78078 Federal Register / Vol. 69, No. 249 / Wednesday, December 29, 2004 / Notices 

6 17 CFR 200.30–3(a)(12).

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).

5NASD understands that the Commission’s 

proposed Regulation NMS may have an impact on 

this pilot program. Accordingly, NASD has 

represented that it will undertake to work with the 

Commission to ensure that the pilot program would 

be consistent with the rules and regulations 

contained in Regulation NMS, if and when it is 

adopted. Telephone Conversation between Andrea 

Orr, Assistant General Counsel, NASD, and 

Ronesha A. Butler, Special Counsel, Division of 

Market Regulation, Commission, on December 20, 

2004.

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 

(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, as amended, 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 

Number SR–NASD–2004–169 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–2004–169. 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–

2004–169 and should be submitted on 

or before January 19, 2005.

For the Commission, by the Division of 

Market Regulation, pursuant to delegated 

authority.6

Margaret H. McFarland, 

Deputy Secretary.

[FR Doc. 04–28442 Filed 12–28–04; 8:45 am] 

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–50893; File No. SR–NASD–

2004–176) 

Self-Regulatory Organizations; Notice 

of Filing and Immediate Effectiveness 

of Proposed Rule Change by the 

National Association of Securities 

Dealers, Inc. To Extend an Existing 

Pilot Relating to Manning PriceImprovement Standards 

December 20, 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 December 

2, 2004, 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, II, and III below, which Items 

have been prepared by NASD. NASD 

has filed this proposed rule change 

pursuant to Section 19(b)(3)(A) of the 

Act 3 and Rule 19b–4(f)(6) thereunder,4

which renders the proposal effective 

upon filing with the Commission. The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change from interested persons.

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

NASD is proposing to extend through 

June 30, 2005, the current pilot priceimprovement standards for decimalized 

securities contained in NASD 

Interpretive Material 2110–2, ‘‘Trading 

Ahead of Customer Limit Order’’

(‘‘Manning Interpretation’’ or 

‘‘Manning’’). Without such an 

extension, these standards will expire 

on December 31, 2004. NASD proposes 

to extend the pilot’s expiration date to 

June 30, 2005,5 NASD does not propose 

to make any substantive changes to the 

pilot. The text of the proposed rule 

change is available at the NASD’s Office 

and at the Commission’s Public 

Reference Room.

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 

NASD’s Manning Interpretation 

requires an NASD member firm to 

provide a minimum level of price 

improvement to an incoming order in an 

NMS or SmallCap security if the firm 

chooses to trade as principal with the 

incoming order at a price superior to a 

customer limit order that it currently 

holds. If the firm fails to provide the 

minimum level of price improvement to 

the incoming order, the firm must 

execute the held customer limit order. 

Generally, if a firm fails to provide the 

requisite amount of price improvement 

and also fails to execute the held 

Federal Register / Vol. 69, No. 249 / Wednesday, December 29, 2004 / Notices 78079

6See Securities Exchange Act Release No. 34–

44165 (April 6, 2001), 66 FR 19268 (April 13, 2001).

7See Securities Exchange Act Release No. 34–

48876 (December 4, 2003), 68 FR 69103 (December 

11, 2003).

8 15 U.S.C. 78o–3

9 15 U.S.C. 78o–3(b)(6).

10 15 U.S.C. 78s(b)(3)(A).

11 17 CFR 240.19b–4(f)(6).

12 In addition, to submit a filing pursuant to Rule 

19b–4(f)(6) under the Act, paragraph (f)(6)(iii) 

thereof also requires the Exchange to give 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 complied 

with this requirement.

13For purposes only of accelerating the operative 

date of this proposal, the Commission has 

considered the proposed rule’s impact on 

efficiency, competition, and capital formation. See

15 U.S.C. 78c(f).

14 17 CFR 200.30–3(a)(12).

1 15 U.S.C. 78s(b)(1).

2 17 CFR 240.19b–4.

customer limit order, it is in violation of 

the Manning Interpretation. 

On April 6, 2001, the Commission 

approved, on a pilot basis, priceimprovement standards for decimalized 

securities contained in Manning.6 Since 

approval, these standards continue to 

operate on a pilot basis which 

terminates on December 31, 2004.7

NASD has determined to seek an 

extension of its current Manning pilot 

until June 30, 2005. NASD believes that 

such an extension provides for an 

appropriate continuation of the current 

Manning price-improvement standard 

while the Commission continues to 

analyze the issues related to customer 

limit order protection in a decimalized 

environment. NASD is not proposing 

any other changes to the pilot at this 

time.

2. Statutory Basis 

NASD believes that the proposed rule 

change is consistent with the provisions 

of Section 15A of the Act,8 in general, 

and with Section 15A(b)(6) of the Act,9

in particular, which requires, among 

other things, that NASD rules must 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.

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 

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 by NASD. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

NASD asserts that the proposed rule 

change is immediately effective 

pursuant to Section 19(b)(3)(A) of the 

Act 10 and Rule 19b–4(f)(6) thereunder 11

because it: (i) does not significantly 

affect the protection of investors or the 

public interest; (ii) does not impose any 

significant burden on competition; and 

(iii) does not become operative for 30 

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.12

NASD proposes to make the proposed 

rule change operative on January 1, 

2005, and requests that the Commission 

waive the 30-day operative date. The 

Commission hereby grants this 

request.13 The Commission believes that 

waiving the 30-day pre-operative period 

is consistent with the protection of 

investors and the public interest 

because it will allow the benefits of 

investors resulting from the pilot to 

continue uninterrupted. At any time 

within 60 days of the filing of the 

proposed rule change, the Commission 

may summarily abrogate such proposed 

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 rulecomments@sec.gov. Please include File 

Number SR–NASD–2004–176 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–2004–176. 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 principle 

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 the File Number SR–

NASD–2004–176 and should be 

submitted on or before January 19, 2005.

For the Commission, by the Division of 

Market Regulation, pursuant to delegated 

authority.14

Margaret H. McFarland, 

Deputy Secretary.

[FR Doc. 04–28443 Filed 12–28–04; 8:45 am] 

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–50922; File No. SR–NASD–

2004–187] 

Self-Regulatory Organizations; Notice 

of Filing and Immediate Effectiveness 

of Proposed Rule Change by National 

Association of Securities Dealers, Inc. 

Relating to Extension of Short Sale 

Rule and Continued Suspension of 

Primary Market Maker Standards Set 

Forth in Rule 4612

December 22, 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 December 

15, 2004, the National Association of 

Securities Dealers, Inc., through its 

subsidiary, the Nasdaq Stock Market,