8820 Federal Register / Vol. 72, No. 38 / Tuesday, February 27, 2007 / Notices 

15 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). 

5NYSE Market, Inc. is the entity to which the 

New York Stock Exchange LLC, a self-regulatory 

organization, has delegated all non-regulatory 

functions involved in conducting the activities of a 

national securities exchange, including the trading 

functions, the listings functions, and market data. 

6See Securities Exchange Act Release Nos. 54084 

(June 30, 2006), 71 FR 38935 (July 10, 2006) (order 

approving File No. SR–NASD–2005–087) (the 

‘‘NASD/Nasdaq TRF Approval Order’’); 54715 

(November 6, 2006), 71 FR 66354 (November 14, 

2006) (order approving File No. SR–NASD–2006–

108); and 54931 (December 13, 2006), 71 FR 76409 

(December 20, 2006) (order approving File No. SR–

NASD–2006–115). See also Securities Exchange Act 

Release No. 54798 (November 21, 2006), 71 FR 

69156 (November 29, 2006) (order approving File 

No. SR–NASD–2006–104) (the ‘‘Phase II Approval 

Order’’). 

7The NASD/NYSE TRF will have controls in 

place to ensure that transactions that are reported 

to the NASD/NYSE TRF, but that are priced 

significantly away from the current market, will not 

be submitted to the SIP. The NASD represents that 

this is consistent with current practice, in that 

neither the NASD’s Alternative Display Facility nor 

the Approved NASD Trade Reporting Facilities 

currently submit such trades to the SIP. According 

to the NASD, this practice is designed to preserve 

the integrity of the tape. 

8See NASD/Nasdaq TRF Approval Order, supra 

note 6. 

9The Commission approved a proposed rule 

change that expanded the ADF’s functionality to all 

exchange-listed securities. See Securities Exchange 

Act Release No. 54537 (September 28, 2006), 71 FR 

59173 (October 6, 2006) (order approving File No. 

SR–NASD–2006–091). 

information that you wish to make 

available publicly. All submissions 

should refer to File Number SR–

NASDAQ–2007–009 and should be 

submitted on or before March 20, 2007. 

For the Commission, by the Division of 

Market Regulation, pursuant to delegated 

authority.15

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E7–3293 Filed 2–26–07; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–55325; File No. SR–NASD–

2007–011] 

Self-Regulatory Organizations; 

National Association of Securities 

Dealers, Inc.; Notice of Filing and 

Immediate Effectiveness of a Proposed 

Rule Change Relating to a New NASD 

Trade Reporting Facility Established in 

Conjunction with NYSE Market, Inc. 

February 21, 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 February 

1, 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, II, and III below, which Items 

have been prepared substantially by the 

NASD. The NASD has filed the proposal 

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 

The NASD proposes to adopt rules 

relating to a new Trade Reporting 

Facility (the ‘‘NASD/NYSE TRF’’) to be 

established by the NASD in conjunction 

with NYSE Market, Inc. (‘‘NYSE’’),5 that 

will provide members with an 

additional mechanism for reporting 

trades in exchange-listed securities 

effected otherwise than on an exchange. 

The proposed NASD/NYSE TRF 

functionality and rules are substantially 

similar to the functionality and rules of 

the Trade Reporting Facilities 

established by the NASD and the 

Nasdaq Stock Market, Inc. (the ‘‘NASD/ 

Nasdaq TRF’’), the NASD and the 

National Stock Exchange, Inc. (the 

‘‘NASD/NSX TRF’’), and the NASD and 

the Boston Stock Exchange, Inc. (the 

‘‘NASD/BSE TRF’’) (collectively, the 

‘‘Approved NASD Trade Reporting 

Facilities’’), which were subject to 

notice and comment and approved by 

the Commission.6 The text of the 

proposed rule change is available at the 

NASD, in the Commission’s Public 

Reference Room, and at http:// 

www.nasd.com. 

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 

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. The 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 

The proposed rule change would 

establish the new NASD/NYSE TRF on 

substantially the same terms as the 

Approved NASD Trade Reporting 

Facilities. The NASD/NYSE TRF will 

provide members with an additional 

mechanism, which has been developed 

by the NYSE, for reporting locked-in 

transactions in exchange-listed 

securities executed otherwise than on 

an exchange. Members will match and/ 

or execute orders internally or through 

proprietary systems and submit these 

trades to the NASD/NYSE TRF with the 

appropriate information and modifiers. 

All trades submitted to the NASD/NYSE 

TRF must be locked-in prior to entry 

into the system and the NASD/NYSE 

TRF will have no trade comparison 

functionality. Participants wishing to 

report to the NASD/NYSE TRF on 

behalf of another NASD member may do 

so only pursuant to a valid give-up 

agreement, as specified in the proposed 

rules. 

The NASD/NYSE TRF will report the 

trades to the appropriate exclusive 

securities information processor 

(‘‘SIP’’).7 As with trades reported to the 

Approved NASD Trade Reporting 

Facilities, NASD/NYSE TRF 

transactions disseminated to the media 

will include a modifier indicating the 

source of such transactions that would 

distinguish them from transactions 

executed on or through the NYSE or 

another NASD Trade Reporting Facility. 

In addition, the NASD/NYSE TRF will 

provide the NASD with a real-time copy 

of each trade report for regulatory 

review purposes. Unlike the Approved 

NASD Trade Reporting Facilities, the 

NASD/NYSE TRF will not at this time 

submit transactions to clearing. 

Like the Approved NASD Trade 

Reporting Facilities, the NASD/NYSE 

TRF will be a facility of the NASD, 

subject to regulation by the NASD and 

the NASD’s registration as a national 

securities association. It will not be a 

service ‘‘for the purpose of effecting or 

reporting a transaction’’ on the NYSE; 

rather, it will be a service for the 

purpose of reporting over-the-counter 

(‘‘OTC’’) transactions in exchange-listed 

securities to the NASD.8 Thus, members 

that meet all applicable requirements 

will have the option of reporting 

transactions in exchange-listed 

securities executed otherwise than on 

an exchange to the NASD/NYSE TRF, 

one of the Approved NASD Trade 

Reporting Facilities, the NASD’s 

Alternative Display Facility (‘‘ADF’’),9

or the NASD’s Intermarket Trading 


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Federal Register / Vol. 72, No. 38 / Tuesday, February 27, 2007 / Notices 8821 

10As part of File No. SR–NASD–2006–104, the 

NASD proposed rule changes providing for the 

operation of the NASD ITS/CAES System, which 

includes the ability to report OTC transactions in 

non-Nasdaq exchange-listed securities. See Phase II 

Approval Order, supra note 6. The NASD 

represents that it will have an integrated audit trail 

of all TRF, ADF, and ITS/CAES System 

transactions, as applicable in a particular security, 

and will have integrated surveillance capabilities. 

The NASD expects that comprehensive audit trail 

and surveillance integration on an automated basis 

will be completed by the end of the first quarter of 

2007. Prior to that time, the NASD represents that 

its staff will be able to create an integrated audit 

trail on a manual basis as needed for regulatory 

purposes. 

11See the NASD Rule 4000 and Rule 6100 Series 

relating to the NASD/Nasdaq TRF; the NASD Rule 

4000C and 6000C Series relating to the NASD/NSX 

TRF; and the NASD Rule 4000D and 6000D Series 

relating to the NASD/BSE TRF. 

12The NASD will submit a separate filing 

proposing amendments to the transaction reporting 

rules relating to the NASD/NYSE TRF consistent 

with the new requirements of Regulation NMS. The 

NASD intends that such amendments will be 

substantially similar to the amendments the NASD 

proposed for the NASD/Nasdaq TRF and the ADF 

in File Nos. SR–NASD–2007–002 and SR–NASD–

2007–001, respectively. See Securities Exchange 

Act Release Nos. 55101 (January 12, 2007), 72 FR 

2568 (January 19, 2007) (notice of filing and 

immediate effectiveness of File No. SR–NASD–

2007–002); and 55088 (January 11, 2007), 72 FR 

2573 (January 19, 2007) (notice of filing and 

immediate effectiveness of File No. SR–NASD–

2007–001). 

13As noted below, a proposed rule change filed 

pursuant to Section 19(b)(3)(A) of the Act and Rule 

19b–4(f)(6) thereunder does not become operative 

for 30 days from the date on which the proposal 

was filed, or such shorter time as the Commission 

may designate if consistent with the protection of 

investors and the public interest. The NASD has not 

asked the Commission to waive the 30-day 

operative delay for the proposal. Accordingly, the 

proposal will become operative 30 days from the 

date on which it was filed. 

14 15 U.S.C. 78o–3(b)(6). 

System/Computer Assisted Execution 

System (‘‘NASD ITS/CAES System’’).10

The NYSE has developed the system 

that participants will use to access the 

NASD/NYSE TRF. Technical 

specifications to connect to the NASD/ 

NYSE TRF system are available upon 

request to NASD and will be accessible 

through NASD’s web site at a later date. 

NASD/NYSE TRF Limited Liability 

Company Agreement 

The NASD and the NYSE propose to 

enter into a Limited Liability Company 

Agreement of the NASD/NYSE Trade 

Reporting Facility LLC (‘‘the NASD/ 

NYSE LLC Agreement’’). The terms of 

the NASD/NYSE LLC Agreement are 

substantially similar to the terms of the 

LLC agreements relating to the 

Approved NASD Trade Reporting 

Facilities. 

The NASD will have sole regulatory 

responsibility for the NASD/NYSE TRF, 

while the NYSE agrees to pay the cost 

of regulation and will provide systems 

to enable members to report trades to 

the NASD/NYSE TRF. The NYSE will 

be entitled to the profits and losses, if 

any, derived from the operation of the 

NASD/NYSE TRF. The provisions of the 

NASD/NYSE LLC Agreement regarding 

the management of the NASD/NYSE 

TRF, and the respective rights and 

responsibilities of the NASD, the ‘‘SRO 

Member,’’ and the NYSE, the ‘‘Business 

Member,’’ are identical to the terms of 

the LLC agreements relating to the 

Approved NASD Trade Reporting 

Facilities. 

The termination provisions of the 

NASD/NYSE LLC Agreement are 

identical to the termination provisions 

of the LLC agreements relating to the 

NASD/NSX TRF and the NASD/BSE 

TRF. In the event of termination of the 

NASD/NYSE TRF arrangement, the 

NASD represents that it will be able to 

fulfill all of its regulatory obligations 

with respect to OTC trade reporting 

through its other facilities. 

The NASD/NYSE LLC Agreement 

includes a provision relating to Capital 

Accounts that is not included in the 

LLC Agreements relating to the 

Approved NASD Trade Reporting 

Facilities. This provision was added for 

tax purposes only. 

NASD/NYSE Trade Reporting Facility 

Rules 

Members will report locked-in trades 

in exchange-listed securities effected 

otherwise than on an exchange to the 

NASD/NYSE TRF pursuant to NASD 

rules. As such, the NASD is proposing 

the new NASD Rule 4000E and Rule 

6000E Series relating to the use and 

operation of the NASD/NYSE TRF. The 

proposed rules are substantially similar 

to the rules approved by the 

Commission relating to the Approved 

NASD Trade Reporting Facilities.11

Discussed below are the differences 

between the proposed rules and the 

rules that the Commission has approved 

for one or more of the Approved NASD 

Trade Reporting Facilities.12

First, similar to the NASD/BSE TRF, 

participants will be able to use threeparty reports for reporting trades to the 

NASD/NYSE TRF. However, pursuant 

to proposed NASD Rule 4632E(d), 

Reporting ECNs, as defined in proposed 

NASD Rule 6110E, are required to use 

the three-party trade report when 

submitting trades to the NASD/NYSE 

TRF. The NASD/BSE TRF rules permit, 

but do not require, Reporting ECNs to 

use three-party trade reports. 

Second, unlike the Approved NASD 

Trade Reporting Facilities, the NASD/ 

NYSE TRF will not submit any trades to 

clearing. Pursuant to proposed NASD 

Rules 6130E(a) and 6140E, where 

appropriate, participants must have a 

valid Qualified Service Representative 

(‘‘QSR’’) agreement with the National 

Securities Clearing Corporation or 

similar arrangement to clear trades 

submitted to the NASD/NYSE TRF (e.g., 

trades with customers generally do not 

need to be sent to clearing). 

Accordingly, references to ‘‘clearing 

only’’ reports that appear in the rules 

relating to the Approved NASD Trade 

Reporting Facilities have been omitted 

from the proposed rules (see proposed 

NASD Rules 4632E(e)(3)(B) and 

6130E(f)). Additionally, proposed NASD 

Rule 6130E(a) provides that the NASD/ 

NYSE TRF will accept trades reported 

as other than regular way settlement 

(i.e., Cash, Next-Day, Seller’s Option); 

however, the NASD/NYSE TRF will not 

compare or submit these trades to 

clearing. 

The NASD notes that the proposed 

rule change does not include any 

proposed rules relating to fees, 

assessments, and credits specifically 

related to the NASD/NYSE TRF. Fees, 

assessments, and credits, if any, with 

respect to the NASD/NYSE TRF will be 

the subject of a future rule filing with 

the Commission. 

The NASD has filed the proposed rule 

change for immediate effectiveness. The 

NASD proposes that the operative date 

of the proposed rule change will be the 

date upon which the NASD/NYSE TRF 

commences operation, which is 

currently anticipated to be in the first 

quarter of 2007.13 The NASD will 

provide notice of that date upon 

successful completion of system testing 

and certification. 

2. Statutory Basis 

The proposed rule change is 

consistent with the provisions of 

Section 15A(b)(6) of the Act,14 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. The 

NASD believes that establishment of the 

NASD/NYSE TRF is in the public 

interest and appropriate for the 

protection of investors and the 

maintenance of fair and orderly markets 

because it will provide members with 

another mechanism to report 

transactions in exchange-listed 

securities effected otherwise than on an 

exchange. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The proposed rule change will not 

result in any burden on competition that 


cprice-sewell on PROD1PC62 with NOTICES
8822 Federal Register / Vol. 72, No. 38 / Tuesday, February 27, 2007 / Notices 

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

16 17 CFR 240.19b–4(f)(6). 

17 17 CFR 240.19b–4(f)(6)(iii). 

18 17 CFR 200.30–3(a)(12). 

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

2 15 U.S.C. 78s(b)(3)(A)(ii). 

3The Commission has modified parts of these 

statements. 

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: (i) Significantly affect 

the protection of investors or the public 

interest; (ii) impose any significant 

burden on competition; and (iii) 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, the 

proposed rule change has become 

effective pursuant to Section 19(b)(3)(A) 

of the Act 15 and Rule 19b-4(f)(6) 

thereunder.16 As required by Rule 19b4(f)(6)(iii),17 the NASD provided the 

Commission with 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. 

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 rulecomments@sec.gov. Please include File 

Number SR–NASD–2007–011 on the 

subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Nancy M. Morris, Secretary, 

Securities and Exchange Commission, 

Station Place, 100 F Street, NE., 

Washington, DC 20549–1090. 

All submissions should refer to File 

Number SR–NASD–2007–011. 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 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–2007–011 and 

should be submitted on or before March 

20, 2007. 

For the Commission, by the Division of 

Market Regulation, pursuant to delegated 

authority.18

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E7–3295 Filed 2–26–07; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–55315; File No. SR–NSCC–

2006–19] 

Self-Regulatory Organizations; 

National Securities Clearing 

Corporation; Notice of Filing and 

Immediate Effectiveness of a Proposed 

Rule Change To Modify Its Fee 

Schedule 

February 20, 2007. 

Pursuant to Section 19(b)(1) of the 

Securities Exchange Act of 1934 

(‘‘Act’’),1 notice is hereby given that on 

December 29, 2006, National Securities 

Clearing Corporation (‘‘NSCC’’) 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 primarily by NSCC. 

NSCC filed the proposed rule change 

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

Act 2 whereby the proposal was 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 

The proposed rule change revises 

NSCC’s fee schedule for certain services 

provided by NSCC. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, 

NSCC 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. NSCC has prepared 

summaries, set forth in sections (A), (B), 

and (C) below, of the most significant 

aspects of such statements.3

(A) Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

Pursuant to the proposed rule change, 

NSCC is reducing fees in Continuous 

Net Settlement Services, Automated 

Customer Account Transfer Services 

(ACATS), and Mutual Fund Networking 

to align the fees with NSCC’s costs of 

providing services. In addition, NSCC is 

introducing new fees for dividend and 

interest payment processing and related 

research, which should help to 

standardize and simplify fees between 

NSCC and DTC. Additionally, NSCC is 

introducing a new fee for CNS fails to 

deliver to encourage members to 

address aged fails. 

The revised fee schedule was filed as 

an attachment to the proposed rule 

change and may be found on NSCC’s 

Web site at http://www.nscc.com. 

Except as otherwise noted on Exhibit 5, 

the proposed fee changes became 

effective on January 2, 2007. 

The proposed rule change is 

consistent with the requirements of the 


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