Federal Register / Vol. 72, No. 46 / Friday, March 9, 2007 / Notices 10805 

26 15 U.S.C. 78s(b)(2). 

27 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)(iii). 

4 17 CFR 240.19b–4(f)(6). 

5The NASD has asked the Commission to waive 

the 30-day operative delay provided in Rule 19b–

4(f)(6)(iii). 17 CFR 240.19b–4(f)(6)(iii). 

6See Securities Exchange Act Release No. 54084 

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

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

7See Securities Exchange Act Release No. 54715 

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

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

108). The NASD/NSX TRF commenced operation 

for the reporting of over-the-counter (‘‘OTC’’) trades 

in Nasdaq-listed securities on November 27, 2006, 

and began accepting reports of OTC trades in nonNasdaq exchange-listed securities on February 20, 

2007. 

8See Securities Exchange Act Release No. 54931 

(December 13, 2006), 71 FR 76409 (December 20, 

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

115). The NASD/BSE TRF will commence operation 

upon successful completion of system testing and 

certification (currently anticipated to be in the first 

quarter of 2007). 

This approval order is conditioned on 

the Exchange’s adherence to these 

representations. 

Exchanges that trade commodityrelated securities generally have in 

place surveillance arrangements with 

markets that trade the underlying 

commodities. The Commission notes 

that the Exchange has indicated that it 

currently is in the process of entering 

into information-sharing agreements 

with the ICE Futures and the Kansas 

Board of Trade, as well as amending its 

current information sharing agreement 

with NYMEX. Although the Exchange 

has not finalized these agreements, the 

Commission believes nevertheless that 

the Exchange’s proposal to trade the 

Covered Securities on a pilot basis is 

consistent with the Act in view of (1) 

the limited duration of the pilot period 

(three months), (2) the Exchange’s 

representation that these informationsharing agreements would be complete 

‘‘in the near future,’’ and (3) the fact that 

the Exchange must submit a proposed 

rule change addressing each Covered 

Security, to continue trading the 

securities after the expiration of the 

pilot period. 

The Commission finds good cause for 

approving this proposal before the 

thirtieth day after the publication of 

notice thereof in the Federal Register. 

As noted previously, the Commission 

previously found that the listing and 

trading of each of the Covered Securities 

by either NYSE or Amex is consistent 

with the Act. The Commission presently 

is not aware of any regulatory issue that 

should cause it to revisit those findings 

or would preclude the trading of the 

Covered Securities on the Exchange 

pursuant to UTP. Furthermore, 

accelerated approval of this proposal is 

necessary to facilitate compliance by 

certain OTC market makers with the 1% 

Rule. Market disruption could result if 

these OTC market makers have no 

venue where they can publish their 

quotations in the Covered Securities. 

For these reasons, the Commission finds 

good cause to approve the amended 

proposal on an accelerated basis. 

V. Conclusion 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act,26 that the 

proposed rule change (SR–NASDAQ–

2007–016), be and it hereby is, approved 

on an accelerated basis for a threemonth pilot period which will 

commence on March 5, 2007. 

For the Commission, by the Division of 

Market Regulation, pursuant to delegated 

authority.27

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E7–4193 Filed 3–8–07; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–55393; File No. SR–NASD–

2007–016] 

Self-Regulatory Organizations; 

National Association of Securities 

Dealers, Inc.; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change To Amend NASD Rules 

4632C and 4632D To Reflect ‘‘As/Of’’

Trade Reporting and the Automated 

Reporting of Trade Cancellations to 

the NASD/NSX and NASD/BSE Trade 

Reporting Facilities 

March 2, 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 

27, 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 prepared substantially by the 

NASD. The NASD has filed this 

proposal pursuant to Section 

19(b)(3)(A)(iii) of the Act 3 and Rule 

19b–4(f)(6) thereunder,4 which renders 

the proposal effective upon filing with 

the Commission.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 

The NASD proposes to amend NASD 

Rules 4632C, ‘‘Transaction Reporting,’’

and 4632D, ‘‘Transaction Reporting,’’ to 

reflect ‘‘as/of’’ (T+1) trade reporting and 

the automated reporting of trade 

cancellations to the NASD/NSX Trade 

Reporting Facility (the ‘‘NASD/NSX 

TRF’’) and the NASD/BSE Trade 

Reporting Facility (the ‘‘NASD/BSE 

TRF’’), respectively. The proposed 

amendments are substantially identical 

to the current language of NASD Rule 

4632, ‘‘Transaction Reporting,’’ relating 

to the NASD/Nasdaq Trade Reporting 

Facility (‘‘NASD/Nasdaq TRF’’), which 

the Commission approved on June 30, 

2006.6 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 Commission approved the 

establishment of the NASD/NSX TRF 7

and the NASD/BSE TRF 8 on November 

6, 2006, and December 13, 2006, 

respectively. The NASD/NSX TRF and 

NASD/BSE TRF provide members with 

additional mechanisms for reporting 

locked-in trades in exchange-listed 

securities executed otherwise than on 

an exchange. 

Currently, the NASD/NSX TRF does 

not accept reports of trades on an ‘‘as/ 

of’’ or next day (T+1) basis and the 

NASD/BSE TRF rules also do not 

contemplate the submission of ‘‘as/of’’

trade reports. The rules relating to the 

NASD/NSX TRF and the NASD/BSE 

TRF expressly provide that members 

must use an alternative electronic 


jlentini on PROD1PC65 with NOTICES
10806 Federal Register / Vol. 72, No. 46 / Friday, March 9, 2007 / Notices 

9See NASD Rule 4632C(a)(2)(B) and (D), relating 

to the NASD/NSX TRF, and NASD Rule 

4632D(a)(2)(B) and (D), relating to the NASD/BSE 

TRF. 

10See NASD Rule 4632C(f)(2)(B), (C), (E), and (F). 

11See NASD Rule 4632D(g)(2)(A), (B), (C), (D), 

(E), and (F). 

12 15 U.S.C. 78o–3(b)(6). 

13 17 CFR 240.19b–4(f)(6)(iii). 

14 15 U.S.C. 78s(b)(3)(A). 

15 17 CFR 240.19b–4(f)(6). 

16For purposes only of waiving the 30-day 

operative delay, the Commission has considered the 

proposed rule’s impact on efficiency, competition, 

and capital formation. 15 U.S.C. 78c(f). 

17See supra note 6. 

mechanism to report ‘‘as/of’’ trades to 

the NASD.9

In addition, members can only 

electronically report trade cancellations 

to the NASD/NSX TRF on trade date; 

members cannot electronically report 

cancellations on an ‘‘as/of’’ basis. The 

rules require that for trades that are 

cancelled after the day of the execution 

of the trade, members must contact 

NASD/NSX TRF Operations to report 

the trade cancellation.10 With respect to 

the NASD/BSE TRF, members cannot 

electronically report any trade 

cancellations, irrespective of whether 

they occur on or after the trade date. 

The NASD/BSE TRF rules require 

members to contact NASD/BSE TRF 

Operations to report any cancellation of 

a trade previously submitted to the 

NASD/BSE TRF.11

The NASD proposes to amend NASD 

Rules 4632C and 4632D to reflect a 

change in the functionality of the 

NASD/NSX TRF and NASD/BSE TRF, 

respectively, to support the reporting of 

trades on an ‘‘as/of’’ (T+1) basis and the 

automated reporting of trade 

cancellations. The NASD believes that 

by providing for the reporting of ‘‘as/of’’

trades, the proposed rule change will 

enhance transparency and the integrity 

of the audit trail. Additionally, the 

NASD believes that by automating the 

reporting of trade cancellations, the 

proposed rule change will facilitate and 

streamline the correction of trades, as 

necessary. 

The NASD anticipates that system 

testing and certification will be 

completed before the end of the first 

quarter of 2007. The NASD will 

announce the date that the system 

changes will be implemented on its Web 

site. 

2. Statutory Basis 

The NASD believes that the proposed 

rule change is consistent with the 

provisions of Section 15A(b)(6) of the 

Act,12 which requires, among other 

things, that the NASD’s 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 the proposed rule 

change will enhance investor protection 

by increasing transparency and the 

integrity of the audit trail. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The 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. 

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 

The NASD has designated the 

proposed rule change as one that: (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 of filing, or such 

shorter time as the Commission may 

designate if consistent with the 

protection of investors and the public 

interest. In addition, as required under 

Rule 19b–4(f)(6)(iii),13 the NASD 

provided the Commission with written 

notice of its intention to file the 

proposed rule change, along with a brief 

description and the text of the proposed 

rule change, at least five business days 

prior to filing the proposal with the 

Commission. Therefore, the foregoing 

rule change has become effective 

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

Act 14 and Rule 19b–4(f)(6) 

thereunder.15

Pursuant to Rule 19b–4(f)(6)(iii) under 

the Act, a proposal does not become 

operative for 30 days after the date of its 

filing, or such shorter time as the 

Commission may designate if consistent 

with the protection of investors and the 

public interest. The NASD has asked the 

Commission to waive the 30-day 

operative delay to allow the proposed 

rule changes to be operative when the 

system changes for ‘‘as/of’’ trade 

reporting and the automated reporting 

of trade cancellations have been 

completed. The NASD believes that 

these system changes may be completed 

prior to the end of the 30-day operative 

delay period, and that it is crucial for a 

complete and accurate audit trail and 

market transparency that the NASD/ 

NSX TRF and the NASD/BSE TRF be 

able to process and report trade 

corrections as quickly as possible. The 

NASD believes that a delay in the 

implementation of this functionality 

would not be in the interests of 

investors. 

The Commission believes that 

waiving the 30-day operative delay is 

consistent with the protection of 

investors and the public interest 

because the proposed changes could 

enhance the accuracy and integrity of 

the audit trail and facilitate the 

reporting of ‘‘as/of’’ trades and trade 

cancellations.16 The Commission also 

notes that the proposed changes are 

substantially identical to the current 

language of NASD Rule 4632 relating to 

the NASD/Nasdaq TRF, which was 

subject to notice and comment.17

Accordingly, the Commission waives 

the 30-day operative delay and 

designates that the proposal become 

operative immediately. 

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–2007–016 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 

No. SR–NASD–2007–016. 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 


jlentini on PROD1PC65 with NOTICES
Federal Register / Vol. 72, No. 46 / Friday, March 9, 2007 / Notices 10807 

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)(iii). 

3 17 CFR 240.19b–4(f)(4). 

4Securities Exchange Act Release No. 36091 

(Aug. 10, 1995), 60 FR 42931 (Aug. 17, 1995) [File 

No. SR–NSCC–95–6]. See also Securities Exchange 

Act Release Nos. 38283 (Feb. 13, 1997), 62 FR 

38283 (Feb. 21, 1997) [File No. SR–NSCC–96–19], 

and 40740 (Dec. 3, 1998), 63 FR 67962 (Dec. 9, 

1998) [File No. SR–NSCC–98–10]. 

5The original Participating Clearing Entities 

were: Participants Trust Company, Philadelphia 

Depository Trust Company, Stock Clearing 

Corporation of Philadelphia, Boston Stock 

Exchange Clearing Corporation, The Depository 

Trust Company, The Options Clearing Corporation, 

MBS Clearing Corporation, and Government 

Securities Clearing Corporation. 

6 15 U.S.C. 78q–1. 

7 15 U.S.C. 78s(b)(3)(A)(iii). 

8 17 CFR 240.19b–4(f)(4). 

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 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 No. 

SR–NASD–2007–016 and should be 

submitted on or before March 30, 2007. 

For the Commission, by the Division of 

Market Regulation, pursuant to delegated 

authority.18

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E7–4185 Filed 3–8–07; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–55391; File No. SR–NSCC–

2007–04] 

Self-Regulatory Organizations; 

National Securities Clearing 

Corporation; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change Relating to Collateral 

Management Service 

March 2, 2007. 

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

Securities Exchange Act of 1934,1 notice 

is hereby given that on February 22, 

2007, the 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 substantially by NSCC. NSCC 

filed the proposed rule change pursuant 

to Section 19(b)(3)(A)(iii) of the Act 2

and Rule 19b–4(f)(4) 3 thereunder so that 

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 

Under the proposed rule change, 

NSCC will eliminate references to the 

Collateral Management Service (‘‘CMS’’) 

in its rules and procedures. 

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. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

NSCC has offered CMS to its members 

since 1995.4 CMS was created to 

provide NSCC members with access on 

a daily basis to information regarding 

their clearing fund, margin, and other 

similar requirements and deposits 

(‘‘CMS data’’) at NSCC, other 

participating clearing agencies 

registered with the Commission, and 

clearing organizations recognized by the 

Commodity Futures Trading 

Commission (collectively, ‘‘Participating 

Clearing Entities’’ 5). The information 

included such things as excess or deficit 

amounts and data on underlying 

collateral. The CMS service also 

permitted Participating Clearing Entities 

to receive CMS data with respect to 

their participants. 

However, few NSCC members elected 

to use CMS because they can obtain 

access to CMS data by other means 

provided by NSCC. In addition, by the 

end of 2004, the Participating Clearing 

Entities had long ceased transmitting 

CMS data to NSCC, and the service had 

become dormant. Accordingly, NSCC 

will delete Rule 53 and Procedure XVI 

(Collateral Management Service), will 

delete all references to CMS from Rule 

4, Section 9 (Clearing Fund), and will 

amend Rule 49 (Release of Clearing 

Data) to preserve NSCC’s right to share 

clearing fund data with appropriate 

regulatory and self-regulatory 

organizations. 

NSCC believes that the proposed rule 

change is consistent with Section 17A of 

the Act 6 and the rules and regulations 

thereunder because by eliminating rules 

pertaining to an obsolete and dormant 

service, while preserving its right to 

share clearing fund data with 

appropriate regulatory bodies, NSCC’s 

rules will more accurately reflect the 

services it provides to its members. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

NSCC does not believe that the 

proposed rule change will have any 

impact or impose any burden on 

competition. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

NSCC has discussed the proposed 

rule change with Participating Clearing 

Entities but has not solicited or received 

written comments relating to the 

proposed rule change. NSCC will notify 

the Commission of any written 

comments it receives. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

The foregoing rule change has become 

effective pursuant to Section 

19(b)(3)(A)(iii) of the Act 7 and Rule 

19b–4(f)(4) 8 thereunder because it 

effects a change in an existing service of 

a registered clearing agency that does 

not adversely affect the safeguarding of 

securities and funds in the custody or 

control of the clearing agency or for 

which it is responsible and does not 

significantly affect the respective rights 

or obligations of the clearing agency or 

persons using the service. 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 


jlentini on PROD1PC65 with NOTICES