Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change to Establish a Directed Order Type, 11069-11071 [E7-4328]

Download as PDF Federal Register / Vol. 72, No. 47 / Monday, March 12, 2007 / Notices The monthly credit is applied against the first $25,000 (or $50,000, in the case of December 2006) in monthly specialist fixed fees otherwise due the CHX from a participant firm. If the participant firm’s fixed fee liability is less than the credit amount, the CHX would apply a credit equal to the amount of the fixed fee liability, but would not issue a refund to such participant firm for the remaining balance of the credit, nor would the CHX carry forward the balance of the credit for application to future fixed fee liabilities.5 2. Statutory Basis The CHX believes the proposal is consistent with the requirements of the Act and the rules and regulations thereunder that are applicable to a national securities exchange, and, in particular, with the requirements of Section 6(b).6 The proposed rule change is consistent with Section 6(b)(4) of the Act in that it provides for the equitable allocation of reasonable dues, fees and other charges among the Exchange’s members and will result in an additional credit for CHX specialist firms impacted by the Exchange’s transition to its new trading model. The proposed rule change is consistent with Section 6(b)(5) of the Act because it would promote just and equitable principles of trade, remove impediments to, and perfect the mechanism of, a free and open market and a national market system, and, in general, protect investors and the public interest by permitting the Exchange to provide incentives for its specialist firms to support the transition to new technology that will result in fully automated executions. B. Self-Regulatory Organization’s Statement on Burden on Competition The Exchange does not believe that the proposed rule change will impose any burden on competition. pwalker on PROD1PC71 with NOTICES C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants or Others No written comments were either solicited or received. 5 For example, if a specialist firm’s monthly fixed fee liability for November 2006 was $32,000, the CHX would apply the $25,000 credit and the firm would be billed for the remaining balance of $7,000 in net fixed fees. If a specialist firm’s fixed fee liability was $10,000, the CHX would apply a credit of $10,000, offsetting the entire liability, and the CHX would not bill the specialist firm for any fixed fees. The CHX would not issue a refund of $15,000 to the specialist firm on account of the unused portion of the available credit and the unused portion would not be available to offset fixed fee liabilities in future months. 6 15 U.S.C. 78f(b). VerDate Aug<31>2005 18:04 Mar 09, 2007 Jkt 211001 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 Exchange 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. 11069 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–CHX–2007–02 and should be submitted on or before March 27, 2007. For the Commission, by the Division of Market Regulation, pursuant to delegated authority.7 Florence E. Harmon, Deputy Secretary. [FR Doc. E7–4325 Filed 3–9–07; 8:45 am] BILLING CODE 8010–01–P 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: SECURITIES AND EXCHANGE COMMISSION [Release No. 34–55405; File No. SR– NASDAQ–2007–020] 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–CHX–2007–02 on the subject line. Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change to Establish a Directed Order Type March 6, 2007. Pursuant to Section 19(b)(1) 1 of the Securities Exchange Act of 1934 (the ‘‘Act’’) 2 and Rule 19b–4 thereunder,3 notice is hereby given that on March 2, Paper Comments 2007, The NASDAQ Stock Market LLC (‘‘Nasdaq’’ or ‘‘Exchange’’) filed with the • Send paper comments in triplicate Securities and Exchange Commission to Nancy M. Morris, Secretary, (‘‘Commission’’) the proposed rule Securities and Exchange Commission, change as described in Items I and II 100 F Street, NE., Washington, DC below, which Items have been 20549–1090. substantially prepared by the Exchange. All submissions should refer to File Nasdaq has designated this proposal as Number SR–CHX–2007–02. This file non-controversial under Section number should be included on the 19(b)(3)(A) of the Act 4 and Rule 19b– subject line if e-mail is used. To help the 4(f)(6) thereunder.5 The Commission is Commission process and review your publishing this notice to solicit comments more efficiently, please use comments on the proposed rule change only one method. The Commission will from interested persons. post all comments on the Commission’s Internet Web site (http://www.sec.gov/ I. Self-Regulatory Organization’s rules/sro.shtml). Copies of the Statement of the Terms of Substance of submission, all subsequent the Proposed Rule Change amendments, all written statements Nasdaq proposes to amend Nasdaq with respect to the proposed rule Rule 4611 to update and codify the change that are filed with the requirements applicable to Nasdaq Commission, and all written members that provide sponsored access communications relating to the to other firms and customers to the proposed rule change between the Nasdaq execution system. Commission and any person, other than The text of the proposed rule change those that may be withheld from the is below. Proposed new language is public in accordance with the provisions of 5 U.S.C. 552, will be 7 17 CFR 200.30–3(a)(12). available for inspection and copying in 1 15 U.S.C.78s(b)(1). the Commission’s Public Reference 2 15 U.S.C. 78a. Room. Copies of the filing also will be 3 17 CFR 240.19b–4 4 15 U.S.C. 78s(b)(3)(A). available for inspection and copying at 5 17 CFR 240.19b–4(f)(6). the principal offices of the Exchange. PO 00000 Frm 00099 Fmt 4703 Sfmt 4703 E:\FR\FM\12MRN1.SGM 12MRN1 11070 Federal Register / Vol. 72, No. 47 / Monday, March 12, 2007 / Notices regarding the proposal. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements. italicized; proposed deletions are in brackets.6 * * * * * 4750. NASDAQ MARKET CENTER— EXECUTION SERVICES 4751. Definitions The following definitions apply to the Rule 4600 and 4750 Series for the trading of securities listed on a national securities exchange other than Nasdaq. (a)–(e) No change. (f) The term ‘‘Order Type’’ shall mean the unique processing prescribed for designated orders that are eligible for entry into the System, and shall include: (1)–(8) No change. (9) ‘‘Directed Orders’’ are orders that are directed to an exchange other than Nasdaq as directed by the entering party without checking the Nasdaq book. If unexecuted, the order (or unexecuted portion thereof) shall be returned to the entering party. This option may only be used for orders with time-in-force parameters of IOC. Directed Orders may be designated as intermarket sweep orders by the entering party to execute against the full displayed size of any protected bid or offer (as defined in Rule 600(b) of Regulation NMS under the Act). A broker-dealer that designates an order as an intermarket sweep order has the responsibility of complying with Rules 610 and 611 of Regulation NMS. (g)–(i) No change. * * * * * 4755. Order Entry Parameters (a) System Orders (1) (A) No Change. (B) A System order may also be designated as Reserve Order, a Pegged Order, a Non-Displayed Order, a Minimum Quantity Order, an Intermarket Sweep Order, a Price to Comply order, a Price to Comply Post order, [or] a Discretionary Order, or a Directed Order. (C) No Change. (2)–(4) No change. * * * * * pwalker on PROD1PC71 with NOTICES 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 changes and discussed any comments it received 6 Changes are marked to the rule text that appears in the electronic Nasdaq Manual found at nasdaq.complinet.com/nasdaq/display/index.html. VerDate Aug<31>2005 18:04 Mar 09, 2007 Jkt 211001 A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose Nasdaq proposes to create a new order type—the Directed Order—for use by its members in compliance with their obligations under Regulation NMS.7 Directed Orders will be entered by a Nasdaq member and sent to a market center other than Nasdaq without checking the Nasdaq book. The entering member will select the market center to receive the order This functionality existed in Nasdaq’s former Brut and INET facilities in the form of a ‘‘Thru’’ order that members used to route trading interest directly to the New York Stock Exchange or American Stock Exchange to avoid trading through those markets.8 If unexecuted, the order (or unexecuted portion thereof) shall be returned to the entering party. This option may only be used for orders with time-in-force parameters of IOC. This order will provide additional flexibility and functionality to Nasdaq’s system and to members that wish to use the system to comply with their obligation to avoid trading through any Protected Quotation within the meaning of Rule 600(b)(58) of Regulation NMS.9 Directed Orders may be designated as intermarket sweep orders (as defined in Rule 600(b)(30) of Regulation NMS 10) and therefore will provide Nasdaq member’s the ability to execute against the full displayed size) of any Protected Bid or Protected Offer (as defined in Rule 600(b)(57) of Regulation NMS 11) in the case of a limit order to sell or buy with a price that is superior to the limit price of the limit order identified in the intermarket sweep order. Nasdaq members will be required to comply with the requirements of Rules 610 and 611 of Regulation NMS 12 when designating Directed Orders as intermarket sweep orders. A brokerdealer that designates an order as an intermarket sweep order has the responsibility of complying with Rules 610 and 611 of Regulation NMS. When 7 See 17 CFR 242.600 et seq. former NASD Rules 4903(b) and 4956(a). 9 17 CFR 242.600(b)(58). 10 17 CFR 242.600(b)(30). 11 17 CFR 242.600(b)(57). 12 17 CFR 242.610; 17 CFR 242.611. 8 See PO 00000 Frm 00100 Fmt 4703 Sfmt 4703 Nasdaq’s execution system receives a Directed Order that is designated as an intermarket sweep order, Nasdaq’s system will pass that order to NASDAQ Execution Services, LLC, Nasdaq’s broker-dealer subsidiary. Nasdaq Execution Services has connectivity to route to all automated trading centers displaying protected quotations.13 Nasdaq Execution Services will accept orders only from Nasdaq, which in turn accepts orders only from Nasdaq members. Because Nasdaq Execution Services will be routing orders strictly on behalf of Nasdaq members, and Nasdaq members that designate Directed Orders as intermarket sweep orders are obligated to comply with Rules 610 and 611 of Regulation NMS, Nasdaq Execution Services will not perform additional validations to ensure that orders are properly designated as intermarket sweep orders. 2. Statutory Basis Nasdaq believes that the proposed rule change is consistent with the provisions of Section 6 of the Act,14 in general, and with Section 6(b)(5) of the Act,15 in particular, in that the proposal is designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to foster cooperation and coordination with persons engaged in regulating, clearing, settling, processing information with respect to, and facilitating transactions in securities, to remove impediments to and perfect the mechanism of a free and open market and a national market system, and, in general, to protect investors and the public interest. B. Self-Regulatory Organization’s Statement on Burden on Competition The Exchange does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purpose of the Act. C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants or Others Written comments on the proposed rule change were neither solicited nor received. 13 See Responses to Frequently Asked Questions, posted on the nasdaqtrader.com Web site at http:// www.nasdaqtrader.com/trader/tradingservices/ regnms_faqs.pdf. 14 15 U.S.C. 78f. 15 15 U.S.C. 78f(b)(5). E:\FR\FM\12MRN1.SGM 12MRN1 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

Agencies

[Federal Register Volume 72, Number 47 (Monday, March 12, 2007)]
[Notices]
[Pages 11069-11071]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E7-4328]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-55405; File No. SR-NASDAQ-2007-020]


Self-Regulatory Organizations; The NASDAQ Stock Market LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change to 
Establish a Directed Order Type

March 6, 2007.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby 
given that on March 2, 2007, The NASDAQ Stock Market LLC (``Nasdaq'' 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. 
Nasdaq has designated this proposal as non-controversial under Section 
19(b)(3)(A) of the Act \4\ and Rule 19b-4(f)(6) thereunder.\5\ The 
Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons.
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    \1\ 15 U.S.C.78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4
    \4\ 15 U.S.C. 78s(b)(3)(A).
    \5\ 17 CFR 240.19b-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    Nasdaq proposes to amend Nasdaq Rule 4611 to update and codify the 
requirements applicable to Nasdaq members that provide sponsored access 
to other firms and customers to the Nasdaq execution system.
    The text of the proposed rule change is below. Proposed new 
language is

[[Page 11070]]

italicized; proposed deletions are in brackets.\6\
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    \6\ Changes are marked to the rule text that appears in the 
electronic Nasdaq Manual found at nasdaq.complinet.com/nasdaq/
display/index.html.
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* * * * *
4750. NASDAQ MARKET CENTER--EXECUTION SERVICES
4751. Definitions
    The following definitions apply to the Rule 4600 and 4750 Series 
for the trading of securities listed on a national securities exchange 
other than Nasdaq.
    (a)-(e) No change.
    (f) The term ``Order Type'' shall mean the unique processing 
prescribed for designated orders that are eligible for entry into the 
System, and shall include: (1)-(8) No change.
    (9) ``Directed Orders'' are orders that are directed to an exchange 
other than Nasdaq as directed by the entering party without checking 
the Nasdaq book. If unexecuted, the order (or unexecuted portion 
thereof) shall be returned to the entering party. This option may only 
be used for orders with time-in-force parameters of IOC.
    Directed Orders may be designated as intermarket sweep orders by 
the entering party to execute against the full displayed size of any 
protected bid or offer (as defined in Rule 600(b) of Regulation NMS 
under the Act). A broker-dealer that designates an order as an 
intermarket sweep order has the responsibility of complying with Rules 
610 and 611 of Regulation NMS.
    (g)-(i) No change.
* * * * *
4755. Order Entry Parameters
(a) System Orders
    (1)
    (A) No Change.
    (B) A System order may also be designated as Reserve Order, a 
Pegged Order, a Non-Displayed Order, a Minimum Quantity Order, an 
Intermarket Sweep Order, a Price to Comply order, a Price to Comply 
Post order, [or] a Discretionary Order, or a Directed Order.
    (C) No Change.
    (2)-(4) 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 changes and 
discussed any comments it received regarding the proposal. The text of 
these statements may be examined at the places specified in Item IV 
below. The Exchange has prepared summaries, set forth in sections A, B, 
and C below, of the most significant aspects of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    Nasdaq proposes to create a new order type--the Directed Order--for 
use by its members in compliance with their obligations under 
Regulation NMS.\7\ Directed Orders will be entered by a Nasdaq member 
and sent to a market center other than Nasdaq without checking the 
Nasdaq book. The entering member will select the market center to 
receive the order This functionality existed in Nasdaq's former Brut 
and INET facilities in the form of a ``Thru'' order that members used 
to route trading interest directly to the New York Stock Exchange or 
American Stock Exchange to avoid trading through those markets.\8\ If 
unexecuted, the order (or unexecuted portion thereof) shall be returned 
to the entering party. This option may only be used for orders with 
time-in-force parameters of IOC.
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    \7\ See 17 CFR 242.600 et seq.
    \8\ See former NASD Rules 4903(b) and 4956(a).
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    This order will provide additional flexibility and functionality to 
Nasdaq's system and to members that wish to use the system to comply 
with their obligation to avoid trading through any Protected Quotation 
within the meaning of Rule 600(b)(58) of Regulation NMS.\9\ Directed 
Orders may be designated as intermarket sweep orders (as defined in 
Rule 600(b)(30) of Regulation NMS \10\) and therefore will provide 
Nasdaq member's the ability to execute against the full displayed size) 
of any Protected Bid or Protected Offer (as defined in Rule 600(b)(57) 
of Regulation NMS \11\) in the case of a limit order to sell or buy 
with a price that is superior to the limit price of the limit order 
identified in the intermarket sweep order.
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    \9\ 17 CFR 242.600(b)(58).
    \10\ 17 CFR 242.600(b)(30).
    \11\ 17 CFR 242.600(b)(57).
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    Nasdaq members will be required to comply with the requirements of 
Rules 610 and 611 of Regulation NMS \12\ when designating Directed 
Orders as intermarket sweep orders. A broker-dealer that designates an 
order as an intermarket sweep order has the responsibility of complying 
with Rules 610 and 611 of Regulation NMS. When Nasdaq's execution 
system receives a Directed Order that is designated as an intermarket 
sweep order, Nasdaq's system will pass that order to NASDAQ Execution 
Services, LLC, Nasdaq's broker-dealer subsidiary. Nasdaq Execution 
Services has connectivity to route to all automated trading centers 
displaying protected quotations.\13\ Nasdaq Execution Services will 
accept orders only from Nasdaq, which in turn accepts orders only from 
Nasdaq members. Because Nasdaq Execution Services will be routing 
orders strictly on behalf of Nasdaq members, and Nasdaq members that 
designate Directed Orders as intermarket sweep orders are obligated to 
comply with Rules 610 and 611 of Regulation NMS, Nasdaq Execution 
Services will not perform additional validations to ensure that orders 
are properly designated as intermarket sweep orders.
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    \12\ 17 CFR 242.610; 17 CFR 242.611.
    \13\ See Responses to Frequently Asked Questions, posted on the 
nasdaqtrader.com Web site at http://www.nasdaqtrader.com/trader/
tradingservices/regnms_faqs.pdf.
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2. Statutory Basis
    Nasdaq believes that the proposed rule change is consistent with 
the provisions of Section 6 of the Act,\14\ in general, and with 
Section 6(b)(5) of the Act,\15\ in particular, in that the proposal is 
designed to prevent fraudulent and manipulative acts and practices, to 
promote just and equitable principles of trade, to foster cooperation 
and coordination with persons engaged in regulating, clearing, 
settling, processing information with respect to, and facilitating 
transactions in securities, to remove impediments to and perfect the 
mechanism of a free and open market and a national market system, and, 
in general, to protect investors and the public interest.
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    \14\ 15 U.S.C. 78f.
    \15\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purpose of the Act.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants or Others

    Written comments on the proposed rule change were neither solicited 
nor received.

[[Page 11071]]

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\
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    \16\ 15 U.S.C. 78s(b)(3)(A).
    \17\ 17 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 pre-filing notice requirement. The 
Commission has determined to grant this request.
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    At any time within 60 days of the filing of the proposed rule 
change, the Commission may summarily abrogate such rule change if it 
appears to the Commission that such action is necessary or appropriate 
in the public interest, for the protection of investors, or otherwise 
in furtherance of the purposes of the Act.
    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.
---------------------------------------------------------------------------

    \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).
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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 e-mail to rule-comments@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.

All submissions should refer to file Number SR-NASDAQ-2007-020. 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 
filings will also be available for inspection and copying at the 
principal office of the Exchange. All comments received will be posted 
without change; the Commission does not edit personal identifying 
information from submissions. You should submit only information that 
you wish to make available publicly. All submissions should refer to 
File number SR-NASDAQ-2007-020 and should be submitted on or before 
April 2, 2007.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\20\
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    \20\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
 [FR Doc. E7-4328 Filed 3-9-07; 8:45 am]
BILLING CODE 8010-01-P