CFR 240.19b–4(f)(6).
5 Nasdaq has requested the Commission to waive
the 30-day pre-operative delay required by Rule
19b–4(f)(6)(iii), 17 CFR 240.19b–4(f)(6)(iii). See
discussion infra Section III.
6 The Commission recently approved Nasdaq’s
application for one of its proposed subsidiaries, The
NASDAQ Stock Market LLC, to be registered as a
national securities exchange under Section 6 of the
Act. See Securities Exchange Act Release No. 53128
(January 13, 2006), 71 FR 3550 (January 23, 2006)
(File No. 10–131).
E:\FR\FM\07AUN1.SGM
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]]>Agencies
[Federal Register Volume 71, Number 151 (Monday, August 7, 2006)]
[Notices]
[Pages 44747-44749]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E6-12738]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-54256; File No. SR-NASD-2006-087]
Self-Regulatory Organizations; National Association of
Securities Dealers, Inc.; Notice of Filing and Immediate Effectiveness
of Proposed Rule Change Relating to NASD Rule 5110 and Certain Other
NASD Rules Amended Pursuant to SR-NASD-2005-087
August 1, 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 July 20, 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 the NASD. The NASD
filed the proposed rules change pursuant to Section 19(b)(3)(A) of the
Act \3\ and Rule 19b-4(f)(6) thereunder,\4\ which renders the proposed
rule change effective upon filing with the Commission. NASD proposes to
make the proposed rule change operative on the date on which the Nasdaq
Stock Market LLC (``Nasdaq Exchange'') commences operation as a
national securities exchange for Nasdaq-listed securities.\5\ The
Commission is publishing this notice to solicit comments on the
proposed rule change from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ 15 U.S.C. 78s(b)(3)(A).
\4\ 17 CFR 240.19b-4(f)(6).
\5\ These securities will not include approximately 40
securities that are dually-listed on the New York Stock Exchange.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The NASD proposes to (1) amend NASD Rule 5110 to clarify that the
rule is applicable to both Nasdaq and non-Nasdaq exchange-listed
securities; and (2) make technical, non-substantive changes to certain
other NASD rules that were amended by proposed rule change SR-NASD-
2005-087.\6\ Rule 5110 and the other amendments to NASD rules proposed
by SR-NASD-2005-087 will become effective on the date upon which the
Nasdaq Exchange operates as a national securities exchange for Nasdaq-
listed securities. Currently, that date is projected to be August 1,
2006. The text of the proposed rule change is available on the NASD's
Web site (https://www.nasd.com), at NASD's principal office, at the
Commission's Public Reference Room.
---------------------------------------------------------------------------
\6\ The NASD filed SR-NASD-2005-087 on July 11, 2005 and
Amendment No. 1 on June 15, 2006. The Commission approved SR-NASD-
2005-087, as amended, on June 30, 2006. See Securities Exchange Act
Release No. 54084 (June 30, 2006), 71 FR 38935 (July 10, 2006)
(``June 30 Approval Order'').
---------------------------------------------------------------------------
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the 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. The NASD has prepared summaries, set forth in Sections
A, B, and C below, of the most significant aspects of such statements.
[[Page 44748]]
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
On June 30, 2006, the Commission approved SR-NASD-2005-087.\7\
Among other things, in SR-NASD-2005-087, the NASD proposed (1)
amendments to the NASD Delegation Plan, NASD By-Laws and NASD rules to
reflect a proposed phased implementation strategy for the operation of
the Nasdaq Exchange as a national securities exchange with respect to
Nasdaq-listed securities during a transitional period; and (2) rules
for reporting transactions effected otherwise than on an exchange to
the new Trade Reporting Facility. The NASD is filing this proposed rule
change in anticipation of SR-NASD-2005-087 becoming effective to (1)
amend Rule 5110 to clarify that the rule is applicable to both Nasdaq
and non-Nasdaq exchange-listed securities; and (2) make technical, non-
substantive changes to certain other NASD rules that were amended by
SR-NASD-2005-087.
---------------------------------------------------------------------------
\7\ Id.
---------------------------------------------------------------------------
Amendments to Rule 5110
Pursuant to SR-NASD-2005-087, NASD proposed to renumber Rule
6440(i) as Rule 5110 and extend its application to Nasdaq exchange-
listed securities. Currently, the rule prohibits members from
executing, otherwise than on an exchange, a transaction in a security
subject to an initial public offering until such security has first
opened for trading on the national securities exchange listing the
security, as indicated by the dissemination of an opening transaction
in the security by the listing exchange via the Consolidated Tape.
As described in footnote 23 of the June 30 Approval Order, the NASD
is proposing to amend Rule 5110 to delete the reference to
dissemination of the opening transaction ``via the Consolidated Tape.''
Pursuant to SR- NASD-2005-087, Rule 5110 is intended to apply to both
Nasdaq and non-Nasdaq exchange-listed securities. As such, the
reference in the rule to the Consolidated Tape is too narrow given that
transactions in securities listed on the Nasdaq Exchange are reported
to the Nasdaq Unlisted Trading Privileges Plan.
Technical, Non-Substantive Amendments
NASD is proposing a number of grammatical and technical, non-
substantive changes to certain NASD rules that were amended by SR-NASD-
2005-087.
Rules 4120A, 4633 and 6431 give NASD authority to halt trading on
the ADF and trading reported to the Trade Reporting Facility, with
respect to Nasdaq-listed securities, and trading otherwise than on an
exchange with respect to non-Nasdaq exchange-listed securities,
respectively. These rules are intended to be consistent in their
language and application. Accordingly, NASD is proposing to amend Rule
4633(a)(2)(C)(i) and (ii) and Rule 6431(a)(2)(C)(i) and (ii) by
replacing the word ``believes'' with the word ``determines.'' The
proposed change would conform the language of these rules to the
language of Rule 4120A(a)(2)(C)(i) and (ii).\8\
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\8\ Specifically, each rule grants NASD authority to halt trades
in a particular security, including in the event of extraordinary
market activity in the security. Rule 4120A(a)(2)(C)(i) and (ii)
provides that NASD may exercise this authority if it ``determines''
that such activity is caused by the misuse or malfunction of a
system operated by or linked to NASD or a national securities
exchange. In otherwise identical provisions, Rule 4633(a)(2)(C)(i)
and (ii) and Rule 6431(a)(2)(C)(i) and (ii) use the word
``believes'' instead of ``determines.''
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NASD is also proposing to amend Rule 4633 to change references to
trading halts ``on'' or ``in'' the Trade Reporting Facility to
``reported to'' the Trade Reporting Facility, to clarify that trades
are not executed on the Trade Reporting Facility.
In addition, SR-NASD-2005-087 inadvertently renumbered
subparagraphs (MM) through (PP) of Rule 2860(b)(2) as (KK) through
(OO). These subparagraphs should have been renumbered (KK) through
(NN). As a result, there currently is no subparagraph (OO). Therefore,
the proposed rule change would renumber the rule's subparagraphs (PP)
through (AAA) as (OO) through (ZZ).
Finally, several rule changes that were approved by the Commission
and implemented subsequent to the filing of Amendment No. 1 to SR-NASD-
2005-087 change the underlying or proposed text provided in Exhibit 5
of SR-NASD-2005-087. As a result, NASD is proposing changes to the rule
text approved pursuant to SR-NASD-2005-087 to make it consistent with
the other recently approved rule changes. These include the following
rule changes along with the rules affected: SR-NASD-2000-023 amended
Rules 6951 and 6954; SR-NASD-2005-098 amended Rule 6740 (renumbered as
Rule 6640 pursuant to SR-NASD-2005-087); SR-NASD-2006-040 amended Rule
9610; and SR-NASD-2006-080 amended Rule 4901. In addition, the ``Nasdaq
National Market'' was recently renamed the ``Nasdaq Global Market,''
and pursuant to SR-NASD-2006-068, a number of rules were amended to
change ``Nasdaq National Market,'' ``NNM'' or ``Nasdaq National Market
securities'' to ``Nasdaq Global Market,'' ``NGM'' or ``Nasdaq Global
Market securities,'' respectively.
2. Statutory Basis
NASD believes that the proposed rule change is consistent with the
provisions of Section 15A(b)(6) of the Act,\9\ 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 the proposed rule change relating
to Rule 5110 will result in uniform regulation of securities that are
subject to an initial public offering. In addition, NASD believes that
the proposed rule change will enhance the integrity of the market by
increasing the consistency and clarity of its rules.
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\9\ 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 will result in
any burden on competition that is not necessary or appropriate in
furtherance of the purposes of the Act, as amended.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
Written comments were neither solicited nor received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule change does not:
(i) Significantly affect the protection of investors or the public
interest;
(ii) Impose any significant burden on competition; and
(iii) Become operative for 30 days from the date on which it was
filed, or such shorter time as the Commission may designate if
consistent with the protection of investors and the public interest, it
has become effective pursuant to Section 19(b)(3)(A) of the Act,\10\
and Rule 19b-4(f)(6) thereunder.\11\ At any time within 60 days of the
filing of the proposed rule change the Commission may summarily
[[Page 44749]]
abrogate such rule change if it appears to the Commission that such
action is necessary or appropriate in the public interest, for the
protection of investors, or otherwise in furtherance of the purposes of
the Act.
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\10\ 15 U.S.C. 78s(b)(3)(A).
\11\ 17 CFR 240.19b-4(f)(6).
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A proposed rule change filed under Rule 19b-4(f)(6) \12\ normally
does not become operative prior to 30 days after the date of filing.
However, pursuant to Rule 19b-4(f)(6)(iii),\13\ the Commission may
designate a shorter time if such action is consistent with the
protection of investors and the public interest. The NASD has asked the
Commission to waive the 30-day pre-operative delay. The Commission
believes that such waiver is consistent with the protection of
investors and the public interest because it would allow the NASD to
update and clarify its rules.\14\ For this reason, the Commission
designates the proposed rule change to be operative on the date that
the Nasdaq Exchange begins operations as a national securities exchange
for Nasdaq-listed securities.\15\
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\12\ 17 CFR 240.19b-4(f)(6).
\13\ 17 CFR 240.19b-4(f)(6)(iii).
\14\ For purposes only of accelerating the operative date of
this proposal, the Commission has considered the rule's impact on
efficiency, competition and capital formation. 15 U.S.C. 78c(f).
\15\ As noted above, the Nasdaq Exchange is currently scheduled
to commence operating as a national securities exchange with respect
to Nasdaq-listed securities on August 1, 2006.
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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-2006-087 on the subject line.
Paper Comments
Send paper comments in triplicate to Nancy M. Morris,
Secretary, Securities and Exchange Commission, 100 F Street, NE.,
Washington, DC 20549-1090.
All submissions should refer to File Number SR-NASD-2006-087. 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 the filing
also will be available for inspection and copying at the principal
office of the NASD. All comments received will be posted without
change; the Commission does not edit personal identifying information
from submissions. You should submit only information that you wish to
make available publicly. All submissions should refer to File Number
SR-NASD-2006-087 and should be submitted on or before August 28, 2006.
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\16\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\16\
Nancy M. Morris,
Secretary.
[FR Doc. E6-12738 Filed 8-4-06; 8:45 am]
BILLING CODE 8010-01-P
