Self-Regulatory Organizations: National Association of Securities Dealers, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to Additional Market Participant Identifier Functionality on the Alternative Display Facility, 47551-47554 [E6-13568]

Download as PDF Federal Register / Vol. 71, No. 159 / Thursday, August 17, 2006 / Notices proposal effective upon filing with the Commission. 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 CBOE is proposing to amend its Fees Schedule to increase the equity options Designated Primary Market Maker (‘‘DPM’’) transaction fee. The text of the proposed rule change is on the Exchange’s Web site (http:// www.cboe.com), at the Exchange’s Office of the Secretary, and at the Commission’s Public Reference Room. II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the CBOE 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 Exchange has prepared summaries, set forth in Sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange proposes to increase the equity options DPM transaction fee from the current $.14 per contract to $.16 per contract, effective August 1, 2006. The Exchange believes that this fee increase is appropriate given that DPM costs are expected to decrease as the result of recently implemented enhanced DPM Linkage transaction fee credits.5 rwilkins on PROD1PC63 with NOTICES 2. Statutory Basis The Exchange believes the proposed rule change is consistent with the requirements of Section 6(b) of the Securities Exchange Act of 1934 (‘‘Act’’),6 in general, and furthers the objectives of Section 6(b)(4) 7 of the Act in particular, in that it is designed to 5 See Section 21 of the CBOE Fees Schedule. See also Securities Exchange Act Release No. 53866 (May 25, 2006), 71 FR 31237 (June 1, 2006). Linkage order fees (except for Satisfaction Orders) and related transaction fee credits are in effect on a pilot basis until July 31, 2007. See Footnote 8 and Section 21 of the CBOE Fees Schedule dated August 3, 2006. 6 15 U.S.C. 78f(b). 7 15 U.S.C. 78f(b)(4). VerDate Aug<31>2005 16:36 Aug 16, 2006 Jkt 208001 provide for the equitable allocation of reasonable dues, fees, and other charges among CBOE members. B. Self-Regulatory Organization’s Statement on Burden on Competition The CBOE does not believe that the proposed rule change will impose 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 No written comments were solicited or received with respect to the proposed rule change. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Because the foregoing rule change establishes or changes a due, fee, or other charge imposed by the Exchange, it has become effective pursuant to Section 19(b)(3)(A) of the Act 8 and subparagraph (f)(2) of Rule 19b–4 9 thereunder. At any time within 60 days of the filing of the proposed rule change, the Commission may summarily 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.10 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: 47551 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 (http://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 Exchange. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File No. SR–CBOE–2006–67 and should be submitted on or before September 7, 2006. For the Commission, by the Division of Market Regulation, pursuant to delegated authority.11 J. Lynn Taylor, Assistant Secretary. [FR Doc. E6–13567 Filed 8–16–06; 8:45 am] BILLING CODE 8010–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–54307; File No. SR–NASD– 2006–096] Electronic Comments • Use the Commission’s Internet comment form (http://www.sec.gov/ rules/sro.shtml); or • Send an e-mail to rulecomments@sec.gov. Please include File Number SR–CBOE–2006–67 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 No. SR–CBOE–2006–67. This file number U.S.C. 78s(b)(3)(A). CFR 240.19b–4(f)(2). 10 Id. Self-Regulatory Organizations: National Association of Securities Dealers, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to Additional Market Participant Identifier Functionality on the Alternative Display Facility August 11, 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 August 8, 2006, the National Association of Securities Dealers, Inc. (‘‘NASD’’) filed with the Securities and Exchange 8 15 11 17 9 17 1 15 PO 00000 Frm 00073 Fmt 4703 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. Sfmt 4703 E:\FR\FM\17AUN1.SGM 17AUN1 47552 Federal Register / Vol. 71, No. 159 / Thursday, August 17, 2006 / Notices Commission (‘‘Commission’’) the proposed rule change as described in Items I, II, and III below, which Items have been prepared by NASD. NASD has filed the proposal as a ‘‘noncontroversial’’ rule change pursuant to Section 19(b)(3)(A) of the Act 3 and Rule 19b–4(f)(6) thereunder,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 from interested persons. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change NASD is proposing to amend NASD Rule 4613A and adopt IM–4613A–1 to enable electronic communications network (‘‘ECN’’) members that post quotations through the Alternative Display Facility (‘‘ADF’’) (i.e., Registered Reporting ADF ECNs), to request and receive multiple market participant identifiers (‘‘MPIDs’’) with which to enter multiple quotes/orders in the ADF and report trades through the ADF trade reporting facility, the Trade Reporting and Comparison Service (‘‘TRACS’’), pursuant to the NASD Rule 4000A Series. Below is the text of the proposed rule change. Proposed new language is in italics. 4613A. Character of Quotations (a) No Change. (b) Primary and Additional MPIDs (1) The first Market Participant Identifier (‘‘MPID’’) issued to an NASD Market Participant shall be referred to as the NASD Market Participant’s ‘‘Primary MPID.’’ For a pilot period ending January 26, 2007, a Registered Reporting ADF ECN may request the use of Additional MPIDs for displaying quotes/orders and reporting trades through TRACS for any ADF-Eligible Security (as defined in NASD Rule 4100A). A Registered Reporting ADF ECN that ceases to meet the obligations appurtenant to its Primary MPID in any security shall not be permitted to use Additional MPIDs for any purpose in that security. (b) through (e) renumbered as (c) through (f). rwilkins on PROD1PC63 with NOTICES IM–4613A–1 Procedures For Allocation of Multiple MPIDs NASD considers the issuance of, the display of, and the trade reporting with Additional MPIDs to be a privilege and 3 15 U.S.C. 78s(b)(3)(A). CFR 240.19b–4(f)(6). 5 NASD 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. 4 17 VerDate Aug<31>2005 16:36 Aug 16, 2006 Jkt 208001 not a right. NASD has developed the following method for allocating the privilege of receiving, displaying, and trade reporting with Additional MPIDs in an orderly, predictable, and fair manner. While NASD does not intend to place a numerical limit on the number of Additional MPIDs it may grant to Registered Reporting ADF ECNs, given the agent business model of ECNs, NASD does not anticipate the granting of many additional MPIDs to Registered Reporting ADF ECNs. As described in Rule 4613A, NASD will automatically designate a Registered Reporting ADF ECN’s first MPID as a ‘‘Primary MPID.’’ Additional MPIDs will be designated as such. Registered Reporting ADF ECNs are required to use their Primary MPID in accordance with the requirements of NASD Rule 4613A as well as all existing requirements for the use of MPIDs in NASD systems and under NASD rules. Each of an ECN’s MPID will be subject to the requirements of NASD Rule 4623A. If it is determined that one or more Additional MPIDs are being used improperly, NASD staff retains full discretion to limit or withdraw its grant of the Additional MPID(s) for all purposes for all securities. In addition, if a Registered Reporting ADF ECN no longer fulfills the conditions appurtenant to its Primary MPID (e.g., by being placed into an unexcused withdrawal), it may not use an Additional MPID for any purpose in that security. The first priority of NASD’s method for allocating the privilege of displaying and trade reporting with Additional MPIDs is that each Registered Reporting ADF ECN should be permitted to display quotations and report trades under a Primary MPID before any is permitted to display additional quotations under and report trades with Additional MPIDs. If all requests for Primary MPIDs have been satisfied, NASD will then register Additional MPIDs on a first-come-first-served basis, consistent with the procedures listed below. A Registered Reporting ADF ECN shall contact NASD in writing setting forth the bona fide business and/or regulatory reasons for requesting an Additional MPID. NASD will consider the business and/or regulatory reasons demonstrated by the Registered Reporting ADF ECN and promptly respond to the Registered Reporting ADF ECN. If an Additional MPID is granted, it will be subject to the same requirements applicable to a Primary MPID. NASD staff retains full discretion to limit or withdraw the Additional PO 00000 Frm 00074 Fmt 4703 Sfmt 4703 MPID privileges of a Registered Reporting ADF ECN. A Registered Reporting ADF ECN that posts a quotation through either a Primary MPID or Additional MPID and reports a trade to TRACS as a result of such a posted quotation must utilize the corresponding Primary MPID or Additional MPID for reporting purposes through which the quotation was originally posted (i.e., Registered Reporting ADF ECNs must use the same MPID for TRACS trade reporting as was used for ADF quotation posting). * * * * * 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 An NASD member that registers as a market maker or ECN is currently permitted to enter one two-sided quotation per security in the ADF and is assigned a unique MPID with which to enter such quotations. The NASD 4600A Rule Series governs the character of such quotations and the rights and obligations of members that display quotations in the ADF via their MPIDs. NASD proposes to amend NASD Rule 4613A and adopt IM–4613A–1 to permit NASD Registered Reporting ADF ECNs to request the use of additional MPIDs for a pilot period ending January 26, 2007.6 At this time only ECNs have been certified for posting quotations through the ADF and at no time has a registered market maker been certified for the ADF. Accordingly, NASD believes it appropriate to limit the scope of this proposed rule to Registered Reporting ADF ECNs.7 An ECN would be entitled 6 This date coincides with the expiration of the current ADF pilot period. See Securities Exchange Act Release No. 53699 (April 21, 2006), 71 FR 25271 (April 28, 2006). Accordingly, the provisions set forth in Rule 4613A and IM–4613A–1 will be extended with any extension of an ADF pilot period. 7 In support of the requirement under the Act that NASD rules not result in unfair discrimination E:\FR\FM\17AUN1.SGM 17AUN1 Federal Register / Vol. 71, No. 159 / Thursday, August 17, 2006 / Notices rwilkins on PROD1PC63 with NOTICES to request additional MPIDs for displaying quotes/orders and reporting trades through the ADF trade reporting facility, TRACS, pursuant to the NASD Rule 4000A Series. Registered Reporting ADF ECNs that are permitted the use of additional MPIDs for displaying quotes/orders would be subject to the same rules applicable to the members’ first quotation. In other words, ECNs that display one or more additional quotes/ orders would be required to comply with all rules applicable to ECNs in their display of quotes/orders. NASD believes that the ability to enter quotes and orders and to display quotations under an additional MPID would potentially carry with it similar benefits that have resulted from the supplemental MPID Program of the Nasdaq Stock Market LLC (‘‘Nasdaq’’).8 Specifically, the introduction of additional MPIDs on the ADF may enable Registered Reporting ADF ECNs to contribute more liquidity to the market, add to the transparency of trading interest, and better serve the needs of investors and the needs of Registered Reporting ADF ECNs themselves.9 As noted above, Registered Reporting ADF ECNs that use an additional MPID would be required to comply with all NASD and Commission rules applicable to their current use of a single MPID. Registered Reporting ADF ECNs would be prohibited from using an additional MPID to accomplish indirectly what they are prohibited from doing directly through their Primary MPID. To the extent that the allocation of additional MPIDs were to create regulatory confusion or ambiguity or would diminish the quality or rigor of the regulation of the over-the-counter (‘‘OTC’’) market, every inference would be drawn against the use of additional MPIDs. Moreover, pursuant to the proposed rule and interpretive material, NASD staff retains full discretion to determine whether a bona fide regulatory and/or business need exists for being granted the additional MPID privilege and to limit or withdraw the between members (see 15 U.S.C. 78o–(b)(6)), NASD commits to expand additional MPID privilege functionality to Registered Reporting ADF Market Makers at such time that at least one broker-dealer NASD member becomes certified for posting quotations through the ADF and demonstrates a bona fide business and/or regulatory need for additional MPID functionality. 8 See Securities Exchange Act Release No. 47954 (May 30, 2003), 68 FR 34017 (June 6, 2003). See also Securities Exchange Act Release No. 53192 (January 30, 2006), 71 FR 6302 (February 4, 2006). 9 NASD will assess no fees for the issuance or use of an additional MPID, other than the Commissionapproved fees set forth in NASD Rule 7010. VerDate Aug<31>2005 16:36 Aug 16, 2006 Jkt 208001 additional MPID display privilege at any time. 2. Statutory Basis NASD believes that the proposed rule change is consistent with the provisions of Section 15A(b)(6) of the Act,10 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 is consistent with these requirements because it will provide a process by which ECNs can request, and NASD can properly allocate, the use of additional MPIDs for displaying quotes and orders through the ADF. B. Self-Regulatory Organization’s Statement on Burden on Competition NASD does not believe that the proposed rule change will result in any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others Written comments were neither solicited nor received. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Because the foregoing proposed rule change does not: (1) Significantly affect the protection of investors or the public interest; (2) impose any significant burden on competition; and (3) 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, the proposal has become effective pursuant to Section 19(b)(3)(A) of the Act and Rule 19b–4(f)(6) thereunder.11 Pursuant to Rule 19b–4(f)(6)(iii),12 a proposed ‘‘non-controversial’’ rule change does not become operative prior to 30 days after the date of filing, or such shorter time as the Commission may designate if consistent with the protection of investors and the public interest. NASD has asked the Commission to waive the 30-day operative delay. The Commission believes that waiving the 30-day operative delay is consistent with the protection of investors and the public 10 15 U.S.C. 78o–3(b)(6). CFR 240.19b-4(f)(6). 12 17 CFR 240.19b–4(f)(6)(iii). 11 17 PO 00000 Frm 00075 Fmt 4703 Sfmt 4703 47553 interest.13 The proposal will extend for ECN participants on the ADF a functionality that has been widely available to ECNs on Nasdaq through a pilot program. Allowing this proposal to become operative immediately is consistent with the protection of investors and the public interest because the benefits of the pilot and the use of multiple MPIDs can continue without undue disruption. For this reason, the Commission designates the proposed rule change to be effective and operative upon filing with the Commission. At any time within 60 days of the filing of the proposed rule change, the Commission may summarily 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. 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 (http://www.sec.gov/ rules/sro.shtml); or • Send an e-mail to rulecomments@sec.gov. Please include File Number SR–NASD–2006–096 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–2006–096. 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 (http://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 13 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. See 15 U.S.C. 78c(f). E:\FR\FM\17AUN1.SGM 17AUN1 47554 Federal Register / Vol. 71, No. 159 / Thursday, August 17, 2006 / Notices 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–2006–096 and should be submitted on or before September 7, 2006. For the Commission, by the Division of Market Regulation, pursuant to delegated authority.14 J. Lynn Taylor, Assistant Secretary. [FR Doc. E6–13568 Filed 8–16–06; 8:45 am] BILLING CODE 8010–01–P DEPARTMENT OF STATE [Public Notice 5506] Bureau of Political-Military Affairs: Revocation of Defense Export Licenses to Venezuela Department of State. ACTION: Notice. AGENCY: SUMMARY: Notice is hereby given that the United States will no longer authorize the export of defense articles and defense services to Venezuela. Furthermore, all licenses and approvals to export or otherwise transfer defense articles and defense services to Venezuela pursuant to section 38 of the Arms Export Control Act (AECA) are revoked. The use of exemptions from licensing as provided for in the International Traffic in Arms Regulations (ITAR) also are revoked with regard to Venezuela with the exception of the license exemptions at section 123.17 for use in connection with certain temporary exports of firearms and ammunition for personal use. EFFECTIVE DATE: August 17, 2006. Mr. Stephen J. Tomchik, Office of Defense Trade Controls Policy, Department of State, Telephone (202) 663–2799 or FAX (202) 261–8199. rwilkins on PROD1PC63 with NOTICES FOR FURTHER INFORMATION CONTACT: 14 17 CFR 200.30–3(a)(12). VerDate Aug<31>2005 16:36 Aug 16, 2006 Jkt 208001 It is the policy of the U.S. Government to deny all applications for licenses and other approvals to export or otherwise transfer defense articles and services to Venezuela until further notice. In addition, U.S. manufacturers and exporters, and any other affected parties (e.g., brokers) are hereby notified that the Department of State has revoked all licenses and approvals authorizing the export of or other transfers of defense articles or services to Venezuela. Revocation extends to the deletion of Venezuela from any manufacturing license or technical assistance agreement involving Venezuela, including any agreement that has Venezuela as a sales territory. This action also precludes the use in connection with Venezuela of any exemptions from licensing or other approval requirements included in the International Traffic in Arms Regulations (ITAR) (22 CFR parts 120– 130), with the exception of the license exemptions at section 123.17 of the ITAR for exports of firearms and ammunition to Venezuela when for personal use by individuals (not for resale or retransfer, including to the Government of Venezuela) and the firearms will be returned to the United States. This action has been taken pursuant to Section 38 of the AECA (22 U.S.C. 2778) and relevant provisions of the ITAR in furtherance of the foreign policy of the United States. No. 257 of April 15, 2003 [68 FR 19875], I hereby determine that the objects to be included in the exhibition ‘‘A Bronze Menagerie: Mat Weight of Early China,’’ imported from abroad for temporary exhibition within the United States, are of cultural significance. The objects are imported pursuant to loan agreements with the foreign owners or custodians. I also determine that the exhibition or display of the exhibit objects at the Isabella Stewart Gardner Museum, Boston, Massachusetts, from on or about October 5, 2006, until on or about January 14, 2007, and at possible additional venues yet to be determined, is in the national interest. Public Notice of these Determinations is ordered to be published in the Federal Register. FOR FURTHER INFORMATION CONTACT: For further information, including a list of the exhibit objects, contact Wolodymyr Sulznsky, Attorney-Adviser, Office of the Legal Adviser, U.S. Department of State (telephone: 202/453–8050). The address is U.S. Department of State, SA– 44, 301 4th Street, SW., Room 700, Washington, DC 20547–0001. Dated: August 2, 2006. Robert G. Joseph, Under Secretary of State for Arms Control and International Security, Department of State. [FR Doc. E6–13583 Filed 8–16–06; 8:45 am] [Public Notice 5500] SUPPLEMENTARY INFORMATION: BILLING CODE 4710–25–P DEPARTMENT OF STATE [Public Notice 5502] Culturally Significant Objects Imported for Exhibition Determinations: ‘‘A Bronze Menagerie: Mat Weight of Early China’’ SUMMARY: Notice is hereby given of the following determinations: Pursuant to the authority vested in me by the Act of October 19, 1965 (79 Stat. 985; 22 U.S.C. 2459), Executive Order 12047 of March 27, 1978, the Foreign Affairs Reform and Restructuring Act of 1998 (112 Stat. 2681, et seq.; 22 U.S.C. 6501 note, et seq.), Delegation of Authority No. 234 of October 1, 1999, Delegation of Authority No. 236 of October 19, 1999, as amended, and Delegation of Authority PO 00000 Frm 00076 Fmt 4703 Sfmt 4703 Dated: August 10, 2006. C. Miller Crouch, Principal Deputy Assistant Secretary for Educational and Cultural Affairs, Department of State. [FR Doc. E6–13576 Filed 8–16–06; 8:45 am] BILLING CODE 4710–05–P DEPARTMENT OF STATE Culturally Significant Objects Imported for Exhibition Determinations: ‘‘Constable’s Great Landscapes: The Six-Foot Paintings’’ SUMMARY: Notice is hereby given of the following determinations: Pursuant to the authority vested in me by the Act of October 19, 1965 (79 Stat. 985; 22 U.S.C. 2459), Executive Order 12047 of March 27, 1978, the Foreign Affairs Reform and Restructuring Act of 1998 (112 Stat. 2681, et seq.; 22 U.S.C. 6501 note, et seq.), Delegation of Authority No. 234 of October 1, 1999, Delegation of Authority No. 236 of October 19, 1999, as amended, and Delegation of Authority No. 257 of April 15, 2003 [68 FR 19875], I hereby determine that the objects to be included in the exhibition ‘‘Constable’s Great Landscapes: The Six-Foot Paintings,’’ imported from abroad for temporary exhibition within the United States, are of cultural significance. The objects are imported pursuant to loan agreements with the foreign owners or custodians. I also determine that the exhibition or display of the exhibit E:\FR\FM\17AUN1.SGM 17AUN1

Agencies

[Federal Register Volume 71, Number 159 (Thursday, August 17, 2006)]
[Notices]
[Pages 47551-47554]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E6-13568]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-54307; File No. SR-NASD-2006-096]


Self-Regulatory Organizations: National Association of Securities 
Dealers, Inc.; Notice of Filing and Immediate Effectiveness of Proposed 
Rule Change Relating to Additional Market Participant Identifier 
Functionality on the Alternative Display Facility

August 11, 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 August 8, 2006, the National Association of Securities Dealers, Inc. 
(``NASD'') filed with the Securities and Exchange

[[Page 47552]]

Commission (``Commission'') the proposed rule change as described in 
Items I, II, and III below, which Items have been prepared by NASD. 
NASD has filed the proposal as a ``non-controversial'' rule change 
pursuant to Section 19(b)(3)(A) of the Act \3\ and Rule 19b-4(f)(6) 
thereunder,\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 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\ NASD 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.
---------------------------------------------------------------------------

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

    NASD is proposing to amend NASD Rule 4613A and adopt IM-4613A-1 to 
enable electronic communications network (``ECN'') members that post 
quotations through the Alternative Display Facility (``ADF'') (i.e., 
Registered Reporting ADF ECNs), to request and receive multiple market 
participant identifiers (``MPIDs'') with which to enter multiple 
quotes/orders in the ADF and report trades through the ADF trade 
reporting facility, the Trade Reporting and Comparison Service 
(``TRACS''), pursuant to the NASD Rule 4000A Series. Below is the text 
of the proposed rule change. Proposed new language is in italics.
4613A. Character of Quotations
    (a) No Change.
    (b) Primary and Additional MPIDs
    (1) The first Market Participant Identifier (``MPID'') issued to an 
NASD Market Participant shall be referred to as the NASD Market 
Participant's ``Primary MPID.'' For a pilot period ending January 26, 
2007, a Registered Reporting ADF ECN may request the use of Additional 
MPIDs for displaying quotes/orders and reporting trades through TRACS 
for any ADF-Eligible Security (as defined in NASD Rule 4100A). A 
Registered Reporting ADF ECN that ceases to meet the obligations 
appurtenant to its Primary MPID in any security shall not be permitted 
to use Additional MPIDs for any purpose in that security.
    (b) through (e) renumbered as (c) through (f).

IM-4613A-1 Procedures For Allocation of Multiple MPIDs

    NASD considers the issuance of, the display of, and the trade 
reporting with Additional MPIDs to be a privilege and not a right. NASD 
has developed the following method for allocating the privilege of 
receiving, displaying, and trade reporting with Additional MPIDs in an 
orderly, predictable, and fair manner. While NASD does not intend to 
place a numerical limit on the number of Additional MPIDs it may grant 
to Registered Reporting ADF ECNs, given the agent business model of 
ECNs, NASD does not anticipate the granting of many additional MPIDs to 
Registered Reporting ADF ECNs.
    As described in Rule 4613A, NASD will automatically designate a 
Registered Reporting ADF ECN's first MPID as a ``Primary MPID.'' 
Additional MPIDs will be designated as such. Registered Reporting ADF 
ECNs are required to use their Primary MPID in accordance with the 
requirements of NASD Rule 4613A as well as all existing requirements 
for the use of MPIDs in NASD systems and under NASD rules. Each of an 
ECN's MPID will be subject to the requirements of NASD Rule 4623A.
    If it is determined that one or more Additional MPIDs are being 
used improperly, NASD staff retains full discretion to limit or 
withdraw its grant of the Additional MPID(s) for all purposes for all 
securities. In addition, if a Registered Reporting ADF ECN no longer 
fulfills the conditions appurtenant to its Primary MPID (e.g., by being 
placed into an unexcused withdrawal), it may not use an Additional MPID 
for any purpose in that security.
    The first priority of NASD's method for allocating the privilege of 
displaying and trade reporting with Additional MPIDs is that each 
Registered Reporting ADF ECN should be permitted to display quotations 
and report trades under a Primary MPID before any is permitted to 
display additional quotations under and report trades with Additional 
MPIDs. If all requests for Primary MPIDs have been satisfied, NASD will 
then register Additional MPIDs on a first-come-first-served basis, 
consistent with the procedures listed below.
    A Registered Reporting ADF ECN shall contact NASD in writing 
setting forth the bona fide business and/or regulatory reasons for 
requesting an Additional MPID. NASD will consider the business and/or 
regulatory reasons demonstrated by the Registered Reporting ADF ECN and 
promptly respond to the Registered Reporting ADF ECN. If an Additional 
MPID is granted, it will be subject to the same requirements applicable 
to a Primary MPID. NASD staff retains full discretion to limit or 
withdraw the Additional MPID privileges of a Registered Reporting ADF 
ECN.
    A Registered Reporting ADF ECN that posts a quotation through 
either a Primary MPID or Additional MPID and reports a trade to TRACS 
as a result of such a posted quotation must utilize the corresponding 
Primary MPID or Additional MPID for reporting purposes through which 
the quotation was originally posted (i.e., Registered Reporting ADF 
ECNs must use the same MPID for TRACS trade reporting as was used for 
ADF quotation posting).
* * * * *

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
    An NASD member that registers as a market maker or ECN is currently 
permitted to enter one two-sided quotation per security in the ADF and 
is assigned a unique MPID with which to enter such quotations. The NASD 
4600A Rule Series governs the character of such quotations and the 
rights and obligations of members that display quotations in the ADF 
via their MPIDs.
    NASD proposes to amend NASD Rule 4613A and adopt IM-4613A-1 to 
permit NASD Registered Reporting ADF ECNs to request the use of 
additional MPIDs for a pilot period ending January 26, 2007.\6\ At this 
time only ECNs have been certified for posting quotations through the 
ADF and at no time has a registered market maker been certified for the 
ADF. Accordingly, NASD believes it appropriate to limit the scope of 
this proposed rule to Registered Reporting ADF ECNs.\7\ An ECN would be 
entitled

[[Page 47553]]

to request additional MPIDs for displaying quotes/orders and reporting 
trades through the ADF trade reporting facility, TRACS, pursuant to the 
NASD Rule 4000A Series.
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    \6\ This date coincides with the expiration of the current ADF 
pilot period. See Securities Exchange Act Release No. 53699 (April 
21, 2006), 71 FR 25271 (April 28, 2006). Accordingly, the provisions 
set forth in Rule 4613A and IM-4613A-1 will be extended with any 
extension of an ADF pilot period.
    \7\ In support of the requirement under the Act that NASD rules 
not result in unfair discrimination between members (see 15 U.S.C. 
78o-(b)(6)), NASD commits to expand additional MPID privilege 
functionality to Registered Reporting ADF Market Makers at such time 
that at least one broker-dealer NASD member becomes certified for 
posting quotations through the ADF and demonstrates a bona fide 
business and/or regulatory need for additional MPID functionality.
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    Registered Reporting ADF ECNs that are permitted the use of 
additional MPIDs for displaying quotes/orders would be subject to the 
same rules applicable to the members' first quotation. In other words, 
ECNs that display one or more additional quotes/orders would be 
required to comply with all rules applicable to ECNs in their display 
of quotes/orders.
    NASD believes that the ability to enter quotes and orders and to 
display quotations under an additional MPID would potentially carry 
with it similar benefits that have resulted from the supplemental MPID 
Program of the Nasdaq Stock Market LLC (``Nasdaq'').\8\ Specifically, 
the introduction of additional MPIDs on the ADF may enable Registered 
Reporting ADF ECNs to contribute more liquidity to the market, add to 
the transparency of trading interest, and better serve the needs of 
investors and the needs of Registered Reporting ADF ECNs themselves.\9\ 
As noted above, Registered Reporting ADF ECNs that use an additional 
MPID would be required to comply with all NASD and Commission rules 
applicable to their current use of a single MPID. Registered Reporting 
ADF ECNs would be prohibited from using an additional MPID to 
accomplish indirectly what they are prohibited from doing directly 
through their Primary MPID. To the extent that the allocation of 
additional MPIDs were to create regulatory confusion or ambiguity or 
would diminish the quality or rigor of the regulation of the over-the-
counter (``OTC'') market, every inference would be drawn against the 
use of additional MPIDs. Moreover, pursuant to the proposed rule and 
interpretive material, NASD staff retains full discretion to determine 
whether a bona fide regulatory and/or business need exists for being 
granted the additional MPID privilege and to limit or withdraw the 
additional MPID display privilege at any time.
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    \8\ See Securities Exchange Act Release No. 47954 (May 30, 
2003), 68 FR 34017 (June 6, 2003). See also Securities Exchange Act 
Release No. 53192 (January 30, 2006), 71 FR 6302 (February 4, 2006).
    \9\ NASD will assess no fees for the issuance or use of an 
additional MPID, other than the Commission-approved fees set forth 
in NASD Rule 7010.
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2. Statutory Basis
    NASD believes that the proposed rule change is consistent with the 
provisions of Section 15A(b)(6) of the Act,\10\ 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 is 
consistent with these requirements because it will provide a process by 
which ECNs can request, and NASD can properly allocate, the use of 
additional MPIDs for displaying quotes and orders through the ADF.
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    \10\ 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.

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: (1) 
Significantly affect the protection of investors or the public 
interest; (2) impose any significant burden on competition; and (3) 
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, the proposal has 
become effective pursuant to Section 19(b)(3)(A) of the Act and Rule 
19b-4(f)(6) thereunder.\11\
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    \11\ 17 CFR 240.19b-4(f)(6).
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    Pursuant to Rule 19b-4(f)(6)(iii),\12\ a proposed ``non-
controversial'' rule change does not become operative prior to 30 days 
after the date of filing, or such shorter time as the Commission may 
designate if consistent with the protection of investors and the public 
interest. NASD has asked the Commission to waive the 30-day operative 
delay. The Commission believes that waiving the 30-day operative delay 
is consistent with the protection of investors and the public 
interest.\13\ The proposal will extend for ECN participants on the ADF 
a functionality that has been widely available to ECNs on Nasdaq 
through a pilot program. Allowing this proposal to become operative 
immediately is consistent with the protection of investors and the 
public interest because the benefits of the pilot and the use of 
multiple MPIDs can continue without undue disruption. For this reason, 
the Commission designates the proposed rule change to be effective and 
operative upon filing with the Commission.
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    \12\ 17 CFR 240.19b-4(f)(6)(iii).
    \13\ 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. See 15 U.S.C. 
78c(f).
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    At any time within 60 days of the filing of the proposed rule 
change, the Commission may summarily 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.

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 (http://
www.sec.gov/rules/sro.shtml); or
     Send an e-mail to rule-comments@sec.gov. Please include 
File Number SR-NASD-2006-096 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-2006-096. 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 (http://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

[[Page 47554]]

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-2006-096 and should be 
submitted on or before September 7, 2006.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\14\
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    \14\ 17 CFR 200.30-3(a)(12).
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J. Lynn Taylor,
Assistant Secretary.
 [FR Doc. E6-13568 Filed 8-16-06; 8:45 am]
BILLING CODE 8010-01-P