Document ID: SEC-2006-1001-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: NASDAQ Stock Market LLC
Posted Date: 2006-08-04T04:00Z

[Federal Register: August 4, 2006 (Volume 71, Number 150)]
[Notices]               
[Page 44336-44338]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr04au06-115]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-54249; File No. SR-NASDAQ-2006-017]

 
Self-Regulatory Organizations; The NASDAQ Stock Market LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change 
Regarding Technical and Conforming Changes to Nasdaq's 1000 Series 
Rules

July 31, 2006.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(the ``Act''), \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given 
that on July 24, 2006, The NASDAQ Stock Market LLC (``Nasdaq'') filed 
with the Securities and Exchange Commission (the ``Commission'') the 
proposed rule change as described in Items I and II below, which Items 
have been prepared by Nasdaq. Nasdaq has designated the proposed rule 
change as constituting a non-controversial rule change pursuant to 
Section 19(b)(3)(A)(iii) of the Act \3\ and Rule 19b 4(f)(6) 
thereunder,\4\ which renders the proposed rule change effective upon 
filing with the Commission.\5\ 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).
    \5\ Nasdaq requested the Commission to waive the 30-day 
operative delay, as specified in Rule 19b-4(f)(6)(iii). 17 CFR 
240.19b-4(f)(6)(iii).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    Nasdaq proposes to conform the Rule 1000 Series of Nasdaq's rules 
to certain changes made to the Rule 1000 Series of the rules of the 
National Association of Securities Dealers, Inc. (``NASD'') since 
approval of Nasdaq's rules by the Commission in January 2006 and to 
correct certain errors in the approved

[[Page 44337]]

rules. Nasdaq proposes to implement the proposed rule change 
immediately.
    The text of the proposed rule change is available on Nasdaq's Web 
site (http://www.complinet.com/nasdaq), 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
    Nasdaq is modifying its 1000 Series Rules, which are based to a 
substantial extent on comparable NASD Rules, to conform them to certain 
changes made to the Rule 1000 Series of the rules of NASD since 
approval of Nasdaq's rules by the Commission in January 2006 and to 
correct certain errors in the approved rules. Specifically, Nasdaq is:
     Amending Nasdaq IM-1002-2 (currently erroneously 
designated as IM-1000-2), to conform it to recent changes to comparable 
NASD Interpretive Material. The rule allows associated persons to be 
placed on inactive status, thereby preserving their registration, while 
serving in the Armed Forces of the United States. In SR-NASD-2005-
135,\6\ NASD tolled the two-year licensing expiration provisions under 
its Rule 1000 Series for a person previously registered with a member 
who commences active military duty within two years after he or she has 
ceased to be registered with the member, and also tolled the expiration 
provisions for a person placed upon ``inactive'' status pursuant to the 
Interpretive Material, who while serving in the Armed Forces of the 
United States, ceases to be registered with a member. Nasdaq is 
proposing to adopt the same tolling provisions as the NASD.
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    \6\ Securities Exchange Act Release No. 53182 (January 26, 
2006), 71 FR 5391 (February 1, 2006) (SR-NASD-2005-135).
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     Amending Nasdaq Rule 1013 to reflect changes to the names 
of the forms used by NASD to authorize access to its Web CRD system.\7\
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    \7\ See Securities Exchange Act Release No. 53564 (March 29, 
2006), 71 FR 16847 (April 4, 2006) (SR-NASD-2006-038). Web CRD is an 
NASD system used by NASD and other SROs for maintenance of 
registration information concerning broker-dealers and their 
associated persons. Nasdaq members are required to use Web CRD.
    SR-NASD-2006-038 also adopted a uniform form for registration of 
NASD members, Form NMA. Nasdaq is not at this time formally adopting 
Form NMA, because of differences between the requirements of Nasdaq 
Rule 1013 and the comparable NASD Rule 1013. Applicants for Nasdaq 
membership may, however, use Form NMA to enhance their understanding 
of those aspects of Nasdaq Rule 1013 that directly parallel 
requirements of NASD Rule 1013.
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     Correcting an error in the description of the requirements 
for registration as a Limited Representative--Equity Trader. The 
comparable NASD Rule requires an associated person of an NASD member 
engaged in trading ``otherwise than on a securities exchange'' to 
register as an equity trader and pass the applicable qualifications 
examination, known as the Series 55 exam. Because the trading systems 
of The Nasdaq Stock Market, Inc. had historically been the primary 
systems for trading otherwise than on an exchange, the exam has been 
focused largely on the use of those systems. Nasdaq Rule 1032(f) had 
likewise been intended to focus registration and examination 
requirements on traders using Nasdaq systems, but the words ``otherwise 
than on a securities exchange'' were deleted from the rule without an 
appropriate substitution. Accordingly, Nasdaq is amending the rule to 
require registration ``with respect to transactions in equity, 
preferred or convertible debt securities on Nasdaq.'' Thus, if an 
associated person of a Nasdaq member is engaged in trading securities 
on a venue other than Nasdaq, the Nasdaq Rule would not require the 
trader to register under this category.
     Amending Nasdaq Rules 1011, 1012, 1013, 1032, and 1140 and 
IM-1002-4 to correct typographical errors.
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 Section 
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. The proposed rule change 
conforms the Rule 1000 Series of Nasdaq's rules to certain changes made 
to the Rule 1000 Series of NASD rules since approval of Nasdaq's rules 
by the Commission in January 2006 and corrects certain errors in the 
approved rules.
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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.

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

    The foregoing proposed rule change has become effective pursuant to 
Section 19(b)(3)(A) of the Act \10\ and Rule 19b-4(f)(6) thereunder 
\11\ because the proposed rule change: (1) Does not significantly 
affect the protection of investors or the public interest; (2) does not 
impose any significant burden on competition; and (3) does not become 
operative for 30 days from the date of filing, or such shorter time as 
the Commission may designate if consistent with the protection of 
investors and the public interest pursuant to Section 19(b)(3)(A) of 
the Act \12\ and Rule 19b-4(f)(6) \13\ thereunder.
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    \10\ 15 U.S.C. 78s(b)(3)(A).
    \11\ CFR 240.19b-4(f)(6).
    \12\ 15 U.S.C. 78s(b)(3)(A).
    \13\ 17 CFR 240.19b-4(f)(6).
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    Nasdaq has requested that the Commission waive the 30-day operative 
delay.\14\ The Commission believes that the waiver of the 30-day 
operative delay is consistent with the protection of investors and the 
public interest. Waiver of the 30-day operative period will allow 
Nasdaq to implement these changes immediately so that they can be in 
place prior to the time Nasdaq begins to operate as a national 
securities exchange. Accordingly, the Commission designates the 
proposal to be effective

[[Page 44338]]

and operative upon filing with the Commission.\15\
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    \14\ 17 CFR 240.19b-4(f)(6)(iii).
    \15\ For the purposes only of waiving the operative date of this 
proposal, 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 the 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-2006-017 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-NASDAQ-2006-017. 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 Section, 100 F Street, 
NE., Washington, DC 20549-1090. 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-2006-
017 and should be submitted on or before August 25, 2006.
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    \16\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\16\
Jill M. Peterson,
Assistant Secretary.
[FR Doc. E6-12612 Filed 8-3-06; 8:45 am]

BILLING CODE 8010-01-P