Federal Register / Vol. 72, No. 47 / Monday, March 12, 2007 / Notices 11069 

5For example, if a specialist firm’s monthly fixed 

fee liability for November 2006 was $32,000, the 

CHX would apply the $25,000 credit and the firm 

would be billed for the remaining balance of $7,000 

in net fixed fees. If a specialist firm’s fixed fee 

liability was $10,000, the CHX would apply a credit 

of $10,000, offsetting the entire liability, and the 

CHX would not bill the specialist firm for any fixed 

fees. The CHX would not issue a refund of $15,000 

to the specialist firm on account of the unused 

portion of the available credit and the unused 

portion would not be available to offset fixed fee 

liabilities in future months. 

6 15 U.S.C. 78f(b). 

7 17 CFR 200.30–3(a)(12). 

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

2 15 U.S.C. 78a. 

3 17 CFR 240.19b–4 

4 15 U.S.C. 78s(b)(3)(A). 

5 17 CFR 240.19b–4(f)(6). 

The monthly credit is applied against 

the first $25,000 (or $50,000, in the case 

of December 2006) in monthly specialist 

fixed fees otherwise due the CHX from 

a participant firm. If the participant 

firm’s fixed fee liability is less than the 

credit amount, the CHX would apply a 

credit equal to the amount of the fixed 

fee liability, but would not issue a 

refund to such participant firm for the 

remaining balance of the credit, nor 

would the CHX carry forward the 

balance of the credit for application to 

future fixed fee liabilities.5

2. Statutory Basis 

The CHX believes the proposal is 

consistent with the requirements of the 

Act and the rules and regulations 

thereunder that are applicable to a 

national securities exchange, and, in 

particular, with the requirements of 

Section 6(b).6 The proposed rule change 

is consistent with Section 6(b)(4) of the 

Act in that it provides for the equitable 

allocation of reasonable dues, fees and 

other charges among the Exchange’s 

members and will result in an 

additional credit for CHX specialist 

firms impacted by the Exchange’s 

transition to its new trading model. The 

proposed rule change is consistent with 

Section 6(b)(5) of the Act because it 

would promote just and equitable 

principles of trade, remove 

impediments to, and perfect the 

mechanism of, a free and open market 

and a national market system, and, in 

general, protect investors and the public 

interest by permitting the Exchange to 

provide incentives for its specialist 

firms to support the transition to new 

technology that will result in fully 

automated executions. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Exchange does not believe that 

the proposed rule change will impose 

any burden on competition. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants or Others 

No written comments were either 

solicited or 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 Exchange 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 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–CHX–2007–02 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–CHX–2007–02. 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 offices of the Exchange. 

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–CHX–2007–02 and should 

be submitted on or before March 27, 

2007. 

For the Commission, by the Division of 

Market Regulation, pursuant to delegated 

authority.7

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E7–4325 Filed 3–9–07; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–55405; File No. SR–

NASDAQ–2007–020] 

Self-Regulatory Organizations; The 

NASDAQ Stock Market LLC; Notice of 

Filing and Immediate Effectiveness of 

Proposed Rule Change to Establish a 

Directed Order Type 

March 6, 2007. 

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

Securities Exchange Act of 1934 (the 

‘‘Act’’) 2 and Rule 19b–4 thereunder,3

notice is hereby given that on March 2, 

2007, The NASDAQ Stock Market LLC 

(‘‘Nasdaq’’ or ‘‘Exchange’’) 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 the Exchange. 

Nasdaq has designated this proposal as 

non-controversial under Section 

19(b)(3)(A) of the Act 4 and Rule 19b–

4(f)(6) thereunder.5 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 

Nasdaq proposes to amend Nasdaq 

Rule 4611 to update and codify the 

requirements applicable to Nasdaq 

members that provide sponsored access 

to other firms and customers to the 

Nasdaq execution system. 

The text of the proposed rule change 

is below. Proposed new language is 


pwalker on PROD1PC71 with NOTICES
11070 Federal Register / Vol. 72, No. 47 / Monday, March 12, 2007 / Notices 

6Changes are marked to the rule text that appears 

in the electronic Nasdaq Manual found at 

nasdaq.complinet.com/nasdaq/display/index.html. 

7See 17 CFR 242.600 et seq. 

8See former NASD Rules 4903(b) and 4956(a). 

9 17 CFR 242.600(b)(58). 

10 17 CFR 242.600(b)(30). 

11 17 CFR 242.600(b)(57). 

12 17 CFR 242.610; 17 CFR 242.611. 

13See Responses to Frequently Asked Questions, 

posted on the nasdaqtrader.com Web site at http:// 

www.nasdaqtrader.com/trader/tradingservices/ 

regnms_faqs.pdf. 

14 15 U.S.C. 78f. 

15 15 U.S.C. 78f(b)(5). 

italicized; proposed deletions are in 

brackets.6

* * * * * 

4750. NASDAQ MARKET CENTER—

EXECUTION SERVICES 

4751. Definitions 

The following definitions apply to the 

Rule 4600 and 4750 Series for the 

trading of securities listed on a national 

securities exchange other than Nasdaq. 

(a)–(e) No change. 

(f) The term ‘‘Order Type’’ shall mean 

the unique processing prescribed for 

designated orders that are eligible for 

entry into the System, and shall include: 

(1)–(8) No change. 

(9) ‘‘Directed Orders’’ are orders that 

are directed to an exchange other than 

Nasdaq as directed by the entering party 

without checking the Nasdaq book. If 

unexecuted, the order (or unexecuted 

portion thereof) shall be returned to the 

entering party. This option may only be 

used for orders with time-in-force 

parameters of IOC. 

Directed Orders may be designated as 

intermarket sweep orders by the 

entering party to execute against the full 

displayed size of any protected bid or 

offer (as defined in Rule 600(b) of 

Regulation NMS under the Act). A 

broker-dealer that designates an order as 

an intermarket sweep order has the 

responsibility of complying with Rules 

610 and 611 of Regulation NMS. 

(g)–(i) No change. 

* * * * * 

4755. Order Entry Parameters 

(a) System Orders 

(1) 

(A) No Change. 

(B) A System order may also be 

designated as Reserve Order, a Pegged 

Order, a Non-Displayed Order, a 

Minimum Quantity Order, an 

Intermarket Sweep Order, a Price to 

Comply order, a Price to Comply Post 

order, [or] a Discretionary Order, or a 

Directed Order. 

(C) No Change. 

(2)–(4) 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, the 

Exchange included statements 

concerning the purpose of and basis for 

the proposed rule changes and 

discussed any comments it received 

regarding the proposal. The text of these 

statements may be examined at the 

places specified in Item IV below. The 

Exchange 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 create a new order 

type—the Directed Order—for use by its 

members in compliance with their 

obligations under Regulation NMS.7

Directed Orders will be entered by a 

Nasdaq member and sent to a market 

center other than Nasdaq without 

checking the Nasdaq book. The entering 

member will select the market center to 

receive the order This functionality 

existed in Nasdaq’s former Brut and 

INET facilities in the form of a ‘‘Thru’’

order that members used to route 

trading interest directly to the New York 

Stock Exchange or American Stock 

Exchange to avoid trading through those 

markets.8 If unexecuted, the order (or 

unexecuted portion thereof) shall be 

returned to the entering party. This 

option may only be used for orders with 

time-in-force parameters of IOC. 

This order will provide additional 

flexibility and functionality to Nasdaq’s 

system and to members that wish to use 

the system to comply with their 

obligation to avoid trading through any 

Protected Quotation within the meaning 

of Rule 600(b)(58) of Regulation NMS.9

Directed Orders may be designated as 

intermarket sweep orders (as defined in 

Rule 600(b)(30) of Regulation NMS 10) 

and therefore will provide Nasdaq 

member’s the ability to execute against 

the full displayed size) of any Protected 

Bid or Protected Offer (as defined in 

Rule 600(b)(57) of Regulation NMS 11) in 

the case of a limit order to sell or buy 

with a price that is superior to the limit 

price of the limit order identified in the 

intermarket sweep order. 

Nasdaq members will be required to 

comply with the requirements of Rules 

610 and 611 of Regulation NMS 12 when 

designating Directed Orders as 

intermarket sweep orders. A brokerdealer that designates an order as an 

intermarket sweep order has the 

responsibility of complying with Rules 

610 and 611 of Regulation NMS. When 

Nasdaq’s execution system receives a 

Directed Order that is designated as an 

intermarket sweep order, Nasdaq’s 

system will pass that order to NASDAQ 

Execution Services, LLC, Nasdaq’s 

broker-dealer subsidiary. Nasdaq 

Execution Services has connectivity to 

route to all automated trading centers 

displaying protected quotations.13

Nasdaq Execution Services will accept 

orders only from Nasdaq, which in turn 

accepts orders only from Nasdaq 

members. Because Nasdaq Execution 

Services will be routing orders strictly 

on behalf of Nasdaq members, and 

Nasdaq members that designate Directed 

Orders as intermarket sweep orders are 

obligated to comply with Rules 610 and 

611 of Regulation NMS, Nasdaq 

Execution Services will not perform 

additional validations to ensure that 

orders are properly designated as 

intermarket sweep orders. 

2. Statutory Basis 

Nasdaq believes that the proposed 

rule change is consistent with the 

provisions of Section 6 of the Act,14 in 

general, and with Section 6(b)(5) of the 

Act,15 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. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Exchange does not believe that 

the proposed rule change will impose 

any burden on competition that is not 

necessary or appropriate in furtherance 

of the purpose of the Act. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants or Others 

Written comments on the proposed 

rule change were neither solicited nor 

received. 


pwalker on PROD1PC71 with NOTICES
Federal Register / Vol. 72, No. 47 / Monday, March 12, 2007 / Notices 11071 

16 15 U.S.C. 78s(b)(3)(A). 

17 17 CFR 240.19b–4(f)(6). When filing a proposed 

rule change pursuant to Rule 19b–4(f)(6) under the 

Act, an exchange is required 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. The Exchange has 

requested that the Commission waive the 5-day prefiling notice requirement. The Commission has 

determined to grant this request. 

18 17 CFR 19b–4(f)(6)(iii). 

19For purposes only of waiving the operative 

delay for this proposal, the Commission has 

considered the proposed rule’s impact on 

efficiency, competition, and capital formation. See 

15 U.S.C. 78c(f). 20 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3NASD Rule 3360 provides that the term ‘‘OTC 

Equity Securities’’ refers to any equity security that 

is not listed on The Nasdaq Stock Market or a 

national securities exchange. 

4Non-self-clearing broker-dealers generally are 

considered to have satisfied their reporting 

requirement by making appropriate arrangements 

with their respective clearing organizations. See 

NASD Notice to Members 03–08 (January 2003). 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

Because the proposed 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 after the date of 

the filing, 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 16 and 

Rule 19b–4(f)(6) thereunder.17

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. 

A proposed rule change filed under 

Rule 19b–4(f)(6) normally may not 

become operative prior to 30 days after 

the date of filing. However, Rule 19b–

4(f)(6)(iii) 18 permits the Commission to 

designate a shorter time if such action 

is consistent with the protection of 

investors and the public interest. The 

Exchange has requested that the 

Commission waive the 30-day operative 

delay. The Commission believes that 

waiver of the 30-day operative delay is 

consistent with the protection of 

investors and the public interest.19 The 

Commission believes that the proposed 

rule change will facilitate the ability of 

Nasdaq members to utilize Nasdaq’s 

automated system to comply with their 

respective obligations under Regulation 

NMS. 

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 e-mail to rulecomments@sec.gov. Please include File 

Number SR–NASDAQ–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–NASDAQ–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 such filings will also be 

available for inspection and copying at 

the principal office of the Exchange. 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–NASDAQ–2007–020 and should be 

submitted on or before April 2, 2007. 

For the Commission, by the Division of 

Market Regulation, pursuant to delegated 

authority.20

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E7–4328 Filed 3–9–07; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–55406; File Nos. SR–

NASD–2006–131; SR–NYSE–2006–111; SR–

Amex–2007–05] 

Self-Regulatory Organizations: 

National Association of Securities 

Dealers, Inc.; New York Stock 

Exchange LLC; American Stock 

Exchange LLC; Order Approving 

Proposed Rule Changes To Increase 

the Frequency of the Short Interest 

Reporting Requirements 

March 6, 2007. 

On December 4, 2006, December 7, 

2006, and January 10, 2007, 

respectively, the National Association of 

Securities Dealers, Inc. (‘‘NASD’’), the 

New York Stock Exchange LLC 

(‘‘NYSE’’), and the American Stock 

Exchange LLC (‘‘Amex’’) (collectively, 

the ‘‘SROs’’), pursuant to Section 

19(b)(1) of the Securities Exchange Act 

of 1934 (the ‘‘Act’’ or the ‘‘Exchange 

Act’’) 1 and Rule 19b–4 thereunder,2

filed with the Securities and Exchange 

Commission (the ‘‘Commission’’) the 

proposed rule changes as described 

below: 

Æ NASD proposed to increase the 

frequency of the short interest reporting 

requirements under NASD Rule 3360 

from monthly to twice per month. 

Currently, NASD Rule 3360, ShortInterest Reporting, requires members to 

maintain a record of total short 

positions in all customer and 

proprietary firm accounts in OTC Equity 

Securities 3 and securities listed on a 

national securities exchange if not 

reported to another self-regulatory 

organization and to regularly report 

such information in the manner 

prescribed by NASD.4 Thus, no changes 

to the text of NASD rules are required 

by this proposed rule change. 

Æ NYSE proposed an amendment to 

NYSE Rule 421.10 (Short Positions), 

which would increase the frequency of 

the short interest reporting requirements 

under Rule 421.10 from monthly to 

twice per month. In addition, NYSE 

proposed additional amendments to the 

Rule 421.10’s text in light of recent 

changes to NYSE organizational 


pwalker on PROD1PC71 with NOTICES