[Federal Register: November 9, 2004 (Volume 69, Number 216)]
[Notices]
[Page 65003-65004]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr09no04-97]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-50621; File No. SR-NASD-2004-151]
Self-Regulatory Organizations; Notice of Filing and Immediate
Effectiveness of Proposed Rule Change by the National Association of
Securities Dealers, Inc. Making Technical Modifications to the NASD
Trade Reporting Rules
November 2, 2004.
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 12, 2004, the National Association of Securities Dealers,
Inc. (``NASD''), through its subsidiary, The Nasdaq Stock Market, Inc.
(``Nasdaq''), 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 prepared by Nasdaq. Nasdaq has
designated this proposal as one concerned solely with the
administration of the self-regulatory organization under Section
19(b)(3)(A)(iii) of the Act \3\ and Rule 19b-4(f)(3) thereunder,\4\
which renders the rule effective upon Commission receipt of this
filing. The Commission is publishing this notice to solicit comments on
the proposed rule change from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 7 CFR 240.19b-4.
\3\ 15 U.S.C. 78s(b)(3)(A)(iii).
\4\ 17 CFR 240.19b-4(f)(3).
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
Nasdaq proposes to make technical modifications to the NASD trade
reporting rules. These modifications do not in any way alter members'
trade reporting obligations. The changes merely reflect technical
language changes necessitated by the fact that SR-NASD-2004-076 (the
``name change'' filing'') \5\ was filed without including the language
changes previously approved as part of SR-NASD-2003-159.\6\ In
addition, the filing makes two technical corrections to the text of
NASD Rules 5430(b)(10) and 6620(e)(5) to correct placement errors made
in SR-NASD-2004-076.\7\ The text of the proposed rule change is
available at the NASD and at the Commission.
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\5\ Securities Exchange Act Release No. 50074 (July 23, 2004),
69 FR 45866 (July 30, 2004).
\6\ Securities Exchange Act Release No. 49581 (April 19, 2004),
69 FR 22578 (April 26, 2004).
\7\ See footnote 5, supra.
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II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, Nasdaq included statements
concerning the purpose of and basis for the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. Nasdaq has prepared summaries, set forth in Sections A,
B, and C below, of the most significant aspects of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
Nasdaq proposes to make technical modifications to the NASD trade
reporting rules. These modifications do not in any way alter members'
trade reporting obligations. The changes merely reflect technical
language changes necessitated by the fact that SR-NASD-2004-076 \8\ was
filed without including the language previously approved as part of SR-
NASD-2003-159.\9\
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\8\ Id.
\9\ See footnote 6, supra.
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On April 19, 2004, the Commission approved SR-NASD-2003-159,\10\
which filing created several new trade report modifiers and expanded
the use of certain existing modifiers. For example, Nasdaq created the
.ST modifier, which it will attach to late reports of pre-open and
after-hours trades. The filing also proposed expanding use of the .W
modifier to identify Stop Stock Transactions, and allowing the .PRP
modifier to be used for exchange-listed securities. These modifications
pertain only to reports submitted to Nasdaq's Automated Confirmation
Transaction Service (``ACT''), and do not affect reports submitted to
the NASD's alternative display facility. The appropriate language
changes were included in the filing--SR-NASD-2003-159.\11\
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\10\ Id.
\11\ Id.
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Subsequent to the Commission approving SR-NASD-2003-159, Nasdaq
filed, as effective upon filing, SR-NASD-2004-076,\12\ re-naming
certain Nasdaq systems. For example, Nasdaq's trade reporting system
and its execution system were known as ACT and SuperMontage,
respectively. SR-NASD-2004-076 \13\ eliminated the individual names of
these systems, which are referred to collectively now as the Nasdaq
Market Center. However, Nasdaq deliberately did not incorporate in the
name-change filing the rule language changes approved in SR-NASD-2003-
159 \14\ because, at that time, there were some questions as to when,
or if, some of the new modifiers would be implemented.
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\12\ See footnote 5, supra.
\13\ Id.
\14\ See footnote 6, supra.
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The .ST modifier, while approved by the Commission, could not be
implemented until the respective participants of the Nasdaq UTP Plan
and Consolidated Tape Association Plan (``CTA Plan'') approved the
changes, which approval had not been obtained when the name-change
filing was submitted. Nasdaq believed incorporating the rule language
changes approved in SR-NASD-2003-159 \15\ in the name-change filing
would create confusion because the language was not effective.
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\15\ Id.
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Since the filing of SR-NASD-2004-076,\16\ Nasdaq has obtained
approval from the Nasdaq UTP Plan and CTA Plan participants to
implement the .ST modifier and other modifiers approved in SR-NASD-
2003-159.\17\ Because of these developments, Nasdaq believes it is
appropriate to include the language associated with these modifiers in
the NASD rules. However, given that implementation of some of the
changes will be delayed for an additional period of time, Nasdaq is
adding footnotes after affected text to indicate that the rule
[[Page 65004]]
language modifications will become effective at a later date. These
footnotes were not included in SR-NASD-2003-159,\18\ and thus are new
language being added by the current filing.
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\16\ See footnote 5, supra.
\17\ See footnote 6, supra.
\18\ Id.
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Nasdaq also is adding new language to avoid confusion about when
the time of execution must be included on all reports submitted to the
Nasdaq Market Center. In SR-NASD-2003-159,\19\ the Commission approved
Nasdaq's proposal to require the time of execution on all reports
submitted to the Nasdaq Market Center, but Nasdaq also requested that
the effective date of this obligation be delayed for one year after
Commission approval. The filing contained the changes to the NASD rules
that would be appropriate when the obligation is effective. For
example, Nasdaq proposed removing language that indicated the time of
execution is necessary only when a trade is reported late, and added
language indicating that the time of execution is necessary on all
reports. Including these language changes in the name-change filing
also would have created confusion because the actual effective date of
the obligation is not until April 25, 2005. To prevent such confusion,
Nasdaq is adding interpretive material indicating that members will be
required to provide the time of execution on all trade reports
beginning on April 25, 2005, and that the necessary language changes
will be made to the NASD rules at a later time.
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\19\ Id.
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Finally, Nasdaq is making non-substantive changes to NASD Rules
5430(b)(10) and 6620(e)(5) to correct text placement errors made in SR-
NASD-2204-076.\20\ In particular, the language of section (10) of NASD
Rule 5430(b) will be moved in its entirety to its correct location
under subparagraph (a) of that same rule in conformity with SR-NASD-
2003-154,\21\ the rule filing that created it. For NASD Rule 6620,
Nasdaq proposes to remove the incorrectly placed language of
subparagraph (e)(5) that duplicates the correct rule language already
in place in subparagraph (b)(5) of that same rule.
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\20\ See footnote 5, supra.
\21\ 21 Securities Exchange Act Release No. 48823 (November 21,
2003), 68 FR 67249 (December 1, 2003).
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2. Statutory Basis
Nasdaq believes that the proposed rule change is consistent with
the provisions of Section 15A of the Act,\22\ in general, and with
Section 15A(b)(6) of the Act,\23\ in particular, in that it is designed
to prevent fraudulent and manipulative acts and practices, to foster
cooperation and coordination with persons engaged in regulating,
clearing, settling, processing information with respect to, and
facilitating transactions in securities, and to protect investors and
the public interest. Nasdaq believes the proposal is consistent with
these obligations because it consolidates the rule language changes of
two previously approved NASD filings and clarifies the effective date
of certain of the proposals.
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\22\ 15 U.S.C. 78o-3.
\23\ 15 U.S.C. 78o-3(b)(6).
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B. Self-Regulatory Organization's Statement on Burden on Competition
Nasdaq 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
Nasdaq neither solicited nor received written comments with respect
to the proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become effective upon filing pursuant
to Section 19(b)(3)(A)(iii) of the Act,\24\ and Rule 19b-4(f)(3)
thereunder,\25\ in that it is concerned solely with the administration
of the self-regulatory organization.
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\24\ 15 U.S.C. 78s (b)(3)(A)(iii).
\25\ 17 CFR 240.19b-4(f)(3).
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At any time within 60 days of the filing of the proposed rule
change, the Commission may summarily abrogate such rule change if it
appears to the Commission that such action is necessary or appropriate
in the public interest, for the protection of investors, or otherwise
in furtherance of the purposes of the Act.
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-2004-151 on the subject line.
Paper Comments
Send paper comments in triplicate to Jonathan G. Katz,
Secretary, Securities and Exchange Commission, 450 Fifth Street, NW.,
Washington, DC 20549-0609.
All submissions should refer to File Number SR-NASD-2004-151. 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, 450 Fifth
Street, NW., Washington, DC 20549. Copies of such filing also will be
available for inspection and copying at the principal office of the
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-2004-151 and should be submitted on or before November 30, 2004.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\26\
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\26\ 17 CFR 200.30-3(a)(12).
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Jill M. Peterson,
Assistant Secretary.
[FR Doc. E4-3074 Filed 11-8-04; 8:45 am]
BILLING CODE 8010-01-P