Document ID: SEC-2007-0378-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: National Association of Securities Dealers, Inc.
Posted Date: 2007-03-13T04:00Z

[Federal Register: March 13, 2007 (Volume 72, Number 48)]
[Notices]               
[Page 11417-11418]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr13mr07-95]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-55410; File No. SR-NASD-2007-020]

 
Self-Regulatory Organizations; National Association of Securities 
Dealers, Inc.; Notice of Filing and Immediate Effectiveness of Proposed 
Rule Change To Revise the Implementation Date of Previously Proposed 
Amendments to NASD Rules 4632(f) and 6130(e)

March 6, 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 March 5, 2007, the National Association of Securities Dealers, Inc. 
(``NASD'') 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 NASD. NASD 
has filed the proposal as a ``non-controversial'' rule change pursuant 
to Section 19(b)(3)(A) of the Act\3\ and Rule 19b-4(f)(6) 
thereunder,\4\ which renders it 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 Substance 
of the Proposed Rule Change

    NASD proposes to revise the implementation date of certain 
amendments to the NASD/Nasdaq Trade Reporting Facility (``NASD/Nasdaq 
TRF'') rules that were previously proposed by NASD pursuant to SR-NASD-
2007-002.\5\ Specifically, NASD proposes to implement the amendments to 
Rule 4632(f) and Rule 6130(e) regarding aggregation of trades for 
purposes of reporting to the NASD/Nasdaq TRF on the Regulation NMS 
Trading Phase Date, March 5, 2007.\6\ There is no new rule text.
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    \5\ See Securities Exchange Act Release No. 55101 (January 12, 
2007), 72 FR 2568 (January 19, 2007) (SR-NASD-2007-002).
    \6\ See Securities Exchange Act Release No. 55160 (January 24, 
2007), 72 FR 4202 (January 30, 2007).
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II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, NASD 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. NASD 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
    On January 8, 2007, NASD filed proposed rule change SR-NASD-2007-
002, which proposed to make conforming changes to the transaction 
reporting rules relating to the NASD/Nasdaq TRF consistent with the new 
requirements of Regulation NMS under the Act. Among other changes, NASD 
proposed to amend Rule 4632(f) to expressly prohibit a member from 
aggregating individual executions of orders in a security at the same 
price into a single transaction report for tape purposes. As stated in 
SR-NASD-2007-002, NASD has determined that prohibiting the bunching of 
transactions when reporting to an NASD facility helps ensure greater 
transparency of individual transactions. However, for purposes of 
trades that are not printed to the tape, NASD proposed to amend Rule 
6130(e) to continue to permit members--for clearing purposes only--to 
aggregate individual executions of orders in a security at the same 
price with the identical contra party and submit a single report to the 
System.\7\
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    \7\ ``System'' is defined in Rule 6110 to mean the NASD/Nasdaq 
TRF, the OTC Reporting Facility, and the ITS/CAES System.
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    These amendments are consistent with recent amendments to the 
reporting rules relating to NASD's Alternative Display Facility 
(``ADF''). Pursuant to SR-NASD-2006-091, NASD proposed to amend Rule 
4632A(f) to expressly prohibit aggregation of individual executions of 
orders in a security at the same price into a single transaction 
report. The effective date of SR-NASD-2006-091 is the Regulation NMS 
Trading Phase Date.\8\
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    \8\ See Securities Exchange Act Release No. 54537 (September 28, 
2006), 71 FR 59173 (October 6, 2006) (SR-NASD-2006-091). See also 
NASD Notice to Members 06-67 (November 2006) announcing the 
effective date of SR-NASD-2006-091.
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    To ensure consistency across NASD facilities, NASD proposes to 
implement the amendments to Rules 4632(f) and 6130(e) on the Regulation 
NMS Trading Phase Date, which, as noted above, is the implementation 
date for similar amendments to the ADF rules.\9\ All other changes that 
were proposed in SR-NASD-2007-002 will become effective on the Pilot 
Stocks Phase Date, as set forth in that filing.
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    \9\ The rules relating to the NASD/NSX Trade Reporting Facility, 
the NASD/BSE Trade Reporting Facility, and the NASD/NYSE Trade 
Reporting Facility prohibit the aggregation of trades for purposes 
of reporting.
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    NASD is clarifying that proposed Rule 4632(f) is intended to 
prohibit only the aggregation of multiple executions into a single 
transaction report using the ``.B'' modifier for purposes of 
transaction reporting to the NASD/Nasdaq TRF. It will not apply to the 
matching or crossing of multiple orders in a single execution (e.g., 
via an alternative trading system or broker-dealer order-management 
system). Today, such single executions are not submitted to the NASD/
Nasdaq TRF as bunched or aggregated transaction reports using the 
``.B'' modifier and, thus, are not affected by the proposed rule 
change.
    NASD has filed the proposed rule change for immediate 
effectiveness. NASD proposes to implement the amendments to Rules 
4632(f) and 6130(e) on the Regulation NMS Trading Phase Date, March 5, 
2007.
2. Statutory Basis
    NASD believes that the proposed rule change is consistent with the 
provisions of Section 15A(b)(6) of the Act,\10\ which requires, among 
other things, that NASD 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. NASD believes that the proposed rule change will 
enhance the consistency of the trade reporting rules applicable to NASD 
facilities and will ensure greater transparency of individual 
transactions.
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    \10\ 15 U.S.C. 78o-3(b)(6).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    NASD does not believe that the proposed rule change will result in 
any burden on competition that is not

[[Page 11418]]

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

    Because the foregoing rule change does not: (1) Significantly 
affect the protection of investors or the public interest; (2) impose 
any significant burden on competition; and (3) become operative for 30 
days from the date of this filing, or such shorter time as the 
Commission may designate, it has become effective pursuant to Section 
19(b)(3)(A) of the Act \11\ and Rule 19b-4(f)(6) thereunder.\12\
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    \11\ 15 U.S.C. 78s(b)(3)(A).
    \12\ 17 CFR 240.19b-4(f)(6)(iii). In addition, Rule 19b-
4(f)(6)(iii) requires that a self-regulatory organization submit to 
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 
of the proposed rule change, or such shorter time as designated by 
the Commission. NASD has satisfied the five-day pre-filing 
requirement.
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    NASD has requested that the Commission waive the 30-day operative 
delay in this case. The Commission believes that waiving the 30-day 
operative delay is consistent with the protection of investors and the 
public interest because such waiver will allow the amendments to Rules 
4632(f) and 6130(e) to be implemented on the Regulation NMS Trading 
Phase Date. For this reason, the Commission designates the proposed 
rule change to be operative upon filing with the Commission.\13\
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    \13\ For the purposes only of waiving the 30-day operative 
delay, the Commission has considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
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    At any time within 60 days of the filing of such 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 Comment

     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-NASD-2007-020 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-NASD-2007-020. 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 the 
filing also will be available for inspection and copying at the 
principal office of 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-2007-020 and should be submitted on or before April 3, 2007.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\14\
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    \14\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
 [FR Doc. E7-4508 Filed 3-12-07; 8:45 am]

BILLING CODE 8010-01-P