15924 Federal Register / Vol. 72, No. 63 / Tuesday, April 3, 2007 / Notices 

13See Commentary .03(a)(A)(3) to Amex Rule 

1000–AEMI and Commentary .02(a)(A)(3) to Amex 

Rule 1000A–AEMI. 14See Commentary .03(a)(A)(4) to Amex Rule 

1000–AEMI and Commentary .02(a)(A)(4) to Amex 

Rule 1000A–AEMI. 15See Commentary .03(a)(B)(3) to Amex Rule 

1000–AEMI and Commentary .02(a)(B)(3) to Amex 

Rule 1000A–AEMI. 16See Commentary .03(a)(B)(4) to Amex Rule 

1000–AEMI and Commentary .02(a)(B)(4) to Amex 

Rule 1000A–AEMI. 

17 15 U.S.C. 78s(b)(2). 

18 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)(ii). 

4 17 CFR 240.19b–4(f)(2). 

5See Securities Exchange Act Release No. 54084 

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

approving SR–NASD–2005–087). 

6See Securities Exchange Act Release No. 54798 

(November 21, 2006), 71 FR 69156 (November 29, 

2006) (order approving SR–NASD–2006–104). 

7See Securities Exchange Act Release Nos. 54984 

(December 20, 2006), 71 FR 78245 (December 28, 

2006) (notice of filing and immediate effectiveness 

of SR–NASD–2006–135) and 55274 (February 12, 

2007), 72 FR 7785 (February 20, 2007) (notice of 

filing and immediate effectiveness of SR–NASD–

2007–012). 

listing standards for ETFs would 

potentially reduce the time frame for 

bringing ETFs based on indexes with 

nontraditional weighting techniques to 

the market, thereby reducing the 

burdens on issuers and other market 

participants and promoting competition, 

without compromising investor 

protection. 

The Commission notes that the 

generic listing standards for domestic 

indexes will continue to require, 

without limitation, that the most heavily 

weighted component stock of an index 

not exceed 30% of the weight of the 

index, and the five most heavily 

weighted component stocks of an index 

not exceed 65% of the weight of the 

index,13 and that an index include a 

minimum of 13 component stocks.14

Similarly, the generic listing standards 

for international or global indexes 

require, without limitation, that the 

most heavily weighted component stock 

of an index not exceed 25% of the 

weight of the index, and the five most 

heavily weighted component stocks of 

an index not exceed 60% of the weight 

of the index,15 and that an index 

include a minimum of 20 component 

stocks.16 Therefore, the Commission 

believes that indexes underlying ETFs 

will continue to be sufficiently broadbased in scope to minimize potential 

manipulation. 

The Commission believes that the 

proposed rule change will enable the 

Exchange and issuers to benefit from the 

expected efficiencies resultant from this 

proposed rule change while at the same 

time still ensuring adequate protection 

for investors and the public in general. 

IV. Conclusion 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act,17 that the 

proposed rule change (SR–Amex–2007–

07), as amended, be, and is hereby 

approved. 

For the Commission, by the Division of 

Market Regulation, pursuant to delegated 

authority.18

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E7–6083 Filed 4–2–07; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–55538; File No. SR–NASD–

2007–018] 

Self-Regulatory Organizations: 

National Association of Securities 

Dealers, Inc.; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change To Amend the NASD Rule 

7000 Series To Delete References To 

Systems and Services That Will No 

Longer Be Provided by NASD 

March 27, 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 March 1, 

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, II, and III below, which Items 

have been prepared substantially by 

NASD. NASD has designated this 

proposal as ‘‘establishing or changing a 

due, fee, or other charge’’ under Section 

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

4(f)(2) thereunder,4 which renders the 

proposal 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 the Substance 

of the Proposed Rule Change 

NASD is proposing to amend the 

NASD Rule 7000 Series (Charges for 

Services and Equipment) to delete 

references to systems and services that 

will no longer be provided by NASD 

upon the operation of NASD’s 

Alternative Display Facility (the ‘‘ADF’’) 

for non-Nasdaq exchange-listed 

securities, which is anticipated to be 

March 5, 2007. The Rule 7000 Series 

only will apply to NASD’s OTC Bulletin 

Board Service, OTC Reporting Facility 

(‘‘ORF’’) and Trade Reporting and 

Compliance Engine (‘‘TRACE’’). In this 

proposed rule change, NASD also is 

providing notice relating to the 

calculation of fees under Rule 7010 for 

use of NASD’s Intermarket Trading 

System/Computer Assisted Execution 

Service (the ‘‘ITS/CAES System’’) on 

March 1 and 2, 2007, which will apply 

if the changes proposed herein are 

implemented on March 5, 2007 as 

anticipated. The text of the proposed 

rule change is available at NASD, the 

Commission’s Public Reference Room, 

and 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, 

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 June 30, 2006, the Commission 

approved SR–NASD–2005–087, which, 

among other things, proposed an 

implementation strategy for the 

operation of the Nasdaq Stock Market 

LLC (the ‘‘Nasdaq Exchange’’) as a 

national securities exchange for Nasdaqlisted securities during a transitional 

period.5 On November 21, 2006, the 

Commission approved SR–NASD–2006–

104, which, among other things, 

proposed amendments necessary to 

reflect the complete separation of The 

Nasdaq Stock Market Inc. (‘‘Nasdaq’’) 

from NASD upon the operation of the 

Nasdaq Exchange as a national 

securities exchange for non-Nasdaq 

exchange-listed securities.6 As 

described in SR–NASD–2006–135, for a 

transitional period, Nasdaq has 

continued to operate the 

SuperIntermarket (SiM) trading platform 

on NASD’s behalf via the Transitional 

System and Regulatory Services 

Agreement, even upon commencement 

of the Nasdaq Exchange’s operation as 

an exchange for non-Nasdaq exchangelisted securities on February 12, 2007.7

Upon the operation of the ADF for nonNasdaq exchange-listed securities, SiM 


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Federal Register / Vol. 72, No. 63 / Tuesday, April 3, 2007 / Notices 15925 

8NASD notes that NASD members will continue 

to access the OTC Bulletin Board, which Nasdaq 

operates on NASD’s behalf, via the Nasdaq 

Workstation. The Nasdaq Workstation also provides 

access to a variety of Nasdaq Exchange systems and 

services. Pursuant to the proposed rule change, the 

fees relating to access to and use of the Nasdaq 

Workstation will be deleted from NASD’s rules as 

NASD does not charge for this service. However, 

NASD members are nonetheless required to pay all 

fees for access to and use of the Nasdaq Workstation 

pursuant to the applicable rules of the Nasdaq 

Exchange (see, e.g., Rules 7011 and 7015), which 

apply to members and non-members of the Nasdaq 

Exchange. 

9 15 U.S.C. 78o–3. 

10 15 U.S.C. 78o–3(b)(5). 

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

12 17 CFR 240.19b–4(f)(2). 

will no longer be operated as a facility 

of NASD. 

Currently, the NASD Rule 7000 Series 

addresses, among other things, the 

pricing schedule for the Consolidated 

Quotation Service and ITS/CAES 

System, which operate as part of, or in 

conjunction with, the SiM platform. 

Once the ADF becomes operational for 

non-Nasdaq exchange-listed securities, 

these systems will no longer be operated 

as NASD facilities and as such, the 

pricing schedule for use of these 

systems, as well as associated 

equipment and other fees, must be 

deleted from NASD’s rules. 

Accordingly, NASD is proposing to 

rename the Rule 7000 Series as 

‘‘Charges For OTC Reporting Facility, 

OTC Bulletin Board and Trade 

Reporting and Compliance Engine 

Services’’ and delete from the Rule 7000 

Series all fee provisions that are no 

longer applicable. The current pricing 

schedule for members’ use of the OTC 

Bulletin Board Service, ORF and TRACE 

will be retained and renumbered. 

Specifically, current Rule 7010(g) will 

be renumbered as Rule 7010 (OTC 

Reporting Facility) and amended to 

apply only to the ORF; current Rule 

7010(j) will be renumbered as Rule 7020 

(OTC Bulletin Board Service); current 

Rule 7010(k) will be renumbered as 

Rule 7030 (Trade Reporting and 

Compliance Engine (TRACE)); and 

paragraphs (3) and (4) of current Rule 

7010(p) will be renumbered as 

paragraphs (a) and (b) of Rule 7040 

(Historical Research and Administrative 

Reports). NASD is not proposing to 

modify any of the fees relating to such 

services in this proposed rule change; it 

is only deleting those fee provisions that 

are no longer applicable.8

NASD also notes that the fee schedule 

currently set forth in Rule 7010 relating 

to the use of the ITS/CAES System 

varies based upon the member’s 

monthly volume. Assuming 

implementation of the changes 

proposed herein on March 5, 2007, the 

fees in Rule 7010 will apply only to two 

trading dates in March. Thus, NASD is 

clarifying that the fees charged for use 

of the ITS/CAES System on March 1 and 

2, 2007 will be based on the member’s 

volume for February 2007. In other 

words, the fee rates charged to a 

member for March 1 and 2, 2007 will be 

the same rates charged to the member 

for February 2007. 

NASD has filed the proposed rule 

change for immediate effectiveness. The 

operative date of the proposed rule 

change will be the date upon which the 

ADF begins operating for non-Nasdaq 

exchange-listed securities, currently 

scheduled for March 5, 2007. 

2. Statutory Basis 

NASD believes that the proposed rule 

change is consistent with the provisions 

of Section 15A of the Act,9 in general, 

and with Section 15A(b)(5) of the Act,10

in particular, in that it 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 the NASD 

operates or controls. NASD is proposing 

to delete references to fees for systems 

and services that NASD will no longer 

provide and is not proposing to modify 

the fees for use of any of the systems 

and services that NASD will continue to 

provide. 

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 

Because the foregoing proposed rule 

change establishes or changes a member 

due, fee, or other charge imposed by the 

Exchange, it has become effective 

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

Act 11 and subparagraph (f)(2) of Rule 

19b–4 12 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. 

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–2007–018 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–2007–018. 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–2007–018 and 

should be submitted on or before April 

24, 2007. 


ycherry on PROD1PC64 with NOTICES
15926 Federal Register / Vol. 72, No. 63 / Tuesday, April 3, 2007 / Notices 

13 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)(6). 

5See Securities Exchange Act Release No. 51808 

(June 9, 2005), 70 FR 37496 (June 29, 2005). 

6NYSE Rule 127.10 defines a ‘‘block’’ size as at 

least 10,000 shares or a quantity of stock having a 

market value of $200,000 or more, whichever is 

less. 

7See NYSE Rule 60(e)(i)(B). 

8See NYSE Rule 1000(a)(v). 

9See NYSE Rule 60(e)(ii)(B). 

10See NYSE Rule 1000(b). 

11See NYSE Rule 60(e)(i)(A). For a description of 

gapped quotations, see Securities Exchange Act 

Release No. 53539 (March 22, 2006), 71 FR 16353 

(March 31, 2006) (SR–NYSE–2004–05) (the ‘‘Hybrid 

MarketSM Approval Order’’). 

12See NYSE Rule 60(e)(i)(C). For a description of 

LRPs, see Hybrid MarketSM Approval Order, supra 

note 11. 

For the Commission, by the Division of 

Market Regulation, pursuant to delegated 

authority.13

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E7–6125 Filed 4–2–07; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–55543; File No. SR–NYSE–

2007–31] 

Self-Regulatory Organizations; New 

York Stock Exchange LLC; Notice of 

Filing and Immediate Effectiveness of 

Proposed Rule Change To Amend Rule 

60 To Allow the Exchange To Identify 

Its Quotation as Slow Non-Firm During 

the Manual Reporting of a Block-Sized 

Transaction 

March 27, 2007. 

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

Securities Exchange Act of 1934 (the 

‘‘Act’’) and Rule 19b–4 thereunder,2

notice is hereby given that on March 20, 

2007, the New York Stock Exchange 

LLC (‘‘NYSE’’ or the ‘‘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. NYSE has designated the 

proposed rule change as constituting a 

‘‘non-controversial’’ rule change under 

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

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

the proposal 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 

The Exchange is proposing to amend 

Rule 60 to provide that when the 

Exchange quotation is not available for 

automatic execution due to the manual 

reporting of a block-sized transaction, 

the Exchange will identify such quotes 

with an indicator signifying that they 

are non-firm within the context of 

Regulation National Market System 

(‘‘Reg. NMS’’).5 The text of the rule 

proposal is available on the Exchange’s 

Web site (http://www.nyse.com), at the 

Exchange, 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, the 

Exchange included statements 

concerning the purpose of and basis for 

the proposed rule change. 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 

The NYSE proposes to amend Rule 60 

to specify that when a specialist 

manually reports a block-sized 

transaction 6 that involves orders in the 

Display Book( system (‘‘block-sized 

transaction’’), the Exchange will use an 

indicator to signify that the NYSE quote 

is non-firm. During the brief moment it 

takes a specialist to manually report a 

block-sized transaction in a security, 

autoquoting of the highest bid/lowest 

offer is suspended in that stock.7 In 

addition, during that same period of 

time, automatic executions against the 

displayed quotation are not available.8

After the specialist has completed the 

report of a block-sized transaction, 

autoquote will resume immediately,9

and the NYSE quotation will similarly 

again be available for automatic 

executions.10

In the NYSE Hybrid MarketSM

(‘‘Hybrid Market’’), autoquote and the 

availability of the Exchange quotation 

for automatic executions are likewise 

both disengaged for limited periods in 

connection with two other specific 

auction market activities: (1) When the 

specialist gaps the quotation in 

accordance with Exchange policies and 

procedures,11 and (2) when trading on 

the Exchange reaches a Liquidity 

Replenishment Point (‘‘LRP’’).12 For 

both of these situations, as provided in 

Rule 60(c)(2)(b), the Exchange identifies 

its quotation as unavailable for 

automatic execution in accordance with 

Reg. NMS. 

Through this filing, the Exchange 

proposes to specify in Rule 60(c)(2)(b) 

that in addition to the two situations 

described in the preceding paragraph, 

the NYSE will identify its quotation as 

non-firm as soon as the report template 

is opened by the specialist to report a 

block-sized transaction, and will 

continue to do so until the trade has 

been reported. This change is necessary 

because the quotation that is 

disseminated when a block-sized 

transaction is being manually reported 

may not reflect the current state of the 

market in the stock, given the temporary 

suspension of autoquoting of the highest 

bid/lowest offer that occurs during the 

reporting of a block-sized transaction. 

Thus, identifying the quotation as nonfirm when autoquote and automatic 

executions are suspended by a blocksized transaction will provide market 

participants with more accurate 

information about the state of the NYSE 

quotation. Moreover, identifying the 

NYSE quotation as non-firm will bring 

the dissemination of the quotation 

during block-sized transactions more in 

line with the way in which they are 

identified during other Exchange 

manual auction market activities that 

similarly cause the suspension of 

autoquote and automatic executions—

i.e., gap quotes and LRPs. 

The Exchange completed Phase IV of 

the Hybrid MarketSM rollout on 

February 28, 2007. However, the Phase 

IV software does not contain the coding 

necessary to properly identify the 

Exchange quotation as non-firm during 

the manual report of a block-sized 

transaction that involves orders in the 

Display Book. The NYSE has made the 

software changes required and is 

currently rolling it out as part of the 

post-Phase IV software in phases 

through March 30, 2007, the date by 

which it currently expects the rollout to 

be completed. 

In addition, the NYSE notes that it has 

requested from the Commission limited 

no-action relief from the requirement 

that the NYSE enforce compliance by its 

specialist members with NYSE Rule 19 

(Locking or Crossing Protected 

Quotations in NMS Stocks), with 

respect only to the display of a 

quotation when a block-sized 

transaction is being manually reported, 


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