Document ID: SEC-2007-1128-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: NASDAQ Stock Market LLC
Posted Date: 2007-08-13T04:00Z

[Federal Register: August 13, 2007 (Volume 72, Number 155)]
[Notices]               
[Page 45288-45290]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr13au07-111]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-56204; File No. SR-NASDAQ-2007-070]

 
Self-Regulatory Organizations; The NASDAQ Stock Market LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Adopt Certain FINRA Rules Relating to Trading Halts and Disclosure of 
Disciplinary Information

August 3, 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 August 3, 2007, The NASDAQ Stock Market LLC (``Nasdaq''), 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 Nasdaq.

[[Page 45289]]

Nasdaq has designated the proposed rule change as one constituting a 
non-controversial rule change under Section 19(b)(3)(A)(iii) 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.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \4\ 17 CFR 240.19b-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    Nasdaq proposes this rule change to add several rules, based on 
Financial Industry Regulatory Authority, Inc. (``FINRA'') rules, that 
were inadvertently omitted from the Nasdaq rulebook when Nasdaq became 
a national securities exchange.
    The text of the proposed rule change is available on Nasdaq's Web 
site at http://www.nasdaq.com, at Nasdaq's principal office, 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, 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
    To ensure that FINRA members did not incur significant regulatory 
burdens as a result of Nasdaq separating from FINRA and registering as 
a national securities exchange, Nasdaq based its rules governing 
regulatory standards and disciplinary processes on FINRA rules, to a 
significant extent. Over the past few months, however, it has come to 
Nasdaq's attention that several FINRA rules that arguably should have 
been copied into the Nasdaq rulebook were inadvertently omitted during 
the exchange registration process. Nasdaq believes that adding these 
rules will enhance Nasdaq's regulatory programs and enhance FINRA's 
ability to serve as Nasdaq's regulatory services provider under NASD 
Regulation's regulatory services agreement with Nasdaq.\5\
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    \5\ Notwithstanding the fact that Nasdaq has entered into a 
regulatory services agreement with NASD Regulation to perform some 
of Nasdaq's functions, Nasdaq retains ultimate legal responsibility 
for, and control of, such functions.
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    Accordingly, Nasdaq is adding new Rule 3340, which explicitly 
prohibits Nasdaq members and their associated persons from trading 
during a trading halt. The rule is written broadly to cover effecting 
transactions or publishing quotations, priced bids and/or offers, 
unpriced indications of interest, or bids or offers accompanied by a 
modifier to reflect unsolicited customer interest, in securities, 
single stock futures, and futures on narrow indexes that could be used 
as proxies for trading in the halted stock. Although Nasdaq believes 
that violations of a trading halt by a Nasdaq member could currently be 
addressed as violations of Rule 2110, which mandates high standards of 
commercial honor and just and equitable principles of trade, adding the 
rule to its rulebook will provide added clarity with regard to the 
requirement.
    Second, Nasdaq is adopting IM-8310-3, which provides for release of 
disciplinary complaints, decisions and other information regarding 
Nasdaq members and their associated persons.\6\ The Rule is drafted to 
be administered by Nasdaq Regulation, which under Rule 8001, is defined 
to include FINRA staff, NASD Regulation staff, and FINRA departments 
acting on Nasdaq's behalf pursuant to Nasdaq's regulatory services 
agreement.\7\ Nasdaq's rule would empower its Chief Regulatory Officer 
to make certain determinations regarding the scope of disclosure; the 
comparable FINRA rule looks to the NASD Regulation Board of Directors 
or the President of FINRA Regulatory Policy and Oversight to make 
comparable decisions. In all other material respects, however, Nasdaq's 
IM-8310-3 will be substantively similar to FINRA's comparable 
Interpretive Material.
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    \6\ Among other things, the Interpretive Material contains 
descriptions of when particular decisions become effective. In this 
regard, the Interpretive Material is merely describing the 
parameters otherwise established in the 9000 Series of the Nasdaq 
Rules. Accordingly, Nasdaq believes that including the descriptions 
in the Interpretive Material enhances its clarity.
    \7\ Nasdaq will amend its entire rulebook at a later date to 
replace references to NASD with references to FINRA.
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2. Statutory Basis
    Nasdaq believes that the proposed rule change is consistent with 
the provisions of section 6 of the Act,\8\ in general, and with 
sections 6(b)(5) of the Act,\9\ 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.
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    \8\ 15 U.S.C. 78f.
    \9\ 15 U.S.C. 78f(b)(5).
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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 with respect 
to the proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Because the foregoing proposed rule change does not: (i) 
Significantly affect the protection of investors or the public 
interest; (ii) impose any significant burden on competition; and (iii) 
become operative for 30 days from the date on which it was filed, or 
such shorter time as the Commission may designate, it has become 
effective pursuant to section 19(b)(3)(A) of the Act \10\ and Rule 19b-
4(f)(6) thereunder.\11\
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    \10\ 15 U.S.C. 78s(b)(3)(A).
    \11\ 17 CFR 240.19b-4(f)(6).
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    Nasdaq has requested that the Commission waive the 30-day pre-
operative period for ``non-controversial'' proposals because it adopts 
rules that are already part of FINRA rules, and the waiver will allow 
FINRA to process disciplinary matters as Nasdaq's regulatory services 
provider in accordance with the disclosure standards provided in IM-
8310-3 without delay. In light of the foregoing, the Commission 
believes that waiver of the 30-day operative delay is consistent with 
the protection of investors and the public interest. Accordingly, the 
Commission has determined to waive the operative delay, and the 
proposed rule change has become effective pursuant to section 
19(b)(3)(A) of the

[[Page 45290]]

Act,\12\ and Rule 19b-4(f)(6) thereunder,\13\ with no operative 
delay.\14\
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    \12\ 15 U.S.C. 78s(b)(3)(A).
    \13\ 17 CFR 240.19b-4(f)(6).
    \14\ For purposes only 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).
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    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 rule-comments@sec.gov. Please include 

File Number SR-NASDAQ-2007-070 on the subject line.

Paper Comments

     Send paper comments in triplicate to Nancy M. Morris, 
Secretary, Securities and Exchange Commission, Station Place, 100 F. 
Street, NE., Washington, DC 20549-1090.

All submissions should refer to File Number SR-NASDAQ-2007-070. 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, 100 F. Street, 
NE., Washington, DC 20549, on official business days between the hours 
of 10 a.m. and 3 p.m. Copies of such filing also will be available for 
inspection and copying at the principal office of Nasdaq. 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-NASDAQ-2007-070 and should 
be submitted on or before September 4, 2007.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\15\
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    \15\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7-15757 Filed 8-10-07; 8:45 am]

BILLING CODE 8010-01-P