[Federal Register: March 13, 2007 (Volume 72, Number 48)]
[Notices]
[Page 11417-11418]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr13mr07-95]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-55410; File No. SR-NASD-2007-020]
Self-Regulatory Organizations; National Association of Securities
Dealers, Inc.; Notice of Filing and Immediate Effectiveness of Proposed
Rule Change To Revise the Implementation Date of Previously Proposed
Amendments to NASD Rules 4632(f) and 6130(e)
March 6, 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 March 5, 2007, the National Association of Securities Dealers, Inc.
(``NASD'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I and
II below, which Items have been substantially prepared by NASD. NASD
has filed the proposal as a ``non-controversial'' rule change pursuant
to Section 19(b)(3)(A) of the Act\3\ and Rule 19b-4(f)(6)
thereunder,\4\ which renders it effective upon filing with the
Commission. The Commission is publishing this notice to solicit
comments on the proposed rule change from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ 15 U.S.C. 78s(b)(3)(A).
\4\ 17 CFR 240.19b-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
NASD proposes to revise the implementation date of certain
amendments to the NASD/Nasdaq Trade Reporting Facility (``NASD/Nasdaq
TRF'') rules that were previously proposed by NASD pursuant to SR-NASD-
2007-002.\5\ Specifically, NASD proposes to implement the amendments to
Rule 4632(f) and Rule 6130(e) regarding aggregation of trades for
purposes of reporting to the NASD/Nasdaq TRF on the Regulation NMS
Trading Phase Date, March 5, 2007.\6\ There is no new rule text.
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\5\ See Securities Exchange Act Release No. 55101 (January 12,
2007), 72 FR 2568 (January 19, 2007) (SR-NASD-2007-002).
\6\ See Securities Exchange Act Release No. 55160 (January 24,
2007), 72 FR 4202 (January 30, 2007).
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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, NASD included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. NASD has prepared summaries, set forth in Sections A, B,
and C below, of the most significant aspects of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
On January 8, 2007, NASD filed proposed rule change SR-NASD-2007-
002, which proposed to make conforming changes to the transaction
reporting rules relating to the NASD/Nasdaq TRF consistent with the new
requirements of Regulation NMS under the Act. Among other changes, NASD
proposed to amend Rule 4632(f) to expressly prohibit a member from
aggregating individual executions of orders in a security at the same
price into a single transaction report for tape purposes. As stated in
SR-NASD-2007-002, NASD has determined that prohibiting the bunching of
transactions when reporting to an NASD facility helps ensure greater
transparency of individual transactions. However, for purposes of
trades that are not printed to the tape, NASD proposed to amend Rule
6130(e) to continue to permit members--for clearing purposes only--to
aggregate individual executions of orders in a security at the same
price with the identical contra party and submit a single report to the
System.\7\
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\7\ ``System'' is defined in Rule 6110 to mean the NASD/Nasdaq
TRF, the OTC Reporting Facility, and the ITS/CAES System.
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These amendments are consistent with recent amendments to the
reporting rules relating to NASD's Alternative Display Facility
(``ADF''). Pursuant to SR-NASD-2006-091, NASD proposed to amend Rule
4632A(f) to expressly prohibit aggregation of individual executions of
orders in a security at the same price into a single transaction
report. The effective date of SR-NASD-2006-091 is the Regulation NMS
Trading Phase Date.\8\
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\8\ See Securities Exchange Act Release No. 54537 (September 28,
2006), 71 FR 59173 (October 6, 2006) (SR-NASD-2006-091). See also
NASD Notice to Members 06-67 (November 2006) announcing the
effective date of SR-NASD-2006-091.
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To ensure consistency across NASD facilities, NASD proposes to
implement the amendments to Rules 4632(f) and 6130(e) on the Regulation
NMS Trading Phase Date, which, as noted above, is the implementation
date for similar amendments to the ADF rules.\9\ All other changes that
were proposed in SR-NASD-2007-002 will become effective on the Pilot
Stocks Phase Date, as set forth in that filing.
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\9\ The rules relating to the NASD/NSX Trade Reporting Facility,
the NASD/BSE Trade Reporting Facility, and the NASD/NYSE Trade
Reporting Facility prohibit the aggregation of trades for purposes
of reporting.
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NASD is clarifying that proposed Rule 4632(f) is intended to
prohibit only the aggregation of multiple executions into a single
transaction report using the ``.B'' modifier for purposes of
transaction reporting to the NASD/Nasdaq TRF. It will not apply to the
matching or crossing of multiple orders in a single execution (e.g.,
via an alternative trading system or broker-dealer order-management
system). Today, such single executions are not submitted to the NASD/
Nasdaq TRF as bunched or aggregated transaction reports using the
``.B'' modifier and, thus, are not affected by the proposed rule
change.
NASD has filed the proposed rule change for immediate
effectiveness. NASD proposes to implement the amendments to Rules
4632(f) and 6130(e) on the Regulation NMS Trading Phase Date, March 5,
2007.
2. Statutory Basis
NASD believes that the proposed rule change is consistent with the
provisions of Section 15A(b)(6) of the Act,\10\ which requires, among
other things, that NASD rules be designed to prevent fraudulent and
manipulative acts and practices, to promote just and equitable
principles of trade, and, in general, to protect investors and the
public interest. NASD believes that the proposed rule change will
enhance the consistency of the trade reporting rules applicable to NASD
facilities and will ensure greater transparency of individual
transactions.
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\10\ 15 U.S.C. 78o-3(b)(6).
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B. Self-Regulatory Organization's Statement on Burden on Competition
NASD does not believe that the proposed rule change will result in
any burden on competition that is not
[[Page 11418]]
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 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 30
days from the date of this filing, or such shorter time as the
Commission may designate, it has become effective pursuant to Section
19(b)(3)(A) of the Act \11\ and Rule 19b-4(f)(6) thereunder.\12\
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\11\ 15 U.S.C. 78s(b)(3)(A).
\12\ 17 CFR 240.19b-4(f)(6)(iii). In addition, Rule 19b-
4(f)(6)(iii) requires that a self-regulatory organization submit to
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 of filing
of the proposed rule change, or such shorter time as designated by
the Commission. NASD has satisfied the five-day pre-filing
requirement.
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NASD has requested that the Commission waive the 30-day operative
delay in this case. The Commission believes that waiving the 30-day
operative delay is consistent with the protection of investors and the
public interest because such waiver will allow the amendments to Rules
4632(f) and 6130(e) to be implemented on the Regulation NMS Trading
Phase Date. For this reason, the Commission designates the proposed
rule change to be operative upon filing with the Commission.\13\
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\13\ For the purposes only of waiving the 30-day operative
delay, the Commission has considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
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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 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 Comment
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-2007-020 on the subject line.
Paper Comments
Send paper comments in triplicate to Nancy M. Morris,
Secretary, Securities and Exchange Commission, 100 F Street, NE.,
Washington, DC 20549-1090.
All submissions should refer to File Number SR-NASD-2007-020. 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. Copies of the
filing also will be available for inspection and copying at the
principal office of NASD. All comments received will be posted without
change; the Commission does not edit personal identifying information
from submissions. You should submit only information that you wish to
make available publicly. All submissions should refer to File Number
SR-NASD-2007-020 and should be submitted on or before April 3, 2007.
For the Commission, by the Division of Market Regulation,
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. E7-4508 Filed 3-12-07; 8:45 am]
BILLING CODE 8010-01-P