11414 Federal Register / Vol. 72, No. 48 / Tuesday, March 13, 2007 / Notices 

5Securities Exchange Act Release No. 54655 

(October 26, 2006), 71 FR 64596 (November 2, 2006) 

(SR–NYSEArca–2006–48). 

6 15 U.S.C. 78f. 

7 15 U.S.C. 78f(b)(4). 

8 15 U.S.C. 78s(b)(3)(A)(ii). 

9 17 CFR 240.19b–4(f)(2). 

10For the purposes of calculating the 60-day 

abrogation period, the Commission considers the 

proposed rule change to have been filed on March 

1, 2007, when Amendment No. 1 was filed. 

11 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

Nasdaq is concerned that some 

members have abused the appeals 

process by appealing all decisions in 

which they are involved regardless of 

merit or the value of shares at issue. 

During December 2006 and January 

2007, five firms were responsible for 

44% of all appeals. Two appeals were 

for odd lot amounts, including one 

appeal for just 50 shares. Of the appeals 

during this two-month period, 77% of 

appeals were upheld by the MORC and 

23% resulted in trade adjustments. 

These statistics suggest that parties are 

overusing and abusing the appellate 

system because there is no downside 

risk. A number of the appeals involve 

trades that do not meet the numerical 

thresholds and other factors used in 

adjudicating clearly erroneous filings set 

forth in IM–11890–4 and IM–11890–5. 

As a result, the MORC is often serving 

as a redundant decision maker in cases 

where the outcome is not legitimately in 

question. This is not the role Nasdaq 

intended when it established the 

appeals process using the MORC. 

In order to reduce the number of 

frivolous appeals and to preserve 

Nasdaq’s ability to attract qualified 

persons to serve on the MORC, Nasdaq 

is proposing a modest fee of $500.00 

that will be levied only in cases where 

the MORC upholds the Nasdaq officer’s 

decision. Firms would not be charged 

for successful appeals. Nasdaq believes 

that this fee will encourage members to 

consider whether the facts and 

economic value at stake merit appellate 

consideration. Nasdaq notes that NYSE 

Arca Equities, Inc. (‘‘NYSE Arca’’) 

recently adopted a similar $500.00 

appellate fee in order to reduce apparent 

abuses of the appeals process on that 

exchange.5

2. Statutory Basis 

Nasdaq believes that the proposed 

rule change is consistent with the 

provisions of Section 6 of the Act,6 in 

general, and with Section 6(b)(4) of the 

Act,7 in particular, in that the proposed 

rule change provides for the equitable 

allocation of reasonable dues, fees, and 

other charges among members and 

issuers and other persons using any 

facility or system which Nasdaq 

operates or controls. Nasdaq believes 

that the modest fee of $500 for an 

unsuccessful appeal under Rule 11890 

will be equitably assessed against 

members that impose burdens on the 

time of Nasdaq staff and MORC 

members by filing appeals that lack 

merit. 

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. 

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 foregoing rule change has become 

effective pursuant to Section 

19(b)(3)(A)(ii) of the Act 8 and paragraph 

(f)(2) of Rule 19b–49 thereunder. 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.10

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–NASDAQ–2007–013 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–2007–013. 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 Nasdaq. 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–2007–013 and 

should be submitted on or before April 

3, 2007. 

For the Commission, by the Division of 

Market Regulation, pursuant to delegated 

authority.11

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E7–4506 Filed 3–12–07; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–55412; File No. SR–NASD–

2007–015] 

Self-Regulatory Organizations; 

National Association of Securities 

Dealers, Inc.; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change To Amend NASD Rules 

1012 (General Provisions) and 1013 

(New Member Application and 

Interview) To Require an Applicant for 

Membership To Submit an Application 

in the Manner Prescribed by NASD 

March 7, 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 

20, 2007, the National Association of 

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

with the Securities and Exchange 


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Federal Register / Vol. 72, No. 48 / Tuesday, March 13, 2007 / Notices 11415 

3 Id. 

4See Securities Exchange Act Release No. 53564 

(March 29, 2006), 71 FR 16847 (April 4, 2006) (SR–

NASD–2006–038). 

5See Rule 1012(a)(1) and Rule 1013(a)(1). 

6NASD no longer refers to itself using its full 

corporate name or ‘‘the Association.’’ Instead, 

NASD uses the name ‘‘NASD’’ unless otherwise 

appropriate for corporate or regulatory reasons. 

7NASD will also provide notice through the 

NASD Notice to Members process (or similar 

guidance) of any systems changes to the electronic 

application process that would alter the manner in 

which applicants interact with the electronic filing 

system. 

8Cf. Securities Exchange Act Release No. 54654 

(October 26, 2006), 71 FR 64326 (November 1, 2006) 

(SR–NASD–2006–60) (order approving new NASD 

Rule 3170 (Mandatory Electronic Filing 

Requirements) giving NASD the authority to require 

members to file or submit electronically any 

regulatory notice or other document that a member 

is required to file with (or otherwise submit to) 

NASD). 

9NASD By-Laws, Art. IV, Sec. 1(a). 

10 15 U.S.C. 78o-3(b)(6). 

Commission (‘‘Commission’’) the 

proposed rule change as described in 

Items I, II and III below, which Items 

have been prepared by NASD. NASD 

has designated the proposed rule change 

as constituting a ‘‘non-controversial’’

proposed rule change under paragraph 

(f)(6) of Rule 19b–4 under the Act,3

which renders the proposed rule change 

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 proposes to amend NASD 

Rules 1012 (General Provisions) and 

1013 (New Member Application and 

Interview) to require an applicant for 

membership to submit an application in 

the manner prescribed by NASD. The 

text of the proposed rule change is 

available at NASD, www.nasd.com, and 

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 

Applying for NASD membership is a 

comprehensive process requiring the 

submission of extensive information, 

considerable attention to detail, and a 

substantial time commitment. To 

streamline the application process and 

outline clearly the information that 

must be submitted with the application, 

NASD recently amended Rule 1013 

(New Member Application and 

Interview) to require applicants to use a 

standardized form, Form NMA, to 

submit their membership applications.4

Form NMA is organized according to 

the 14 individual standards for 

membership enumerated in Rule 1014 

(Department Decision) and assists 

applicants in compiling a complete 

application package by listing the forms 

and supporting documentation required 

by Rule 1013. Applicants currently 

submit Form NMA in hard copy to 

NASD, along with the required forms 

and supporting documentation, via 

hand delivery, courier, or first-class 

mail.5

NASD, however, previously indicated 

in the rule filing requiring applicants to 

use Form NMA that it intended to 

develop systems to enable applicants to 

submit Form NMA electronically. NASD 

has now completed those systems and 

converted Form NMA to an electronic 

document. The electronic Form NMA 

and the new electronic application 

submission process changes only the 

manner in which NASD receives the 

information that a membership 

application is required to include under 

Rule 1013. They do not change the 

information applicants must submit 

pursuant to Rule 1013 or the standards 

set forth in Rule 1014 for granting an 

applicant’s membership application. 

The proposed rule change amends 

Rule 1012 to require applicants to file 

an application in the manner prescribed 

in Rule 1013. The proposed rule change 

also amends Rule 1012(a) to reflect that 

the electronic filing of a new member 

application will be deemed complete on 

the date specified on the confirmation 

page generated by the electronic filing 

system. In addition, the proposed rule 

change amends Rule 1013(a) to require 

new member applicants to file an 

application in the manner prescribed by 

NASD and to include the completed 

Form NMA as part of the contents of a 

membership application. 

Finally, the proposed rule change 

deletes outdated references in Rules 

1011, 1012 and 1013 to ‘‘the 

Association’’ and replaces them with 

‘‘NASD.’’6

Prior to the proposed rule change 

being operative and implemented, 

NASD will make the Form NMA 

available to applicants via Web CRD and 

will outline details in a Notice to 

Members regarding how to complete the 

online form and submit it using the new 

electronic filing system.7

This move away from a paper new 

member application to an electronic 

application will further streamline and 

make more efficient the new member 

application process.8 An electronic 

application process is also consistent 

with NASD’s By-Laws, which state that 

new member applications ‘‘shall be 

made to the NASD via electronic 

process or such other process as the 

NASD may prescribe, on the form to be 

prescribed by the NASD.’’9

As noted in Item 2 above, NASD has 

filed the proposed rule change for 

immediate effectiveness. NASD will 

announce the implementation date of 

the proposed rule change in a Notice to 

Members to be published no later than 

60 days following Commission notice of 

the filing of the proposed rule change 

for immediate effectiveness. The 

implementation date will be 30 days 

from the publication of the Notice to 

Members. 

2. Statutory Basis 

NASD believes that the proposed rule 

change is consistent with the provisions 

of Section 15A(b)(6) of the Act,10 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. 

The proposed rule change amends Rules 

1012 and 1013 to require new member 

applications to be submitted in the 

manner prescribed by NASD, which 

will be electronically. The proposed 

rule change does not propose any new 

or additional content requirements for 

member applications. NASD believes 

that the proposed rule change is 

consistent with the provisions of 

Section 15A(b)(6) as the requirement to 

file electronic applications using Form 

NMS will ensure a more streamlined 

and efficient membership application 

process. 

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. 


cprice-sewell on PROD1PC66 with NOTICES
11416 Federal Register / Vol. 72, No. 48 / Tuesday, March 13, 2007 / Notices 

11 15 U.S.C. 78s(b)(3)(A). 

12 17 CFR 240.19b–4(f)(6). 

13 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3See Securities Exchange Act Release No. 55180 

(January 26, 2007), 72 FR 5095. 

4Amendment No. 1 made technical changes to 

the proposal and is not subject to notice and 

comment. 

5 In approving this proposed rule change, the 

Commission notes that it has considered the 

proposed rule’s impact on efficiency, competition, 

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

6 15 U.S.C. 78o–3(b)(5). 

7 15 U.S.C. 78s(b)(2). 

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, it has become effective 

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

Act 11 and Rule 19b–4(f)(6) 

thereunder.12

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–2007–015 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–NASD–2007–015. 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 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–2007–015 and 

should be submitted on or before April 

3, 2007. 

For the Commission, by the Division of 

Market Regulation, pursuant to delegated 

authority.13

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E7–4505 Filed 3–12–07; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–55409; File No. SR–NASD–

2007–004] 

Self-Regulatory Organizations; 

National Association of Securities 

Dealers, Inc.; Order Approving 

Proposed Rule Change as Modified by 

Amendment No. 1 To Amend NASD 

Rule 7010(k) Relating to Transaction 

Reporting and Compliance Engine 

Transaction Data 

March 6, 2007. 

On January 16, 2007, the National 

Association of Securities Dealers, Inc. 

(‘‘NASD’’) filed with the Securities and 

Exchange Commission (‘‘Commission’’), 

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

Securities Exchange Act of 1934 

(‘‘Act’’) 1 and Rule 19b–4 thereunder,2 a 

proposed rule change to offer 

subscribers to its Transaction Reporting 

and Compliance Engine system 

(‘‘TRACE’’) the ability to receive, for a 

reduced fee, a ‘‘snapshot’’ of real-time 

TRACE transaction data once each day 

rather than continuously throughout the 

day. The proposed rule change was 

published for comment in the Federal 

Register on February 2, 2007.3 The 

Commission received no comments 

regarding the proposal. On March 2, 

2007, the Exchange submitted 

Amendment No. 1 to the proposed rule 

change.4

The Commission finds that the 

proposed rule change, as amended, is 

consistent with the requirements of the 

Act and the rules and regulations 

thereunder applicable to a national 

securities association.5 The proposal 

would offer a new TRACE subscription 

option whereby subscribers could pay 

$250/month to receive TRACE 

transaction data daily, once a day 

(‘‘Snapshot TRACE data’’) rather than 

paying $1,500/month for continuous 

access to TRACE transaction data. 

NASD has identified certain market 

participants, namely institutional 

investors, who only need a single price, 

daily, for each security for purposes of 

position valuation. NASD believes that, 

given the limited need for TRACE 

transaction data for these market 

participants, the $1,500/month charge 

for continuous access to TRACE 

transaction data may be unnecessarily 

expensive for them. NASD further 

believes that the proposed charge of 

$250/month for Snapshot TRACE data is 

reasonable and more appropriate for the 

tailored transaction informational needs 

of certain institutional market 

participants, who are currently 

foregoing TRACE transaction data at the 

higher monthly charge for continuous 

data. 

The Commission finds that the 

proposed rule change is consistent with 

the Act, and particularly with Section 

15A(b)(5) thereof,6 which requires that 

NASD’s rules provide for the equitable 

allocation of dues, fees, and other 

charges among members and issuers and 

other persons using any facility or 

system which NASD operates or 

controls. The Commission believes that 

the proposed rule change, by offering 

the option of tailored access to TRACE 

transaction data at a reduced cost, is 

reasonable. 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act,7 that the 

proposed rule change (SR–NASD–2007–


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