[Federal Register: June 25, 2004 (Volume 69, Number 122)]
[Notices]
[Page 35696-35698]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr25jn04-143]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-49898; File No. SR-NASD-2004-091]
Self-Regulatory Organizations; Notice of Filing of Proposed Rule
Change by the National Association of Securities Dealers, Inc. To
Discontinue the Use of the Nasdaq NEWS Feature of the Nasdaq
Workstation II, and To Provide a Different Standard for the Beginning
and End of a Trading Halt
June 21, 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 June 15, 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. 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.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
Nasdaq proposes to discontinue the Nasdaq NEWS feature of the
Nasdaq Workstation II (``NWII''). Should the Commission approve the
proposed rule change, Nasdaq intends to implement the proposed rule
change during August 2004, and will inform market participants of the
exact implementation date via a Head Trader Alert on http:/ /
http://www.nasdaqtrader.com.
The text of the proposed rule change is below. Proposed new
language is in italics; proposed deletions are in brackets.\3\
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\3\ The proposed rule change is marked to show changes from the
rule as it appears in the electronic NASD Manual available at
http://www.nasd.com.
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4120. Trading Halts
(a) No change.
(b) Procedure for Initiating a Trading Halt
(1)-(3) No change.
(4) Should Nasdaq determine that a basis exists under Rule 4120(a)
for initiating a trading halt, the commencement of the trading halt
will be effective [simultaneously with appropriate notice in the Nasdaq
``NEWS'' frame] at the time specified by Nasdaq in a notice posted on a
publicly available Nasdaq website. In addition, Nasdaq shall
disseminate notice of the commencement of a trading halt through major
wire services.
(5) Trading in a halted security shall resume at the time specified
by Nasdaq in a notice posted on a publicly available Nasdaq website
[upon notice via the Nasdaq ``NEWS'' frame that a trading halt is no
longer in effect]. In addition, Nasdaq shall disseminate notice of the
resumption of trading through major wire services.
(6)-(7) No change.
* * * * *
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
[[Page 35697]]
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
As part of an effort to streamline its operations, Nasdaq proposes
to eliminate the Nasdaq NEWS function of the NWII. This function
provides information that is readily available through other sources.
Accordingly, Nasdaq has concluded that the function is not needed by
NWII users.
Nasdaq NEWS is a ``window'' on the NWII that users can open to
retrieve security-specific information on corporate actions such as
stock splits, name or symbol changes, additions to or deletions from
the roster of Nasdaq-listed securities, or trade halt status, as well
as information about the status of Nasdaq systems. The information
provided through Nasdaq NEWS is available to market participants
through other sources, however; depending on the nature of the
information, these sources include major financial wire services and
Nasdaq Web sites. Accordingly, the elimination of the service will not
affect the quality or quantity of information that is readily available
to market participants. Moreover, it should be noted that Nasdaq NEWS
is currently provided automatically only to users of the NWII
``presentation device,'' the desktop terminal provided by Nasdaq. It is
available to market participants that access Nasdaq through a
customized application programming interface (``API'') or through a
service bureau only if the market participant or service bureau chooses
to program for its availability, and it is Nasdaq's understanding that
many such market participants do not in fact receive Nasdaq NEWS.
Finally, Nasdaq NEWS is not accessible to market participants that
access the market through the computer-to-computer interface (``CTCI'')
or Financial Information Exchange (``FIX'') protocols.
The Nasdaq NEWS function is currently referenced in NASD Rule 4120,
concerning trading halts. Specifically, the rule provides that a
trading halt commences simultaneously with the posting of a notice in
Nasdaq NEWS, and that a trading halt ends at the time specified in a
notice via Nasdaq NEWS. Accordingly, in order to reflect the
elimination of the function, Nasdaq proposes to amend the rule to
provide a different standard for the beginning and end of a trading
halt.
Nasdaq currently provides notice of trading halts not only through
Nasdaq NEWS, but also through releases on major wire services, through
the cessation of quotation dissemination through external vendor feeds,
and through notices on http://www.nasdaqtrader.com. Nasdaq NEWS does not
provide an audible or visual alert to Nasdaq Workstation subscribers;
rather, a user would become aware of notices provided through Nasdaq
NEWS only if the user opened the Nasdaq NEWS frame on the user's
workstation and read the notices posted there. Moreover, as noted
above, Nasdaq NEWS is not available to many market participants that
access Nasdaq through CTCI, FIX, or service bureaus, or who opt not to
program their API to access it. Accordingly, Nasdaq NEWS does not
provide a faster or more reliable method of providing notice about
trading halts than the other methods currently in use. Given these
alternatives, Nasdaq is proposing to amend NASD Rule 4120 to provide
that trading halts will begin and end at the time specified by Nasdaq
in a notice posted on a publicly available Nasdaq Web site.\4\ In
addition, the rule provides that Nasdaq will provide notice of the
commencement and termination of trading halts through releases
disseminated through major wire services. It should be noted, however,
that such wire service notices generally do not contain the time of the
commencement and termination; rather, they alert market participants to
the fact of the halt and put them on notice to access the Web site for
the relevant times. Accordingly, in the case of a trading halt
commencing at 10:30 a.m., a notice (with the effective time of 10:30
a.m.) would be posted on a Nasdaq Web site, and a wire service release
(without the effective time) would be disseminated. In the case of the
termination of a trading halt, a notice stating, for example, that
quoting in the halted stock would resume at 1:15 p.m. and trading would
resume at 1:20 p.m., would be posted on a Nasdaq Web site, and a wire
service release (without these times) would be disseminated. Nasdaq
believes the timeliness and breadth of dissemination of information
provided to market participants through these methods will be
indistinguishable from the status quo, in that the same information
provided through Nasdaq NEWS is, and will in the future, be provided
through a Nasdaq Web site.
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\4\ The Web site currently used for this purpose is
http://www.nasdaqtrader.com. However, Nasdaq is not specifically referring
to this Web site in the text of NASD Rule 4120, to avoid the need to
amend the rule at a later date if a different Web site is used for
this purpose in the future. Nasdaq would, of course, provide advance
notice to market participants if a change in the Web site used for
this purpose was ever made.
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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,\5\ in general, and with
Section 15A(b)(6) of the Act,\6\ in particular, in that the proposal is
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 and perfect the
mechanism of a free and open market and a national market system, and,
in general, to protect investors and the public interest. The proposal
will allow Nasdaq to eliminate an obsolete communications functionality
without impairing Nasdaq's ability to communicate with market
participants concerning trading halts.
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\5\ 15 U.S.C. 78o-3.
\6\ 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
Written comments were neither solicited nor received.
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 (ii) as to
which the self-regulatory organization consents, the Commission will:
A. By order approve such proposed rule change, or
[[Page 35698]]
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 No. SR-NASD-2004-091 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-2004-091. 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 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 No. SR-NASD-2004-091 and
should be submitted on or before July 16, 2004.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\7\
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\7\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 04-14450 Filed 6-24-04; 8:45 am]
BILLING CODE 8010-01-P