Document ID: SEC-2006-0088-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: National Association of Securities Dealers, Inc.
Posted Date: 2006-01-24T05:00Z

[Federal Register: January 24, 2006 (Volume 71, Number 15)]
[Notices]               
[Page 3909-3910]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr24ja06-133]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-53111; File No. SR-NASD-2006-002]

 
Self-Regulatory Organizations; National Association of Securities 
Dealers, Inc.; Notice of Filing and Immediate Effectiveness of Proposed 
Rule Change and Amendment No. 1 Thereto Related to Non-NASD Member 
Broker-Dealer Access to Nasdaq's Brut Facility

January 12, 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 January 3, 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. On January 12, 
2006, Nasdaq submitted Amendment No. 1 to the proposed rule change.\3\ 
Nasdaq has filed the proposal pursuant to section 19(b)(3)(A) of the 
Act \4\ and Rule 19b-4(f)(6) thereunder,\5\ which renders the proposal 
effective upon filing with the Commission. The Commission is publishing 
this notice to solicit comments on the proposed rule change, as 
amended, from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ Amendment No. 1 made technical changes to the proposed rule 
change.
    \4\ 15 U.S.C. 78s(b)(3)(A).
    \5\ 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 continue to provide, through February 8, 2006, 
broker-dealers that are not members of the NASD access to Nasdaq's Brut 
facility. Nasdaq states that it would implement the proposed rule 
change, as amended, immediately. Nasdaq has designated this proposal as 
non-controversial and has requested that the Commission waive the five-
day pre-filing requirement and the 30-day pre-operative waiting period 
contained in Rule 19b-4(f)(6)(iii) under the Act.\6\
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    \6\ 17 CFR 240.19b-4(f)(6)(iii).
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    The text of the proposed rule change, as amended, is below. 
Proposed new language is italicized; proposed deletions are in 
[brackets].
* * * * *

4901. Definitions

    (a) through (h) No Change.
    (i) The term ``Participant'' shall mean an NASD member that 
fulfills the obligations contained in Rule 4902 regarding participation 
in the System. Until [December 31, 2005,] February 8, 2006, the term 
``Participant'' shall also include non-NASD [members] broker/dealers 
that desire to use the System and otherwise meet all other requirements 
for System participation.
    (j) through (w) No Change.
* * * * *

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, as 
amended, and discussed any comments it received on the proposed rule 
change, as amended. 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
    Under current NASD Rule 4901(i), entities that are not members of 
the NASD may use the Brut system until December 31, 2005. Nasdaq 
proposes to amend this provision so as to allow non-NASD member broker-
dealers to use the Brut system through February 8, 2006.\7\ Nasdaq 
notes that the continued provision of such access impacts seven current 
Brut broker-dealer users (four active and three inactive), which Nasdaq 
believes is similar to access already being provided by the Arca 
Trading subsidiary of the Archipelago Exchange.\8\ Nasdaq commits that 
Brut will not accept any new broker-dealer subscribers to its system 
that are non-NASD members during the extended

[[Page 3910]]

access period for current non-NASD member broker-dealer system users 
proposed in this filing.
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    \7\ Nasdaq states that non-NASD member entities that are not 
broker-dealers will not be able to use the Brut system beyond 
December 31, 2005. Nasdaq states that the February 8, 2006 date was 
selected to coincide with the current deadline for non-NASD member 
broker-dealers to leave Nasdaq's INET Facility. See Securities 
Exchange Act Release No. 52902 (December 7, 2005); 70 FR 73810 
(December 13, 2005) (SR-NASD-2005-128). Nasdaq states that the INET 
Facility is expected to be merged into the Brut broker-dealer in the 
near future.
    \8\ See Securities Exchange Act Release No. 52497 (September 22, 
2005); 70 FR 56949 (September 29, 2005) (SR-PCX-2005-90).
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2. Statutory Basis
    Nasdaq believes that the proposed rule change, as amended, is 
consistent with the provisions of section 15A of the Act,\9\ in 
general, and with section 15A(b)(6) of the Act,\10\ in particular, in 
that it is designed to promote just and equitable principles of trade, 
and to remove impediments to a free and open market and a national 
market system.
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    \9\ 15 U.S.C. 78o-3.
    \10\ 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, as amended, 
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, as amended, is subject to 
section 19(b)(3)(A)(iii) of the Act \11\ and Rule 19b-4(f)(6) 
thereunder \12\ 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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    \11\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \12\ 17 CFR 240.19b-4(f)(6).
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    Nasdaq has requested that the Commission waive the five-day pre-
filing requirement and the 30-day operative delay. The Commission 
believes that waiving the five-day pre-filing requirement and the 30-
day operative delay is consistent with the protection of investors and 
the public interest because such waiver will permit current non-NASD 
member broker-dealers continued access to the Brut system without 
disruption. In addition, the Commission notes that the proposed rule's 
February 8, 2006 date matches the date for which non-NASD members are 
required to leave Nasdaq's INET facility. For these reasons, the 
Commission designates the proposed rule change, as amended, to be 
effective and operative upon filing with the Commission.\13\
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    \13\ 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, as amended, 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.\14\
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    \14\ The effective date of the original proposed rule change is 
January 3, 2006 and the effective date of Amendment No. 1 is January 
12, 2006. For purposes of calculating the 60-day period within which 
the Commission may summarily abrogate the proposed rule change, as 
amended, under section 19(b)(3)(C) of the Act, the Commission 
considers the period to commence on January 12, 2006, the date on 
which the Exchange submitted Amendment No. 1. See 15 U.S.C. 
78s(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, as amended, 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-2006-002 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 20549-9303.
All submissions should refer to File Number SR-NASD-2006-002. 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, as 
amended, 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 
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-2006-002 and should be 
submitted on or before February 14, 2006.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\15\
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    \15\ 17 CFR 200.30-3(a)(12).
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Jill M. Peterson,
Assistant Secretary.
 [FR Doc. E6-777 Filed 1-23-06; 8:45 am]

BILLING CODE 8010-01-P