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###### Securities and Exchange Commission

          - [Release No. 34-55518; File No. SR-NASD-2007-024] 

                    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act” or “Exchange Act”) [1]                                          and Rule 19b-4 thereunder,[2]                                          notice is hereby given that on March 20, 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 by NASD. NASD has filed the proposed rule as a “non-controversial” rule change pursuant to Section 19(b)(3)(A) of the Act [3]                                          and Rule 19b-4(f)(6) thereunder,[4]                                          which renders it 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 is proposing to correct a typographical error in NASD Rule 2520 (Margin Requirements). In particular, the proposed rule change would amend NASD Rule 2520 to re-label a subparagraph that was incorrectly identified as part of a recent rule filing. Below is the text of the proposed rule change.[5]                                          Proposed new language is in                     *italics;*                     proposed deletions are in [brackets].                 

* * * * *

#### 2520. Margin Requirements 

(a) through (f) No Change. 

(g) Portfolio Margin. 

                    As an alternative to the “strategy-based” margin requirements set forth in paragraphs (a) through (f) of this Rule, members may elect to apply the portfolio margin requirements set forth in this paragraph (g) to all margin equity securities,1                     listed options, security futures products (as defined in Section 3(a)(56) of the Exchange Act), unlisted derivatives, warrants, index warrants and related instruments, provided that the requirements of paragraph (g)(6)(B)(i) of this Rule are met.                 

In addition, a member, provided that it is a Futures Commission Merchant (“FCM”) and is either a clearing member of a futures clearing organization or has an affiliate that is a clearing member of a futures clearing organization, is permitted under this paragraph (g) to combine an eligible participant's related instruments as defined in paragraph (g)(2)(D), with listed index options, unlisted derivatives, options on exchange traded funds (“ETF”), index warrants and underlying instruments and compute a margin requirement for such combined products on a portfolio margin basis. 

The portfolio margin provisions of this Rule shall not apply to Individual Retirement Accounts (“IRAs”). 

(1) through (5) No Change. 

(6) Establishing Account and Eligible Positions.l 

(A) No Change. 

(B) Eligible Products. 

(i) For eligible participants as described in paragraphs (g)(4)(A) through (g)(4)(C), a transaction in, or transfer of, an eligible product may be effected in the portfolio margin account. Eligible products under this paragraph (g) consist of: 

(a) through (e) No Change. 

                    [(d)]                    *(f)*                     a related instrument as defined in paragraph (g)(2)(D).                 

(7) through (15) No Change.

1                        For purposes of this paragraph (g) of the Rule, the term “margin equity security” utilizes the definition at Section 220.2 of Regulation T of the Board of Governors of the Federal Reserve System.                     

* * * * *

## 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 

                    On February 12, 2007, NASD filed with the Commission for immediate effectiveness a proposed rule change to amend Rule 2520 (Margin Requirements) to establish a portfolio margin pilot program.[6]                                          The Commission published notice of the proposed rule change in the                     **Federal Register**                     on March 20, 2007.[7]                                          The proposed rule change, among other things, added a new paragraph (g)(6)(B)(i) that specifies in separate subparagraphs a list of the eligible products for the portfolio margin pilot program. This list of eligible products in paragraph (g)(6)(B)(i) inadvertently identifies two provisions as subparagraph (d). NASD is filing this proposed rule change to re-label the last subparagraph (d) as subparagraph (f).                 

                    NASD has filed the proposed rule change for immediate effectiveness. As noted above, the proposed rule change is part of a pilot program that would                           ( print page 14842)                        begin on April 2, 2007 and end on July 31, 2007, unless the SEC approves an extension of the pilot or adoption of the program on a permanent basis.                 

#### 2. Statutory Basis 

                    NASD believes that the proposed rule change is consistent with the provisions of Section 15A(b)(6) of the Act,[8]                                          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. NASD believes that this technical change is consistent with the protection of investors and the public interest in that it will avoid any confusion when reading the provisions of Rule 2520(g)(6)(B)(i).                 

### 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. 

### 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 proposed rule change is subject to Section 19(b)(3)(A)(iii) of the Act [9]                                          and Rule 19b-4(f)(6) thereunder [10]                                          because the proposal: (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 prior to 30 days after the date of filing or such shorter time as the Commission may designate. 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.                 

                    NASD has asked the Commission to waive the five-day pre-filing notice requirement and the 30-day operative delay. The Commission believes such waivers are consistent with the protection of investors and the public interest because they would allow the technical corrections in the proposed rule change to be implemented on April 2, 2007, when the NASD portfolio margin pilot program begins, pursuant to SR-NASD-2007-013.[11]                                          For this reason, the Commission designates the proposal to be operative upon filing with the Commission.[12] 

## 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 rule-comments@sec.gov.                      Please include File Number SR-NASD-2007-024 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-2007-024. 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-2007-024 and should be submitted on or before April 19, 2007.                                    

                        For the Commission, by the Division of Market Regulation, pursuant to delegated authority.13

Florence E. Harmon, 

Deputy Secretary.

# Footnotes

1.                             15 U.S.C. 78s(b)(1).                     
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2.                             17 CFR 240.19b-4.                    
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3.                             15 U.S.C. 78s(b)(3)(A).                    
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4.                             17 CFR 240.19b-4(f)(6).                    
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5.                             The underlying rule text used in this proposed rule change is based on NASD Rule 2520, as amended by SR-NASD-2007-013, which will be implemented on April 2, 2007.                         *See*                         Exchange Act Release No. 55471 (March 14, 2007), 72 FR 13149 (March 20, 2007) (Notice of filing and immediate effectiveness of File No. SR-NASD-2007-013).                     
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6.                             The portfolio margin pilot program is substantially similar to recent margin rule amendments by the New York Stock Exchange (“NYSE”) and the Chicago Board Options Exchange (“CBOE”), which were approved by the Commission.                         *See*                         Exchange Act Release No. 54918 (December 12, 2006), 71 FR 75790 (December 18, 2006) (SR-NYSE-2006-13, relating to further amendments to the NYSE's portfolio margin pilot program); Exchange Act Release No. 54125 (July 11, 2006), 71 FR 40766 (July 18, 2006) (SR-NYSE-2005-93, relating to amendments to the NYSE's portfolio margin pilot program); Exchange Act Release No. 52031 (July 14, 2005) 70 FR 42130 (July 21, 2005) (SR-NYSE-2002-19, relating to the NYSE's original portfolio margin pilot).                         *See also*                         Exchange Act Release No. 54919 (December 12, 2006), 71 FR 75781 (December 18, 2006) (SR-CBOE-2006-014, relating to amendments to the CBOE's portfolio margin pilot); Exchange Act Release No. 52032 (July 14, 2005) 70 FR 42118 (July 21, 2005) (SR-CBOE-2002-03, relating to the CBOE's original portfolio margin pilot).                     
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7.                                                     *See*                         Exchange Act Release No. 55471 (March 14, 2007), 72 FR 13149 (March 20, 2007) (Notice of filing and immediate effectiveness of File No. SR-NASD-2007-013).                     
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8.                             15 U.S.C. 78o-3(b)(6).                     
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9.                             15 U.S.C. 78s(b)(3)(A)(iii).                     
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10.                             17 CFR 240.19b-4(f)(6).                     
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11.                             For purposes only of waiving the 30-day pre-operative period, the Commission has considered the proposed rule's impact on efficiency, competition and capital formation. 15 U.S.C. 78c(f).                     
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12.                                                     *See supra*                         note 7.                     
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13.                                 17 CFR 200.30-3(a)(12).                         
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 [FR Doc. E7-5814 Filed 3-28-07; 8:45 am] 

BILLING CODE 8010-01-P