Self-Regulatory Organization; The NASDAQ Stock Market LLC; Order Approving Proposed Rule Change and Amendment No. 1 Thereto To Amend Its Rule Governing the Relation of a Nasdaq Market Maker's Quotations to the Prevailing Market, 64102-64103 [E7-22164]

Download as PDF 64102 Federal Register / Vol. 72, No. 219 / Wednesday, November 14, 2007 / Notices not accrue to exchanges.6 The NYSE has indicated that because there are currently no fees for reporting trades to the NASD/NYSE TRF, the NYSE will fund regulatory costs associated with the NASD/NYSE TRF from NYSE general revenues. FINRA is proposing that the effective date of the proposed rule change shall be retroactive to April 18, 2007, the date on which the NASD/NYSE TRF commenced operation. 2. Statutory Basis FINRA believes that the proposed rule change is consistent with the provisions of section 15A of the Act,7 in general, and with section 15A(b)(5) of the Act,8 in particular, which requires, among other things, that FINRA rules provide for the equitable allocation of reasonable dues, fees and other charges among members and issuers and other persons using any facility or system that FINRA operates or controls. FINRA believes that the proposed rule change is a reasonable and equitable credit structure in that it will be applied uniformly among members that participate in the NASD/NYSE TRF and that the NYSE has indicated that all regulatory costs owed by the NYSE as the Business Member related to the NASD/NYSE TRF will be funded by NYSE general revenues. B. Self-Regulatory Organization’s Statement on Burden on Competition FINRA does not believe that the proposed rule change will result in any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants or Others Written comments were neither solicited nor received. mstockstill on PROD1PC66 with NOTICES 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 6 See letter dated April 27, 2006 from Mr. John A. Thain, Chief Executive Officer, NYSE Group, to Chairman Cox, SEC. In that letter, the NYSE also stated that ‘‘Since dealer-internalized trades do not contribute directly to price discovery, the ideal resolution would be to remove such trades from the revenue sharing formula.’’ 7 15 U.S.C. 78o–3. 8 15 U.S.C. 78o–3(b)(5). VerDate Aug<31>2005 18:23 Nov 13, 2007 Jkt 214001 (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. 2007–031 and should be submitted on or before December 5, 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 No. SR–NASD–2007–031 on the subject line. For the Commission, by the Division of Market Regulation, pursuant to delegated authority.9 Florence E. Harmon, Deputy Secretary. [FR Doc. E7–22163 Filed 11–13–07; 8:45 am] SECURITIES AND EXCHANGE COMMISSION [Release No. 34–56759; File No. SR– NASDAQ–2007–069] Self-Regulatory Organization; The NASDAQ Stock Market LLC; Order Approving Proposed Rule Change and Amendment No. 1 Thereto To Amend Its Rule Governing the Relation of a Nasdaq Market Maker’s Quotations to the Prevailing Market November 7, 2007. On August 1, 2007, The NASDAQ Stock Market LLC (‘‘Nasdaq’’) filed with Paper Comments the Securities and Exchange Commission (‘‘Commission’’), pursuant • Send paper comments in triplicate to section 19(b)(1) of the Securities to Nancy M. Morris, Secretary, Exchange Act of 1934 (‘‘Act’’) 1 and Rule Securities and Exchange Commission, 19b–4 thereunder,2 a proposed rule Station Place, 100 F Street, NE., change to eliminate a requirement Washington, DC 20549–1090. governing the relation of Nasdaq market All submissions should refer to File makers’ quotations to the prevailing Number SR–NASD–2007–031. This file market. On September 19, 2007, Nasdaq number should be included on the subject line if e-mail is used. To help the filed Amendment No. 1 to the proposed rule change. The proposed rule change, Commission process and review your as amended, was published for comments more efficiently, please use only one method. The Commission will comment in the Federal Register on 3 post all comments on the Commission’s October 5, 2007. The Commission received no comments regarding the Internet Web site (http://www.sec.gov/ proposal, and is thereby approving the rules/sro.shtml). Copies of the proposed rule change as modified by submission, all subsequent Amendment No. 1. amendments, all written statements The Commission finds that the with respect to the proposed rule proposed rule change is consistent with change that are filed with the the requirements of the Act and the Commission, and all written rules and regulations thereunder communications relating to the applicable to a national securities proposed rule change between the 4 Commission and any person, other than exchange. In particular, the Commission finds that the proposed those that may be withheld from the rule change is consistent with section public in accordance with the 6(b)(5) of the Act, 5 which requires that provisions of 5 U.S.C. 552, will be the rules of an exchange be designed to available for inspection and copying in promote just and equitable principles of the Commission’s Public Reference Room on official business days between trade, to remove impediments to and perfect the mechanism of a free and the hours of 10 a.m. and 3 p.m. Copies open market and a national securities of such filing also will be available for inspection and copying at the principal 9 17 CFR 200.30–3(a)(12). office of FINRA. All comments received 1 15 U.S.C. 78s(b)(1). will be posted without change; the 2 17 CFR 240.19b–4. Commission does not edit personal 3 See Securities Exchange Act Release No. 56586 (October 1, 2007), 72 FR 57085. identifying information from 4 In approving this proposed rule change, the submissions. You should submit only Commission has considered the proposed rule’s information that you wish to make impact on efficiency, competition, and capital available publicly. All submissions formation. See 15 U.S.C. 78c(f). should refer to File Number SR–NASD– 5 15 U.S.C. 78f(b)(5). PO 00000 Frm 00065 Fmt 4703 Sfmt 4703 E:\FR\FM\14NON1.SGM 14NON1 Federal Register / Vol. 72, No. 219 / Wednesday, November 14, 2007 / Notices system, and, in general, to protect investors and the public interest. Nasdaq proposes to amend Rule 4613(c) to eliminate the requirement that a Nasdaq market maker’s quotations be ‘‘reasonably related to the prevailing market.’’ The requirement was adopted in 1987, at which time Nasdaq was part of the National Association of Securities Dealers, Inc. and operated an over-thecounter market with competing dealers. Nasdaq states that the requirement is no longer meaningful, given the regulatory changes, as well as the changes Nasdaq has made to the way its market operates in the last 20 years. However, for each security in which they are registered, market makers would continue to be required to be willing to buy and sell the security for their own account on a continuous basis and at all times maintain a two-sided, attributable quotation that is displayed in the Nasdaq Quotation Montage. The Commission believes that the proposal is reasonable in that it mirrors the market maker definition set forth in section 3(a)(38) of the Act 6 and is consistent with market maker obligations contained in rules of other national securities exchanges.7 Furthermore, the Commission notes that Nasdaq has represented that it will carefully monitor the performance of market makers to determine if the proposal has any impact on the extent to which market makers quote at or near the inside market.8 It is therefore ordered, pursuant to section 19(b)(2) of the Act,9 that the proposed rule change (SR–NASDAQ– 2007–069), as modified by Amendment No. 1, be, and it hereby is, approved. 6 15 U.S.C. 78c(a)(38). e.g., NYSE Arca Rule 7.23. 8 In addition, the Commission notes that this rule change does not affect the market maker exception from the ‘‘locate’’ requirement of Regulation SHO under the Act. Rule 203(b)(2)(iii) of Regulation SHO provides an exception from the ‘‘locate’’ requirement for short sales executed by market makers, as defined in section 3(a)(38) of the Act, but only in connection with bona-fide market making activities. To qualify for Regulation SHO’s ‘‘locate’’ exception, a broker-dealer must be both a market maker in the specific security and engaged in bona fide market making at the time of the short sale for which the broker-dealer is claiming the exception. Thus, a broker-dealer’s general status as a market maker or its status as a market maker in the security being sold short does not qualify it for the exception. Further, Regulation SHO’s ‘‘locate’’ requirement applies on a transaction-by-transaction basis and, therefore, a market maker must determine whether it is engaged in bona fide market making for each short sale transaction. See Securities Exchange Act Release No. 50103 (July 28, 2004), 69 FR 48008 (August 6, 2004). 9 15 U.S.C. 78s(b)(2). mstockstill on PROD1PC66 with NOTICES 7 See, VerDate Aug<31>2005 18:23 Nov 13, 2007 Jkt 214001 For the Commission, by the Division of Market Regulation, pursuant to delegated authority.10 Florence E. Harmon, Deputy Secretary. [FR Doc. E7–22164 Filed 11–13–07; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–56763; File No. SR– NYSEArca–2007–81] Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Order Granting Accelerated Approval of Proposed Rule Change To Trade Shares of Funds of the Rydex ETF Trust Pursuant to Unlisted Trading Privileges November 7, 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 August 2, 2007, NYSE Arca, Inc. (the ‘‘Exchange’’), through its wholly-owned subsidiary, NYSE Arca Equities, Inc. (‘‘NYSE Arca Equities’’), 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. This order provides notice of the proposed rule change and approves the proposed rule change on an accelerated basis. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange, through NYSE Arca Equities, proposes to trade shares (‘‘Shares’’) of 45 funds of the Rydex ETF Trust (‘‘Trust’’) based on numerous domestic indexes pursuant to unlisted trading privileges (‘‘UTP’’). The text of the proposed rule change is available at the Exchange, the Commission’s Public Reference Room, and http:// www.nyse.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 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 10 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 1 15 PO 00000 Frm 00066 Fmt 4703 Sfmt 4703 64103 places specified in Item III 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 Under NYSE Arca Equities Rule 5.2(j)(3), which permits the trading of Shares either by listing or pursuant to UTP,3 the Exchange proposes to trade pursuant to UTP shares of 45 funds of the Trust that are designated as Rydex Leveraged Funds (the ‘‘Leveraged Funds’’), Rydex Inverse Funds (the ‘‘Inverse Funds’’), and Rydex Leveraged Inverse Funds (the ‘‘Leveraged Inverse Funds’’ and together with the Leveraged Funds and Inverse Funds, the ‘‘Funds’’). The Commission has approved the listing and trading of the Shares on the American Stock Exchange LLC (‘‘Amex’’).4 Each of the Funds will have a distinct investment objective by attempting, on a daily basis, to correspond to a specified multiple of the performance, or the inverse performance, of a particular equity securities index as described in the Amex Notice. A detailed discussion of the investment objective of each of the Funds; the portfolio management methodology for each of the Funds, including specific information about the portfolio composition for each Fund (e.g., the ‘‘IIV File’’ and portfolio composition file or ‘‘PCF’’); the investment techniques for each of the Funds; the creation and redemption of baskets of Shares for each of the Funds; and the calculation methodology of the 3 In October 1999, the Commission approved NYSE Arca Equities Rule 5.2(j)(3), which sets forth the rules related to listing and trading criteria for ‘‘Investment Company Units’’. See Securities Exchange Act Release No. 41983 (October 6, 1999), 64 FR 56008 (October 15, 1999) (SR–PCX–1998–29). In July 2001, the Commission also approved the Exchange’s generic listing standards for listing and trading, or the trading pursuant to UTP, of Investment Company Units under NYSE Arca Equities Rule 5.2(j)(3). See Securities Exchange Act Release No. 44551 (July 12, 2001), 66 FR 37716–01 (July 19, 2001) (SR–PCX–2001–14). The definition of an Investment Company Unit is set forth in NYSE Arca Equities Rule 5.1(b)(15), which provides that an Investment Company Unit is a security representing an interest in a registered investment company that could be organized as a unit investment trust, an open-end management investment company, or a similar entity. 4 See Securities Exchange Act Release No. 56713 (October 29, 2007) (SR–Amex–2007–74) (granting approval to list and trade the Shares on Amex) (‘‘Amex Approval Order’’); Securities Exchange Act Release No. 56218 (August 7, 2007), 72 FR 45469 (August 14, 2007) (SR–Amex–2007–74) (providing notice of Amex’s proposal to list and trade the Shares (‘‘Amex Notice’’)). E:\FR\FM\14NON1.SGM 14NON1

Agencies

[Federal Register Volume 72, Number 219 (Wednesday, November 14, 2007)]
[Notices]
[Pages 64102-64103]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E7-22164]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-56759; File No. SR-NASDAQ-2007-069]


Self-Regulatory Organization; The NASDAQ Stock Market LLC; Order 
Approving Proposed Rule Change and Amendment No. 1 Thereto To Amend Its 
Rule Governing the Relation of a Nasdaq Market Maker's Quotations to 
the Prevailing Market

November 7, 2007.
    On August 1, 2007, The NASDAQ Stock Market LLC (``Nasdaq'') filed 
with the Securities and Exchange Commission (``Commission''), pursuant 
to section 19(b)(1) of the Securities Exchange Act of 1934 (``Act'') 
\1\ and Rule 19b-4 thereunder,\2\ a proposed rule change to eliminate a 
requirement governing the relation of Nasdaq market makers' quotations 
to the prevailing market. On September 19, 2007, Nasdaq filed Amendment 
No. 1 to the proposed rule change. The proposed rule change, as 
amended, was published for comment in the Federal Register on October 
5, 2007.\3\ The Commission received no comments regarding the proposal, 
and is thereby approving the proposed rule change as modified by 
Amendment No. 1.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 56586 (October 1, 
2007), 72 FR 57085.
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    The Commission finds that the proposed rule change is consistent 
with the requirements of the Act and the rules and regulations 
thereunder applicable to a national securities exchange.\4\ In 
particular, the Commission finds that the proposed rule change is 
consistent with section 6(b)(5) of the Act, \5\ which requires that the 
rules of an exchange be designed to promote just and equitable 
principles of trade, to remove impediments to and perfect the mechanism 
of a free and open market and a national securities

[[Page 64103]]

system, and, in general, to protect investors and the public interest.
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    \4\ In approving this proposed rule change, the Commission has 
considered the proposed rule's impact on efficiency, competition, 
and capital formation. See 15 U.S.C. 78c(f).
    \5\ 15 U.S.C. 78f(b)(5).
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    Nasdaq proposes to amend Rule 4613(c) to eliminate the requirement 
that a Nasdaq market maker's quotations be ``reasonably related to the 
prevailing market.'' The requirement was adopted in 1987, at which time 
Nasdaq was part of the National Association of Securities Dealers, Inc. 
and operated an over-the-counter market with competing dealers. Nasdaq 
states that the requirement is no longer meaningful, given the 
regulatory changes, as well as the changes Nasdaq has made to the way 
its market operates in the last 20 years. However, for each security in 
which they are registered, market makers would continue to be required 
to be willing to buy and sell the security for their own account on a 
continuous basis and at all times maintain a two-sided, attributable 
quotation that is displayed in the Nasdaq Quotation Montage. The 
Commission believes that the proposal is reasonable in that it mirrors 
the market maker definition set forth in section 3(a)(38) of the Act 
\6\ and is consistent with market maker obligations contained in rules 
of other national securities exchanges.\7\ Furthermore, the Commission 
notes that Nasdaq has represented that it will carefully monitor the 
performance of market makers to determine if the proposal has any 
impact on the extent to which market makers quote at or near the inside 
market.\8\
---------------------------------------------------------------------------

    \6\ 15 U.S.C. 78c(a)(38).
    \7\ See, e.g., NYSE Arca Rule 7.23.
    \8\ In addition, the Commission notes that this rule change does 
not affect the market maker exception from the ``locate'' 
requirement of Regulation SHO under the Act. Rule 203(b)(2)(iii) of 
Regulation SHO provides an exception from the ``locate'' requirement 
for short sales executed by market makers, as defined in section 
3(a)(38) of the Act, but only in connection with bona-fide market 
making activities.
    To qualify for Regulation SHO's ``locate'' exception, a broker-
dealer must be both a market maker in the specific security and 
engaged in bona fide market making at the time of the short sale for 
which the broker-dealer is claiming the exception. Thus, a broker-
dealer's general status as a market maker or its status as a market 
maker in the security being sold short does not qualify it for the 
exception. Further, Regulation SHO's ``locate'' requirement applies 
on a transaction-by-transaction basis and, therefore, a market maker 
must determine whether it is engaged in bona fide market making for 
each short sale transaction. See Securities Exchange Act Release No. 
50103 (July 28, 2004), 69 FR 48008 (August 6, 2004).
---------------------------------------------------------------------------

    It is therefore ordered, pursuant to section 19(b)(2) of the 
Act,\9\ that the proposed rule change (SR-NASDAQ-2007-069), as modified 
by Amendment No. 1, be, and it hereby is, approved.
---------------------------------------------------------------------------

    \9\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\10\
---------------------------------------------------------------------------

    \10\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7-22164 Filed 11-13-07; 8:45 am]
BILLING CODE 8011-01-P