Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Modify Nasdaq Rule 4760 Relating to the Operation of the Nasdaq Crossing Network, 61815-61816 [E6-17440]

Download as PDF Federal Register / Vol. 71, No. 202 / Thursday, October 19, 2006 / Notices 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 Number SR–Amex–2006–78 and should be submitted on or before November 3, 2006. For the Commission, by the Division of Market Regulation, pursuant to delegated authority.29 J. Lynn Taylor, Assistant Secretary. [FR Doc. E6–17396 Filed 10–18–06; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Modify Nasdaq Rule 4760 Relating to the Operation of the Nasdaq Crossing Network cprice-sewell on PROD1PC66 with NOTICES October 13, 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 October 4, 2006, The NASDAQ Stock Market LLC (‘‘Nasdaq’’) 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 Nasdaq. Nasdaq filed the proposed rule 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. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. CFR 200.30–3(a)(12). 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). 1 15 VerDate Aug<31>2005 14:50 Oct 18, 2006 Jkt 211001 Nasdaq is proposing to modify Nasdaq Rule 4760 relating to the operation of the Nasdaq Crossing Network. Nasdaq plans to implement the proposed rule change on November 6, 2006. The text of the proposed rule change is available on Nasdaq’s Web site (http://www.nasdaq.com), at Nasdaq’s principal office, 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, Nasdaq 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. Nasdaq 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 [Release No. 34–54598; File No. SR– NASDAQ–2006–042] 29 17 I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change 1. Purpose On July 5, 2006, the Commission approved Nasdaq Rule 4760 which governs the operation of the Nasdaq Crossing Network.5 The Nasdaq Crossing Network will provide a new execution option to market participants trading in Nasdaq and other exchangelisted securities that will facilitate the execution of trades quickly and anonymously. Nasdaq expects to launch the operation of the Crossing Network on or about November 6, 2006.6 In anticipation of the launch, Nasdaq has proposed some minor modifications to Nasdaq Rule 4760. Due to the intervening approval of Nasdaq’s Single 5 See Securities Exchange Act Release No. 54248 (July 31, 2006), 71 FR 44738 (August 7, 2006) (SR– NASDAQ–2006–019). Prior to the effective date of Nasdaq’s operation as an exchange for Nasdaqlisted securities, the rule governing the Nasdaq Crossing Network had been approved as an NASD rule (NASD Rule 4716). Securities Exchange Act Release No. 54101 (July 5, 2006), 71 FR 39382 (July 12, 2006) (SR–NASD–2005–140). 6 Telephone conference between Jan Woo, Attorney, Division of Market Regulation, Commission, and Jeffrey Davis, Senior Associate General Counsel, Nasdaq, on October 4, 2006 (correcting a typographical error in the filing which stated that Nasdaq plans to launch the operation of the Crossing Network on or about October 30, 2006). PO 00000 Frm 00110 Fmt 4703 Sfmt 4703 61815 Book integration rule proposal 7 which has caused a conflict regarding the numbering of certain Nasdaq rules, Nasdaq proposes to renumber the provisions governing the operation of the Nasdaq Crossing Network as Nasdaq Rule 4770. In addition, in response to input from our members and other market participants, Nasdaq proposes to modify the times of the Reference Price Crosses during the regular hours session. Under the proposed rule change, the regular hours session crosses would commence at 10:45 a.m., 12:45 p.m., and 2:45 p.m. Eastern Time. Nasdaq also proposes to add a clarification to Nasdaq Rule 4770 about how Reference Price Cross orders will be allocated. The existing rule provides that Reference Price Cross orders will be allocated on a pro-rata basis, so that shares will be allocated pro-rata in round lots to eligible orders based on the original size of the order. If additional shares remain after the initial pro-rata allocation, those shares will continue to be allocated pro-rata to eligible orders until a number of round lots remain that is less than the number of eligible orders. The proposed rule change clarifies that any remaining shares will be allocated to the order which has designated the smallest minimum acceptable execution quantity. If more than one such order exists, any remaining shares will be allocated to the oldest eligible order. 2. Statutory Basis Nasdaq believes that the proposed rule change is consistent with the provisions of section 6 of the Act,8 in general and with section 6(b)(5) of the Act,9 in particular, in that it is designed to promote just and equitable principles of trade, to foster cooperation and coordination with persons engaged in regulating, clearing, settling, processing information with respect to, and facilitating transactions in securities, to remove impediments to and perfect the mechanism of a free and open market and a national market system, and, in general, to protect investors and the public interest. Nasdaq believes that the proposed rule change is consistent with these requirements in that the changes are designed to address market participant input and issues raised in testing relating to Nasdaq’s proposed reference price crossing product, which 7 See Securities Exchange Act Release No. 54155 (July 14, 2006), 71 FR 41291 (July 20, 2006) (SR– NASDAQ–2006–001). 8 5 U.S.C. 78f. 9 15 U.S.C. 78f(b)(5). E:\FR\FM\19OCN1.SGM 19OCN1 61816 Federal Register / Vol. 71, No. 202 / Thursday, October 19, 2006 / Notices will provide the Nasdaq additional means for facilitating transactions. B. Self-Regulatory Organization’s Statement on Burden on Competition Nasdaq 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) by its terms become operative for 30 days after the date of this filing, or such shorter time as the Commission may designate if consistent with the protection of investors and the public interest, the proposed rule change has become effective pursuant to section 19(b)(3)(A) 10 of the Act and Rule 19b– 4(f)(6) thereunder.11 At any time within 60 days of the filing of such 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: cprice-sewell on PROD1PC66 with NOTICES 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–NASDAQ–2006–042 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–NASDAQ–2006–042. 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 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 Nasdaq. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to the File Number SR–NASDAQ–2006–042 and should be submitted on or before November 9, 2006. For the Commission, by the Division of Market Regulation, pursuant to delegated authority.12 J. Lynn Taylor, Assistant Secretary. [FR Doc. E6–17440 Filed 10–18–06; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–54601; File No. SR– NASDAQ–2006–037] Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Notice of Filing and Order Granting Accelerated Approval of Proposed Rule Change To Modify NASDAQ Rules 3350 and 4755 Pursuant to section 19(b)(1) under the Securities Exchange Act of 1934 (‘‘Act’’),1 and Rule 19b–4 thereunder,2 notice is hereby given that on CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. U.S.C. 78s(b)(3)(A). 11 17 CFR 240.19b–4(f)(6). VerDate Aug<31>2005 14:50 Oct 18, 2006 1 15 Jkt 211001 PO 00000 Frm 00111 Fmt 4703 I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change Nasdaq proposes to modify Nasdaq Rule 3350(a) to establish the national best bid rather than the Nasdaq best bid, as the basis for determining compliance with Nasdaq Rule 3350(a). Nasdaq also proposes to amend Nasdaq Rule 4755(a)(2) to clearly describe the test that Nasdaq’s Single Book execution system will use to validate for compliance with applicable short sale rules for all securities that trade through the system. The text of the proposed rule change, as amended, is below. Proposed new language is italicized; proposed deletions are in brackets.4 * * * * * 3350 Short Sale Rule (a) With respect to trades executed on Nasdaq, no member shall effect a short sale for the account of a customer or for its own account in a Nasdaq Global Market security at or below the current best (inside) bid displayed in the [Nasdaq Market Center] National Market System when the current best (inside) bid is below the preceding best (inside) bid in the security. For purposes of this rule, the term ‘‘customer’’ includes a non-member broker-dealer. (b)–(l) No Change. * * * * * 4755. Order Entry Parameters (a) System Orders October 13, 2006. 12 17 10 15 September 27, 2006, The NASDAQ Stock Market LLC (‘‘Nasdaq’’), filed with the Securities and Exchange Commission (‘‘Commission’’ or ‘‘SEC’’) the proposed rule change as described in Items I, and II below, which Items have been prepared by Nasdaq. On October 12, 2006, Nasdaq filed Amendment No. 1 to the proposed rule change.3 Nasdaq has requested that this proposal, as amended, be approved on an accelerated basis by October 16, 2006 to coincide with the launch of Nasdaq’s new Single Book execution system. The Commission is publishing this notice to solicit comments on the proposed rule change, as amended, from interested persons. In addition, the Commission is granting accelerated approval of the proposed rule change, as amended. Sfmt 4703 (1) No Change. 3 In Amendment No. 1, which supplemented the original filing, Nasdaq made certain technical and clarifying changes following discussions with Commission staff. 4 Changes are marked to the rule text that appears in the electronic NASDAQ Manual found at http:// www.nasdaqtrader.com. E:\FR\FM\19OCN1.SGM 19OCN1

Agencies

[Federal Register Volume 71, Number 202 (Thursday, October 19, 2006)]
[Notices]
[Pages 61815-61816]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E6-17440]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-54598; File No. SR-NASDAQ-2006-042]


Self-Regulatory Organizations; The NASDAQ Stock Market LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Modify Nasdaq Rule 4760 Relating to the Operation of the Nasdaq 
Crossing Network

October 13, 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 October 4, 2006, The NASDAQ Stock Market LLC (``Nasdaq'') 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 Nasdaq. Nasdaq filed the proposed rule 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. The Commission is publishing this notice to 
solicit comments on the proposed rule change from interested persons.
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    \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).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    Nasdaq is proposing to modify Nasdaq Rule 4760 relating to the 
operation of the Nasdaq Crossing Network. Nasdaq plans to implement the 
proposed rule change on November 6, 2006. The text of the proposed rule 
change is available on Nasdaq's Web site (http://www.nasdaq.com), at 
Nasdaq's principal office, 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, Nasdaq 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. Nasdaq 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
    On July 5, 2006, the Commission approved Nasdaq Rule 4760 which 
governs the operation of the Nasdaq Crossing Network.\5\ The Nasdaq 
Crossing Network will provide a new execution option to market 
participants trading in Nasdaq and other exchange-listed securities 
that will facilitate the execution of trades quickly and anonymously. 
Nasdaq expects to launch the operation of the Crossing Network on or 
about November 6, 2006.\6\
---------------------------------------------------------------------------

    \5\ See Securities Exchange Act Release No. 54248 (July 31, 
2006), 71 FR 44738 (August 7, 2006) (SR-NASDAQ-2006-019). Prior to 
the effective date of Nasdaq's operation as an exchange for Nasdaq-
listed securities, the rule governing the Nasdaq Crossing Network 
had been approved as an NASD rule (NASD Rule 4716). Securities 
Exchange Act Release No. 54101 (July 5, 2006), 71 FR 39382 (July 12, 
2006) (SR-NASD-2005-140).
    \6\ Telephone conference between Jan Woo, Attorney, Division of 
Market Regulation, Commission, and Jeffrey Davis, Senior Associate 
General Counsel, Nasdaq, on October 4, 2006 (correcting a 
typographical error in the filing which stated that Nasdaq plans to 
launch the operation of the Crossing Network on or about October 30, 
2006).
---------------------------------------------------------------------------

    In anticipation of the launch, Nasdaq has proposed some minor 
modifications to Nasdaq Rule 4760. Due to the intervening approval of 
Nasdaq's Single Book integration rule proposal \7\ which has caused a 
conflict regarding the numbering of certain Nasdaq rules, Nasdaq 
proposes to renumber the provisions governing the operation of the 
Nasdaq Crossing Network as Nasdaq Rule 4770.
---------------------------------------------------------------------------

    \7\ See Securities Exchange Act Release No. 54155 (July 14, 
2006), 71 FR 41291 (July 20, 2006) (SR-NASDAQ-2006-001).
---------------------------------------------------------------------------

    In addition, in response to input from our members and other market 
participants, Nasdaq proposes to modify the times of the Reference 
Price Crosses during the regular hours session. Under the proposed rule 
change, the regular hours session crosses would commence at 10:45 a.m., 
12:45 p.m., and 2:45 p.m. Eastern Time.
    Nasdaq also proposes to add a clarification to Nasdaq Rule 4770 
about how Reference Price Cross orders will be allocated. The existing 
rule provides that Reference Price Cross orders will be allocated on a 
pro-rata basis, so that shares will be allocated pro-rata in round lots 
to eligible orders based on the original size of the order. If 
additional shares remain after the initial pro-rata allocation, those 
shares will continue to be allocated pro-rata to eligible orders until 
a number of round lots remain that is less than the number of eligible 
orders. The proposed rule change clarifies that any remaining shares 
will be allocated to the order which has designated the smallest 
minimum acceptable execution quantity. If more than one such order 
exists, any remaining shares will be allocated to the oldest eligible 
order.
2. Statutory Basis
    Nasdaq believes that the proposed rule change is consistent with 
the provisions of section 6 of the Act,\8\ in general and with section 
6(b)(5) of the Act,\9\ in particular, in that it is designed to promote 
just and equitable principles of trade, to foster cooperation and 
coordination with persons engaged in regulating, clearing, settling, 
processing information with respect to, and facilitating transactions 
in securities, to remove impediments to and perfect the mechanism of a 
free and open market and a national market system, and, in general, to 
protect investors and the public interest. Nasdaq believes that the 
proposed rule change is consistent with these requirements in that the 
changes are designed to address market participant input and issues 
raised in testing relating to Nasdaq's proposed reference price 
crossing product, which

[[Page 61816]]

will provide the Nasdaq additional means for facilitating transactions.
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    \8\ 5 U.S.C. 78f.
    \9\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    Nasdaq 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) by 
its terms become operative for 30 days after the date of this filing, 
or such shorter time as the Commission may designate if consistent with 
the protection of investors and the public interest, the proposed rule 
change has become effective pursuant to section 19(b)(3)(A) \10\ of the 
Act and Rule 19b-4(f)(6) thereunder.\11\
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    \10\ 15 U.S.C. 78s(b)(3)(A).
    \11\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------

    At any time within 60 days of the filing of such 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-NASDAQ-2006-042 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-NASDAQ-2006-042. 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 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 Nasdaq.
    All comments received will be posted without change; the Commission 
does not edit personal identifying information from submissions. You 
should submit only information that you wish to make available 
publicly. All submissions should refer to the File Number SR-NASDAQ-
2006-042 and should be submitted on or before November 9, 2006.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\12\
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    \12\ 17 CFR 200.30-3(a)(12).
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J. Lynn Taylor,
Assistant Secretary.
[FR Doc. E6-17440 Filed 10-18-06; 8:45 am]
BILLING CODE 8011-01-P