47990 Federal Register / Vol. 73, No. 159 / Friday, August 15, 2008 / Notices 

9See Schneider Letter, supra note 4. 

10See Securities Exchange Act Release No. 44607 

(July 27, 2001), 66 FR 40757 (August 3, 2001) (SR–

CBOE–2001–40) (establishing the CBOE Order 

Routing System cancellation fee). 

11See supra note 8. 

12 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3See Securities Exchange Act Release No. 57986 

(June 18, 2008), 73 FR 36363 (‘‘Notice’’). 

4See letters from Verdun Edgtton, Vice President 

and Corporate Governance Officer, The Bank of 

New York Mellon, to Secretary, Commission, dated 

July 17, 2008 (‘‘BNYMellon Letter’’); Sam Guidetti, 

Director of Compliance, Hill, Thompson, Magid & 

Co., to Florence E. Harmon, Acting Secretary, 

Commission, dated July 15, 2008 (‘‘Hill Thompson 

Letter’’); Peter Coolidge, Portfolio Manager, Deltec 

Special Situations Partners, L.P., to Secretary, 

Commission, dated July 9, 2008 (‘‘Deltec Letter’’); 

R. Cromwell Coulson, Chief Executive Officer, Pink 

OTC Markets, to Secretary, Commission, dated July 

7, 2008 (‘‘Pink OTC Markets Letter’’); and Robert 

Arancio, President, and Kimberly Unger, Executive 

Director, The Security Traders Association of New 

York, to Secretary, Commission, dated June 27, 

2008 (‘‘STANY Letter’’). 

5See NASD Rule 6620(a). For purposes of the 

NASD Rule 6600 Series, ‘‘OTC Equity Securities’’

means equity securities for which real-time trade 

reporting is not otherwise required. See NASD Rule 

6600. NASD Rule 6610(d) further defines ‘‘OTC 

Equity Security’’ as ‘‘any non-exchange-listed 

security and certain exchange-listed securities that 

do not otherwise qualify for real-time trade 

reporting.’’

6See NASD Rule 6620(a)(3)(C)(iii). Although not 

required, a member may choose to report 

transactions in foreign securities within 90 seconds 

of execution. See NASD Rule 6620 n.1. 

7See NASD Rule 6530(b)(1). 

customer, and may be rescinded at a 

customer’s election. 

The commenter questioned how the 

proposed rule change would benefit 

public customers.9 The commenter 

maintained that if CBOE is willing to 

forgive its cancellation fees, ‘‘then 

* * * there was never a problem with 

cancels from public customers but only 

[the Exchange] trying to concentrate 

power and punish the public customer.’’

The Commission is not today 

considering CBOE’s cancellation fee.10

Instead, the Commission is approving a 

proposed rule change that would give 

public customers more flexibility in 

how they participate in CBOE’s 

marketplace. In sum, the Commission 

believes that the proposed rule change 

would provide an additional choice to 

public customers. 

The Commission finds good cause for 

approving the proposed rule change 

prior to the thirtieth day after the date 

of publication of notice of filing thereof 

in the Federal Register. The 

Commission believes that accelerated 

approval of the Exchange’s proposal 

relating to Voluntary Professionals is 

appropriate because it is similar to an 

ISE rule that recently was approved by 

the Commission.11 The Commission 

believes that CBOE’s proposal does not 

raise any new issues that were not 

considered by the Commission in 

connection with the ISE proposal. 

It is therefore ordered, pursuant to 

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

proposed rule change (SR–CBOE–2008–

09), as modified by Amendment No. 2, 

be, and hereby is, approved on an 

accelerated basis. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.12

Florence E. Harmon, 

Acting Secretary. 

[FR Doc. E8–18895 Filed 8–14–08; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–58331; File No. SR–FINRA–

2008–016] 

Self-Regulatory Organizations; 

Financial Industry Regulatory 

Authority, Inc.; Order Approving a 

Proposed Rule Change To Align the 

Reporting Requirements and 

Dissemination Protocols for OTC 

Equity Transactions Involving Foreign 

Securities With All Other OTC Equity 

Securities 

August 8, 2008. 

I. Introduction 

On April 25, 2008, the Financial 

Industry Regulatory Authority, Inc. 

(‘‘FINRA’’) (f/k/a National Association 

of Securities Dealers, Inc. (‘‘NASD’’)) 

filed with the Securities and Exchange 

Commission (‘‘Commission’’), pursuant 

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

Exchange Act of 1934 (‘‘Act’’ or 

‘‘Exchange Act’’) 1 and Rule 19b–4 

thereunder,2 a proposal: (1) To amend 

NASD Rule 6620 to align the reporting 

requirements for over-the-counter 

(‘‘OTC’’) equity transactions involving 

foreign securities with the reporting 

requirements for other OTC equity 

transactions; and (2) to align the 

dissemination protocols for all last sale 

reports of OTC equity transactions. On 

June 12, 2008, FINRA submitted 

Amendment No. 1 to the proposed rule 

change. The proposal was published for 

comment in the Federal Register on 

June 26, 2008.3 The Commission 

received five comments regarding the 

proposal.4 This order approves the 

proposed rule change, as modified by 

Amendment No. 1. 

II. Description of the Proposed Rule 

Change 

Currently, NASD rules require that 

transactions in OTC Equity Securities 

(which term encompasses domestic 

equity securities, American Depositary 

Receipts (‘‘ADRs’’), and Canadian 

issues) that are executed between 8 a.m. 

and 8 p.m. Eastern Time be reported to 

the OTC Reporting Facility within 90 

seconds of execution.5 Thus, 

transactions in all ADRs and Canadian 

issues, including those that are not 

registered with the Commission and 

thus are not subject to the Commission’s 

reporting requirements, are subject to 

90-second reporting under NASD Rule 

6620. Transactions in all other foreign 

equity securities are excluded from the 

90-second reporting requirement and 

instead must be reported by 1:30 p.m. 

Eastern Time the day after the 

transaction is executed.6

Last sale information for transactions 

in domestic OTC Equity Securities 

reported pursuant to Rule 6620 is 

disseminated on a real-time basis, 

irrespective of whether the security is 

registered with the Commission. 

However, there is no uniformity 

regarding the dissemination of last sale 

information for transactions in ADRs 

and foreign securities. Last sale reports 

of ADRs and Canadian issues that are 

quoted on the OTC Bulletin Board 

(‘‘OTCBB’’), which has an eligibility 

requirement that OTCBB issuers must 

be reporting issuers,7 are disseminated 

on a real-time basis. However, only 

summary information is disseminated at 

the end of each trading day for OTC 

ADRs and Canadian issues that are not 

quoted on the OTCBB, whether or not 

they are registered with the 

Commission. Transactions in foreign 

securities, other than Canadian issues 

and ADRs, that are quoted on the 

OTCBB are disseminated on a real-time 

basis if they are received on the day of 

the trade. However, as noted above, 

there is no current requirement to report 

these trades to FINRA within 90 

seconds of execution, or even on the 

trade date. If an OTC transaction in a 

foreign security is not reported on the 

trade date, last sale information for that 

transaction is not disseminated. 

FINRA now proposes: (1) To require 

all transactions in OTC Equity 

Securities to be reported within 90 

seconds of execution; and (2) to 

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Federal Register / Vol. 73, No. 159 / Friday, August 15, 2008 / Notices 47991 

8The single exception would be for transactions 

in foreign equity securities executed over-thecounter in a foreign country and reported to the 

regulator of securities markets for that country. See 

NASD Rule 6620(g)(2)(B). Transactions in foreign 

equity securities executed on and reported to a 

foreign securities exchange also are excepted from 

the FINRA reporting requirements. See NASD Rule 

6620(g)(2)(A). 

9See supra note 4. 

10See BNYMellon Letter; Hill Thompson Letter; 

Deltec Letter; Pink OTC Markets Letter; STANY 

Letter. 

11See id. 

12See Pink OTC Markets Letter; STANY Letter. 

13 In approving this proposal, the Commission has 

considered the proposed rule’s impact on 

efficiency, competition, and capital formation. See 

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

14 15 U.S.C. 78o–3(b)(6). 

15See supra notes 10 and 11 and accompanying 

text. 

16See Notice, supra note 3. 

17STANY Letter, supra note 4. 

18See supra notes 10 and 11 and accompanying 

text. 

19 15 U.S.C. 78s(b)(2). 

20 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

disseminate last sale information 

regarding those transactions on a realtime basis. Thus, the proposed rule 

change would eliminate the distinctions 

between domestic, foreign, ADR, and 

Canadian securities and would require 

prompt reporting and real-time 

dissemination for all OTC transactions.8

FINRA believes that the proposal would 

substantially improve the transparency 

of the OTC market. 

FINRA represented that it would 

announce the effective date of the 

proposed rule change in a Regulatory 

Notice to be published no later than 60 

days following Commission approval of 

this proposed rule change. The effective 

date would be 30 days following 

publication of that Regulatory Notice. 

III. Summary of Comments 

The Commission received letters from 

five commenters.9 All of the 

commenters supported the proposal. 

The commenters stated that the 

proposal would lead to greater 

transparency, better price discovery, 

and/or better trading practices, and 

should therefore foster a strong and 

competitive U.S. OTC market in foreign 

securities.10 The commenters also 

unanimously stated that the proposal 

would provide industry participants 

with the ability to monitor the quality 

of executions that they receive in 

foreign securities, which they believe 

would increase competition among 

broker-dealers and enhance best 

execution practices in the industry.11

Two commenters noted that the 

proposal would help prevent improper 

trading practices, such as frontrunning.12

IV. Discussion and Findings 

After careful consideration of the 

proposal and the comments submitted, 

the Commission finds that the proposed 

rule change is consistent with the 

requirements of the Act and the rules 

and regulations thereunder applicable to 

a national securities association.13 In 

particular, the Commission finds that 

the proposed rule change is consistent 

with Section 15A(b)(6) of the Act,14

which requires, among other things, that 

FINRA 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. 

FINRA stated in its proposal that it 

believed that prompt last sale reporting 

and real-time dissemination of trade 

reports for all OTC transactions in 

ADRs, foreign securities, and Canadian 

issues would enhance the amount of 

market information available to 

investors and better enable investors to 

monitor the executions they receive in 

these securities. The Commission notes 

that all the commenters agreed with this 

statement.15

In its request for comments, the 

Commission specifically requested 

comment regarding whether the 

proposed rule change would 

significantly change the factors 

considered by foreign private issuers in 

deciding whether to list on a U.S. 

securities exchange and register with 

the Commission, and whether the 

proposed rule change would serve to 

promote the U.S. over-the-counter 

market for unregistered foreign 

securities.16 In response to the first 

inquiry, one commenter stated that it 

did not believe that the proposal would 

‘‘in any way serve to encourage foreign 

firms to trade their issues in the United 

States without registration.’’ 17

Regarding the second inquiry, the 

commenters noted the benefits of greater 

transparency that would allow U.S. 

broker-dealers to better compete with 

foreign markets, and U.S. investors to 

better assess the executions that they 

receive, when effecting OTC 

transactions in foreign securities.18

The Commission believes that it is 

appropriate to eliminate the distinctions 

in trade reporting and dissemination 

that currently exist for OTC transactions 

in domestic, foreign, ADR, and 

Canadian securities. The Commission 

believes that the proposed rule change 

is consistent with the requirements of 

the Act and the rules and regulations 

thereunder applicable to a national 

securities association. 

V. Conclusion 

It is therefore ordered, pursuant to 

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

proposed rule change (File No. SR–

FINRA–2008–016), as modified by 

Amendment No. 1, be, and it hereby is, 

approved. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.20

Florence E. Harmon, 

Acting Secretary. 

[FR Doc. E8–18896 Filed 8–14–08; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–58333; File No. SR–FINRA–

2008–032] 

Self-Regulatory Organizations; 

Financial Industry Regulatory 

Authority, Inc.; Notice of Filing of 

Proposed Rule Change To Adopt 

FINRA Rules 2350 Through 2359 

(Regarding Trading in Index Warrants, 

Currency Index Warrants, and 

Currency Warrants), FINRA Rule 2360 

(Options), and FINRA Rule 2370 

(Security Futures) in the Consolidated 

FINRA Rulebook 

August 8, 2008. 

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 July 29, 

2008, the Financial Industry Regulatory 

Authority, Inc. (‘‘FINRA’’) (f/k/a 

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 by FINRA. 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 

FINRA proposes to adopt NASD Rules 

2840 through 2853 regarding Trading in 

Index Warrants, Currency Index 

Warrants, and Currency Warrants, 2860 

(Options), and 2865 (Security Futures) 

as FINRA Rules in the consolidated 

FINRA rulebook (‘‘Consolidated FINRA 

mstockstill on PROD1PC66 with NOTICES