Document ID: SEC-2006-1244-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: National Association of Securities Dealers, Inc.
Posted Date: 2006-09-25T04:00Z

[Federal Register: September 25, 2006 (Volume 71, Number 185)]
[Notices]               
[Page 55817-55819]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr25se06-57]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-54461; File No. SR-NASD-2006-106]

 
Self-Regulatory Organizations; National Association of Securities 
Dealers, Inc.; Notice of Filing and Immediate Effectiveness of Proposed 
Rule Change Related to Market/Limit-on-Open Orders Sent to the American 
Stock Exchange or New York Stock Exchange

September 15, 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 11, 2006, the National Association of Securities Dealers, 
Inc. (``NASD''), through its subsidiary, The Nasdaq Stock Market, Inc. 
(``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 prepared by Nasdaq. Nasdaq has filed 
the proposal pursuant to Section 19(b)(3)(A) 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).
    \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 to establish a new order processing option for its 
INET and Brut facilities that allow those system users to direct that 
their market/limit-on-open orders being sent to the American Stock 
Exchange (``Amex'') or New York Stock Exchange (``NYSE'') for 
participation in those markets'' opening processes have any shares 
remaining unexecuted after the open be returned to the Nasdaq facility 
of their origin for display and potential execution, as appropriate. 
Nasdaq has designated this proposal as non-controversial and has 
requested that the Commission waive the 30-day pre-operative waiting 
period contained in Rule 19b-4(f)(6)(iii) under the Act.\5\
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    \5\ 17 CFR 240.19b-4(f)(6)(iii).
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    The text of the proposed rule change is below. Proposed new 
language is italicized.
* * * * *

4903. Order Entry Parameters

    (a)-(b) No Change.
    (c) Thru Brut Orders--
    (1) General. A Thru Brut Order is an order submitted to the System 
that is designated for routing to another market center. The following 
requirements shall apply to Thru Brut Orders:
    (A)-(B) No Change.
    (C) Market/Limit on Open Orders--if requested by the entering 
party, unexecuted share amounts of market on open orders directed to 
the New York or American stock exchanges will be returned to the System 
for display and potential execution.
    (d)-(f) No Change.
* * * * *

[[Page 55818]]

4956. Routing

    (a) INET Order Routing Process.
    (1) The INET Order Routing Process shall be available to 
Participants from 7 a.m. to 8 p.m. Eastern Time, and shall route orders 
as described below:
    (A)-(B) No Change.
    (C) Market/Limit on Open Orders.
    If requested by the entering party, unexecuted share amounts of 
market on open orders directed to the New York or American stock 
exchanges will be returned to the INET System for display and potential 
execution.
* * * * *

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 proposes to provide a new voluntary option for its INET and 
Brut facilities that would allow users to direct that, for orders being 
sent to the NYSE or Amex for participation in those markets' opening 
process, thereafter return any unexecuted share amounts back to the 
originating facility for display and potential execution. Currently, 
such share amounts are automatically cancelled back to the entering 
party, and Nasdaq wishes give its facility users the ability to elect 
to have those unexecuted remainders to instead continue to participate 
in Nasdaq's automated execution environment. Nasdaq believes that the 
above option would enhance the choices available to users of the INET 
and Brut systems to select the best method to execute proprietary and 
customer orders across multiple trading venues.
2. Statutory Basis
    Nasdaq believes that the proposed rule change is consistent with 
the provisions of Section 15A of the Act,\6\ in general, and with 
Section 15A(b)(6) of the Act,\7\ in particular, in that it is designed 
to prevent fraudulent and manipulative acts and practices, to promote 
just and equitable principles of trade, to 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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    \6\ 15 U.S.C. 78o-3.
    \7\ 15 U.S.C. 78o-3(b)(6).
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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

    The foregoing proposed rule change is subject to Section 
19(b)(3)(A)(iii) of the Act \8\ and Rule 19b-4(f)(6) thereunder \9\ 
because the proposal: (i) Does not significantly affect the protection 
of investors or the public interest; (ii) does not impose any 
significant burden on competition; and (iii) does not become operative 
prior to 30 days after the date of filing or such shorter time as the 
Commission may designate if consistent with the protection of investors 
and the public interest; provided that Nasdaq has given the Commission 
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.
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    \8\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \9\ 17 CFR 240.19b-4(f)(6).
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    Nasdaq has fulfilled the five-day pre-filing requirement. Nasdaq 
has requested that the Commission waive the 30-day operative delay. The 
Commission believes that waiving the 30-day operative delay is 
consistent with the protection of investors and the public interest 
because such waiver would immediately provide users of Nasdaq's INET 
and Brut facilities the choice to have unexecuted remainders of certain 
orders either continue to participate in Nasdaq's automated execution 
environment or be automatically cancelled. For these reasons, the 
Commission designates the proposed rule change to be effective and 
operative upon filing with the Commission.\10\
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    \10\ For purposes only of accelerating 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 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 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-NASD-2006-106 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-2006-106. 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 the NASD. All comments received will be posted without 
change; the Commission does

[[Page 55819]]

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-2006-106 and should be 
submitted on or before October 16, 2006.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\11\
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    \11\ 17 CFR 200.30-3(a)(12).
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Nancy M. Morris,
Secretary.
[FR Doc. 06-8143 Filed 9-22-06; 8:45 am]

BILLING CODE 8010-01-P