Self-Regulatory Organizations: National Association of Securities Dealers, Inc.; New York Stock Exchange LLC; American Stock Exchange LLC; Order Approving Proposed Rule Changes To Increase the Frequency of the Short Interest Reporting Requirements, 11071-11072 [E7-4293]

Download as PDF Federal Register / Vol. 72, No. 47 / Monday, March 12, 2007 / Notices III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Because the proposed rule change does not: (1) Significantly affect the protection of investors or the public interest; (2) impose any significant burden on competition; and (3) become operative for 30 days after the date of the 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) of the Act 16 and Rule 19b–4(f)(6) thereunder.17 At any time within 60 days of the filing of the proposed rule change, the Commission may summarily abrogate such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. A proposed rule change filed under Rule 19b–4(f)(6) normally may not become operative prior to 30 days after the date of filing. However, Rule 19b– 4(f)(6)(iii) 18 permits the Commission to designate a shorter time if such action is consistent with the protection of investors and the public interest. The Exchange has requested that the Commission waive the 30-day operative delay. The Commission believes that waiver of the 30-day operative delay is consistent with the protection of investors and the public interest.19 The Commission believes that the proposed rule change will facilitate the ability of Nasdaq members to utilize Nasdaq’s automated system to comply with their respective obligations under Regulation NMS. 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. 16 15 U.S.C. 78s(b)(3)(A). CFR 240.19b–4(f)(6). When filing a proposed rule change pursuant to Rule 19b–4(f)(6) under the Act, an exchange is required to give the Commission written 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. The Exchange has requested that the Commission waive the 5-day prefiling notice requirement. The Commission has determined to grant this request. 18 17 CFR 19b–4(f)(6)(iii). 19 For purposes only of waiving the operative delay for this proposal, the Commission has considered the proposed rule’s impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). pwalker on PROD1PC71 with NOTICES 17 17 VerDate Aug<31>2005 18:04 Mar 09, 2007 Jkt 211001 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 e-mail to rulecomments@sec.gov. Please include File Number SR–NASDAQ–2007–020 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. 11071 SECURITIES AND EXCHANGE COMMISSION [Release No. 34–55406; File Nos. SR– NASD–2006–131; SR–NYSE–2006–111; SR– Amex–2007–05] Self-Regulatory Organizations: National Association of Securities Dealers, Inc.; New York Stock Exchange LLC; American Stock Exchange LLC; Order Approving Proposed Rule Changes To Increase the Frequency of the Short Interest Reporting Requirements March 6, 2007. On December 4, 2006, December 7, 2006, and January 10, 2007, respectively, the National Association of Securities Dealers, Inc. (‘‘NASD’’), the All submissions should refer to file New York Stock Exchange LLC Number SR–NASDAQ–2007–020. This (‘‘NYSE’’), and the American Stock file number should be included on the subject line if e-mail is used. To help the Exchange LLC (‘‘Amex’’) (collectively, the ‘‘SROs’’), pursuant to Section Commission process and review your 19(b)(1) of the Securities Exchange Act comments more efficiently, please use only one method. The Commission will of 1934 (the ‘‘Act’’ or the ‘‘Exchange 1 2 post all comments on the Commission’s Act’’) and Rule 19b–4 thereunder, filed with the Securities and Exchange Internet Web site (http://www.sec.gov/ Commission (the ‘‘Commission’’) the rules/sro/shtml). Copies of the proposed rule changes as described submission, all subsequent below: amendments, all written statements Æ NASD proposed to increase the with respect to the proposed rule frequency of the short interest reporting change that are filed with the requirements under NASD Rule 3360 Commission, and all written from monthly to twice per month. communications relating to the Currently, NASD Rule 3360, Shortproposed rule change between the Interest Reporting, requires members to Commission and any person, other than maintain a record of total short those that may be withheld from the positions in all customer and public in accordance with the proprietary firm accounts in OTC Equity provisions of 5 U.S.C. 552, will be Securities 3 and securities listed on a available for inspection and copying in national securities exchange if not the Commission’s Public Reference reported to another self-regulatory Room. Copies of such filings will also be organization and to regularly report such information in the manner available for inspection and copying at the principal office of the Exchange. All prescribed by NASD.4 Thus, no changes to the text of NASD rules are required comments received will be posted by this proposed rule change. without change; the Commission does Æ NYSE proposed an amendment to not edit personal identifying NYSE Rule 421.10 (Short Positions), information from submissions. You which would increase the frequency of should submit only information that you wish to make available publicly. All the short interest reporting requirements submissions should refer to File number under Rule 421.10 from monthly to twice per month. In addition, NYSE SR–NASDAQ–2007–020 and should be proposed additional amendments to the submitted on or before April 2, 2007. Rule 421.10’s text in light of recent For the Commission, by the Division of changes to NYSE organizational Market Regulation, pursuant to delegated authority.20 Florence E. Harmon, Deputy Secretary. [FR Doc. E7–4328 Filed 3–9–07; 8:45 am] BILLING CODE 8010–01–P 20 17 PO 00000 CFR 200.30–3(a)(12). Frm 00101 Fmt 4703 Sfmt 4703 1 15 U.S.C. 78s(b)(1). CFR 240.19b–4. 3 NASD Rule 3360 provides that the term ‘‘OTC Equity Securities’’ refers to any equity security that is not listed on The Nasdaq Stock Market or a national securities exchange. 4 Non-self-clearing broker-dealers generally are considered to have satisfied their reporting requirement by making appropriate arrangements with their respective clearing organizations. See NASD Notice to Members 03–08 (January 2003). 2 17 E:\FR\FM\12MRN1.SGM 12MRN1 11072 Federal Register / Vol. 72, No. 47 / Monday, March 12, 2007 / Notices positions are significant indicators of investor sentiment.11 As such, the commenter stated that timelier reporting of short interest data provides additional relevant information and more accurate indications of changes in investor outlook.12 In response to these comments and in recognition of technological and systems changes that may be required to implement the proposed rule change, the Commission finds that the 180 day implementation period proposed by the SROs will provide members adequate time to make any necessary changes. It is therefore ordered, pursuant to Section 19(b)(2) of the Act, that the proposed rule changes (SR–NASD– 2006–131; SR–NYSE–2006–111; SR– Amex–2007–05) be, and it hereby are,approved. B. Related Issues SECURITIES AND EXCHANGE COMMISSION [Release No. 34–55398; File No. SR–NYSE– 2007–25] Discussion and Commission Findings Short positions required to be reported under the SROs’ rules are those resulting from ‘‘short sales’’ as the term is defined in Rule 200 of Regulation SHO,13 with certain exceptions related to Exchange Act Rule 10a–1.14 Commission staff has instructed the SROs to review these exceptions to short interest reporting to determine whether further rulemaking is appropriate. A. Comments C. Commission Findings The Commission specifically asked whether the proposed 180 day implementation period should be shortened. The Commission received one comment letter.7 The commenter supported the NYSE and NASD proposals 8 because she favored regulation of short sales generally. However, the commenter believed that the implementation period should be shortened. Prior to filing with the Commission, NASD solicited comments on its proposed rule change in NASD Notice to Members 05–63 (September 2005) and received two comments.9 Of the two comment letters received, both were in favor of the proposed rule change. One commenter noted that minimal programming and costs would be required to implement this proposal, but recommended six months for implementation of the proposal.10 The other commenter indicated that increases or decreases in short interest After a review of the rule proposals and the comments, the Commission finds that the proposed rule changes are consistent with the requirements of the Act and the rules and regulations thereunder applicable to national securities exchanges and national securities associations, and in particular Sections 6(b)(5) 15 and 15A(b)(6) 16 of the Act, which require, among other things, that NASD, NYSE, and Amex 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. The Commission believes that the proposed rule changes will provide additional and more timely information related to short selling.17 structure and to reflect the adoption of the Commission’s Regulation SHO.5 Æ Amex proposed to increase the frequency of the short interest reporting requirements from monthly to twice a month, and to codify the short interest reporting requirement authorized by Amex Rule 30. The proposed amendment would incorporate the short interest reporting requirements into new Amex Rule 30A. The SROs proposed an implementation date of 180 days (six months) following Commission approval of the filing in order to allow firms sufficient time to make any systems changes necessary to comply with the new requirements. The proposed rule changes were published in the Federal Register on February 1, 2007.6 The Commission received one comment, which was submitted in support of this proposal. Prior to the proposal, NASD had received two comments that also supported the proposal. This order approves the rule change. 5 17 CFR 242.200 through 242.203. Exchange Act Release No. 55170 (January 26, 2007), 72 FR 4756 (February 1, 2007). 7 Letter from Carol McCrory, Visitiing Assistant Professor of Legal Skils, Stetson University College of Law (Jan. 30, 2007) (commenting on SR–NASD– 2006–131 and SR–NYSE–2006–111). 8 See id. The letter did not comment on the Amex proposal. 9 Comments were received from the following: Lisa Morel-Misener of Cognos Incorporated, dated October 27, 2005 and Christopher Charles of Wulff Hansen & Co., dated November 15, 2005. 10 See supra note 9, Wulff Hansen & Co. letter. pwalker on PROD1PC71 with NOTICES 6 Securities VerDate Aug<31>2005 18:04 Mar 09, 2007 Jkt 211001 11 See supra note 9, Cognos Incorporated letter. 12 Id. 13 17 CFR 242.200. CFR 240.10a–1. NASD Rule 3360(b)(1) excludes positions that meet the requirements of subsections (e)(1), (6), (7), (8), and (10) of Rule 10a– 1 and NYSE Rule 421.10 currently excludes positions resulting from sales specified in subsections (1), (6), (7), (8), (9) and (10) of paragraph (e) of Rule 10a–1. NYSE’s proposal removes subsection (9). To conform with the NASD and NYSE rules, Amex Rule 30A as proposed excludes positions resulting from sales specified in Rule 10a–1(e) (1), (6), (7), (8) or (10). 15 15 U.S.C. 78f(b)(5). 16 15 U.S.C. 78o–3(b)(6). 17 In approving this proposed rule change, the Commission notes that it has considered the proposed rule’s impact on efficiency, competition, and capital formation. 15 U.S.C. 78c(f). 14 17 PO 00000 Frm 00102 Fmt 4703 Sfmt 4703 For the Commission, by the Division of Market Regulation, pursuant to delegated authority.18 Florence E. Harmon, Deputy Secretary. [FR Doc. E7–4293 Filed 3–9–07; 8:45 am] BILLING CODE 8010–01–P Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to Rule 123D (Openings and Halts In Trading) March 5, 2007. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the ‘‘Act’’) 1 and Rule 19b–4 thereunder,2 notice is hereby given that on March 2, 2007, the New York Stock Exchange LLC (‘‘NYSE’’ 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 prepared substantially by the Exchange. The Exchange has filed the proposal pursuant to Section 19(b)(3)(A) of the Act 3 and Rule 19b–4(f)(6) thereunder,4 which renders the proposal effective upon filing with the Commission. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange is proposing to amend Exchange Rule 123D to add new section (3) to enable the Exchange to halt trading in a security whose price may be about to fall below $1.00 per share, without delisting the security, so that the security may continue to trade on other markets that deal in bids, offers, orders, or indications of interest in subpenny prices, until the price of the security has recovered sufficiently to 18 17 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 E:\FR\FM\12MRN1.SGM 12MRN1

Agencies

[Federal Register Volume 72, Number 47 (Monday, March 12, 2007)]
[Notices]
[Pages 11071-11072]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E7-4293]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-55406; File Nos. SR-NASD-2006-131; SR-NYSE-2006-111; 
SR-Amex-2007-05]


Self-Regulatory Organizations: National Association of Securities 
Dealers, Inc.; New York Stock Exchange LLC; American Stock Exchange 
LLC; Order Approving Proposed Rule Changes To Increase the Frequency of 
the Short Interest Reporting Requirements

March 6, 2007.
    On December 4, 2006, December 7, 2006, and January 10, 2007, 
respectively, the National Association of Securities Dealers, Inc. 
(``NASD''), the New York Stock Exchange LLC (``NYSE''), and the 
American Stock Exchange LLC (``Amex'') (collectively, the ``SROs''), 
pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(the ``Act'' or the ``Exchange Act'') \1\ and Rule 19b-4 thereunder,\2\ 
filed with the Securities and Exchange Commission (the ``Commission'') 
the proposed rule changes as described below:
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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    [cir] NASD proposed to increase the frequency of the short interest 
reporting requirements under NASD Rule 3360 from monthly to twice per 
month. Currently, NASD Rule 3360, Short-Interest Reporting, requires 
members to maintain a record of total short positions in all customer 
and proprietary firm accounts in OTC Equity Securities \3\ and 
securities listed on a national securities exchange if not reported to 
another self-regulatory organization and to regularly report such 
information in the manner prescribed by NASD.\4\ Thus, no changes to 
the text of NASD rules are required by this proposed rule change.
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    \3\ NASD Rule 3360 provides that the term ``OTC Equity 
Securities'' refers to any equity security that is not listed on The 
Nasdaq Stock Market or a national securities exchange.
    \4\ Non-self-clearing broker-dealers generally are considered to 
have satisfied their reporting requirement by making appropriate 
arrangements with their respective clearing organizations. See NASD 
Notice to Members 03-08 (January 2003).
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    [cir] NYSE proposed an amendment to NYSE Rule 421.10 (Short 
Positions), which would increase the frequency of the short interest 
reporting requirements under Rule 421.10 from monthly to twice per 
month. In addition, NYSE proposed additional amendments to the Rule 
421.10's text in light of recent changes to NYSE organizational

[[Page 11072]]

structure and to reflect the adoption of the Commission's Regulation 
SHO.\5\
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    \5\ 17 CFR 242.200 through 242.203.
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    [cir] Amex proposed to increase the frequency of the short interest 
reporting requirements from monthly to twice a month, and to codify the 
short interest reporting requirement authorized by Amex Rule 30. The 
proposed amendment would incorporate the short interest reporting 
requirements into new Amex Rule 30A.
    The SROs proposed an implementation date of 180 days (six months) 
following Commission approval of the filing in order to allow firms 
sufficient time to make any systems changes necessary to comply with 
the new requirements.
    The proposed rule changes were published in the Federal Register on 
February 1, 2007.\6\ The Commission received one comment, which was 
submitted in support of this proposal. Prior to the proposal, NASD had 
received two comments that also supported the proposal. This order 
approves the rule change.
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    \6\ Securities Exchange Act Release No. 55170 (January 26, 
2007), 72 FR 4756 (February 1, 2007).
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Discussion and Commission Findings

A. Comments

    The Commission specifically asked whether the proposed 180 day 
implementation period should be shortened. The Commission received one 
comment letter.\7\ The commenter supported the NYSE and NASD proposals 
\8\ because she favored regulation of short sales generally. However, 
the commenter believed that the implementation period should be 
shortened.
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    \7\ Letter from Carol McCrory, Visitiing Assistant Professor of 
Legal Skils, Stetson University College of Law (Jan. 30, 2007) 
(commenting on SR-NASD-2006-131 and SR-NYSE-2006-111).
    \8\ See id. The letter did not comment on the Amex proposal.
---------------------------------------------------------------------------

    Prior to filing with the Commission, NASD solicited comments on its 
proposed rule change in NASD Notice to Members 05-63 (September 2005) 
and received two comments.\9\ Of the two comment letters received, both 
were in favor of the proposed rule change. One commenter noted that 
minimal programming and costs would be required to implement this 
proposal, but recommended six months for implementation of the 
proposal.\10\ The other commenter indicated that increases or decreases 
in short interest positions are significant indicators of investor 
sentiment.\11\ As such, the commenter stated that timelier reporting of 
short interest data provides additional relevant information and more 
accurate indications of changes in investor outlook.\12\
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    \9\ Comments were received from the following: Lisa Morel-
Misener of Cognos Incorporated, dated October 27, 2005 and 
Christopher Charles of Wulff Hansen & Co., dated November 15, 2005.
    \10\ See supra note 9, Wulff Hansen & Co. letter.
    \11\ See supra note 9, Cognos Incorporated letter.
    \12\ Id.
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    In response to these comments and in recognition of technological 
and systems changes that may be required to implement the proposed rule 
change, the Commission finds that the 180 day implementation period 
proposed by the SROs will provide members adequate time to make any 
necessary changes.

B. Related Issues

    Short positions required to be reported under the SROs' rules are 
those resulting from ``short sales'' as the term is defined in Rule 200 
of Regulation SHO,\13\ with certain exceptions related to Exchange Act 
Rule 10a-1.\14\ Commission staff has instructed the SROs to review 
these exceptions to short interest reporting to determine whether 
further rulemaking is appropriate.
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    \13\ 17 CFR 242.200.
    \14\ 17 CFR 240.10a-1. NASD Rule 3360(b)(1) excludes positions 
that meet the requirements of subsections (e)(1), (6), (7), (8), and 
(10) of Rule 10a-1 and NYSE Rule 421.10 currently excludes positions 
resulting from sales specified in subsections (1), (6), (7), (8), 
(9) and (10) of paragraph (e) of Rule 10a-1. NYSE's proposal removes 
subsection (9). To conform with the NASD and NYSE rules, Amex Rule 
30A as proposed excludes positions resulting from sales specified in 
Rule 10a-1(e) (1), (6), (7), (8) or (10).
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C. Commission Findings

    After a review of the rule proposals and the comments, the 
Commission finds that the proposed rule changes are consistent with the 
requirements of the Act and the rules and regulations thereunder 
applicable to national securities exchanges and national securities 
associations, and in particular Sections 6(b)(5) \15\ and 15A(b)(6) 
\16\ of the Act, which require, among other things, that NASD, NYSE, 
and Amex 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. The 
Commission believes that the proposed rule changes will provide 
additional and more timely information related to short selling.\17\
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    \15\ 15 U.S.C. 78f(b)(5).
    \16\ 15 U.S.C. 78o-3(b)(6).
    \17\ In approving this proposed rule change, the Commission 
notes that it has considered the proposed rule's impact on 
efficiency, competition, and capital formation. 15 U.S.C. 78c(f).
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    It is therefore ordered, pursuant to Section 19(b)(2) of the Act, 
that the proposed rule changes (SR-NASD-2006-131; SR-NYSE-2006-111; SR-
Amex-2007-05) be, and it hereby are, approved.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\18\
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    \18\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
 [FR Doc. E7-4293 Filed 3-9-07; 8:45 am]
BILLING CODE 8010-01-P