Document ID: SEC-2006-1335-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: NASDAQ Stock Market LLC
Posted Date: 2006-10-16T04:00Z

[Federal Register: October 16, 2006 (Volume 71, Number 199)]
[Notices]               
[Page 60783-60784]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr16oc06-110]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-54581; File No. SR-NASDAQ-2006-039]

 
Self-Regulatory Organizations; NASDAQ Stock Market LLC; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change To Modify 
the Reporting Required When Nasdaq Lists the Security of an Affiliate

October 6, 2006.
    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 28, 2006, the NASDAQ Stock Market LLC (``Nasdaq'' or 
``Exchange'') 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 Nasdaq. Pursuant to 
Section 19(b)(3)(A) of the Act \3\ and Rule 19b-4(f)(6) thereunder,\4\ 
Nasdaq has designated this proposal as ``non-controversial,'' which 
renders the proposed rule change 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).
    \4\ 17 CFR 240.19b-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of the 
Substance of the Proposed Rule Change

    Nasdaq is proposing a proposed rule change to modify the reporting 
required when Nasdaq lists the security of an affiliate. The text of 
the proposed rule change is available on Nasdaq's Web site (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
    Nasdaq is proposing to revise Rule 4370 to file on a quarterly 
basis, rather than on a monthly basis, the report detailing Nasdaq's 
monitoring of (1) the Nasdaq Affiliate's compliance with the provisions 
of Rule 4200, 4300 and 4400 Series (which include quantitative and 
qualitative listing requirements) and (2) the trading of the Affiliate 
Security, including summaries of all related surveillance alerts, 
complaints, regulatory referrals, busted or adjusted trades, 
investigations, examinations, formal and informal disciplinary actions, 
exception reports and trading data.
    The proposed rule change is similar to a recent New York Stock 
Exchange rule filing.\5\ Additionally, Nasdaq notes that providing 
these reports on a quarterly rather than monthly basis will not affect 
the compliance monitoring done by Nasdaq and NASD, but will make the 
reporting less burdensome.\6\ Further, by adopting a quarterly 
reporting cycle, the reports will be more closely aligned with the 
issuer's financial reporting cycle and NASD's review and surveillance 
cycle.
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    \5\ See Securities Exchange Act Release No. 53382 (February 27, 
2006), 71 FR 11270 (March 6, 2006) (SR-NYSE-2005-77), adopting NYSE 
Rule 497.
    \6\ The NASD performs regulatory services on behalf of Nasdaq 
pursuant to a regulatory services contract. Telephone conversation 
between Jonathan Cayne, Associate General Counsel, Nasdaq, and 
Rebekah Liu, Special Counsel, Division of Market Regulation, 
Commission, on October 6, 2006.
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    In addition, the proposed rule change would permit Nasdaq to file a 
report with the Commission within five business days of providing 
notice to the Nasdaq Affiliate of its non-compliance with Nasdaq's 
listing requirements rather than at the same time that Nasdaq notifies 
the Nasdaq Affiliate. This proposed change is also similar to language 
in the recent New York Stock Exchange rule filing referenced above.
    Finally, the proposed rule change would clarify that the applicable 
provisions of the Rule 4200, 4300, and 4400 Series that are the subject 
of Nasdaq's reports are those related to the listing requirements.
    Nasdaq will implement the proposed rule change 30 days after 
filing.
2. Statutory Basis
    Nasdaq believes that the proposed rule change is consistent with 
the provisions of Section 6 of the Act \7\ in

[[Page 60784]]

general, and with Section 6(b)(5) of the Act \8\ in particular, in that 
it is designed to prevent fraudulent and manipulative acts and 
practices, to promote just and equitable principles of trade, remove 
impediments to a free and open market and a national market system, 
and, in general, to protect investors and the public interest.
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    \7\ 15 U.S.C. 78f.
    \8\ 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.

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

    This proposed rule change is filed pursuant to paragraph (A) of 
Section 19(b)(3) of the Act \9\ and Rule 19b-4(f)(6) \10\ thereunder. 
The proposed rule change does not significantly affect the protection 
of investors or the public interest, does not impose any significant 
burden on competition, and, by its terms, does not become operative for 
30 days from the date on which it was filed, or such shorter time as 
the Commission may designate. Nasdaq provided the Commission written 
notice of its intent to file the proposed rule change, along with a 
brief description and text of the proposed rule change, at least five 
business days prior to the date of filing the proposed rule change. 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.\11\
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    \9\ 15 U.S.C. 78s(b)(3)(A).
    \10\ 17 CFR 240.19b-4(f)(6).
    \11\ See 15 U.S.C. 78(b)(3)(C).
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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-2006-039 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-2006-039. 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 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-2006-039 and 
should be submitted on or before November 6, 2006
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    \12\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\12\
Jill M. Peterson,
Assistant Secretary.
[FR Doc. E6-17081 Filed 10-13-06; 8:45 am]

BILLING CODE 8011-01-P