Federal Register / Vol. 65, No. 228 / Monday, November 27, 2000 / Notices 70745

15 ‘‘Net book value’’ is defined as original cost less

accumulated depreciation.

16Applicants state that certain of the Agreements

may provide for certain services between Transco

and affiliates of WPSR, including WPSC, to be

rendered at market rates, without regard to cost.

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

2Securities Exchange Act Release No. 43125

(August 7, 2000), 65 FR 49278.

3Letters from Robert J. Duke, Director of

Underwriting, The Surety Association of America

(August 28, 2000); Jerome J. Clair, Chairman,

Securities Industry Association Operations

Committee (August 30, 2000); Dan W. Schneider,

Baker and McKenzie (on behalf of EquiServe L.P.)

(August 31, 2000); and William A. Harris, Vice

President and Assistant General Counsel,

ChaseMellon Shareholder Services (September 1,

2000); Joseph M. Velli, Senior Executive Vice

Continued

Transco by those participants. It is

expected that WPSC’s Contribution

Value as of December 31, 2000 will be

approximately $63 million, and its

initial interest in Transco will be

approximately 12.62%. WPSR, the other

participating Wisconsin utilities, and

South Beloit intend to contribute their

transmission assets to Transco on or

about January 1, 2001 (the ‘‘Operations

Date’’). Depending on the number of

initial members of the Transco, it is

expected that Applicants’ interest in

Transco and Manager will be between

10% and 15% of each entity. The

Transco’s other participants will make

similar initial contributions.

The WPSC Transmission Assets

proposed to be transferred include: (1)

Transmission lines and transmission

substations; (2) transformers providing

transformation within the bulk

transmission system and between the

bulk and area transmission systems; (3)

lines connecting to generation sources

and step-up substations; (4) radial taps

from the transmission system up to, but

not including, the facilities that

establish the final connection to

distribution facilities or retail

customers; (5) substations that provide

primarily a transmission function; and

(6) voltage control devices and power

flow control devices directly connected

to the transmission system. Applicants

expect that, as of December 31, 2000,

the original cost of the WPSC

Transmission Assets will be

approximately $139 million. The net

book value 15 of the WPSC Transmission

Assets at December 31, 2000 is expected

to be approximately $70 million.

Applicants state that the

transmission-owning Member Utilities

and Transco expect to enter into various

agreements (‘‘Agreements’’) under

which the Member Utilities will provide

Transco with operations and

maintenance services, control area

operations, and other services. Any

services provided or received by

Applicants under any of these

Agreements will be provided at cost in

accordance with rules 90 and 91 under

the Act, unless authorized or directed

by appropriate governmental or

regulatory authority.16

For the Commission, by the Division of

Investment Management, under delegated

authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 00–30133 Filed 11–24–00; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

Sunshine Act Meeting

Notice is hereby given, pursuant to

the provisions of the Government in the

Sunshine Act, Pub. L. 94–409, that the

Securities and Exchange Commission

will hold the following meetings during

the week of November 27, 2000.

An open meeting will be held on

Wednesday, November 29, 2000, at

10:00 a.m. in Room 1C30, the Williams

O. Douglas Room.

The subject matter of the open

meeting will be:

The Commission will hear oral argument

on an appeal by Seaboard Investment

Advisers, Inc. and Eugene W. Hansen

(together, the ‘‘Respondents’’) as well as the

Division of Enforcement from an

administrative law judge’s initial decision.

The law judge found that the United States

District Court for the Eastern District of

Virginia had issued an order, with

Respondents’ consent without admitting or

denying liability, permanently enjoining the

Respondents from violating Sections 206(1),

206(2), and 206(4) of the Investment Advisers

Act of 1940 and Advisers Act Rule 206(4)–

1(a)(5) and from violating an earlier

Commission Order Making Findings and

Imposing Remedial Sanctions and Cease and

Desist Order. On the basis of the injunction,

the law judge revoked the registration of

Seaboard and suspended Hansen from being

associated with an investment adviser for a

period of twelve months.

Among the issues likely to be argued are

the following:

(1) Whether the record establishes that the

Respondents were permanently enjoined

from violating antifraud provisions of the

securities laws and from violating an earlier

Commission cease-and-desist order; and

(2) If so, what sanction, if any, is

appropriate in the public interest.

For further information, contact Alissa L.

Baum at (202) 942–0923.

Closed meetings will be held on

Wednesday, November 29, 2000 and

Thursday, November 30, 2000 at 11:00

a.m.

Commissioners, Counsel to the

Commissioners, the Secretary to the

Commission, and recording secretaries

will attend the closed meeting. Certain

staff members who have an interest in

the matters may also be present.

The General Counsel of the

Commission, or his designee, has

certified that, in his opinion, one or

more of the exemptions set forth in 5

U.S.C. 552b(c)(4), (8)(A) and (10) and 17

CFR 200.402(a)(4), (8), (9)(A) and (10),

permit consideration for the scheduled

matters at the closed meeting.

The subject matter of the closed

meeting scheduled for Wednesday,

November 29, 2000 will be: post

argument discussion; and an opinion.

The subject matters of the closed

meeting scheduled for Thursday,

November 30, 2000 will be: institution

and settlement of injunctive actions;

and institution and settlement of

administrative proceedings of an

enforcement nature.

At times, changes in Commission

priorities require alterations in the

scheduling of meeting items. For further

information and to ascertain what, if

any, matters have been added, deleted

or postponed, please contact:

The Office of the Secretary at (202)

942–7070.

Dated: November 22, 2000.

Jonathan G. Katz,

Secretary.

[FR Doc. 00–30235 Filed 11–22–00; 11:28

am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–43586; File No. SR–DTC–

00–09]

Self-Regulatory Organizations; The

Depository Trust Company; Order

Granting Approval of a Proposed Rule

Change Relating to the Profile Surety

Program in the Direct Registration

System

November 17, 2000.

On June 29, 2000, The Depository

Trust Company (‘‘DTC’’) filed with the

Securities and Exchange Commission

(‘‘Commission’’), pursuant to Section

19(b)(1) of the Securities Exchange Act

of 1934 (‘‘Act’’),1 a proposed rule

change. Notice of the proposal was

published in the Federal Register on

August 11, 2000.2 The Commission

received six comment letters in

response to the proposed rule change.3

70746 Federal Register / Vol. 65, No. 228 / Monday, November 27, 2000 / Notices

President, The Bank of New York (September 6,

2000); and Larry E. Thompson, Managing Director

and Deputy General Counsel, The Depository Trust

and Clearing Corporation (September 19, 2000). 4For a description of DRS and Profile, refer to

Securities Exchange Act Release Nos. 35038

(December 1, 1994), 59 FR 63652 (concept release

relating to DRS); 41862 (September 10, 1999), 64 FR

51162 (September 21, 1999) (order approving

implementation of the Profile Modification feature

of DRS); 42366 (January 28, 2000), 65 FR 5714

(February 4, 2000) (order approving an

interpretation of an existing rule pertaining to DRS);

42704 (April 19, 2000), 65 FR 24242 (April 25,

2000) (order approving modification of Profile to

incorporate use of an electronic screen-based

indemnification).

5Profile contains two indemnities. The first is

applicable when a DTC participant (i.e., generally

a broker-dealer) requests that a customer’s

registered book-entry position be transferred from

the books of the issuer to the participant’s account

at DTC, to be held in street name for the benefit of

the customer. The second indemnity is applicable

when a DRS limited participant (i.e., a transfer

agent) requests a shareholder’s position at a brokerdealer be transferred from the broker-dealer’s

account at DTC to the books of the issuer and

registered in the name of the shareholder. Except

for language reflecting whether the broker-dealer or

the transfer agent is the requestor or the guarantor,

the language of these two indemnities is identical.

Securities Exchange Act Release No. 42704 (April

19, 2000), 65 FR 25242 (April 25, 2000).

6Securities Exchange Act Release No. 41862

(September 10, 1999), 64 FR 51162 (September 21,

1999).

7 DRS Committee meeting minutes of January 12,

1999. Minutes of the DRS Committee meetings are

available from DTC. The DRS Committee is an

industry committee responsible for designing DRS.

Its members include the Securities Transfer

Association, the Corporate Transfer Association, the

Securities Industry Association, the American

Society of Corporate Secretaries, and DTC.

8Subsequent to the DRS Committee’s approval of

the screen-based indemnification, a number of

transfer agents raised concerns regarding the

perceived lack of protections in the indemnification

for issuers and transfer agents. The DRS Committee

agreed to reopen discussions in an attempt to

develop an alternative indemnification that would

address the transfer agents’ concerns. After a year

of discussions, an impasse developed and

discussions ceased. Since Profile was effectively

inoperable due to a lack of any indemnification,

DTC determined to adopt the screen-based

indemnification approved by the DRS Committee in

1999. Any changes to the language of the screenbased indemnities will be subject to a rule filing

pursuant to Section 19(b) of the Exchange Act.

9Today, physical certificates must be signature

guaranteed by a guarantor participating in a

signature guarantee program. The Medallion

Signature Program, the Securities Transfer

Association Medallion Program, and the Securities

Exchange Medallion Program are the three

operating signature guarantee programs.

10Supra note 3.

11 DTC has informed the Commission that its has

had conversations with the SAA and will make the

bond form publicly available. Telephone

conversation between Larry E. Thompson,

Managing Director and Deputy General Counsel,

The Depository Trust and Clearing Corporation, and

Jerry W. Carpenter, Assistant Director, Commission

(November 16, 2000).

The Commission is publishing this

order to grant approval of the proposed

rule change.

I. Description

On April 19, 2000, the Commission

granted approval of a DTC rule filing

concerning changes to the Profile

Modification System (‘‘Profile’’), a

feature of the Direct Registration System

(‘‘DRS’’).4 Pursuant to that rule filing, a

screen-based indemnification was

incorporated into DRS.5 Because

companies issuing securities in DRS

after September 15, 1999, are required to

use Profile and because Profile was

deemed inoperable without an

indemnification agreement, DTC

adopted a screen-based indemnification

as an accommodation to those issuers

and their transfer agents wanting to

issue securities in DRS on or after

September 15, 1999.6 The screen-based

indemnification adopted by DTC was

substantially in the form of an

indemnification approved by the DRS

Committee in 1999 7 and will be used in

DRS until such time as the DRS

Committee agreed to an alternative

indemnification.8

At the time DTC filed the rule change

modifying Profile to incorporate the use

of a screen-based indemnification into

DRS, industry representatives on the

DRS Committee contemplated the

organization currently administering

one of the three signature guarantee

programs in connection with transfers of

physical certificates 9 would develop a

similar surety program to accommodate

some version of a screen-based

indemnification to be used in Profile.

The program envisioned by the DRS

Committee would have required

guarantors (i.e., the initiator of the

instruction in Profile to move an

investor’s position) to subscribe to

surety bond coverage that would have

specifically covered a claim that a DRS

transfer was unauthorized in the event

that a guarantor refused or failed to

satisfy the claim. However, the DRS

Committee was unable to reach a

consensus on a program, thereby

making it impossible for any of the

signature guarantee program

administrators to extend its program or

develop a similar program to

accommodate the Profile

indemnification.

On April 20, 1999, representatives of

the DRS Committee met in an effort to

find an alternative solution. At that

meeting, those in attendance concluded

because of its role as administrator of

DRS, DTC would be a logical party to

administer an electronic

indemnification program. As a result,

DTC proposed to implement and

administer the DRS Profile Surety

Program (‘‘PSP’’) and filed the present

rule change.

PSP is designed to provide for a

surety bond to back the representation

a guarantor makes under the screenbased indemnity. Since PSP is modeled

in large part after the NYSE’s Medallion

Signature Program, many of the two

programs’ details are similar.

All broker-dealers and transfer agents

participating in DRS will be required to

procure a surety bond in order to send

electronic instructions through Profile.

(Profile will be programmed to not

accept an instruction until the guarantor

enters a valid PSP membership

number.) The surety company issuing

the surety bond for PSP will either be

a company selected by DTC as the

administrator of PSP or a surety

company selected by the DRS user. If a

DRS user elects to use a surety company

other than one DTC has selected, the

surety company selected will be

required to issue its surety bond in a

form consistent with the bond issued by

the surety company selected by DTC.

For example, the surety bond must have

a coverage limit of $2 million per

occurrence and an aggregate limit of $6

million. DTC will also require that all

companies issuing surety bonds must be

highly rated by an approved rating

service.

II. Comment Letters

The Commission received six

comment letters.10 In stating its support

for PSP, the Securities Industry

Association stated it believed that the

PSP had been formulated by the DRS

Committee to address the concerns of

certain interested parties and should

finally make DRS the electronic

alternative to certificate ownership for

many investors.

The Surety Association of America

(‘‘SAA’’) expressed qualified support for

the implementation of PSP. The SAA

stated that institutions that were able to

qualify under the paper-based

medallion programs might not be able to

qualify under PSP because PSP is

requiring higher bond limits than the

current paper-based medallion

programs, which in turn requires

guarantors to have greater financial

strength, stronger internal controls, and

stronger risk management. Furthermore

the SAA requested that the Commission

refrain from approving the filing until

their membership has had an

opportunity to review the proposed

bond form and requirements of the

PSP.11

The Bank of New York (‘‘BONY’’) also

qualified its support of PSP. BONY

expressed its belief that the screenbased indemnification agreement was

inadequate and stated that

implementation of the PSP should be

Federal Register / Vol. 65, No. 228 / Monday, November 27, 2000 / Notices 70747

12Securities Exchange Act Release No. 42704

(April 19, 2000), 65 FR 24242 (April 25, 2000).

13 15 U.S.C. 78q–1(b)(3)(F).

14The prompt and accurate clearance and

settlement of securities transactions includes the

transfer of record ownership of securities. 15 U.S.C.

78q–1(a)(1)(A).

15The Commission also notes that when enacting

Section 17A, Congress set forth its findings that the

prompt and accurate clearance and settlement of

securities transactions, including the transfer of

record ownership, is necessary for the protection of

investors; inefficient procedures for clearance and

settlement impose unnecessary costs on investors;

and that new data processing and communication

techniques create the opportunity for more efficient,

effective, and safe procedures for clearance and

settlement. 15 U.S.C. 78q–1(a)(1)(A), (B), and (C).

DRS, including Profile supported by PSP, advance

these objectives. 16 15 U.S.C. 78q–1(b)(3)(F).

conditioned on revisions to the screenbased indemnity.

ChaseMellon Shareholder Services

(‘‘CMSS’’) expressed no position on

whether it supported DTC’s proposal.

Rather it expressed its belief that the

screen-based indemnification language

is vague and does not provide transfer

agents with sufficient assurances that

requested transfers are authorized.

CMSS suggested several modifications

to the indemnification language to better

address perceived potential for transfer

agent liability.

Baker & McKenzie (on behalf of

EquiServe L.P.) contends that DTC’s

rule filing is vague, specifically with

regards to the surety bond processing

arrangements, the claims procedures,

and the standards used by DTC to select

a designated surety. Baker & McKenzie

also states that there should be no

aggregate limit on the surety bond under

PSP. This commenter also elaborated on

what it believes to be the deficiencies of

DRS and Profile.

In its letter, DTC responded

specifically to the issues raised by Baker

& McKenzie’s comment letter and

generally to the issues raised by CMSS

and BONY. DTC states that while the

Baker & McKenzie letter was submitted

as a comment letter to this proposed

rule filing on PSP, the bulk of the letter

raises issues relating to the screen-based

indemnity language, which was the

subject of another DTC rule filing

approved by the Commission on April

19, 2000.12 DTC states it is ‘‘mystified’’

by the Baker & McKenzie letter in light

of the contributions made by EquiServe

to the indemnity language, which

language Baker & McKenzie criticize in

its comment letter. DTC states that the

language of the screen-based indemnity

is based closely on language approved

in 1998 by the DRS Committee, on

which EquiServe has always been

represented, and reflects comments

received from EquiServe when the

language of the screen-based indemnity

was being finalized. DTC states that

many of the issues that Baker &

McKenzie raise either have already been

resolved over the last several years or

are issues that key industry officials,

including representatives from

EquiServe, have decided to move

beyond in order to advance DRS.

III. Discussion

Section 17A(b)(3)(F) of the Act 13

requires that the rules of a clearing

agency be designed to promote the

prompt and accurate clearance and

settlement of securities transactions and

to foster cooperation and coordination

with persons engaged in the clearance

and settlement of securities

transactions.14 As set forth below, the

Commission believes that DTC’s

proposed rule change is consistent with

its obligations under Section

17A(b)(3)(F).15

As the Commission has stated in

previous orders dealing with the DRS,

the primary purpose of Profile is to

provide a more prompt and accurate

mechanism for the transfer of an

investor’s book-entry position between

the investor’s broker-dealer and the

transfer agent for the issue than the

multistep, paper based processing

otherwise used by the industry. Without

Profile, investors holding securities

positions in DRS, a majority of whom

were issued securities in DRS through

corporate actions, would continue to be

disadvantaged by their inability to

transfer their shares to their brokerdealer (or back to the transfer agent)

without significant delays.

The adoption of PSP by DTC does not

affect DRS’s operations or its

mechanisms to facilitate a more efficient

manner of transfer ownership of

investors’ book-entry positions. The

purpose of PSP is to provide an

additional layer of protection for

transfer agents and broker-dealers using

DRS. DTC developed PSP in an effort to

foster cooperation and coordination

between transfer agents, issuers, and

broker-dealers by addressing concerns

of risk resulting from unauthorized

instructions to transfer investors’ bookentry positions.

We have considered the views of

commenters. Three commenters (BONY,

CMSS, and Baker & McKenzie) raised a

number of issues regarding Profile and

the screen-based indemnifications that

were not the subject of this filing. BONY

also predicated its support of PSP on the

condition that the condition that the

screen-based indemnifications be

revised. Baker & McKenzie indicated its

belief that the specifics of PSP were not

sufficiently described in DTC’s filing.

The adoption of PSP does not affect

the ability of the DRS Committee to

continue to negotiate alternative

indemnification language. DTC has

stated it will use the screen-based

indemnification only until such time as

an alternative indemnification

agreement is reached by the DRS

Committee. If and when that happens,

DTC will modify PSP accordingly.

In addition, DTC structured PSP,

including the increased aggregate limit

amount of surety coverage, in the

manner specified by the DRS

Committee. The limit was increased to

accommodate transfer agents’ concerns

that the current signature guarantee

programs’ aggregate limits were too low

for transfer activity in an electronic

environment. The DRS Committee is

always free to revisit the issue of surety

coverage amounts and to adjust PSP as

necessary. The assertion made by Baker

& McKenzie that the surety coverage

should contain no aggregate limit is not

feasible because no surety company is

likely to provide coverage where its

exposure is unlimited.

Finally, PSP’s application and

subscription agreement, which

describes the coverage and claims

process to be applied under PSP, are

available from DTC upon request. DRS

users that deem PSP’s coverage

insufficient may independently

purchase additional insurance to cover

outstanding liabilities.

The Commission urges the DRS

Committee to continue to meet to

address on-going concerns regarding

liability and to continue to discuss

improvements in the design of DRS.

These efforts will contribute to the

industry’s objective of promoting the

immobilization of physical certificates.

As set forth above, the Commission

finds that DTC’s establishment of PSP is

consistent with Section 17A(b)(3)(F) of

the Act 16 because it will facilitate the

use of a more efficient mechanism by

which to transfer investors’ book-entry

positions and thereby promotes the

prompt and accurate settlement of

securities transactions. Furthermore,

since PSP will provide additional

protection to DRS users for liabilities

that may arise in certain DRS

transactions, PSP should foster

cooperation between person engaged in

the clearance and settlement of

securities transactions.

V. Conclusion

On the basis of the foregoing, the

Commission finds that DTC’s proposal

to modify Profile to include an

electronic screen-based indemnification

70748 Federal Register / Vol. 65, No. 228 / Monday, November 27, 2000 / Notices

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)(5).

5See Securities Exchange Act Release No. 42344

(January 14, 2000), 65 FR 3897.

6 15 U.S.C. 78o–3(b)(6).

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

8 17 CFR 240.19b–4(f)(5).

is consistent with the requirements of

the Act and in particular with the

requirements of Section 17A of the Act

and the rules and regulations

thereunder.

It Is Therefore Ordered, pursuant to

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

proposed rule change (File N. SR–DTC–

00–09) be and hereby is approved.

For the Commission by the Division of

Market Regulation, pursuant to delegated

authority.17

Jonathan G. Katz,

Secretary.

[FR Doc. 00–30137 Filed 11–24–00; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–43575; File No. SR–NASD–

00–66]

Self-Regulatory Organizations; Notice

of Filing and Immediate Effectiveness

of Proposed Rule Change by the

National Association of Securities

Dealers, Inc. Relating to Maximum

Share Size Order Parameters for the

Nasdaq National Market Execution

System

November 16, 2000.

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 November

6, 2000, the National Association of

Securities Dealers, Inc., through its

wholly-owned subsidiary The Nasdaq

Stock Market, Inc. (‘‘Nasdaq’’) filed with

the Securities and Exchange

Commission (‘‘SEC’’ or ‘‘Commission’’)

the proposed rule change as described

in Items I, II, and III below, which Items

have been prepared by Nasdaq. Nasdaq

filed with the proposed rule change

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

Act,3 and Rule 19b–4(f)(5) thereunder.4

Pursuant to Rule 19b–4(f)(5), Nasdaq

has designated this proposal as one

effecting a change in an existing orderentry or trading system of a selfregulatory organization that does not: (1)

Significantly affect the protection of

investors or the public interest, (2)

impose any significant burden on

competition, or (3) significantly have

the effect of limiting the access to or

availability of the system. As such, the

proposed rule change is immediately

effective upon the Commission’s receipt

of this filing. 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

Nasdaq is proposing to amend Rule

4710(d) of the National Association of

Securities Dealers, Inc. (‘‘NASD’’ or

‘‘Association’’), to expand the maximum

share size parameter for orders entered

into the Nasdaq National Market

Execution System (‘‘NNMS’’). Below is

the text of the proposed rule change.

Proposed new language is italicized;

proposed deletions are in brackets.

* * * * *

4710. Participant Obligations in NNMS

(a) through (c) No Change.

(d) Order Entry Parameters.

(1) No Change.

(2) No Change.

(3) NNMS will not accept orders that

exceed [9,900] 999,999 shares, and no

participant in the NNMS system shall

enter an order into the system that

exceeds [9,900] 999,999 shares.

(e) No Change.

* * * * *

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

Nasdaq is proposing to expand the

maximum share size parameter for

single orders entered into the NNMS,

Currently, the maximum number of

shares that may be entered into NNMS

using a single order is 9,900. Under the

rule change proposed here, that single

order maximum share amount will be

increased to 999,999 shares. As outlined

in the Commission’s approval order of

the NNMS system, the smaller 9,900-

share order entry size was a response to

then existing technological system

constraints. 5 In the interim between the

Commission’s approval of NNMS and

the system’s upcoming implementation,

Nasdaq technology staff diligently

worked to modify and improve the

NNMS order processing and execution

platform to accommodate a larger single

order size maximum. As the result of

those efforts, Nasdaq is now prepared to

provide to NNMS participants a single

order share maximum entry capability

of 999,999 shares. Expansion of NNMS’s

automatic execution single order

maximum size parameter will give users

the optional ability to seek automatic

execution of larger orders in the NNMS

system than would be allowed under

current NNMS rules. In addition to

providing increased flexibility and

functionality to NNMS users, the

proposal also establishes uniformity in

maximum single-order size parameters

between Nasdaq’s automatic execution

and order delivery systems.

For the reasons set forth above,

Nasdaq believes that the proposed rule

change is consistent with the provisions

of Section 15A(b)(6) of the Act 6 in that

the proposal is designed to promote just

and equitable principles of trade, foster

cooperation and coordination with

persons engaged in processing

information with respect to and

facilitating transactions in securities, as

well as removing impediments to and

perfecting the mechanism of a free and

open market, and, in general, to protect

investors and the public interest.

(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) 7of the Act and Rule 19b–

4(f)(5) 8 thereunder in that it constitutes

a change in an existing order-entry or

trading system of a self-regulatory

organization that does not: (1)

Significantly affect the protection of

investors or the public interest, (2)