Federal Register / Vol. 70, No. 183 / Thursday, September 22, 2005 / Notices 55647 

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

2 17 CFR 240.19b–4. 

3Amendment No. 1 made technical changes to 

the rule text of the proposed rule change and 

requested that the Commission waive the 30-day 

operative delay. 

4 15 U.S.C. 78s(b)(3)(A). 

5 17 CFR 240.19b–4(f)(6). 

6Nasdaq provided the Commission with written 

notice of its intention to file the proposed rule 

change on August 16, 2005. 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–52449; File No. SR–NASD–

2005–107] 

Self-Regulatory Organizations; 

National Association of Securities 

Dealers, Inc.; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change and Amendment No. 1 

Thereto Regarding Enhancements to 

the Nasdaq Market Center Pegged 

Order Functionality 

September 15, 2005. 

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 

September 8, 2005, the National 

Association of Securities Dealers, Inc. 

(‘‘NASD’’), through its 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 and II below, which Items 

have been prepared by Nasdaq. On 

September 14, 2005, Nasdaq filed 

Amendment No. 1 to the proposed rule 

change.3 Nasdaq filed the proposal as a 

‘‘non-controversial’’ rule change 

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

Act 4 and Rule 19b–4(f)(6) 5 thereunder, 

which renders the proposed rule change 

effective upon filing with the 

Commission.6 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 the Substance 

of the Proposed Rule Change 

Nasdaq proposes to modify the orderpegging functionality of the Nasdaq 

Market Center. Nasdaq intends to 

implement the proposed rule change 

immediately and will inform market 

participants of the exact implementation 

date via a Head Trader Alert on http:// 

www.nasdaqtrader.com. 

The text of the proposed rule change 

is below. Proposed new language is in 

italics; proposed deletions are in 

[brackets]. 

* * * * * 

4700. NASDAQ MARKET CENTER—

EXECUTION SERVICES 

4701. Definitions 

Unless stated otherwise, the terms 

described below shall have the 

following meaning: 

(a)–(jj) No Change. 

(kk) The term ‘‘Auto-Ex’’ shall mean, 

for orders in Nasdaq listed securities so 

designated, an order that (except when 

it is displayed or interacts with a 

displayed Discretionary Order at a price 

in its discretionary price range) will 

execute solely against the Quotes/ 

Orders of Nasdaq Market Center 

Participants that participate in the 

automatic execution functionality of the 

Nasdaq Market Center and that do not 

charge a separate quote-access fee to 

Nasdaq Market Center Participants 

accessing their Quotes/Orders through 

the Nasdaq Market Center. An Auto-Ex 

Order may be designated as ‘‘Immediate 

or Cancel’’ (an ‘‘IOC Auto-Ex Order’’) or 

‘‘Day’’ or ‘‘GTC’’ (a ‘‘Postable Auto-Ex 

Order’’). A party entering a Postable 

Auto-Ex Order may (but is not required 

to) specify that the order will utilize the 

functionality associated with Pegged 

Orders or Discretionary Orders. Auto-Ex 

orders shall not be eligible for routing as 

set out in Rule 4714. 

(ll) No change. 

(mm) The term ‘‘Pegged’’ shall mean, 

for priced limit orders so designated, 

that after entry into the Nasdaq Market 

Center, the price of the order is 

automatically adjusted by Nasdaq 

Market Center in response to changes in 

either the Nasdaq Market Center inside 

bid or offer or the national best bid or 

offer, as appropriate. [The] A Nasdaq 

Market Center Participant may 

[entering] enter either a Regular Pegged 

Order or a Reverse Pegged Order. A 

Nasdaq Market Center Participant 

entering a Regular Pegged Order may 

specify that the price of the order will 

deviate from either [equal] the Nasdaq 

inside quote on the same side of the 

market or the national best bid or offer 

on the same side of the market by an 

offset amount of $0 to $0.99. [(a 

‘‘Regular Pegged Order’’)] A Nasdaq 

Market Center Participant entering a 

Reverse Pegged Order may specify that 

the price of the order will [or equal a 

price that] deviate[s] from either the 

Nasdaq inside quote on the contra side 

of the market or the national best bid or 

offer on the contra side of the market by 

an offset amount of $0.01 to $0.99 [(i.e., 

$0.01 less than the inside offer or $0.01 

more than the inside bid) (a ‘‘Reverse 

Pegged Order’’)]. The market participant 

entering a Pegged Order may (but is not 

required to) specify a cap price, to 

define a price at which pegging of the 

order will stop and the order will be 

permanently converted into an 

unpegged limit order. Pegged Orders 

shall not be available for ITS Securities. 

Pegged orders shall not be eligible for 

routing as set out in Rule 4714. 

(nn) The term ‘‘Discretionary’’ shall 

mean. 

(1) For priced limit orders in Nasdaq 

listed securities so designated, an order 

that when entered into the Nasdaq 

Market Center has both a displayed bid 

or offer price, as well as a non-displayed 

discretionary price range in which the 

participant is also willing to buy or sell, 

if necessary. The displayed price may be 

fixed or may be pegged to [equal] 

deviate from the Nasdaq inside quote or 

the national best bid or offer on the 

same side of the market by an offset 

amount of $0 to $0.99. The pegging of 

the Discretionary Order may be capped 

in the same manner as that of a Pegged 

Order. The discretionary price range of 

a Discretionary Order that is pegged will 

be adjusted to follow the pegged 

displayed price. Discretionary Orders 

for Nasdaq listed securities shall be 

eligible for routing as set out in Rule 

4714. 

(2) No change. 

(oo)–(uu) No change. 

* * * * * 

4706. Order Entry Parameters 

(a) Non-Directed Orders—

(1) General. The following 

requirements shall apply to NonDirected Orders Entered by Nasdaq 

Market Center Participants: 

(A)–(B) No change. 

(i)–(iv) No change. 

(v) For Nasdaq listed securities, an 

order may be designated as ‘‘Auto-Ex,’’

in which case the order may be 

designated as IOC, Day or GTC. If a 

Nasdaq Market Center Participant 

entering a Postable Auto-Ex Order 

specifies that the order will utilize the 

functionality associated with Pegged or 

Discretionary Orders, the order will 

automatically be designated as Day. 

(vi) No change. 

(vii) An order may be designated as 

‘‘Pegged,’’ in which case the order will 

also automatically be designated as Day. 

A Pegged Order may not be designated 

as a Preferenced Order. A Pegged Order 

(or unexecuted portion thereof) will be 

retained by the Nasdaq Market Center 

and its price adjusted in response to 

changes in the Nasdaq Market Center 

inside market or the national best bid or 

offer, as appropriate. A Pegged Order 

(including [a Discretionary Order] any 

other order type with a price that is 

pegged) will be cancelled if there is no 

displayable Quote/Order to which its 

price can be pegged. Starting at 7:30 

55648 Federal Register / Vol. 70, No. 183 / Thursday, September 22, 2005 / Notices 

a.m., until the 4:00 p.m. market close, 

Pegged Orders may be entered into the 

Nasdaq Market Center (or previously 

entered orders cancelled), but such 

orders entered prior to market open will 

not become available for execution until 

9:30 a.m. Eastern Time. The initial price 

of [Pegged Orders (including 

Discretionary Orders that are pegged)] 

any type of order with a price that is 

pegged entered prior to market open 

will be established at 9:30 a.m. based on 

the Nasdaq inside bid or offer or the 

national best bid or offer at that time, as 

appropriate. Pegged Orders shall not be 

available for ITS Securities. 

To maintain the capacity and 

performance of the Nasdaq Market 

Center, Nasdaq may at any time suspend 

the entry of [Pegged Orders (including 

Discretionary Orders that are pegged)] 

all types of orders with prices that are 

pegged for all securities or for any 

security. Pegged Orders that are in the 

Nasdaq Market Center at the time of 

such suspension will continue to be 

available for adjustment and execution. 

(viii) a. An order may be designated 

as ‘‘Discretionary’’, in which case the 

order will also automatically be 

designated as Day. A Discretionary 

Order may not be designated as a 

Preferenced Order. The order (or 

unexecuted portion thereof) shall be 

displayed in the system, if appropriate, 

using the displayed price selected by 

the entering party, with the system also 

retaining a non-displayed discretionary 

price range within which the entering 

party is also willing to execute if 

necessary. If a Discretionary Order is 

pegged, its displayed price will be 

adjusted in response to changes in the 

Nasdaq inside market or the national 

best bid or offer, as appropriate. Starting 

at 7:30 a.m., until the 4 p.m. market 

close, Discretionary Orders may be 

entered into the Nasdaq Market Center 

(or previously entered orders cancelled), 

but such orders entered prior to market 

open will not become available for 

execution until 9:30 a.m. Eastern Time. 

Discretionary Orders whose displayed 

price or discretionary price range does 

not lock or cross another Quote/Order 

will be available for execution at 9:30 

a.m. All other Discretionary Orders will 

be added to the time-priority queue 

described in Rule 4706(a)(1)(F) and 

(a)(2)(B) and processed by the Nasdaq 

Market Center at market open. 

b. No change. 

(ix)–(xiii) No change. 

(C)–(F) No Change. 

(2) Entry of Non-Directed Orders by 

Order Entry Firms—In addition to the 

requirements in paragraph (a)(1) of this 

rule, the following conditions shall 

apply to Non-Directed Orders entered 

by Order Entry Firms: 

(A) (i) All Non-Directed orders in 

Nasdaq listed securities shall be 

designated as Immediate or Cancel, GTC 

or Day but shall be required to be 

entered as Non-Attributable if not 

entered as IOC. Order Entry Firms may 

designate orders as ‘‘Pegged’’ or 

‘‘Discretionary,’’ in which case the order 

will also automatically be designated as 

Day. Order Entry Firms may also 

designate orders as ‘‘Auto-Ex,’’ in which 

case the order may be designated as 

IOC, Day or GTC. If an Order Entry Firm 

entering a Postable Auto-Ex Order 

specifies that the order will utilize the 

functionality associated with Pegged or 

Discretionary Orders, the order will 

automatically be designated as Day. For 

IOC orders, if after entry into the Nasdaq 

Market Center of a Non-Directed Order 

that is marketable, the order (or the 

unexecuted portion thereof) becomes 

non-marketable, the system will return 

the order (or unexecuted portion 

thereof) to the entering participant. 

(ii) No change. 

(B) No change. 

(b)–(e) No change. 

4707. Entry and Display of Quotes/ 

Orders 

(a) Entry of Quotes/Orders—Nasdaq 

Quoting Market Participants may enter 

Quotes/Orders into the Nasdaq Market 

Center, and Order Entry Firms may 

enter Non-Attributable Orders into the 

Nasdaq Market Center, subject to the 

following requirements and conditions: 

(1) No change. 

(2) Upon entry of a Quote/Order into 

the system, the Nasdaq Market Center 

shall time-stamp it, which time-stamp 

shall determine the ranking of the 

Quote/Order for purposes of processing 

Non-Directed Orders as described in 

Rules 4710(b) and 4714. For each 

subsequent size increase received for an 

existing quote at a given price, the 

system will maintain the original timestamp for the original quantity of the 

quote and assign a separate time-stamp 

to that size increase. When [a Pegged 

Order (including a Discretionary Order 

that is pegged)]any type of order with a 

price that is pegged is displayed as a 

Quote/Order, its time-stamp will be 

updated whenever its price is adjusted. 

(3)–(4) No change. 

(b)–(f) No change. 

* * * * * 

4710. Participant Obligations in the 

Nasdaq Market Center 

(a) No change. 

(b) Non-Directed Orders 

(1) No change. 

(A) No change. 

(B) No change. 

(i) No change. 

(ii) Exceptions—The following 

exceptions shall apply to the above 

execution parameters: 

a.–c. No change. 

d. An Auto-Ex Order in a Nasdaq 

listed security that is designated IOC 

will interact solely with the Quotes/ 

Orders of Nasdaq Market Center 

Participants that participate in the 

automatic execution functionality of the 

Nasdaq Market Center and that do not 

charge a separate quote-access fee to 

Nasdaq Market Center Participants 

accessing their Quotes/Orders through 

the Nasdaq Market Center (‘‘Auto-Ex 

Eligible Participants’’). An IOC Auto-Ex 

Order will not interact with the Quote/ 

Order of an Auto-Ex Eligible Participant 

if the Quote/Order of a Nasdaq Market 

Center Participant that is not an AutoEx Eligible Participant is priced better 

than the Quote/Order of any Auto-Ex 

Eligible Participant at that time. An IOC 

Auto-Ex Order (or an unexecuted 

portion thereof) will be cancelled if it 

cannot be immediately executed. Upon 

entry into the Nasdaq Market Center, a 

Postable Auto-Ex Order will be 

processed in the same manner as an IOC 

Auto-Ex Order; provided, however, that 

if the Nasdaq Market Center Participant 

entering the Postable Auto-Ex Order 

[includes discretionary prices] specifies 

that the order will utilize the 

functionality associated with Pegged 

Orders or Discretionary Orders 

(including pegged Discretionary Orders), 

the order will be processed in the same 

manner as a Pegged Order or a 

Discretionary Order, but will interact 

solely with the Quotes/Orders of AutoEx Eligible Participants and will not 

interact with the Quote/Order of an 

Auto-Ex Eligible Participant if the 

Quote/Order of a Nasdaq Market Center 

Participant that is not an Auto-Ex 

Eligible Participant is priced better than 

the Quote/Order of any Auto-Ex Eligible 

Participant at that time. Any portion of 

a Postable Auto-Ex Order that cannot be 

immediately executed will be displayed, 

unless it would lock or cross the Quote/ 

Order of a Nasdaq Market Center 

Participant that is not an Auto-Ex 

Eligible Participant, in which case the 

Postable Auto-Ex Order (or any 

unexecuted portion thereof) will be 

cancelled. Depending on the 

functionality specified by the Nasdaq 

Market Center Participant entering the 

order, a Postable Auto-Ex Order that is 

displayed will have the same 

characteristics and be subject to the 

same rules as a regular limit order, a 

Pegged Order, or a Discretionary Order. 

For purposes of this subclause d., any 

displayed Discretionary Order that may 

Federal Register / Vol. 70, No. 183 / Thursday, September 22, 2005 / Notices 55649 

7See Securities Exchange Act Release Nos. 48798 

(November 17, 2003), 68 FR 66147 (November 25, 

2003) (SR–NASD–2003–150) (Pegged Orders); 

49085 (January 15, 2004), 69 FR 3412 (January 23, 

2004) (SR–NASD–2003–165) (Discretionary Orders); 

49020 (January 5, 2004), 69 FR 1769 (January 12, 

2004) (SR–NASD–2003–143) (IOC Auto-Ex Orders); 

49547 (April 9, 2004), 69 FR 20091 (April 15, 2004) 

(SR–NASD–2004–046 (Postable Auto-Ex Orders). 

8A Postable Auto-Ex Order that would lock or 

cross the Quote/Order of a participant that is not 

an Auto-Ex Eligible Participant is cancelled, 

however. 

9Similarly, an Auto-Ex Order to sell that used 

reverse pegging functionality would initially be 

priced at $19.99 and would therefore access 

liquidity from Auto-Ex Eligible Participants at $20 

and possibly also $19.99. 

10 15 U.S.C. 78o–3. 

11 15 U.S.C. 78o–3(b)(6). 

be executed against (or delivered to) an 

Auto-Ex Order at a price in the 

Discretionary Order’s discretionary 

price range will be deemed to have been 

entered by an Auto-Ex Eligible 

Participant. 

e.–f. No change. 

(C)–(D) No change. 

(2)–(8) No change. 

(c)–(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 

1. Purpose 

In the past several years, Nasdaq has 

introduced numerous new order types 

for use in the Nasdaq Market Center.7 A 

Pegged Order is a limit order, the price 

of which is automatically adjusted to 

follow the price movements of the 

inside market. A Regular Pegged Order 

pegs to the same side of the market it 

is entered on, while a Reverse Pegged 

Order pegs to a price that deviates from 

the opposite side of the market by $0.01. 

A Discretionary Order allows a market 

participant to specify both a displayed 

price and one or more undisplayed 

discretionary prices at which it is 

willing to trade. The displayed price can 

be pegged to follow the inside price on 

the same side of the market as the order, 

with discretionary price(s) adjusted to 

follow changes in the displayed price. 

Upon entry, the Auto-Ex Order executes 

solely against the Quotes/Orders of 

Nasdaq Market Center participants that 

participate in the system’s automatic 

execution functionality and that do not 

charge a separate quote-access fee to 

participants accessing their Quotes/ 

Orders through the Nasdaq Market 

Center (‘‘Auto-Ex Eligible Participants’’). 

Auto-Ex Orders either cancel after 

accessing available liquidity (‘‘IOC 

Auto-Ex Orders’’) or post to the Nasdaq 

Market Center book after accessing 

available liquidity (‘‘Postable Auto-Ex 

Orders’’).8

Currently, market participants using 

Pegged Orders or Pegged Discretionary 

Orders have the option only of pegging 

to the best bid or offer in Nasdaq. To 

provide market participants with added 

flexibility in the use of pegged order 

types, however, Nasdaq is modifying its 

system to provide the option of pegging 

orders to the national best bid or offer. 

In addition, the proposal creates a wider 

range of offset amounts for use in 

connection with pegged orders, with a 

range $0.00 to $0.99 for orders pegged 

to the same side of the market and $0.01 

to $0.99 for orders pegged to the 

opposite side of the market. Finally, the 

proposal makes several non-substantive 

rule-text changes to remove extraneous 

language relating to pegging 

functionality being available for 

discretionary orders, and to make clear 

the general availability of pegging 

functionality for orders, including 

Postable Auto-Ex Orders. 

As is currently the case, an order may 

not be pegged to prices away from the 

inside market. Thus, by entering a 

Regular Pegged Order pegged to the 

national best bid or offer, the market 

participant would indicate its 

willingness to provide liquidity at the 

best price established by any participant 

in any market trading the stock. By 

entering a Reverse Pegged Order pegged 

to the national best bid or offer, the 

market participant would indicate its 

willingness to provide liquidity at a 

price $0.01–$0.99 away from the best 

price on the opposite side of the market 

established by any participant in any 

market trading the stock. As a result, in 

circumstances where the spread 

between the national best bid and best 

offer is greater than $0.01, the entry of 

a Reverse Pegged Order would establish 

a new national best price. All other 

features of these order types, including 

the ability to place a cap on an order’s 

pegging function, would remain 

unchanged. 

In addition, Nasdaq will allow market 

participants entering Postable Auto-Ex 

Orders to specify that an order will use 

the pegging functionality. An Auto-Ex 

Order pegged to the Nasdaq inside 

would function in the same manner as 

a Pegged Order, since the order would 

either join the existing Nasdaq inside, 

establish a new Nasdaq inside, or be 

executed by (or receive delivery from) a 

displayed Discretionary Order at its 

discretionary price. However, an AutoEx Order that is pegged to the national 

best bid or offer may interact with prices 

already displayed in Nasdaq, in which 

case the order’s Auto-Ex functionality 

would become relevant. For example, if 

the Nasdaq inside was $20.00–$20.01, 

but the national best offer $20.00, an 

Auto-Ex Order to sell that used regular 

pegging functionality would initially be 

priced at $20.00 and would therefore 

potentially be eligible for execution 

against the Nasdaq best bid of $20.00. 

The order would access all liquidity 

offered by Auto-Ex Eligible Participants 

at $20.00, and if there was no bid at that 

price level from a market participant 

that was not an Auto-Ex Eligible 

Participant, the order (or unexecuted 

portion thereof) would be displayed at 

$20.00. However, if an Order-Delivery 

ECN (or an auto-ex ECN that charges an 

access fee) had a bid at $20.00 displayed 

in the Nasdaq Market Center, the AutoEx Order (or unexecuted portion 

thereof) would be cancelled, because it 

would lock the ECN’s offer if it were 

displayed.9

2. Statutory Basis 

Nasdaq believes that the proposed 

rule change is consistent with the 

provisions of Section 15A of the Act,10

in general, and with Section 15A(b)(6) 

of the Act,11 in particular, in that the 

proposal is designed to prevent 

fraudulent and manipulative acts and 

practices, to promote just and equitable 

principles of trade, to foster cooperation 

and coordination with persons engaged 

in regulating, clearing, settling, 

processing information with respect to, 

and facilitating transactions in 

securities, to remove impediments to 

and perfect the mechanism of a free and 

open market and a national market 

system, and, in general, to protect 

investors and the public interest. The 

proposed rule change will provide 

market participants with a voluntary 

tool to use to offer liquidity at the inside 

market. Nasdaq notes that the 

Commission has found similar orders 

55650 Federal Register / Vol. 70, No. 183 / Thursday, September 22, 2005 / Notices 

12Securities Exchange Act Release No. 47467 

(March 7, 2003), 68 FR 12134 (March 13, 2003) (SR–

PCX–2002–75). 

13 15 U.S.C. 78s(b)(3)(A). 

14 17 CFR 240.19b–4(f)(6). 

15 17 CFR 240.19b–4(f)(6)(iii). 

16For purposes of waiving the 30-day operative 

delay, the Commission has considered the proposed 

rule’s impact on efficiency, competition, and capital 

formation. 15 U.S.C. 78c(f). 

17The effective date of the original proposed rule 

is September 8, 2005. The effective date of 

Amendment No. 1 is September 14, 2005. For 

purposes of calculating the 60-day period within 

which the Commission may summarily abrogate the 

proposed rule change under Section 19(b)(3)(C) of 

the Act, the Commission considers the period to 

commence on September 14, 2005, the date on 

which Nasdaq submitted Amendment No. 1. See 15 

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

18 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3See Form 19b–4, dated June 1, 2005 

(‘‘Amendment No. 1’’). Amendment No. 1 replaced 

the original filing in its entirety. 

4See Form 19b–4, dated September 1, 2005 

(‘‘Amendment No. 2’’). Amendment No. 2 replaced 

Amendment No. 1 in its entirety. 

5See Form 19b–4, dated September 14, 2005 

(‘‘Amendment No. 3’’). In Amendment No. 3, Phlx, 

in part, deleted proposed rule text to clarify that 

during a manual opening all market orders are to 

be executed at one price. 

offered by at least one other market 

center to be consistent with the Act.12

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, as amended. 

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, as amended: (1) Does not 

significantly affect the protection of 

investors or the public interest; (2) does 

not impose any significant burden on 

competition; and (3) by its terms does 

not become operative for 30 days after 

the date of this filing, or such shorter 

time as the Commission may designate 

if consistent with the protection of 

investors and the public interest, the 

proposed rule change has become 

effective pursuant to Section 

19(b)(3)(A) 13 of the Act and Rule 19b–

4(f)(6) thereunder.14

Nasdaq has requested that the 

Commission waive the 30-day operative 

delay, as specified in Rule 19b–

4(f)(6)(iii),15 and designate the proposed 

rule change to become operative upon 

filing with the Commission. The 

Commission believes that waiving the 

30-day operative delay is consistent 

with the protection of investors and the 

public interest because the proposed 

rule change is similar to order types 

already in use in the marketplace. 

Therefore the Commission designates 

the proposal to be effective and 

operative upon filing with the 

Commission.16

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.17

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–2005–107 on the 

subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Jonathan G. Katz, Secretary, 

Securities and Exchange Commission, 

100 F Street, NE., Washington, DC 

20549–9303. 

All submissions should refer to File 

Number SR–NASD–2005–107. 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 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–2005–107 and 

should be submitted on or before 

October 13, 2005. 

For the Commission, by the Division of 

Market Regulation, pursuant to delegated 

authority.18

Jonathan G. Katz, 

Secretary. 

[FR Doc. 05–18898 Filed 9–21–05; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 52448; File No. SR–Phlx–2005–

25] 

Self-Regulatory Organizations; Notice 

of Filing of Proposed Rule Change and 

Amendments No. 1, 2, and 3 Thereto 

by the Philadelphia Stock Exchange, 

Inc. Relating to the Adoption of New 

Rules That Would Establish an 

Automated Opening System on the 

Exchange 

September 15, 2005. 

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

Securities Exchange Act of 1934 

(‘‘Act’’),1 and Rule 19b–42 thereunder, 

notice is hereby given that on April 21, 

2005, the Philadelphia Stock Exchange, 

Inc. (‘‘Phlx’’ or ‘‘Exchange’’) filed with 

the Securities and Exchange 

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

the proposed rule change. The Exchange 

submitted Amendment No. 1,3

Amendment No. 2,4 and Amendment 

No. 3 5 to its proposal on June 1, 2005, 

September 1, 2005, and September 14, 

2005, respectively. The proposed rule 

change, as amended, is described in 

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

have been prepared by the Phlx. 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 

The Phlx proposes to adopt new rules 

that would establish an automated 

opening system on the Exchange. The 

Exchange also proposes to make