Self-Regulatory Organizations; National Association of Securities Dealers, Inc.; Notice of Filing and Order Granting Accelerated Approval of Proposed Rule Change to Operate the Alternative Display Facility on a Permanent Basis, 5093-5095 [E7-1688]
Download as PDF
Federal Register / Vol. 72, No. 22 / Friday, February 2, 2007 / Notices
(2) Statutory Basis
Paper Comments
The proposed rule change is designed
to be consistent with Regulation NMS,
as well as consistent with Section 6(b)
of the Act,4 in general, and furthers the
objectives of Section 6(b)(5),5 in
particular, in that it is 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.
Send paper comments in triplicate to
Nancy M. Morris, Secretary, Securities
and Exchange Commission, 100 F
Street, NE., Washington, DC 20549–
1090.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The proposed rule change does not
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
Within 35 days of the date of
publication of this notice in the Federal
Register or within such longer period (i)
as the Commission may designate up to
90 days of such date if it finds such
longer period to be appropriate and
publishes its reasons for so finding or
(ii) as to which the self-regulatory
organization consents, the Commission
will:
(A) By order approve such proposed
rule change, or
(B) institute proceedings to determine
whether the proposed rule change
should be disapproved.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the 1934 Act.
Comments may be submitted by any of
the following methods:
All submissions should refer to File No.
SR–Amex–2007–08. 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 at 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, 100 F Street, NE., Washington,
DC 20549. Copies of such 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–Amex–2007–08 and should be
submitted on or before February 23,
2007.
For the Commission, by the Division of
Market Regulation, pursuant to delegated
authority.6
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7–1689 Filed 2–1–07; 8:45 am]
BILLING CODE 8011–01–P
sroberts on PROD1PC70 with NOTICES
Use the Commission’s Internet
comment form at https://www.sec.gov/
rules/sro.shtml or send an e-mail to
rule-comments@sec.gov. Please include
File No. SR–Amex–2007–08 on the
subject line.
5 15
U.S.C. 78f(b).
U.S.C. 78f(b)(5).
VerDate Aug<31>2005
16:13 Feb 01, 2007
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–55181; File No. SR–NASD–
2007–005]
Self-Regulatory Organizations;
National Association of Securities
Dealers, Inc.; Notice of Filing and
Order Granting Accelerated Approval
of Proposed Rule Change to Operate
the Alternative Display Facility on a
Permanent Basis
January 26, 2007.
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 January
23, 2007, 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 and II below, which Items have
been substantially prepared by NASD.
The Commission is publishing this
notice to solicit comments on the
proposed rule change from interested
persons. In addition, the Commission is
granting accelerated approval of the
proposed rule change.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
NASD proposes to amend NASD Rule
4100A to operate its Alternative Display
Facility (‘‘ADF’’) on a permanent basis.
The ADF pilot program, as approved by
the Commission on July 24, 2002, and
extended on April 7, 2003, January 26,
2004, October 21, 2004, July 20, 2005,
and April 26, 2006, will expire on
January 26, 2007. NASD has requested
accelerated approval of the proposed
rule change and proposes an operative
date of January 27, 2007. The text of the
proposed rule change is available at
NASD, the Commission’s Public
Reference Room, and https://
www.nasd.com.
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 had received on the
proposed rule change. The text of these
statements may be examined at the
places specified in Item III below. NASD
has prepared summaries, set forth in
Electronic Comments
4 15
1 15
6 17
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U.S.C. 78s(b)(1).
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Federal Register / Vol. 72, No. 22 / Friday, February 2, 2007 / Notices
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 24, 2002, the Commission
approved SR–NASD–2002–97,3 which
authorized NASD to operate the ADF on
a pilot basis for nine months. NASD
subsequently filed for immediate
effectiveness proposed rule changes SR–
NASD–2003–067 to extend the pilot
until January 26, 2004; 4 SR–NASD–
2004–012 to extend the pilot until
October 26, 2004; 5 SR–NASD–2004–160
to extend the pilot until July 26, 2005; 6
SR–NASD–2005–092 to extend the pilot
until April 26, 2006; 7 and SR–NASD–
2006–050 to extend the pilot until
January 26, 2007.8 As described in
detail in SR–NASD–2005–087, which
replaced withdrawn rule filing SR–
NASD–2001–090, the ADF is a
quotation collection, trade comparison,
and trade reporting facility developed
by NASD in accordance with the
Commission’s SuperMontage Approval
Order 9 and in conjunction with
Nasdaq’s then anticipated registration as
a national securities exchange.10 In
addition, since the Commission gave its
initial approval to the ADF pilot, NASD
has filed several other ADF-related rule
change proposals that have been
incorporated into the operation and
administration of the pilot,11 and
sroberts on PROD1PC70 with NOTICES
3 See
Securities Exchange Act Release No. 46249
(July 24, 2002), 67 FR 49822 (July 31, 2002).
4 See Securities Exchange Act Release No. 47663
(April 10, 2003), 68 FR 19043 (April 17, 2003).
5 See Securities Exchange Act Release No. 49131
(January 27, 2004), 69 FR 5229 (February 3, 2004).
6 See Securities Exchange Act Release No. 50601
(October 28, 2004), 69 FR 64611 (November 5,
2004).
7 See Securities Exchange Act Release No. 52122
(July 25, 2005), 70 FR 44133 (August 1, 2005).
8 See Securities Exchange Act Release No. 53699
(April 21, 2006), 71 FR 25271 (April 28, 2006).
9 See Securities Exchange Act Release No. 43863
(January 19, 2001), 66 FR 8020 (January 26, 2001)
(SR–NASD–99–53).
10 See Securities Exchange Act Release No. 44396
(June 7, 2001), 66 FR 31952 (June 13, 2001) (File
No. 10–131). The Commission conditionally
approved the Nasdaq Exchange application on
January 13, 2006. See Securities Exchange Act
Release No. 53128 (January 13, 2006), 71 FR 3550
(January 23, 2006).
11 On January 30, 2003, NASD filed proposed rule
change SR–NASD–2003–009 to revise the
transaction and quotation-related fees applicable to
ADF activity during the pilot program. The rule
change proposal became effective upon filing, with
an implementation date of February 17, 2003. See
Securities Exchange Act Release No. 47331
(February 10, 2003), 68 FR 7635 (February 14,
2003). On January 6, 2004, the Commission granted
accelerated approval to SR–NASD–2003–145, a
proposal to amend the ADF pilot rules to give
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16:13 Feb 01, 2007
Jkt 211001
accordingly, would now operate on a
permanent basis as well.12
NASD believes that the ADF has been
operating successfully during the pilot
period. The Commission acknowledged
this fact when it approved the launch of
SuperMontage, stating that the ADF met
the conditions set forth in its
SuperMontage Approval Order to
provide an alternative quotation
collection, trade comparison, and trade
reporting facility. NASD believes that
the ADF has since continued to honor
those conditions. Moreover, on
September 28, 2006, the Commission
approved SR NASD–2006–91,13 which,
among other things, amended the ADF
rules governing quoting, trade reporting,
and clearing applicable to the ADF and
extended this functionality to all NMS
jurisdiction to a three-member subcommittee of
NASD’s Market Regulation Committee to review
system outage determinations under NASD Rule
4300A(f) and excused withdrawal denials under
NASD Rule 4619A. The rule change proposal
became effective contemporaneous with the
Commission’s approval. See Securities Exchange
Act Release No. 49029 (January 6, 2004), 69 FR
2167 (January 14, 2004). On December 4, 2003,
NASD filed for immediate effectiveness SR–NASD–
2003–181 to amend Rule 4613A(c) to clarify that
NASD may suspend quotations in the ADF
displayed by any market participant, including an
electronic communications network (‘‘ECN’’), that
are no longer reasonably related to the prevailing
market. See Securities Exchange Act Release No.
49075 (January 14, 2004), 69 FR 3414 (January 23,
2004). On March 12, 2004, the Commission
approved SR–NASD–2003–175, a proposal to repeal
Rule 4613A(e)(1), which required a member that
displays priced quotations for a Nasdaq security in
two or more market centers to display the same
priced quotations for that security in each market
center. See Securities Exchange Act Release No.
49413 (March 12, 2004), 69 FR 12882 (March 18,
2004). On August 18, 2004, the Commission
approved SR–NASD–2004–002, a proposed rule
change to amend NASD Rule 4300A to require an
ADF Market Participant to provide advance written
notice to NASD’s ADF Market Operations before
denying electronic access to its ADF quote to any
NASD member in the limited circumstances where
a broker-dealer fails to pay contractually obligated
costs for access to the Market Participant’s
quotations. See Securities Exchange Act Release No.
50218 (August 18, 2004), 69 FR 52055 (August 24,
2004). On March 10, 2005, the Commission
approved SR–NASD–2004–159, a proposed rule
change to establish Rule 4400A, which gives NASD
authority to receive and review complaints against
ADF Market Participants that allege denial of direct
or indirect access pursuant to NASD Rule 4300A.
See Securities Exchange Act Release No. 51356
(March 10, 2005), 70 FR 12924 (March 16, 2005).
12 On August 8, 2006, NASD filed SR–NASD–
2006–096 as an immediately effective rule change.
This rule change amended Rule 4613A and adopted
IM–4613A–1 to enable ECN members that post
quotations through the ADF to request and receive
multiple market participant identifiers. See
Securities Exchange Act Release No. 54307 (August
11, 2006), 71 FR 47551 (August 17, 2006). It should
be noted that NASD is not requesting that SR–
NASD–2006–096 operate on a permanent basis.
Rather, NASD is requesting that this remain a pilot
and will address this in a separate rule filing.
13 See Securities Exchange Act Release No. 54537
(September 28, 2006), 71 FR 59173 (October 6,
2006).
PO 00000
Frm 00097
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stocks.14 Accordingly, NASD believes it
is appropriate to approve the operation
of ADF on a permanent basis.
NASD proposes that the proposed
rule change be operative on January 27,
2007.
2. Statutory Basis
NASD believes that the proposed rule
change is consistent with the provisions
of Section 15A(b)(6) of the Act,15 which
requires, among other things, that NASD
rules must 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 approval of the
operation of ADF rules on a permanent
basis provides an effective mechanism
for quoting and trading activities
otherwise than on an exchange.
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. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
Electronic Comments
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an e-mail to rulecomments@sec.gov. Please include File
14 In addition, on January 5, 2007, NASD filed
SR–NASD–2007–001 for immediate effectiveness.
This rule filing amended certain ADF rules to: (1)
Expand the prohibition on locking and crossing
quotations in NMS stocks to include pre-opening
and post-closing quotations; (2) extend the
obligation to comply with ADF rules to pre-opening
quotes; and (3) replace the specific modifiers
identified in Rule 4632(A)(a)(4) with a more general
reference to modifiers as specified by NASD. See
Securities Exchange Act Release No. 55088 (January
11, 2007), 72 FR 2573 (January 19, 2007). While
NASD is requesting that the amendments made to
ADF rules in both SR–NASD 2006–091 and SR–
NASD–2007–001 also become permanent, it should
be noted that they will not be implemented until
the Regulation NMS Trading Phase Date.
15 15 U.S.C. 78o–3(b)(6).
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Federal Register / Vol. 72, No. 22 / Friday, February 2, 2007 / Notices
In addition, the Commission believes
that the proposal is consistent with
Section 15A(b)(11) of the Act 18 in that
Paper Comments
it is designed to produce fair and
• Send paper comments in triplicate
informative quotations, to prevent
to Nancy M. Morris, Secretary,
fictitious or misleading quotations, and
Securities and Exchange Commission,
to promote orderly procedures for
100 F Street, NE., Washington, DC
collecting, distributing, and publishing
20549–1090.
quotations.
All submissions should refer to File
In approving SR–NASD–2006–091,
Number SR–NASD–2007–005. This file
which, among other things, amended
number should be included on the
the ADF rules to align them with
subject line if e-mail is used. To help the Regulation NMS, the Commission
Commission process and review your
considered and addressed the regulatory
comments more efficiently, please use
issues regarding NASD’s operation of
only one method. The Commission will the ADF. The Commission believes the
post all comments on the Commission’s instant proposal to make the ADF
Internet Web site (https://www.sec.gov/
permanent does not raise any new
rules/sro.shtml). Copies of the
regulatory issues. For the same reasons
submission, all subsequent
stated in its order approving SR–NASD–
amendments, all written statements
2006–091, the Commission believes that
with respect to the proposed rule
this proposal is consistent with the
change that are filed with the
requirements of the Act and the rules
Commission, and all written
and regulations thereunder applicable to
communications relating to the
a national securities association.
proposed rule change between the
NASD has requested that the
Commission and any person, other than Commission find good cause for
those that may be withheld from the
approving the proposed rule change
public in accordance with the
prior to the thirtieth day after
provisions of 5 U.S.C. 552, will be
publication of notice thereof in the
available for inspection and copying in
Federal Register. The Commission
the Commission’s Public Reference
believes that granting accelerated
Room. Copies of such filing also will be approval of the proposed rule change is
available for inspection and copying at
appropriate because the proposed rule
the principal office of NASD. All
change does not raise any new
comments received will be posted
regulatory issues. In addition, SR–
without change; the Commission does
NASD–2006–091 went through a full
not edit personal identifying
notice-and-comment period, and no
information from submissions. You
comments were received. Accelerated
should submit only information that
approval of this proposal will allow the
you wish to make publicly available. All benefits of the ADF to continue without
submissions should refer to File
a lapse in the pilot due to expire on
Number SR–NASD–2007–005 and
January 26, 2007. Accordingly, the
should be submitted on or before
Commission finds good cause, pursuant
February 23, 2007.
to Section 19(b)(2) of the Act,19 for
approving the proposed rule change
IV. Commission’s Findings and Order
prior to the thirtieth day after the date
Granting Accelerated Approval of
of publication of notice thereof in the
Proposed Rule Change
Federal Register.
The Commission finds that the
proposed rule change is consistent with V. Conclusion
the requirements of the Act and the
It is therefore ordered, pursuant to
rules and regulations thereunder
Section 19(b)(2) of the Act,20 that the
applicable to a national securities
proposed rule change (SR–NASD–2007–
association.16 Specifically, the
005) be, and hereby is, approved on an
Commission believes that the proposed
accelerated basis.
rule change is consistent with Section
For the Commission, by the Division of
15A(b)(6) of the Act,17 which requires
Market Regulation, pursuant to delegated
that the rules of the self-regulatory
authority.21
organization are designed to prevent
Florence E. Harmon,
fraudulent and manipulative acts and
Deputy Secretary.
practices, to promote just and equitable
[FR Doc. E7–1688 Filed 2–1–07; 8:45 am]
principles of trade, and, in general, to
protect investors and the public interest. BILLING CODE 8010–01–P
sroberts on PROD1PC70 with NOTICES
Number SR–NASD–2007–005 on the
subject line.
16 In approving this proposal, the Commission has
considered its impact on efficiency, competition,
and capital formation. See 15 U.S.C. 78c(f).
17 15 U.S.C. 78o–3(b)(6).
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16:13 Feb 01, 2007
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18 15
U.S.C. 78o–3(b)(11).
U.S.C. 78s(b)(2).
20 15 U.S.C. 78s(b)(2).
21 17 CFR 200.30–3(a)(12).
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–55180; File No. SR–NASD–
2007–004]
Self-Regulatory Organizations;
National Association of Securities
Dealers, Inc.; Notice of Filing of a
Proposed Rule Change to Amend
NASD Rule 7010(k) Relating to
Transaction Reporting and Compliance
Engine Transaction Data
January 26, 2007.
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 January
16, 2007, 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 substantially prepared by
NASD. 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 7010(k) relating to Transaction
Reporting and Compliance Engine
(‘‘TRACE’’) transaction data to offer the
ability to receive, for a reduced fee, a
‘‘snapshot’’ of real-time TRACE
transaction data (‘‘TRACE data’’) once
each day rather than continuously
throughout the day.
The text of the proposed rule change
is available on NASD’s Web site at
https://www.nasd.com/RulesRegulation/
RuleFilings/2007RuleFilings/index.htm,
at NASD’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,
NASD included statements concerning
the purpose of, and basis for, the
proposed rule change and discussed any
comments it received on the proposal.
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.
19 15
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U.S.C. 78s(b)(1).
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Agencies
[Federal Register Volume 72, Number 22 (Friday, February 2, 2007)]
[Notices]
[Pages 5093-5095]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E7-1688]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-55181; File No. SR-NASD-2007-005]
Self-Regulatory Organizations; National Association of Securities
Dealers, Inc.; Notice of Filing and Order Granting Accelerated Approval
of Proposed Rule Change to Operate the Alternative Display Facility on
a Permanent Basis
January 26, 2007.
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 January 23, 2007, 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 and
II below, which Items have been substantially prepared by NASD. The
Commission is publishing this notice to solicit comments on the
proposed rule change from interested persons. In addition, the
Commission is granting accelerated approval of the proposed rule
change.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
NASD proposes to amend NASD Rule 4100A to operate its Alternative
Display Facility (``ADF'') on a permanent basis. The ADF pilot program,
as approved by the Commission on July 24, 2002, and extended on April
7, 2003, January 26, 2004, October 21, 2004, July 20, 2005, and April
26, 2006, will expire on January 26, 2007. NASD has requested
accelerated approval of the proposed rule change and proposes an
operative date of January 27, 2007. The text of the proposed rule
change is available at NASD, the Commission's Public Reference Room,
and https://www.nasd.com.
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 had received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item III below. NASD has prepared summaries, set forth in
[[Page 5094]]
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 24, 2002, the Commission approved SR-NASD-2002-97,\3\ which
authorized NASD to operate the ADF on a pilot basis for nine months.
NASD subsequently filed for immediate effectiveness proposed rule
changes SR-NASD-2003-067 to extend the pilot until January 26, 2004;
\4\ SR-NASD-2004-012 to extend the pilot until October 26, 2004; \5\
SR-NASD-2004-160 to extend the pilot until July 26, 2005; \6\ SR-NASD-
2005-092 to extend the pilot until April 26, 2006; \7\ and SR-NASD-
2006-050 to extend the pilot until January 26, 2007.\8\ As described in
detail in SR-NASD-2005-087, which replaced withdrawn rule filing SR-
NASD-2001-090, the ADF is a quotation collection, trade comparison, and
trade reporting facility developed by NASD in accordance with the
Commission's SuperMontage Approval Order \9\ and in conjunction with
Nasdaq's then anticipated registration as a national securities
exchange.\10\ In addition, since the Commission gave its initial
approval to the ADF pilot, NASD has filed several other ADF-related
rule change proposals that have been incorporated into the operation
and administration of the pilot,\11\ and accordingly, would now operate
on a permanent basis as well.\12\
---------------------------------------------------------------------------
\3\ See Securities Exchange Act Release No. 46249 (July 24,
2002), 67 FR 49822 (July 31, 2002).
\4\ See Securities Exchange Act Release No. 47663 (April 10,
2003), 68 FR 19043 (April 17, 2003).
\5\ See Securities Exchange Act Release No. 49131 (January 27,
2004), 69 FR 5229 (February 3, 2004).
\6\ See Securities Exchange Act Release No. 50601 (October 28,
2004), 69 FR 64611 (November 5, 2004).
\7\ See Securities Exchange Act Release No. 52122 (July 25,
2005), 70 FR 44133 (August 1, 2005).
\8\ See Securities Exchange Act Release No. 53699 (April 21,
2006), 71 FR 25271 (April 28, 2006).
\9\ See Securities Exchange Act Release No. 43863 (January 19,
2001), 66 FR 8020 (January 26, 2001) (SR-NASD-99-53).
\10\ See Securities Exchange Act Release No. 44396 (June 7,
2001), 66 FR 31952 (June 13, 2001) (File No. 10-131). The Commission
conditionally approved the Nasdaq Exchange application on January
13, 2006. See Securities Exchange Act Release No. 53128 (January 13,
2006), 71 FR 3550 (January 23, 2006).
\11\ On January 30, 2003, NASD filed proposed rule change SR-
NASD-2003-009 to revise the transaction and quotation-related fees
applicable to ADF activity during the pilot program. The rule change
proposal became effective upon filing, with an implementation date
of February 17, 2003. See Securities Exchange Act Release No. 47331
(February 10, 2003), 68 FR 7635 (February 14, 2003). On January 6,
2004, the Commission granted accelerated approval to SR-NASD-2003-
145, a proposal to amend the ADF pilot rules to give jurisdiction to
a three-member subcommittee of NASD's Market Regulation Committee to
review system outage determinations under NASD Rule 4300A(f) and
excused withdrawal denials under NASD Rule 4619A. The rule change
proposal became effective contemporaneous with the Commission's
approval. See Securities Exchange Act Release No. 49029 (January 6,
2004), 69 FR 2167 (January 14, 2004). On December 4, 2003, NASD
filed for immediate effectiveness SR-NASD-2003-181 to amend Rule
4613A(c) to clarify that NASD may suspend quotations in the ADF
displayed by any market participant, including an electronic
communications network (``ECN''), that are no longer reasonably
related to the prevailing market. See Securities Exchange Act
Release No. 49075 (January 14, 2004), 69 FR 3414 (January 23, 2004).
On March 12, 2004, the Commission approved SR-NASD-2003-175, a
proposal to repeal Rule 4613A(e)(1), which required a member that
displays priced quotations for a Nasdaq security in two or more
market centers to display the same priced quotations for that
security in each market center. See Securities Exchange Act Release
No. 49413 (March 12, 2004), 69 FR 12882 (March 18, 2004). On August
18, 2004, the Commission approved SR-NASD-2004-002, a proposed rule
change to amend NASD Rule 4300A to require an ADF Market Participant
to provide advance written notice to NASD's ADF Market Operations
before denying electronic access to its ADF quote to any NASD member
in the limited circumstances where a broker-dealer fails to pay
contractually obligated costs for access to the Market Participant's
quotations. See Securities Exchange Act Release No. 50218 (August
18, 2004), 69 FR 52055 (August 24, 2004). On March 10, 2005, the
Commission approved SR-NASD-2004-159, a proposed rule change to
establish Rule 4400A, which gives NASD authority to receive and
review complaints against ADF Market Participants that allege denial
of direct or indirect access pursuant to NASD Rule 4300A. See
Securities Exchange Act Release No. 51356 (March 10, 2005), 70 FR
12924 (March 16, 2005).
\12\ On August 8, 2006, NASD filed SR-NASD-2006-096 as an
immediately effective rule change. This rule change amended Rule
4613A and adopted IM-4613A-1 to enable ECN members that post
quotations through the ADF to request and receive multiple market
participant identifiers. See Securities Exchange Act Release No.
54307 (August 11, 2006), 71 FR 47551 (August 17, 2006). It should be
noted that NASD is not requesting that SR-NASD-2006-096 operate on a
permanent basis. Rather, NASD is requesting that this remain a pilot
and will address this in a separate rule filing.
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NASD believes that the ADF has been operating successfully during
the pilot period. The Commission acknowledged this fact when it
approved the launch of SuperMontage, stating that the ADF met the
conditions set forth in its SuperMontage Approval Order to provide an
alternative quotation collection, trade comparison, and trade reporting
facility. NASD believes that the ADF has since continued to honor those
conditions. Moreover, on September 28, 2006, the Commission approved SR
NASD-2006-91,\13\ which, among other things, amended the ADF rules
governing quoting, trade reporting, and clearing applicable to the ADF
and extended this functionality to all NMS stocks.\14\ Accordingly,
NASD believes it is appropriate to approve the operation of ADF on a
permanent basis.
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\13\ See Securities Exchange Act Release No. 54537 (September
28, 2006), 71 FR 59173 (October 6, 2006).
\14\ In addition, on January 5, 2007, NASD filed SR-NASD-2007-
001 for immediate effectiveness. This rule filing amended certain
ADF rules to: (1) Expand the prohibition on locking and crossing
quotations in NMS stocks to include pre-opening and post-closing
quotations; (2) extend the obligation to comply with ADF rules to
pre-opening quotes; and (3) replace the specific modifiers
identified in Rule 4632(A)(a)(4) with a more general reference to
modifiers as specified by NASD. See Securities Exchange Act Release
No. 55088 (January 11, 2007), 72 FR 2573 (January 19, 2007). While
NASD is requesting that the amendments made to ADF rules in both SR-
NASD 2006-091 and SR-NASD-2007-001 also become permanent, it should
be noted that they will not be implemented until the Regulation NMS
Trading Phase Date.
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NASD proposes that the proposed rule change be operative on January
27, 2007.
2. Statutory Basis
NASD believes that the proposed rule change is consistent with the
provisions of Section 15A(b)(6) of the Act,\15\ which requires, among
other things, that NASD rules must 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 approval of the operation of ADF
rules on a permanent basis provides an effective mechanism for quoting
and trading activities otherwise than on an exchange.
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\15\ 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. 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
[[Page 5095]]
Number SR-NASD-2007-005 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-2007-005. This file
number should be included on the subject line if e-mail is used. To
help the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's Internet Web site (https://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent
amendments, all written statements with respect to the proposed rule
change that are filed with the Commission, and all written
communications relating to the proposed rule change between the
Commission and any person, other than those that may be withheld from
the public in accordance with the provisions of 5 U.S.C. 552, will be
available for inspection and copying in the Commission's Public
Reference Room. Copies of such filing also will be available for
inspection and copying at the principal office of NASD. All comments
received will be posted without change; the Commission does not edit
personal identifying information from submissions. You should submit
only information that you wish to make publicly available. All
submissions should refer to File Number SR-NASD-2007-005 and should be
submitted on or before February 23, 2007.
IV. Commission's Findings and Order Granting Accelerated Approval of
Proposed Rule Change
The Commission finds that the proposed rule change is consistent
with the requirements of the Act and the rules and regulations
thereunder applicable to a national securities association.\16\
Specifically, the Commission believes that the proposed rule change is
consistent with Section 15A(b)(6) of the Act,\17\ which requires that
the rules of the self-regulatory organization are 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. In addition, the Commission believes that the
proposal is consistent with Section 15A(b)(11) of the Act \18\ in that
it is designed to produce fair and informative quotations, to prevent
fictitious or misleading quotations, and to promote orderly procedures
for collecting, distributing, and publishing quotations.
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\16\ In approving this proposal, the Commission has considered
its impact on efficiency, competition, and capital formation. See 15
U.S.C. 78c(f).
\17\ 15 U.S.C. 78o-3(b)(6).
\18\ 15 U.S.C. 78o-3(b)(11).
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In approving SR-NASD-2006-091, which, among other things, amended
the ADF rules to align them with Regulation NMS, the Commission
considered and addressed the regulatory issues regarding NASD's
operation of the ADF. The Commission believes the instant proposal to
make the ADF permanent does not raise any new regulatory issues. For
the same reasons stated in its order approving SR-NASD-2006-091, the
Commission believes that this proposal is consistent with the
requirements of the Act and the rules and regulations thereunder
applicable to a national securities association.
NASD has requested that the Commission find good cause for
approving the proposed rule change prior to the thirtieth day after
publication of notice thereof in the Federal Register. The Commission
believes that granting accelerated approval of the proposed rule change
is appropriate because the proposed rule change does not raise any new
regulatory issues. In addition, SR-NASD-2006-091 went through a full
notice-and-comment period, and no comments were received. Accelerated
approval of this proposal will allow the benefits of the ADF to
continue without a lapse in the pilot due to expire on January 26,
2007. Accordingly, the Commission finds good cause, pursuant to Section
19(b)(2) of the Act,\19\ for approving the proposed rule change prior
to the thirtieth day after the date of publication of notice thereof in
the Federal Register.
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\19\ 15 U.S.C. 78s(b)(2).
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V. Conclusion
It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\20\ that the proposed rule change (SR-NASD-2007-005) be, and
hereby is, approved on an accelerated basis.
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\20\ 15 U.S.C. 78s(b)(2).
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\21\
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\21\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7-1688 Filed 2-1-07; 8:45 am]
BILLING CODE 8010-01-P