Document ID: SEC-2006-0772-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: National Association of Securities Dealers, Inc.
Posted Date: 2006-06-16T04:00Z

[Federal Register: June 16, 2006 (Volume 71, Number 116)]
[Notices]               
[Page 34976]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr16jn06-158]                         

-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-53977; File No. SR-NASD-2006-055]

 
Self-Regulatory Organizations; National Association of Securities 
Dealers, Inc.; Order Granting Approval of a Proposed Rule Change To 
Require Members To Report All Transactions That Must Be Reported to 
NASD and Are Subject to a Regulatory Transaction Fee to the Nasdaq 
Market Center and/or the Trade Reporting and Comparison Service

June 12, 2006.
    On April 21, 2006, the National Association of Securities Dealers, 
Inc. (``NASD'') filed with the Securities and Exchange Commission 
(``Commission''), pursuant to section 19(b)(1) of the Securities 
Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ a 
proposed rule change to require NASD members to report all transactions 
that must be reported to NASD and that are subject to a regulatory 
transaction fee pursuant to Section 3 of Schedule A to the NASD By-Laws 
(``Section 3'') to the Nasdaq Market Center (``NMC'') and/or the Trade 
Reporting and Comparison Service (``TRACS''). The proposed rule change 
was published for comment in the Federal Register on May 8, 2006.\3\ 
The Commission received no comments on the proposal. This order 
approves the proposed rule change.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 53748 (May 2, 2006), 
71 FR 26795.
---------------------------------------------------------------------------

    Currently, NASD obtains funds to pay its Section 31 fees and 
assessments from its membership, in accordance with Section 3. Further, 
NASD represents that most of the transactions that are assessed a fee 
under Section 3 are subject to automated reporting to NMC or TRACS 
pursuant to NASD trade reporting rules. NASD member firms, however, 
currently are required to manually self-report covered sales that are 
odd lots, away-from-the-market sales, and exercises of OTC options.
    NASD represents that the current self-reporting process has allowed 
NASD to meet its obligations under section 31 of the Act.\4\ However, 
there have been instances when some NASD members have filed their self-
reporting forms late or amended previous forms in later months to 
include additional covered sales volume. NASD has now proposed to 
require automated reporting, to NMC or TRACS, of these additional types 
of covered sales, so that all covered sales that must be reported for 
purposes of Section 3 are reported in an automated fashion. NASD also 
has proposed to establish separate modifiers for reports of covered 
sales that are odd lots, away-from-the-market sales, and exercises of 
OTC options. NASD would not print these transactions to the 
Consolidated Tape.
---------------------------------------------------------------------------

    \4\ 15 U.S.C. 78ee.
---------------------------------------------------------------------------

    NASD will announce the effective date of the proposed rule change 
in a Notice to Members to be published no later than 60 days following 
this approval order. The effective date would be at least 90 days 
following publication of the Notice to Members announcing Commission 
approval to allow firms sufficient time to make any necessary systems 
changes.
    The Commission finds that the proposed rule change is consistent 
with the requirements of section 15A of the Act,\5\ and the rules and 
regulations thereunder applicable to a national securities 
association.\6\ In particular, the Commission finds that the proposed 
rule change is consistent with section 15A(b)(6) of the Act,\7\ which 
requires, among other things, that NASD's 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. The proposal should improve the efficiency, 
accuracy, and timeliness of NASD trade reporting by requiring automated 
reporting of certain types of transactions that currently are manually 
reported to NASD and is, therefore, reasonable and consistent with the 
Act.
---------------------------------------------------------------------------

    \5\ 15 U.S.C. 78o-3.
    \6\ In approving this proposed rule change, the Commission has 
considered the proposed rule's impact on efficiency, competition, 
and capital formation. See 15 U.S.C. 78c(f).
    \7\ 15 U.S.C. 78o-3(b)(6).
---------------------------------------------------------------------------

    It is therefore ordered, pursuant to section 19(b)(2) of the 
Act,\8\ that the proposed rule change (SR-NASD-2006-055) is approved.
---------------------------------------------------------------------------

    \8\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\9\
---------------------------------------------------------------------------

    \9\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Jill M. Peterson,
Assistant Secretary.
 [FR Doc. E6-9438 Filed 6-15-06; 8:45 am]

BILLING CODE 8010-01-P