Self-Regulatory Organizations; National Association of Securities Dealers, Inc. (n/k/a Financial Industry Regulatory Authority, Inc.); Notice of Filing of Proposed Rule Change Related to Mandated Use of an Automated Liability Notification System, 58918-58920 [E7-20385]

Download as PDF 58918 Federal Register / Vol. 72, No. 200 / Wednesday, October 17, 2007 / Notices Sector SPDR (XLE) and the Financial Select Sector SPDR (XLF).6 CBOE proposes to amend Footnote 6 of its Fee Schedule to note that XLE and XLF are not among the Penny Pilot classes in which it assesses a $.10 per contract marketing fee, similar to QQQQ options and IWM options. All other option classes being added to the Penny Pilot Program, including DIA options and SPY options, will be assessed the marketing fee at a rate of $.10 per contract. CBOE also proposes to make a nonsubstantive change to the text of Footnote 6 of its Fee Schedule to delete references to ‘‘LMM’’ because LMMs are not appointed in any option classes in which the marketing fee is assessed. CBOE is not amending its marketing fee program in any other respects. 2. Statutory Basis The Exchange believes that the proposed rule change is consistent with Section 6(b) of the Act 7 in general, and Section 6(b)(4) of the Act 8 in particular, in that it is designed to provide for the equitable allocation of reasonable dues, fees, and other charges among CBOE members and other persons using its facilities. 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 purposes of the Act. C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others No written comments were solicited or received with respect to the proposed rule change. sroberts on PROD1PC70 with NOTICES III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The foregoing proposed rule change has been designated as a fee change pursuant to Section 19(b)(3)(A)(ii) of the Act 9 and Rule 19b–4(f)(2) 10 thereunder, because it establishes or changes a due, fee, or other charge imposed by the Exchange. Accordingly, the proposal will take effect upon filing with the Commission. At any time within 60 6 See Securities Exchange Release No. 56565 (September 27, 2007), 72 FR 56403 (October 3, 2007) (SR–CBOE–2007–117) (approving expansion of Penny Pilot Program). 7 15 U.S.C. 78f(b). 8 15 U.S.C. 78f(b)(4). 9 15 U.S.C. 78s(b)(3)(A)(ii). 10 17 CFR 240.19b–4(f)(2). VerDate Aug<31>2005 19:05 Oct 16, 2007 Jkt 214001 days of the filing of such 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. 2007–117 and should be submitted on or before November 7, 2007. IV. Solicitation of Comments BILLING CODE 8011–01–P Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission’s Internet comment form (http://www.sec.gov/ rules/sro.shtml); or • Send an e-mail to rulecomments@sec.gov. Please include File Number SR–CBOE–2007–117 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–CBOE–2007–117. 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 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 CBOE. 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–CBOE– PO 00000 Frm 00115 Fmt 4703 Sfmt 4703 For the Commission, by the Division of Market Regulation, pursuant to delegated authority.11 Florence E. Harmon, Deputy Secretary. [FR Doc. E7–20459 Filed 10–16–07; 8:45 am] SECURITIES AND EXCHANGE COMMISSION [Release No. 34–56639; File No. SR–NASD– 2007–035] Self-Regulatory Organizations; National Association of Securities Dealers, Inc. (n/k/a Financial Industry Regulatory Authority, Inc.); Notice of Filing of Proposed Rule Change Related to Mandated Use of an Automated Liability Notification System October 11, 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 May 25, 2007, the National Association of Securities Dealers (‘‘NASD’’) filed with the Securities and Exchange Commission (‘‘Commission’’) the proposed rule change described in Items I, II, and III below, which items have been prepared primarily by the NASD.3 The Commission is publishing this notice to solicit comments on the proposed rule change from interested parties. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change NASD is proposing to amend Rule 11810(i) to mandate the use of the automated liability notification system of a registered clearing agency when issuing liability notices in connection with certain securities transactions provided both parties to the contract are participants in a registered clearing agency that has such an automated system.4 11 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 3 On July 26, 2007, the Commission approved a proposed rule change filed by NASD to amend NASD’s Certificate of Incorporation to reflect its name change to Financial Industry Regulatory Authority, Inc., or FINRA, in connection with the consolidation of the member firm regulatory functions of NASD and NYSE Regulation, Inc. See Exchange Act Release No. 56146 (July 26, 2007); 72 FR 42190 (Aug. 1, 2007). 4 Proposed new rule text is attached to NASD’s filing as Exhibit 1 and can be found at http:// 1 15 E:\FR\FM\17OCN1.SGM 17OCN1 Federal Register / Vol. 72, No. 200 / Wednesday, October 17, 2007 / 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 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 these statements.5 (A) Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change sroberts on PROD1PC70 with NOTICES (1) Purpose NASD Rule 11810(i) sets forth the procedures that must be followed when a party is owed securities that have become the subject of a voluntary corporate action, such as a tender or exchange offer. Under Rule 11810(i), the owed party delivers a liability notice to the owing or failing party. The liability notice sets a cut off date for the delivery of the securities by the owing party and provides notice to the owing party that the counterparty will be held liable for any damages caused by its failure to deliver the securities in time for the owed party to participate in the voluntary corporate action. If the owing party delivers the securities in response to the liability notice, it has met its delivery obligation. If the owing party fails to deliver the securities in sufficient time for the owed party to participate in the voluntary corporate action, it will be liable for any damages that may accrue thereby (i.e., in lieu of delivering the securities the owing party must deliver proceeds equivalent to the proceeds that the owed party would have received if it had been able to participate in the offer). The owed party has the responsibility to communicate its intentions to the owing party and to prove, if necessary, that the owing party received the liability notice. Rule 11810(i) currently requires broker-dealers to send liability notices using ‘‘electronic media having immediate receipt capabilities.’’ Although there is currently no one acceptable means for sending and tracking liability notices, NASD members have advised that it is industry practice to send liability notices by fax www.finra.org/RulesRegulation/RuleFilings/ index.htm. 5 The Commission has modified portions of the text of the summaries prepared by the NASD. VerDate Aug<31>2005 19:05 Oct 16, 2007 Jkt 214001 to the failing counterparty. Sending liability notices by fax is a manual, paper-intensive process that is subject to error. For example, the fax may be directed to the wrong department and not timely received by the correct department, or sent to the correct department but overlooked by the responsible person(s). In other cases, the receiver may not notify the sender that the fax has been received, and the sender must follow up with another fax or telephone call or both. The financial risk to an owing firm that misses or incorrectly processes a liability notice relating to a voluntary corporate action can be considerable, since the corporate action may involve hundreds of shareholders. In response to industry need for a reliable and uniform method of transmitting liability notices, The Depository Trust Company (‘‘DTC’’) developed SMART/Track for Corporate Action Liability Notification Service (‘‘SMART/Track’’). SMART/Track is a web-based system for the communication of corporate action liability notices that allows DTC participants and the clearing members of the National Securities Clearing Corporation to create, send, process and tract such notices.6 Transmitting liability notices through SMART/Track eliminates paper liability notices and provides firms with an electronic, centralized system for the distribution, management and control of liability notices and helps reduce the risks, costs, and delays resulting from missing or inaccurate information associated with paper corporate action liability notices. Specifically, SMART/Track provides participants with (1) more timely receipt and distribution of corporation action liability notifications; (2) a centralized system to manage and control all liability notifications on all issues; (3) immediate identification of the security affected by a corporate action liability notification; (4) detailed disclosure and clearer explanation of the terms and conditions of the corporate action; and (5) an audit trail with a complete record of actions taken regarding a liability notice. As proposed, NASD Rule 11810(i) will mandate the use of the automated liability notification system of a registered clearing agency when the parties to a contract are both participants in a registered clearing agency that has an automated service for corporate action liability notices. When either or both parties to a contract are 6 Currently DTC is the only registered clearing agency operating an automated corporate liability notification service. PO 00000 Frm 00116 Fmt 4703 Sfmt 4703 58919 not participants in a registered clearing agency that has an automated service for corporate action liability notices, Rule 11810(i) will continue to require the liability notice to be issued using written or comparable electronic media having immediate receipt capabilities. NASD proposes to announce the effective date of the proposed rule change in a ‘‘Notice to Members’’ that will be published no later than sixty days following the date of approval of the proposed rule change by the Commission. The NASD anticipates that the effective date of the proposed rule change will be thirty days following publication of the Notice to Members announcing the Commission’s approval of the proposed rule change. (2) Statutory Basis The statutory basis under the Act for this proposed rule change is the requirement under Section 15A of the Act, which requires, among other things, that the rules of a national securities association are 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 perfect the mechanism of a free and open market and a national market system, and in general to protect investors and the public interest.7 NASD believes that the proposed rule change is consistent with the provisions of the Act in that SMART/Track will eliminate the use of paper corporate action liability notices and will provide firms with an electronic, centralized system to distribute, manage, and control liability notices. In addition to reducing the risks, costs, and delays resulting from missing or inaccurate information associated with paper corporate action liability notices, SMART/Track gives firms detailed disclosure of the terms and conditions of the corporate action, enables firms to more timely receive and distribute corporate action liability notices, and provides an audit trail with a complete record of actions taken regarding a liability notice. (B) Self-Regulatory Organization’s Statement on Burden on Competition NASD does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. 7 15 E:\FR\FM\17OCN1.SGM U.S.C. 78f(b)(5). 17OCN1 58920 Federal Register / Vol. 72, No. 200 / Wednesday, October 17, 2007 / Notices (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 Within thirty-five 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 ninety days of such date if it finds such longer period to be appropriate and publishes its reasons for so finding or (ii) as to which the self-regulatory organization consents, the Commission will: (A) By order approve such proposed rule change or (B) Institute proceedings to determine whether the proposed rule change should be disapproved. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission’s Internet comment form (http://www.sec.gov/ rules/sro.shtml) or • Send an e-mail to rulecomments@sec.gov. Please include File Number SR–NASD–2007–035 in the subject line. sroberts on PROD1PC70 with NOTICES 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–2007–035. 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 VerDate Aug<31>2005 19:05 Oct 16, 2007 Jkt 214001 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 Section, 100 F Street, NE., Washington, DC 20549, on official business days between the hours of 10 a.m. and 3 p.m. Copies of such filings also will be available for inspection and copying at the principal office of the NASD and on NASD’s Web site, http://www.finra.org/ RulesRegulation/RuleFilings/index.htm. 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–2007–035 and should be submitted on or before November 7, 2007. upon filing with the Commission.5 The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. For the Commission by the Division of Market Regulation, pursuant to delegated authority.8 Florence E. Harmon, Deputy Secretary. [FR Doc. E7–20385 Filed 10–16–07; 8:45 am] II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, FINRA 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. FINRA has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements. BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–56644; File No. SR–FINRA– 2007–016] Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Reflect the Closing of the NASD/BSE Trade Reporting Facility October 11, 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 October 9, 2007, the Financial Industry Regulatory Authority, Inc. (‘‘FINRA’’) (f/k/a the National Association of Securities Dealers, Inc. (‘‘NASD’’)) filed with the Securities and Exchange Commission (‘‘Commission’’) the proposed rule change as described in Items I and II below, which Items have been prepared substantially by FINRA. FINRA has submitted the proposed rule change under Section 19(b)(3)(A) of the Act 3 and Rule 19b–4(f)(6) thereunder,4 which renders the proposal effective 8 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 PO 00000 Frm 00117 Fmt 4703 Sfmt 4703 I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change FINRA proposes to delete in their entirety the NASD Rule 4000D, 6000D, and 7000D Series and the Limited Liability Company Agreement of The NASD/BSE Trade Reporting Facility LLC (the ‘‘NASD/BSE TRF LLC Agreement’’), in light of the recent closing of the NASD/BSE Trade Reporting Facility (the ‘‘NASD/BSE TRF’’).6 The text of the proposed rule change is available at http://www.finra.org, at the principal offices of FINRA, and at the Commission’s Public Reference Room. A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The NASD/BSE TRF was approved by the Commission 7 and commenced operation in February 2007 to provide members with a mechanism for reporting locked-in trades in NMS stocks, as defined in Rule 600(b)(47) of Regulation NMS under the Act,8 effected otherwise than on an exchange. The Boston Stock Exchange, Inc. (‘‘BSE’’), the ‘‘Business Member’’ under the NASD/BSE TRF LLC Agreement, 5 FINRA has asked the Commission to waive the 30-day operative delay provided in Rule 19b– 4(f)(6)(iii). 17 CFR 240.19b–4(f)(6)(iii). 6 Effective July 30, 2007, FINRA was formed through the consolidation of NASD and the member regulatory functions of NYSE Regulation, Inc. Accordingly, from that date until the date it closed on September 21, 2007, the NASD/BSE TRF was doing business as the FINRA/BSE TRF. 7 See Securities Exchange Act Release No. 54931 (December 13, 2006), 71 FR 76409 (December 20, 2006) (order approving File No. SR–NASD–2006– 115). 8 17 CFR 242.600(b)(47). E:\FR\FM\17OCN1.SGM 17OCN1

Agencies

[Federal Register Volume 72, Number 200 (Wednesday, October 17, 2007)]
[Notices]
[Pages 58918-58920]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E7-20385]


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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-56639; File No. SR-NASD-2007-035]


Self-Regulatory Organizations; National Association of Securities 
Dealers, Inc. (n/k/a Financial Industry Regulatory Authority, Inc.); 
Notice of Filing of Proposed Rule Change Related to Mandated Use of an 
Automated Liability Notification System

 October 11, 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 May 25, 2007, the National Association of Securities Dealers 
(``NASD'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change described in Items I, II, and 
III below, which items have been prepared primarily by the NASD.\3\ The 
Commission is publishing this notice to solicit comments on the 
proposed rule change from interested parties.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ On July 26, 2007, the Commission approved a proposed rule 
change filed by NASD to amend NASD's Certificate of Incorporation to 
reflect its name change to Financial Industry Regulatory Authority, 
Inc., or FINRA, in connection with the consolidation of the member 
firm regulatory functions of NASD and NYSE Regulation, Inc. See 
Exchange Act Release No. 56146 (July 26, 2007); 72 FR 42190 (Aug. 1, 
2007).
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    NASD is proposing to amend Rule 11810(i) to mandate the use of the 
automated liability notification system of a registered clearing agency 
when issuing liability notices in connection with certain securities 
transactions provided both parties to the contract are participants in 
a registered clearing agency that has such an automated system.\4\
---------------------------------------------------------------------------

    \4\ Proposed new rule text is attached to NASD's filing as 
Exhibit 1 and can be found at http://www.finra.org/RulesRegulation/
RuleFilings/index.htm.

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

[[Page 58919]]

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 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 these 
statements.\5\
---------------------------------------------------------------------------

    \5\ The Commission has modified portions of the text of the 
summaries prepared by the NASD.
---------------------------------------------------------------------------

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

(1) Purpose
    NASD Rule 11810(i) sets forth the procedures that must be followed 
when a party is owed securities that have become the subject of a 
voluntary corporate action, such as a tender or exchange offer. Under 
Rule 11810(i), the owed party delivers a liability notice to the owing 
or failing party. The liability notice sets a cut off date for the 
delivery of the securities by the owing party and provides notice to 
the owing party that the counterparty will be held liable for any 
damages caused by its failure to deliver the securities in time for the 
owed party to participate in the voluntary corporate action.
    If the owing party delivers the securities in response to the 
liability notice, it has met its delivery obligation. If the owing 
party fails to deliver the securities in sufficient time for the owed 
party to participate in the voluntary corporate action, it will be 
liable for any damages that may accrue thereby (i.e., in lieu of 
delivering the securities the owing party must deliver proceeds 
equivalent to the proceeds that the owed party would have received if 
it had been able to participate in the offer). The owed party has the 
responsibility to communicate its intentions to the owing party and to 
prove, if necessary, that the owing party received the liability 
notice.
    Rule 11810(i) currently requires broker-dealers to send liability 
notices using ``electronic media having immediate receipt 
capabilities.'' Although there is currently no one acceptable means for 
sending and tracking liability notices, NASD members have advised that 
it is industry practice to send liability notices by fax to the failing 
counterparty. Sending liability notices by fax is a manual, paper-
intensive process that is subject to error. For example, the fax may be 
directed to the wrong department and not timely received by the correct 
department, or sent to the correct department but overlooked by the 
responsible person(s). In other cases, the receiver may not notify the 
sender that the fax has been received, and the sender must follow up 
with another fax or telephone call or both. The financial risk to an 
owing firm that misses or incorrectly processes a liability notice 
relating to a voluntary corporate action can be considerable, since the 
corporate action may involve hundreds of shareholders.
    In response to industry need for a reliable and uniform method of 
transmitting liability notices, The Depository Trust Company (``DTC'') 
developed SMART/Track for Corporate Action Liability Notification 
Service (``SMART/Track''). SMART/Track is a web-based system for the 
communication of corporate action liability notices that allows DTC 
participants and the clearing members of the National Securities 
Clearing Corporation to create, send, process and tract such 
notices.\6\ Transmitting liability notices through SMART/Track 
eliminates paper liability notices and provides firms with an 
electronic, centralized system for the distribution, management and 
control of liability notices and helps reduce the risks, costs, and 
delays resulting from missing or inaccurate information associated with 
paper corporate action liability notices. Specifically, SMART/Track 
provides participants with (1) more timely receipt and distribution of 
corporation action liability notifications; (2) a centralized system to 
manage and control all liability notifications on all issues; (3) 
immediate identification of the security affected by a corporate action 
liability notification; (4) detailed disclosure and clearer explanation 
of the terms and conditions of the corporate action; and (5) an audit 
trail with a complete record of actions taken regarding a liability 
notice.
---------------------------------------------------------------------------

    \6\ Currently DTC is the only registered clearing agency 
operating an automated corporate liability notification service.
---------------------------------------------------------------------------

    As proposed, NASD Rule 11810(i) will mandate the use of the 
automated liability notification system of a registered clearing agency 
when the parties to a contract are both participants in a registered 
clearing agency that has an automated service for corporate action 
liability notices. When either or both parties to a contract are not 
participants in a registered clearing agency that has an automated 
service for corporate action liability notices, Rule 11810(i) will 
continue to require the liability notice to be issued using written or 
comparable electronic media having immediate receipt capabilities.
    NASD proposes to announce the effective date of the proposed rule 
change in a ``Notice to Members'' that will be published no later than 
sixty days following the date of approval of the proposed rule change 
by the Commission. The NASD anticipates that the effective date of the 
proposed rule change will be thirty days following publication of the 
Notice to Members announcing the Commission's approval of the proposed 
rule change.
(2) Statutory Basis
    The statutory basis under the Act for this proposed rule change is 
the requirement under Section 15A of the Act, which requires, among 
other things, that the rules of a national securities association are 
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 perfect the 
mechanism of a free and open market and a national market system, and 
in general to protect investors and the public interest.\7\ NASD 
believes that the proposed rule change is consistent with the 
provisions of the Act in that SMART/Track will eliminate the use of 
paper corporate action liability notices and will provide firms with an 
electronic, centralized system to distribute, manage, and control 
liability notices. In addition to reducing the risks, costs, and delays 
resulting from missing or inaccurate information associated with paper 
corporate action liability notices, SMART/Track gives firms detailed 
disclosure of the terms and conditions of the corporate action, enables 
firms to more timely receive and distribute corporate action liability 
notices, and provides an audit trail with a complete record of actions 
taken regarding a liability notice.
---------------------------------------------------------------------------

    \7\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

(B) Self-Regulatory Organization's Statement on Burden on Competition

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

[[Page 58920]]

(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

    Within thirty-five 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 ninety days of such date if it finds 
such longer period to be appropriate and publishes its reasons for so 
finding or (ii) as to which the self-regulatory organization consents, 
the Commission will:
    (A) By order approve such proposed rule change or
    (B) Institute proceedings to determine whether the proposed rule 
change should be disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://
www.sec.gov/rules/sro.shtml) or
     Send an e-mail to rule-comments@sec.gov. Please include 
File Number SR-NASD-2007-035 in 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-2007-035. 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 Section, 100 F Street, 
NE., Washington, DC 20549, on official business days between the hours 
of 10 a.m. and 3 p.m. Copies of such filings also will be available for 
inspection and copying at the principal office of the NASD and on 
NASD's Web site, http://www.finra.org/RulesRegulation/RuleFilings/
index.htm. 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-2007-035 and should be submitted on or before November 7, 2007.

    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority.\8\
---------------------------------------------------------------------------

    \8\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7-20385 Filed 10-16-07; 8:45 am]
BILLING CODE 8011-01-P