Federal Register / Vol. 72, No. 48 / Tuesday, March 13, 2007 / Notices 11413 

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

16 17 CFR 19b-4(f)(2). 

17 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)(2). 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants or Others 

The Exchange has not solicited, and 

does not intend to solicit, comments on 

this proposed rule change. The 

Exchange has not received any 

unsolicited written comments from 

members or other interested parties. 

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) 

of the Act15 and Rule 19b-4(f)(2)16

thereunder. At any time within 60 days 

of the filing of such 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 

No. SR–ISE–2007–13 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–ISE–2007–13. 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 ISE. 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–ISE–2007–13 and should be 

submitted on or before April 3, 2007. 

For the Commission, by the Division of 

Market Regulation, pursuant to delegated 

authority.17

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E7–4504 Filed 3–12–07; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–55413; File No. SR–

NASDAQ–2007–013] 

Self-Regulatory Organizations; The 

NASDAQ Stock Market LLC; Notice of 

Filing and Immediate Effectiveness of 

Proposed Rule Change as Modified by 

Amendment No. 1 to Assess a Fee for 

Unsuccessful Appeals Under Rule 

11890 

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 

27, 2007, The NASDAQ Stock Market 

LLC (‘‘Nasdaq’’ or the ‘‘Exchange’’) 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 substantially prepared by 

Nasdaq. Nasdaq submitted the proposed 

rule change under Section 19(b)(3)(A) of 

the Act 3 and Rule 19b–4(f)(2) 

thereunder,4 which renders the proposal 

effective upon filing with the 

Commission. On March 1, 2007, the 

Exchange filed Amendment No. 1 to the 

proposed rule change. The Commission 

is publishing this notice to solicit 

comments on the proposed rule change, 

as amended, from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

Nasdaq proposes to assess a fee for 

unsuccessful appeals under Rule 11890. 

Nasdaq expects to implement the 

proposed rule change as of March 1, 

2007. 

The text of the proposed rule change 

is available on the Nasdaq’s Web site at 

http://www.nasdaq.com, at Nasdaq’s 

Office of the Secretary, 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, 

Nasdaq 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. Nasdaq 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 is amending Rule 11890, 

which covers the breaking of trades 

determined to be clearly erroneous, to 

add a new Rule 11890(c)(4) that would 

assess a fee of $500.00 for unsuccessful 

appeals of clearly erroneous 

adjudications. 

Rule 11890(c) provides that the losing 

party may appeal decisions made by 

Nasdaq officers on whether or not to 

break trades. Appeals are heard by the 

Market Operations Review Committee 

(‘‘MORC’’), a committee of up to 15 

volunteers who are not affiliated with 

Nasdaq. Each appeal is heard by a panel 

of two or three MORC members who 

must take time from their work or 

personal activities to prepare for and 

hear the appeal. In addition, appeals 

take significant staff time to perform a 

number functions including: processing 

the appeal, contacting the 

counterparties, communicating with 

MORC members to determine 

availability, preparing briefing materials 

on the circumstances of the trade(s) and 

communicating the MORC’s decision to 

the parties. Nasdaq estimates that on 

average the appeals process takes from 

four to five person-hours to complete 

including staff and panel time. 


cprice-sewell on PROD1PC66 with NOTICES
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 


cprice-sewell on PROD1PC66 with NOTICES