Self-Regulatory Organizations: National Association of Securities Dealers, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Delay Implementation of Certain Changes to the Manning Rule, 40918-40920 [E7-14359]
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Federal Register / Vol. 72, No. 142 / Wednesday, July 25, 2007 / Notices
particular, the requirements of Section 6
of the Act.8 Specifically, the
Commission finds that the proposal is
consistent with Section 6(b)(5) of the
Act 9 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.
OATS was designed to provide an
accurate, time-sequenced record of
orders and transactions, beginning with
the receipt of an order at the first point
of contact between the broker-dealer
and the customer or counterparty and
further documenting the life of the order
through the process of execution. One of
the principle objectives of OATS is
customer protection through the
transparency of the executions of
customer orders. The Commission does
not believe that the proposed rule
change would impact this objective
since, by definition, Proprietary Trading
Firms do not handle customer orders.
Further, the Commission notes that
Nasdaq believes that the current
requirement for Proprietary Trading
Firms to transmit all order data
information is onerous and is not offset
by an equivalent regulatory benefit. In
addition, the Commission notes that this
approach parallels the approach
undertaken by the New York Stock
Exchange (‘‘NYSE’’) in NYSE Rule 132C,
which requires NYSE members, upon
request, to transmit order tracking data
to the NYSE.10
The Commission therefore believes
that it is consistent with the Act to
permit Proprietary Trading Firms to
submit OATS data to Nasdaq only upon
request.
V. Accelerated Approval
The Commission finds good cause for
approving the proposed rule change, as
modified by Amendment Nos. 1 and 2,
prior to the thirtieth day after
publishing notice of Amendment No. 2
in the Federal Register pursuant to
Section 19(b)(2) of the Act.11 In
rwilkins on PROD1PC63 with NOTICES
8 15
U.S.C. 78f.
U.S.C. 78f(b)(5).
10 See Securities Exchange Act Release No. 47689
(April 17, 2003), 68 FR 20200 (April 24, 2003)
(Order approving SR–NYSE–99–51).
11 15 U.S.C. 78s(b)(2). Pursuant to Section 19(b)(2)
of the Act, the Commission may not approve any
proposed rule change prior to the thirtieth day after
9 15
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Amendment No. 2, Nasdaq clarified that
the proposed exception from the daily
OATS transmissions requirements for
Proprietary Trading Firms would not
extend to persons associated with
Proprietary Trading Firms. The
Commission believes that this is a
clarifying change to the scope of the
proposed rule change and raises no
significant regulatory issues. The
Commission therefore finds good cause
exists to accelerate approval of the
proposed change, as modified by
Amendment Nos. 1 and 2, pursuant to
Section 19(b)(2) of the Act.
VI. Conclusion
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act,12 that the
proposed rule change (SR–NASDAQ–
2007–037), as modified by Amendments
No. 1 and 2, is approved on
anaccelerated basis.
For the Commission, by the Division of
Market Regulation, pursuant to delegated
authority.13
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7–14356 Filed 7–24–07; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–56103; File No. SR–NASD–
2007–039]
Self-Regulatory Organizations:
National Association of Securities
Dealers, Inc.; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change To Delay Implementation
of Certain Changes to the Manning
Rule
July 19, 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 June 20,
2007, the National Association of
Securities Dealers, Inc. (‘‘NASD’’) filed
with the Securities and Exchange
Commission (‘‘Commission’’) the
proposed rule change as described in
Items I, II and III below, which Items
have been substantially prepared by
NASD. NASD filed the proposed rule
change pursuant to Section 19(b)(3)(A)
of the Act 3 and Rule 19b–4(f)(6)
thereunder,4 which renders it effective
the date of publication of the notice thereof, unless
the Commission finds good cause for so doing.
12 15 U.S.C. 78s(b)(2).
13 17 CFR 200.30–3(a)(12).
1 15 U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 15 U.S.C. 78s(b)(3)(A).
4 17 CFR 240.19b–4(f)(6).
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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
NASD is proposing to delay
implementation of certain NASD rule
changes approved in SR–NASD–2005–
146 until November 26, 2007.5 There are
no new changes to the text of NASD
rules. The text of the proposed rule
change is available at NASD,
https://www.nasd.com, and the
Commission’s Public Reference Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission,
NASD included statements concerning
the purpose of and basis for the
proposed rule change and discussed any
comments it received on the 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
On February 26, 2007, the
Commission approved SR–NASD–2005–
146, which, among other clarifying and
conforming changes, proposed
amendments to NASD IM–2110–2 6 to
(1) expand the scope to apply to OTC
Equity Securities; 7 (2) modify the
minimum price-improvement standards
for securities trading in decimals; (3)
adopt on a permanent basis the pilot
price-improvement standards for
5 See Securities Exchange Act Release No. 55351
(February 26, 2007), 72 FR 9810 (March 5, 2007)
(order approving SR–NASD–2005–146).
6 Currently, NASD IM–2110–2 generally prohibits
a member from trading for its own account in an
exchange-listed security at a price that is equal to
or better than an unexecuted customer limit order
in that security, unless the member immediately
thereafter executes the customer limit order at the
price at which it traded for its own account or
better. As part of SR–NASD–2005–146, NASD
replaced the term ‘‘exchange-listed security’’ with
the term ‘‘NMS stock,’’ which is defined as any
NMS security other than an option. See Rule
600(b)(47) of Regulation NMS. Although the
replacement of the term would not become effective
until the November 26, 2007 final implementation
date, as stated in SR–NASD–2005–146, NASD IM–
2110–2 does not apply to options.
7 See NASD Rule 6610(d) (definition of ‘‘OTC
Equity Security’’).
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Federal Register / Vol. 72, No. 142 / Wednesday, July 25, 2007 / Notices
securities trading in decimals; and (4)
delete certain unnecessary text relating
to the minimum price-improvement
required for securities trading in
fractions. On April 27, 2007, NASD
published Notice to Members 07–19,
which announced the Commission’s
approval of SR–NASD–2005–146 and
established July 26, 2007 as the effective
date of the rule changes in SR–NASD–
2005–146.8
Following Commission approval of
SR–NASD–2005–146 and the
publication of the Notice to Members,
several firms have requested that the
effective date of the approved rule
changes be delayed to allow firms
additional time to make necessary
systems changes in light of other
competing technological demands
required by implementation of
Regulation NMS. In addition, some
broker-dealers raised concerns regarding
the application of the approved
minimum price-improvement standards.
NASD staff is currently revisiting the
amended price-improvement standards
in light of these concerns. If, based on
this review, NASD concludes that
further rulemaking is warranted, NASD
will file a separate rule change with the
Commission.
Therefore, to provide adequate time to
firms to make technological changes
given competing technological demands
from Regulation NMS, and to consider
and potentially act upon the concerns
regarding the minimum priceimprovement standards, NASD is
proposing that the effective date of
certain NASD rule changes approved in
SR–NASD–2005–146 as described
herein be delayed until November 26,
2007. Specifically, NASD is proposing
to delay the approved rule changes in
SR–NASD–2005–146 that relate solely
to the expansion of the scope of NASD
IM–2110–2 to OTC Equity Securities
and the related deletion of NASD Rule
6541. Accordingly, the requirements in
NASD Rule 6541 would continue to
apply to OTCBB securities until NASD
IM–2110–2 is implemented for OTC
Equity Securities.
In addition, the amendments in SR–
NASD–2005–146 also make changes to
the minimum price-improvement
standards in NASD IM–2110–2, which,
as approved, would apply uniformly to
both OTC Equity Securities and NMS
stocks. NASD is delaying these changes
as well, with one exception: For
customer limit orders in exchange-listed
securities priced less than $1.00 that are
at or inside the best inside market, the
8 See NASD Notice to Members 07–19 (April
2007) (announcing the effective date of the rule
changes in SR–NASD–2005–146).
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19:31 Jul 24, 2007
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minimum amount of price improvement
required is the lesser of $0.01 or onehalf (1⁄2) of the current inside spread.
This provision will go into effect on July
26, 2007, as currently scheduled.
All other changes unrelated to the
expansion to OTC Equity Securities,
including the deletion of certain
unnecessary text relating to the
minimum price-improvement required
for securities trading in fractions and
the adoption on a permanent basis of
the pilot price-improvement standards
for securities trading in decimals that
were approved pursuant to SR–NASD–
2005–146 will become effective as
scheduled on July 26, 2007.
NASD has filed the proposed rule
change for immediate effectiveness.
NASD proposes to implement the
proposed rule change as described
herein.
2. Statutory Basis
NASD believes that the proposed rule
change is consistent with the provisions
of Section 15A(b)(6) of the Act,9 which
requires, among other things, that NASD
rules be designed to prevent fraudulent
and manipulative acts and practices, to
promote just and equitable principles of
trade, and, in general, to protect
investors and the public interest. NASD
believes that the proposed rule change
will improve the treatment of customer
limit orders and promote investor
protection.
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, as amended.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
Written comments were neither
solicited nor received.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule
change does not:
(i) Significantly affect the protection
of investors or the public interest;
(ii) Impose any significant burden on
competition; and
(iii) Become operative for 30 days
from the date on which it was filed, or
such shorter time as the Commission
may designate, it has become effective
pursuant to Section 19(b)(3)(A) of the
Act 10 and Rule 19b–4(f)(6)
thereunder.11 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.
In accordance with Rule 19b–4,12
NASD submitted 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.
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 (https://www.sec.gov/
rules/sro.shtml); or
• Send an e-mail to rulecomments@sec.gov. Please include File
Number SR–NASD–2007–039 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–2007–039. This file
number should be included on the
subject line if e-mail is used. To help the
Commission process and review your
comments more efficiently, please use
only one method. The Commission will
post all comments on the Commission’s
Internet Web site (https://www.sec.gov/
rules/sro.shtml). Copies of the
submission, all subsequent
amendments, all written statements
with respect to the proposed rule
change that are filed with the
Commission, and all written
communications relating to the
proposed rule change between the
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for inspection and copying in
the Commission’s Public Reference
Room, 100 F Street, NE., Washington,
10 15
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(6).
12 17 CFR 240.19b–4.
11 17
9 15
PO 00000
U.S.C. 78o–3(b)(6).
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Federal Register / Vol. 72, No. 142 / Wednesday, July 25, 2007 / Notices
DC 20549, on official business days
between the hours of 10 a.m. and 3 p.m.
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–2007–039 and
should be submitted on or before
August 15, 2007.
For the Commission, by the Division of
Market Regulation, pursuant to delegated
authority.13
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7–14359 Filed 7–24–07; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–56101; File No. SR–Phlx–
2007–50]
Self-Regulatory Organizations;
Philadelphia Stock Exchange, Inc.;
Notice of Filing and Immediate
Effectiveness of a Proposed Rule
Change Relating To Extending the
Specialist Option Transaction Charge
Credit Pilot Program
July 19, 2007.
rwilkins on PROD1PC63 with NOTICES
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 June 22,
2007, 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, II, and III below, which Items
have been substantially prepared by the
Exchange. Phlx has designated this
proposal as one establishing or changing
a due, fee, or other charge imposed by
the Exchange under Section
19(b)(3)(A)(ii) of the Act 3 and Rule 19b–
4(f)(2) 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.
13 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)(ii).
4 17 CFR 240.19b–4(f)(2).
1 15
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19:31 Jul 24, 2007
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I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
Phlx proposes to extend for a one-year
period, until July 31, 2008, its current
pilot program that provides for an
option transaction charge credit of $0.21
per contract for Exchange options
specialist units 5 that incur Phlx option
transaction charges when a customer
order is delivered to the limit order
book via the Exchange’s Options Floor
Broker Management System (‘‘FBMS’’) 6
and is then sent to an away market and
executed via the Intermarket Option
Linkage (‘‘Linkage’’) under the Plan for
the Purpose of Creating and Operating
an Intermarket Option Linkage
(‘‘Plan’’) 7 as a Principal Acting as Agent
Order (‘‘P/A Order’’).8 The pilot
program in effect is currently scheduled
to expire on July 31, 2007.9 The text of
the proposed rule change is available at
the Exchange, the Commission’s Public
Reference Room, and https://
www.phlx.com.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
Exchange included statements
concerning the purpose of, and basis for,
5 The terms ‘‘specialist’’ and ‘‘specialist unit’’ are
used interchangeably herein.
6 The FBMS is designed to enable Floor Brokers
and/or their employeesto enter, route and report
transactions stemming from options orders received
on the Exchange. The FBMS also is designed to
establish an electronic audit trail for options orders
represented and executed by Floor Brokers on the
Exchange, such that the audit trail provides an
accurate, time-sequenced record of electronic and
other orders, quotations and transactions on the
Exchange, beginning with the receipt of an order by
the Exchange, and further documenting the life of
the order through the process of execution, partial
execution, or cancellation of that order. See Phlx
Rule 1080, Commentary .06.
7 See Securities Exchange Act Release Nos. 43086
(July 28, 2000), 65 FR 48023 (August 4, 2000) and
43573 (November 16, 2000), 65 FR 70851
(November 28, 2000) (order approving Phlx as a
participant in the Plan).
8 A P/A order is an order for the principal account
of a specialist (orequivalent entity on another
participant exchange that is authorized to represent
public customer orders), reflecting the terms of a
related unexecuted public customer order for which
the specialist is acting as agent. See Phlx Rule
1083(k)(i).
9 See Securities Exchange Act Release No. 54257
(August 1, 2006), 71 FR 45089 (August 8, 2006)
(SR–Phlx–2006–46). This proposal is scheduled to
be in effect for the same time period as fees for
Linkage Principal Orders (‘‘P Orders’’) and P/A
Orders. See Securities Exchange Act Release No.
54233 (July 27, 2006), 71 FR 44070 (August 3, 2006)
(SR–Phlx–2006–44). The Exchange intends to file a
separate proposed rule change to extend, for a oneyear period through July 31, 2008, the pilot relating
to transaction fees applicable to the execution of P/
A Orders and P Orders sent to the Exchange via
Linkage under the Plan.
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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. The
Exchange has substantially 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
Currently, the Exchange provides an
option transaction charge credit of $0.21
per contract for Exchange options
specialist units that incur Phlx option
transaction charges when a customer
order is delivered to the limit order
book via FBMS and is then sent to an
away market and executed via Linkage
under the Plan as a P/A Order.
The purpose of this proposal is to
continue to alleviate the potential
economic burden of multiple
transaction charges imposed on
Exchange specialist units by
establishing a credit for Exchange
option transaction charges incurred by
an Exchange specialist unit when a
customer limit order placed on the limit
order book by a Floor Broker 10 results
in an execution of a P/A Order that is
sent to another exchange via Linkage.
The Exchange believes that continuing
to give an options transaction charge
credit of $0.21 per contract should
encourage the use of Linkage and
should allow the Exchange to remain
competitive with other exchanges with
respect to the assessment of Linkagerelated fees.11
This proposal is to remain in effect as
a pilot program until July 31, 2008.12
2. Statutory Basis
The Exchange believes that the
proposed rule change is consistent with
Section 6(b) of the Act 13 in general, and
Section 6(b)(4) of the Act 14 in
10 A Floor Broker who wishes to place a limit
order on the limit orderbook must submit such a
limit order electronically through the FBMS. See
Exchange Rule 1063, Commentary .01. See also
Phlx Rule 1080, Commentary .02(b).
11 See Securities Exchange Act Release No. 53866
(May 25, 2006), 71 FR 31237 (June 1, 2006) (SR–
CBOE–2006–44) (rebate of certain transaction fees
to Designated Primary Market Makers related to the
execution of outbound P Orders and P/A Orders).
See also Footnote 8 and Section 21 of the CBOE
Fees Schedule.
12 This proposal is in connection with an existing
pilot program forLinkage P and P/A Orders and is
scheduled to be in effect for the same time period
as the pilot program for Linkage P and P/A Orders.
See supra at note 9.
13 15 U.S.C. 78f(b).
14 15 U.S.C. 78f(b)(4).
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]]>Agencies
[Federal Register Volume 72, Number 142 (Wednesday, July 25, 2007)]
[Notices]
[Pages 40918-40920]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E7-14359]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-56103; File No. SR-NASD-2007-039]
Self-Regulatory Organizations: National Association of Securities
Dealers, Inc.; Notice of Filing and Immediate Effectiveness of Proposed
Rule Change To Delay Implementation of Certain Changes to the Manning
Rule
July 19, 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 June 20, 2007, the National Association of Securities Dealers, Inc.
(``NASD'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I, II
and III below, which Items have been substantially prepared by NASD.
NASD filed the proposed rule change pursuant to Section 19(b)(3)(A) of
the Act \3\ and Rule 19b-4(f)(6) thereunder,\4\ which renders it
effective upon filing with the Commission. The Commission is publishing
this notice to solicit comments on the proposed rule change from
interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ 15 U.S.C. 78s(b)(3)(A).
\4\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
NASD is proposing to delay implementation of certain NASD rule
changes approved in SR-NASD-2005-146 until November 26, 2007.\5\ There
are no new changes to the text of NASD rules. The text of the proposed
rule change is available at NASD, https://www.nasd.com, and the
Commission's Public Reference Room.
---------------------------------------------------------------------------
\5\ See Securities Exchange Act Release No. 55351 (February 26,
2007), 72 FR 9810 (March 5, 2007) (order approving SR-NASD-2005-
146).
---------------------------------------------------------------------------
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
On February 26, 2007, the Commission approved SR-NASD-2005-146,
which, among other clarifying and conforming changes, proposed
amendments to NASD IM-2110-2 \6\ to (1) expand the scope to apply to
OTC Equity Securities; \7\ (2) modify the minimum price-improvement
standards for securities trading in decimals; (3) adopt on a permanent
basis the pilot price-improvement standards for
[[Page 40919]]
securities trading in decimals; and (4) delete certain unnecessary text
relating to the minimum price-improvement required for securities
trading in fractions. On April 27, 2007, NASD published Notice to
Members 07-19, which announced the Commission's approval of SR-NASD-
2005-146 and established July 26, 2007 as the effective date of the
rule changes in SR-NASD-2005-146.\8\
---------------------------------------------------------------------------
\6\ Currently, NASD IM-2110-2 generally prohibits a member from
trading for its own account in an exchange-listed security at a
price that is equal to or better than an unexecuted customer limit
order in that security, unless the member immediately thereafter
executes the customer limit order at the price at which it traded
for its own account or better. As part of SR-NASD-2005-146, NASD
replaced the term ``exchange-listed security'' with the term ``NMS
stock,'' which is defined as any NMS security other than an option.
See Rule 600(b)(47) of Regulation NMS. Although the replacement of
the term would not become effective until the November 26, 2007
final implementation date, as stated in SR-NASD-2005-146, NASD IM-
2110-2 does not apply to options.
\7\ See NASD Rule 6610(d) (definition of ``OTC Equity
Security'').
\8\ See NASD Notice to Members 07-19 (April 2007) (announcing
the effective date of the rule changes in SR-NASD-2005-146).
---------------------------------------------------------------------------
Following Commission approval of SR-NASD-2005-146 and the
publication of the Notice to Members, several firms have requested that
the effective date of the approved rule changes be delayed to allow
firms additional time to make necessary systems changes in light of
other competing technological demands required by implementation of
Regulation NMS. In addition, some broker-dealers raised concerns
regarding the application of the approved minimum price-improvement
standards. NASD staff is currently revisiting the amended price-
improvement standards in light of these concerns. If, based on this
review, NASD concludes that further rulemaking is warranted, NASD will
file a separate rule change with the Commission.
Therefore, to provide adequate time to firms to make technological
changes given competing technological demands from Regulation NMS, and
to consider and potentially act upon the concerns regarding the minimum
price-improvement standards, NASD is proposing that the effective date
of certain NASD rule changes approved in SR-NASD-2005-146 as described
herein be delayed until November 26, 2007. Specifically, NASD is
proposing to delay the approved rule changes in SR-NASD-2005-146 that
relate solely to the expansion of the scope of NASD IM-2110-2 to OTC
Equity Securities and the related deletion of NASD Rule 6541.
Accordingly, the requirements in NASD Rule 6541 would continue to apply
to OTCBB securities until NASD IM-2110-2 is implemented for OTC Equity
Securities.
In addition, the amendments in SR-NASD-2005-146 also make changes
to the minimum price-improvement standards in NASD IM-2110-2, which, as
approved, would apply uniformly to both OTC Equity Securities and NMS
stocks. NASD is delaying these changes as well, with one exception: For
customer limit orders in exchange-listed securities priced less than
$1.00 that are at or inside the best inside market, the minimum amount
of price improvement required is the lesser of $0.01 or one-half (\1/
2\) of the current inside spread. This provision will go into effect on
July 26, 2007, as currently scheduled.
All other changes unrelated to the expansion to OTC Equity
Securities, including the deletion of certain unnecessary text relating
to the minimum price-improvement required for securities trading in
fractions and the adoption on a permanent basis of the pilot price-
improvement standards for securities trading in decimals that were
approved pursuant to SR-NASD-2005-146 will become effective as
scheduled on July 26, 2007.
NASD has filed the proposed rule change for immediate
effectiveness. NASD proposes to implement the proposed rule change as
described herein.
2. Statutory Basis
NASD believes that the proposed rule change is consistent with the
provisions of Section 15A(b)(6) of the Act,\9\ which requires, among
other things, that NASD rules be designed to prevent fraudulent and
manipulative acts and practices, to promote just and equitable
principles of trade, and, in general, to protect investors and the
public interest. NASD believes that the proposed rule change will
improve the treatment of customer limit orders and promote investor
protection.
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\9\ 15 U.S.C. 78o-3(b)(6).
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B. Self-Regulatory Organization's Statement on Burden on Competition
NASD does not believe that the proposed rule change will result in
any burden on competition that is not necessary or appropriate in
furtherance of the purposes of the Act, as amended.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
Written comments were neither solicited nor received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule change does not:
(i) Significantly affect the protection of investors or the public
interest;
(ii) Impose any significant burden on competition; and
(iii) Become operative for 30 days from the date on which it was
filed, or such shorter time as the Commission may designate, it has
become effective pursuant to Section 19(b)(3)(A) of the Act \10\ and
Rule 19b-4(f)(6) thereunder.\11\ 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.
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\10\ 15 U.S.C. 78s(b)(3)(A).
\11\ 17 CFR 240.19b-4(f)(6).
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In accordance with Rule 19b-4,\12\ NASD submitted 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.
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\12\ 17 CFR 240.19b-4.
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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 (https://
www.sec.gov/rules/sro.shtml); or
Send an e-mail to rule-comments@sec.gov. Please include
File Number SR-NASD-2007-039 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-2007-039. This file
number should be included on the subject line if e-mail is used. To
help the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's Internet Web site (https://www.sec.gov/rules/
sro.shtml). Copies of the submission, all subsequent amendments, all
written statements with respect to the proposed rule change that are
filed with the Commission, and all written communications relating to
the proposed rule change between the Commission and any person, other
than those that may be withheld from the public in accordance with the
provisions of 5 U.S.C. 552, will be available for inspection and
copying in the Commission's Public Reference Room, 100 F Street, NE.,
Washington,
[[Page 40920]]
DC 20549, on official business days between the hours of 10 a.m. and 3
p.m. 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-2007-039 and should be submitted on
or before August 15, 2007.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\13\
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\13\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7-14359 Filed 7-24-07; 8:45 am]
BILLING CODE 8010-01-P
