Self-Regulatory Organizations: National Association of Securities Dealers, Inc.; Notice of Filing and Order Granting Accelerated Approval of Proposed Rule Change Relating to Extension of NASD's Short Sale Rule Contained in Rule 5100 and Short Sale Standard Contained in IM-5100, 6635-6637 [E7-2303]

Download as PDF Federal Register / Vol. 72, No. 28 / Monday, February 12, 2007 / Notices become effective pursuant to Section 19(b)(3)(A) of the Act 8 and Rule 19b– 4(f)(6) thereunder.9 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 Act. 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 No. SR–NASD–2007–007 and should be submitted on or before March 5, 2007. 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: For the Commission, by the Division of Market Regulation, pursuant to delegated authority.10 Florence E. Harmon, Deputy Secretary. [FR Doc. 07–608 Filed 2–9–07; 8:45 am] 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 No. SR–NASD–2007–007 on the subject line. SECURITIES AND EXCHANGE COMMISSION Paper Comments • Send paper comments in triplicate to Nancy M. Morris, Secretary, Securities and Exchange Commission, Station Place, 100 F Street, NE., Washington, DC 20549–1090. All submissions should refer to File No. SR–NASD–2007–007. 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 will also be 8 15 U.S.C. 78s(b)(3)(A). CFR 240.19b–4(f)(6). Rule 19b–4(f)(6) also requires the self-regulatory organization to give the Commission notice of its intent to file the proposed rule change, along with a brief description and text of the proposed rule change, at least five business days prior to the date of filing of the proposed rule change, or such shorter time as designated by the Commission. NASD has satisfied the five-day prefiling requirement. sroberts on PROD1PC70 with NOTICES 9 17 VerDate Aug<31>2005 19:52 Feb 09, 2007 Jkt 211001 BILLING CODE 8010–01–P [Release No. 34–55245; File No. SR–NASD– 2007–009] Self-Regulatory Organizations: National Association of Securities Dealers, Inc.; Notice of Filing and Order Granting Accelerated Approval of Proposed Rule Change Relating to Extension of NASD’s Short Sale Rule Contained in Rule 5100 and Short Sale Standard Contained in IM–5100 February 5, 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 26, 2007, the National Association of Securities Dealers, Inc. (‘‘NASD’’) filed with the Securities and Exchange Commission (the ‘‘Commission’’) the proposed rule change as described in Items I, II, and III below, which Items have been prepared by NASD. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. For the reasons discussed below, 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 is proposing to extend retroactively to December 16, 2006, and prospectively through December 15, 2007, the pilot effectiveness of Rule 5100 (Short Sale Rule). NASD is also seeking to extend the pilot effectiveness of the penny ($0.01) legal short sale standard contained in Interpretive Material (IM) 5100. Without such 10 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 1 15 PO 00000 Frm 00119 Fmt 4703 Sfmt 4703 6635 extension, these pilots would have expired on December 15, 2006. NASD does not propose any substantive changes to the pilots; the only changes are making the pilots effective on a retroactive basis to December 16, 2006 and extending the pilots’ expiration dates to December 15, 2007. Below is the text of the proposed rule change. Proposed new language is in italics; proposed deletions are in brackets.3 * * * * * 5100. Short Sale Rule (a) through (k) No Change. (l) This section shall be in effect until December 15, 200[6]7. * * * * * 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 Proposal to Extend Penny Short Sale Rule. Section 10(a) of the Act gives the Commission plenary authority to regulate short sales 4 of securities registered on a national securities exchange, as needed to protect investors. Rule 10a–1(a)(1) provides that, subject to certain exceptions, a listed security may be sold short (A) at a price above the price at which the immediately preceding sale was effected (plus tick), or (B) at the last sale price if it is higher than the last different price (zero-plus tick).5 On June 29 1994, the Commission granted temporary approval to NASD’s short sale rule, Rule 5100 (formerly Rule 3 There are no proposed changes to the text of IM–5100. 4 A short sale is a sale of a security that the seller does not own or any sale that is consummated by the delivery of a security borrowed by, or for the account of, the seller. See Rule 200(a) of Regulation SHO under the Act. 5 See 17 CFR 240.10a–1(a)(1). E:\FR\FM\12FEN1.SGM 12FEN1 6636 Federal Register / Vol. 72, No. 28 / Monday, February 12, 2007 / Notices sroberts on PROD1PC70 with NOTICES 3350),6 applicable to Nasdaq Global Market (‘‘NGM’’) securities 7 on a pilot basis.8 Rule 5100 applies to short sales of OTC transactions reported to the Alternative Display Facility (‘‘ADF’’) or a Trade Reporting Facility (‘‘TRF’’). Rule 5100 provides that, with respect to trades reported to the ADF or the TRF, no member shall effect a short sale in a NGM security otherwise than on an exchange at or below the current national best (inside) bid when the current national best (inside) bid is below the preceding national best (inside) bid (referred to as the ‘‘bid test’’). Since approval, NASD proposed, and the Commission approved, numerous extensions of NASD’s short sale rule and it continues to operate on a pilot basis.9 NASD has determined to seek an extension of the pilot until December 15, 2007 and to make it effective on a retroactive basis to December 16, 2006. NASD believes that such an extension provides an appropriate continuation of NASD’s short sale price test contained in Rule 5100 while the Commission considers whether changes to short sale price tests are necessary in light of current market practices and the purposes underlying short sale regulation.10 Proposal to Extend Penny Short Sale Standard. On March 2, 2001, the Commission approved, on a pilot basis,11 the proposal to establish a $0.01 above the bid standard for legal short sales in NGM securities as part of the Decimals Implementation Plan for the Equities and Options Markets. This pilot program has been continuously extended since that date and expired on December 15, 2006.12 NASD now proposes to extend retroactively to December 16, 2006, and prospectively 6 NASD has renumbered Rule 3350 and IM–3350 as Rule 5100 and IM–5100, respectively. See Securities Exchange Act Release No. 54084 (June 30, 2006), 71 FR 38935 (July 10, 2006) (File No. SR– NASD–2005–087). 7 Nasdaq Global Market securities were formerly known as Nasdaq National Market securities. See Securities Exchange Act Release No. 54084 (June 30, 2006), 71 FR 38935 (July 10, 2006). 8 See Securities Exchange Act Release No. 34277 (June 29, 1994), 59 FR 34885 (July 7, 1994) (‘‘Short Sale Rule Approval Order’’). 9 See Securities Exchange Act Release No. 53093 (January 10, 2006), 71 FR 2966 (January 18, 2006) (Notice of Immediate Effectiveness of SR–NASD– 2005–149 extending the Short Sale Rule and continued suspension of Primary Market Maker standards). 10 See Securities Exchange Act Release No. 54891 (December 7, 2006), 71 FR 75067 (December 13, 2006) (proposed amendments to Regulation SHO and Rule 10a–1 under the Act). 11 See Securities Exchange Act Release No. 44030 (March 2, 2001), 66 FR 14235 (March 9, 2001) (SR– NASD–2001–09). 12 See supra note 9. VerDate Aug<31>2005 19:52 Feb 09, 2007 Jkt 211001 through December 15, 2007, the penny short sale pilot program. Extension of the pilot will allow NASD and the Commission to maintain the status quo until the Commission takes further action on short sale price tests. If approved, NASD will continue during the pilot period to require NASD members seeking to effect ‘‘legal’’ short sales when the current national best (inside) bid is lower than the preceding national best (inside) bid, to execute those short sales at a price that is at least $0.01 above the current national best (inside) bid in that security. NASD believes that such an extension provides for an appropriate continuation of the current penny short sale standards while the Commission continues to consider the effectiveness of short sale price tests. NASD is not proposing any other changes to the pilot at this time. NASD is requesting that the Commission accelerate the effectiveness of the proposed rule change and is seeking to make the proposed rule change effective on a retroactive basis to December 16, 2006. 2. Statutory Basis NASD believes that the proposed rule change is consistent with the provisions of Section 15A(b)(6) of the Act,13 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 it is in the best interest of investors and the public to extend the short sale regulation pilot program. NASD also believes that it is important to continue the pilot while the Commission continues to consider the effectiveness of short sale price tests.14 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 NASD has requested that the Commission find good cause pursuant to Section 19(b)(2) of the Act 15 for approving the proposed rule change prior to the 30th day after publication in the Federal Register. The Commission finds that the proposed rule change is consistent with the requirements of the Act and the rules and regulations thereunder applicable to NASD and, in particular, the requirements of Section 15A of the Act and the rules and regulations thereunder.16 The Commission finds good cause for approving the proposed rule change prior to the 30th day after the date of publication of notice of filing thereof in that accelerated approval will allow the short sale pilot program to operate without interruption. 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–2007–009 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–2007–009. 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 15 15 U.S.C. 78s(b)(2). approving this proposed rule change, the Commission notes that it has considered the proposed rule’s impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). 16 In 13 15 U.S.C. 78o–3(b)(6). supra note 10. 14 See PO 00000 Frm 00120 Fmt 4703 Sfmt 4703 E:\FR\FM\12FEN1.SGM 12FEN1 Federal Register / Vol. 72, No. 28 / Monday, February 12, 2007 / 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–NASD–2007–009 and should be submitted on or before March 5, 2007. V. Conclusion It is therefore ordered, pursuant to Section 19(b)(2) of the Act that the proposed rule change (SR–NASD–2007– 009) is approved on an accelerated basis. For the Commission, by the Division of Market Regulation, pursuant to delegated authority.17 Florence E. Harmon, Deputy Secretary. [FR Doc. E7–2303 Filed 2–9–07; 8:45 am] BILLING CODE 8010–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–55211; File No. SR–Phlx– 2006–79] Self-Regulatory Organizations; Philadelphia Stock Exchange, Inc.; Notice of Filing and Order Granting Accelerated Approval of Proposed Rule Change, as Modified by Amendment No. 1, Relating to an Amendment to the Generic Listing Standards for Trust Shares sroberts on PROD1PC70 with NOTICES January 31, 2007. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Exchange Act’’),1 and Rule 19b–4 thereunder,2 notice is hereby given that on November 29, 2006, the Philadelphia Stock Exchange, Inc. (‘‘Phlx’’ or ‘‘Exchange’’) 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 the Exchange. On January 29, 2007, the Exchange filed CFR 200.30–3(a)(12). 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 19:52 Feb 09, 2007 I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to amend Phlx Rule 803—Criteria for Listing— Tier 1, regarding generic listing standards for Trust Shares. The text of the proposed Phlx Rule is set forth below, with new text italicized and deleted text [bracketed]. Rule 803 Criteria for Listing—Tier I * * * * * (a)–(h) No Change. (i) Trust Shares (1)–(10) No Change. (11) The Exchange may approve a series of Trust Shares for trading, whether by listing or pursuant to unlisted trading privileges, pursuant to Rule 19b–4(e) under the Securities Exchange Act of 1934 provided each of the following criteria is satisfied: (a) Eligibility Criteria for Index Components. Upon the initial listing of a series of Trust Shares on the Exchange, the component stocks of an index or portfolio underlying such series of Trust Shares shall meet the following criteria as of the date of the initial deposit of cash and securities into the trust: (i)–(ii) No Change. (iii) The most heavily weighted component stock cannot exceed [25]30% of the weight of the index or portfolio, and the five most heavily weighted component stocks cannot exceed 65% of the weight of the index or portfolio; (iv)–(v) No Change. (b)–(h) No Change. (j)–(m) No Change. * * * * * 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 Exchange 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 Jkt 211001 places specified in Item III below. The Exchange has prepared summaries, substantially 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 purpose of the proposed rule change is to conform Phlx’s generic listing standards for Trust Shares, specifically Rule 803(i)(11)(a)(iii), to the standards of other exchanges. Phlx Rule 803 provides generic listing standards for Trust Shares to permit listing and trading of these securities pursuant to Rule 19b–4(e) under the Act.4 Rule 19b– 4(e) provides that the listing and trading of a new derivative securities product by a self-regulatory organization shall not be deemed a proposed rule change, pursuant to paragraph (c)(1) of Rule 19b–4,5 if the Commission has approved, pursuant to Section 19(b) of the Act,6 the self-regulatory organization’s trading rules, procedures and listing standards for the product class that would include the new derivative securities product, and the self-regulatory organization has a surveillance program for the product class.7 These generic listing standards are intended to ensure that stocks with substantial market capitalization and trading volume account for a substantial portion of the weight of an index or portfolio. Phlx Rule 803 provides that, upon the initial listing of a series of Trust Shares under Rule 19b–4(e), component stocks that in the aggregate account for at least 90 percent of the weight of the index or portfolio must have a minimum market value of at least $75 million. In addition, the component stocks in the index must have a minimum monthly trading volume during each of the last six months of at least 250,000 shares for stocks representing at least 90 percent of the weight of the index or portfolio. Currently, Rule 803(i)(11)(a)(iii) provides that the most heavily weighted component stock in an underlying index cannot exceed 25 percent of the weight of the index or portfolio, and the five most heavily weighted component stocks cannot exceed 65 percent of the weight of the index or portfolio. The 4 17 CFR 240.19b–4(e). CFR 240.19b–4(c)(1). 6 15 U.S.C. 78s(b). 7 See Securities Exchange Act Release No. 40761 (December 8, 1998), 63 FR 70952 (December 22, 1998). 5 17 3 In Amendment No. 1, the Exchange supplemented the rationale for its request for accelerated approval and made technical changes to the proposed rule text. 17 17 VerDate Aug<31>2005 Amendment No. 1 to the proposed rule change.3 The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons, and is granting accelerated approval to the proposed rule change as modified by Amendment No. 1. PO 00000 Frm 00121 Fmt 4703 Sfmt 4703 6637 E:\FR\FM\12FEN1.SGM 12FEN1

Agencies

[Federal Register Volume 72, Number 28 (Monday, February 12, 2007)]
[Notices]
[Pages 6635-6637]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E7-2303]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-55245; File No. SR-NASD-2007-009]


Self-Regulatory Organizations: National Association of Securities 
Dealers, Inc.; Notice of Filing and Order Granting Accelerated Approval 
of Proposed Rule Change Relating to Extension of NASD's Short Sale Rule 
Contained in Rule 5100 and Short Sale Standard Contained in IM-5100

February 5, 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 26, 2007, the National Association of Securities Dealers, 
Inc. (``NASD'') filed with the Securities and Exchange Commission (the 
``Commission'') the proposed rule change as described in Items I, II, 
and III below, which Items have been prepared by NASD. The Commission 
is publishing this notice to solicit comments on the proposed rule 
change from interested persons. For the reasons discussed below, 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 is proposing to extend retroactively to December 16, 2006, and 
prospectively through December 15, 2007, the pilot effectiveness of 
Rule 5100 (Short Sale Rule). NASD is also seeking to extend the pilot 
effectiveness of the penny ($0.01) legal short sale standard contained 
in Interpretive Material (IM) 5100. Without such extension, these 
pilots would have expired on December 15, 2006. NASD does not propose 
any substantive changes to the pilots; the only changes are making the 
pilots effective on a retroactive basis to December 16, 2006 and 
extending the pilots' expiration dates to December 15, 2007.
    Below is the text of the proposed rule change. Proposed new 
language is in italics; proposed deletions are in brackets.\3\
---------------------------------------------------------------------------

    \3\ There are no proposed changes to the text of IM-5100.
---------------------------------------------------------------------------

* * * * *
5100. Short Sale Rule
    (a) through (k) No Change.
    (l) This section shall be in effect until December 15, 200[6]7.
* * * * *

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
    Proposal to Extend Penny Short Sale Rule. Section 10(a) of the Act 
gives the Commission plenary authority to regulate short sales \4\ of 
securities registered on a national securities exchange, as needed to 
protect investors. Rule 10a-1(a)(1) provides that, subject to certain 
exceptions, a listed security may be sold short (A) at a price above 
the price at which the immediately preceding sale was effected (plus 
tick), or (B) at the last sale price if it is higher than the last 
different price (zero-plus tick).\5\
---------------------------------------------------------------------------

    \4\ A short sale is a sale of a security that the seller does 
not own or any sale that is consummated by the delivery of a 
security borrowed by, or for the account of, the seller. See Rule 
200(a) of Regulation SHO under the Act.
    \5\ See 17 CFR 240.10a-1(a)(1).
---------------------------------------------------------------------------

    On June 29 1994, the Commission granted temporary approval to 
NASD's short sale rule, Rule 5100 (formerly Rule

[[Page 6636]]

3350),\6\ applicable to Nasdaq Global Market (``NGM'') securities \7\ 
on a pilot basis.\8\ Rule 5100 applies to short sales of OTC 
transactions reported to the Alternative Display Facility (``ADF'') or 
a Trade Reporting Facility (``TRF''). Rule 5100 provides that, with 
respect to trades reported to the ADF or the TRF, no member shall 
effect a short sale in a NGM security otherwise than on an exchange at 
or below the current national best (inside) bid when the current 
national best (inside) bid is below the preceding national best 
(inside) bid (referred to as the ``bid test'').
---------------------------------------------------------------------------

    \6\ NASD has renumbered Rule 3350 and IM-3350 as Rule 5100 and 
IM-5100, respectively. See Securities Exchange Act Release No. 54084 
(June 30, 2006), 71 FR 38935 (July 10, 2006) (File No. SR-NASD-2005-
087).
    \7\ Nasdaq Global Market securities were formerly known as 
Nasdaq National Market securities. See Securities Exchange Act 
Release No. 54084 (June 30, 2006), 71 FR 38935 (July 10, 2006).
    \8\ See Securities Exchange Act Release No. 34277 (June 29, 
1994), 59 FR 34885 (July 7, 1994) (``Short Sale Rule Approval 
Order'').
---------------------------------------------------------------------------

    Since approval, NASD proposed, and the Commission approved, 
numerous extensions of NASD's short sale rule and it continues to 
operate on a pilot basis.\9\ NASD has determined to seek an extension 
of the pilot until December 15, 2007 and to make it effective on a 
retroactive basis to December 16, 2006. NASD believes that such an 
extension provides an appropriate continuation of NASD's short sale 
price test contained in Rule 5100 while the Commission considers 
whether changes to short sale price tests are necessary in light of 
current market practices and the purposes underlying short sale 
regulation.\10\
---------------------------------------------------------------------------

    \9\ See Securities Exchange Act Release No. 53093 (January 10, 
2006), 71 FR 2966 (January 18, 2006) (Notice of Immediate 
Effectiveness of SR-NASD-2005-149 extending the Short Sale Rule and 
continued suspension of Primary Market Maker standards).
    \10\ See Securities Exchange Act Release No. 54891 (December 7, 
2006), 71 FR 75067 (December 13, 2006) (proposed amendments to 
Regulation SHO and Rule 10a-1 under the Act).
---------------------------------------------------------------------------

    Proposal to Extend Penny Short Sale Standard. On March 2, 2001, the 
Commission approved, on a pilot basis,\11\ the proposal to establish a 
$0.01 above the bid standard for legal short sales in NGM securities as 
part of the Decimals Implementation Plan for the Equities and Options 
Markets. This pilot program has been continuously extended since that 
date and expired on December 15, 2006.\12\ NASD now proposes to extend 
retroactively to December 16, 2006, and prospectively through December 
15, 2007, the penny short sale pilot program. Extension of the pilot 
will allow NASD and the Commission to maintain the status quo until the 
Commission takes further action on short sale price tests.
---------------------------------------------------------------------------

    \11\  See Securities Exchange Act Release No. 44030 (March 2, 
2001), 66 FR 14235 (March 9, 2001) (SR-NASD-2001-09).
    \12\ See supra note 9.
---------------------------------------------------------------------------

    If approved, NASD will continue during the pilot period to require 
NASD members seeking to effect ``legal'' short sales when the current 
national best (inside) bid is lower than the preceding national best 
(inside) bid, to execute those short sales at a price that is at least 
$0.01 above the current national best (inside) bid in that security. 
NASD believes that such an extension provides for an appropriate 
continuation of the current penny short sale standards while the 
Commission continues to consider the effectiveness of short sale price 
tests. NASD is not proposing any other changes to the pilot at this 
time.
    NASD is requesting that the Commission accelerate the effectiveness 
of the proposed rule change and is seeking to make the proposed rule 
change effective on a retroactive basis to December 16, 2006.
2. Statutory Basis
    NASD believes that the proposed rule change is consistent with the 
provisions of Section 15A(b)(6) of the Act,\13\ 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 it is in the best interest of investors 
and the public to extend the short sale regulation pilot program. NASD 
also believes that it is important to continue the pilot while the 
Commission continues to consider the effectiveness of short sale price 
tests.\14\
---------------------------------------------------------------------------

    \13\ 15 U.S.C. 78o-3(b)(6).
    \14\ See supra note 10.
---------------------------------------------------------------------------

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

    NASD has requested that the Commission find good cause pursuant to 
Section 19(b)(2) of the Act \15\ for approving the proposed rule change 
prior to the 30th day after publication in the Federal Register. The 
Commission finds that the proposed rule change is consistent with the 
requirements of the Act and the rules and regulations thereunder 
applicable to NASD and, in particular, the requirements of Section 15A 
of the Act and the rules and regulations thereunder.\16\ The Commission 
finds good cause for approving the proposed rule change prior to the 
30th day after the date of publication of notice of filing thereof in 
that accelerated approval will allow the short sale pilot program to 
operate without interruption.
---------------------------------------------------------------------------

    \15\ 15 U.S.C. 78s(b)(2).
    \16\ In approving this proposed rule change, the Commission 
notes that it has considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
---------------------------------------------------------------------------

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-2007-009 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-2007-009. 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 6637]]

communications relating to the proposed rule change between the 
Commission and any person, other than those that may be withheld from 
the public in accordance with the provisions of 5 U.S.C. 552, will be 
available for inspection and copying in the Commission's Public 
Reference Room. Copies of such filing also will be available for 
inspection and copying at the principal office of NASD. All comments 
received will be posted without change; the Commission does not edit 
personal identifying information from submissions. You should submit 
only information that you wish to make available publicly. All 
submissions should refer to File Number SR-NASD-2007-009 and should be 
submitted on or before March 5, 2007.

V. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the Act 
that the proposed rule change (SR-NASD-2007-009) is approved on an 
accelerated basis.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\17\
---------------------------------------------------------------------------

    \17\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Florence E. Harmon,
Deputy Secretary.
 [FR Doc. E7-2303 Filed 2-9-07; 8:45 am]
BILLING CODE 8010-01-P