Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Relating to Dissemination of Trade Reports for OTC Equity Securities Transactions of Fewer Than 100 Shares, 3783-3785 [E8-992]

Download as PDF Federal Register / Vol. 73, No. 14 / Tuesday, January 22, 2008 / Notices proposal is consistent with Section 6(c)(4) of the Exchange Act and does not constitute an effort by CBOE to decrease the number of CBOE members. sroberts on PROD1PC70 with NOTICES V. Pending State Court Litigation The Commission wants to emphasize the limited nature of our position on the state law issues we have addressed. The Commission is aware of the state court litigation between the CBOE and members of the CBOT and the state court’s decision to stay the litigation until the Commission acts on the CBOE rule proposal. We stress that our consideration of the state law questions in this matter should in no way prejudice or affect the state court’s consideration of those questions. As we explained, the state law questions played a role in our analysis of the federal law considerations the Commission is charged with deciding under the Exchange Act. To carry out our responsibilities under the Exchange Act (and also to avoid an endless cycle of our deference to the state court on the state law issues and the state court’s deference to us on the federal law issues) we have proceeded to review the CBOE rule proposal. Our decisions about state law matters, however, are only those required to serve as a basis for carrying out our Exchange Act responsibilities. We also recognize that our review of the CBOE proposed rule involves procedures different from those the state court uses in the pending litigation. This review process is not a forum to litigate state law issues that may arise regarding an SRO’s rule proposal. Rather, our review of a proposed rule of an SRO employs public notice and comment, the receipt of written submissions from the SRO and the public, and the possibility of a proceeding to determine whether it should be disapproved. To this process, we bring familiarity with SROs and their rules and extensive knowledge and experience with the relevant provisions of the Exchange Act. The state court applies the range of procedures used in traditional adversarial litigation, including discovery, rules of evidence, witnesses, cross-examination, motions, and the like. It has deep and specialized knowledge of Delaware corporate law. The state court thus is free to find the relevant facts and determine and apply the relevant state law in its normal fashion without according weight to our evaluation of the state law questions, which was done employing different procedures and for different VerDate Aug<31>2005 20:38 Jan 18, 2008 Jkt 214001 3783 purposes.190 And, as we have explained, if the state law decision calls into question the basis on which our decision here with respect to these state law issues or any other relevant state law issues was made, we would expect CBOE to respond appropriately, or we will act on our own as necessary. controversial’’ proposed rule change pursuant to Section 19(b)(3)(A)(iii) 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. VI. Conclusion It is therefore ordered, pursuant to Section 19(b)(2) of the Exchange Act,191 that the proposed rule change (SR– CBOE–2006–106), as amended, be, and hereby is approved. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change FINRA’s proposed rule change relates to the dissemination of last sale information for transactions of fewer than 100 shares in OTC Equity Securities.5 Specifically, FINRA is proposing that for OTC Equity Securities that traded at or above $175.00 per share during the fourth calendar quarter of 2007, FINRA will change the ‘‘unit of trade’’ from 100 shares to one share (such that transactions in these securities will no longer be considered ‘‘odd-lot transactions’’ for dissemination purposes) and will disseminate last sale information for all reported transactions of one or more shares in these securities. The proposed rule change amends FINRA’s trade report dissemination policy and does not require amendments to any rules. By the Commission. Florence E. Harmon, Deputy Secretary. [FR Doc. E8–954 Filed 1–18–08; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION Release No. 34–57143; File No. SR–FINRA– 2007–034] Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Relating to Dissemination of Trade Reports for OTC Equity Securities Transactions of Fewer Than 100 Shares January 14, 2008. 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 December 19, 2007, Financial Industry Regulatory Authority, Inc. (‘‘FINRA’’) (f/k/a 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 substantially prepared by FINRA. FINRA filed the proposal as a ‘‘non190 The Delaware court discussed possible ways in which the Commission’s jurisdiction and the court’s state law authority might interact. As the court emphasized, the court ‘‘has jurisdiction to consider the ‘economic rights’ issues by the Complaint because those claims emerge from and are governed by state contract or fiduciary duty law.’’ See Memorandum of Opinion, supra note 68, at 29. The court also noted that ‘‘even if it turns out that the SEC’s mandate requires that CBOT Full Members be excluded from trading on the CBOE,’’ then ‘‘it does not ineluctably follow that, in these unique circumstances, they are also divested of whatever economic (or contractual) rights they hold as a result of that status.’’ Id. at note 48. We agree with the Delaware court and welcome its expert determination of these issues. 191 15 U.S.C. 78s(b)(2). 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. PO 00000 Frm 00124 Fmt 4703 Sfmt 4703 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 those 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 parts of such statements. A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose Only reports of transactions that meet the ‘‘unit of trade’’ test pursuant to FINRA’s dissemination protocols are publicly disseminated. As a general matter, OTC Equity Securities have a unit of trade of 100 shares. While 3 15 U.S.C. 78s(b)(3)(A)(iii). CFR 240.19b–4(f)(6). 5 NASD Rule 6610(d) defines OTC Equity Security as ‘‘any non-exchange-listed security and certain exchange-listed securities that do not otherwise qualify for real-time trade reporting.’’ 4 17 E:\FR\FM\22JAN1.SGM 22JAN1 3784 Federal Register / Vol. 73, No. 14 / Tuesday, January 22, 2008 / Notices transactions of fewer than 100 shares (commonly referred to as ‘‘odd-lot transactions’’) in such securities are reported to FINRA,6 they are not publicly disseminated. FINRA believes that, consistent with the dissemination protocols for NMS stocks, disseminating last sale information for odd-lot transactions would provide minimal market value, particularly with respect to low-priced OTC Equity Securities. However, with respect to high-priced OTC Equity Securities, many (if not all) transactions may be for fewer than the standard unit of trade of 100 shares. Thus, information regarding trades at these levels is more valuable to the market and investors. In fact, trading data for such securities could effectively be unavailable to market participants if only trades of 100 or more shares were disseminated. Accordingly, FINRA disseminates last sale information for transactions of fewer than 100 shares in a limited number of high-priced OTC Equity Securities today. For these OTC Equity Securities, the unit of trade has been designated as one share, such that any transaction of one or more shares will meet the unit of trade test for that security and be disseminated. For example, if OTC Equity Security ABCD has a unit of trade of one share, a transaction of 25 shares of ABCD would meet the unit of trade test for that security and last sale information for the transaction would be disseminated. Under past practice, the unit of trade of OTC Equity Securities was changed on a case-by-case basis upon request from a market participant (e.g., a market maker or issuer) to facilitate the dissemination of trades of fewer than 100 shares. Typically, such changes were made in connection with securities trading above $200.00 per share. FINRA is proposing to adopt a more uniform policy regarding the dissemination of OTC Equity Securities and will publish a Notice informing members, investors and other interested parties of the new policy.7 Specifically, for all OTC Equity Securities that traded at or above $175.00 per share during the fourth calendar quarter of 2007, FINRA will designate the unit of trade as one (such that transactions in these securities will no longer be considered odd-lot transactions for dissemination purposes) and will disseminate last sale sroberts on PROD1PC70 with NOTICES 6 See NASD Rule 6620. the exception of NASD Rule 6250, which applies to dissemination of transaction information for TRACE-eligible securities, dissemination of trade reports is typically not governed by FINRA’s rules, but rather by its protocols. Thus, FINRA is not proposing to amend any rules to effectuate the change discussed herein. 7 With VerDate Aug<31>2005 20:38 Jan 18, 2008 Jkt 214001 information for all transactions of one or more shares in such securities. FINRA will publish a list of the OTC Equity Securities that meet the stated dissemination criteria in the proposed Notice and will also make this list available on the OTC Bulletin Board Web site (https://www.otcbb.com).8 FINRA staff anticipates that the unit of trade for the vast majority of OTC Equity Securities will remain 100 shares. Additionally, using the above criteria, FINRA will update the list of OTC Equity Securities at the end of each calendar quarter based on that quarter’s trading activity. While OTC Equity Securities may be added to the list, they generally will not be removed.9 FINRA staff believes that retaining OTC Equity Securities on the list, rather than reevaluating each security’s eligibility every calendar quarter, will achieve greater transparency and consistency with respect to trade data dissemination. FINRA believes that the proposed rule change will enhance transparency and the amount of information available to market participants with respect to transactions in OTC Equity Securities. FINRA is filing the proposed rule change for immediate effectiveness. FINRA will publish a Notice announcing the operative date of the new dissemination policy, which date will be at least 30 days after the date of filing. 2. Statutory Basis The proposed rule change is consistent with the provisions of Section 15A(b)(6) of the Act,10 which requires, among other things, that FINRA 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. FINRA believes that the proposed rule change will enhance transparency and the amount of information available to 8 FINRA notes that all OTC Equity Securities for which the unit of trade is currently designated as one will be included in this list and will remain on this list regardless of whether they meet the stated dissemination criteria. 9 FINRA may determine that an OTC Equity Security should be removed from the list if, e.g., there has been a significant corporate action, such as a stock split, that has changed the pricing in the security such that a unit of trade of one is no longer appropriate, or if the OTC Equity Security was erroneously included on the list as a result of inaccurate prices included in the trade report(s) that qualified the security for dissemination of last sale transaction information. Telephone conversation between Lisa Horrigan, Associate General Counsel, FINRA, and Ronesha Butler, Special Counsel, Division of Trading and Markets, Commission, on January 14, 2008. 10 15 U.S.C. 78o–3(b)(6). PO 00000 Frm 00125 Fmt 4703 Sfmt 4703 market participants with respect to transactions in OTC Equity Securities. B. Self-Regulatory Organization’s Statement on Burden on Competition The proposed rule change will not 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. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Because the foregoing 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 thirty days from the date on which it was filed, or such shorter time as the Commission may designate if consistent with the protection of investors and the public interest, it has become effective pursuant to Section 19(b)(3)(A) of the Act 11 and Rule 19b– 4(f)(6) 12 thereunder.13 At any time within 60 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 the furtherance of the purposes of the Act. 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–FINRA–2007–034 on the subject line. 11 15 U.S.C. 78s(b)(3)(A). CFR 240.19b–4(f)(6). 13 FINRA has given 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 on which it filed the proposed rule change. See 17 CFR 240.19b–4(f)(6)(iii). 12 17 E:\FR\FM\22JAN1.SGM 22JAN1 Federal Register / Vol. 73, No. 14 / Tuesday, January 22, 2008 / 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. SECURITIES AND EXCHANGE COMMISSION [Release No. 34–57144; File No. SR–ISE– 2008–03] Self-Regulatory Organizations; International Securities Exchange, LLC; Notice of Filing and Immediate All submissions should refer to File Number SR–FINRA–2007–034. This file Effectiveness of Proposed Rule Change Extending the Pilot Program number should be included on the subject line if e-mail is used. To help the Increasing Position and Exercise Limits for Options on the iShares Commission process and review your Russell 2000 Index Fund comments more efficiently, please use only one method. The Commission will January 14, 2008. post all comments on the Commission’s Pursuant to Section 19(b)(1) of the Internet Web site (https://www.sec.gov/ Securities Exchange Act of 1934 rules/sro.shtml). Copies of the (‘‘Act’’) 1 and Rule 19b–4 thereunder,2 submission, all subsequent notice is hereby given that on January 8, amendments, all written statements 2008, the International Securities with respect to the proposed rule Exchange, LLC (‘‘Exchange’’ or ‘‘ISE’’) filed with the Securities and Exchange change that are filed with the Commission (‘‘Commission’’) the Commission, and all written proposed rule change as described in communications relating to the Items I and II below, which Items have proposed rule change between the Commission and any person, other than been substantially prepared by the Exchange. The Exchange has designated those that may be withheld from the this proposal as non-controversial under public in accordance with the Section 19(b)(3)(A)(iii) of the Act 3 and provisions of 5 U.S.C. 552, will be Rule 19b–4(f)(6) thereunder,4 which available for inspection and copying in renders the proposed rule change the Commission’s Public Reference effective upon filing with the Room, 100 F Street, NE., Washington, Commission. The Commission is DC 20549, on official business days publishing this notice to solicit between the hours of 10 a.m. and 3 p.m. comments on the proposed rule change Copies of such filing also will be from interested persons. available for inspection and copying at I. Self-Regulatory Organization’s the principal office of FINRA. All Statement of the Terms of Substance of comments received will be posted the Proposed Rule Change without change; the Commission does not edit personal identifying The Exchange is proposing to extend information from submissions. You an existing pilot program that increases should submit only information that the position and exercise limits for you wish to make available publicly. All options on the iShares Russell 2000 Index Fund (‘‘IWM’’) traded on the submissions should refer to File Exchange (‘‘IWM Pilot Program’’). The Number SR–FINRA–2007–034 and text of the proposed rule change is should be submitted on or before available on the Exchange’s Web site February 12, 2008. (https://www.ise.com), at the Exchange’s For the Commission, by the Division of principal office, and at the Trading and Markets, pursuant to delegated Commission’s Public Reference Room. 14 authority. Florence E. Harmon, Deputy Secretary. [FR Doc. E8–992 Filed 1–18–08; 8:45 am] BILLING CODE 8011–01–P 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, 1 15 U.S.C. 78s(b)(1). CFR 240.19b–4. 3 15 U.S.C. 78s(b)(3)(A)(iii). 4 17 CFR 240.19b–4(f)(6). sroberts on PROD1PC70 with NOTICES 2 17 14 17 CFR 200.30–3(a)(12). VerDate Aug<31>2005 21:55 Jan 18, 2008 Jkt 214001 PO 00000 Frm 00126 Fmt 4703 Sfmt 4703 3785 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 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 The IWM Pilot Program provides for increased position and exercise limits for IWM options traded on the Exchange.5 Specifically, the IWM Pilot Program increases the position and exercise limits for IWM options from 250,000 contracts to 500,000 contracts.6 The purpose of the proposed rule change is to extend the IWM Pilot Program until March 1, 2008. The Exchange is not proposing any other changes to the IWM Pilot Program. The Exchange believes that extending the IWM Pilot Program is warranted due to the positive feedback received from market participants and for the reasons cited in the original rule filing that proposed the adoption of the IWM Pilot Program. Further, the Exchange represents that it has not encountered any problems or difficulties relating to the IWM Pilot Program since its inception. The Exchange believes that maintaining the increased position and exercise limits for IWM options will lead to a more liquid and more competitive market environment for IWM options that will benefit customers interested in trading this product. As a result, the Exchange requests that the Commission extend the pilot through March 1, 2008. 5 The proposal that established the IWM Pilot Program was designated by the Commission to be effective and operative upon filing. See Securities Exchange Act Release No. 55175 (January 25, 2007), 72 FR 4753 (February 1, 2007) (SR–ISE–2007–07). The IWM Pilot Program was extended by the Commission and is due to expire on January 18, 2008. See Securities Exchange Act Release No. 56020 (July 6, 2007), 72 FR 38109 (July 12, 2007) (SR–ISE–2007–56). 6 Pursuant to ISE Rule 414, the exercise limit established under Rule 414 for IWM options shall be equivalent to the position limit prescribed for IWM options in Supplementary Material .01 to Rule 412. The increased exercise limits would only be in effect during the pilot period, to run from January 22, 2007 through March 1, 2008. E:\FR\FM\22JAN1.SGM 22JAN1

Agencies

SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 73, Number 14 (Tuesday, January 22, 2008)]
[Notices]
[Pages 3783-3785]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-992]


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

SECURITIES AND EXCHANGE COMMISSION

Release No. 34-57143; File No. SR-FINRA-2007-034]


Self-Regulatory Organizations; Financial Industry Regulatory 
Authority, Inc.; Notice of Filing and Immediate Effectiveness of a 
Proposed Rule Change Relating to Dissemination of Trade Reports for OTC 
Equity Securities Transactions of Fewer Than 100 Shares

 January 14, 2008.
    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 December 19, 2007, Financial Industry Regulatory Authority, Inc. 
(``FINRA'') (f/k/a 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 substantially prepared by FINRA. FINRA 
filed the proposal as a ``non-controversial'' proposed rule change 
pursuant to Section 19(b)(3)(A)(iii) 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)(iii).
    \4\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------

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

    FINRA's proposed rule change relates to the dissemination of last 
sale information for transactions of fewer than 100 shares in OTC 
Equity Securities.\5\ Specifically, FINRA is proposing that for OTC 
Equity Securities that traded at or above $175.00 per share during the 
fourth calendar quarter of 2007, FINRA will change the ``unit of 
trade'' from 100 shares to one share (such that transactions in these 
securities will no longer be considered ``odd-lot transactions'' for 
dissemination purposes) and will disseminate last sale information for 
all reported transactions of one or more shares in these securities. 
The proposed rule change amends FINRA's trade report dissemination 
policy and does not require amendments to any rules.
---------------------------------------------------------------------------

    \5\ NASD Rule 6610(d) defines OTC Equity Security as ``any non-
exchange-listed security and certain exchange-listed securities that 
do not otherwise qualify for real-time trade reporting.''
---------------------------------------------------------------------------

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 those 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 parts of such statements.

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

1. Purpose
    Only reports of transactions that meet the ``unit of trade'' test 
pursuant to FINRA's dissemination protocols are publicly disseminated. 
As a general matter, OTC Equity Securities have a unit of trade of 100 
shares. While

[[Page 3784]]

transactions of fewer than 100 shares (commonly referred to as ``odd-
lot transactions'') in such securities are reported to FINRA,\6\ they 
are not publicly disseminated. FINRA believes that, consistent with the 
dissemination protocols for NMS stocks, disseminating last sale 
information for odd-lot transactions would provide minimal market 
value, particularly with respect to low-priced OTC Equity Securities. 
However, with respect to high-priced OTC Equity Securities, many (if 
not all) transactions may be for fewer than the standard unit of trade 
of 100 shares. Thus, information regarding trades at these levels is 
more valuable to the market and investors. In fact, trading data for 
such securities could effectively be unavailable to market participants 
if only trades of 100 or more shares were disseminated.
---------------------------------------------------------------------------

    \6\ See NASD Rule 6620.
---------------------------------------------------------------------------

    Accordingly, FINRA disseminates last sale information for 
transactions of fewer than 100 shares in a limited number of high-
priced OTC Equity Securities today. For these OTC Equity Securities, 
the unit of trade has been designated as one share, such that any 
transaction of one or more shares will meet the unit of trade test for 
that security and be disseminated. For example, if OTC Equity Security 
ABCD has a unit of trade of one share, a transaction of 25 shares of 
ABCD would meet the unit of trade test for that security and last sale 
information for the transaction would be disseminated. Under past 
practice, the unit of trade of OTC Equity Securities was changed on a 
case-by-case basis upon request from a market participant (e.g., a 
market maker or issuer) to facilitate the dissemination of trades of 
fewer than 100 shares. Typically, such changes were made in connection 
with securities trading above $200.00 per share.
    FINRA is proposing to adopt a more uniform policy regarding the 
dissemination of OTC Equity Securities and will publish a Notice 
informing members, investors and other interested parties of the new 
policy.\7\ Specifically, for all OTC Equity Securities that traded at 
or above $175.00 per share during the fourth calendar quarter of 2007, 
FINRA will designate the unit of trade as one (such that transactions 
in these securities will no longer be considered odd-lot transactions 
for dissemination purposes) and will disseminate last sale information 
for all transactions of one or more shares in such securities. FINRA 
will publish a list of the OTC Equity Securities that meet the stated 
dissemination criteria in the proposed Notice and will also make this 
list available on the OTC Bulletin Board Web site (https://
www.otcbb.com).\8\ FINRA staff anticipates that the unit of trade for 
the vast majority of OTC Equity Securities will remain 100 shares.
---------------------------------------------------------------------------

    \7\ With the exception of NASD Rule 6250, which applies to 
dissemination of transaction information for TRACE-eligible 
securities, dissemination of trade reports is typically not governed 
by FINRA's rules, but rather by its protocols. Thus, FINRA is not 
proposing to amend any rules to effectuate the change discussed 
herein.
    \8\ FINRA notes that all OTC Equity Securities for which the 
unit of trade is currently designated as one will be included in 
this list and will remain on this list regardless of whether they 
meet the stated dissemination criteria.
---------------------------------------------------------------------------

    Additionally, using the above criteria, FINRA will update the list 
of OTC Equity Securities at the end of each calendar quarter based on 
that quarter's trading activity. While OTC Equity Securities may be 
added to the list, they generally will not be removed.\9\ FINRA staff 
believes that retaining OTC Equity Securities on the list, rather than 
re-evaluating each security's eligibility every calendar quarter, will 
achieve greater transparency and consistency with respect to trade data 
dissemination.
---------------------------------------------------------------------------

    \9\ FINRA may determine that an OTC Equity Security should be 
removed from the list if, e.g., there has been a significant 
corporate action, such as a stock split, that has changed the 
pricing in the security such that a unit of trade of one is no 
longer appropriate, or if the OTC Equity Security was erroneously 
included on the list as a result of inaccurate prices included in 
the trade report(s) that qualified the security for dissemination of 
last sale transaction information. Telephone conversation between 
Lisa Horrigan, Associate General Counsel, FINRA, and Ronesha Butler, 
Special Counsel, Division of Trading and Markets, Commission, on 
January 14, 2008.
---------------------------------------------------------------------------

    FINRA believes that the proposed rule change will enhance 
transparency and the amount of information available to market 
participants with respect to transactions in OTC Equity Securities.
    FINRA is filing the proposed rule change for immediate 
effectiveness. FINRA will publish a Notice announcing the operative 
date of the new dissemination policy, which date will be at least 30 
days after the date of filing.
2. Statutory Basis
    The proposed rule change is consistent with the provisions of 
Section 15A(b)(6) of the Act,\10\ which requires, among other things, 
that FINRA 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. FINRA 
believes that the proposed rule change will enhance transparency and 
the amount of information available to market participants with respect 
to transactions in OTC Equity Securities.
---------------------------------------------------------------------------

    \10\ 15 U.S.C. 78o-3(b)(6).
---------------------------------------------------------------------------

B. Self-Regulatory Organization's Statement on Burden on Competition

    The proposed rule change will not 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.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Because the foregoing 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 thirty days from the date on which it was filed, 
or such shorter time as the Commission may designate if consistent with 
the protection of investors and the public interest, it has become 
effective pursuant to Section 19(b)(3)(A) of the Act \11\ and Rule 19b-
4(f)(6) \12\ thereunder.\13\
---------------------------------------------------------------------------

    \11\ 15 U.S.C. 78s(b)(3)(A).
    \12\ 17 CFR 240.19b-4(f)(6).
    \13\ FINRA has given 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 on which it filed the proposed rule change. See 17 CFR 
240.19b-4(f)(6)(iii).
---------------------------------------------------------------------------

    At any time within 60 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 the furtherance of the purposes of the Act.

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-FINRA-2007-034 on the subject line.

[[Page 3785]]

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-FINRA-2007-034. 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, 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 FINRA. 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-FINRA-2007-034 and should be 
submitted on or before February 12, 2008. 

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\14\
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    \14\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E8-992 Filed 1-18-08; 8:45 am]
BILLING CODE 8011-01-P

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